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Midland States Bancorp, Inc. Announces 2022 Third Quarter Results
来源: Nasdaq GlobeNewswire / 20 10月 2022 16:10:01 America/New_York
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, 2022Consolidated
Ratios as of
Sept. 30, 2022Minimum
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) 342-7321MIDLAND 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 %