Midland States Bancorp : Announces 2022 Second Quarter Results - Form 8-K

Midland States Bancorp, Inc. Announces 2022 Second Quarter Results

Summary

• Net income of $21.9 million, or $0.97 diluted earnings per share
• ROAA, ROAE, and ROATCE all increased from prior quarter
• Total loans increased 18.5% annualized from prior quarter
• Net interest margin increased 15 basis points from prior quarter to 3.65%
• Efficiency ratio improved to 53.10% from 55.73% in prior quarter
  

EFFINGHAM, Ill., July 28, 2022 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the "Company") today reported net income of $21.9 million, or $0.97 diluted earnings per share, for the second quarter of 2022. This compares to net income of $20.7 million, or $0.92 diluted earnings per share, for the first quarter of 2022. This also compares to net income of $20.1 million, or $0.88 diluted earnings per share, for the second quarter of 2021.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "We continue to generate improvement in our financial performance as a result of the strategic initiatives we have implemented over the past few years to strengthen our commercial banking team, increase our focus on higher growth markets, and improve operational efficiencies. We had another exceptionally strong quarter of loan production, which resulted in 18% annualized growth in total loans, as well as continued expansion in our net interest margin. The loan growth and margin expansion drove increases in our revenue and earnings, as well as improved efficiencies and returns compared to the prior quarter.

"Our loan pipeline remains strong, although we expect loan growth to moderate in the second half of the year as it is likely that higher rates and concern about weakening economic conditions will have a greater impact on loan demand. However, with our continued loan growth and margin expansion, combined with stable expense levels, we believe that we are well positioned to generate further improvement in earnings and returns," said Mr. Ludwig.

Net Interest Margin

Net interest margin for the second quarter of 2022 was 3.65%, compared to 3.50% for the first quarter of 2022, due primarily to a favorable shift in the mix of earning assets and an 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 first and second quarters of 2022.

Relative to the second quarter of 2021, net interest margin increased 36 basis points from 3.29%, primarily due to a favorable shift in the mix of earning assets and an increase in the average yield on earning assets. Accretion income on purchased loan portfolios contributed 9 basis points to net interest margin in the second quarter of 2021. Excluding the impact of accretion income, net interest margin increased 42 basis points from the second quarter of 2021.

Net Interest Income

Net interest income for the second quarter of 2022 was $61.3 million, an increase of 7.9% from $56.8 million for the first quarter of 2022, which was primarily due to higher average loan balances and an increase in net interest margin. PPP loan income totaled $0.7 million in the second quarter of 2022, compared to $1.2 million in the first quarter of 2022. Accretion income associated with purchased loan portfolios totaled $0.6 million for the second quarter of 2022, unchanged from $0.6 million for the first quarter of 2022.

Relative to the second quarter of 2021, net interest income increased $11.2 million, or 22.4%, due to higher average earning assets and an increase in net interest margin. Accretion income for the second quarter of 2021 was $1.3 million. PPP loan income totaled $2.5 million in the second quarter of 2021.

Noninterest Income

Noninterest income for the second quarter of 2022 was $14.6 million, a decrease of 6.4% from $15.6 million for the first quarter of 2022. The decrease in noninterest income was primarily attributable to lower wealth management revenue due to a decline in assets under administration resulting from market performance.

Relative to the second quarter of 2021, noninterest income decreased 16.1% from $17.4 million. The decrease was primarily attributable to a decline in residential mortgage banking revenue and other income.

Wealth management revenue for the second quarter of 2022 was $6.1 million, a decrease of 14.0% from $7.1 million in the first quarter of 2022. Compared to the second quarter of 2021, wealth management revenue decreased 5.9%, primarily due to a decline in assets under administration resulting from market performance.

Noninterest Expense

Noninterest expense for the second quarter of 2022 was $41.3 million, an increase of 1.1% from $40.9 million in the first quarter of 2022. The increase was primarily due to higher salaries and employee benefits expense resulting from a modest increase in staffing levels and higher incentive compensation.

Relative to the second quarter of 2021, noninterest expense decreased 15.5% from $48.9 million. Noninterest expense for the second quarter of 2021 included $3.6 million in professional fees related to the settlement of a prior tax issue and $3.7 million in FHLB advance prepayment fees.

Loan Portfolio

Total loans outstanding were $5.80 billion at June 30, 2022, compared with $5.54 billion at March 31, 2022, and $4.84 billion at June 30, 2021. The increase in total loans from March 31, 2022 was primarily attributable to higher balances of commercial real estate loans, partially offset by lower period-end balances of commercial FHA warehouse lines and continued forgiveness of PPP loans.

Equipment finance balances increased $27.9 million from March 31, 2022 to $985.5 million at June 30, 2022.

Compared to loan balances at June 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, PPP loans and residential real estate loans.

Deposits

Total deposits were $6.18 billion at June 30, 2022, compared with $6.06 billion at March 31, 2022, and $5.20 billion at June 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 $56.9 million, or 0.98% of total loans, at June 30, 2022, compared with $52.9 million, or 0.95% of total loans, at March 31, 2022. The increase in nonperforming loans was attributable to one commercial real estate loan where no loss is currently expected. At June 30, 2021, nonperforming loans totaled $61.4 million, or 1.27% of total loans.

Net charge-offs for the second quarter of 2022 were $2.8 million, or 0.20% of average loans on an annualized basis, compared to net charge-offs of $2.3 million, or 0.17% of average loans on an annualized basis, for the first quarter of 2022, and $4.0 million, or 0.33% of average loans on an annualized basis, for the second quarter of 2021.

The Company recorded a provision for credit losses on loans of $4.7 million for the second quarter of 2022, which was primarily related to the growth in total loans and weakening economic conditions.

The Company's allowance for credit losses on loans was 0.95% of total loans and 96.5% of nonperforming loans at June 30, 2022, compared with 0.96% of total loans and 100.1% of nonperforming loans at March 31, 2022.

Capital

At June 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 June 30, 2022	Consolidated Ratios as of June 30, 2022	Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets	10.60%	11.44%	10.50%
Tier 1 capital to risk-weighted assets	9.85%	8.63%	8.50%
Tier 1 leverage ratio	9.12%	7.98%	4.00%
Common equity Tier 1 capital	9.85%	7.66%	7.00%
Tangible common equity to tangible assets (1)	NA	6.22%	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 second quarter of 2022, the Company did not repurchase any shares under its stock repurchase program. As of June 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, July 29, 2022, to discuss its financial results.

Telephone Access: https://register.vevent.com/register/BI640d5b3f68364a9991310d1cfd490581

A slide presentation relating to the second 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 June 30, 2022, the Company had total assets of approximately $7.44 billion, and its Wealth Management Group had assets under administration of approximately $3.60 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 [e-mail] or [phone]
Eric T. Lemke, Chief Financial Officer, at [e-mail] or [phone]
Douglas J. Tucker, SVP and Corporate Counsel, at [e-mail] or [phone]

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands, except per share data)	2022		2022		2021		2021		2021
Earnings Summary
Net interest income	$	61,334			$	56,827			$	54,301			$	51,396				$	50,110
Provision for credit losses		5,441				4,167				467				(184	)				(455	)
Noninterest income		14,613				15,613				22,523				15,143					17,417
Noninterest expense		41,339				40,884				45,757				41,292					48,941
Income before income taxes		29,167				27,389				30,600				25,431					19,041
Income taxes		7,284				6,640				7,493				5,883					(1,083	)
Net income	$	21,883			$	20,749			$	23,107			$	19,548				$	20,124
Diluted earnings per common share	$	0.97			$	0.92			$	1.02			$	0.86				$	0.88
Weighted average shares outstanding - diluted		22,360,819				22,350,307				22,350,771				22,577,880					22,677,515
Return on average assets		1.19	%			1.16	%			1.26	%			1.15		%			1.20		%
Return on average shareholders' equity		13.65	%			12.80	%			14.04	%			11.90		%			12.59		%
Return on average tangible common equity(1)		19.14	%			17.84	%			19.69	%			16.76		%			17.85		%
Net interest margin		3.65	%			3.50	%			3.25	%			3.34		%			3.29		%
Efficiency ratio(1)		53.10	%			55.73	%			52.61	%			58.78		%			60.19		%
Adjusted Earnings Performance Summary(1)
Adjusted earnings	$	22,191			$	20,815			$	25,416			$	19,616				$	19,755
Adjusted diluted earnings per common share	$	0.98			$	0.92			$	1.12			$	0.86				$	0.86
Adjusted return on average assets		1.21	%			1.16	%			1.39	%			1.15		%			1.17		%
Adjusted return on average shareholders' equity		13.84	%			12.84	%			15.44	%			11.94		%			12.36		%
Adjusted return on average tangible common equity		19.41	%			17.89	%			21.65	%			16.82		%			17.52		%
Adjusted pre-tax, pre-provision earnings	$	35,902			$	32,041			$	36,324			$	28,379				$	26,967
Adjusted pre-tax, pre-provision return on average assets		1.95	%			1.79	%			1.98	%			1.67		%			1.60		%
(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
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands, except per share data)	2022		2022		2021		2021		2021
Net interest income:
Interest income	$	69,236				$	62,748				$	60,427				$	58,490				$	58,397
Interest expense		7,902					5,921					6,126					7,094					8,287
Net interest income		61,334					56,827					54,301					51,396					50,110
Provision for credit losses:
Provision for credit losses on loans		4,741					4,132					-					-					-
Provision for credit losses on unfunded commitments		700					256					388					-					(265	)
Provision for other credit losses		-					(221	)				79					(184	)				(190	)
Total provision for credit losses		5,441					4,167					467					(184	)				(455	)
Net interest income after provision for credit losses		55,893					52,660					53,834					51,580					50,565
Noninterest income:
Wealth management revenue		6,143					7,139					7,176					7,175					6,529
Residential mortgage banking revenue		384					599					1,103					1,287					1,562
Service charges on deposit accounts		2,304					2,068					2,338					2,268					1,916
Interchange revenue		3,590					3,280					3,677					3,651					3,797
(Loss) gain on sales of investment securities, net		(101	)				-					-					160					377
Gain on termination of hedged interest swap		-					-					1,845					-					-
Impairment on commercial mortgage servicing rights		(869	)				(394	)				(2,072	)				(3,037	)				(1,148	)
Company-owned life insurance		840					1,019					1,904					869					863
Other income		2,322					1,902					6,552					2,770					3,521
Total noninterest income		14,613					15,613					22,523					15,143					17,417
Noninterest expense:
Salaries and employee benefits		22,645					21,870					22,109					22,175					22,071
Occupancy and equipment		3,489					3,755					3,429					3,701					3,796
Data processing		6,082					5,873					5,819					6,495					6,288
Professional		1,516					1,972					1,499					1,738					5,549
Amortization of intangible assets		1,318					1,398					1,425					1,445					1,470
Loss on mortgage servicing rights held for sale		-					-					-					79					143
FHLB advances prepayment fees		-					-					4,859					-					3,669
Other expense		6,289					6,016					6,617					5,659					5,955
Total noninterest expense		41,339					40,884					45,757					41,292					48,941
Income before income taxes		29,167					27,389					30,600					25,431					19,041
Income taxes		7,284					6,640					7,493					5,883					(1,083	)
Net income	$	21,883				$	20,749				$	23,107				$	19,548				$	20,124
Basic earnings per common share	$	0.97				$	0.92				$	1.03				$	0.86				$	0.88
Diluted earnings per common share	$	0.97				$	0.92				$	1.02				$	0.86				$	0.88

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2022		2022		2021		2021		2021
Assets
Cash and cash equivalents	$	270,117				$	332,264				$	680,371				$	662,643				$	425,100
Investment securities		769,278					858,246					916,132					900,319					756,831
Loans		5,795,544					5,539,961					5,224,801					4,915,554					4,835,866
Allowance for credit losses on loans		(54,898	)				(52,938	)				(51,062	)				(55,675	)				(58,664	)
Total loans, net		5,740,646					5,487,023					5,173,739					4,859,879					4,777,202
Loans held for sale		5,298					8,931					32,045					26,621					12,187
Premises and equipment, net		77,668					77,857					79,220					79,701					80,699
Other real estate owned		11,131					11,537					12,059					11,931					12,768
Loan servicing rights, at lower of cost or fair value		25,879					27,484					28,865					30,916					34,577
Goodwill		161,904					161,904					161,904					161,904					161,904
Other intangible assets, net		23,559					22,976					24,374					26,065					27,900
Company-owned life insurance		148,900					148,060					148,378					149,146					148,277
Other assets		201,432					202,433					186,718					184,834					192,565
Total assets	$	7,435,812				$	7,338,715				$	7,443,805				$	7,093,959				$	6,630,010
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits	$	1,972,261				$	1,965,032				$	2,245,701				$	1,672,901				$	1,366,453
Interest-bearing deposits		4,212,177					4,092,507					3,864,947					3,928,475					3,829,898
Total deposits		6,184,438					6,057,539					6,110,648					5,601,376					5,196,351
Short-term borrowings		67,689					60,352					76,803					66,666					75,985
FHLB advances and other borrowings		285,000					310,171					310,171					440,171					440,171
Subordinated debt		139,277					139,184					139,091					138,998					138,906
Trust preferred debentures		49,674					49,524					49,374					49,235					49,094
Other liabilities		73,546					76,959					93,881					139,669					81,317
Total liabilities		6,799,624					6,693,729					6,779,968					6,436,115					5,981,824
Total shareholders' equity		636,188					644,986					663,837					657,844					648,186
Total liabilities and shareholders' equity	$	7,435,812				$	7,338,715				$	7,443,805				$	7,093,959				$	6,630,010

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2022		2022		2021		2021		2021
Loan Portfolio
Equipment finance loans	$	546,267			$	528,572			$	521,973			$	486,623			$	464,380
Equipment finance leases		439,202				429,000				423,280				412,430				407,161
Commercial FHA warehouse lines		23,872				83,999				91,927				180,248				129,607
SBA PPP loans		6,409				22,862				52,477				82,410				146,728
Other commercial loans		814,710				802,692				783,811				718,054				683,365
Total commercial loans and leases		1,830,460				1,867,125				1,873,468				1,879,765				1,831,241
Commercial real estate		2,335,655				2,114,041				1,816,828				1,562,013				1,540,489
Construction and land development		203,955				188,668				193,749				200,792				212,508
Residential real estate		340,103				329,331				338,151				344,414				366,612
Consumer		1,085,371				1,040,796				1,002,605				928,570				885,016
Total loans	$	5,795,544			$	5,539,961			$	5,224,801			$	4,915,554			$	4,835,866
Deposit Portfolio
Noninterest-bearing demand	$	1,972,261			$	1,965,032			$	2,245,701			$	1,672,901			$	1,366,453
Interest-bearing:
Checking		1,808,885				1,779,018				1,663,021				1,697,326				1,619,436
Money market		1,027,547				964,352				869,067				852,836				787,688
Savings		740,364				710,955				679,115				665,710				669,277
Time		620,363				619,386				630,583				688,693				721,502
Brokered time		15,018				18,796				23,161				23,910				31,995
Total deposits	$	6,184,438			$	6,057,539			$	6,110,648			$	5,601,376			$	5,196,351

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2022		2022		2021		2021		2021
Average Balance Sheets
Cash and cash equivalents	$	226,517			$	384,231			$	685,655			$	525,848			$	509,886
Investment securities		818,927				894,634				915,707				773,372				734,462
Loans		5,677,791				5,274,051				4,995,794				4,800,063				4,826,234
Loans held for sale		9,865				31,256				34,272				15,204				36,299
Nonmarketable equity securities		36,338				36,378				39,203				43,873				49,388
Total interest-earning assets		6,769,438				6,620,550				6,670,631				6,158,360				6,156,269
Non-earning assets		615,348				631,187				605,060				597,153				589,336
Total assets	$	7,384,786			$	7,251,737			$	7,275,691			$	6,755,513			$	6,745,605
Interest-bearing deposits	$	4,152,764			$	3,953,249			$	3,913,475			$	3,895,970			$	3,815,179
Short-term borrowings		59,301				70,044				66,677				68,103				65,727
FHLB advances and other borrowings		307,611				311,282				319,954				440,171				519,490
Subordinated debt		139,232				139,139				139,046				138,954				165,155
Trust preferred debentures		49,602				49,451				49,307				49,167				49,026
Total interest-bearing liabilities		4,708,510				4,523,165				4,488,459				4,592,365				4,614,577
Noninterest-bearing deposits		1,967,263				1,989,413				2,049,802				1,434,193				1,411,428
Other noninterest-bearing liabilities		66,009				81,832				84,538				77,204				78,521
Shareholders' equity		643,004				657,327				652,892				651,751				641,079
Total liabilities and shareholders' equity	$	7,384,786			$	7,251,737			$	7,275,691			$	6,755,513			$	6,745,605
Yields
Earning Assets
Cash and cash equivalents		0.83	%			0.18	%			0.16	%			0.16	%			0.11	%
Investment securities		2.41	%			2.22	%			2.12	%			2.34	%			2.43	%
Loans		4.49	%			4.40	%			4.36	%			4.42	%			4.43	%
Loans held for sale		3.15	%			2.86	%			3.53	%			2.79	%			2.88	%
Nonmarketable equity securities		5.38	%			5.40	%			5.07	%			5.05	%			4.94	%
Total interest-earning assets		4.12	%			3.87	%			3.62	%			3.79	%			3.83	%
Interest-Bearing Liabilities
Interest-bearing deposits		0.37	%			0.22	%			0.22	%			0.26	%			0.31	%
Short-term borrowings		0.15	%			0.14	%			0.12	%			0.12	%			0.12	%
FHLB advances and other borrowings		1.87	%			1.58	%			1.75	%			1.80	%			1.91	%
Subordinated debt		5.78	%			5.78	%			5.78	%			5.79	%			5.61	%
Trust preferred debentures		5.05	%			4.21	%			3.90	%			3.92	%			4.00	%
Total interest-bearing liabilities		0.67	%			0.53	%			0.54	%			0.61	%			0.72	%
Cost of Deposits		0.25	%			0.15	%			0.15	%			0.19	%			0.23	%
Net Interest Margin		3.65	%			3.50	%			3.25	%			3.34	%			3.29	%

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
	As of and for the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands, except per share data)	2022		2022		2021		2021		2021
Asset Quality
Loans 30-89 days past due	$	16,212			$	29,044			$	17,514			$	16,772			$	20,224
Nonperforming loans		56,883				52,900				42,580				54,620				61,363
Nonperforming assets		69,344				66,164				57,068				69,261				76,926
Net charge-offs		2,781				2,255				4,613				2,989				4,023
Loans 30-89 days past due to total loans		0.28	%			0.52	%			0.34	%			0.34	%			0.42	%
Nonperforming loans to total loans		0.98	%			0.95	%			0.81	%			1.11	%			1.27	%
Nonperforming assets to total assets		0.93	%			0.90	%			0.77	%			0.98	%			1.16	%
Allowance for credit losses to total loans		0.95	%			0.96	%			0.98	%			1.13	%			1.21	%
Allowance for credit losses to nonperforming loans		96.51	%			100.07	%			119.92	%			101.93	%			95.60	%
Net charge-offs to average loans		0.20	%			0.17	%			0.37	%			0.25	%			0.33	%
Wealth Management
Trust assets under administration	$	3,597,944			$	4,044,138			$	4,217,412			$	4,058,168			$	4,077,581
Market Data
Book value per share at period end	$	28.84			$	29.26			$	30.11			$	29.64			$	28.96
Tangible book value per share at period end(1)	$	20.43			$	20.87			$	21.66			$	21.17			$	20.48
Market price at period end	$	24.04			$	28.86			$	24.79			$	24.73			$	26.27
Shares outstanding at period end		22,060,255				22,044,626				22,050,537				22,193,141				22,380,492
Capital
Total capital to risk-weighted assets		11.44	%			11.74	%			12.19	%			13.10	%			13.11	%
Tier 1 capital to risk-weighted assets		8.63	%			8.82	%			9.16	%			9.73	%			9.64	%
Tier 1 common capital to risk-weighted assets		7.66	%			7.80	%			8.08	%			8.55	%			8.44	%
Tier 1 leverage ratio		7.98	%			7.96	%			7.75	%			8.16	%			8.00	%
Tangible common equity to tangible assets(1)		6.22	%			6.43	%			6.58	%			6.80	%			7.12	%
(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
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands, except per share data)	2022		2022		2021		2021		2021
Income before income taxes - GAAP	$	29,167				$	27,389				$	30,600				$	25,431				$	19,041
Adjustments to noninterest income:
Loss (gain) on sales of investment securities, net		101					-					-					(160	)				(377	)
(Gain) on termination of hedged interest rate swap		-					-					(1,845	)				-					-
Other income		-					-					-					-					27
Total adjustments to noninterest income		101					-					(1,845	)				(160	)				(350	)
Adjustments to noninterest expense:
(Loss) on mortgage servicing rights held for sale		-					-					-					(79	)				(143	)
FHLB advances prepayment fees		-					-					(4,859	)				-					(3,669	)
Integration and acquisition expenses		(324	)				(91	)				(171	)				(176	)				(3,771	)
Total adjustments to noninterest expense		(324	)				(91	)				(5,030	)				(255	)				(7,583	)
Adjusted earnings pre tax		29,592					27,480					33,785					25,526					26,274
Adjusted earnings tax		7,401					6,665					8,369					5,910					6,519
Adjusted earnings - non-GAAP	$	22,191				$	20,815				$	25,416				$	19,616				$	19,755
Adjusted diluted earnings per common share	$	0.98				$	0.92				$	1.12				$	0.86				$	0.86
Adjusted return on average assets		1.21		%			1.16		%			1.39		%			1.15		%			1.17		%
Adjusted return on average shareholders' equity		13.84		%			12.84		%			15.44		%			11.94		%			12.36		%
Adjusted return on average tangible common equity		19.41		%			17.89		%			21.65		%			16.82		%			17.52		%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2022		2022		2021		2021		2021
Adjusted earnings pre tax - non-GAAP	$	29,592				$	27,480				$	33,785				$	25,526				$	26,274
Provision for credit losses		5,441					4,167					467					(184	)				(455	)
Impairment on commercial mortgage servicing rights		869					394					2,072					3,037					1,148
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	35,902				$	32,041				$	36,324				$	28,379				$	26,967
Adjusted pre-tax, pre-provision return on average assets		1.95		%			1.79		%			1.98		%			1.67		%			1.60		%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2022		2022		2021		2021		2021
Noninterest expense - GAAP	$	41,339				$	40,884				$	45,757				$	41,292				$	48,941
(Loss) on mortgage servicing rights held for sale		-					-					-					(79	)				(143	)
FHLB advances prepayment fees		-					-					(4,859	)				-					(3,669	)
Integration and acquisition expenses		(324	)				(91	)				(171	)				(176	)				(3,771	)
Adjusted noninterest expense	$	41,015				$	40,793				$	40,727				$	41,037				$	41,358
Net interest income - GAAP	$	61,334				$	56,827				$	54,301				$	51,396				$	50,110
Effect of tax-exempt income		321					369					372					402					383
Adjusted net interest income		61,655					57,196					54,673					51,798					50,493
Noninterest income - GAAP		14,613					15,613					22,523					15,143					17,417
Impairment on commercial mortgage servicing rights		869					394					2,072					3,037					1,148
Loss (gain) on sales of investment securities, net		101					-					-					(160	)				(377	)
(Gain) on termination of hedged interest rate swap		-					-					(1,845	)				-					-
Other		-					-					-					-					27
Adjusted noninterest income		15,583					16,007					22,750					18,020					18,215
Adjusted total revenue	$	77,238				$	73,203				$	77,423				$	69,818				$	68,708
Efficiency ratio		53.10		%			55.73		%			52.61		%			58.78		%			60.19		%

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
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands, except per share data)	2022		2022		2021		2021		2021
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity-GAAP	$	636,188				$	644,986				$	663,837				$	657,844				$	648,186
Adjustments:
Goodwill		(161,904	)				(161,904	)				(161,904	)				(161,904	)				(161,904	)
Other intangible assets, net		(23,559	)				(22,976	)				(24,374	)				(26,065	)				(27,900	)
Tangible common equity	$	450,725				$	460,106				$	477,558				$	469,875				$	458,382
Total Assets to Tangible Assets:
Total assets-GAAP	$	7,435,812				$	7,338,715				$	7,443,805				$	7,093,959				$	6,630,010
Adjustments:
Goodwill		(161,904	)				(161,904	)				(161,904	)				(161,904	)				(161,904	)
Other intangible assets, net		(23,559	)				(22,976	)				(24,374	)				(26,065	)				(27,900	)
Tangible assets	$	7,250,349				$	7,153,835				$	7,257,527				$	6,905,990				$	6,440,206
Common Shares Outstanding		22,060,255					22,044,626					22,050,537					22,193,141					22,380,492
Tangible Common Equity to Tangible Assets		6.22		%			6.43		%			6.58		%			6.80		%			7.12		%
Tangible Book Value Per Share	$	20.43				$	20.87				$	21.66				$	21.17				$	20.48
Return on Average Tangible Common Equity (ROATCE)
	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2022		2022		2021		2021		2021
Net income	$	21,883				$	20,749				$	23,107				$	19,548				$	20,124
Average total shareholders' equity-GAAP	$	643,004				$	657,327				$	652,892				$	651,751				$	641,079
Adjustments:
Goodwill		(161,904	)				(161,904	)				(161,904	)				(161,904	)				(161,904	)
Other intangible assets, net		(22,570	)				(23,638	)				(25,311	)				(27,132	)				(26,931	)
Average tangible common equity	$	458,530				$	471,785				$	465,677				$	462,715				$	452,244
ROATCE		19.14		%			17.84		%			19.69		%			16.76		%			17.85		%