Midland States Bancorp, Inc. Announces 2016 Second Quarter Results

Second Quarter 2016 Summary

Successful initial public offering raises net proceeds of $71.7 million
Net income of $6.8 million, or $0.50 diluted earnings per share
Total loans increased $145 million, or 28.8% on an annualized basis
Non-interest income of $14.0 million, or 33.4% of total revenue
Return on average assets of 0.89%; Return on average equity of 10.18%

EFFINGHAM, Ill., July 28, 2016 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported net income of $6.8 million, or $0.50 diluted earnings per share, for the second quarter of 2016, compared with net income of $5.1 million, or $0.42 diluted earnings per share, for the first quarter of 2016, and net income of $6.7 million, or $0.55 diluted earnings per share, for the second quarter of 2015. Net income for the second quarter of 2016 included a $3.0 million charge for the impairment of residential mortgage servicing rights (MSR), compared to $2.0 million in the first quarter of 2016 and a reversal of impairment of $1.0 million in the second quarter of 2015. The effect of changes in residential MSR valuation negatively impacted diluted earnings per share by $0.14 and $0.10 for the second quarter of 2016 and first quarter of 2016, respectively, and positively impacted diluted earnings per share by $0.06 in the second quarter of 2015.

“We were very pleased to complete our initial public offering during the second quarter of 2016,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “The capital raised through the IPO will support the continued implementation of our organic and acquisitive growth strategies, which we believe will create additional value for our shareholders in the years ahead.

“We had an outstanding quarter of business development and through the first half of 2016 our total loan portfolio increased at an annualized rate of 16%. Our loan production was very well balanced in the second quarter and underscores the diverse business model we have built. We had strong growth in our consumer, equipment leasing, construction, commercial real estate and residential real estate portfolios, and also had a robust quarter of loan production in our commercial FHA lending business.

“We also had a significant increase in our residential mortgage loan production and the net gain on loan sales generated from this business. However, with the continued decline in interest rates, we recorded a $3.0 million impairment of our residential mortgage servicing rights, which offset much of the residential mortgage banking revenue generated this quarter.

“Looking ahead to the remainder of 2016, we believe that our markets are fundamentally healthy and we are seeing positive trends in loan demand and credit quality. We continue to have a robust loan pipeline, which should support continued quality balance sheet growth during the second half of the year,” said Mr. Holschbach.

Net Interest Income

Net interest income for the second quarter of 2016 was $28.0 million, an increase of 16.4% from $24.0 million for the first quarter of 2016. The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $4.9 million for the second quarter of 2016, compared with $1.9 million for the first quarter of 2016. In addition to higher accretion income, the increase in net interest income was primarily attributable to an increase in average loan balances.

Accretion income for the second quarter of 2016 was positively impacted by the payoff of purchased credit impaired loans (PCI) totaling $5.9 million. One of the PCI loans was an FDIC loss share loan, which resulted in the Company recording $1.8 million in net interest income, a $1.5 million expense for the amount payable to the FDIC within noninterest income, and an $808,000 reduction of provision for loan losses.

Relative to the second quarter of 2015, net interest income declined $328,000 due to a decline in accretion income, which totaled $5.9 million for the second quarter of 2015. The decline in accretion income was offset by an increase in average loan balances.

Net Interest Margin

Net interest margin for the second quarter of 2016 was 4.20%, compared to 3.80% for the first quarter of 2016. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.52% for the second quarter of 2016, compared with 3.55% for the first quarter of 2016. The decrease in net interest margin excluding accretion income was primarily attributable to a decline in the average yield on loans.

Relative to the second quarter of 2015, the net interest margin declined from 4.79%, primarily due to lower accretion income. Excluding accretion income, net interest margin declined from 3.88%, which was primarily attributable to lower average yields on loans and investment securities and an increase in cost of funds.

Noninterest Income

Noninterest income for the second quarter of 2016 was $14.0 million, an increase of 11.1% from $12.6 million for the first quarter of 2016. The increase was primarily attributable to higher commercial FHA revenue and lower other-than-temporary impairment recorded on investment securities. This was partially offset by higher FDIC loss-sharing expense related to the $1.5 million payable to the FDIC as discussed above.

Commercial FHA revenue for the second quarter of 2016 was $8.5 million, an increase of 30.1% from $6.6 million in the first quarter of 2016. The Company originated $281.2 million in rate lock commitments during the second quarter of 2016, compared to $227.3 million in the prior quarter.

Residential mortgage banking revenue for the second quarter of 2016 was $1.0 million, a decrease of 6.8% from $1.1 million in the first quarter of 2016. During the second quarter of 2016, the Company recorded mortgage servicing rights impairment of $3.0 million due to a decline in long-term rates and the impact on prepayment speed assumptions compared to a $2.0 million impairment charge in the first quarter of 2016.

Relative to the second quarter of 2015, noninterest income declined 1.2% from $14.2 million. The decline was primarily due to lower residential mortgage banking revenue and higher FDIC loss-sharing expense, which was partially offset by higher commercial FHA revenue.

Noninterest Expense

Noninterest expense for the second quarter of 2016 was $30.9 million, an increase of 11.8% from $27.6 million for the first quarter of 2016. The increase was primarily driven by higher salaries resulting from annual salary increases that took effect in the second quarter, and higher bonus accrual. During the second quarter of 2016, the Company also recorded a $511,000 write-off of accounting discount related to the early payoff of subordinated debt.

Relative to the second quarter of 2015, noninterest expense was essentially unchanged. Higher salaries and benefits expense and the write-off of accounting discount related to the payoff of subordinated debt in the second quarter of 2016 were offset by a decline in professional fees.

Loan Portfolio

Total loans outstanding were $2.16 billion at June 30, 2016, compared with $2.02 billion at March 31, 2016, and $1.91 billion at June 30, 2015. The $145 million increase in the loan portfolio during the second quarter of 2016 was driven primarily by a $46.1 million increase in consumer loans, a $32.3 million increase in commercial real estate loans, a $22.2 million increase in construction and land development loans, a $21.0 million increase in residential real estate loans, and an $18.9 million increase in equipment lease financing loans.

Purchased Credit Impaired Loans

Purchased credit impaired (PCI) loans totaled $28.6 million at June 30, 2016, compared to $35.3 million at the end of the prior quarter and $42.5 million at June 30, 2015. The decreases in PCI loans were primarily due to repayments and pay-offs of PCI loans as the Company did not complete any bank acquisitions during 2015 or the first half of 2016.

Deposits

Total deposits were $2.35 billion at June 30, 2016, compared with $2.39 billion at March 31, 2016, and $2.24 billion at June 30, 2015. The decrease in total deposits from March 31, 2016 was primarily due to declines in non-interest bearing demand deposits and money market accounts, which were partially offset by an increase in NOW accounts. The decrease in demand deposits was primarily attributable to fluctuations in Commercial FHA servicing deposits caused by the timing of loan payoffs.

Asset Quality

Non-performing loans totaled $18.4 million, or 0.85% of total loans, at June 30, 2016, compared with $18.8 million, or 0.93% of total loans, at March 31, 2016.

Net charge-offs for the second quarter of 2016 were $448,000, or 0.09% of average loans on an annualized basis.

The Company recorded a provision for loan losses of $629,000 for the second quarter of 2016, primarily to reflect the growth in the loan portfolio. During the second quarter of 2016, the Company recorded a recovery of $808,000 on a PCI loan, which reduced the level of provision required for the quarter.

The Company’s allowance for loan losses was 0.68% of total loans and 80.0% of non-performing loans at June 30, 2016, compared with 0.72% and 77.6%, respectively, at March 31, 2016. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 1.13% at June 30, 2016, compared with 1.18% at March 31, 2016.

Capital

At June 30, 2016, 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, 2016			Well Capitalized Regulatory Requirements
Total capital to risk-weighted assets		13.91	%		10.00	%
Tier 1 capital to risk-weighted assets		11.23	%		8.00	%
Tier 1 leverage ratio		9.77	%		5.00	%
Tier 1 common capital to risk-weighted assets		9.24	%		6.50	%
Tangible common equity to tangible assets		8.89	%		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 29, 2016. During the call, management will review the second quarter results and operational highlights. The call can be accessed via telephone at (877) 516-3531 (passcode: 49066877). A recorded replay can be accessed through August 5, 2016 by dialing (855) 859-2056 (passcode: 49066877).

A slide presentation relating to the second quarter 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. Midland had assets of approximately $3.0 billion, and its Midland Wealth Management Group had assets under administration of approximately $1.2 billion as of June 30, 2016. Midland provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, commercial equipment leasing services are provided through Heartland Business Credit, and multi-family and healthcare facility FHA financing is provided through Love Funding, Midland's non-bank subsidiaries. Midland has more than 80 locations across the United States. 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 accounting principles generally accepted in the United States (“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,” “Yields on Loans Excluding Accretion Income, ” “Net Interest Margin Excluding Accretion Income,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes that 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.

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 expected loan production 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.


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

	For the Quarter Ended
	June 30,			March 31,				December 31,			September 30,			June 30,
(in thousands, except per share data)	2016			2016				2015			2015			2015
Earnings Summary
Net interest income	$	27,989		$	24,041			$	26,452		$	25,437		$	28,317
Provision for loan losses		629			1,125				1,052			6,699			2,379
Noninterest income		14,024			12,618				12,799			14,464			14,197
Noninterest expense		30,911			27,639				27,692			27,823			30,703
Income before income taxes		10,473			7,895				10,507			5,379			9,432
Income taxes		3,683			2,777				2,811			1,928			2,762
Net income		6,790			5,118				7,696			3,451			6,670
Net income (loss) attributable to noncontrolling
interest in subsidiaries		1			(1	)			1			6			17
Net income attributable to Midland
States Bancorp, Inc.	$	6,789		$	5,119			$	7,695		$	3,445		$	6,653

Diluted earnings per common share	$	0.50		$	0.42			$	0.63		$	0.28		$	0.55
Weighted average shares outstanding - diluted		13,635,074			12,229,293				12,181,664			12,130,529			12,098,476
Return on average assets		0.89	%		0.70		%		1.06	%		0.49	%		0.97	%
Return on average shareholders' equity		10.18	%		8.69		%		13.19	%		5.88	%		11.74	%
Return on average tangible common
shareholders' equity		12.67	%		11.22		%		17.26	%		7.72	%		15.56	%
Net interest margin		4.20	%		3.80		%		4.19	%		4.18	%		4.79	%
Efficiency ratio		67.09	%		67.72		%		68.83	%		64.32	%		67.61	%

Adjusted Earnings Performance Summary
Adjusted earnings	$	7,107		$	5,767			$	7,525		$	4,638		$	8,026
Adjusted diluted earnings per common share	$	0.52		$	0.47			$	0.61		$	0.38		$	0.66
Adjusted return on average assets		0.93	%		0.79		%		1.04	%		0.66	%		1.17	%
Adjusted return on average shareholders' equity		10.66	%		9.79		%		12.90	%		7.92	%		14.16	%
Adjusted return on average tangible common
shareholders' equity		13.27	%		12.64		%		16.77	%		10.39	%		18.77	%
Net interest margin excluding accretion income		3.52	%		3.55		%		3.56	%		3.83	%		3.88	%


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)	2016			2016			2015			2015			2015
Net interest income:
Total interest income	$	32,115		$	27,967		$	30,300		$	28,949		$	31,242
Total interest expense		4,126			3,926			3,848			3,512			2,925
Net interest income		27,989			24,041			26,452			25,437			28,317
Provision for loan losses		629			1,125			1,052			6,699			2,379
Net interest income after provision
for loan losses		27,360			22,916			25,400			18,738			25,938
Noninterest income:
Commercial FHA revenue		8,538			6,562			3,045			5,914			4,101
Residential mortgage banking revenue		1,045			1,121			3,328			3,490			4,832
Wealth management revenue		1,870			1,785			1,831			1,808			1,857
Service charges on deposit accounts		965			907			979			1,022			950
Interchange revenue		945			964			858			895			863
FDIC loss sharing expense		(1,608	)		(53	)		(212	)		(57	)		(204	)
Gain on sales of investment securities, net		72			204			33			1			-
Other than temporary impairment on
investment securities		-			(824	)		-			(299	)		-
Other income		2,197			1,952			2,937			1,690			1,798
Total noninterest income		14,024			12,618			12,799			14,464			14,197
Noninterest expense:
Salaries and employee benefits		17,020			15,387			13,725			14,932			16,437
Occupancy and equipment		3,233			3,310			3,424			3,114			3,317
Data processing		2,624			2,620			2,546			2,541			2,626
Professional		1,573			1,701			2,079			2,075			2,183
Intangible assets amortization		519			580			598			597			602
Other		5,942			4,041			5,320			4,564			5,538
Total noninterest expense		30,911			27,639			27,692			27,823			30,703
Income before income taxes		10,473			7,895			10,507			5,379			9,432
Income taxes		3,683			2,777			2,811			1,928			2,762
Net income		6,790			5,118			7,696			3,451			6,670
Net income (loss) attributable to
noncontrolling interest in subsidiaries		1			(1	)		1			6			17
Net income attributable to Midland
States Bancorp, Inc.	$	6,789		$	5,119		$	7,695		$	3,445		$	6,653

Basic earnings per common share	$	0.51		$	0.43		$	0.64		$	0.29		$	0.56
Diluted earnings per common share	$	0.50		$	0.42		$	0.63		$	0.28		$	0.55


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

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)	2016			2016			2015			2015			2015
Assets
Cash and cash equivalents	$	123,366		$	162,416		$	212,475		$	206,664		$	172,230
Investment securities available-for-sale at fair value		238,781			232,074			236,627			211,359			207,848
Investment securities held to maturity at amortized cost		84,756			88,085			87,521			92,011			94,637
Loans		2,161,041			2,016,034			1,995,589			1,972,844			1,909,943
Allowance for loan losses		(14,752	)		(14,571	)		(15,988	)		(15,157	)		(16,206	)
Total loans, net		2,146,289			2,001,463			1,979,601			1,957,687			1,893,737
Loans held for sale, at fair value		101,782			103,365			54,413			53,032			75,480
Premises and equipment, net		72,147			72,421			73,133			73,362			73,263
Other real estate owned		3,540			4,740			5,472			6,471			5,926
Mortgage servicing rights at lower of cost or market		62,808			65,486			66,651			65,417			64,921
Intangible assets		5,905			6,424			7,004			7,601			8,199
Goodwill		46,519			46,519			46,519			47,102			47,102
Cash surrender value of life insurance policies		73,665			53,173			52,729			52,271			51,814
Other assets		62,226			61,914			62,679			59,331			58,424
Total assets	$	3,021,784		$	2,898,080		$	2,884,824		$	2,832,308		$	2,753,581

Liabilities and Shareholders' Equity
Noninterest-bearing deposits	$	528,966		$	546,664		$	543,401		$	512,632		$	566,966
Interest-bearing deposits		1,825,586			1,843,046			1,824,247			1,791,846			1,668,944
Total deposits		2,354,552			2,389,710			2,367,648			2,304,478			2,235,910
Short-term borrowings		125,014			101,649			107,538			108,823			117,314
FHLB advances and other borrowings		97,588			40,133			40,178			50,225			50,264
Subordinated debt		54,459			61,903			61,859			61,814			61,853
Trust preferred debentures		37,229			37,142			37,057			36,973			37,142
Other liabilities		36,627			28,982			37,488			38,370			22,523
Total liabilities		2,705,469			2,659,519			2,651,768			2,600,683			2,525,006
Midland States Bancorp, Inc. shareholders’ equity		316,268			238,386			232,880			231,415			228,371
Noncontrolling interest in subsidiaries		47			175			176			210			204
Total shareholders’ equity		316,315			238,561			233,056			231,625			228,575
Total liabilities and shareholders’ equity	$	3,021,784		$	2,898,080		$	2,884,824		$	2,832,308		$	2,753,581


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

	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2016		2016		2015		2015		2015
Loan Portfolio
Commercial loans	$	489,228	$	484,618	$	499,573	$	521,983	$	544,014
Commercial real estate loans		929,399		897,099		876,784		866,027		842,907
Construction and land development loans		181,667		159,507		150,266		131,083		121,314
Residential real estate loans		179,184		158,221		163,224		168,129		158,798
Consumer loans		205,060		158,938		161,512		157,521		122,116
Lease financing loans		176,503		157,651		144,230		128,101		120,794
Total loans	$	2,161,041	$	2,016,034	$	1,995,589	$	1,972,844	$	1,909,943

Purchase credit impaired loans	$	28,642	$	35,262	$	38,477	$	39,992	$	42,454

Deposit Portfolio
Noninterest-bearing demand deposits	$	528,966	$	546,664	$	543,401	$	512,632	$	566,966
NOW accounts		627,003		612,475		621,925		623,494		557,197
Money market accounts		374,537		415,130		377,654		350,398		360,303
Savings accounts		164,792		163,163		155,778		154,632		160,504
Time deposits		431,173		433,386		446,621		426,762		404,361
Brokered deposits		228,081		218,892		222,269		236,560		186,579
Total deposits	$	2,354,552	$	2,389,710	$	2,367,648	$	2,304,478	$	2,235,910


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)	2016			2016			2015			2015			2015
Average Balance Sheets
Cash and cash equivalents	$	232,362		$	223,951		$	184,072		$	131,272		$	170,046
Investment securities		338,224			327,267			345,114			317,886			319,294
Loans		2,171,814			2,063,568			2,039,046			2,032,122			1,940,698
Total interest-earning assets		2,742,400			2,614,786			2,568,232			2,481,280			2,430,038
Non-earning assets		324,880			317,648			312,154			314,959			314,518
Total assets	$	3,067,280		$	2,932,434		$	2,880,386		$	2,796,239		$	2,744,556
Interest-bearing deposits	$	1,844,493		$	1,832,599		$	1,813,974		$	1,733,899		$	1,680,728
Short-term borrowings		114,651			120,753			118,118			121,453			111,237
FHLB advances and other borrowings		185,195			99,499			48,583			54,056			73,517
Subordinated debt		61,677			61,878			61,835			62,830			22,785
Trust preferred debentures		37,182			37,094			37,013			37,083			37,075
Total interest-bearing liabilities		2,243,198			2,151,823			2,079,523			2,009,321			1,925,342
Noninterest-bearing deposits		522,632			511,019			529,196			509,259			555,287
Other noninterest-bearing liabilities		33,188			32,671			40,247			45,379			36,591
Shareholders' equity		268,262			236,921			231,420			232,280			227,336
Total liabilities and shareholders' equity	$	3,067,280		$	2,932,434		$	2,880,386		$	2,796,239		$	2,744,556

Yields
Cash and cash equivalents		0.50	%		0.50	%		0.27	%		0.25	%		0.22	%
Investment securities		5.12	%		5.31	%		5.02	%		5.33	%		5.37	%
Loans		5.22	%		4.68	%		5.15	%		4.94	%		5.70	%
Total interest-earning assets		4.81	%		4.40	%		4.79	%		4.74	%		5.27	%
Interest-bearing deposits		0.50	%		0.49	%		0.48	%		0.44	%		0.42	%
Short-term borrowings		0.24	%		0.23	%		0.20	%		0.18	%		0.21	%
FHLB advances and other borrowings		0.56	%		0.55	%		0.87	%		0.81	%		1.27	%
Subordinated debt		6.87	%		6.87	%		6.79	%		6.66	%		7.68	%
Trust preferred debentures		4.95	%		4.80	%		4.60	%		3.96	%		4.83	%
Total interest-bearing liabilities		0.74	%		0.73	%		0.73	%		0.69	%		0.61	%
Net interest margin		4.20	%		3.80	%		4.19	%		4.18	%		4.79	%


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,
(in thousands, except per share data)	2016			2016			2015			2015			2015
Asset Quality
Loans 30-89 days past due	$	10,453		$	6,616		$	10,120		$	11,079		$	7,143
Nonperforming loans		18,430			18,787			24,891			24,223			36,048
Nonperforming assets		21,469			22,312			29,206			30,118			41,388
Net charge-offs (recoveries)		448			2,542			220			7,748			(578	)
Loans 30-89 days past due to total loans		0.48	%		0.33	%		0.51	%		0.56	%		0.37		%
Nonperforming loans to total loans		0.85	%		0.93	%		1.25	%		1.23	%		1.89		%
Nonperforming assets to total assets		0.71	%		0.77	%		1.01	%		1.06	%		1.50		%
Allowance for loan losses to total loans		0.68	%		0.72	%		0.80	%		0.77	%		0.85		%
Allowance for loan losses to
nonperforming loans		80.04	%		77.56	%		64.23	%		62.57	%		44.96		%
Net charge-offs to average loans		0.09	%		0.51	%		0.04	%		1.57	%		(0.14	)	%

Wealth Management
Trust assets under administration	$	1,198,044		$	1,189,693		$	1,181,128		$	1,145,056		$	1,183,807

Market Data
Book value per share	$	20.53		$	20.19		$	19.74		$	19.68		$	19.42
Tangible book value per share	$	17.13		$	15.71		$	15.20		$	15.03		$	14.72
Shares outstanding at period end		15,402,946			11,804,779			11,797,404			11,760,589			11,759,138
Weighted average shares outstanding:
Basic		13,358,289			11,957,381			11,924,072			11,911,414			11,899,919
Diluted		13,635,074			12,229,293			12,181,664			12,130,529			12,098,476

Capital
Total capital to risk-weighted assets		13.91	%		11.67	%		11.82	%		11.43	%		11.71		%
Tier 1 capital to risk-weighted assets		11.23	%		8.48	%		8.62	%		8.19	%		8.32		%
Tier 1 leverage ratio		9.77	%		7.25	%		7.49	%		7.41	%		7.52		%
Tier 1 common capital to
risk-weighted assets		9.24	%		6.40	%		6.50	%		6.16	%		6.27		%
Tangible common equity to tangible assets		8.89	%		6.52	%		6.33	%		6.36	%		6.41		%


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

	For the Quarter Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
(in thousands, except per share data)	2016				2016				2015				2015				2015
Adjusted Earnings Reconciliation
Income before income taxes - GAAP	$	10,473			$	7,895			$	10,507			$	5,379			$	9,432
Adjustments to other income:
Gain on sales of investment securities, net		72				204				33				1				-
Other-than-temporary impairment
on investment securities		-				(824	)			-				(299	)			-
FDIC loss-sharing expense		-				-				(212	)			(57	)			(204	)
Amortization of FDIC indemnification asset, net		-				-				(39	)			(121	)			(120	)
Reversal of contingent consideration accrual		350				-				-				-				-
Other income		-				-				-				12				-
Total adjusted other income		422				(620	)			(218	)			(464	)			(324	)
Adjustments to other expense:
Expenses associated with payoff
of subordinated debt		511				-				-				-				-
Integration and acquisition expenses		406				385				214				898				1,910
Total adjusted other expense		917				385				214				898				1,910
Adjusted earnings pre tax		10,968				8,900				10,939				6,741				11,666
Adjusted earnings tax		3,861				3,133				3,414				2,103				3,640
Adjusted earnings - non-GAAP	$	7,107			$	5,767			$	7,525			$	4,638			$	8,026
Adjusted diluted EPS	$	0.52			$	0.47			$	0.61			$	0.38			$	0.66
Adjusted return on average assets		0.93		%		0.79		%		1.04		%		0.66		%		1.17		%
Adjusted return on average
shareholders' equity		10.66		%		9.79		%		12.90		%		7.92		%		14.16		%
Adjusted return on average
tangible common equity		13.27		%		12.64		%		16.77		%		10.39		%		18.77		%


Yield on Loans
Reported yield on loans		5.22		%		4.68		%		5.15		%		4.94		%		5.70		%
Effect of accretion income on acquired loans		(0.85	)	%		(0.30	)	%		(0.78	)	%		(0.41	)	%		(1.13	)	%
Yield on loans excluding accretion income		4.37		%		4.38		%		4.37		%		4.53		%		4.57		%

Net Interest Margin
Reported net interest margin		4.20		%		3.80		%		4.19		%		4.18		%		4.79		%
Effect of accretion income on acquired loans		(0.68	)	%		(0.25	)	%		(0.63	)	%		(0.35	)	%		(0.91	)	%
Net interest margin excluding accretion income		3.52		%		3.55		%		3.56		%		3.83		%		3.88		%


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


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,
(in thousands, except per share data)	2016				2016				2015				2015				2015

Shareholders' Equity to Tangible Common Equity:
Total shareholders' equity—GAAP	$	316,315			$	238,561			$	233,056			$	231,625			$	228,575
Adjustments:
Noncontrolling interest in subsidiaries		(47	)			(175	)			(176	)			(210	)			(204	)
Goodwill		(46,519	)			(46,519	)			(46,519	)			(47,102	)			(47,102	)
Other intangibles		(5,905	)			(6,424	)			(7,004	)			(7,601	)			(8,199	)
Tangible common equity	$	263,844			$	185,443			$	179,357			$	176,712			$	173,070

Total Assets to Tangible Assets:
Total assets—GAAP		3,021,784				2,898,080				2,884,824				2,832,308				2,753,581
Adjustments:
Goodwill		(46,519	)			(46,519	)			(46,519	)			(47,102	)			(47,102	)
Other intangibles		(5,905	)			(6,424	)			(7,004	)			(7,601	)			(8,199	)
Tangible assets	$	2,969,360			$	2,845,137			$	2,831,301			$	2,777,605			$	2,698,280

Common Shares Outstanding		15,402,946				11,804,779				11,797,404				11,760,589				11,759,138

Tangible Common Equity to Tangible Assets		8.89		%		6.52		%		6.33		%		6.36		%		6.41		%
Tangible Book Value Per Share	$	17.13			$	15.71			$	15.20			$	15.03			$	14.72


Return on Average Tangible Common Equity (ROATCE)

	For the Quarter Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
(in thousands, except per share data)	2016				2016				2015				2015				2015

Net Income	$	6,789			$	5,119			$	7,695			$	3,445			$	6,653

Average total shareholders' equity—GAAP	$	268,262			$	236,921			$	231,420			$	232,287			$	227,336
Adjustments:
Noncontrolling interest in subsidiaries		(121	)			(184	)			(204	)			(207	)			(175	)
Goodwill		(46,519	)			(46,519	)			(46,997	)			(47,102	)			(47,102	)
Other intangibles		(6,184	)			(6,740	)			(7,324	)			(7,917	)			(8,553	)
Average tangible common equity	$	215,438			$	183,478			$	176,895			$	177,061			$	171,506
ROATCE		12.67		%		11.22		%		17.26		%		7.72		%		15.56		%

CONTACTS:

Jeffrey G. Ludwig, Exec. V.P., Chief Financial Officer, at jludwig@midlandsb.com or (217) 342-7321
Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

Midland States Bancorp, Inc.

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Midland States Bancorp, Inc. Announces 2016 Second Quarter Results