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Midland States Bancorp, Inc. Announces 2021 Fourth Quarter Results
ソース: Nasdaq GlobeNewswire / 27 1 2022 15:05:01 America/Chicago
Summary
- Net income of $23.1 million, or $1.02 diluted earnings per share
- Total loans increased 25.2% annualized
- Total deposits increased 9.1% from end of prior quarter
- Non-performing loans declined 22.0% from end of prior quarter
- Net interest income increased 5.7% from prior quarter to $54.3 million
- Efficiency ratio improved to 52.61% from 58.78% in prior quarter
- Book value and tangible book value per share increased 1.6% and 2.3%, respectively
EFFINGHAM, Ill., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $23.1 million, or $1.02 diluted earnings per share, for the fourth quarter of 2021, which included a $4.9 million FHLB advance prepayment fee and a $1.9 million gain on the termination of an interest rate swap. This compares to net income of $19.5 million, or $0.86 diluted earnings per share, for the third quarter of 2021. This also compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which included $4.9 million in FHLB advance prepayment fees.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continue to see an acceleration of our new business development efforts driven by the more productive commercial banking teams we have built over the past year and our increased presence in higher growth markets in Northern Illinois and St. Louis. We had a record quarter of loan production, resulting in 25% annualized growth in total loans, which we were able to fund with strong inflows of noninterest-bearing deposits. The strong balance sheet growth we are seeing is driving higher levels of revenue, increased operating leverage, and an improvement in our level of profitability.
“Based on our current commercial and commercial real estate lending pipelines and improving loan demand, we expect to deliver another year of strong loan growth in 2022. We also expect to keep expense levels relatively flat compared to 2021, despite continuing to increase our technology investment in order to further improve our revenue generation capabilities and enhance client service. In 2022, we will be focused on continuing to build relationship-based commercial and commercial real estate loans funded by low-cost deposits, which we combine with a growing wealth management business that provides a large, consistent source of non-interest income. We believe the improvements we have made to our business model and operations will enable us to generate a higher level of returns and consistently increase the value of our franchise in the years ahead,” said Mr. Ludwig.
Adjusted Earnings
Financial results for the fourth quarter of 2021 were impacted by $4.9 million FHLB advance prepayment fees and a $1.9 million gain on the termination of an interest rate swap. Excluding these amounts and certain other income and expenses, adjusted earnings were $25.4 million, or $1.12 per diluted share, for the fourth quarter of 2021, up from $19.6 million, or $0.86 per diluted share, for the prior quarter.
Financial results for the fourth quarter of 2020 were impacted by $4.9 million FHLB advance prepayment fees, a $0.6 million loss on residential mortgage servicing rights (“MSRs”) held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income items, adjusted earnings were $12.5 million, or $0.54 per diluted share, for the fourth quarter of 2020.
A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.
Net Interest Margin
Net interest margin for the fourth quarter of 2021 was 3.25%, compared to 3.34% for the third quarter of 2021. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 4 and 7 basis points to net interest margin in the fourth and third quarters of 2021, respectively. Excluding the impact of accretion income, net interest margin decreased 6 basis points from the third quarter of 2021, due primarily to an increase in liquidity largely resulting from a significant increase in commercial FHA servicing deposits.
Relative to the fourth quarter of 2020, net interest margin decreased from 3.47%. Accretion income on purchased loan portfolios contributed 10 basis points to net interest margin in the fourth quarter of 2020. Excluding the impact of accretion income, net interest margin decreased 16 basis points from the fourth quarter of 2020, primarily due to an unfavorable shift in the mix of earning assets.
Net Interest Income
Net interest income for the fourth quarter of 2021 was $54.3 million, an increase of 5.7% from $51.4 million for the third quarter of 2021. Excluding accretion income, net interest income increased $3.1 million from the prior quarter, which was primarily due to a higher average balance of interest-earning assets coupled with a decrease in funding costs. Accretion income associated with purchased loan portfolios totaled $0.8 million for the fourth quarter of 2021, compared to $1.0 million for the third quarter of 2021. PPP loan income totaled $1.6 million, including net loan origination fees of $1.4 million, in the fourth quarter of 2021, compared to $2.4 million, including net loan origination fees of $2.1 million, in the third quarter of 2021.
Relative to the fourth quarter of 2020, net interest income increased $0.8 million, or 1.5%. Accretion income for the fourth quarter of 2020 was $1.6 million. Excluding the impact of accretion income, net interest income increased primarily due to a decrease in funding costs.
Noninterest Income
Noninterest income for the fourth quarter of 2021 was $22.5 million, an increase of 48.7% from $15.1 million for the third quarter of 2021. Noninterest income for the fourth quarter of 2021 was positively impacted by $3.9 million in unrealized income on equity investments, a $1.9 million gain on the termination of an FHLB interest rate swap, and a $1.0 million gain on company-owned life insurance. Impairment on commercial MSRs negatively impacted noninterest income by $2.1 million and $3.0 million in the fourth quarter of 2021 and third quarter of 2021, respectively. Excluding the impairments, noninterest income increased 35.3% from the prior quarter.
Relative to the fourth quarter of 2020, noninterest income increased 57.1% from $14.3 million. The increase was attributable to higher levels of wealth management and interchange revenue, as well as the items mentioned above for the fourth quarter of 2021.
Wealth management revenue for the fourth quarter of 2021 was $7.2 million, unchanged from the third quarter of 2021. Compared to the fourth quarter of 2020, wealth management revenue increased 22.3%, primarily due to the increase in assets under administration over the past year and the acquisition of ATG Trust Company.
Noninterest Expense
Noninterest expense for the fourth quarter of 2021 was $45.8 million, compared with $41.3 million in the third quarter of 2021. Noninterest expense for the fourth quarter of 2021 included $4.9 million FHLB advance prepayment fees and $0.2 million in integration and acquisition expenses. Excluding the FHLB advance prepayment fees and integration and acquisition expenses, noninterest expense decreased by $0.4 million.
Relative to the fourth quarter of 2020, noninterest expense decreased 2.7% from $47.0 million, which included $4.9 million in FHLB advance prepayment fees and a $0.6 million loss on residential MSRs held-for-sale. Excluding FHLB advance prepayment fees and losses on residential MSRs held-for-sale, noninterest expense decreased $0.6 million, primarily due to lower salaries and employee benefits expense.
Loan Portfolio
Total loans outstanding were $5.22 billion at December 31, 2021, compared with $4.92 billion at September 30, 2021, and $5.10 billion at December 31, 2020. The increase in total loans from September 30, 2021 was primarily attributable to higher balances of commercial real estate and consumer loans, partially offset by declines in commercial FHA warehouse lines and forgiveness of PPP loans.
Equipment finance balances increased $46.2 million from September 30, 2021 to $945.3 million at December 31, 2021.
Compared to loan balances at December 31, 2020, growth in equipment finance balances, commercial real estate, construction, and consumer loans was offset by declines in commercial FHA warehouse lines, PPP loans and residential real estate loans.
Deposits
Total deposits were $6.11 billion at December 31, 2021, compared with $5.60 billion at September 30, 2021, and $5.10 billion at December 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in commercial FHA servicing deposits and inflows of other commercial deposits.
Asset Quality
Nonperforming loans totaled $42.6 million, or 0.81% of total loans, at December 31, 2021, compared with $54.6 million, or 1.11% of total loans, at September 30, 2021. The decrease in nonperforming loans was primarily attributable to the payoff of two nonaccrual loans totaling $5.6 million and the charge-off of a third nonaccrual loan of $1.8 million. At December 31, 2020, nonperforming loans totaled $54.1 million, or 1.06% of total loans.
Net charge-offs for the fourth quarter of 2021 were $4.6 million, or 0.37% of average loans on an annualized basis, compared to net charge-offs of $3.0 million, or 0.25% of average loans on an annualized basis, for the third quarter of 2021, and $2.3 million, or 0.19% of average loans on an annualized basis, for the fourth quarter of 2020.
The Company recorded a provision for credit losses of $0.5 million for the fourth quarter of 2021. No provision for credit losses on loans was recorded, due to improvements in asset quality and economic forecasts. Provisions of $0.4 million and $0.1 million were recorded for credit losses on unfunded commitments and available-for-sale securities, respectively.
The Company’s allowance for credit losses on loans was 0.98% of total loans and 119.9% of nonperforming loans at December 31, 2021, compared with 1.13% of total loans and 101.9% of nonperforming loans at September 30, 2021. Approximately 94% of the allowance for credit losses on loans at December 31, 2021 was allocated to general reserves.
Capital
At December 31, 2021, 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
Dec. 31, 2021Consolidated Ratios as of Dec. 31, 2021 Minimum Regulatory Requirements (2) Total capital to risk-weighted assets 11.21% 12.19% 10.50% Tier 1 capital to risk-weighted assets 10.49% 9.16% 8.50% Tier 1 leverage ratio 8.89% 7.75% 4.00% Common equity Tier 1 capital 10.49% 8.08% 7.00% Tangible common equity to tangible assets (1) NA 6.58% NA (1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.Stock Repurchase Program
During the fourth quarter of 2021, the Company repurchased 205,015 shares of its common stock at a weighted average price of $25.58 under its stock repurchase program. As of December 31, 2021, the Company had $19.7 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, January 28, 2022, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 8339225. A recorded replay can be accessed through February 4, 2022, by dialing (855) 859-2056; conference ID: 8339225.
A slide presentation relating to the fourth quarter 2021 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. 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 December 31, 2021, the Company had total assets of approximately $7.44 billion, and its Wealth Management Group had assets under administration of approximately $4.22 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 Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “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, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; 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) 342-7321MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 2021 2021 2021 2020 Earnings Summary Net interest income $ 54,301 $ 51,396 $ 50,110 $ 51,868 $ 53,516 Provision for credit losses 467 (184 ) (455 ) 3,565 10,058 Noninterest income 22,523 15,143 17,417 14,816 14,336 Noninterest expense 45,757 41,292 48,941 39,079 47,048 Income before income taxes 30,600 25,431 19,041 24,040 10,746 Income taxes 7,493 5,883 (1,083 ) 5,502 2,413 Net income $ 23,107 $ 19,548 $ 20,124 $ 18,538 $ 8,333 Diluted earnings per common share $ 1.02 $ 0.86 $ 0.88 $ 0.81 $ 0.36 Weighted average shares outstanding - diluted 22,350,771 22,577,880 22,677,515 22,578,553 22,656,343 Return on average assets 1.26 % 1.15 % 1.20 % 1.11 % 0.49 % Return on average shareholders' equity 14.04 % 11.90 % 12.59 % 12.04 % 5.32 % Return on average tangible common equity (1) 19.69 % 16.76 % 17.85 % 17.28 % 7.68 % Net interest margin 3.25 % 3.34 % 3.29 % 3.45 % 3.47 % Efficiency ratio (1) 52.61 % 58.78 % 60.19 % 57.14 % 58.55 % Adjusted Earnings Performance Summary (1) Adjusted earnings $ 25,416 $ 19,616 $ 19,755 $ 18,434 $ 12,471 Adjusted diluted earnings per common share $ 1.12 $ 0.86 $ 0.86 $ 0.81 $ 0.54 Adjusted return on average assets 1.39 % 1.15 % 1.17 % 1.11 % 0.73 % Adjusted return on average shareholders' equity 15.44 % 11.94 % 12.36 % 11.97 % 7.97 % Adjusted return on average tangible common equity 21.65 % 16.82 % 17.52 % 17.18 % 11.50 % Adjusted pre-tax, pre-provision earnings $ 36,324 $ 28,379 $ 26,967 $ 28,737 $ 28,855 Adjusted pre-tax, pre-provision return on average assets 1.98 % 1.67 % 1.60 % 1.73 % 1.69 % (1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures. MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (in thousands, except per share data) 2021 2021 2021 2021 2020 Net interest income: Interest income $ 60,427 $ 58,490 $ 58,397 $ 60,503 $ 62,712 Interest expense 6,126 7,094 8,287 8,635 9,196 Net interest income 54,301 51,396 50,110 51,868 53,516 Provision for credit losses: Provision for credit losses on loans - - - 3,950 10,000 Provision for credit losses on unfunded commitments 388 - (265 ) (535 ) - Provision for other credit losses 79 (184 ) (190 ) 150 58 Total provision for credit losses 467 (184 ) (455 ) 3,565 10,058 Net interest income after provision for credit losses 53,834 51,580 50,565 48,303 43,458 Noninterest income: Wealth management revenue 7,176 7,175 6,529 5,931 5,868 Commercial FHA revenue 369 411 342 292 400 Residential mortgage banking revenue 1,103 1,287 1,562 1,574 2,285 Service charges on deposit accounts 2,338 2,268 1,916 1,826 2,149 Interchange revenue 3,677 3,651 3,797 3,375 3,137 Gain on sales of investment securities, net - 160 377 - - Gain on termination of hedged interest swap 1,845 - - 314 - Impairment on commercial mortgage servicing rights (2,072 ) (3,037 ) (1,148 ) (1,275 ) (2,344 ) Company-owned life insurance 1,904 869 863 860 893 Other income 6,183 2,359 3,179 1,919 1,948 Total noninterest income 22,523 15,143 17,417 14,816 14,336 Noninterest expense: Salaries and employee benefits 22,109 22,175 22,071 20,528 22,636 Occupancy and equipment 3,429 3,701 3,796 3,940 3,531 Data processing 5,819 6,495 6,288 5,993 5,987 Professional 1,499 1,738 5,549 2,185 1,912 Amortization of intangible assets 1,425 1,445 1,470 1,515 1,556 Loss on mortgage servicing rights held for sale - 79 143 - 617 Impairment related to facilities optimization - - - - (10 ) FHLB advances prepayment fees 4,859 - 3,669 8 4,872 Other expense 6,617 5,659 5,955 4,910 5,947 Total noninterest expense 45,757 41,292 48,941 39,079 47,048 Income before income taxes 30,600 25,431 19,041 24,040 10,746 Income taxes 7,493 5,883 (1,083 ) 5,502 2,413 Net income $ 23,107 $ 19,548 $ 20,124 $ 18,538 $ 8,333 Basic earnings per common share $ 1.03 $ 0.86 $ 0.88 $ 0.81 $ 0.36 Diluted earnings per common share $ 1.02 $ 0.86 $ 0.88 $ 0.81 $ 0.36 MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) As of December 31, September 30, June 30, March 31, December 31, (in thousands) 2021 2021 2021 2021 2020 Assets Cash and cash equivalents $ 680,371 $ 662,643 $ 425,100 $ 631,219 $ 341,640 Investment securities 916,132 900,319 756,831 690,390 686,135 Loans 5,224,801 4,915,554 4,835,866 4,910,806 5,103,331 Allowance for credit losses on loans (51,062 ) (55,675 ) (58,664 ) (62,687 ) (60,443 ) Total loans, net 5,173,739 4,859,879 4,777,202 4,848,119 5,042,888 Loans held for sale 32,045 26,621 12,187 55,174 138,090 Premises and equipment, net 70,792 71,241 71,803 73,255 74,124 Other real estate owned 12,059 11,931 12,768 20,304 20,247 Loan servicing rights, at lower of cost or fair value 28,865 30,916 34,577 36,876 39,276 Goodwill 161,904 161,904 161,904 161,904 161,904 Other intangible assets, net 24,374 26,065 27,900 26,867 28,382 Cash surrender value of life insurance policies 148,378 149,146 148,277 146,864 146,004 Other assets 195,146 193,294 201,461 193,814 189,850 Total assets $ 7,443,805 $ 7,093,959 $ 6,630,010 $ 6,884,786 $ 6,868,540 Liabilities and Shareholders' Equity Noninterest-bearing deposits $ 2,245,701 $ 1,672,901 $ 1,366,453 $ 1,522,433 $ 1,469,579 Interest-bearing deposits 3,864,947 3,928,475 3,829,898 3,818,080 3,631,437 Total deposits 6,110,648 5,601,376 5,196,351 5,340,513 5,101,016 Short-term borrowings 76,803 66,666 75,985 71,728 68,957 FHLB advances and other borrowings 310,171 440,171 440,171 529,171 779,171 Subordinated debt 139,091 138,998 138,906 169,888 169,795 Trust preferred debentures 49,374 49,235 49,094 48,954 48,814 Other liabilities 93,881 139,669 81,317 89,065 79,396 Total liabilities 6,779,968 6,436,115 5,981,824 6,249,319 6,247,149 Total shareholders’ equity 663,837 657,844 648,186 635,467 621,391 Total liabilities and shareholders’ equity $ 7,443,805 $ 7,093,959 $ 6,630,010 $ 6,884,786 $ 6,868,540 MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) As of December 31, September 30, June 30, March 31, December 31, (in thousands) 2021 2021 2021 2021 2020 Loan Portfolio Equipment finance loans $ 521,973 $ 486,623 $ 464,380 $ 456,059 $ 451,437 Equipment finance leases 423,280 412,430 407,161 402,546 410,064 Commercial FHA warehouse lines 91,927 180,248 129,607 205,115 273,298 SBA PPP loans 52,477 82,410 146,728 211,564 184,401 Other commercial loans 783,811 718,054 683,365 702,156 776,439 Total commercial loans and leases 1,873,468 1,879,765 1,831,241 1,977,440 2,095,639 Commercial real estate 1,816,828 1,562,013 1,540,489 1,494,031 1,525,973 Construction and land development 193,749 200,792 212,508 191,870 172,737 Residential real estate 338,151 344,414 366,612 398,501 442,880 Consumer 1,002,605 928,570 885,016 848,964 866,102 Total loans $ 5,224,801 $ 4,915,554 $ 4,835,866 $ 4,910,806 $ 5,103,331 Deposit Portfolio Noninterest-bearing demand $ 2,245,701 $ 1,672,901 $ 1,366,453 $ 1,522,433 $ 1,469,579 Interest-bearing: Checking 1,663,021 1,697,326 1,619,436 1,601,449 1,568,888 Money market 869,067 852,836 787,688 819,455 785,871 Savings 679,115 665,710 669,277 653,256 597,966 Time 630,583 688,693 721,502 718,788 655,620 Brokered time 23,161 23,910 31,995 25,132 23,092 Total deposits $ 6,110,648 $ 5,601,376 $ 5,196,351 $ 5,340,513 $ 5,101,016 MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2021 2021 2021 2021 2020 Average Balance Sheets Cash and cash equivalents $ 685,655 $ 525,848 $ 509,886 $ 350,061 $ 415,686 Investment securities 915,707 773,372 734,462 680,202 672,937 Loans 4,995,794 4,800,063 4,826,234 4,992,802 4,998,912 Loans held for sale 34,272 15,204 36,299 65,365 45,196 Nonmarketable equity securities 39,203 43,873 49,388 55,935 51,906 Total interest-earning assets 6,670,631 6,158,360 6,156,269 6,144,365 6,184,637 Non-earning assets 605,060 597,153 589,336 602,017 602,716 Total assets $ 7,275,691 $ 6,755,513 $ 6,745,605 $ 6,746,382 $ 6,787,353 Interest-bearing deposits $ 3,913,475 $ 3,895,970 $ 3,815,179 $ 3,757,108 $ 3,680,645 Short-term borrowings 66,677 68,103 65,727 75,544 62,432 FHLB advances and other borrowings 319,954 440,171 519,490 617,504 682,981 Subordinated debt 139,046 138,954 165,155 169,844 169,751 Trust preferred debentures 49,307 49,167 49,026 48,887 48,751 Total interest-bearing liabilities 4,488,459 4,592,365 4,614,577 4,668,887 4,644,560 Noninterest-bearing deposits 2,049,802 1,434,193 1,411,428 1,370,604 1,446,359 Other noninterest-bearing liabilities 84,538 77,204 78,521 82,230 73,840 Shareholders' equity 652,892 651,751 641,079 624,661 622,594 Total liabilities and shareholders' equity $ 7,275,691 $ 6,755,513 $ 6,745,605 $ 6,746,382 $ 6,787,353 Yields Earning Assets Cash and cash equivalents 0.16 % 0.16 % 0.11 % 0.11 % 0.12 % Investment securities 2.12 % 2.34 % 2.43 % 2.51 % 2.65 % Loans 4.36 % 4.42 % 4.43 % 4.50 % 4.58 % Loans held for sale 3.53 % 2.79 % 2.88 % 2.74 % 3.14 % Nonmarketable equity securities 5.07 % 5.05 % 4.94 % 4.93 % 5.22 % Total interest-earning assets 3.62 % 3.79 % 3.83 % 4.02 % 4.06 % Interest-Bearing Liabilities Interest-bearing deposits 0.22 % 0.26 % 0.31 % 0.34 % 0.36 % Short-term borrowings 0.12 % 0.12 % 0.12 % 0.13 % 0.14 % FHLB advances and other borrowings 1.75 % 1.80 % 1.91 % 1.69 % 1.71 % Subordinated debt 5.78 % 5.79 % 5.61 % 5.57 % 5.60 % Trust preferred debentures 3.90 % 3.92 % 4.00 % 4.08 % 4.03 % Total interest-bearing liabilities 0.54 % 0.61 % 0.72 % 0.75 % 0.79 % Cost of Deposits 0.15 % 0.19 % 0.23 % 0.25 % 0.26 % Net Interest Margin 3.25 % 3.34 % 3.29 % 3.45 % 3.47 % MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) As of and for the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 2021 2021 2021 2020 Asset Quality Loans 30-89 days past due $ 17,514 $ 16,772 $ 20,224 $ 24,819 $ 31,460 Nonperforming loans 42,580 54,620 61,363 52,826 54,070 Nonperforming assets 57,069 69,261 76,926 75,004 75,432 Net charge-offs 4,613 2,989 4,023 1,706 2,328 Loans 30-89 days past due to total loans 0.34 % 0.34 % 0.42 % 0.51 % 0.62 % Nonperforming loans to total loans 0.81 % 1.11 % 1.27 % 1.08 % 1.06 % Nonperforming assets to total assets 0.77 % 0.98 % 1.16 % 1.09 % 1.10 % Allowance for credit losses to total loans 0.98 % 1.13 % 1.21 % 1.28 % 1.18 % Allowance for credit losses to nonperforming loans 119.92 % 101.93 % 95.60 % 118.67 % 111.79 % Net charge-offs to average loans 0.37 % 0.25 % 0.33 % 0.14 % 0.19 % Wealth Management Trust assets under administration $ 4,217,412 $ 4,058,168 $ 4,077,581 $ 3,560,427 $ 3,480,759 Market Data Book value per share at period end $ 30.11 $ 29.64 $ 28.96 $ 28.43 $ 27.83 Tangible book value per share at period end (1) $ 21.66 $ 21.17 $ 20.48 $ 19.98 $ 19.31 Market price at period end $ 24.79 $ 24.73 $ 26.27 $ 27.74 $ 17.87 Shares outstanding at period end 22,050,537 22,193,141 22,380,492 22,351,740 22,325,471 Capital Total capital to risk-weighted assets 12.19 % 13.10 % 13.11 % 13.73 % 13.24 % Tier 1 capital to risk-weighted assets 9.16 % 9.73 % 9.64 % 9.62 % 9.20 % Tier 1 common capital to risk-weighted assets 8.08 % 8.55 % 8.44 % 8.39 % 7.99 % Tier 1 leverage ratio 7.75 % 8.16 % 8.00 % 7.79 % 7.50 % Tangible common equity to tangible assets (1) 6.58 % 6.80 % 7.12 % 6.67 % 6.46 % (1) Non-GAAP financial measures. Refer to pages 13 - 15 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 December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 2021 2021 2021 2020 Income before income taxes - GAAP $ 30,600 $ 25,431 $ 19,041 $ 24,040 $ 10,746 Adjustments to noninterest income: Gain on sales of investment securities, net - 160 377 - - Gain on termination of hedged interest rate swap 1,845 - - 314 - Other income - - (27 ) 75 3 Total adjustments to noninterest income 1,845 160 350 389 3 Adjustments to noninterest expense: Loss on mortgage servicing rights held for sale - 79 143 - 617 Impairment related to facilities optimization - - - - (10 ) FHLB advances prepayment fees 4,859 - 3,669 8 4,872 Integration and acquisition expenses 171 176 3,771 238 231 Total adjustments to noninterest expense 5,030 255 7,583 246 5,710 Adjusted earnings pre tax 33,785 25,526 26,274 23,897 16,453 Adjusted earnings tax 8,369 5,910 6,519 5,463 3,982 Adjusted earnings - non-GAAP $ 25,416 $ 19,616 $ 19,755 $ 18,434 $ 12,471 Adjusted diluted earnings per common share $ 1.12 $ 0.86 $ 0.86 $ 0.81 $ 0.54 Adjusted return on average assets 1.39 % 1.15 % 1.17 % 1.11 % 0.73 % Adjusted return on average shareholders' equity 15.44 % 11.94 % 12.36 % 11.97 % 7.97 % Adjusted return on average tangible common equity 21.65 % 16.82 % 17.52 % 17.18 % 11.50 % Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2021 2021 2021 2021 2020 Adjusted earnings pre tax - non- GAAP $ 33,785 $ 25,526 $ 26,274 $ 23,897 $ 16,453 Provision for credit losses 467 (184 ) (455 ) 3,565 10,058 Impairment on commercial mortgage servicing rights 2,072 3,037 1,148 1,275 2,344 Adjusted pre-tax, pre-provision earnings - non-GAAP $ 36,324 $ 28,379 $ 26,967 $ 28,737 $ 28,855 Adjusted pre-tax, pre-provision return on average assets 1.98 % 1.67 % 1.60 % 1.73 % 1.69 % MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2021 2021 2021 2021 2020 Noninterest expense - GAAP $ 45,757 $ 41,292 $ 48,941 $ 39,079 $ 47,048 Loss on mortgage servicing rights held for sale - (79 ) (143 ) - (617 ) Impairment related to facilities optimization - - - - 10 FHLB advances prepayment fees (4,859 ) - (3,669 ) (8 ) (4,872 ) Integration and acquisition expenses (171 ) (176 ) (3,771 ) (238 ) (231 ) Adjusted noninterest expense $ 40,727 $ 41,037 $ 41,358 $ 38,833 $ 41,338 Net interest income - GAAP $ 54,301 $ 51,396 $ 50,110 $ 51,868 $ 53,516 Effect of tax-exempt income 372 402 383 386 413 Adjusted net interest income 54,673 51,798 50,493 52,254 53,929 Noninterest income - GAAP 22,523 15,143 17,417 14,816 14,336 Impairment on commercial mortgage servicing rights 2,072 3,037 1,148 1,275 2,344 Gain on sales of investment securities, net - (160 ) (377 ) - - Gain on termination of hedged interest rate swap (1,845 ) - - (314 ) - Other - - 27 (75 ) (3 ) Adjusted noninterest income 22,750 18,020 18,215 15,702 16,677 Adjusted total revenue $ 77,423 $ 69,818 $ 68,708 $ 67,956 $ 70,606 Efficiency ratio 52.61 % 58.78 % 60.19 % 57.14 % 58.55 % 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 December 31, September 30, June 30, March 31, December 31, (dollars in thousands, except per share data) 2021 2021 2021 2021 2020 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 663,837 $ 657,844 $ 648,186 $ 635,467 $ 621,391 Adjustments: Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (24,374 ) (26,065 ) (27,900 ) (26,867 ) (28,382 ) Tangible common equity $ 477,558 $ 469,875 $ 458,382 $ 446,696 $ 431,105 Total Assets to Tangible Assets: Total assets—GAAP $ 7,443,805 $ 7,093,959 $ 6,630,010 $ 6,884,786 $ 6,868,540 Adjustments: Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (24,374 ) (26,065 ) (27,900 ) (26,867 ) (28,382 ) Tangible assets $ 7,257,527 $ 6,905,990 $ 6,440,206 $ 6,696,015 $ 6,678,254 Common Shares Outstanding 22,050,537 22,193,141 22,380,492 22,351,740 22,325,471 Tangible Common Equity to Tangible Assets 6.58 % 6.80 % 7.12 % 6.67 % 6.46 % Tangible Book Value Per Share $ 21.66 $ 21.17 $ 20.48 $ 19.98 $ 19.31 Return on Average Tangible Common Equity (ROATCE) For the Quarter Ended December 31, September 30, June 30, March 31, December 31, (dollars in thousands) 2021 2021 2021 2021 2020 Net income available to common shareholders $ 23,107 $ 19,548 $ 20,124 $ 18,538 $ 8,333 Average total shareholders' equity—GAAP $ 652,892 $ 651,751 $ 641,079 $ 624,661 $ 622,594 Adjustments: Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (25,311 ) (27,132 ) (26,931 ) (27,578 ) (29,123 ) Average tangible common equity $ 465,677 $ 462,715 $ 452,244 $ 435,179 $ 431,567 ROATCE 19.69 % 16.76 % 17.85 % 17.28 % 7.68 % 
