MSBI Midland States Bancorp Inc

Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $4.5 million, or $0.20 per diluted share, for the second quarter of 2024, compared to $11.7 million, or $0.53 per diluted share, for the first quarter of 2024. This also compares to net income available to common shareholders of $19.3 million, or $0.86 per diluted share, for the second quarter of 2023.

Provision expense was $16.8 million in the second quarter of 2024 compared to $14.0 million and $5.9 million in the first quarter of 2024 and the second quarter of 2023, respectively. The provision expense in the second quarter of 2024 included provision for credit losses on loans of $17.0 million, offset by a $0.2 million benefit related to unfunded commitments. The elevated loan provision in the second quarter of 2024 was primarily due to credit deterioration and servicing issues involving one of our fintech partners, LendingPoint, subsequent to their system conversion in late 2023. The provision expense for the first quarter of 2024 included a specific reserve of $8.0 million on a multi-family construction project.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We continued to execute well on our strategic priorities during the second quarter and our balance sheet management strategies resulted in further increases in our capital ratios. We are continuing to address credit risk in our loan portfolios, including the relationship with Lending Point, by prudently increasing our loan loss reserves with a focus on reducing problem assets. Our emphasis on our community bank and local markets has led to another good quarter of generating high quality, in-market loans with full banking relationships, which are partially funded by the continued intentional reduction of our equipment finance and consumer portfolios. In particular, we are seeing good results from the investments we have made to increase our presence and business development efforts in the St. Louis market, where our loan balances increased at an annualized rate of 31% during the second quarter.

“We continue to benefit from the strength of the franchise we have built to attract high quality banking talent across the organization. We recently added a new market president for our Northern Illinois region and a new Chief Deposit Officer, who we expect to positively impact our treasury management services and our ability to add new commercial deposit relationships. We are also continuing to invest in our Wealth Management business to improve our ability to cross-sell this service to our community bank clients. We believe the banking talent we are adding will further enhance our efforts to expand our market share within our community bank. Our successful efforts in this area are resulting in a favorable shift in the mix of our loan portfolio; moving towards a higher quality portfolio and expanded banking relationships with both loans and deposits. We expect to make continued progress on this strategic priority over the remainder of the year, which we believe will further enhance the value of our franchise,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.76 billion at June 30, 2024, compared to $7.83 billion at March 31, 2024, and $8.03 billion at June 30, 2023. At June 30, 2024, portfolio loans were $5.85 billion, compared to $5.96 billion at March 31, 2024, and $6.37 billion at June 30, 2023.

Loans

During the second quarter of 2024, outstanding loans declined by $106.5 million, or 1.8%, from March 31, 2024, as the Company continued to shrink its equipment financing and consumer loan portfolios, and focus on commercial loan opportunities in our community bank footprint. Increases in commercial, commercial real estate, and construction and land development loans of $25.9 million, $24.4 million and $2.4 million, respectively, were offset by decreases in all other loan categories.

Equipment finance loan and lease balances decreased $59.9 million during the second quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $91.1 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $67.7 million during the second quarter to $538.3 million at June 30, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of June 30, 2024, the Company had $114.2 million in loans that were originated through and serviced by LendingPoint. Equipment financing and consumer loans comprised 15.2% and 12.7%, respectively, of the loan portfolio at June 30, 2024, compared to 15.9% and 14.0%, respectively, at March 31, 2024.

		As of
		June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)		2024			2024			2023			2023			2023
Loan Portfolio
Commercial loans		$	939,458		$	913,564		$	951,387		$	943,761		$	962,756
Equipment finance loans			461,409			494,068			531,143			578,931			614,633
Equipment finance leases			428,659			455,879			473,350			485,460			500,485
Commercial FHA warehouse lines			—			8,035			—			48,547			30,522
Total commercial loans and leases			1,829,526			1,871,546			1,955,880			2,056,699			2,108,396
Commercial real estate			2,421,505			2,397,113			2,406,845			2,412,164			2,443,995
Construction and land development			476,528			474,128			452,593			416,801			366,631
Residential real estate			378,393			378,583			380,583			375,211			371,486
Consumer			746,042			837,092			935,178			1,020,008			1,076,836
Total loans		$	5,851,994		$	5,958,462		$	6,131,079		$	6,280,883		$	6,367,344

Loan Quality

Overall, credit quality metrics declined this quarter compared to the first quarter of 2024. Non-performing loans increased $7.1 million to $112.1 million at June 30, 2024, compared to $105.0 million as of March 31, 2024. A $3.6 million commercial loan and $4.7 million of equipment financing loans account for the increase.

		As of and for the Three Months Ended
(in thousands)		June 30,				March 31,				December 31,				September 30,				June 30,
			2024				2024				2023				2023				2023
Asset Quality
Loans 30-89 days past due		$	54,045			$	58,854			$	82,778			$	46,608			$	44,161
Nonperforming loans			112,124				104,979				56,351				55,981				54,844
Nonperforming assets			123,774				116,721				67,701				58,677				57,688
Substandard loans			135,555				149,049				184,224				143,793				130,707
Net charge-offs			2,874				4,445				5,117				3,449				2,996
Loans 30-89 days past due to total loans			0.92	%			0.99	%			1.35	%			0.74	%			0.69	%
Nonperforming loans to total loans			1.92	%			1.76	%			0.92	%			0.89	%			0.86	%
Nonperforming assets to total assets			1.60	%			1.49	%			0.86	%			0.74	%			0.72	%
Allowance for credit losses to total loans			1.58	%			1.31	%			1.12	%			1.06	%			1.02	%
Allowance for credit losses to nonperforming loans			82.22	%			74.35	%			121.56	%			119.09	%			118.43	%
Net charge-offs to average loans			0.20	%			0.30	%			0.33	%			0.22	%			0.19	%

The Company continued to increase its allowance for credit losses on loans during the second quarter of 2024. Notably, the Company recognized provision expense of $14.0 million this quarter related to the loans originated and serviced by LendingPoint, increasing the allowance to $14.6 million on this portfolio. Credit deterioration and servicing issues following their system conversion have resulted in increased losses within this portfolio. At June 30, 2024, loans serviced by LendingPoint totaled $114.2 million.

The allowance for credit losses on loans totaled $92.2 million at June 30, 2024, compared to $78.1 million at March 31, 2024, and $65.0 million at June 30, 2023. The allowance as a percentage of portfolio loans was 1.58% at June 30, 2024, compared to 1.31% at March 31, 2024, and 1.02% at June 30, 2023.

Deposits

Total deposits were $6.12 billion at June 30, 2024, compared with $6.32 billion at March 31, 2024. Noninterest-bearing deposits decreased $103.9 million to $1.11 billion at June 30, 2024, while interest-bearing deposits decreased $102.1 million to $5.01 billion at June 30, 2024. Brokered time deposits decreased $56.8 million to $131.4 million, and represented 2.15% of total deposits at June 30, 2024.

		As of
		June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)		2024			2024			2023			2023			2023
Deposit Portfolio
Noninterest-bearing demand		$	1,108,521		$	1,212,382		$	1,145,395		$	1,154,515		$	1,162,909
Interest-bearing:
Checking			2,343,533			2,394,163			2,511,840			2,572,224			2,499,693
Money market			1,143,668			1,128,463			1,135,629			1,090,962			1,226,470
Savings			538,462			555,552			559,267			582,359			624,005
Time			852,415			845,190			862,865			885,858			840,734
Brokered time			131,424			188,234			94,533			119,084			72,737
Total deposits		$	6,118,023		$	6,323,984		$	6,309,529		$	6,405,002		$	6,426,548

Results of Operations Highlights

Net Interest Income and Margin

During the second quarter of 2024, net interest income, on a tax-equivalent basis, totaled $55.2 million, a decrease of $0.9 million, or 1.6%, compared to $56.1 million for the first quarter of 2024. The tax-equivalent net interest margin for the second quarter of 2024 was 3.12%, compared with 3.18% in the first quarter of 2024. Net interest income and net interest margin, on a tax-equivalent basis, were $59.0 million and 3.23%, respectively, in the second quarter of 2023. The decline in both the net interest income and margin were largely attributable to increased market interest rates resulting in a faster increase in the cost of funding liabilities than the yield on earning assets, as well as the impact of interest reversals on loans placed on non-accrual.

Average interest-earning assets for the second quarter of 2024 were $7.13 billion, compared to $7.11 billion for the first quarter of 2024. The yield increased 8 basis points to 5.84% compared to the first quarter of 2024. Interest-earning assets averaged $7.33 billion for the second quarter of 2023.

Average loans were $5.92 billion for the second quarter of 2024, compared to $6.01 billion for the first quarter of 2024 and $6.36 billion for the second quarter of 2023. The yield on loans was 6.03% for the second quarter of 2024, up from 5.99% for the first quarter of 2024 and 5.80% for the second quarter of 2023.

Investment securities averaged $1.10 billion for the second quarter of 2024, and yielded 4.69%, compared to an average balance and yield of $988.7 million and 4.36%, respectively, for the first quarter of 2024. The Company purchased additional higher-yielding investments resulting in the increased average balance and yield. Investment securities averaged $861.4 million for the second quarter of 2023.

Average interest-bearing deposits were $5.10 billion for the second quarter of 2024, compared to $5.20 billion for the first quarter of 2024, and $5.26 billion for the second quarter of 2023. Cost of interest-bearing deposits was 3.11% in the second quarter of 2024, which represented a 7 basis point increase from the first quarter of 2024. A competitive market, driven by rising interest rates and increased competition, contributed to the increase in deposit costs.

		For the Three Months Ended
(dollars in thousands)		June 30, 2024									March 31, 2024									June 30, 2023
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		$	65,250		$	875		5.40	%		$	69,316		$	951		5.52	%		$	67,377		$	852		5.07	%
Investment securities(1)			1,098,452			12,805		4.69				988,716			10,708		4.36				861,409			7,286		3.39
Loans(1)(2)			5,915,523			88,738		6.03				6,012,032			89,489		5.99				6,356,012			91,890		5.80
Loans held for sale			4,910			84		6.84				3,405			55		6.56				4,067			59		5.79
Nonmarketable equity securities			44,216			963		8.76				35,927			687		7.69				45,028			599		5.33
Total interest-earning assets			7,128,351			103,465		5.84				7,109,396			101,890		5.76				7,333,893			100,686		5.51
Noninterest-earning assets			669,370									671,671									612,238
Total assets		$	7,797,721								$	7,781,067								$	7,946,131
Interest-Bearing Liabilities
Interest-bearing deposits		$	5,101,365		$	39,476		3.11	%		$	5,195,118		$	39,214		3.04	%		$	5,259,188		$	33,617		2.56	%
Short-term borrowings			30,449			308		4.07				65,182			836		5.16				22,018			14		0.26
FHLB advances & other borrowings			500,758			5,836		4.69				313,121			3,036		3.90				471,989			5,396		4.59
Subordinated debt			93,090			1,265		5.47				93,583			1,280		5.50				97,278			1,335		5.51
Trust preferred debentures			50,921			1,358		10.73				50,707			1,389		11.02				50,218			1,289		10.29
Total interest-bearing liabilities			5,776,583			48,243		3.36				5,717,711			45,755		3.22				5,900,691			41,651		2.83
Noninterest-bearing deposits			1,132,451									1,151,542									1,187,584
Other noninterest-bearing liabilities			104,841									121,908									81,065
Shareholders’ equity			783,846									789,906									776,791
Total liabilities and shareholder’s equity		$	7,797,721								$	7,781,067								$	7,946,131
Net Interest Margin					$	55,222		3.12	%					$	56,135		3.18	%					$	59,035		3.23	%
Cost of Deposits								2.55	%								2.49	%								2.09	%

(1)   Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million for each of the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.(2)   Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

For the six months ended June 30, 2024, net interest income, on a tax-equivalent basis, decreased to $111.4 million, with a tax-equivalent net interest margin of 3.15%, compared to net interest income, on a tax-equivalent basis, of $119.8 million, and a tax-equivalent net interest margin of 3.31% for the six months ended June 30, 2023.

The yield on earning assets increased 37 basis points to 5.80% for the six months ended June 30, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 64 basis points to 3.29% for the six months ended June 30, 2024.

		For the Six Months Ended
(dollars in thousands)		June 30, 2024									June 30, 2023
Interest-earning assets		Average Balance			Interest & Fees			Yield/Rate			Average Balance			Interest & Fees			Yield/Rate
Cash and cash equivalents		$	67,283		$	1,826		5.46	%		$	76,201		$	1,832		4.85	%
Investment securities(1)			1,043,585			23,513		4.53				835,771			13,281		3.18
Loans(1)(2)			5,963,777			178,226		6.01				6,338,305			179,887		5.72
Loans held for sale			4,157			139		6.72				2,794			75		5.42
Nonmarketable equity securities			40,072			1,650		8.28				46,416			1,394		6.05
Total interest-earning assets			7,118,874			205,354		5.80				7,299,487			196,469		5.43
Noninterest-earning assets			669,370									611,528
Total assets		$	7,788,244								$	7,911,015
Interest-Bearing Liabilities
Interest-bearing deposits		$	5,148,242		$	78,690		3.07	%		$	5,157,148		$	60,022		2.35	%
Short-term borrowings			47,815			1,144		4.81				30,291			39		0.26
FHLB advances & other borrowings			406,940			8,872		4.38				505,945			11,402		4.54
Subordinated debt			93,337			2,545		5.45				98,538			2,705		5.54
Trust preferred debentures			50,814			2,747		10.87				50,133			2,518		10.13
Total interest-bearing liabilities			5,747,148			93,998		3.29				5,842,055			76,686		2.65
Noninterest-bearing deposits			1,141,996									1,219,050
Other noninterest-bearing liabilities			112,223									77,895
Shareholders’ equity			786,877									772,015
Total liabilities and shareholders’ equity		$	7,788,244								$	7,911,015
Net Interest Margin					$	111,356		3.15	%					$	119,783		3.31	%
Cost of Deposits								2.52	%								1.90	%

(1)   Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.4 million for each of the six months ended June 30, 2024 and 2023, respectively.(2)   Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Noninterest Income

Noninterest income was $17.7 million for the second quarter of 2024, compared to $21.2 million for the first quarter of 2024. Noninterest income for the second quarter of 2024 included a $0.2 million gain on the repurchase of subordinated debt, offset by $0.2 million of net losses on the sale of investment securities. Noninterest income for the first quarter of 2024 included incremental servicing revenues of $3.7 million related to the Greensky portfolio. 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 net losses on the sale of investment securities. Excluding these transactions, noninterest income for the second quarter of 2024, the first quarter of 2024, and the second quarter of 2023 was $17.6 million, $17.5 million, and $18.1 million, respectively.

		For the Three Months Ended											For the Six Months Ended
		June 30,				March 31,			June 30,				June 30,				June 30,
(in thousands)			2024				2024			2023				2024				2023
Noninterest income
Wealth management revenue		$	6,801			$	7,132		$	6,269			$	13,933			$	12,680
Service charges on deposit accounts			3,121				3,116			2,677				6,237				5,245
Interchange revenue			3,563				3,358			3,696				6,921				7,108
Residential mortgage banking revenue			557				527			540				1,084				945
Income on company-owned life insurance			1,925				1,801			891				3,726				1,767
Loss on sales of investment securities, net			(152	)			—			(869	)			(152	)			(1,517	)
Other income			1,841				5,253			5,549				7,094				8,304
Total noninterest income		$	17,656			$	21,187		$	18,753			$	38,843			$	34,532

Wealth management revenue totaled $6.8 million in the second quarter of 2024, a decrease of $0.3 million, or 4.6%, as compared to the first quarter of 2024, due to the seasonal impact of tax planning fees in the first quarter. Assets under administration increased to $4.00 billion at June 30, 2024 from $3.89 billion at March 31, 2024, primarily due to improved sales activity. Assets under administration totaled $3.59 billion at June 30, 2023.

Noninterest Expense

Noninterest expense was $47.5 million in the second quarter of 2024, compared to $44.9 million in the first quarter of 2024 and $42.9 million in the second quarter of 2023. Noninterest expense for the second quarter of 2024 included $4.1 million of aggregate expenses related to OREO impairment and property taxes, and accruals related to various legal actions. Excluding these transactions, noninterest expense for the second quarter of 2024, the first quarter of 2024, and the second quarter of 2023 was $43.4 million, $44.9 million, and $42.9 million, respectively. The efficiency ratio increased to 65.16% for the quarter ended June 30, 2024, compared to 58.03% for the quarter ended March 31, 2024, and 55.01% for the quarter ended June 30, 2023.

		For the Three Months Ended									For the Six Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,
(in thousands)		2024			2024			2023			2024			2023
Noninterest expense
Salaries and employee benefits		$	22,872		$	24,102		$	22,857		$	46,974		$	47,100
Occupancy and equipment			3,964			4,142			3,879			8,106			8,322
Data processing			7,205			6,722			6,544			13,927			12,855
Professional services			2,243			2,255			1,663			4,498			3,423
Amortization of intangible assets			1,016			1,089			1,208			2,105			2,499
FDIC insurance			1,219			1,274			1,196			2,493			2,525
Other expense			8,960			5,283			5,547			14,243			10,652
Total noninterest expense		$	47,479		$	44,867		$	42,894		$	92,346		$	87,376

Income Tax Expense

Income tax expense was $1.7 million for the second quarter of 2024, compared to $4.4 million for the first quarter of 2024 and $7.2 million for the second quarter of 2023. The resulting effective tax rates were 19.9%, 23.9% and 25.1%, respectively.

Capital

At June 30, 2024, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

	As of June 30, 2024
	Midland States Bank			Midland States Bancorp, Inc.			Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets	13.06	%		13.94	%		10.50	%
Tier 1 capital to risk-weighted assets	11.69	%		11.21	%		8.50	%
Tier 1 leverage ratio	10.26	%		9.84	%		4.00	%
Common equity Tier 1 capital	11.69	%		8.63	%		7.00	%
Tangible common equity to tangible assets (1)	N/A			6.59	%		N/A

(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%, as applicable.

The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an $82.6 million accumulated other comprehensive loss at June 30, 2024, which reduced tangible book value by $3.86 per share.

Stock Repurchase Program

As previously disclosed, on December 5, 2023, 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, 2024. During the second quarter of 2024, the Company repurchased 131,372 shares of its common stock at a weighted average price of $22.84 under its stock repurchase program.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of June 30, 2024, the Company had total assets of approximately $7.76 billion, and its Wealth Management Group had assets under administration of approximately $4.00 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, 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) 342-7321Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
		As of and for the Three Months Ended												As of andfor the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
(dollars in thousands, except per share data)			2024				2024				2023				2024				2023
Earnings Summary
Net interest income		$	55,052			$	55,920			$	58,840			$	110,972			$	119,344
Provision for credit losses			16,800				14,000				5,879				30,800				9,014
Noninterest income			17,656				21,187				18,753				38,843				34,532
Noninterest expense			47,479				44,867				42,894				92,346				87,376
Income before income taxes			8,429				18,240				28,820				26,669				57,486
Income taxes			1,679				4,355				7,245				6,034				14,139
Net income			6,750				13,885				21,575				20,635				43,347
Preferred dividends			2,228				2,228				2,228				4,456				4,456
Net income available to common shareholders		$	4,522			$	11,657			$	19,347			$	16,179			$	38,891
Diluted earnings per common share		$	0.20			$	0.53			$	0.86			$	0.73			$	1.72
Weighted average common shares outstanding - diluted			21,734,849				21,787,691				22,205,079				21,761,492				22,348,981
Return on average assets			0.35	%			0.72	%			1.09	%			0.53	%			1.10	%
Return on average shareholders' equity			3.46	%			7.07	%			11.14	%			5.27	%			11.32	%
Return on average tangible common equity (1)			3.66	%			9.34	%			15.99	%			6.51	%			16.34	%
Net interest margin			3.12	%			3.18	%			3.23	%			3.15	%			3.31	%
Efficiency ratio (1)			65.16	%			58.03	%			55.01	%			61.49	%			56.31	%
Adjusted Earnings Performance Summary (1)
Adjusted earnings available to common shareholders		$	4,511			$	11,657			$	19,488			$	16,168			$	39,505
Adjusted diluted earnings per common share		$	0.20			$	0.53			$	0.87			$	0.73			$	1.75
Adjusted return on average assets			0.35	%			0.72	%			1.10	%			0.53	%			1.12	%
Adjusted return on average shareholders' equity			3.46	%			7.07	%			11.21	%			5.27	%			11.48	%
Adjusted return on average tangible common equity			3.65	%			9.34	%			16.10	%			6.51	%			16.60	%
Adjusted pre-tax, pre-provision earnings		$	25,214			$	32,240			$	34,892			$	57,454			$	67,341
Adjusted pre-tax, pre-provision return on average assets			1.30	%			1.67	%			1.76	%			1.48	%			1.72	%
Market Data
Book value per share at period end		$	31.59			$	31.67			$	30.49
Tangible book value per share at period end (1)		$	23.36			$	23.44			$	22.24
Tangible book value per share excluding accumulated other comprehensive income at period end (1)		$	27.22			$	27.23			$	26.11
Market price at period end		$	22.65			$	25.13			$	19.91
Common shares outstanding at period end			21,377,215				21,485,231				21,854,800
Capital
Total capital to risk-weighted assets			13.94	%			13.68	%			12.65	%
Tier 1 capital to risk-weighted assets			11.21	%			11.16	%			10.47	%
Tier 1 common capital to risk-weighted assets			8.63	%			8.60	%			8.03	%
Tier 1 leverage ratio			9.84	%			9.92	%			9.57	%
Tangible common equity to tangible assets (1)			6.59	%			6.58	%			6.19	%
Wealth Management
Trust assets under administration		$	3,996,175			$	3,888,219			$	3,594,727

(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)
		As of
		June 30,				March 31,				December 31,				September 30,				June 30,
(in thousands)			2024				2024				2023				2023				2023
Assets
Cash and cash equivalents		$	124,646			$	167,316			$	135,061			$	132,132			$	160,695
Investment securities			1,099,654				1,044,900				920,396				839,344				887,003
Loans			5,851,994				5,958,462				6,131,079				6,280,883				6,367,344
Allowance for credit losses on loans			(92,183	)			(78,057	)			(68,502	)			(66,669	)			(64,950	)
Total loans, net			5,759,811				5,880,405				6,062,577				6,214,214				6,302,394
Loans held for sale			5,555				5,043				3,811				6,089				5,632
Premises and equipment, net			83,040				81,831				82,814				82,741				81,006
Other real estate owned			8,304				8,920				9,112				480				202
Loan servicing rights, at lower of cost or fair value			18,902				19,577				20,253				20,933				21,611
Goodwill			161,904				161,904				161,904				161,904				161,904
Other intangible assets, net			14,003				15,019				16,108				17,238				18,367
Company-owned life insurance			207,211				205,286				203,485				201,750				152,210
Other assets			274,244				241,608				251,347				292,460				243,697
Total assets		$	7,757,274			$	7,831,809			$	7,866,868			$	7,969,285			$	8,034,721
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits		$	1,108,521			$	1,212,382			$	1,145,395			$	1,154,515			$	1,162,909
Interest-bearing deposits			5,009,502				5,111,602				5,164,134				5,250,487				5,263,639
Total deposits			6,118,023				6,323,984				6,309,529				6,405,002				6,426,548
Short-term borrowings			7,208				214,446				34,865				17,998				21,783
FHLB advances and other borrowings			600,000				255,000				476,000				538,000				575,000
Subordinated debt			91,656				93,617				93,546				93,475				93,404
Trust preferred debentures			50,921				50,790				50,616				50,457				50,296
Other liabilities			103,694				102,966				110,459				106,743				90,869
Total liabilities			6,971,502				7,040,803				7,075,015				7,211,675				7,257,900
Total shareholders’ equity			785,772				791,006				791,853				757,610				776,821
Total liabilities and shareholders’ equity		$	7,757,274			$	7,831,809			$	7,866,868			$	7,969,285			$	8,034,721

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Three Months Ended											For the Six Months Ended
		June 30,				March 31,			June 30,				June 30,				June 30,
(in thousands, except per share data)		2024				2024			2023				2024				2023
Net interest income:
Interest income		$	103,295			$	101,675		$	100,491			$	204,970			$	196,030
Interest expense			48,243				45,755			41,651				93,998				76,686
Net interest income			55,052				55,920			58,840				110,972				119,344
Provision for credit losses on loans			17,000				14,000			5,879				31,000				9,014
Provision for credit losses on unfunded commitments			(200	)			—			—				(200	)			—
Total provision for credit losses			16,800				14,000			5,879				30,800				9,014
Net interest income after provision for credit losses			38,252				41,920			52,961				80,172				110,330
Noninterest income:
Wealth management revenue			6,801				7,132			6,269				13,933				12,680
Service charges on deposit accounts			3,121				3,116			2,677				6,237				5,245
Interchange revenue			3,563				3,358			3,696				6,921				7,108
Residential mortgage banking revenue			557				527			540				1,084				945
Income on company-owned life insurance			1,925				1,801			891				3,726				1,767
Loss on sales of investment securities, net			(152	)			—			(869	)			(152	)			(1,517	)
Other income			1,841				5,253			5,549				7,094				8,304
Total noninterest income			17,656				21,187			18,753				38,843				34,532
Noninterest expense:
Salaries and employee benefits			22,872				24,102			22,857				46,974				47,100
Occupancy and equipment			3,964				4,142			3,879				8,106				8,322
Data processing			7,205				6,722			6,544				13,927				12,855
Professional services			2,243				2,255			1,663				4,498				3,423
Amortization of intangible assets			1,016				1,089			1,208				2,105				2,499
FDIC insurance			1,219				1,274			1,196				2,493				2,525
Other expense			8,960				5,283			5,547				14,243				10,652
Total noninterest expense			47,479				44,867			42,894				92,346				87,376
Income before income taxes			8,429				18,240			28,820				26,669				57,486
Income taxes			1,679				4,355			7,245				6,034				14,139
Net income			6,750				13,885			21,575				20,635				43,347
Preferred stock dividends			2,228				2,228			2,228				4,456				4,456
Net income available to common shareholders		$	4,522			$	11,657		$	19,347			$	16,179			$	38,891
Basic earnings per common share		$	0.20			$	0.53		$	0.86			$	0.73			$	1.72
Diluted earnings per common share		$	0.20			$	0.53		$	0.86			$	0.73			$	1.72

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For the Three Months Ended												For the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
(dollars in thousands, except per share data)			2024				2024				2023				2024				2023
Income before income taxes - GAAP		$	8,429			$	18,240			$	28,820			$	26,669			$	57,486
Adjustments to noninterest income:
Loss on sales of investment securities, net			152				—				869				152				1,517
(Gain) on repurchase of subordinated debt			(167	)			—				(676	)			(167	)			(676	)
Total adjustments to noninterest income			(15	)			—				193				(15	)			841
Adjusted earnings pre tax - non-GAAP			8,414				18,240				29,013				26,654				58,327
Adjusted earnings tax			1,675				4,355				7,297				6,030				14,366
Adjusted earnings - non-GAAP			6,739				13,885				21,716				20,624				43,961
Preferred stock dividends			2,228				2,228				2,228				4,456				4,456
Adjusted earnings available to common shareholders		$	4,511			$	11,657			$	19,488			$	16,168			$	39,505
Adjusted diluted earnings per common share		$	0.20			$	0.53			$	0.87			$	0.73			$	1.75
Adjusted return on average assets			0.35	%			0.72	%			1.10	%			0.53	%			1.12	%
Adjusted return on average shareholders' equity			3.46	%			7.07	%			11.21	%			5.27	%			11.48	%
Adjusted return on average tangible common equity			3.65	%			9.34	%			16.10	%			6.51	%			16.60	%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
		For the Three Months Ended												For the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
(dollars in thousands)			2024				2024				2023				2024				2023
Adjusted earnings pre tax - non-GAAP		$	8,414			$	18,240			$	29,013			$	26,654			$	58,327
Provision for credit losses			16,800				14,000				5,879				30,800				9,014
Adjusted pre-tax, pre-provision earnings - non-GAAP		$	25,214			$	32,240			$	34,892			$	57,454			$	67,341
Adjusted pre-tax, pre-provision return on average assets			1.30	%			1.67	%			1.76	%			1.48	%			1.72	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Efficiency Ratio Reconciliation
		For the Three Months Ended												For the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
(dollars in thousands)			2024				2024				2023				2024				2023
Noninterest expense - GAAP		$	47,479			$	44,867			$	42,894			$	92,346			$	87,376
Net interest income - GAAP		$	55,052			$	55,920			$	58,840			$	110,972			$	119,344
Effect of tax-exempt income			170				215				195				384				439
Adjusted net interest income			55,222				56,135				59,035				111,356				119,783
Noninterest income - GAAP			17,656				21,187				18,753				38,843				34,532
Loss on sales of investment securities, net			152				—				869				152				1,517
(Gain) on repurchase of subordinated debt			(167	)			—				(676	)			(167	)			(676	)
Adjusted noninterest income			17,641				21,187				18,946				38,828				35,373
Adjusted total revenue		$	72,863			$	77,322			$	77,981			$	150,184			$	155,156
Efficiency ratio			65.16	%			58.03	%			55.01	%			61.49	%			56.31	%
Return on Average Tangible Common Equity (ROATCE)
		For the Three Months Ended												For the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
(dollars in thousands)			2024				2024				2023				2024				2023
Net income available to common shareholders		$	4,522			$	11,657			$	19,347			$	16,179			$	38,891
Average total shareholders' equity—GAAP		$	783,846			$	789,906			$	776,791			$	786,877			$	772,015
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			(14,483	)			(15,525	)			(18,937	)			(15,004	)			(19,557	)
Average tangible common equity		$	496,911			$	501,929			$	485,402			$	499,421			$	480,006
ROATCE			3.66	%			9.34	%			15.99	%			6.51	%			16.34	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
		As of
		June 30,				March 31,				December 31,				September 30,				June 30,
(dollars in thousands, except per share data)			2024				2024				2023				2023				2023
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	785,772			$	791,006			$	791,853			$	757,610			$	776,821
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			(14,003	)			(15,019	)			(16,108	)			(17,238	)			(18,367	)
Tangible common equity			499,317				503,535				503,293				467,920				486,002
Less: Accumulated other comprehensive loss (AOCI)			(82,581	)			(81,419	)			(76,753	)			(101,181	)			(84,719	)
Tangible common equity excluding AOCI		$	581,898			$	584,954			$	580,046			$	569,101			$	570,721
Total Assets to Tangible Assets:
Total assets—GAAP		$	7,757,274			$	7,831,809			$	7,866,868			$	7,969,285			$	8,034,721
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(14,003	)			(15,019	)			(16,108	)			(17,238	)			(18,367	)
Tangible assets		$	7,581,367			$	7,654,886			$	7,688,856			$	7,790,143			$	7,854,450
Common Shares Outstanding			21,377,215				21,485,231				21,551,402				21,594,546				21,854,800
Tangible Common Equity to Tangible Assets			6.59	%			6.58	%			6.55	%			6.01	%			6.19	%
Tangible Book Value Per Share		$	23.36			$	23.44			$	23.35			$	21.67			$	22.24
Tangible Book Value Per Share, excluding AOCI		$	27.22			$	27.23			$	26.91			$	26.35			$	26.11