Midland States Bancorp, Inc. Announces 2024 Second Quarter Results

| Source: Midland States Bancorp, Inc. Midland States Bancorp, Inc.

Second Quarter 2024 Highlights:

  • Net income available to common shareholders of $4.5 million, or $0.20 per diluted share
  • Adjusted pre-tax, pre-provision earnings of $25.2 million
  • Tangible book value per share decreased to $23.36, compared to $23.44 at March 31, 2024
  • Common equity tier 1 capital ratio improved to 8.63% from 8.60%
  • Net interest margin of 3.12%, compared to 3.18% in prior quarter
  • Efficiency ratio of 65.2%, compared to 58.0% in prior quarter

EFFINGHAM, Ill., July 25, 2024 (GLOBE NEWSWIRE) -- 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 assets13.06% 13.94% 10.50%
Tier 1 capital to risk-weighted assets11.69% 11.21% 8.50%
Tier 1 leverage ratio10.26% 9.84% 4.00%
Common equity Tier 1 capital11.69% 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) 342-7321
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)
           
  As of and for the Three Months Ended As of and
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 
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