Midland States Bancorp, Inc. Announces 2021 First Quarter Results

Summary

• Net income of $18.5 million, or $0.81 diluted earnings per share
• Efficiency ratio improved to 56.88% from 58.55% in Q4 2020
• Return on average shareholders’ equity of 12.04%
• Return on average tangible common equity of 17.28%
• Tier 1 leverage ratio increased 29 bps to 7.79%
• Book value and tangible book value per share increased 2.2% and 3.5%, respectively

EFFINGHAM, Ill., April 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021. This compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which was negatively impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on mortgage servicing rights (“MSRs”) held-for-sale, and $0.2 million in integration and acquisition expenses, and to net income of $1.5 million, or $0.06 diluted earnings per share, for the first quarter of 2020, which was negatively impacted by an $8.5 million impairment on commercial MSRs and $0.9 million in integration and acquisition expenses.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter results reflect a significant increase in our level of profitability resulting from the actions we took last year to increase efficiencies and optimize our business model. Despite operating in a low growth, low interest rate environment, we are seeing substantial improvement in our performance metrics including our efficiency ratio, return on average assets, and return on average tangible equity, as well as strong increases in our capital ratios and book value.

“We continued to execute on our strategy to increase our recurring fee income with the announcement of our acquisition of ATG Trust Company, which we expect to close during the second quarter of 2021. The addition of ATG Trust will further increase our assets under administration and provide additional expertise in specialized areas that will improve our ability to attract new clients to our wealth management business.

“During the first quarter, we saw an elevated level of loan payoffs and paydowns, which impacted our total loan balances. However, we are seeing encouraging signs of improving economic conditions in our markets and a growing loan pipeline. As a result, we believe that we will see stronger loan production and loan growth as we move through the year. The stronger loan growth and redeployment of our excess liquidity into higher yielding assets should enable us to realize additional operating leverage and generate further improvement in our level of profitability going forward,” said Mr. Ludwig.

Adjusted Earnings

Financial results for the fourth quarter of 2020 were impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.5 million, or $0.54 per share, for the fourth quarter of 2020.

Financial results for the first quarter of 2020 were impacted by $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding these amounts and certain income and other expenses, adjusted earnings were $2.8 million, or $0.11 diluted earnings per share, for the first quarter of 2020.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Net Interest Margin

Net interest margin for the first quarter of 2021 was 3.45%, compared to 3.47% for the fourth quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 8 and 10 basis points to net interest margin in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin was unchanged from the fourth quarter of 2020, as a favorable shift in the mix of earning assets and a reduction in the average cost of funds was offset by a decline in the average yield on loans and securities.

Relative to the first quarter of 2020, net interest margin decreased from 3.48%. Accretion income on purchased loan portfolios contributed 16 basis points to net interest margin in the first quarter of 2020. Excluding the impact of accretion income, net interest margin increased 5 basis points compared to the first quarter of 2020, primarily due to a reduction in the average cost of deposits and the accelerated recognition of Paycheck Protection Program (“PPP”) loan income upon forgiveness.

Net Interest Income

Net interest income for the first quarter of 2021 was $51.9 million, a decrease of 3.1% from $53.5 million for the fourth quarter of 2020. Excluding accretion income, net interest income decreased $1.2 million from the prior quarter, which was primarily due to lower PPP loan income. Accretion income associated with purchased loan portfolios totaled $1.2 million for the first quarter of 2021, compared with $1.6 million for the fourth quarter of 2020. PPP loan income totaled $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021, compared to $3.7 million, including loan origination fees of $3.1 million, in the fourth quarter of 2020.

Relative to the first quarter of 2020, net interest income increased $5.2 million, or 11.2%. Accretion income for the first quarter of 2020 was $2.2 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in the cost of funds.

Noninterest Income

Noninterest income for the first quarter of 2021 was $14.8 million, an increase of 3.3% from $14.3 million for the fourth quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $1.3 million and $2.3 million in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impairments, noninterest income decreased 3.5% primarily due to lower levels of residential mortgage banking revenue and service charges on deposit accounts.

Relative to the first quarter of 2020, noninterest income increased 72.3% from $8.6 million. The increase was primarily attributable to a lower level of impairment on commercial MSRs.

Wealth management revenue for the first quarter of 2021 was $5.9 million, an increase of 1.1% from the fourth quarter of 2020. Compared to the first quarter of 2020, wealth management revenue increased 4.5%.

Noninterest Expense

Noninterest expense for the first quarter of 2021 was $39.1 million, which included $0.2 million in integration and acquisition expenses, compared with $47.0 million in the fourth quarter of 2020, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, and integration and acquisition expenses, noninterest expense decreased by $2.5 million, primarily due to lower salaries and employee benefits expense resulting from the Company’s branch network and facilities optimization initiative implemented during the fourth quarter of 2020, as well as a one-time vacation rollover accrual recorded in the prior quarter.

Relative to the first quarter of 2020, noninterest expense decreased 6.2% from $41.7 million, which included $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding the integration and acquisition expenses, the losses on residential MSRs held-for-sale and the loss on the repurchase of subordinated debt, noninterest expense declined $1.1 million, primarily due to lower salaries and employee benefits expense and lower occupancy and equipment expense resulting from the Company’s branch network and facilities optimization initiative.

Loan Portfolio

Total loans outstanding were $4.91 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020 and $4.38 billion at March 31, 2020. The decrease in total loans from December 31, 2020 was primarily attributable to elevated payoffs and paydowns across most of the Company’s major portfolios, as well as lower end-of-period balances on commercial FHA warehouse lines of credit, which was partially offset by an increase in PPP loans following the origination of $79.3 million of loans in the second round of the program.

Equipment finance balances decreased $2.9 million from December 31, 2020 to $858.6 million at March 31, 2021, which are booked within the commercial loans and leases portfolio.

The increase in total loans from March 31, 2020 was primarily attributable to the growth in equipment finance balances, consumer loans, and PPP loans.

Deposits

Total deposits were $5.34 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020, and $4.65 billion at March 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to strong inflows of retail deposits resulting from federal government stimulus payments and PPP-related commercial deposits.

Asset Quality

Nonperforming loans totaled $52.8 million, or 1.08% of total loans, at March 31, 2021, compared with $54.1 million, or 1.06% of total loans, at December 31, 2020. The decrease in nonperforming loans was primarily attributable to the resolution of long-term problem loans. At March 31, 2020, nonperforming loans totaled $58.2 million, or 1.33% of total loans.

Net charge-offs for the first quarter of 2021 were $1.7 million, or 0.14% of average loans on an annualized basis.

The Company recorded a provision for credit losses of $3.6 million for the first quarter of 2021, which was primarily related to additions to specific reserves.

The Company’s allowance for credit losses on loans was 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021, compared with 1.18% of total loans and 111.8% of nonperforming loans at December 31, 2020. Approximately 90.3% of the allowance for credit losses on loans at March 31, 2021 was allocated to general reserves.

Capital

At March 31, 2021, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

	Bank Level Ratios as of March 31, 2021	Consolidated Ratios as of March 31, 2021	Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets	12.18%	13.73%	10.50%
Tier 1 capital to risk-weighted assets	11.15%	9.62%	8.50%
Tier 1 leverage ratio	9.03%	7.79%	4.00%
Common equity Tier 1 capital	11.15%	8.39%	7.00%
Tangible common equity to tangible assets (1)	NA	6.67%	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 first quarter of 2021, the Company repurchased 65,840 shares of its common stock at a weighted average price of $18.35 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of March 31, 2021, the Company had $5.2 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, April 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 9390877. A recorded replay can be accessed through April 30, 2021, by dialing (855) 859-2056; conference ID: 9390877.

A slide presentation relating to the first quarter 2021 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website at investors.midlandsb.com under the “News and Events” tab.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of March 31, 2021, the Company had total assets of approximately $6.88 billion, and its Wealth Management Group had assets under administration of approximately $3.56 billion. Midland provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

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

Forward-Looking Statements

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

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

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands, except per share data)		2021				2020				2020				2020				2020
Earnings Summary
Net interest income		$	51,868			$	53,516			$	49,980			$	48,989			$	46,651
Provision for credit losses			3,565				10,058				11,728				10,997				11,578
Noninterest income			14,816				14,336				18,919				19,396				8,598
Noninterest expense			39,079				47,048				53,901				41,395				41,666
Income before income taxes			24,040				10,746				3,270				15,993				2,005
Income taxes			5,502				2,413				3,184				3,424				456
Net income		$	18,538			$	8,333			$	86			$	12,569			$	1,549
Diluted earnings per common share		$	0.81			$	0.36			$	-			$	0.53			$	0.06
Weighted average shares outstanding - diluted			22,578,553				22,656,343				22,937,837				23,339,964				24,538,002
Return on average assets			1.11	%			0.49	%			0.01	%			0.77	%			0.10	%
Return on average shareholders' equity			12.04	%			5.32	%			0.05	%			8.00	%			0.96	%
Return on average tangible common equity (1)			17.28	%			7.68	%			0.08	%			11.84	%			1.39	%
Net interest margin			3.45	%			3.47	%			3.33	%			3.32	%			3.48	%
Efficiency ratio (1)			56.88	%			58.55	%			57.74	%			59.42	%			62.21	%
Adjusted Earnings Performance Summary (1)
Adjusted earnings		$	18,662			$	12,471			$	12,023			$	12,884			$	2,806
Adjusted diluted earnings per common share		$	0.82			$	0.54			$	0.52			$	0.55			$	0.11
Adjusted return on average assets			1.12	%			0.73	%			0.72	%			0.78	%			0.19	%
Adjusted return on average shareholders' equity			12.12	%			7.97	%			7.56	%			8.20	%			1.73	%
Adjusted return on average tangible common equity			17.39	%			11.50	%			11.04	%			12.14	%			2.53	%
Adjusted pre-tax, pre-provision earnings		$	29,051			$	28,855			$	28,751			$	27,531			$	23,785
Adjusted pre-tax, pre-provision return on average assets			1.75	%			1.69	%			1.72	%			1.68	%			1.58	%
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(in thousands, except per share data)		2021				2020				2020				2020				2020
Net interest income:
Interest income		$	60,503			$	62,712			$	60,314			$	60,548			$	61,314
Interest expense			8,635				9,196				10,334				11,559				14,663
Net interest income			51,868				53,516				49,980				48,989				46,651
Provision for credit losses:
Provision for credit losses on loans			3,950				10,000				10,970				11,610				10,569
Provision for credit losses on unfunded commitments			(535	)			-				577				(665	)			934
Provision for other credit losses			150				58				181				52				75
Total provision for credit losses			3,565				10,058				11,728				10,997				11,578
Net interest income after provision for credit losses			48,303				43,458				38,252				37,992				35,073
Noninterest income:
Wealth management revenue			5,931				5,868				5,559				5,698				5,677
Commercial FHA revenue			292				400				926				3,414				1,267
Residential mortgage banking revenue			1,574				2,285				3,049				2,723				1,755
Service charges on deposit accounts			1,826				2,149				2,092				1,706				2,656
Interchange revenue			3,375				3,137				3,283				3,013				2,833
Gain on sales of investment securities, net			-				-				1,721				-				-
Impairment on commercial mortgage servicing rights			(1,275	)			(2,344	)			(1,418	)			(107	)			(8,468	)
Company-owned life insurance			860				893				897				892				900
Other income			2,233				1,948				2,810				2,057				1,978
Total noninterest income			14,816				14,336				18,919				19,396				8,598
Noninterest expense:
Salaries and employee benefits			20,528				22,636				21,118				20,740				21,063
Occupancy and equipment			3,940				3,531				4,866				4,286				4,869
Data processing			5,993				5,987				5,721				5,458				5,477
Professional			2,185				1,912				1,861				1,606				1,855
Amortization of intangible assets			1,515				1,556				1,557				1,629				1,762
Loss on mortgage servicing rights held for sale			-				617				188				391				496
Impairment related to facilities optimization			-				(10	)			12,651				60				146
FHLB advances prepayment fees			8				4,872				-				-				-
Other expense			4,910				5,947				5,939				7,225				5,998
Total noninterest expense			39,079				47,048				53,901				41,395				41,666
Income before income taxes			24,040				10,746				3,270				15,993				2,005
Income taxes			5,502				2,413				3,184				3,424				456
Net income		$	18,538			$	8,333			$	86			$	12,569			$	1,549
Basic earnings per common share		$	0.81			$	0.36			$	0.00			$	0.53			$	0.06
Diluted earnings per common share		$	0.81			$	0.36			$	0.00			$	0.53			$	0.06

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
(in thousands)		2021				2020				2020				2020				2020
Assets
Cash and cash equivalents		$	631,219			$	341,640			$	461,196			$	519,868			$	449,396
Investment securities			690,390				686,135				618,974				639,693				661,894
Loans			4,910,806				5,103,331				4,941,466				4,839,423				4,376,204
Allowance for credit losses on loans			(62,687	)			(60,443	)			(52,771	)			(47,093	)			(38,545	)
Total loans, net			4,848,119				5,042,888				4,888,695				4,792,330				4,337,659
Loans held for sale			55,174				138,090				62,500				32,403				113,852
Premises and equipment, net			73,255				74,124				74,967				89,046				90,118
Other real estate owned			20,304				20,247				15,961				12,728				7,892
Loan servicing rights, at lower of cost or fair value			36,876				39,276				42,465				44,239				44,566
Goodwill			161,904				161,904				161,904				172,796				172,796
Other intangible assets, net			26,867				28,382				29,938				31,495				33,124
Cash surrender value of life insurance policies			146,864				146,004				145,112				144,215				143,323
Other assets			193,814				189,850				198,333				165,685				153,610
Total assets		$	6,884,786			$	6,868,540			$	6,700,045			$	6,644,498			$	6,208,230
Liabilities and Shareholders' Equity
Noninterest-bearing deposits		$	1,522,433			$	1,469,579			$	1,355,188			$	1,273,267			$	1,052,726
Interest-bearing deposits			3,818,080				3,631,437				3,673,548				3,669,840				3,597,914
Total deposits			5,340,513				5,101,016				5,028,736				4,943,107				4,650,640
Short-term borrowings			71,728				68,957				58,625				77,136				43,578
FHLB advances and other borrowings			529,171				779,171				693,640				693,865				593,089
Subordinated debt			169,888				169,795				169,702				169,610				169,505
Trust preferred debentures			48,954				48,814				48,682				48,551				48,420
Other liabilities			89,065				79,396				78,780				78,640				71,838
Total liabilities			6,249,319				6,247,149				6,078,165				6,010,909				5,577,070
Total shareholders’ equity			635,467				621,391				621,880				633,589				631,160
Total liabilities and shareholders’ equity		$	6,884,786			$	6,868,540			$	6,700,045			$	6,644,498			$	6,208,230

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
(in thousands)		2021				2020				2020				2020				2020
Loan Portfolio
Commercial loans and leases		$	1,977,440			$	2,095,639			$	1,938,691			$	1,856,435			$	1,439,145
Commercial real estate			1,494,031				1,525,973				1,496,758				1,495,183				1,507,280
Construction and land development			191,870				172,737				177,894				207,593				208,361
Residential real estate			398,501				442,880				470,829				509,453				548,014
Consumer			848,964				866,102				857,294				770,759				673,404
Total loans		$	4,910,806			$	5,103,331			$	4,941,466			$	4,839,423			$	4,376,204
Deposit Portfolio
Noninterest-bearing demand		$	1,522,433			$	1,469,579			$	1,355,188			$	1,273,267			$	1,052,726
Interest-bearing:
Checking			1,601,449				1,568,888				1,581,216				1,484,728				1,425,022
Money market			819,455				785,871				826,454				877,675				849,642
Savings			653,256				597,966				580,748				594,685				534,457
Time			718,788				655,620				661,872				689,841				765,870
Brokered time			25,132				23,092				23,258				22,911				22,923
Total deposits		$	5,340,513			$	5,101,016			$	5,028,736			$	4,943,107			$	4,650,640

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2021				2020				2020				2020				2020
Average Balance Sheets
Cash and cash equivalents		$	350,061			$	415,686			$	491,728			$	489,941			$	337,851
Investment securities			680,202				672,937				628,705				650,356				662,450
Loans			4,992,802				4,998,912				4,803,940				4,696,288				4,384,206
Loans held for sale			65,365				45,196				44,880				99,169				19,844
Nonmarketable equity securities			55,935				51,906				50,765				50,661				45,124
Total interest-earning assets			6,144,365				6,184,637				6,020,018				5,986,415				5,449,475
Non-earning assets			602,017				602,716				625,522				619,411				624,594
Total assets		$	6,746,382			$	6,787,353			$	6,645,540			$	6,605,826			$	6,074,069
Interest-bearing deposits		$	3,757,108			$	3,680,645			$	3,656,833			$	3,651,406			$	3,549,515
Short-term borrowings			75,544				62,432				64,010				59,103				55,616
FHLB advances and other borrowings			617,504				682,981				693,721				692,470				532,733
Subordinated debt			169,844				169,751				169,657				169,560				170,026
Trust preferred debentures			48,887				48,751				48,618				48,487				48,357
Total interest-bearing liabilities			4,668,887				4,644,560				4,632,839				4,621,026				4,356,247
Noninterest-bearing deposits			1,370,604				1,446,359				1,303,963				1,280,983				986,178
Other noninterest-bearing liabilities			82,230				73,840				75,859				71,853				78,943
Shareholders' equity			624,661				622,594				632,879				631,964				652,701
Total liabilities and shareholders' equity		$	6,746,382			$	6,787,353			$	6,645,540			$	6,605,826			$	6,074,069
Yields
Earning Assets
Cash and cash equivalents			0.11	%			0.12	%			0.10	%			0.14	%			1.26	%
Investment securities			2.51	%			2.65	%			2.86	%			3.05	%			3.23	%
Loans			4.50	%			4.58	%			4.57	%			4.64	%			5.01	%
Loans held for sale			2.74	%			3.14	%			2.92	%			4.07	%			3.87	%
Nonmarketable equity securities			4.93	%			5.22	%			5.26	%			5.40	%			5.39	%
Total interest-earning assets			4.02	%			4.06	%			4.01	%			4.10	%			4.56	%
Interest-Bearing Liabilities
Interest-bearing deposits			0.34	%			0.36	%			0.46	%			0.61	%			0.95	%
Short-term borrowings			0.13	%			0.14	%			0.17	%			0.19	%			0.73	%
FHLB advances and other borrowings			1.69	%			1.71	%			1.85	%			1.69	%			2.24	%
Subordinated debt			5.57	%			5.60	%			5.58	%			5.85	%			5.90	%
Trust preferred debentures			4.08	%			4.03	%			4.16	%			4.86	%			6.02	%
Total interest-bearing liabilities			0.75	%			0.79	%			0.89	%			1.01	%			1.35	%
Cost of Deposits			0.25	%			0.26	%			0.34	%			0.45	%			0.74	%
Net Interest Margin			3.45	%			3.47	%			3.33	%			3.32	%			3.48	%

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of and for the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands, except per share data)		2021				2020				2020				2020				2020
Asset Quality
Loans 30-89 days past due		$	24,819			$	31,460			$	28,188			$	36,551			$	40,392
Nonperforming loans			52,826				54,070				67,443				60,513				58,166
Nonperforming assets			75,004				75,432				84,795				74,707				67,158
Net charge-offs			1,706				2,328				5,292				3,062				12,835
Loans 30-89 days past due to total loans			0.51	%			0.62	%			0.57	%			0.76	%			0.92	%
Nonperforming loans to total loans			1.08	%			1.06	%			1.36	%			1.25	%			1.33	%
Nonperforming assets to total assets			1.09	%			1.10	%			1.27	%			1.12	%			1.08	%
Allowance for credit losses to total loans			1.28	%			1.18	%			1.07	%			0.97	%			0.88	%
Allowance for credit losses to nonperforming loans			118.67	%			111.79	%			78.25	%			77.82	%			66.27	%
Net charge-offs to average loans			0.14	%			0.19	%			0.44	%			0.26	%			1.18	%
Wealth Management
Trust assets under administration		$	3,560,427			$	3,480,759			$	3,260,893			$	3,253,784			$	2,967,536
Market Data
Book value per share at period end		$	28.43			$	27.83			$	27.51			$	27.62			$	26.99
Tangible book value per share at period end (1)		$	19.98			$	19.31			$	19.03			$	18.72			$	18.19
Market price at period end		$	27.74			$	17.87			$	12.85			$	14.95			$	17.49
Shares outstanding at period end			22,351,740				22,325,471				22,602,844				22,937,296				23,381,496
Capital
Total capital to risk-weighted assets			13.73	%			13.24	%			13.34	%			13.67	%			13.73	%
Tier 1 capital to risk-weighted assets			9.62	%			9.20	%			9.40	%			9.71	%			9.76	%
Tier 1 common capital to risk-weighted assets			8.39	%			7.99	%			8.18	%			8.44	%			8.47	%
Tier 1 leverage ratio			7.79	%			7.50	%			7.72	%			7.75	%			8.39	%
Tangible common equity to tangible assets (1)			6.67	%			6.46	%			6.61	%			6.67	%			7.08	%
(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands, except per share data)		2021				2020				2020				2020				2020
Income before income taxes - GAAP		$	24,040			$	10,746			$	3,270			$	15,993			$	2,005
Adjustments to noninterest income:
Gain on sales of investment securities, net			-				-				1,721				-				-
Other			75				3				(17	)			11				(13	)
Total adjustments to noninterest income			75				3				1,704				11				(13	)
Adjustments to noninterest expense:
Loss on mortgage servicing rights held for sale			-				617				188				391				496
Loss on repurchase of subordinated debt			-				-				-				-				193
Impairment related to facilities optimization			-				(10	)			12,651				60				146
FHLB advances prepayment fees			8				4,872				-				-				-
Integration and acquisition expenses			238				231				1,200				(6	)			886
Total adjustments to noninterest expense			246				5,710				14,039				445				1,721
Adjusted earnings pre tax			24,211				16,453				15,605				16,427				3,739
Adjusted earnings tax			5,549				3,982				3,582				3,543				933
Adjusted earnings - non-GAAP		$	18,662			$	12,471			$	12,023			$	12,884			$	2,806
Adjusted diluted earnings per common share		$	0.82			$	0.54			$	0.52			$	0.55			$	0.11
Adjusted return on average assets			1.12	%			0.73	%			0.72	%			0.78	%			0.19	%
Adjusted return on average shareholders' equity			12.12	%			7.97	%			7.56	%			8.20	%			1.73	%
Adjusted return on average tangible common equity			17.39	%			11.50	%			11.04	%			12.14	%			2.53	%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2021				2020				2020				2020				2020
Adjusted earnings pre tax - non-GAAP		$	24,211			$	16,453			$	15,605			$	16,427			$	3,739
Provision for credit losses			3,565				10,058				11,728				10,997				11,578
Impairment on commercial mortgage servicing rights			1,275				2,344				1,418				107				8,468
Adjusted pre-tax, pre-provision earnings - non-GAAP		$	29,051			$	28,855			$	28,751			$	27,531			$	23,785
Adjusted pre-tax, pre-provision return on average assets			1.75	%			1.69	%			1.72	%			1.68	%			1.58	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2021				2020				2020				2020				2020
Noninterest expense - GAAP		$	39,079			$	47,048			$	53,901			$	41,395			$	41,666
Loss on mortgage servicing rights held for sale			-				(617	)			(188	)			(391	)			(496	)
Loss on repurchase of subordinated debt			-				-				-				-				(193	)
Impairment related to facilities optimization			-				10				(12,651	)			(60	)			(146	)
FHLB advances prepayment fees			(8	)			(4,872	)			-				-				-
Integration and acquisition expenses			(238	)			(231	)			(1,200	)			6				(885	)
Adjusted noninterest expense		$	38,833			$	41,338			$	39,862			$	40,950			$	39,946
Net interest income - GAAP		$	51,868			$	53,516			$	49,980			$	48,989			$	46,651
Effect of tax-exempt income			386				413				430				438				485
Adjusted net interest income			52,254				53,929				50,410				49,427				47,136
Noninterest income - GAAP			14,816				14,336				18,919				19,396				8,598
Impairment on commercial mortgage servicing rights			1,275				2,344				1,418				107				8,468
Gain on sales of investment securities, net			-				-				(1,721	)			-				-
Other			(75	)			(3	)			17				(11	)			13
Adjusted noninterest income			16,016				16,677				18,633				19,492				17,079
Adjusted total revenue		$	68,270			$	70,606			$	69,043			$	68,919			$	64,215
Efficiency ratio			56.88	%			58.55	%			57.74	%			59.42	%			62.21	%

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
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands, except per share data)		2021				2020				2020				2020				2020
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	635,467			$	621,391			$	621,880			$	633,589			$	631,160
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(172,796	)			(172,796	)
Other intangible assets, net			(26,867	)			(28,382	)			(29,938	)			(31,495	)			(33,124	)
Tangible common equity		$	446,696			$	431,105			$	430,038			$	429,298			$	425,240
Total Assets to Tangible Assets:
Total assets—GAAP		$	6,884,786			$	6,868,540			$	6,700,045			$	6,644,498			$	6,208,230
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(172,796	)			(172,796	)
Other intangible assets, net			(26,867	)			(28,382	)			(29,938	)			(31,495	)			(33,124	)
Tangible assets		$	6,696,015			$	6,678,254			$	6,508,203			$	6,440,207			$	6,002,310
Common Shares Outstanding			22,351,740				22,325,471				22,602,844				22,937,296				23,381,496
Tangible Common Equity to Tangible Assets			6.67	%			6.46	%			6.61	%			6.67	%			7.08	%
Tangible Book Value Per Share		$	19.98			$	19.31			$	19.03			$	18.72			$	18.19
Return on Average Tangible Common Equity (ROATCE)
		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2021				2020				2020				2020				2020
Net income available to common shareholders		$	18,538			$	8,333			$	86			$	12,569			$	1,549
Average total shareholders' equity—GAAP		$	624,661			$	622,594			$	632,879			$	631,964			$	652,701
Adjustments:
Goodwill			(161,904	)			(161,904	)			(168,771	)			(172,796	)			(171,890	)
Other intangible assets, net			(27,578	)			(29,123	)			(30,690	)			(32,275	)			(33,951	)
Average tangible common equity		$	435,179			$	431,567			$	433,418			$	426,893			$	446,860
ROATCE			17.28	%			7.68	%			0.08	%			11.84	%			1.39	%