-
Midland States Bancorp, Inc. Announces 2023 Second Quarter Results
来源: Nasdaq GlobeNewswire / 27 7月 2023 16:16:25 America/New_York
Second Quarter 2023 Highlights:
- Net income available to common shareholders of $19.3 million, or $0.86 per diluted share
- Efficiency ratio improved to 55.0% from prior quarter
- Total loan growth of $13.1 million, or 0.8% annualized
- Total deposit growth of $1.3 million or 0.1% annualized
- Common equity tier 1 capital ratio improved to 8.03%
- Tangible book value per share of $22.24, an increase of 1.7% from prior quarter
EFFINGHAM, Ill., July 27, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $19.3 million, or $0.86 per diluted share, for the second quarter of 2023, compared to $19.5 million, or $0.86 per diluted share, for the first quarter of 2023. This also compares to net income available to common shareholders of $21.9 million, or $0.97 per diluted share, for the second quarter of 2022.
Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We executed well in the second quarter and continued to deliver strong financial performance while prioritizing prudent risk management given the challenging operating environment, which resulted in an 8% increase in our pre-tax, pre-provision income compared to the prior quarter. Due to our strong financial performance and prudent balance sheet management, we saw an increase in our capital ratios and tangible book value per share, while also taking advantage of the opportunity to repurchase our common stock at below tangible book value and redeeming some of our higher cost subordinated debt.
“We continue to have success in developing full banking relationships with high quality businesses, which resulted in continued growth in our commercial loan portfolio. As planned, we are funding the new commercial loans and additional securities purchases with the runoff in our GreenSky portfolio, which is contributing to our strong financial performance and increase in capital ratios.
“While economic conditions remain uncertain, we will continue to prioritize prudent risk management and be conservative in our new loan production to build capital and liquidity. We continue to see good opportunities to add core deposit relationships in our markets with both retail and commercial customers, and during the second half of the year, we expect to begin seeing a contribution to deposit gathering from our Banking-as-a-Service initiative, which we believe will further strengthen our deposit base, support profitable growth in the future, and create additional franchise value,” said Mr. Ludwig.
Balance Sheet Highlights
Total assets were $8.03 billion at June 30, 2023, compared to $7.93 billion at March 31, 2023, and $7.44 billion at June 30, 2022. At June 30, 2023, portfolio loans were $6.37 billion, compared to $6.35 billion as of March 31, 2023, and $5.80 billion as of June 30, 2022.
Loans
During the second quarter of 2023, outstanding loans increased at a slower rate as the Company originated loans in a more selective and deliberate approach to balance liquidity and funding costs. Commercial loan and lease balances and construction and land development loans increased $18.0 million and $39.8 million, respectively, offsetting the decline in consumer loan balances due to a decrease in loans originated through GreenSky.
As of June 30, March 31, December 31, September 30, June 30, (in thousands) 2023 2023 2022 2022 2022 Loan Portfolio Commercial loans $ 962,756 $ 937,920 $ 872,794 $ 907,651 $ 821,119 Equipment finance loans 614,633 632,205 616,751 577,323 546,267 Equipment finance leases 500,485 510,029 491,744 457,611 439,202 Commercial FHA warehouse lines 30,522 10,275 25,029 51,309 23,872 Total commercial loans and leases 2,108,396 2,090,429 2,006,318 1,993,894 1,830,460 Commercial real estate 2,443,995 2,448,158 2,433,159 2,466,303 2,335,655 Construction and land development 366,631 326,836 320,882 225,549 203,955 Residential real estate 371,486 369,910 366,094 356,225 340,103 Consumer 1,076,836 1,118,938 1,180,014 1,156,480 1,085,371 Total loans $ 6,367,344 $ 6,354,271 $ 6,306,467 $ 6,198,451 $ 5,795,544 Loan Quality
Credit quality metrics declined during the second quarter of 2023. Loans 30-89 days past due totaled $44.2 million as of June 30, 2023, compared to $30.9 million as of March 31, 2023, and $16.2 million as of June 30, 2022. The increase in delinquencies during the most recent quarter was due to a single commercial loan, which has since been brought current, and an increase in delinquencies in equipment finance loans and leases.
Non-performing loans were $54.8 million at June 30, 2023, compared to $50.7 million as of March 31, 2023, and $56.9 million as of June 30, 2022. The increase at June 30, 2023 was related to one commercial real estate loan moving to non-performing at the end of the quarter. Non-performing loans as a percentage of portfolio loans was 0.86% at June 30, 2023, compared with 0.80% at March 31, 2023, and 0.98% at June 30, 2022.
Non-performing assets were 0.72% of total assets at the end of the second quarter of 2023, compared to 0.74% at March 31, 2023 and 0.93% at June 30, 2022. Two other real estate owned (“OREO”) properties were sold during the second quarter of 2023 at a gain of $0.8 million resulting in the decrease in non-performing assets.
As of and for the Three Months Ended (in thousands) June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Asset Quality Loans 30-89 days past due $ 44,161 $ 30,895 $ 32,372 $ 28,275 $ 16,212 Nonperforming loans 54,844 50,713 49,423 46,882 56,883 Nonperforming assets 57,688 58,806 57,824 59,524 69,344 Substandard loans 130,707 99,819 101,044 98,517 114,820 Net charge-offs 2,996 2,119 538 3,233 2,781 Loans 30-89 days past due to total loans 0.69 % 0.49 % 0.51 % 0.46 % 0.28 % Nonperforming loans to total loans 0.86 % 0.80 % 0.78 % 0.76 % 0.98 % Nonperforming assets to total assets 0.72 % 0.74 % 0.74 % 0.76 % 0.93 % Allowance for credit losses to total loans 1.02 % 0.98 % 0.97 % 0.95 % 0.95 % Allowance for credit losses to nonperforming loans 118.43 % 122.39 % 123.53 % 125.08 % 96.51 % Net charge-offs to average loans 0.19 % 0.14 % 0.03 % 0.21 % 0.20 % The Company’s allowance for credit losses totaled $65.0 million at June 30, 2023, compared to $62.1 million at March 31, 2023, and $54.9 million at June 30, 2022. The allowance as a percentage of portfolio loans was 1.02% at June 30, 2023, compared to 0.98% at March 31, 2023, and 0.95% at June 30, 2022.
Deposits
Total deposits were $6.43 billion at both June 30, 2023 and March 31, 2023, compared with $6.18 billion at June 30, 2022. The deposit mix continues to shift from noninterest-bearing deposits to interest-bearing deposits due to the continued rate increases announced by the Federal Reserve. Interest rate promotions offered during the second quarter of 2023 on time deposit products contributed to an increase in balances of $73.9 million at June 30, 2023, compared to March 31, 2023.
As of June 30, March 31, December 31, September 30, June 30, (in thousands) 2023 2023 2022 2022 2022 Deposit Portfolio Noninterest-bearing demand $ 1,162,909 $ 1,215,758 $ 1,362,158 $ 1,362,481 $ 1,403,386 Interest-bearing: Checking 2,499,693 2,502,827 2,494,073 2,568,195 2,377,760 Money market 1,226,470 1,263,813 1,184,101 1,125,333 1,027,547 Savings 624,005 636,832 661,932 704,245 740,364 Time 840,734 766,884 649,552 620,960 620,363 Brokered time 72,737 39,087 12,836 14,038 15,018 Total deposits $ 6,426,548 $ 6,425,201 $ 6,364,652 $ 6,395,252 $ 6,184,438 The Company estimates that uninsured deposits(1) totaled $1.21 billion, or 19% of total deposits, at June 30, 2023 compared to $1.32 billion, or 21%, at March 31, 2023.
(1) Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateralized deposits. Results of Operations Highlights
Net Interest Income and Margin
During the second quarter of 2023, net interest income, on a tax-equivalent basis, totaled $59.0 million, a decrease of $1.7 million, or 2.8%, compared to $60.7 million for the first quarter of 2023. The tax-equivalent net interest margin for the second quarter of 2023 was 3.23%, compared with 3.39% in the first quarter of 2023. Net interest income and related margin, on a tax-equivalent basis, was $61.7 million and 3.65%, respectively, in the second quarter of 2022. The decline in the net interest income and margin was largely attributable to increased market interest rates resulting in the cost of funding liabilities increasing at a faster rate than the yields on earning assets.
Average interest-earning assets for the second quarter of 2023 were $7.33 billion, compared to $7.26 billion for the first quarter of 2023. The yield increased 16 basis points to 5.51% compared to the first quarter of 2023. Interest-earning assets averaged $6.77 billion for the second quarter of 2022.
Average loans were $6.36 billion for the second quarter of 2023, compared to $6.32 billion for the first quarter of 2023 and $5.68 billion for the second quarter of 2022. The yield on loans was 5.80% and 5.65% for the second and first quarters of 2023, respectively.
For the Three Months Ended June 30, March 31, June 30, (dollars in thousands) 2023 2023 2022 Interest-earning assets Average
BalanceInterest &
FeesYield/
RateAverage
BalanceInterest &
FeesYield/
RateAverage
BalanceInterest &
FeesYield/
RateCash and cash equivalents $ 67,377 $ 852 5.07 % $ 85,123 $ 980 4.67 % $ 226,517 $ 468 0.83 % Investment securities 861,409 7,286 3.39 % 809,848 5,995 3.00 % 818,927 4,931 2.41 % Loans 6,356,012 91,890 5.80 % 6,320,402 87,997 5.65 % 5,677,791 63,594 4.49 % Loans held for sale 4,067 59 5.79 % 1,506 16 4.41 % 9,865 77 3.15 % Nonmarketable equity securities 45,028 599 5.33 % 47,819 795 6.75 % 36,338 487 5.38 % Total interest-earning assets $ 7,333,893 $ 100,686 5.51 % $ 7,264,698 $ 95,783 5.35 % $ 6,769,438 $ 69,557 4.12 % Noninterest-earning assets 612,238 610,811 615,348 Total assets $ 7,946,131 $ 7,875,509 $ 7,384,786 Interest-Bearing Liabilities Interest-bearing deposits $ 5,259,188 $ 33,617 2.56 % $ 5,053,941 $ 26,405 2.12 % $ 4,718,759 $ 3,810 0.32 % Short-term borrowings 22,018 14 0.26 % 38,655 25 0.26 % 59,301 22 0.15 % FHLB advances & other borrowings 471,989 5,396 4.59 % 540,278 6,006 4.51 % 307,611 1,435 1.87 % Subordinated debt 97,278 1,335 5.51 % 99,812 1,370 5.57 % 139,232 2,011 5.78 % Trust preferred debentures 50,218 1,289 10.29 % 50,047 1,229 9.96 % 49,602 624 5.05 % Total interest-bearing liabilities $ 5,900,691 $ 41,651 2.83 % $ 5,782,733 $ 35,035 2.46 % $ 5,274,505 $ 7,902 0.60 % Noninterest-bearing deposits 1,187,584 1,250,899 1,401,268 Other noninterest-bearing liabilities 81,065 74,691 66,009 Shareholders’ equity 776,791 767,186 643,004 Total liabilities and shareholder’s equity $ 7,946,131 $ 7,875,509 $ 7,384,786 Net Interest Margin $ 59,035 3.23 % $ 60,748 3.39 % $ 61,655 3.65 % Cost of Deposits 2.09 % 1.70 % 0.25 % (1) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million, $0.2 million and $0.3 million for the three months ended June 30, 2023, March 31, 2023 and 2022, respectively. Investment securities averaged $861.4 million for the second quarter of 2023, compared to $809.8 million for the first quarter of 2023. The Company purchased additional investments and repositioned out of lower-yielding securities in favor of higher-yielding instruments resulting in increased average balances of $51.6 million and a higher yield. These changes are expected to improve overall margin, liquidity, and capital allocations. The Company incurred net losses on sales of $0.9 million in the second quarter of 2023. Investment securities averaged $818.9 million for the second quarter of 2022.
Average interest-bearing deposits were $5.26 billion for the second quarter of 2023, compared to $5.05 billion for the first quarter of 2023, and $4.72 billion for the second quarter of 2022. Cost of interest-bearing deposits was 2.56% in the second quarter of 2023, which represents a 44 basis point increase from the first quarter of 2023. A competitive market driven by rising interest rates was a contributing factor to the increase in deposit costs.
The Company redeemed $6.6 million of subordinated debt during the second quarter of 2023. The debentures were redeemed at a discount, resulting in a gain of $0.7 million.
During the six months ended June 30, 2023, net interest income, on a tax-equivalent basis, increased to $119.8 million, with a tax-equivalent net interest margin of 3.31%, compared to net interest income, on a tax-equivalent basis, of $118.9 million, and a tax-equivalent net interest margin of 3.58% for the six months ended June 30, 2022.
For the Six Months Ended June 30, June 30, (dollars in thousands) 2023 2022 Interest-earning assets Average
BalanceInterest &
FeesYield/
RateAverage
BalanceInterest &
FeesYield/
RateCash and cash equivalents $ 76,201 $ 1,832 4.85 % $ 304,938 $ 639 0.42 % Investment securities 835,771 13,281 3.18 % 856,571 9,894 2.31 % Loans 6,338,305 179,887 5.72 % 5,477,037 120,873 4.45 % Loans held for sale 2,794 75 5.42 % 20,501 297 2.93 % Nonmarketable equity securities 46,416 1,394 6.05 % 36,358 971 5.39 % Total interest-earning assets $ 7,299,487 $ 196,469 5.43 % $ 6,695,405 $ 132,674 4.00 % Noninterest-earning assets 611,528 623,224 Total assets $ 7,911,015 $ 7,318,629 Interest-Bearing Liabilities Interest-bearing deposits $ 5,157,148 $ 60,022 2.35 % $ 4,613,751 $ 5,971 0.26 % Short-term borrowings 30,291 39 0.26 % 64,642 45 0.14 % FHLB advances & other borrowings 505,945 11,402 4.54 % 309,436 2,647 1.72 % Subordinated debt 98,538 2,705 5.54 % 139,186 4,022 5.78 % Trust preferred debentures 50,133 2,518 10.13 % 49,527 1,138 4.64 % Total interest-bearing liabilities $ 5,842,055 $ 76,686 2.65 % $ 5,176,542 $ 13,823 0.54 % Noninterest-bearing deposits 1,219,050 1,418,083 Other noninterest-bearing liabilities 77,895 73,878 Shareholders’ equity 772,015 650,126 Total liabilities and shareholder’s equity $ 7,911,015 $ 7,318,629 Net Interest Margin $ 119,783 3.31 % $ 118,851 3.58 % Cost of Deposits 1.90 % 0.20 % (1) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.4 million and $0.7 million for the six months ended June 30, 2023 and 2022, respectively. The yield on earning assets increased 143 basis points to 5.43% for the six months ended June 30, 2023 compared to the same period one year prior. However, the cost of interest bearing liabilities increased at a faster rate during this period, increasing 211 basis points to 2.65% for the six months ended June 30, 2023.
Noninterest Income
Noninterest income was $18.8 million for the second quarter of 2023, compared to $15.8 million for the first quarter of 2023. Noninterest income for the second quarter of 2023 included an $0.8 million gain on the sale of OREO and a $0.7 million gain on the repurchase of subordinated debt, partially offset by $0.9 million of losses on the sale of investment securities. The first quarter of 2023 was negatively impacted by $0.6 million of losses on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2023 and the first quarter of 2023 was $18.2 million and $16.4 million, respectively. Noninterest income for the second quarter of 2022 was $14.6 million and included $0.9 million impairment charge on commercial servicing rights and a $0.1 million loss on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2022 was $15.6 million.
For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands) 2023 2023 2022 2023 2022 Noninterest income Wealth management revenue $ 6,269 $ 6,411 $ 6,143 $ 12,680 $ 13,282 Residential mortgage banking revenue 540 405 384 945 983 Service charges on deposit accounts 2,677 2,568 2,304 5,245 4,372 Interchange revenue 3,696 3,412 3,590 7,108 6,870 Loss on sales of investment securities, net (869 ) (648 ) (101 ) (1,517 ) (101 ) Gain on repurchase of subordinated debt, net 676 — — 676 — Gain (loss) on sales of other real estate owned, net 819 — (162 ) 819 (121 ) Impairment on commercial mortgage servicing rights — — (869 ) — (1,263 ) Company-owned life insurance 891 876 840 1,767 1,859 Other income 4,054 2,755 2,484 6,809 4,345 Total noninterest income $ 18,753 $ 15,779 $ 14,613 $ 34,532 $ 30,226 Noninterest Expense
Noninterest expense was $42.9 million in the second quarter of 2023, compared to $44.5 million in the first quarter of 2023, and $41.3 million in the second quarter of 2022. The efficiency ratio was 55.01% for the quarter ended June 30, 2023, compared to 57.64% for the quarter ended March 31, 2023, and 53.10% for the quarter ended June 30, 2022.
For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands) 2023 2023 2022 2023 2022 Noninterest expense Salaries and employee benefits $ 22,857 $ 24,243 $ 22,645 $ 47,100 $ 44,515 Occupancy and equipment 3,879 4,443 3,489 8,322 7,244 Data processing 6,544 6,311 6,082 12,855 11,955 Professional 1,663 1,760 1,516 3,423 3,488 Amortization of intangible assets 1,208 1,291 1,318 2,499 2,716 FDIC insurance 1,196 1,329 826 2,525 1,656 Other expense 5,547 5,105 5,463 10,652 10,649 Total noninterest expense $ 42,894 $ 44,482 $ 41,339 $ 87,376 $ 82,223 Noteworthy components of noninterest expense are as follows:
- Salaries and employee benefits expenses were $22.9 million in the second quarter of 2023, compared to $24.2 million in the first quarter of 2023, and $22.6 million in the second quarter of 2022. Employees numbered 915 at June 30, 2023, compared to 931 at March 31, 2023, and 932 at June 30, 2022. Annual salary increases, effective in the second quarter of 2023, were offset by decreased commissions and incentive compensation expense.
- Occupancy and equipment expense decreased $0.6 million in the second quarter of 2023 compared to the first quarter of 2023, primarily due to elevated seasonal related expenses incurred in the first quarter, including snow removal and utilities expenses.
- Increases in FDIC insurance expense on a year to date basis is primarily related to the FDIC’s 2 basis point increase to the initial base deposit insurance assessment rate schedules effective January 1, 2023.
Income Tax Expense
Income tax expense was $7.2 million for the second quarter of 2023, as compared to $6.9 million for the first quarter of 2023 and $7.3 million for the second quarter of 2022. The resulting effective tax rates were 25.1%, 24.0% and 25.0% respectively.
Capital
At June 30, 2023, 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:
As of June 30, 2023 Midland States Bank Midland States Bancorp, Inc. Minimum Regulatory Requirements (2) Total capital to risk-weighted assets 11.89% 12.65% 10.50% Tier 1 capital to risk-weighted assets 11.01% 10.47% 8.50% Tier 1 leverage ratio 10.07% 9.57% 4.00% Common equity Tier 1 capital 11.01% 8.03% 7.00% Tangible common equity to tangible assets (1) N/A 6.19% N/A (1) A non-GAAP financial measure. Refer to page 13 for a reconciliation to the comparable GAAP financial measure. (2) Includes the capital conservation buffer of 2.5%. The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges has resulted in an $84.7 million accumulated other comprehensive loss at June 30, 2023, which impacts tangible book value by $3.87.
Stock Repurchase Program
As previously disclosed, on December 6, 2022, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2023. During the second quarter of 2023, the Company repurchased 308,543 shares of its common stock at a weighted average price of $19.78 under its stock repurchase program. As of June 30, 2023, the Company had $16.1 million remaining under the current stock repurchase authorization.
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, 2023, the Company had total assets of approximately $8.03 billion, and its Wealth Management Group had assets under administration of approximately $3.59 billion. The Company 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 Earnings Available to Common Shareholders,” “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,” “Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income,” 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, continuing effects of the recent failures of Silicon Valley Bank and Signature Bank, including anticipated effects on FDIC premiums, increased deposit volatility and potential regulatory developments; 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) As of and
for the Three Months EndedAs of and
for the Six Months EndedJune 30, March 31, June 30, June 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Earnings Summary Net interest income $ 58,840 $ 60,504 $ 61,334 $ 119,344 $ 118,161 Provision for credit losses 5,879 3,135 5,441 9,014 9,608 Noninterest income 18,753 15,779 14,613 34,532 30,226 Noninterest expense 42,894 44,482 41,339 87,376 82,223 Income before income taxes 28,820 28,666 29,167 57,486 56,556 Income taxes 7,245 6,894 7,284 14,139 13,924 Net income 21,575 21,772 21,883 43,347 42,632 Preferred dividends 2,228 2,228 — 4,456 — Net income available to common shareholders $ 19,347 $ 19,544 $ 21,883 $ 38,891 $ 42,632 Diluted earnings per common share $ 0.86 $ 0.86 $ 0.97 $ 1.72 $ 1.89 Weighted average common shares outstanding - diluted 22,205,079 22,501,970 22,360,819 22,348,981 22,355,936 Return on average assets 1.09 % 1.12 % 1.19 % 1.10 % 1.17 % Return on average shareholders' equity 11.14 % 11.51 % 13.65 % 11.32 % 13.22 % Return on average tangible common equity(1) 15.99 % 16.70 % 19.14 % 16.34 % 18.48 % Net interest margin 3.23 % 3.39 % 3.65 % 3.31 % 3.58 % Efficiency ratio(1) 55.01 % 57.64 % 53.10 % 56.32 % 54.38 % Adjusted Earnings Performance Summary(1) Adjusted earnings available to common shareholders $ 19,487 $ 20,017 $ 22,191 $ 39,505 $ 43,006 Adjusted diluted earnings per common share $ 0.87 $ 0.88 $ 0.98 $ 1.75 $ 1.90 Adjusted return on average assets 1.10 % 1.15 % 1.21 % 1.12 % 1.18 % Adjusted return on average shareholders' equity 11.21 % 11.76 % 13.84 % 11.48 % 13.34 % Adjusted return on average tangible common equity 16.10 % 17.11 % 19.41 % 16.60 % 18.65 % Adjusted pre-tax, pre-provision earnings $ 34,892 $ 32,449 $ 35,902 $ 67,341 $ 67,943 Adjusted pre-tax, pre-provision return on average assets 1.76 % 1.67 % 1.95 % 1.72 % 1.87 % Market Data Book value per share at period end $ 30.49 $ 30.08 $ 28.84 Tangible book value per share at period end(1) $ 22.24 $ 21.87 $ 20.43 Tangible book value per share excluding accumulated other comprehensive income at period end(1) $ 26.11 $ 25.39 $ 22.84 Market price at period end $ 19.91 $ 21.42 $ 24.04 Common shares outstanding at period end 21,854,800 22,111,454 22,060,255 Capital Total capital to risk-weighted assets 12.65 % 12.46 % 11.44 % Tier 1 capital to risk-weighted assets 10.47 % 10.25 % 8.63 % Tier 1 common capital to risk-weighted assets 8.03 % 7.84 % 7.66 % Tier 1 leverage ratio 9.57 % 9.54 % 7.98 % Tangible common equity to tangible assets(1) 6.19 % 6.24 % 6.22 % Wealth Management Trust assets under administration $ 3,594,727 $ 3,502,635 $ 3,503,227 (1) Non-GAAP financial measures. Refer to pages 11 - 13 for a reconciliation to the comparable GAAP financial measures. MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) As of June 30, March 31, December 31, September 30, June 30, (in thousands) 2023 2023 2022 2022 2022 Assets Cash and cash equivalents $ 160,695 $ 138,310 $ 160,631 $ 313,188 $ 270,117 Investment securities 887,003 821,005 776,860 690,504 769,278 Loans 6,367,344 6,354,271 6,306,467 6,198,451 5,795,544 Allowance for credit losses on loans (64,950 ) (62,067 ) (61,051 ) (58,639 ) (54,898 ) Total loans, net 6,302,394 6,292,204 6,245,416 6,139,812 5,740,646 Loans held for sale 5,632 2,747 1,286 4,338 5,298 Premises and equipment, net 81,006 80,582 78,293 77,519 77,668 Other real estate owned 202 6,729 6,729 11,141 11,131 Loan servicing rights, at lower of cost or fair value 21,611 1,117 1,205 1,297 25,879 Commercial FHA mortgage loan servicing rights held for sale — 20,745 20,745 23,995 — Goodwill 161,904 161,904 161,904 161,904 161,904 Other intangible assets, net 18,367 19,575 20,866 22,198 23,559 Company-owned life insurance 152,210 151,319 150,443 149,648 148,900 Other assets 243,697 233,937 231,123 226,333 201,432 Total assets $ 8,034,721 $ 7,930,174 $ 7,855,501 $ 7,821,877 $ 7,435,812 Liabilities and Shareholders' Equity Noninterest-bearing demand deposits $ 1,162,909 $ 1,215,758 $ 1,362,158 $ 1,362,481 $ 1,403,386 Interest-bearing deposits 5,263,639 5,209,443 5,002,494 5,032,771 4,781,052 Total deposits 6,426,548 6,425,201 6,364,652 6,395,252 6,184,438 Short-term borrowings 21,783 31,173 42,311 58,518 67,689 FHLB advances and other borrowings 575,000 482,000 460,000 360,000 285,000 Subordinated debt 93,404 99,849 99,772 139,370 139,277 Trust preferred debentures 50,296 50,135 49,975 49,824 49,674 Other liabilities 90,869 66,173 80,217 79,634 73,546 Total liabilities 7,257,900 7,154,531 7,096,927 7,082,598 6,799,624 Total shareholders’ equity 776,821 775,643 758,574 739,279 636,188 Total liabilities and shareholders’ equity $ 8,034,721 $ 7,930,174 $ 7,855,501 $ 7,821,877 $ 7,435,812 MIDLAND STATES BANCORP, INC. CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued) For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (in thousands, except per share data) 2023 2023 2022 2023 2022 Net interest income: Interest income $ 100,491 $ 95,539 $ 69,236 $ 196,030 $ 131,984 Interest expense 41,651 35,035 7,902 76,686 13,823 Net interest income 58,840 60,504 61,334 119,344 118,161 Provision for credit losses: Provision for credit losses on loans 5,879 3,135 4,741 9,014 8,873 Provision for credit losses on unfunded commitments — — 700 — 956 Provision for other credit losses — — — — (221 ) Total provision for credit losses 5,879 3,135 5,441 9,014 9,608 Net interest income after provision for credit losses 52,961 57,369 55,893 110,330 108,553 Noninterest income: Wealth management revenue 6,269 6,411 6,143 12,680 13,282 Residential mortgage banking revenue 540 405 384 945 983 Service charges on deposit accounts 2,677 2,568 2,304 5,245 4,372 Interchange revenue 3,696 3,412 3,590 7,108 6,870 Loss on sales of investment securities, net (869 ) (648 ) (101 ) (1,517 ) (101 ) Gain on repurchase of subordinated debt, net 676 — — 676 — Gain (loss) on sales of other real estate owned, net 819 — (162 ) 819 (121 ) Impairment on commercial mortgage servicing rights — — (869 ) — (1,263 ) Company-owned life insurance 891 876 840 1,767 1,859 Other income 4,054 2,755 2,484 6,809 4,345 Total noninterest income 18,753 15,779 14,613 34,532 30,226 Noninterest expense: Salaries and employee benefits 22,857 24,243 22,645 47,100 44,515 Occupancy and equipment 3,879 4,443 3,489 8,322 7,244 Data processing 6,544 6,311 6,082 12,855 11,955 Professional 1,663 1,760 1,516 3,423 3,488 Amortization of intangible assets 1,208 1,291 1,318 2,499 2,716 FDIC insurance 1,196 1,329 826 2,525 1,656 Other expense 5,547 5,105 5,463 10,652 10,649 Total noninterest expense 42,894 44,482 41,339 87,376 82,223 Income before income taxes 28,820 28,666 29,167 57,486 56,556 Income taxes 7,245 6,894 7,284 14,139 13,924 Net income 21,575 21,772 21,883 43,347 42,632 Preferred stock dividends 2,228 2,228 — 4,456 — Net income available to common shareholders $ 19,347 $ 19,544 $ 21,883 $ 38,891 $ 42,632 Basic earnings per common share $ 0.86 $ 0.86 $ 0.97 $ 1.72 $ 1.89 Diluted earnings per common share $ 0.86 $ 0.86 $ 0.97 $ 1.72 $ 1.89 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2023 2022 Income before income taxes - GAAP $ 28,820 $ 28,666 $ 29,167 $ 57,486 $ 56,556 Adjustments to noninterest income: Loss on sales of investment securities, net 869 648 101 1,517 101 (Gain) on repurchase of subordinated debt (676 ) — — (676 ) — Total adjustments to noninterest income 193 648 101 841 101 Adjustments to noninterest expense: Integration and acquisition expenses — — (324 ) — (415 ) Total adjustments to noninterest expense — — (324 ) — (415 ) Adjusted earnings pre tax - non-GAAP 29,013 29,314 29,592 58,327 57,072 Adjusted earnings tax 7,297 7,069 7,401 14,366 14,066 Adjusted earnings - non-GAAP 21,716 22,245 22,191 43,961 43,006 Preferred stock dividends 2,228 2,228 — 4,456 — Adjusted earnings available to common shareholders $ 19,487 $ 20,017 $ 22,191 $ 39,505 $ 43,006 Adjusted diluted earnings per common share $ 0.87 $ 0.88 $ 0.98 $ 1.75 $ 1.90 Adjusted return on average assets 1.10 % 1.15 % 1.21 % 1.12 % 1.18 % Adjusted return on average shareholders' equity 11.21 % 11.76 % 13.84 % 11.48 % 13.34 % Adjusted return on average tangible common equity 16.10 % 17.11 % 19.41 % 16.60 % 18.65 % Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Adjusted earnings pre tax - non-GAAP $ 29,013 $ 29,314 $ 29,592 $ 58,327 $ 57,072 Provision for credit losses 5,879 3,135 5,441 9,014 9,608 Impairment on commercial mortgage servicing rights — — 869 — 1,263 Adjusted pre-tax, pre-provision earnings - non-GAAP $ 34,892 $ 32,449 $ 35,902 $ 67,341 $ 67,943 Adjusted pre-tax, pre-provision return on average assets 1.76 % 1.67 % 1.95 % 1.72 % 1.87 % MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Noninterest expense - GAAP $ 42,894 $ 44,482 $ 41,339 $ 87,376 $ 82,223 Integration and acquisition expenses — — (324 ) — (415 ) Adjusted noninterest expense $ 42,894 $ 44,482 $ 41,015 $ 87,376 $ 81,808 Net interest income - GAAP $ 58,840 $ 60,504 $ 61,334 $ 119,344 $ 118,161 Effect of tax-exempt income 195 244 321 439 690 Adjusted net interest income 59,035 60,748 61,655 119,783 118,851 Noninterest income - GAAP 18,753 15,779 14,613 34,532 30,226 Impairment on commercial mortgage servicing rights — — 869 — 1,263 Loss on sales of investment securities, net 869 648 101 1,517 101 (Gain) on repurchase of subordinated debt (676 ) — — (676 ) — Adjusted noninterest income 18,946 16,427 15,583 35,373 31,590 Adjusted total revenue $ 77,980 $ 77,175 $ 77,238 $ 155,156 $ 150,441 Efficiency ratio 55.01 % 57.64 % 53.10 % 56.32 % 54.38 % Return on Average Tangible Common Equity (ROATCE) For the Three Months Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, (dollars in thousands) 2023 2023 2022 2023 2022 Net income available to common shareholders $ 19,347 $ 19,544 $ 21,883 $ 38,891 $ 42,632 Average total shareholders' equity—GAAP $ 776,791 $ 767,186 $ 643,004 $ 772,015 $ 650,126 Adjustments: Preferred Stock (110,548 ) (110,548 ) — (110,548 ) — Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (18,937 ) (20,184 ) (22,570 ) (19,557 ) (23,101 ) Average tangible common equity $ 485,402 $ 474,550 $ 458,530 $ 480,006 $ 465,121 ROATCE 15.99 % 16.70 % 19.14 % 16.34 % 18.48 % 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) 2023 2023 2022 2022 2022 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 776,821 $ 775,643 $ 758,574 $ 739,279 $ 636,188 Adjustments: Preferred Stock (110,548 ) (110,548 ) (110,548 ) (110,548 ) — Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (18,367 ) (19,575 ) (20,866 ) (22,198 ) (23,559 ) Tangible common equity $ 486,002 $ 483,616 $ 465,256 $ 444,629 $ 450,725 Less: Accumulated other comprehensive income (AOCI) (84,719 ) (77,797 ) (83,797 ) (78,383 ) (53,097 ) Tangible common equity excluding AOCI 570,721 561,413 549,053 523,012 503,822 Total Assets to Tangible Assets: Total assets—GAAP $ 8,034,721 $ 7,930,174 $ 7,855,501 $ 7,821,877 $ 7,435,812 Adjustments: Goodwill (161,904 ) (161,904 ) (161,904 ) (161,904 ) (161,904 ) Other intangible assets, net (18,367 ) (19,575 ) (20,866 ) (22,198 ) (23,559 ) Tangible assets $ 7,854,450 $ 7,748,695 $ 7,672,731 $ 7,637,775 $ 7,250,349 Common Shares Outstanding 21,854,800 22,111,454 22,214,913 22,074,740 22,060,255 Tangible Common Equity to Tangible Assets 6.19 % 6.24 % 6.06 % 5.82 % 6.22 % Tangible Book Value Per Share $ 22.24 $ 21.87 $ 20.94 $ 20.14 $ 20.43 Tangible Book Value Per Share excluding AOCI $ 26.11 $ 25.39 $ 24.72 $ 23.69 $ 22.84