Press Release

Midland States Bancorp, Inc. Announces 2018 Second Quarter Results

Highlights

  • Net income of $12.8 million, or $0.52 diluted earnings per share

  • Adjusted earnings of $14.5 million, or $0.59 diluted earnings per share, primarily reflects the exclusion of $2.0 million of integration and acquisition expenses

  • Total loans increased $66.7 million from end of prior quarter, or 6.6% annualized

  • Efficiency ratio improved to 67.8%

  • Wealth management revenue surpassed $5.0 million for the quarter

EFFINGHAM, Ill., July 26, 2018 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq:MSBI) (the “Company”) today reported net income of $12.8 million, or $0.52 diluted earnings per share, for the second quarter of 2018, which included $2.0 million of integration and acquisition expenses. This compares to net income of $1.8 million, or $0.08 diluted earnings per share, for the first quarter of 2018, which included $11.9 million of integration and acquisition expenses, and net income of $3.5 million, or $0.20 diluted earnings per share, for the second quarter of 2017, which included $7.5 million of integration and acquisition expenses.

“Our second quarter results reflected the initial full quarter benefits of the Alpine Bancorporation acquisition, which resulted in improved profitability and a more favorable revenue mix weighted towards recurring income generated from our core community banking and wealth management operations,” said Leon J. Holschbach, Chief Executive Officer of the Company.  “While we continue to prudently manage our balance sheet in order to maintain stability in our net interest margin, we saw a pick-up in loan growth during the second quarter driven by our expanded equipment financing business and our consumer lending programs.  We recently completed the Alpine system conversion and are ahead of schedule in realizing the projected cost savings from the Alpine acquisition.  These cost savings have helped us to drive improvement in our level of efficiency, and we believe we are well-positioned to deliver additional earnings growth in 2019.”

Factors Affecting Comparability

The Company acquired Alpine Bancorporation, Inc. (“Alpine”), and Centrue Financial Corporation (“Centrue”) in February 2018 and June 2017, respectively. The financial position and results of operations of these entities prior to their acquisition dates are not included in the Company’s financial results.

Adjusted Earnings

Adjusted earnings were $14.5 million, or $0.59 diluted earnings per share, for the second quarter of 2018, which primarily reflects the exclusion of $2.0 million in integration and acquisition expenses.  This compares to adjusted earnings of $11.3 million, or $0.52 diluted earnings per share, for the first quarter of 2018, which primarily reflects the exclusion of $11.9 million in integration and acquisition expenses.

The increase in adjusted earnings per share was primarily attributable to the earnings contribution from Alpine.

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

Net Interest Income

Net interest income for the second quarter of 2018 was $48.3 million, an increase of 26.5% from $38.2 million for the first quarter of 2018.  The increase in net interest income was primarily attributable to the full quarter of net interest income contributed by Alpine.

The Company’s net interest income benefits from accretion income associated with purchased loan portfolios.  Accretion income totaled $5.5 million for the second quarter of 2018, compared with $2.0 million for the first quarter of 2018. 

Relative to the second quarter of 2017, net interest income increased $18.9 million, or 64.2%.  Accretion income for the second quarter of 2017 was $1.3 million.  The increase in net interest income resulted from the increase in accretion income and a $23.8 million increase in interest income on interest-earning assets, offset in part by a $4.9 million increase in interest expense.  These increases were due to the full quarter impact of Alpine and Centrue, as well as organic growth.

Net Interest Margin

Net interest margin for the second quarter of 2018 was 3.91%, compared to 3.69% for the first quarter of 2018.  The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 40 and 16 basis points to net interest margin in the second quarter of 2018 and first quarter of 2018, respectively.  Excluding the impact of accretion income, net interest margin was relatively unchanged compared to the first quarter of 2018.

Relative to the second quarter of 2017, net interest margin increased from 3.70%.  Accretion income on purchased loan portfolios contributed 13 basis points to net interest margin in the second quarter of 2017.  Excluding the impact of accretion income, the net interest margin declined due to non-deposit funding costs increasing faster than the yield on earning assets. 

Noninterest Income

Noninterest income for the second quarter of 2018 was $15.9 million, a decrease of 4.0% from $16.6 million for the first quarter of 2018.  The decrease was primarily attributable to a decline in commercial FHA revenue, which was partially offset by increases in most of the Company’s other fee generating areas due to the full quarter benefit of Alpine.

Wealth management revenue for the second quarter of 2018 was $5.4 million, an increase of 29.5% from $4.2 million in the first quarter of 2018.  The increase was primarily attributable to the full quarter contribution of Alpine’s wealth management business, which added $1.1 billion in assets under administration.  Compared to the second quarter of 2017, wealth management revenue increased 59.0%, which was attributable to 7.9% organic growth in assets under administration and the addition of Alpine’s wealth management business.

Commercial FHA revenue for the second quarter of 2018 was $0.3 million, a decrease of 90.2% from $3.3 million in the first quarter of 2018.  The Company originated $11.1 million in rate lock commitments during the second quarter of 2018, compared to $80.4 million in the prior quarter.  Compared to the second quarter of 2017, commercial FHA revenue decreased 92.2%.

In response to the recent performance in the commercial FHA business, the Company has made changes in the leadership at Love Funding and implemented cost reductions to better align expenses with the current level of revenue being generated.  On a long-term basis, Midland expects annual commercial FHA revenue to range between $12 million and $20 million, with a pre-tax margin of 20% to 40%.

Relative to the second quarter of 2017, noninterest income increased 17.1% from $13.6 million.  The increase was primarily due to greater wealth management and core banking fees, partially offset by lower commercial FHA and residential mortgage banking revenue.

Noninterest Expense

Noninterest expense for the second quarter of 2018 was $46.6 million, which included $2.0 million in integration and acquisition expense, compared with $49.6 million for the first quarter of 2018, which included $11.9 million in integration and acquisition expense.  Excluding integration and acquisition expense, noninterest expense increased $6.8 million, or 18.1%, from the prior quarter.  The increase was primarily due to a full quarter of expenses associated with the addition of Alpine’s operations.

Relative to the second quarter of 2017, noninterest expense, excluding integration and acquisition expenses, increased 47.5% from $30.2 million.  The increase was primarily due to the addition of personnel and facilities from the two acquisitions completed over the past year. 

Loan Portfolio

Total loans outstanding were $4.10 billion at June 30, 2018, compared with $4.03 billion at March 31, 2018 and $3.18 billion at June 30, 2017.  The increase in total loans from March 31, 2018, was primarily attributable to growth in equipment financing, consumer lending and residential real estate.  Equipment financing balances increased $38.1 million from March 31, 2018, which are booked within either the commercial or the lease financing portfolios.  The increase in total loans from June 30, 2017 was primarily attributable to the addition of Alpine’s loans.

Deposits

Total deposits were $4.16 billion at June 30, 2018, compared with $4.23 billion at March 31, 2018, and $3.33 billion at June 30, 2017.  The decrease in total deposits from March 31, 2018 was primarily attributable to normal fluctuations in servicing deposits and a reduction in brokered time deposits. The increase in total deposits from June 30, 2017 was primarily attributable to the addition of Alpine’s deposits.

Asset Quality

Non-performing loans totaled $28.3 million, or 0.69% of total loans, at June 30, 2018, compared with $26.5 million, or 0.66% of total loans, at March 31, 2018, and $27.6 million, or 0.87% of total loans, at June 30, 2017.  

Net charge-offs for the second quarter of 2018 were $1.3 million, or 0.13% of average loans on an annualized basis.  

The Company recorded a provision for loan losses of $1.9 million for the second quarter of 2018.  The Company’s allowance for loan losses was 0.45% of total loans and 64.4% of non-performing loans at June 30, 2018, compared with 0.44% of total loans and 66.8% of non-performing loans at March 31, 2018.  Fair market value discounts recorded in connection with acquired loan portfolios represented 0.81% of total loans at June 30, 2018, compared with 0.65% of total loans at March 31, 2018.

Capital

At June 30, 2018, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

  June 30, 2018 Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 12.27% 10.00%
Tier 1 capital to risk-weighted assets 9.78% 8.00%
Tier 1 leverage ratio 8.16% 5.00%
Common equity Tier 1 capital 8.28% 6.50%
Tangible common equity to tangible assets 6.96% NA 

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, July 27, 2018 to discuss its financial results.  The call can be accessed via telephone at (877) 516-3531; passcode: 4999299.  A recorded replay can be accessed through August 3, 2018 by dialing (855) 859-2056; passcode: 4999299.

A slide presentation relating to the second quarter 2018 results will be accessible prior to the scheduled conference call.  The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website.

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, 2018, the Company had total assets of approximately $5.7 billion and its Wealth Management Group had assets under administration of approximately $3.2 billion.  Midland provides a full range of commercial and consumer banking products and services, business equipment financing, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, multi-family and healthcare facility FHA financing is provided through Love Funding, Midland’s non-bank subsidiary. For additional information, visit www.midlandsb.com or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

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

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels.  These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; 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" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do 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, at jludwig@midlandsb.com or (217) 342-7321
Stephen A. Erickson, Chief Financial Officer, at serickson@midlandsb.com or (217) 540-1712
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321


                                           
MIDLAND STATES BANCORP, INC.    
CONSOLIDATED FINANCIAL SUMMARY (unaudited)    
                                           
    For the Quarter Ended    
    June 30,    March 31,    December 31,      September 30,        June 30,     
(dollars in thousands, except per share data)   2018   2018   2017   2017   2017  
Earnings Summary                                          
Net interest income   $   48,286     $   38,185     $   36,036   $     36,765     $   29,400    
Provision for loan losses       1,854         2,006         6,076         1,489         458    
Noninterest income       15,948         16,605         13,998         15,403         13,619    
Noninterest expense       46,553         49,602         36,192         48,363         37,645    
Income before income taxes       15,827         3,182         7,766         2,316         4,916    
Income taxes       3,045         1,376         5,775         280         1,377    
Net income        12,782         1,806         1,991         2,036         3,539    
Preferred stock dividends, net       36         36         37         27         19    
Net income available to common shareholders   $   12,746     $   1,770     $   1,954     $   2,009     $   3,520    
                                           
Diluted earnings per common share   $ 0.52     $ 0.08     $ 0.10     $ 0.10     $ 0.20    
Weighted average shares outstanding - diluted     24,268,111       21,351,511       19,741,833       19,704,217       17,320,089    
Return on average assets     0.91 %     0.15 %     0.18 %     0.18 %     0.39 %  
Return on average shareholders' equity     8.77 %     1.47 %     1.74 %     1.78 %     3.93 %  
Return on average tangible common equity (1)     13.48 %     2.05 %     2.31 %     2.38 %     4.89 %  
Net interest margin     3.91 %     3.69 %     3.73 %     3.78 %     3.70 %  
Efficiency ratio (1)     67.81 %     68.45 %     64.64 %     69.00 %     66.54 %  
                                           
Adjusted Earnings Performance Summary                                          
Adjusted earnings (1)   $ 14,486     $ 11,301     $ 8,403     $ 9,173     $ 8,076    
Adjusted diluted earnings per common share (1)   $ 0.59     $ 0.52     $ 0.42     $ 0.46     $ 0.46    
Adjusted return on average assets (1)     1.03 %     0.96 %     0.76 %     0.82 %     0.89 %  
Adjusted return on average shareholders' equity (1)     9.94 %     9.19 %     7.34 %     8.03 %     8.97 %  
Adjusted return on average tangible common equity (1)     15.28 %     13.06 %     9.88 %     10.83 %     11.20 %  
                                           
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.                              
                               


                                             
MIDLAND STATES BANCORP, INC.    
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)    
       
    For the Quarter Ended      
    June 30,    March 31,    December 31,    September 30,    June 30,     
(in thousands, except per share data)   2018   2018   2017   2017   2017    
Net interest income:                                            
Total interest income   $   58,283       $ 46,505     $ 43,500     $ 43,246     $ 34,528      
Total interest expense       9,997         8,320       7,464       6,481       5,128      
Net interest income       48,286         38,185       36,036       36,765       29,400      
Provision for loan losses       1,854         2,006       6,076       1,489       458      
Net interest income after provision for loan losses       46,432         36,179       29,960       35,276       28,942      
Noninterest income:                                            
Commercial FHA revenue       326         3,330       3,127       3,777       4,153      
Residential mortgage banking revenue       2,116         1,418       1,556       2,317       2,330      
Wealth management revenue       5,417         4,182       3,587       3,475       3,406      
Service charges on deposit accounts       2,693         1,967       1,828       2,133       1,122      
Interchange revenue       2,929         2,045       1,538       1,724       1,114      
(Loss) gain on sales of investment securities, net       (70 )       65       2       98       55      
Other income       2,537         3,598       2,360       1,879       1,439      
Total noninterest income       15,948         16,605       13,998       15,403       13,619      
Noninterest expense:                                            
Salaries and employee benefits       23,467         28,395       17,344       22,411       21,842      
Occupancy and equipment       4,708         4,252       3,859       4,144       3,472      
Data processing       4,852         4,286       3,640       5,786       2,949      
Professional       3,575         4,074       3,611       4,151       3,142      
Amortization of intangible assets       1,576         1,675       1,035       1,187       579      
Loss on mortgage servicing rights held for sale       188           -       442       3,617         -      
Other       8,187         6,920       6,261       7,067       5,661      
Total noninterest expense       46,553         49,602       36,192       48,363       37,645      
Income before income taxes       15,827         3,182       7,766       2,316       4,916      
Income taxes       3,045         1,376       5,775       280       1,377      
Net income       12,782         1,806       1,991       2,036       3,539      
Preferred stock dividends, net       36         36       37       27       19      
Net income available to common shareholders   $   12,746       $   1,770     $   1,954     $   2,009     $   3,520      
                                             
Basic earnings per common share   $ 0.53       $ 0.08     $ 0.10     $ 0.10     $ 0.21      
Diluted earnings per common share   $ 0.52       $ 0.08     $ 0.10     $ 0.10     $ 0.20      
                                             


                                         
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                                         
    As of  
    June 30,    March 31,    December 31,    September 30,    June 30, 
(in thousands)   2018   2018   2017   2017   2017
Assets                                        
Cash and cash equivalents   $ 276,331       $ 331,183       $ 215,202       $ 183,572       $ 334,356    
Investment securities      708,001         738,172         450,525         467,852         460,711    
Loans     4,095,811         4,029,150         3,226,678         3,157,972         3,184,063    
Allowance for loan losses     (18,246 )       (17,704 )       (16,431 )       (16,861 )       (15,424 )  
Total loans, net     4,077,565         4,011,446         3,210,247         3,141,111         3,168,639    
Loans held for sale at fair value     41,449         25,267         50,089         35,874         41,689    
Premises and equipment, net     94,783         95,332         76,162         80,941         76,598    
Other real estate owned     3,911         5,059         5,708         6,379         7,036    
Mortgage servicing rights at lower of cost or market     52,381         56,427         56,352         56,299         70,277    
Mortgage servicing rights held for sale     4,806         3,962         10,176         10,618           -    
Intangible assets     41,081         46,473         16,932         17,966         18,459    
Goodwill     164,044         155,674         98,624         97,351         96,940    
Cash surrender value of life insurance policies     137,681         136,766         113,366         112,591         111,802    
Other assets     128,567         117,611         109,318         137,207         105,135    
Total assets   $ 5,730,600       $ 5,723,372       $ 4,412,701       $ 4,347,761       $ 4,491,642    
                                         
Liabilities and Shareholders' Equity                                        
Noninterest-bearing deposits   $ 1,001,802       $ 1,037,710       $ 724,443       $ 674,118       $ 780,803    
Interest-bearing deposits     3,158,055         3,196,105         2,406,646         2,440,349         2,552,228    
Total deposits     4,159,857         4,233,815         3,131,089         3,114,467         3,333,031    
Short-term borrowings     114,536         130,693         156,126         153,443         170,629    
FHLB advances and other borrowings     678,873         587,493         496,436         488,870         400,304    
Subordinated debt     94,053         94,013         93,972         54,581         54,556    
Trust preferred debentures     47,559         47,443         47,330         47,218         47,107    
Other liabilities     43,187         44,530         38,203         38,493         34,063    
Total liabilities     5,138,065         5,137,987         3,963,156         3,897,072         4,039,690    
Total shareholders’ equity     592,535         585,385         449,545         450,689         451,952    
Total liabilities and shareholders’ equity   $ 5,730,600       $ 5,723,372       $ 4,412,701       $ 4,347,761       $ 4,491,642    
                                         


                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    As of    
    June 30,    March 31,    December 31,    September 30,    June 30,   
(in thousands)   2018   2018   2017   2017   2017  
Loan Portfolio                                          
Commercial loans   $ 762,549     $ 802,752     $ 555,930     $ 513,544     $ 571,111    
Commercial real estate loans     1,711,296       1,773,510       1,440,011       1,472,284       1,470,487    
Construction and land development loans     247,889       234,837       200,587       182,513       176,098    
Residential real estate loans     601,808       570,321       453,552       445,747       428,464    
Consumer loans     543,654       424,229       371,455       343,038       335,902    
Lease financing loans     228,615       223,501       205,143       200,846       202,001    
Total loans   $ 4,095,811     $ 4,029,150     $ 3,226,678     $ 3,157,972     $ 3,184,063    
                                           
Deposit Portfolio                                          
Noninterest-bearing demand deposits   $ 1,001,802     $ 1,037,710     $ 724,443     $ 674,118     $ 780,803    
Checking accounts     1,024,506       993,253       785,934       800,649       841,640    
Money market accounts     843,984       840,415       646,426       633,844       578,077    
Savings accounts     460,560       466,887       281,212       278,977       291,912    
Time deposits     638,215       672,034       502,810       493,777       525,647    
Brokered deposits     190,790       223,516       190,264       233,102       314,952    
Total deposits   $ 4,159,857     $ 4,233,815     $ 3,131,089     $ 3,114,467     $ 3,333,031    
                                           


                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    For the Quarter Ended    
    June 30,    March 31,    December 31,    September 30,    June 30,   
(dollars in thousands)   2018   2018   2017   2017   2017  
Average Balance Sheets                                          
Cash and cash equivalents   $ 227,499     $ 138,275     $ 173,540     $ 202,407     $ 192,483    
Investment securities     731,017       548,168       461,475       474,216       362,268    
Loans     3,982,958       3,477,917       3,198,036       3,173,027       2,621,139    
Loans held for sale     31,220       40,841       40,615       46,441       61,718    
Nonmarketable equity securities     38,872       34,890       33,703       31,224       22,246    
Total interest-earning assets     5,011,566       4,240,091       3,907,369       3,927,315       3,259,854    
Non-earning assets     639,864       536,750       497,502       498,364       372,473    
Total assets   $ 5,651,430     $ 4,776,841     $ 4,404,871     $ 4,425,679     $ 3,632,327    
                                           
Interest-bearing deposits   $ 3,158,816     $ 2,675,339     $ 2,433,461     $ 2,527,490     $ 2,116,565    
Short-term borrowings     120,794       148,703       181,480       182,015       146,144    
FHLB advances and other borrowings     573,107       489,567       472,709       434,860       290,401    
Subordinated debt     94,035       93,993       88,832       54,570       54,542    
Trust preferred debentures     47,488       47,373       47,263       47,152       40,820    
Total interest-bearing liabilities     3,994,240       3,454,975       3,223,745       3,246,087       2,648,472    
Noninterest-bearing deposits     1,025,308       782,164       684,907       688,986       579,977    
Other noninterest-bearing liabilities     47,229       40,761       42,251       37,289       42,372    
Shareholders' equity     584,653       498,941       453,968       453,317       361,506    
Total liabilities and shareholders' equity   $ 5,651,430     $ 4,776,841     $ 4,404,871     $ 4,425,679     $ 3,632,327    
                                           
Yields                                          
Cash and cash equivalents     1.79 %     1.53 %     1.28 %     1.19 %     1.02 %  
Investment securities     2.91 %     2.87 %     3.01 %     2.86 %     3.33 %  
Loans     5.21 %     4.85 %     4.88 %     4.90 %     4.71 %  
Loans held for sale     3.79 %     4.25 %     3.62 %     3.74 %     4.68 %  
Nonmarketable equity securities     4.97 %     4.64 %     4.78 %     4.20 %     4.31 %  
Total interest-earning assets     4.71 %     4.49 %     4.48 %     4.44 %     4.33 %  
Interest-bearing deposits     0.64 %     0.62 %     0.58 %     0.53 %     0.53 %  
Short-term borrowings     0.38 %     0.34 %     0.26 %     0.22 %     0.23 %  
FHLB advances and other borrowings     1.81 %     1.55 %     1.42 %     1.36 %     1.16 %  
Subordinated debt     6.44 %     6.44 %     6.46 %     6.40 %     6.40 %  
Trust preferred debentures     6.59 %     5.94 %     5.51 %     5.37 %     5.15 %  
Total interest-bearing liabilities     1.00 %     0.98 %     0.92 %     0.79 %     0.78 %  
Net interest margin     3.91 %     3.69 %     3.73 %     3.78 %     3.70 %  
                                           


                                           
MIDLAND STATES BANCORP, INC.  
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)  
                                           
    As of and for the Quarter Ended    
    June 30,    March 31,    December 31,    September 30,    June 30,   
(dollars in thousands, except per share data)   2018   2018   2017   2017   2017  
Asset Quality                                          
Loans 30-89 days past due   $ 19,362     $ 20,138     $ 15,405     $ 13,526     $ 13,566    
Nonperforming loans     28,342       26,499       26,760       33,431       27,615    
Nonperforming assets     31,542       29,938       30,894       38,109       33,150    
Net charge-offs      1,312       732       6,506       52       839    
Loans 30-89 days past due to total loans     0.47 %     0.50 %     0.48 %     0.43 %     0.43 %  
Nonperforming loans to total loans     0.69 %     0.66 %     0.83 %     1.06 %     0.87 %  
Nonperforming assets to total assets     0.55 %     0.52 %     0.70 %     0.88 %     0.74 %  
Allowance for loan losses to total loans     0.45 %     0.44 %     0.51 %     0.53 %     0.48 %  
Allowance for loan losses to nonperforming loans     64.38 %     66.81 %     61.40 %     50.43 %     55.81 %  
Net charge-offs to average loans     0.13 %     0.09 %     0.81 %     0.01 %     0.13 %  
                                           
Wealth Management                                          
Trust assets under administration   $ 3,188,909     $ 3,125,051     $ 2,051,249     $ 2,001,106     $ 1,929,513    
                                           
Market Data                                          
Book value per share at period end   $ 24.92     $ 24.67     $ 23.35     $ 23.45     $ 23.51    
Tangible book value per share at period end (1)   $ 16.25     $ 16.11     $ 17.31     $ 17.41     $ 17.47    
Market price at period end   $ 34.26     $ 31.56     $ 32.48     $ 31.68     $ 33.52    
Shares outstanding at period end     23,664,596       23,612,430       19,122,049       19,093,153       19,087,409    
                                           
Capital                                          
Total capital to risk-weighted assets     12.27 %     12.37 %     13.26 %     12.21 %     11.98 %  
Tier 1 capital to risk-weighted assets     9.78 %     9.84 %     10.19 %     10.20 %     10.05 %  
Tier 1 leverage ratio     8.16 %     9.55 %     8.63 %     8.54 %     10.45 %  
Tier 1 common capital to risk-weighted assets     8.28 %     8.30 %     8.45 %     8.50 %     8.36 %  
Tangible common equity to tangible assets (1)     6.96 %     6.89 %     7.70 %     7.85 %     7.62 %  
                                           
(1) Non-GAAP financial measures. Refer to pages 12 - 14 for a reconciliation to the comparable GAAP financial measures.                          
                                           


 
MIDLAND STATES BANCORP, INC.  
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES  
                                           
Adjusted Earnings Reconciliation                                           
                                           
    For the Quarter Ended    
    June 30,    March 31,    December 31,    September 30,    June 30,   
(dollars in thousands, except per share data)   2018   2018   2017   2017   2017  
Income before income taxes - GAAP   $   15,827       $   3,182     $   7,766       $   2,316     $   4,916      
Adjustments to noninterest income:                                          
(Loss) gain on sales of investment securities, net     (70 )         65         2           98         55      
Other       (48 )         150         37           45         (91 )    
Total adjustments to noninterest income       (118 )         215         39           143         (36 )    
Adjustments to noninterest expense:                                          
Loss on mortgage servicing rights held for sale       188           -         442           3,617         -      
Integration and acquisition expenses       2,019           11,884         2,686           8,303         7,450      
Total adjustments to noninterest expense       2,207           11,884         3,128           11,920         7,450      
Adjusted earnings pre tax     18,152           14,851         10,855           14,093         12,402      
Adjusted earnings tax        3,666           3,550         6,992           4,920         4,326      
Revaluation of net deferred tax assets       -           -         (4,540 )         -         -      
Adjusted earnings - non-GAAP     14,486           11,301         8,403           9,173         8,076      
Preferred stock dividends, net       36           36         37           27         19      
Adjusted earnings - available to common shareholders - non-GAAP   $   14,450       $   11,265     $   8,366       $   9,146     $   8,057      
Adjusted diluted earnings per common share   $   0.59       $   0.52     $   0.42       $   0.46     $   0.46      
Adjusted return on average assets       1.03   %       0.96  %       0.76   %       0.82  %       0.89   %  
Adjusted return on average shareholders' equity       9.94   %       9.19  %       7.34   %       8.03  %       8.97   %  
Adjusted return on average tangible common equity       15.28   %       13.06  %       9.88   %       10.83  %       11.20   %  
                                           


MIDLAND STATES BANCORP, INC.    
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (continued)    
                                             
Efficiency Ratio Reconciliation                                            
    For the Quarter Ended      
    June 30,    March 31,    December 31,    September 30,    June 30,     
(dollars in thousands)   2018   2018   2017   2017   2017    
Noninterest expense - GAAP   $   46,553       $   49,602       $   36,192       $   48,363       $   37,645        
Loss on mortgage servicing rights held for sale       (188 )         -           (442 )         (3,617 )         -        
Integration and acquisition expenses       (2,019 )         (11,884 )         (2,686 )         (8,303 )         (7,450 )      
Adjusted noninterest expense   $   44,346       $   37,718       $   33,064       $   36,443       $   30,195        
                                             
Net interest income - GAAP   $   48,286       $   38,185       $   36,036       $   36,765       $   29,400        
Effect of tax-exempt income       541           394           659           687           674        
Adjusted net interest income       48,827           38,579           36,695           37,452           30,074        
                                             
Noninterest income - GAAP   $   15,948       $   16,605       $   13,998       $   15,403       $   13,619        
Mortgage servicing rights impairment        500           133           494           104           1,650        
Loss (gain) on sales of investment securities, net     70           (65 )         (2 )         (98 )         (55 )      
Other       48           (150 )         (37 )         (45 )         91        
Adjusted noninterest income       16,566           16,523           14,453           15,364           15,305        
                                             
Adjusted total revenue   $   65,393       $   55,102       $   51,148       $   52,816       $   45,379        
                                             
Efficiency ratio       67.81   %       68.45   %       64.64   %       69.00   %       66.54   %    
                                             


                                             
MIDLAND STATES BANCORP, INC.    
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (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)   2018   2018   2017   2017   2017    
Shareholders' Equity to Tangible Common Equity                                            
Total shareholders' equity—GAAP   $   592,535       $   585,385       $   449,545       $   450,689       $   451,952        
Adjustments:                                            
Preferred stock       (2,876 )         (2,923 )         (2,970 )         (3,015 )         (3,134 )      
Goodwill       (164,044 )         (155,674 )         (98,624 )         (97,351 )         (96,940 )      
Other intangibles       (41,081 )         (46,473 )         (16,932 )         (17,966 )         (18,459 )      
Tangible common equity   $   384,534       $   380,315       $   331,019       $   332,357       $   333,419        
                                             
Total Assets to Tangible Assets:                                            
Total assets—GAAP   $   5,730,600       $   5,723,372       $   4,412,701       $   4,347,761       $   4,491,642        
Adjustments:                                            
Goodwill       (164,044 )         (155,674 )         (98,624 )         (97,351 )         (96,940 )      
Other intangibles       (41,081 )         (46,473 )         (16,932 )         (17,966 )         (18,459 )      
Tangible assets   $   5,525,475       $   5,521,225       $   4,297,145       $   4,232,444       $   4,376,243        
                                             
Common Shares Outstanding       23,664,596           23,612,430           19,122,049           19,093,153           19,087,409        
                                             
Tangible Common Equity to Tangible Assets       6.96   %       6.89   %       7.70   %       7.85   %       7.62   %    
Tangible Book Value Per Share   $   16.25       $   16.11       $   17.31       $   17.41       $   17.47        
                                             
Return on Average Tangible Common Equity (ROATCE)                                      
                                             
  For the Quarter Ended    
    June 30,    March 31,    December 31,    September 30,    June 30,     
(dollars in thousands)   2018   2018   2017   2017   2017    
Net income available to common shareholders   $   12,746       $   1,770       $   1,954       $   2,009       $   3,520        
                                             
Average total shareholders' equity—GAAP   $   584,653       $   498,941       $   453,968       $   453,317       $   361,335        
Adjustments:                                            
Preferred stock        (2,905 )         (2,952 )         (2,997 )         (3,126 )         (654 )      
Goodwill       (158,461 )         (118,996 )         (97,406 )         (97,129 )         (61,424 )      
Other intangibles       (44,098 )         (27,156 )         (17,495 )         (18,153 )         (10,812 )      
Average tangible common equity   $   379,189       $   349,837       $   336,070       $   334,909       $   288,445        
ROATCE       13.48   %       2.05   %       2.31   %       2.38   %       4.89   %    
                                             


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