Midland States Bancorp, Inc. Announces 2022 Third Quarter Results

Summary

• Net income of $23.5 million, or $1.04 diluted earnings per share
• ROAA of 1.22%, ROAE of 13.34% and ROATCE of 20.24%
• Total loans increased 27.8% annualized from prior quarter
• Continued growth in noninterest-bearing and total deposits
• Nonperforming assets declined 14.2% from end of prior quarter
• Total capital ratio strengthened with the recent preferred stock offering

EFFINGHAM, Ill., Oct. 20, 2022 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $23.5 million, or $1.04 diluted earnings per share, for the third quarter of 2022. This compares to net income of $21.9 million, or $0.97 diluted earnings per share, for the second quarter of 2022. This also compares to net income of $19.5 million, or $0.86 diluted earnings per share, for the third quarter of 2021.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continue to see healthy economic conditions throughout our markets and strong loan demand. Our commercial banking teams are effectively capitalizing on the loan demand across all areas of our lending, resulting in well balanced loan production and 28% annualized growth in total loans during the third quarter. The strong loan growth helped us to generate further improvement in earnings and our level of returns.

“Following the capital raised through our preferred stock offering in the third quarter, we are well positioned to support continued balance sheet growth, although we expect our level of loan growth to moderate as higher interest rates and economic uncertainty have a greater impact on loan demand. Even with a lower level of loan growth, given our higher net interest margin and increased efficiencies, we believe we can continue to generate strong financial results for our shareholders, which will help us to further increase our capital ratios and support the continued growth of our franchise,” said Mr. Ludwig.

Net Interest Margin

Net interest margin for the third quarter of 2022 was 3.63%, a slight decline from 3.65% for the second quarter of 2022 as an increase in the cost of deposits more than offset the increase in the average yield on earning assets. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 3 basis points to net interest margin in both the second and third quarters of 2022.

Relative to the third quarter of 2021, net interest margin increased 29 basis points from 3.34%, primarily due to an increase in the average yield on earning assets. Accretion income on purchased loan portfolios contributed 7 basis points to net interest margin in the third quarter of 2021. Excluding the impact of accretion income, net interest margin increased 33 basis points from the third quarter of 2021.  

Net Interest Income

Net interest income for the third quarter of 2022 was $64.0 million, an increase of 4.4% from $61.3 million for the second quarter of 2022, which was primarily due to higher average loan balances. Accretion income associated with purchased loan portfolios totaled $0.5 million for the third quarter of 2022, compared with $0.6 million for the second quarter of 2022.

Relative to the third quarter of 2021, net interest income increased $12.6 million, or 24.6%, due to higher average earning assets and an increase in net interest margin. Accretion income for the third quarter of 2021 was $1.0 million.

Noninterest Income

Noninterest income for the third quarter of 2022 was $15.8 million, an increase of 8.3% from $14.6 million for the second quarter of 2022. The increase in noninterest income was primarily attributable to impairment on commercial mortgage servicing rights of approximately $0.9 million that negatively impacted noninterest income in the second quarter of 2022.

Relative to the third quarter of 2021, noninterest income increased 4.5% from $15.1 million. The increase was primarily attributable to impairment on commercial mortgage servicing rights that negatively impacted noninterest income in the third quarter of 2021.

Wealth management revenue for the third quarter of 2022 was $6.2 million, an increase of 0.9% from $6.1 million in the second quarter of 2022. Compared to the third quarter of 2021, wealth management revenue decreased 13.6%, primarily due to a decline in assets under administration resulting from market performance.

Noninterest Expense

Noninterest expense for the third quarter of 2022 was $43.5 million, an increase of 5.2% from $41.3 million in the second quarter of 2022. The increase was attributable to small increases across most expense items consistent with the growth of the Company including the full quarter impact of the branch purchase completed in June 2022.

Relative to the third quarter of 2021, noninterest expense increased 5.3% from $41.3 million, primarily due to higher marketing, loan, and other expense.

Loan Portfolio

Total loans outstanding were $6.20 billion at September 30, 2022, compared with $5.80 billion at June 30, 2022, and $4.92 billion at September 30, 2021. The increase in total loans from June 30, 2022 was attributable to growth in all portfolios with the exception of the SBA PPP loan portfolio, which continues to decline as loans are forgiven.

Equipment finance balances increased $49.4 million from June 30, 2022 to $1.03 billion at September 30, 2022.  

Compared to loan balances at September 30, 2021, growth in equipment finance balances, other commercial loans, commercial real estate loans, and consumer loans was partially offset by declines in commercial FHA warehouse lines and PPP loans.

Deposits

Total deposits were $6.40 billion at September 30, 2022, compared with $6.18 billion at June 30, 2022, and $5.60 billion at September 30, 2021. The increase in total deposits from the end of the prior quarter was primarily attributable to growth in noninterest-bearing and lower-cost interest-bearing deposits.

Asset Quality

Nonperforming loans totaled $46.9 million, or 0.76% of total loans, at September 30, 2022, compared with $56.9 million, or 0.98% of total loans, at June 30, 2022. The decrease in nonperforming loans was attributable to a combination of paydowns, note sale, and a charge off of a previously resolved loan relationship. At September 30, 2021, nonperforming loans totaled $54.6 million, or 1.11% of total loans.

Net charge-offs for the third quarter of 2022 were $3.2 million, or 0.21% of average loans on an annualized basis, compared to net charge-offs of $2.8 million, or 0.20% of average loans on an annualized basis, for the second quarter of 2022, and $3.0 million, or 0.25% of average loans on an annualized basis, for the third quarter of 2021.  

The Company recorded a provision for credit losses on loans of $7.0 million for the third quarter of 2022, which was primarily related to the growth in total loans and negative economic forecasts.

The Company’s allowance for credit losses on loans was 0.95% of total loans and 125.1% of nonperforming loans at September 30, 2022, compared with 0.95% of total loans and 96.5% of nonperforming loans at June 30, 2022.

Capital

During the third quarter of 2022, the Company raised $115 million of capital through a preferred stock offering, which increased its total capital, tier 1 capital, and tier 1 leverage ratios. At September 30, 2022, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

	Bank Level Ratios as of Sept. 30, 2022	Consolidated Ratios as of Sept. 30, 2022	Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets	11.19%	12.79%	10.50%
Tier 1 capital to risk-weighted assets	10.43%	10.05%	8.50%
Tier 1 leverage ratio	9.75%	9.40%	4.00%
Common equity Tier 1 capital	10.43%	7.56%	7.00%
Tangible common equity to tangible assets (1)	NA	5.82%	NA

(1)   A non-GAAP financial measure. Refer to page 14 for a reconciliation to the comparable GAAP financial measure.
(2)   Includes the capital conservation buffer of 2.5%.

Since the beginning of 2022, the impact of rising interest rates on the Company’s investment portfolio has resulted in a $83.6 million decline in accumulated other comprehensive income (AOCI), which has negatively impacted tangible book value per share by $3.55, and the tangible common equity to tangible assets ratio by 103 basis points.

Stock Repurchase Program

During the third quarter of 2022, the Company did not repurchase any shares under its stock repurchase program. As of September 30, 2022, the Company had $18.6 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, October 21, 2022, to discuss its financial results.

Telephone Access: https://register.vevent.com/register/BIe092c94fe0b7469db1a7031df0e48485

A slide presentation relating to the third quarter 2022 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of September 30, 2022, the Company had total assets of approximately $7.81 billion, and its Wealth Management Group had assets under administration of approximately $3.45 billion. Midland provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “Efficiency Ratio,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the impact of inflation, the effects of the COVID-19 pandemic and its potential effects on the economic environment; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2022				2022				2022				2021				2021
Earnings Summary
Net interest income		$	64,024			$	61,334			$	56,827			$	54,301			$	51,396
Provision for credit losses			6,974				5,441				4,167				467				(184	)
Noninterest income			15,826				14,613				15,613				22,523				15,143
Noninterest expense			43,496				41,339				40,884				45,757				41,292
Income before income taxes			29,380				29,167				27,389				30,600				25,431
Income taxes			5,859				7,284				6,640				7,493				5,883
Net income		$	23,521			$	21,883			$	20,749			$	23,107			$	19,548
Diluted earnings per common share		$	1.04			$	0.97			$	0.92			$	1.02			$	0.86
Weighted average shares outstanding - diluted			22,390,438				22,360,819				22,350,307				22,350,771				22,577,880
Return on average assets			1.22	%			1.19	%			1.16	%			1.26	%			1.15	%
Return on average shareholders' equity			13.31	%			13.65	%			12.80	%			14.04	%			11.90	%
Return on average tangible common equity (1)			20.20	%			19.14	%			17.84	%			19.69	%			16.76	%
Net interest margin			3.63	%			3.65	%			3.50	%			3.25	%			3.34	%
Efficiency ratio (1)			54.26	%			53.10	%			55.73	%			52.61	%			58.78	%
Adjusted Earnings Performance Summary (1)
Adjusted earnings		$	23,568			$	22,191			$	20,815			$	25,416			$	19,616
Adjusted diluted earnings per common share		$	1.04			$	0.98			$	0.92			$	1.12			$	0.86
Adjusted return on average assets			1.22	%			1.21	%			1.16	%			1.39	%			1.15	%
Adjusted return on average shareholders' equity			13.34	%			13.84	%			12.84	%			15.44	%			11.94	%
Adjusted return on average tangible common equity			20.24	%			19.41	%			17.89	%			21.65	%			16.82	%
Adjusted pre-tax, pre-provision earnings		$	36,415			$	35,902			$	32,041			$	36,324			$	28,379
Adjusted pre-tax, pre-provision return on average assets			1.89	%			1.95	%			1.79	%			1.98	%			1.67	%
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(in thousands, except per share data)		2022				2022				2022				2021				2021
Net interest income:
Interest income		$	79,556			$	69,236			$	62,748			$	60,427			$	58,490
Interest expense			15,532				7,902				5,921				6,126				7,094
Net interest income			64,024				61,334				56,827				54,301				51,396
Provision for credit losses:
Provision for credit losses on loans			6,974				4,741				4,132				—				—
Provision for credit losses on unfunded commitments			—				700				256				388				—
Provision for other credit losses			—				—				(221	)			79				(184	)
Total provision for credit losses			6,974				5,441				4,167				467				(184	)
Net interest income after provision for credit losses			57,050				55,893				52,660				53,834				51,580
Noninterest income:
Wealth management revenue			6,199				6,143				7,139				7,176				7,175
Residential mortgage banking revenue			210				384				599				1,103				1,287
Service charges on deposit accounts			2,597				2,304				2,068				2,338				2,268
Interchange revenue			3,531				3,590				3,280				3,677				3,651
(Loss) gain on sales of investment securities, net			(129	)			(101	)			—				—				160
Gain on termination of hedged interest swap			—				—				—				1,845				—
Impairment on commercial mortgage servicing rights			—				(869	)			(394	)			(2,072	)			(3,037	)
Company-owned life insurance			929				840				1,019				1,904				869
Other income			2,489				2,322				1,902				6,552				2,770
Total noninterest income			15,826				14,613				15,613				22,523				15,143
Noninterest expense:
Salaries and employee benefits			22,889				22,645				21,870				22,109				22,175
Occupancy and equipment			3,850				3,489				3,755				3,429				3,701
Data processing			6,093				6,082				5,873				5,819				6,495
Professional			1,693				1,516				1,972				1,499				1,738
Amortization of intangible assets			1,361				1,318				1,398				1,425				1,445
Loss on mortgage servicing rights held for sale			—				—				—				—				79
FHLB advances prepayment fees			—				—				—				4,859				—
Other expense			7,610				6,289				6,016				6,617				5,659
Total noninterest expense			43,496				41,339				40,884				45,757				41,292
Income before income taxes			29,380				29,167				27,389				30,600				25,431
Income taxes			5,859				7,284				6,640				7,493				5,883
Net income		$	23,521			$	21,883			$	20,749			$	23,107			$	19,548
Basic earnings per common share		$	1.04			$	0.97			$	0.92			$	1.03			$	0.86
Diluted earnings per common share		$	1.04			$	0.97			$	0.92			$	1.02			$	0.86

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(in thousands)		2022				2022				2022				2021				2021
Assets
Cash and cash equivalents		$	313,188			$	270,117			$	332,264			$	680,371			$	662,643
Investment securities			690,504				769,278				858,246				916,132				900,319
Loans			6,198,451				5,795,544				5,539,961				5,224,801				4,915,554
Allowance for credit losses on loans			(58,639	)			(54,898	)			(52,938	)			(51,062	)			(55,675	)
Total loans, net			6,139,812				5,740,646				5,487,023				5,173,739				4,859,879
Loans held for sale			4,338				5,298				8,931				32,045				26,621
Premises and equipment, net			77,519				77,668				77,857				79,220				79,701
Other real estate owned			11,141				11,131				11,537				12,059				11,931
Loan servicing rights, at lower of cost or fair value			1,297				25,879				27,484				28,865				30,916
Commercial FHA mortgage loan servicing rights held for sale			23,995				—				—				—				—
Goodwill			161,904				161,904				161,904				161,904				161,904
Other intangible assets, net			22,198				23,559				22,976				24,374				26,065
Company-owned life insurance			149,648				148,900				148,060				148,378				149,146
Other assets			226,333				201,432				202,433				186,718				184,834
Total assets		$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805			$	7,093,959
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits		$	2,025,237			$	1,972,261			$	1,965,032			$	2,245,701			$	1,672,901
Interest-bearing deposits			4,370,015				4,212,177				4,092,507				3,864,947				3,928,475
Total deposits			6,395,252				6,184,438				6,057,539				6,110,648				5,601,376
Short-term borrowings			58,518				67,689				60,352				76,803				66,666
FHLB advances and other borrowings			360,000				285,000				310,171				310,171				440,171
Subordinated debt			139,370				139,277				139,184				139,091				138,998
Trust preferred debentures			49,824				49,674				49,524				49,374				49,235
Other liabilities			79,634				73,546				76,959				93,881				139,669
Total liabilities			7,082,598				6,799,624				6,693,729				6,779,968				6,436,115
Total shareholders’ equity			739,279				636,188				644,986				663,837				657,844
Total liabilities and shareholders’ equity		$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805			$	7,093,959

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(in thousands)		2022				2022				2022				2021				2021
Loan Portfolio
Equipment finance loans		$	577,323			$	546,267			$	528,572			$	521,973			$	486,623
Equipment finance leases			457,611				439,202				429,000				423,280				412,430
Commercial FHA warehouse lines			51,309				23,872				83,999				91,927				180,248
SBA PPP loans			2,810				6,409				22,862				52,477				82,410
Other commercial loans			904,840				814,710				802,692				783,811				718,054
Total commercial loans and leases			1,993,893				1,830,460				1,867,125				1,873,468				1,879,765
Commercial real estate			2,466,303				2,335,655				2,114,041				1,816,828				1,562,013
Construction and land development			225,550				203,955				188,668				193,749				200,792
Residential real estate			356,225				340,103				329,331				338,151				344,414
Consumer			1,156,480				1,085,371				1,040,796				1,002,605				928,570
Total loans		$	6,198,451			$	5,795,544			$	5,539,961			$	5,224,801			$	4,915,554
Deposit Portfolio
Noninterest-bearing demand		$	2,025,237			$	1,972,261			$	1,965,032			$	2,245,701			$	1,672,901
Interest-bearing:
Checking			1,905,439				1,808,885				1,779,018				1,663,021				1,697,326
Money market			1,125,333				1,027,547				964,352				869,067				852,836
Savings			704,245				740,364				710,955				679,115				665,710
Time			620,960				620,363				619,386				630,583				688,693
Brokered time			14,038				15,018				18,796				23,161				23,910
Total deposits		$	6,395,252			$	6,184,438			$	6,057,539			$	6,110,648			$	5,601,376

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2022				2022				2022				2021				2021
Average Balance Sheets
Cash and cash equivalents		$	195,657			$	226,517			$	384,231			$	685,655			$	525,848
Investment securities			749,022				818,927				894,634				915,707				773,372
Loans			6,040,358				5,677,791				5,274,051				4,995,794				4,800,063
Loans held for sale			6,044				9,865				31,256				34,272				15,204
Nonmarketable equity securities			37,765				36,338				36,378				39,203				43,873
Total interest-earning assets			7,028,846				6,769,438				6,620,550				6,670,631				6,158,360
Non-earning assets			618,138				615,348				631,187				605,060				597,153
Total assets		$	7,646,984			$	7,384,786			$	7,251,737			$	7,275,691			$	6,755,513
Interest-bearing deposits		$	4,325,098			$	4,152,764			$	3,953,249			$	3,913,475			$	3,895,970
Short-term borrowings			58,271				59,301				70,044				66,677				68,103
FHLB advances and other borrowings			340,163				307,611				311,282				319,954				440,171
Subordinated debt			139,324				139,232				139,139				139,046				138,954
Trust preferred debentures			49,751				49,602				49,451				49,307				49,167
Total interest-bearing liabilities			4,912,607				4,708,510				4,523,165				4,488,459				4,592,365
Noninterest-bearing deposits			1,969,873				1,967,263				1,989,413				2,049,802				1,434,193
Other noninterest-bearing liabilities			63,638				66,009				81,832				84,538				77,204
Shareholders' equity			700,866				643,004				657,327				652,892				651,751
Total liabilities and shareholders' equity		$	7,646,984			$	7,384,786			$	7,251,737			$	7,275,691			$	6,755,513
Yields
Earning Assets
Cash and cash equivalents			2.28	%			0.83	%			0.18	%			0.16	%			0.16	%
Investment securities			2.44	%			2.41	%			2.22	%			2.12	%			2.34	%
Loans			4.83	%			4.49	%			4.40	%			4.36	%			4.42	%
Loans held for sale			3.87	%			3.15	%			2.86	%			3.53	%			2.79	%
Nonmarketable equity securities			5.78	%			5.38	%			5.40	%			5.07	%			5.05	%
Total interest-earning assets			4.51	%			4.12	%			3.87	%			3.62	%			3.79	%
Interest-Bearing Liabilities
Interest-bearing deposits			0.94	%			0.37	%			0.22	%			0.22	%			0.26	%
Short-term borrowings			0.19	%			0.15	%			0.14	%			0.12	%			0.12	%
FHLB advances and other borrowings			2.83	%			1.87	%			1.58	%			1.75	%			1.80	%
Subordinated debt			5.77	%			5.78	%			5.78	%			5.78	%			5.79	%
Trust preferred debentures			6.54	%			5.05	%			4.21	%			3.90	%			3.92	%
Total interest-bearing liabilities			1.25	%			0.67	%			0.53	%			0.54	%			0.61	%
Cost of Deposits			0.65	%			0.25	%			0.15	%			0.15	%			0.19	%
Net Interest Margin			3.63	%			3.65	%			3.50	%			3.25	%			3.34	%

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of and for the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2022				2022				2022				2021				2021
Asset Quality
Loans 30-89 days past due		$	28,275			$	16,212			$	29,044			$	17,514			$	16,772
Nonperforming loans			46,882				56,883				52,900				42,580				54,620
Nonperforming assets			59,524				69,344				66,164				57,068				69,261
Net charge-offs			3,233				2,781				2,256				4,613				2,989
Loans 30-89 days past due to total loans			0.46	%			0.28	%			0.52	%			0.34	%			0.34	%
Nonperforming loans to total loans			0.76	%			0.98	%			0.95	%			0.81	%			1.11	%
Nonperforming assets to total assets			0.76	%			0.93	%			0.90	%			0.77	%			0.98	%
Allowance for credit losses to total loans			0.95	%			0.95	%			0.96	%			0.98	%			1.13	%
Allowance for credit losses to nonperforming loans			125.08	%			96.51	%			100.07	%			119.92	%			101.93	%
Net charge-offs to average loans			0.21	%			0.20	%			0.17	%			0.37	%			0.25	%
Wealth Management
Trust assets under administration		$	3,445,244			$	3,597,944			$	4,044,138			$	4,217,412			$	4,058,168
Market Data
Book value per share at period end		$	28.48			$	28.84			$	29.26			$	30.11			$	29.64
Tangible book value per share at period end (1)		$	20.14			$	20.43			$	20.87			$	21.66			$	21.17
Market price at period end		$	23.57			$	24.04			$	28.86			$	24.79			$	24.73
Common shares outstanding at period end			22,074,740				22,060,255				22,044,626				22,050,537				22,193,141
Capital
Total capital to risk-weighted assets			12.79	%			11.44	%			11.74	%			12.19	%			13.10	%
Tier 1 capital to risk-weighted assets			10.05	%			8.63	%			8.82	%			9.16	%			9.73	%
Tier 1 common capital to risk-weighted assets			7.56	%			7.66	%			7.80	%			8.08	%			8.55	%
Tier 1 leverage ratio			9.40	%			7.98	%			7.96	%			7.75	%			8.16	%
Tangible common equity to tangible assets (1)			5.82	%			6.22	%			6.43	%			6.58	%			6.80	%
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2022				2022				2022				2021				2021
Income before income taxes - GAAP		$	29,380			$	29,167			$	27,389			$	30,600			$	25,431
Adjustments to noninterest income:
Loss (gain) on sales of investment securities, net			129				101				—				—				(160	)
(Gain) on termination of hedged interest rate swap			—				—				—				(1,845	)			—
Total adjustments to noninterest income			129				101				—				(1,845	)			(160	)
Adjustments to noninterest expense:
(Loss) on mortgage servicing rights held for sale			—				—				—				—				(79	)
FHLB advances prepayment fees			—				—				—				(4,859	)			—
Integration and acquisition expenses			68				(324	)			(91	)			(171	)			(176	)
Total adjustments to noninterest expense			68				(324	)			(91	)			(5,030	)			(255	)
Adjusted earnings pre tax			29,441				29,592				27,480				33,785				25,526
Adjusted earnings tax			5,873				7,401				6,665				8,369				5,910
Adjusted earnings - non-GAAP		$	23,568			$	22,191			$	20,815			$	25,416			$	19,616
Adjusted diluted earnings per common share		$	1.04			$	0.98			$	0.92			$	1.12			$	0.86
Adjusted return on average assets			1.22	%			1.21	%			1.16	%			1.39	%			1.15	%
Adjusted return on average shareholders' equity			13.34	%			13.84	%			12.84	%			15.44	%			11.94	%
Adjusted return on average tangible common equity			20.24	%			19.41	%			17.89	%			21.65	%			16.82	%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2022				2022				2022				2021				2021
Adjusted earnings pre tax - non-GAAP		$	29,441			$	29,592			$	27,480			$	33,785			$	25,526
Provision for credit losses			6,974				5,441				4,167				467				(184	)
Impairment on commercial mortgage servicing rights			—				869				394				2,072				3,037
Adjusted pre-tax, pre-provision earnings - non-GAAP		$	36,415			$	35,902			$	32,041			$	36,324			$	28,379
Adjusted pre-tax, pre-provision return on average assets			1.89	%			1.95	%			1.79	%			1.98	%			1.67	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2022				2022				2022				2021				2021
Noninterest expense - GAAP		$	43,496			$	41,339			$	40,884			$	45,757			$	41,292
Loss on mortgage servicing rights held for sale			—				—				—				—				(79	)
FHLB advances prepayment fees			—				—				—				(4,859	)			—
Integration and acquisition expenses			68				(324	)			(91	)			(171	)			(176	)
Adjusted noninterest expense		$	43,564			$	41,015			$	40,793			$	40,727			$	41,037
Net interest income - GAAP		$	64,024			$	61,334			$	56,827			$	54,301			$	51,396
Effect of tax-exempt income			307				321				369				372				402
Adjusted net interest income			64,331				61,655				57,196				54,673				51,798
Noninterest income - GAAP			15,826				14,613				15,613				22,523				15,143
Impairment on commercial mortgage servicing rights			—				869				394				2,072				3,037
Loss (gain) on sales of investment securities, net			129				101				—				—				(160	)
(Gain) on termination of hedged interest rate swap			—				—				—				(1,845	)			—
Adjusted noninterest income			15,955				15,583				16,007				22,750				18,020
Adjusted total revenue		$	80,286			$	77,238			$	73,203			$	77,423			$	69,818
Efficiency ratio			54.26	%			53.10	%			55.73	%			52.61	%			58.78	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2022				2022				2022				2021				2021
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	739,279			$	636,188			$	644,986			$	663,837			$	657,844
Adjustments:
Preferred Stock			(110,548	)			—				—				—				—
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(22,198	)			(23,559	)			(22,976	)			(24,374	)			(26,065	)
Tangible common equity		$	444,629			$	450,725			$	460,106			$	477,558			$	469,875
Total Assets to Tangible Assets:
Total assets—GAAP		$	7,821,877			$	7,435,812			$	7,338,715			$	7,443,805			$	7,093,959
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(22,198	)			(23,559	)			(22,976	)			(24,374	)			(26,065	)
Tangible assets		$	7,637,775			$	7,250,349			$	7,153,835			$	7,257,527			$	6,905,990
Common Shares Outstanding			22,074,740				22,060,255				22,044,626				22,050,537				22,193,141
Tangible Common Equity to Tangible Assets			5.82	%			6.22	%			6.43	%			6.58	%			6.80	%
Tangible Book Value Per Share		$	20.14			$	20.43			$	20.87			$	21.66			$	21.17
Return on Average Tangible Common Equity (ROATCE)
		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2022				2022				2022				2021				2021
Net income		$	23,521			$	21,883			$	20,749			$	23,107			$	19,548
Average total shareholders' equity—GAAP		$	700,866			$	643,004			$	657,327			$	652,892			$	651,751
Adjustments:
Preferred Stock			(54,072	)			—				—				—				—
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(22,859	)			(22,570	)			(23,638	)			(25,311	)			(27,132	)
Average tangible common equity		$	462,031			$	458,530			$	471,785			$	465,677			$	462,715
ROATCE			20.20	%			19.14	%			17.84	%			19.69	%			16.76	%