Summary

Net income of $19.5 million, or $0.86 diluted earnings per share
Total loans increased 8.2% annualized, excluding commercial FHA lines and PPP loans
Non-performing loans declined 11.0% from end of prior quarter
Net interest margin increased 5 bps from prior quarter to 3.34%
Efficiency ratio improved to 58.78% from 60.19% in prior quarter
Book value and tangible book value per share increased 2.3% and 3.4%, respectively

EFFINGHAM, Ill., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported net income of $19.5 million, or $0.86 diluted earnings per share, for the third quarter of 2021, which included a $3.0 million impairment charge on commercial mortgage servicing rights ("MSRs"). This compares to net income of $20.1 million, or $0.88 diluted earnings per share, for the second quarter of 2021, which included a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. This also compares to net income of $86 thousand, or $0.00 diluted earnings per share, for the third quarter of 2020, which included $13.9 million of charges primarily related to the Company's branch and facilities optimization plan.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "We delivered another strong quarter driven by positive trends across most areas of our operations. The contribution of new additions to our commercial banking team and increasing demand helped drive another quarter of solid loan growth. We are also seeing improved asset quality, net interest margin expansion as a result of the elimination of higher cost funding sources, and growth in wealth management revenue following our acquisition of ATG Trust Company earlier this year. The higher level of revenue we are generating is driving further improvement in operating leverage and an increase in pre-provision, pre-tax income.

"We expect to see a continuation of these positive trends in the fourth quarter. We are benefitting from our efforts to increase our presence in higher growth markets in Northern Illinois and St. Louis, which is resulting in the consistent addition of full banking relationships with new commercial clients. Our loan and deposit pipelines remain healthy, which should lead to continued quality balance sheet growth that we expect to result in a higher level of net interest income, additional operating leverage, and further improvement in our level of profitability," said Mr. Ludwig.

Adjusted Earnings

Financial results for the second quarter of 2021 were impacted by a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.8 million of integration and acquisition expenses inclusive of the $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. Excluding these amounts and certain other income and expense, adjusted earnings were $19.8 million, or $0.86 diluted earnings per share, for the second quarter of 2021.

Financial results for the third quarter of 2020 were impacted by $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), $1.7 million in gains on sales of investment securities, and a $0.2 million loss on residential MSRs held-for-sale. Excluding these amounts and certain other income and expenses, adjusted earnings were $12.0 million, or $0.52 diluted earnings per share, for the third 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 third quarter of 2021 was 3.34%, compared to 3.29% for the second quarter of 2021. The Company's net interest margin benefits from accretion income on purchased loan portfolios, which contributed 7 and 9 basis points to net interest margin in the third and second quarters of 2021, respectively. Excluding the impact of accretion income, net interest margin increased 7 basis points from the second quarter of 2021, due primarily to a reduction in the cost of funds.

Relative to the third quarter of 2020, net interest margin increased from 3.33%. Accretion income on purchased loan portfolios contributed 14 basis points to net interest margin in the third quarter of 2020. Excluding the impact of accretion income, net interest margin increased 8 basis points from the third quarter of 2020, primarily due to a reduction in the cost of funds.

Net Interest Income

Net interest income for the third quarter of 2021 was $51.4 million, an increase of 2.6% from $50.1 million for the second quarter of 2021. Excluding accretion income, net interest income increased $1.6 million from the prior quarter, which was primarily due to a lower cost of funds. Accretion income associated with purchased loan portfolios totaled $1.0 million for the third quarter of 2021, compared with $1.3 million for the second quarter of 2021. PPP loan income totaled $2.4 million, including net loan origination fees of $2.1 million, in the third quarter of 2021, compared to $2.4 million, including net loan origination fees of $1.9 million, in the second quarter of 2021.

Relative to the third quarter of 2020, net interest income increased $1.4 million, or 2.8%. Accretion income for the third quarter of 2020 was $2.1 million. Excluding the impact of accretion income, net interest income increased primarily due to a higher average balance of interest-earning assets and a significant decline in the cost of funds.

Noninterest Income

Noninterest income for the third quarter of 2021 was $15.1 million, a decrease of 13.1% from $17.4 million for the second quarter of 2021. Impairment on commercial MSRs impacted noninterest income by $3.0 million and $1.1 million in the third quarter of 2021 and second quarter of 2021, respectively. Excluding the impairments, noninterest income decreased 2.1% primarily due to gains on the sale of other real estate owned that were recognized in the prior quarter.

Relative to the third quarter of 2020, noninterest income decreased 20.0% from $18.9 million. The decrease was primarily attributable to a larger impairment on commercial MSRs, lower residential mortgage banking revenue, and lower gains on sales of investment securities, partially offset by higher wealth management revenue.

Wealth management revenue for the third quarter of 2021 was $7.2 million, an increase of 9.9% from the second quarter of 2021, primarily due to the full quarter contribution of ATG Trust Company following its acquisition at the beginning of June. Compared to the third quarter of 2020, wealth management revenue increased 29.1%, primarily due to the increase in assets under administration over the past year and the acquisition of ATG Trust Company.

Noninterest Expense

Noninterest expense for the third quarter of 2021 was $41.3 million, compared with $48.9 million in the second quarter of 2021, which included $3.6 million in professional fees related to the settlement of the prior tax issue and $3.7 million in FHLB advance prepayment fees. Excluding the professional fees related to the settlement of the prior tax issue, FHLB advance prepayment fees, integration and acquisition expenses, and losses on residential MSRs held-for-sale, noninterest expense decreased by $0.3 million.

Relative to the third quarter of 2020, noninterest expense decreased 23.4% from $53.9 million, which included $13.9 million in charges primarily related to the branch and facilities optimization plan (integration and acquisition expenses), and a $0.2 million loss on residential MSRs held-for-sale. Excluding the integration and acquisition expenses and losses on residential MSRs held-for-sale, noninterest expense increased $1.2 million, primarily due to higher salaries and employee benefits expense.

Loan Portfolio

Total loans outstanding were $4.92 billion at September 30, 2021, compared with $4.84 billion at June 30, 2021 and $4.94 billion at September 30, 2020. The increase in total loans from June 30, 2021 was primarily attributable to higher balances of commercial, commercial real estate, and consumer loans, partially offset by forgiveness of PPP loans and runoff in the residential real estate portfolio resulting from refinancings.

Equipment finance balances increased $27.5 million from June 30, 2021 to $899.1 million at September 30, 2021, which are booked within the commercial loans and leases portfolio.

Compared to loan balances at September 30, 2020, growth in equipment finance balances, commercial real estate, and consumer loans was offset by declines in residential real estate loans and PPP loans held in the commercial portfolio.

Deposits

Total deposits were $5.60 billion at September 30, 2021, compared with $5.20 billion at June 30, 2021, and $5.03 billion at September 30, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to an increase in commercial FHA servicing deposits and inflows of other commercial deposits.

Asset Quality

Nonperforming loans totaled $54.6 million, or 1.11% of total loans, at September 30, 2021, compared with $61.4 million, or 1.27% of total loans, at June 30, 2021. The decrease in nonperforming loans was primarily attributable to the disposition of certain loans combined with minimal inflow during the third quarter of 2021. At September 30, 2020, nonperforming loans totaled $67.4 million, or 1.36% of total loans.

Net charge-offs for the third quarter of 2021 were $3.0 million, or 0.25% of average loans on an annualized basis, compared to net charge-offs of $4.0 million, or 0.33% of average loans on an annualized basis, for the second quarter of 2021 and $5.3 million, or 0.44% of average loans on an annualized basis, for the third quarter of 2020.

The Company recorded a negative provision for credit losses of $0.2 million for the third quarter of 2021. No provision for credit losses on loans was recorded due to general improvement in asset quality and economic forecasts, while a negative provision of $0.2 million was recorded for credit losses on available-for-sale securities.

The Company's allowance for credit losses on loans was 1.13% of total loans and 101.9% of nonperforming loans at September 30, 2021, compared with 1.21% of total loans and 95.6% of nonperforming loans at June 30, 2021. Approximately 96% of the allowance for credit losses on loans at September 30, 2021 was allocated to general reserves.

Capital

At September 30, 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 Sep. 30, 2021	Consolidated Ratios as of Sep. 30, 2021	Minimum Regulatory Requirements ⁽²⁾
Total capital to risk-weighted assets	12.03%	13.10%	10.50%
Tier 1 capital to risk-weighted assets	11.17%	9.73%	8.50%
Tier 1 leverage ratio	9.38%	8.16%	4.00%
Common equity Tier 1 capital	11.17%	8.55%	7.00%
Tangible common equity to tangible assets ⁽¹⁾	NA	6.80%	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 third quarter of 2021, the Company repurchased 210,177 shares of its common stock at a weighted average price of $24.93 under its stock repurchase program. On September 7, 2021, the Company announced that its Board of Directors approved modifications to the previously announced stock repurchase program, which increased the aggregate repurchase authority to $75 million from $50 million and extended the expiration date of the program to December 31, 2022. As of September 30, 2021, the Company had $24.9 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 29, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 6697900. A recorded replay can be accessed through November 5, 2021, by dialing (855) 859-2056; conference ID: 6697900.

A slide presentation relating to the third 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 September 30, 2021, the Company had total assets of approximately $7.09 billion, and its Wealth Management Group had assets under administration of approximately $4.06 billion. Midland provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

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

Forward-Looking Statements

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

CONTACTS:

Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321

Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321

Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

MIDLAND 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)	2021				2021				2021			2020			2020
Earnings Summary
Net interest income	$	51,396			$	50,110			$	51,868		$	53,516		$	49,980
Provision for credit losses		(184	)			(455	)			3,565			10,058			11,728
Noninterest income		15,143				17,417				14,816			14,336			18,919
Noninterest expense		41,292				48,941				39,079			47,048			53,901
Income before income taxes		25,431				19,041				24,040			10,746			3,270
Income taxes		5,883				(1,083	)			5,502			2,413			3,184
Net income	$	19,548			$	20,124			$	18,538		$	8,333		$	86

Diluted earnings per common share	$	0.86			$	0.88			$	0.81		$	0.36		$	-
Weighted average shares outstanding - diluted		22,577,880				22,677,515				22,578,553			22,656,343			22,937,837
Return on average assets		1.15		%		1.20		%		1.11	%		0.49	%		0.01	%
Return on average shareholders' equity		11.90		%		12.59		%		12.04	%		5.32	%		0.05	%
Return on average tangible common equity⁽¹⁾		16.76		%		17.85		%		17.28	%		7.68	%		0.08	%
Net interest margin		3.34		%		3.29		%		3.45	%		3.47	%		3.33	%
Efficiency ratio ⁽¹⁾		58.78		%		60.19		%		56.88	%		58.55	%		57.74	%

Adjusted Earnings Performance Summary ⁽¹⁾
Adjusted earnings	$	19,616			$	19,755			$	18,662		$	12,471		$	12,023
Adjusted diluted earnings per common share	$	0.86			$	0.86			$	0.82		$	0.54		$	0.52
Adjusted return on average assets		1.15		%		1.17		%		1.12	%		0.73	%		0.72	%
Adjusted return on average shareholders' equity		11.94		%		12.36		%		12.12	%		7.97	%		7.56	%
Adjusted return on average tangible common equity		16.82		%		17.52		%		17.39	%		11.50	%		11.04	%
Adjusted pre-tax, pre-provision earnings	$	28,379			$	26,967			$	29,051		$	28,855		$	28,751
Adjusted pre-tax, pre-provision return on average assets		1.67		%		1.60		%		1.75	%		1.69	%		1.72	%

(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
	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands, except per share data)	2021			2021			2021			2020			2020
Net interest income:
Interest income	$	58,490		$	58,397		$	60,503		$	62,712		$	60,314
Interest expense		7,094			8,287			8,635			9,196			10,334
Net interest income		51,396			50,110			51,868			53,516			49,980
Provision for credit losses:
Provision for credit losses on loans		-			-			3,950			10,000			10,970
Provision for credit losses on unfunded commitments		-			(265	)		(535	)		-			577
Provision for other credit losses		(184	)		(190	)		150			58			181
Total provision for credit losses		(184	)		(455	)		3,565			10,058			11,728
Net interest income after provision for credit losses		51,580			50,565			48,303			43,458			38,252
Noninterest income:
Wealth management revenue		7,175			6,529			5,931			5,868			5,559
Commercial FHA revenue		411			342			292			400			926
Residential mortgage banking revenue		1,287			1,562			1,574			2,285			3,049
Service charges on deposit accounts		2,268			1,916			1,826			2,149			2,092
Interchange revenue		3,651			3,797			3,375			3,137			3,283
Gain on sales of investment securities, net		160			377			-			-			1,721
Impairment on commercial mortgage servicing rights		(3,037	)		(1,148	)		(1,275	)		(2,344	)		(1,418	)
Company-owned life insurance		869			863			860			893			897
Other income		2,359			3,179			2,233			1,948			2,810
Total noninterest income		15,143			17,417			14,816			14,336			18,919
Noninterest expense:
Salaries and employee benefits		22,175			22,071			20,528			22,636			21,118
Occupancy and equipment		3,701			3,796			3,940			3,531			4,866
Data processing		6,495			6,288			5,993			5,987			5,721
Professional		1,738			5,549			2,185			1,912			1,861
Amortization of intangible assets		1,445			1,470			1,515			1,556			1,557
Loss on mortgage servicing rights held for sale		79			143			-			617			188
Impairment related to facilities optimization		-			-			-			(10	)		12,651
FHLB advances prepayment fees		-			3,669			8			4,872			-
Other expense		5,659			5,955			4,910			5,947			5,939
Total noninterest expense		41,292			48,941			39,079			47,048			53,901
Income before income taxes		25,431			19,041			24,040			10,746			3,270
Income taxes		5,883			(1,083	)		5,502			2,413			3,184
Net income	$	19,548		$	20,124		$	18,538		$	8,333		$	86

Basic earnings per common share	$	0.86		$	0.88		$	0.81		$	0.36		$	0.00
Diluted earnings per common share	$	0.86		$	0.88		$	0.81		$	0.36		$	0.00

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2021			2021			2021			2020			2020
Assets
Cash and cash equivalents	$	662,643		$	425,100		$	631,219		$	341,640		$	461,196
Investment securities		900,319			756,831			690,390			686,135			618,974
Loans		4,915,554			4,835,866			4,910,806			5,103,331			4,941,466
Allowance for credit losses on loans		(55,675	)		(58,664	)		(62,687	)		(60,443	)		(52,771	)
Total loans, net		4,859,879			4,777,202			4,848,119			5,042,888			4,888,695
Loans held for sale		26,621			12,187			55,174			138,090			62,500
Premises and equipment, net		71,241			71,803			73,255			74,124			74,967
Other real estate owned		11,931			12,768			20,304			20,247			15,961
Loan servicing rights, at lower of cost or fair value		30,916			34,577			36,876			39,276			42,465
Goodwill		161,904			161,904			161,904			161,904			161,904
Other intangible assets, net		26,065			27,900			26,867			28,382			29,938
Cash surrender value of life insurance policies		149,146			148,277			146,864			146,004			145,112
Other assets		193,294			201,461			193,814			189,850			198,333
Total assets	$	7,093,959		$	6,630,010		$	6,884,786		$	6,868,540		$	6,700,045

Liabilities and Shareholders' Equity
Noninterest-bearing deposits	$	1,672,901		$	1,366,453		$	1,522,433		$	1,469,579		$	1,355,188
Interest-bearing deposits		3,928,475			3,829,898			3,818,080			3,631,437			3,673,548
Total deposits		5,601,376			5,196,351			5,340,513			5,101,016			5,028,736
Short-term borrowings		66,666			75,985			71,728			68,957			58,625
FHLB advances and other borrowings		440,171			440,171			529,171			779,171			693,640
Subordinated debt		138,998			138,906			169,888			169,795			169,702
Trust preferred debentures		49,235			49,094			48,954			48,814			48,682
Other liabilities		139,669			81,317			89,065			79,396			78,780
Total liabilities		6,436,115			5,981,824			6,249,319			6,247,149			6,078,165
Total shareholders' equity		657,844			648,186			635,467			621,391			621,880
Total liabilities and shareholders' equity	$	7,093,959		$	6,630,010		$	6,884,786		$	6,868,540		$	6,700,045

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
(in thousands)	2021		2021		2021		2020		2020
Loan Portfolio
Commercial loans and leases	$	1,879,765	$	1,831,241	$	1,977,440	$	2,095,639	$	1,938,691
Commercial real estate		1,562,013		1,540,489		1,494,031		1,525,973		1,496,758
Construction and land development		200,792		212,508		191,870		172,737		177,894
Residential real estate		344,414		366,612		398,501		442,880		470,829
Consumer		928,570		885,016		848,964		866,102		857,294
Total loans	$	4,915,554	$	4,835,866	$	4,910,806	$	5,103,331	$	4,941,466

Deposit Portfolio
Noninterest-bearing demand	$	1,672,901	$	1,366,453	$	1,522,433	$	1,469,579	$	1,355,188
Interest-bearing:
Checking		1,697,326		1,619,436		1,601,449		1,568,888		1,581,216
Money market		852,836		787,688		819,455		785,871		826,454
Savings		665,710		669,277		653,256		597,966		580,748
Time		688,693		721,502		718,788		655,620		661,872
Brokered time		23,910		31,995		25,132		23,092		23,258
Total deposits	$	5,601,376	$	5,196,351	$	5,340,513	$	5,101,016	$	5,028,736

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)	2021			2021			2021			2020			2020
Average Balance Sheets
Cash and cash equivalents	$	525,848		$	509,886		$	350,061		$	415,686		$	491,728
Investment securities		773,372			734,462			680,202			672,937			628,705
Loans		4,800,063			4,826,234			4,992,802			4,998,912			4,803,940
Loans held for sale		15,204			36,299			65,365			45,196			44,880
Nonmarketable equity securities		43,873			49,388			55,935			51,906			50,765
Total interest-earning assets		6,158,360			6,156,269			6,144,365			6,184,637			6,020,018
Non-earning assets		597,153			589,336			602,017			602,716			625,522
Total assets	$	6,755,513		$	6,745,605		$	6,746,382		$	6,787,353		$	6,645,540

Interest-bearing deposits	$	3,895,970		$	3,815,179		$	3,757,108		$	3,680,645		$	3,656,833
Short-term borrowings		68,103			65,727			75,544			62,432			64,010
FHLB advances and other borrowings		440,171			519,490			617,504			682,981			693,721
Subordinated debt		138,954			165,155			169,844			169,751			169,657
Trust preferred debentures		49,167			49,026			48,887			48,751			48,618
Total interest-bearing liabilities		4,592,365			4,614,577			4,668,887			4,644,560			4,632,839
Noninterest-bearing deposits		1,434,193			1,411,428			1,370,604			1,446,359			1,303,963
Other noninterest-bearing liabilities		77,204			78,521			82,230			73,840			75,859
Shareholders' equity		651,751			641,079			624,661			622,594			632,879
Total liabilities and shareholders' equity	$	6,755,513		$	6,745,605		$	6,746,382		$	6,787,353		$	6,645,540

Yields
Earning Assets
Cash and cash equivalents		0.16	%		0.11	%		0.11	%		0.12	%		0.10	%
Investment securities		2.34	%		2.43	%		2.51	%		2.65	%		2.86	%
Loans		4.42	%		4.43	%		4.50	%		4.58	%		4.57	%
Loans held for sale		2.79	%		2.88	%		2.74	%		3.14	%		2.92	%
Nonmarketable equity securities		5.05	%		4.94	%		4.93	%		5.22	%		5.26	%
Total interest-earning assets		3.79	%		3.83	%		4.02	%		4.06	%		4.01	%

Interest-Bearing Liabilities
Interest-bearing deposits		0.26	%		0.31	%		0.34	%		0.36	%		0.46	%
Short-term borrowings		0.12	%		0.12	%		0.13	%		0.14	%		0.17	%
FHLB advances and other borrowings		1.80	%		1.91	%		1.69	%		1.71	%		1.85	%
Subordinated debt		5.79	%		5.61	%		5.57	%		5.60	%		5.58	%
Trust preferred debentures		3.92	%		4.00	%		4.08	%		4.03	%		4.16	%
Total interest-bearing liabilities		0.61	%		0.72	%		0.75	%		0.79	%		0.89	%

Cost of Deposits		0.19	%		0.23	%		0.25	%		0.26	%		0.34	%

Net Interest Margin		3.34	%		3.29	%		3.45	%		3.47	%		3.33	%

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)	2021			2021			2021			2020			2020
Asset Quality
Loans 30-89 days past due	$	16,772		$	20,224		$	24,819		$	31,460		$	28,188
Nonperforming loans		54,620			61,363			52,826			54,070			67,443
Nonperforming assets		69,261			76,926			75,004			75,432			84,795
Net charge-offs		2,989			4,023			1,706			2,328			5,292
Loans 30-89 days past due to total loans		0.34	%		0.42	%		0.51	%		0.62	%		0.57	%
Nonperforming loans to total loans		1.11	%		1.27	%		1.08	%		1.06	%		1.36	%
Nonperforming assets to total assets		0.98	%		1.16	%		1.09	%		1.10	%		1.27	%
Allowance for credit losses to total loans		1.13	%		1.21	%		1.28	%		1.18	%		1.07	%
Allowance for credit losses to nonperforming loans		101.93	%		95.60	%		118.67	%		111.79	%		78.25	%
Net charge-offs to average loans		0.25	%		0.33	%		0.14	%		0.19	%		0.44	%

Wealth Management
Trust assets under administration	$	4,058,168		$	4,077,581		$	3,560,427		$	3,480,759		$	3,260,893

Market Data
Book value per share at period end	$	29.64		$	28.96		$	28.43		$	27.83		$	27.51
Tangible book value per share at period end ⁽¹⁾	$	21.17		$	20.48		$	19.98		$	19.31		$	19.03
Market price at period end	$	24.73		$	26.27		$	27.74		$	17.87		$	12.85
Shares outstanding at period end		22,193,141			22,380,492			22,351,740			22,325,471			22,602,844

Capital
Total capital to risk-weighted assets		13.10	%		13.11	%		13.73	%		13.24	%		13.34	%
Tier 1 capital to risk-weighted assets		9.73	%		9.64	%		9.62	%		9.20	%		9.40	%
Tier 1 common capital to risk-weighted assets		8.55	%		8.44	%		8.39	%		7.99	%		8.18	%
Tier 1 leverage ratio		8.16	%		8.00	%		7.79	%		7.50	%		7.72	%
Tangible common equity to tangible assets ⁽¹⁾		6.80	%		7.12	%		6.67	%		6.46	%		6.61	%

(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
	September 30,				June 30,				March 31,			December 31,				September 30,
(dollars in thousands, except per share data)	2021				2021				2021			2020				2020
Income before income taxes - GAAP	$	25,431			$	19,041			$	24,040		$	10,746			$	3,270
Adjustments to noninterest income:
Gain on sales of investment securities, net		160				377				-			-				1,721
Other income		-				(27	)			75			3				(17	)
Total adjustments to noninterest income		160				350				75			3				1,704
Adjustments to noninterest expense:
Loss on mortgage servicing rights held for sale		79				143				-			617				188
Impairment related to facilities optimization		-				-				-			(10	)			12,651
FHLB advances prepayment fees		-				3,669				8			4,872				-
Integration and acquisition expenses		176				3,771				238			231				1,200
Total adjustments to noninterest expense		255				7,583				246			5,710				14,039
Adjusted earnings pre tax		25,526				26,274				24,211			16,453				15,605
Adjusted earnings tax		5,910				6,519				5,549			3,982				3,582
Adjusted earnings - non-GAAP	$	19,616			$	19,755			$	18,662		$	12,471			$	12,023
Adjusted diluted earnings per common share	$	0.86			$	0.86			$	0.82		$	0.54			$	0.52
Adjusted return on average assets		1.15		%		1.17		%		1.12	%		0.73		%		0.72		%
Adjusted return on average shareholders' equity		11.94		%		12.36		%		12.12	%		7.97		%		7.56		%
Adjusted return on average tangible common equity		16.82		%		17.52		%		17.39	%		11.50		%		11.04		%


Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

	For the Quarter Ended
	September 30,				June 30,				March 31,			December 31,				September 30,
(dollars in thousands)	2021				2021				2021			2020				2020
Adjusted earnings pre tax - non- GAAP	$	25,526			$	26,274			$	24,211		$	16,453			$	15,605
Provision for credit losses		(184	)			(455	)			3,565			10,058				11,728
Impairment on commercial mortgage servicing rights		3,037				1,148				1,275			2,344				1,418
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	28,379			$	26,967			$	29,051		$	28,855			$	28,751
Adjusted pre-tax, pre-provision return on average assets		1.67		%		1.60		%		1.75	%		1.69		%		1.72		%

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)	2021				2021				2021				2020				2020
Noninterest expense - GAAP	$	41,292			$	48,941			$	39,079			$	47,048			$	53,901
Loss on mortgage servicing rights held for sale		(79	)			(143	)			-				(617	)			(188	)
Impairment related to facilities optimization		-				-				-				10				(12,651	)
FHLB advances prepayment fees		-				(3,669	)			(8	)			(4,872	)			-
Integration and acquisition expenses		(176	)			(3,771	)			(238	)			(231	)			(1,200	)
Adjusted noninterest expense	$	41,037			$	41,358			$	38,833			$	41,338			$	39,862

Net interest income - GAAP	$	51,396			$	50,110			$	51,868			$	53,516			$	49,980
Effect of tax-exempt income		402				383				386				413				430
Adjusted net interest income		51,798				50,493				52,254				53,929				50,410

Noninterest income - GAAP		15,143				17,417				14,816				14,336				18,919
Impairment on commercial mortgage servicing rights		3,037				1,148				1,275				2,344				1,418
Gain on sales of investment securities, net		(160	)			(377	)			-				-				(1,721	)
Other		-				27				(75	)			(3	)			17
Adjusted noninterest income		18,020				18,215				16,016				16,677				18,633

Adjusted total revenue	$	69,818			$	68,709			$	68,270			$	70,607			$	69,043

Efficiency ratio		58.78		%		60.19		%		56.88		%		58.55		%		57.74		%

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)	2021				2021				2021				2020				2020
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP	$	657,844			$	648,186			$	635,467			$	621,391			$	621,880
Adjustments:
Goodwill		(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net		(26,065	)			(27,900	)			(26,867	)			(28,382	)			(29,938	)
Tangible common equity	$	469,875			$	458,382			$	446,696			$	431,105			$	430,038

Total Assets to Tangible Assets:
Total assets—GAAP	$	7,093,959			$	6,630,010			$	6,884,786			$	6,868,540			$	6,700,045
Adjustments:
Goodwill		(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net		(26,065	)			(27,900	)			(26,867	)			(28,382	)			(29,938	)
Tangible assets	$	6,905,990			$	6,440,206			$	6,696,015			$	6,678,254			$	6,508,203

Common Shares Outstanding		22,193,141				22,380,492				22,351,740				22,325,471				22,602,844

Tangible Common Equity to Tangible Assets		6.80		%		7.12		%		6.67		%		6.46		%		6.61		%
Tangible Book Value Per Share	$	21.17			$	20.48			$	19.98			$	19.31			$	19.03

Return on Average Tangible Common Equity (ROATCE)

	For the Quarter Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)	2021				2021				2021				2020				2020
Net income available to common shareholders	$	19,548			$	20,124			$	18,538			$	8,333			$	86

Average total shareholders' equity—GAAP	$	651,751			$	641,079			$	624,661			$	622,594			$	632,879
Adjustments:
Goodwill		(161,904	)			(161,904	)			(161,904	)			(161,904	)			(168,771	)
Other intangible assets, net		(27,132	)			(26,931	)			(27,578	)			(29,123	)			(30,690	)
Average tangible common equity	$	462,715			$	452,244			$	435,179			$	431,567			$	433,418
ROATCE		16.76		%		17.85		%		17.28		%		7.68		%		0.08		%

Midland States Bancorp, Inc. Announces 2021 Third Quarter Results