Third Quarter 2023 Highlights:

Net income available to common shareholders of $15.8 million, or $0.71 per diluted share
Adjusted earnings per diluted share of $0.78 reflects impact of balance sheet repositioning that is expected to be accretive to earnings prospectively
Common equity tier 1 capital ratio improved to 8.16%
Efficiency ratio of 55.8% compared to 55.0% in prior quarter

EFFINGHAM, Ill., Oct. 26, 2023 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported net income available to common shareholders of $15.8 million, or $0.71 per diluted share, for the third quarter of 2023, compared to $19.3 million, or $0.86 per diluted share, for the second quarter of 2023. This also compares to net income available to common shareholders of $23.5 million, or $1.04 per diluted share, for the third quarter of 2022.

Financial results for the third quarter of 2023 included a one-time enhancement fee of $6.6 million related to the surrender and purchase of company-owned life insurance, a $4.5 million tax charge related to the surrender, and $5.0 million of losses on the sale of investment securities. Excluding these transactions, adjusted earnings available to common shareholders were $17.3 million, or $0.78 per diluted share.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "We delivered another quarter of strong financial results highlighted by good stability in our deposit base, net interest margin, and asset quality, as well as disciplined expense control that resulted in a decline in our non-interest expense from the prior quarter. Due to our strong financial performance and prudent balance sheet management, we had increases in all of our regulatory capital ratios, while also continuing to repurchase our common stock at below tangible book value, which we believe is in the best long-term interests of shareholders.

"While continuing to prioritize prudent risk management and maintaining disciplined expense control, we will continue to be active in our new business development efforts with a focus on adding new core deposit relationships with both retail and commercial customers. We also continue to invest in initiatives that we believe will enhance the long-term value of the franchise, including our Banking-as-a-Service platform with two new partnerships launching in the fourth quarter that will contribute low-cost deposits and generate fee income. We expect the Banking-as-a-Service initiative to begin making a meaningful contribution during 2024, which, along with our continued progress on adding new clients in our markets, should support profitable growth in the future, improve our level of returns, and create additional value for our shareholders," said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.98 billion at September 30, 2023, compared to $8.03 billion at June 30, 2023, and $7.82 billion at September 30, 2022. At September 30, 2023, portfolio loans were $6.28 billion, compared to $6.37 billion as of June 30, 2023, and $6.20 billion as of September 30, 2022.

Loans

During the third quarter of 2023, outstanding loans declined slightly as the Company continued to originate loans in a more selective and deliberate approach to balance liquidity and funding costs. Increases in construction and land development loans, commercial FHA warehouse lines, and residential real estate loans of $50.2 million, $18.0 million, and $3.7 million, respectively, were offset by decreases in all other loan categories. Consumer loans decreased $56.8 million due to loan payoffs and a decrease in loans originated through GreenSky.

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
(in thousands)	2023		2023		2023		2022		2022
Loan Portfolio
Commercial loans	$	943,761	$	962,756	$	937,920	$	872,794	$	907,651
Equipment finance loans		578,931		614,633		632,205		616,751		577,323
Equipment finance leases		485,460		500,485		510,029		491,744		457,611
Commercial FHA warehouse lines		48,547		30,522		10,275		25,029		51,309
Total commercial loans and leases		2,056,699		2,108,396		2,090,429		2,006,318		1,993,894
Commercial real estate		2,412,164		2,443,995		2,448,158		2,433,159		2,466,303
Construction and land development		416,801		366,631		326,836		320,882		225,549
Residential real estate		375,211		371,486		369,910		366,094		356,225
Consumer		1,020,008		1,076,836		1,118,938		1,180,014		1,156,480
Total loans	$	6,280,883	$	6,367,344	$	6,354,271	$	6,306,467	$	6,198,451

Loan Quality

Credit quality metrics remained steady during the third quarter of 2023. Loans 30-89 days past due totaled $46.6 million as of September 30, 2023, compared to $44.2 million as of June 30, 2023. Non-performing loans were $56.0 million at September 30, 2023, compared to $54.8 million as of June 30, 2023, and non-performing assets were 0.74% of total assets at the end of the third quarter of 2023, compared to 0.72% at June 30, 2023.

At September 30, 2022, loans 30-89 days past due totaled $28.3 million, non-performing loans were $46.9 million, and non-performing assets as a percentage of total assets were 0.76%.

	As of and for the Three Months Ended
(in thousands)	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2023			2023			2023			2022			2022
Asset Quality
Loans 30-89 days past due	$	46,608		$	44,161		$	30,895		$	32,372		$	28,275
Nonperforming loans		55,981			54,844			50,713			49,423			46,882
Nonperforming assets		58,677			57,688			58,806			57,824			59,524
Substandard loans		143,793			130,707			99,819			101,044			98,517
Net charge-offs		3,449			2,996			2,119			538			3,233
Loans 30-89 days past due to total loans		0.74	%		0.69	%		0.49	%		0.51	%		0.46	%
Nonperforming loans to total loans		0.89	%		0.86	%		0.80	%		0.78	%		0.76	%
Nonperforming assets to total assets		0.74	%		0.72	%		0.74	%		0.74	%		0.76	%
Allowance for credit losses to total loans		1.06	%		1.02	%		0.98	%		0.97	%		0.95	%
Allowance for credit losses to nonperforming loans		119.09	%		118.43	%		122.39	%		123.53	%		125.08	%
Net charge-offs to average loans		0.22	%		0.19	%		0.14	%		0.03	%		0.21	%

The Company continued to increase its allowance for credit losses on loans due to increased delinquencies and losses within our equipment finance portfolio. The allowance totaled $66.7 million at September 30, 2023, compared to $65.0 million at June 30, 2023, and $58.6 million at September 30, 2022. The allowance as a percentage of portfolio loans was 1.06% at September 30, 2023, compared to 1.02% at June 30, 2023, and 0.95% at September 30, 2022.

Deposits

Total deposits were $6.41 billion at September 30, 2023, compared with $6.43 billion at June 30, 2023 and $6.40 billion at September 30, 2022. The deposit mix continues to shift from noninterest-bearing deposits to interest-bearing deposits due to the recent rate increases announced by the Federal Reserve and the expectation that rates will remain high for a longer period.

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
(in thousands)	2023		2023		2023		2022		2022
Deposit Portfolio
Noninterest-bearing demand	$	1,154,515	$	1,162,909	$	1,215,758	$	1,362,158	$	1,362,481
Interest-bearing:
Checking		2,572,224		2,499,693		2,502,827		2,494,073		2,568,195
Money market		1,090,962		1,226,470		1,263,813		1,184,101		1,125,333
Savings		582,359		624,005		636,832		661,932		704,245
Time		885,858		840,734		766,884		649,552		620,960
Brokered time		119,084		72,737		39,087		12,836		14,038
Total deposits	$	6,405,002	$	6,426,548	$	6,425,201	$	6,364,652	$	6,395,252

The Company estimates that uninsured deposits⁽¹⁾ totaled $1.28 billion, or 20% of total deposits, at September 30, 2023 compared to $1.21 billion, or 19%, at June 30, 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 third quarter of 2023, net interest income, on a tax-equivalent basis, totaled $58.8 million, a decrease of $0.2 million, or 0.4%, compared to $59.0 million for the second quarter of 2023. The tax-equivalent net interest margin for the third quarter of 2023 was 3.20%, compared with 3.23% in the second quarter of 2023. Net interest income and related margin, on a tax-equivalent basis, was $64.3 million and 3.63%, respectively, in the third 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 yield on earning assets.

Average interest-earning assets for the third quarter of 2023 were $7.28 billion, compared to $7.33 billion for the second quarter of 2023. The yield increased 14 basis points to 5.65% compared to the second quarter of 2023. Interest-earning assets averaged $7.03 billion for the third quarter of 2022.

Average loans were $6.30 billion for the third quarter of 2023, compared to $6.36 billion for the second quarter of 2023 and $6.04 billion for the third quarter of 2022. The yield on loans was 5.93% and 5.80% for the third and second quarters of 2023, respectively.

Investment securities averaged $863.0 million for the third quarter of 2023, and yielded 3.60%, compared to an average balance and yield of $861.4 million and 3.39%, respectively, for the second quarter of 2023. The Company purchased additional investments and repositioned out of lower-yielding securities in favor of higher-yielding instruments resulting in the increased average balance and yield. The Company incurred net losses on sales of $5.0 million in the third quarter of 2023. The repositioning is expected to improve the overall margin, liquidity, and capital allocations. Investment securities averaged $749.0 million for the third quarter of 2022.

Average interest-bearing deposits were $5.35 billion for the third quarter of 2023, compared to $5.26 billion for the second quarter of 2023, and $4.92 billion for the third quarter of 2022. Cost of interest-bearing deposits was 2.80% in the third quarter of 2023, which represents a 24 basis point increase from the second quarter of 2023. A competitive market, driven by rising interest rates and increased competition, were contributing factors to the increase in deposit costs.

	For the Three Months Ended
	September 30,						June 30,						September 30,
(dollars in thousands)	2023						2023						2022
Interest-earning assets	Average Balance		Interest & Fees		Yield/ Rate		Average Balance		Interest & Fees		Yield/ Rate		Average Balance		Interest & Fees		Yield/ Rate
Cash and cash equivalents	$	78,391	$	1,036	5.24	%	$	67,377	$	852	5.07	%	$	195,657	$	1,125	2.28	%
Investment securities		862,998		7,822	3.60			861,409		7,286	3.39			749,022		4,560	2.44
Loans		6,297,568		94,118	5.93			6,356,012		91,890	5.80			6,040,358		73,568	4.83
Loans held for sale		6,078		104	6.80			4,067		59	5.79			6,044		60	3.87
Nonmarketable equity securities		39,347		710	7.16			45,028		599	5.33			37,765		550	5.78
Total interest-earning assets	$	7,284,382	$	103,790	5.65	%	$	7,333,893	$	100,686	5.51	%	$	7,028,846	$	79,863	4.51	%
Noninterest-earning assets		622,969						612,238						618,138
Total assets	$	7,907,351					$	7,946,131					$	7,646,984

Interest-Bearing Liabilities
Interest-bearing deposits	$	5,354,356	$	37,769	2.80	%	$	5,259,188	$	33,617	2.56	%	$	4,922,345	$	10,249	0.83	%
Short-term borrowings		20,127		14	0.28			22,018		14	0.26			58,271		28	0.19
FHLB advances & other borrowings		402,500		4,557	4.49			471,989		5,396	4.59			340,163		2,424	2.83
Subordinated debt		93,441		1,280	5.43			97,278		1,335	5.51			139,324		2,010	5.77
Trust preferred debentures		50,379		1,369	10.78			50,218		1,289	10.29			49,751		821	6.54
Total interest-bearing liabilities	$	5,920,803	$	44,989	3.01	%	$	5,900,691	$	41,651	2.83	%	$	5,509,854	$	15,532	1.12	%
Noninterest-bearing deposits		1,116,988						1,187,584						1,372,626
Other noninterest-bearing liabilities		97,935						81,065						63,638
Shareholders' equity		771,625						776,791						700,866
Total liabilities and shareholder's equity	$	7,907,351					$	7,946,131					$	7,646,984

Net Interest Margin			$	58,801	3.20	%			$	59,035	3.23	%			$	64,331	3.63	%

Cost of Deposits					2.32	%					2.09	%					0.65	%

(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 September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

During the nine months ended September 30, 2023, net interest income, on a tax-equivalent basis, decreased to $178.6 million, with a tax-equivalent net interest margin of 3.27%, compared to net interest income, on a tax-equivalent basis, of $183.2 million, and a tax-equivalent net interest margin of 3.60% for the nine months ended September 30, 2022.

The yield on earning assets increased 133 basis points to 5.50% for the nine months ended September 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 203 basis points to 2.77% for the nine months ended September 30, 2023.

	For the Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2023						2022
Interest-earning assets	Average Balance		Interest & Fees		Yield/ Rate		Average Balance		Interest & Fees		Yield/ Rate
Cash and cash equivalents	$	76,939	$	2,868	4.98	%	$	268,111	$	1,764	0.88	%
Investment securities		844,946		21,103	3.33			820,328		14,453	2.35
Loans		6,324,578		274,005	5.79			5,666,874		194,442	4.59
Loans held for sale		3,900		179	6.14			15,629		357	3.05
Nonmarketable equity securities		44,034		2,104	6.39			36,832		1,521	5.52
Total interest-earning assets	$	7,294,397	$	300,259	5.50	%	$	6,807,774	$	212,537	4.17	%
Noninterest-earning assets		615,383						621,510
Total assets	$	7,909,780					$	7,429,284

Interest-Bearing Liabilities
Interest-bearing deposits	$	5,223,852	$	97,791	2.50	%	$	4,717,610	$	16,220	0.46	%
Short-term borrowings		26,865		53	0.26			62,495		73	0.16
FHLB advances & other borrowings		471,084		15,959	4.53			319,791		5,071	2.12
Subordinated debt		96,820		3,985	5.49			139,233		6,032	5.78
Trust preferred debentures		50,216		3,887	10.35			49,603		1,959	5.28
Total interest-bearing liabilities	$	5,868,837	$	121,675	2.77	%	$	5,288,732	$	29,355	0.74	%
Noninterest-bearing deposits		1,184,410						1,402,900
Other noninterest-bearing liabilities		84,650						70,427
Shareholders' equity		771,883						667,225
Total liabilities and shareholder's equity	$	7,909,780					$	7,429,284

Net Interest Margin			$	178,584	3.27	%			$	183,182	3.60	%

Cost of Deposits					2.04	%					0.35	%

(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 $0.6 million and $1.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Noninterest Income

Noninterest income was $18.2 million for the third quarter of 2023, compared to $18.8 million for the second quarter of 2023. Noninterest income for the third quarter of 2023 included a one-time enhancement fee of $6.6 million related to the surrender and purchase of company-owned life insurance, partially offset by $5.0 million of losses on the sale of investment securities. 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. Excluding these transactions, noninterest income for the third quarter of 2023 and the second quarter of 2023 was $16.5 million and $18.2 million, respectively. Noninterest income for the third quarter of 2022 was $15.8 million and included $0.1 million loss on the sale of investment securities.

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(in thousands)	2023			2023			2022			2023			2022
Noninterest income
Wealth management revenue	$	6,288		$	6,269		$	6,199		$	18,968		$	19,481
Residential mortgage banking revenue		507			540			210			1,452			1,193
Service charges on deposit accounts		3,149			2,849			2,783			8,744			7,544
Interchange revenue		3,609			3,696			3,531			10,717			10,401
Loss on sales of investment securities, net		(4,961	)		(869	)		(129	)		(6,478	)		(230	)
Gain on repurchase of subordinated debt, net		—			676			—			676			—
Gain (loss) on sales of other real estate owned, net		—			819			—			819			(131	)
Impairment on commercial mortgage servicing rights		—			—			—			—			(1,263	)
Company-owned life insurance		7,558			891			929			9,325			2,788
Other income		2,035			3,882			2,303			8,494			6,269
Total noninterest income	$	18,185		$	18,753		$	15,826		$	52,717		$	46,052

Noninterest Expense

Noninterest expense was $42.0 million in the third quarter of 2023, compared to $42.9 million in the second quarter of 2023, and $43.5 million in the third quarter of 2022. The efficiency ratio was 55.82% for the quarter ended September 30, 2023, compared to 55.01% for the quarter ended June 30, 2023, and 54.26% for the quarter ended September 30, 2022.

	For the Three Months Ended						For the Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
(in thousands)	2023		2023		2022		2023		2022
Noninterest expense
Salaries and employee benefits	$	22,307	$	22,857	$	22,889	$	69,407	$	67,404
Occupancy and equipment		3,730		3,879		3,850		12,052		11,094
Data processing		6,468		6,544		6,093		19,323		18,048
Professional		1,554		1,663		1,693		4,977		5,181
Amortization of intangible assets		1,129		1,208		1,361		3,628		4,077
FDIC insurance		1,107		1,196		977		3,632		2,633
Other expense		5,743		5,547		6,633		16,395		17,282
Total noninterest expense	$	42,038	$	42,894	$	43,496	$	129,414	$	125,719

Salaries and employee benefits expenses were $22.3 million in the third quarter of 2023, compared to $22.9 million in both the second quarter of 2023 and the third quarter of 2022. Employees numbered 911 at September 30, 2023, compared to 915 at June 30, 2023, and 930 at September 30, 2022. The third quarter of 2023 included a decline in medical insurance expense of $0.7 million.

Income Tax Expense

Income tax expense was $11.5 million for the third quarter of 2023, as compared to $7.2 million for the second quarter of 2023 and $5.9 million for the third quarter of 2022. The resulting effective tax rates were 39.0%, 25.1% and 19.9% respectively. The third quarter of 2023 included tax charges of $4.5 million associated with the surrender of company-owned life insurance and $1.4 million related to the finalization of the 2022 federal and state tax returns. Exclusive of these items our effective tax rate is 25.1% for the third quarter of 2023.

Capital

At September 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 September 30, 2023
	Midland States Bank	Midland States Bancorp, Inc.	Minimum Regulatory Requirements ⁽²⁾
Total capital to risk-weighted assets	12.13%	12.84%	10.50%
Tier 1 capital to risk-weighted assets	11.21%	10.62%	8.50%
Tier 1 leverage ratio	10.21%	9.67%	4.00%
Common equity Tier 1 capital	11.21%	8.16%	7.00%
Tangible common equity to tangible assets ⁽¹⁾	N/A	6.09%	N/A

(1) A non-GAAP financial measure. Refer to page 16 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 a $101.2 million accumulated other comprehensive loss at September 30, 2023, which impacts tangible book value by $4.68 per share.

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 third quarter of 2023, the Company repurchased 271,059 shares of its common stock at a weighted average price of $22.14 under its stock repurchase program. As of September 30, 2023, the Company had $10.1 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 September 30, 2023, the Company had total assets of approximately $7.98 billion, and its Wealth Management Group had assets under administration of approximately $3.50 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, the measures in this press release 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 failures of Silicon Valley Bank and Signature Bank, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; 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)

(dollars in thousands, except per share data)	As of and for the Three Months Ended									As of and for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2023			2023			2022			2023			2022
Earnings Summary
Net interest income	$	58,596		$	58,840		$	64,024		$	177,940		$	182,185
Provision for credit losses		5,168			5,879			6,974			14,182			16,582
Noninterest income		18,185			18,753			15,826			52,717			46,052
Noninterest expense		42,038			42,894			43,496			129,414			125,719
Income before income taxes		29,575			28,820			29,380			87,061			85,936
Income taxes		11,533			7,245			5,859			25,672			19,783
Net income		18,042			21,575			23,521			61,389			66,153
Preferred dividends		2,229			2,228			—			6,685			—
Net income available to common shareholders	$	15,813		$	19,347		$	23,521		$	54,704		$	66,153

Diluted earnings per common share	$	0.71		$	0.86		$	1.04		$	2.43		$	2.92
Weighted average common shares outstanding - diluted		21,977,196			22,205,079			22,390,438			22,223,986			22,367,095
Return on average assets		0.91	%		1.09	%		1.22	%		1.04	%		1.19	%
Return on average shareholders' equity		9.28	%		11.14	%		13.31	%		10.63	%		13.26	%
Return on average tangible common equity ⁽¹⁾		13.03	%		15.99	%		20.20	%		15.22	%		19.06	%
Net interest margin		3.20	%		3.23	%		3.63	%		3.27	%		3.60	%
Efficiency ratio⁽¹⁾		55.82	%		55.01	%		54.26	%		56.15	%		54.34	%

Adjusted Earnings Performance Summary ⁽¹⁾
Adjusted earnings available to common shareholders	$	17,278		$	19,488		$	23,568		$	56,783		$	66,574
Adjusted diluted earnings per common share	$	0.78		$	0.87		$	1.04		$	2.53		$	2.94
Adjusted return on average assets		0.98	%		1.10	%		1.22	%		1.07	%		1.20	%
Adjusted return on average shareholders' equity		10.03	%		11.21	%		13.34	%		10.99	%		13.34	%
Adjusted return on average tangible common equity		14.24	%		16.10	%		20.24	%		15.80	%		19.18	%
Adjusted pre-tax, pre-provision earnings	$	33,064		$	34,892		$	36,415		$	100,405		$	104,358
Adjusted pre-tax, pre-provision return on average assets		1.66	%		1.76	%		1.89	%		1.70	%		1.88	%

Market Data
Book value per share at period end	$	30.27		$	30.49		$	28.48
Tangible book value per share at period end⁽¹⁾	$	21.98		$	22.24		$	20.14
Tangible book value per share excluding accumulated other comprehensive income at period end⁽¹⁾	$	26.66		$	26.11		$	23.69
Market price at period end	$	20.54		$	19.91		$	23.57
Common shares outstanding at period end		21,594,546			21,854,800			22,074,740

Capital
Total capital to risk-weighted assets		12.84	%		12.65	%		12.79	%
Tier 1 capital to risk-weighted assets		10.62	%		10.47	%		10.05	%
Tier 1 common capital to risk-weighted assets		8.16	%		8.03	%		7.56	%
Tier 1 leverage ratio		9.67	%		9.57	%		9.40	%
Tangible common equity to tangible assets⁽¹⁾		6.09	%		6.19	%		5.82	%

Wealth Management
Trust assets under administration	$	3,501,225		$	3,594,727		$	3,355,019

(1) Non-GAAP financial measures. Refer to pages 14 - 16 for a reconciliation to the comparable GAAP financial measures.



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

	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)	2023			2023			2023			2022			2022
Assets
Cash and cash equivalents	$	132,132		$	160,695		$	138,310		$	160,631		$	313,188
Investment securities		839,344			887,003			821,005			776,860			690,504
Loans		6,280,883			6,367,344			6,354,271			6,306,467			6,198,451
Allowance for credit losses on loans		(66,669	)		(64,950	)		(62,067	)		(61,051	)		(58,639	)
Total loans, net		6,214,214			6,302,394			6,292,204			6,245,416			6,139,812
Loans held for sale		6,089			5,632			2,747			1,286			4,338
Premises and equipment, net		82,741			81,006			80,582			78,293			77,519
Other real estate owned		480			202			6,729			6,729			11,141
Loan servicing rights, at lower of cost or fair value		20,933			21,611			1,117			1,205			1,297
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		17,238			18,367			19,575			20,866			22,198
Company-owned life insurance		208,390			152,210			151,319			150,443			149,648
Other assets		292,460			243,697			233,937			231,123			226,333
Total assets	$	7,975,925		$	8,034,721		$	7,930,174		$	7,855,501		$	7,821,877

Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits	$	1,154,515		$	1,162,909		$	1,215,758		$	1,362,158		$	1,362,481
Interest-bearing deposits		5,250,487			5,263,639			5,209,443			5,002,494			5,032,771
Total deposits		6,405,002			6,426,548			6,425,201			6,364,652			6,395,252
Short-term borrowings		17,998			21,783			31,173			42,311			58,518
FHLB advances and other borrowings		538,000			575,000			482,000			460,000			360,000
Subordinated debt		93,475			93,404			99,849			99,772			139,370
Trust preferred debentures		50,457			50,296			50,135			49,975			49,824
Other liabilities		106,743			90,869			66,173			80,217			79,634
Total liabilities		7,211,675			7,257,900			7,154,531			7,096,927			7,082,598
Total shareholders' equity		764,250			776,821			775,643			758,574			739,279
Total liabilities and shareholders' equity	$	7,975,925		$	8,034,721		$	7,930,174		$	7,855,501		$	7,821,877


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

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(in thousands, except per share data)	2023			2023			2022			2023			2022
Net interest income:
Interest income	$	103,585		$	100,491		$	79,556		$	299,615		$	211,540
Interest expense		44,989			41,651			15,532			121,675			29,355
Net interest income		58,596			58,840			64,024			177,940			182,185
Provision for credit losses:
Provision for credit losses on loans		5,168			5,879			6,974			14,182			15,847
Provision for credit losses on unfunded commitments		—			—			—			—			956
Provision for other credit losses		—			—			—			—			(221	)
Total provision for credit losses		5,168			5,879			6,974			14,182			16,582
Net interest income after provision for credit losses		53,428			52,961			57,050			163,758			165,603
Noninterest income:
Wealth management revenue		6,288			6,269			6,199			18,968			19,481
Residential mortgage banking revenue		507			540			210			1,452			1,193
Service charges on deposit accounts		3,149			2,849			2,783			8,744			7,544
Interchange revenue		3,609			3,696			3,531			10,717			10,401
Loss on sales of investment securities, net		(4,961	)		(869	)		(129	)		(6,478	)		(230	)
Gain on repurchase of subordinated debt, net		—			676			—			676			—
Gain (loss) on sales of other real estate owned, net		—			819			—			819			(131	)
Impairment on commercial mortgage servicing rights		—			—			—			—			(1,263	)
Company-owned life insurance		7,558			891			929			9,325			2,788
Other income		2,035			3,882			2,303			8,494			6,269
Total noninterest income		18,185			18,753			15,826			52,717			46,052
Noninterest expense:
Salaries and employee benefits		22,307			22,857			22,889			69,407			67,404
Occupancy and equipment		3,730			3,879			3,850			12,052			11,094
Data processing		6,468			6,544			6,093			19,323			18,048
Professional		1,554			1,663			1,693			4,977			5,181
Amortization of intangible assets		1,129			1,208			1,361			3,628			4,077
FDIC insurance		1,107			1,196			977			3,632			2,633
Other expense		5,743			5,547			6,633			16,395			17,282
Total noninterest expense		42,038			42,894			43,496			129,414			125,719
Income before income taxes		29,575			28,820			29,380			87,061			85,936
Income taxes		11,533			7,245			5,859			25,672			19,783
Net income		18,042			21,575			23,521			61,389			66,153
Preferred stock dividends		2,229			2,228			—			6,685			—
Net income available to common shareholders	$	15,813		$	19,347		$	23,521		$	54,704		$	66,153

Basic earnings per common share	$	0.71		$	0.86		$	1.04		$	2.43		$	2.93
Diluted earnings per common share	$	0.71		$	0.86		$	1.04		$	2.43		$	2.92


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)

Adjusted Earnings Reconciliation

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in thousands, except per share data)	2023			2023			2022			2023			2022
Income before income taxes - GAAP	$	29,575		$	28,820		$	29,380		$	87,061		$	85,936
Adjustments to noninterest income:
Loss on sales of investment securities, net		4,961			869			129			6,478			230
(Gain) on repurchase of subordinated debt		—			(676	)		—			(676	)		—
Company-owned life insurance enhancement fee		(6,640	)		—			—			(6,640	)		—
Total adjustments to noninterest income		(1,679	)		193			129			(838	)		230
Adjustments to noninterest expense:
Integration and acquisition expenses		—			—			68			—			(347	)
Total adjustments to noninterest expense		—			—			68			—			(347	)
Adjusted earnings pre tax - non-GAAP		27,896			29,013			29,441			86,223			86,513
Adjusted earnings tax		8,389			7,297			5,873			22,755			19,939
Adjusted earnings - non-GAAP		19,507			21,716			23,568			63,468			66,574
Preferred stock dividends		2,229			2,228			—			6,685			—
Adjusted earnings available to common shareholders	$	17,278		$	19,488		$	23,568		$	56,783		$	66,574
Adjusted diluted earnings per common share	$	0.78		$	0.87		$	1.04		$	2.53		$	2.94
Adjusted return on average assets		0.98	%		1.10	%		1.22	%		1.07	%		1.20	%
Adjusted return on average shareholders' equity		10.03	%		11.21	%		13.34	%		10.99	%		13.34	%
Adjusted return on average tangible common equity		14.24	%		16.10	%		20.24	%		15.80	%		19.18	%


Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in thousands)	2023			2023			2022			2023			2022
Adjusted earnings pre tax - non-GAAP	$	27,896		$	29,013		$	29,441		$	86,223		$	86,513
Provision for credit losses		5,168			5,879			6,974			14,182			16,582
Impairment on commercial mortgage servicing rights		—			—			—			—			1,263
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	33,064		$	34,892		$	36,415		$	100,405		$	104,358
Adjusted pre-tax, pre-provision return on average assets		1.66	%		1.76	%		1.89	%		1.70	%		1.88	%


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)

Efficiency Ratio Reconciliation

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in thousands)	2023			2023			2022			2023			2022
Noninterest expense - GAAP	$	42,038		$	42,894		$	43,496		$	129,414		$	125,719
Integration and acquisition expenses		—			—			68			—			(347	)
Adjusted noninterest expense	$	42,038		$	42,894		$	43,564		$	129,414		$	125,372

Net interest income - GAAP	$	58,596		$	58,840		$	64,024		$	177,940		$	182,185
Effect of tax-exempt income		205			195			307			644			997
Adjusted net interest income		58,801			59,035			64,331			178,584			183,182

Noninterest income - GAAP		18,185			18,753			15,826			52,717			46,052
Impairment on commercial mortgage servicing rights		—			—			—			—			1,263
Loss on sales of investment securities, net		4,961			869			129			6,478			230
(Gain) on repurchase of subordinated debt		—			(676	)		—			(676	)		—
Company-owned life insurance enhancement fee		(6,640	)		—			—			(6,640	)		—
Adjusted noninterest income		16,506			18,946			15,955			51,879			47,545

Adjusted total revenue	$	75,307		$	77,981		$	80,286		$	230,463		$	230,727

Efficiency ratio		55.82	%		55.01	%		54.26	%		56.15	%		54.34	%

Return on Average Tangible Common Equity (ROATCE)

	For the Three Months Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in thousands)	2023			2023			2022			2023			2022
Net income available to common shareholders	$	15,813		$	19,347		$	23,521		$	54,704		$	66,153

Average total shareholders' equity—GAAP	$	771,625		$	776,791		$	700,866		$	771,883		$	667,225
Adjustments:
Preferred Stock		(110,548	)		(110,548	)		(54,072	)		(110,548	)		—
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(17,782	)		(18,937	)		(22,859	)		(18,959	)		(23,019	)
Average tangible common equity	$	481,391		$	485,402		$	462,031		$	480,472		$	482,302
ROATCE		13.03	%		15.99	%		20.20	%		15.22	%		19.06	%


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)	2023			2023			2023			2022			2022
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP	$	764,250		$	776,821		$	775,643		$	758,574		$	739,279
Adjustments:
Preferred Stock		(110,548	)		(110,548	)		(110,548	)		(110,548	)		(110,548	)
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(17,238	)		(18,367	)		(19,575	)		(20,866	)		(22,198	)
Tangible common equity	$	474,560		$	486,002		$	483,616		$	465,256		$	444,629

Less: Accumulated other comprehensive income (AOCI)		(101,181	)		(84,719	)		(77,797	)		(83,797	)		(78,383	)
Tangible common equity excluding AOCI		575,741			570,721			561,413			549,053			523,012

Total Assets to Tangible Assets:
Total assets—GAAP	$	7,975,925		$	8,034,721		$	7,930,174		$	7,855,501		$	7,821,877
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(17,238	)		(18,367	)		(19,575	)		(20,866	)		(22,198	)
Tangible assets	$	7,796,783		$	7,854,450		$	7,748,695		$	7,672,731		$	7,637,775

Common Shares Outstanding		21,594,546			21,854,800			22,111,454			22,214,913			22,074,740

Tangible Common Equity to Tangible Assets		6.09	%		6.19	%		6.24	%		6.06	%		5.82	%
Tangible Book Value Per Share	$	21.98		$	22.24		$	21.87		$	20.94		$	20.14
Tangible Book Value Per Share excluding AOCI	$	26.66		$	26.11		$	25.39		$	24.72		$	23.69

Midland States Bancorp, Inc. Announces 2023 Third Quarter Results