Midland States Bancorp, Inc. Announces 2017 Second Quarter Results

Highlights

Acquisition of Centrue Financial Corporation completed on June 9, 2017, increasing total assets to $4.5 billion
Net income of $3.5 million, or $0.20 diluted earnings per share, for the second quarter of 2017
Tangible book value per share increased to $17.47 at June 30, 2017
Non-performing loans decline $1.3 million to $27.6 million at June 30, 2017

EFFINGHAM, Ill., July 27, 2017 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported financial results for the second quarter of 2017, which included $7.5 million, or $0.31 per diluted share, in integration and acquisition expenses largely related to the acquisition of Centrue Financial Corporation on June 9, 2017, and $1.7 million, or $0.07 per diluted share, in impairment of mortgage servicing rights (“MSR”). Inclusive of these expenses and impairment, Midland reported net income of $3.5 million, or $0.20 diluted earnings per share for the second quarter of 2017, compared with net income of $8.5 million, or $0.52 diluted earnings per share for the first quarter of 2017, and net income of $6.8 million, or $0.50 diluted earnings per share for the second quarter of 2016.

“The highlight of the second quarter was the completion of our acquisition of Centrue Financial Corporation,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “Through this acquisition, we have increased our scale and deepened our presence in northern Illinois. We expect to complete the integration and system conversion in September and begin realizing the majority of the synergies we projected for this transaction in the fourth quarter of 2017.

“Through the first half of 2017, we have generated annualized loan growth of 15% with meaningful contributions coming from all of our major lending areas. The strong growth we are seeing in net interest income helped to offset lighter than expected results in commercial FHA and residential mortgage banking revenue in the second quarter. Over the second half of the year, we will be focused on continuing to generate organic growth, integrating the Centrue acquisition, and executing on our strategic initiatives,” said Mr. Holschbach.

Adjusted Earnings

Financial results for the first and second quarters of 2017 included $1.3 million and $7.5 million in integration and acquisition-related expenses, respectively. Excluding these expenses, adjusted earnings were $9.4 million, or $0.57 diluted earnings per share, for the first quarter of 2017, compared with adjusted earnings of $8.9 million, or $0.51 diluted earnings per share, for the second quarter of 2017. The decline in adjusted earnings is primarily attributable to lower commercial FHA and residential mortgage banking revenue. A reconciliation of adjusted earnings to net income according to generally accepted accounting principles (“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 2017 was $29.4 million, an increase of 7.1% from $27.5 million for the first quarter of 2017. The increase in net interest income was primarily attributable to higher interest income on loans due to a 10.2% increase in the average balance of loans, largely due to the Centrue acquisition.

The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $1.3 million for the second quarter of 2017, compared with $2.7 million for the first quarter of 2017.

Relative to the second quarter of 2016, net interest income increased $1.4 million, or 5.0%. Excluding the impact of a $3.6 million decrease in accretion income, net interest income increased $5.0 million. This increase resulted from a $6.9 million increase in interest income on loans (excluding the effect of accretion income) due to growth in the average balance of loans. This increase was offset in part by a $1.1 million decline in interest income on investment securities due to the sale of the portfolio of CMOs.

Net Interest Margin

Net interest margin for the second quarter of 2017 was 3.70%, compared to 3.87% for the first quarter of 2017. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.57% for the second quarter of 2017, compared with 3.52% for the first quarter of 2017. The increase in net interest margin excluding accretion income was primarily attributable to an increase in average yields on loans and investments.

Relative to the second quarter of 2016, the net interest margin decreased from 4.20%, primarily due to a decrease in accretion income. Excluding accretion income, the net interest margin increased from 3.52%, which was primarily attributable to higher average yields on loans.

Noninterest Income

Noninterest income for the second quarter of 2017 was $13.6 million, a decrease of 16.6% from $16.3 million for the first quarter of 2017. The decline was primarily attributable to lower commercial FHA and residential mortgage banking revenue, partially due to MSR impairment.

Commercial FHA revenue for the second quarter of 2017 was $4.2 million, a decrease of 38.0% from $6.7 million in the first quarter of 2017. Commercial FHA revenue was negatively impacted in the second quarter of 2017 by a $0.9 million MSR impairment charge. The Company originated $151.6 million in rate lock commitments during the second quarter of 2017, compared to $216.9 million in the prior quarter. Compared to the second quarter of 2016, commercial FHA revenue decreased 51.4%.

Residential mortgage banking revenue for the second quarter of 2017 was $2.3 million, a decrease of 20.1% from $2.9 million in the first quarter of 2017. Residential mortgage banking revenue was negatively impacted in the second quarter of 2017 by a $0.8 million MSR impairment charge. Compared to the second quarter of 2016, residential mortgage banking revenue increased 124.7%, primarily due to higher MSR impairment charges recorded in the prior year period.

Wealth management revenue for the second quarter of 2017 was $3.4 million, an increase of 18.6% from $2.9 million in the first quarter of 2017. The increase was primarily attributable to the growth in assets under administration resulting from the acquisition of CedarPoint Investment Advisors in March 2017. Compared to the second quarter of 2016, wealth management revenue increased 82.1%, which was attributable to 12.2% organic growth in assets under management and the acquisitions of Sterling Trust in November 2016 and CedarPoint Investment Advisors in March 2017.

Relative to the second quarter of 2016, noninterest income decreased 2.8% from $14.0 million. The decrease was primarily due to lower commercial FHA revenue, partially due to MSR impairment charges.

Noninterest Expense

Noninterest expense for the second quarter of 2017 was $37.6 million, compared with $30.8 million for the first quarter of 2017. Noninterest expense for the first and second quarters of 2017 included $1.3 million and $7.5 million in integration and acquisition related expenses, respectively. Excluding these expenses, noninterest expense increased $0.7 million or 2.2% from the prior quarter. The increase was attributable to $1.6 million in expenses related to the partial quarter impact of the Centrue acquisition, which was partially offset by a decline in operating expense related to the rest of Midland’s operations.

Relative to the second quarter of 2016, noninterest expense excluding integration and acquisition-related expenses and expenses associated with the payoff of subordinated debt increased 0.7% from $30.0 million. The increase was primarily due to personnel and facilities added in the three acquisitions completed over the past year, partially offset by cost savings resulting from the Company’s Operational Excellence initiative.

Income Tax Expense

Income tax expense was $1.4 million for the second quarter of 2017, compared to $3.0 million for the first quarter of 2017. The effective tax rate for the second quarter of 2017 was 28.0%, compared to 26.0% in the prior quarter. The increase in effective tax rate reflects a reduction in the level of tax benefits recorded in the second quarter of 2017 related to the exercise of employee stock options.

Loan Portfolio

Total loans outstanding were $3.18 billion at June 30, 2017, compared with $2.45 billion at March 31, 2017. The increase in total loans reflects the addition of $688.1 million in loans from the Centrue acquisition and $41.0 million in organic loan growth. Over the 12 month period ending June 30, 2017, total loans increased 47.3% from $2.16 billion at June 30, 2016. The $41.0 million of organic loan growth recorded in the second quarter of 2017 was primarily driven by increases in the residential real estate and equipment leasing portfolios.

Deposits

Total deposits were $3.33 billion at June 30, 2017, compared with $2.53 billion at March 31, 2017, and $2.35 billion at June 30, 2016. The increase in total deposits reflects the addition of $741.8 million in deposits from the Centrue acquisition.

Asset Quality

Non-performing loans totaled $27.6 million, or 0.87% of total loans, at June 30, 2017, compared with $28.9 million, or 1.18% of total loans, at March 31, 2017, and $18.4 million, or 0.85% of total loans, at June 30, 2016.

Net charge-offs for the second quarter of 2017 were $0.8 million, or 0.13% of average loans on an annualized basis.

The Company recorded a provision for loan losses of $0.5 million for the second quarter of 2017, primarily related to the growth in the loan portfolio.

The Company’s allowance for loan losses was 0.48% of total loans and 55.8% of non-performing loans at June 30, 2017, compared with 0.64% and 54.6%, respectively, at March 31, 2017. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 0.98% at June 30, 2017, compared with 0.92% at March 31, 2017.

Capital

At June 30, 2017, 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, 2017		Well Capitalized Regulatory Requirements
Total capital to risk-weighted assets	12.34	%	10.00	%
Tier 1 capital to risk-weighted assets	10.45	%	8.00	%
Tier 1 leverage ratio	11.04	%	5.00	%
Common equity Tier 1 capital	8.68	%	6.50	%
Tangible common equity to tangible assets	7.62	%	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 28, 2017 to discuss its financial results. The call can be accessed via telephone at (877) 516-3531 (passcode: 51055156). A recorded replay can be accessed through August 4, 2017 by dialing (855) 859-2056; passcode: 51055156.

A slide presentation relating to the second quarter 2017 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, 2017, the Company had total assets of $4.5 billion and its Wealth Management Group had assets under administration of approximately $1.9 billion. 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. 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,” “Yield 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, operating expenses 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,
(dollars in thousands, except per share data)	2017			2017			2016			2016			2016
Earnings Summary
Net interest income	$	29,400		$	27,461		$	25,959		$	27,265		$	27,989
Provision for loan losses		458			1,533			2,445			1,392			629
Noninterest income		13,619			16,330			30,486			14,937			14,016
Noninterest expense		37,645			30,785			34,090			28,657			30,904
Income before income taxes		4,916			11,473			19,910			12,153			10,472
Income taxes		1,377			2,983			8,327			4,102			3,683
Net income	$	3,539		$	8,490		$	11,583		$	8,051		$	6,789

Diluted earnings per common share	$	0.20		$	0.52		$	0.72		$	0.51		$	0.50
Weighted average shares outstanding - diluted		17,320,089			16,351,637			16,032,016			15,858,273			13,635,074
Return on average assets		0.39	%		1.05	%		1.44	%		1.03	%		0.89	%
Return on average shareholders' equity		3.93	%		10.58	%		14.05	%		10.04	%		10.20	%
Return on average tangible common shareholders' equity		4.91	%		12.78	%		16.84	%		12.01	%		12.70	%
Net interest margin		3.70	%		3.87	%		3.70	%		4.00	%		4.20	%
Efficiency ratio		66.54	%		66.34	%		76.64	%		64.54	%		66.46	%

Adjusted Earnings Performance Summary
Adjusted earnings	$	8,929		$	9,409		$	6,302		$	8,277		$	7,106
Adjusted diluted earnings per common share	$	0.51		$	0.57		$	0.39		$	0.52		$	0.52
Adjusted return on average assets		0.99	%		1.16	%		0.78	%		1.06	%		0.93	%
Adjusted return on average shareholders' equity		9.91	%		11.73	%		7.64	%		10.33	%		10.66	%
Adjusted return on average tangible common shareholders' equity		12.39	%		14.16	%		9.16	%		12.35	%		13.27	%
Net interest margin excluding accretion income		3.57	%		3.52	%		3.42	%		3.66	%		3.52	%


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)	2017		2017		2016		2016		2016
Net interest income:
Total interest income	$	34,528	$	31,839	$	29,981	$	31,186	$	32,115
Total interest expense		5,128		4,378		4,022		3,921		4,126
Net interest income		29,400		27,461		25,959		27,265		27,989
Provision for loan losses		458		1,533		2,445		1,392		629
Net interest income after provision for loan losses		28,942		25,928		23,514		25,873		27,360
Noninterest income:
Commercial FHA revenue		4,153		6,695		3,704		3,260		8,538
Residential mortgage banking revenue		2,330		2,916		6,241		4,990		1,037
Wealth management revenue		3,406		2,872		2,495		1,941		1,870
Service charges on deposit accounts		1,122		892		988		1,044		965
Interchange revenue		1,114		977		921		920		945
FDIC loss sharing expense		-		-		-		-		(1,608	)
Gain on sales of investment securities, net		55		67		14,387		39		72
Other-than-temporary impairment on investment securities		-		-		-		-		-
Other income		1,439		1,911		1,750		2,743		2,197
Total noninterest income		13,619		16,330		30,486		14,937		14,016
Noninterest expense:
Salaries and employee benefits		21,842		17,115		17,326		16,568		17,012
Occupancy and equipment		3,472		3,184		3,266		3,271		3,233
Data processing		2,949		2,796		2,828		2,586		2,624
Professional		3,142		2,992		2,898		1,877		1,573
Amortization of intangible assets		579		525		534		514		519
Other		5,661		4,173		7,238		3,841		5,943
Total noninterest expense		37,645		30,785		34,090		28,657		30,904
Income before income taxes		4,916		11,473		19,910		12,153		10,472
Income taxes		1,377		2,983		8,327		4,102		3,683
Net income	$	3,539	$	8,490	$	11,583	$	8,051	$	6,789

Basic earnings per common share	$	0.21	$	0.54	$	0.74	$	0.51	$	0.51
Diluted earnings per common share	$	0.20	$	0.52	$	0.72	$	0.51	$	0.50


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

	At Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)	2017			2017			2016			2016			2016
Assets
Cash and cash equivalents	$	334,356		$	218,096		$	190,716		$	228,030		$	123,366
Investment securities available-for-sale at fair value		385,340			259,332			246,339			252,212			238,781
Investment securities held to maturity at amortized cost		75,371			76,276			78,672			82,941			84,756
Loans		3,184,063			2,454,950			2,319,976			2,312,778			2,161,041
Allowance for loan losses		(15,424	)		(15,805	)		(14,862	)		(15,559	)		(14,752	)
Total loans, net		3,168,639			2,439,145			2,305,114			2,297,219			2,146,289
Loans held for sale at fair value		41,689			39,900			70,565			61,363			101,782
Premises and equipment, net		76,598			66,914			66,692			70,727			72,147
Other real estate owned		7,036			3,680			3,560			4,828			3,540
Mortgage servicing rights at lower of cost or market		70,277			68,557			68,008			64,689			62,808
Intangible assets		18,459			8,633			7,187			5,391			5,905
Goodwill		96,940			50,807			48,836			46,519			46,519
Cash surrender value of life insurance policies		111,802			74,806			74,226			74,276			73,665
Other assets		105,135			67,431			73,808			59,532			62,226
Total assets	$	4,491,642		$	3,373,577		$	3,233,723		$	3,247,727		$	3,021,784

Liabilities and Shareholders' Equity
Noninterest bearing deposits	$	780,803		$	528,021		$	562,333		$	629,113		$	528,966
Interest bearing deposits		2,552,228			1,999,455			1,842,033			1,790,919			1,825,586
Total deposits		3,333,031			2,527,476			2,404,366			2,420,032			2,354,552
Short-term borrowings		170,629			124,035			131,557			138,289			125,014
FHLB advances and other borrowings		400,304			250,353			237,518			237,543			97,588
Subordinated debt		54,556			54,532			54,508			54,484			54,459
Trust preferred debentures		45,156			37,496			37,405			37,316			37,229
Other liabilities		36,014			45,352			46,599			38,314			36,674
Total liabilities		4,039,690			3,039,244			2,911,953			2,925,978			2,705,516
Total shareholders’ equity		451,952			334,333			321,770			321,749			316,268
Total liabilities and shareholders’ equity	$	4,491,642		$	3,373,577		$	3,233,723		$	3,247,727		$	3,021,784

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

	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2017		2017		2016		2016		2016
Loan Portfolio
Commercial loans	$	571,111	$	475,408	$	457,827	$	545,069	$	489,228
Commercial real estate loans		1,470,487		997,200		969,615		956,298		929,399
Construction and land development loans		176,098		171,047		177,325		163,900		181,667
Residential real estate loans		428,464		277,402		253,713		216,935		179,184
Consumer loans		335,902		337,081		270,017		248,131		205,060
Lease financing loans		202,001		196,812		191,479		182,445		176,503
Total loans	$	3,184,063	$	2,454,950	$	2,319,976	$	2,312,778	$	2,161,041


Deposit Portfolio
Noninterest-bearing demand deposits	$	780,803	$	528,021	$	562,333	$	629,113	$	528,966
Checking accounts		841,640		751,193		656,248		658,021		627,003
Money market accounts		578,077		415,322		399,851		366,193		374,537
Savings accounts		291,912		169,715		166,910		162,742		164,792
Time deposits		525,647		394,508		400,304		420,779		431,173
Brokered deposits		314,952		268,717		218,720		183,184		228,081
Total deposits	$	3,333,031	$	2,527,476	$	2,404,366	$	2,420,032	$	2,354,552

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)	2017			2017			2016			2016			2016
Average Balance Sheets
Cash and cash equivalents	$	192,483		$	163,595		$	140,439		$	154,764		$	232,362
Investment securities		362,268			328,880			315,511			329,900			321,424
Loans		2,620,875			2,361,380			2,299,115			2,177,517			2,092,248
Loans held for sale		61,759			73,914			86,665			90,661			79,566
Nonmarketable equity securities		22,246			20,047			18,927			18,365			16,800
Total interest-earning assets		3,259,631			2,947,816			2,860,657			2,771,207			2,742,400
Non-earning assets		372,525			336,761			337,566			329,504			324,880
Total assets	$	3,632,156		$	3,284,577		$	3,198,223		$	3,100,711		$	3,067,280
Interest-bearing deposits	$	2,116,564		$	1,896,569		$	1,838,760		$	1,803,189		$	1,844,493
Short-term borrowings		146,144			143,583			151,191			134,052			114,651
FHLB advances and other borrowings		290,401			248,045			183,614			165,774			185,195
Subordinated debt		54,542			54,518			54,495			54,470			61,677
Trust preferred debentures		39,179			37,443			37,357			37,266			37,182
Total interest-bearing liabilities		2,646,830			2,380,158			2,265,417			2,194,751			2,243,198
Noninterest-bearing deposits		579,977			525,868			562,958			550,816			522,632
Other noninterest-bearing liabilities		44,014			53,109			41,962			36,284			33,309
Shareholders' equity		361,335			325,442			327,886			318,860			268,141
Total liabilities and shareholders' equity	$	3,632,156		$	3,284,577		$	3,198,223		$	3,100,711		$	3,067,280

Yields
Cash and cash equivalents		1.02	%		0.77	%		0.53	%		0.50	%		0.50	%
Investment securities		3.33	%		3.21	%		3.10	%		5.02	%		5.15	%
Loans		4.71	%		4.91	%		4.65	%		4.83	%		5.24	%
Loans held for sale		4.67	%		4.22	%		4.22	%		3.77	%		4.65	%
Nonmarketable equity securities		4.31	%		4.41	%		3.85	%		3.77	%		4.16	%
Total interest-earning assets		4.33	%		4.47	%		4.26	%		4.57	%		4.81	%
Interest-bearing deposits		0.53	%		0.51	%		0.48	%		0.48	%		0.50	%
Short-term borrowings		0.23	%		0.23	%		0.22	%		0.24	%		0.24	%
FHLB advances and other borrowings		1.16	%		0.93	%		0.78	%		0.73	%		0.56	%
Subordinated debt		6.40	%		6.40	%		6.41	%		6.41	%		6.84	%
Trust preferred debentures		5.37	%		5.12	%		4.99	%		5.03	%		4.95	%
Total interest-bearing liabilities		0.78	%		0.75	%		0.71	%		0.71	%		0.74	%
Net interest margin		3.70	%		3.87	%		3.70	%		4.00	%		4.20	%

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)	2017			2017			2016			2016			2016
Asset Quality
Loans 30-89 days past due	$	13,566		$	14,075		$	10,767		$	10,318		$	10,453
Nonperforming loans		27,615			28,933			31,603			29,926			18,430
Nonperforming assets		33,150			31,684			34,550			34,304			21,469
Net charge-offs		839			590			3,142			585			448
Loans 30-89 days past due to total loans		0.43	%		0.57	%		0.46	%		0.45	%		0.48	%
Nonperforming loans to total loans		0.87	%		1.18	%		1.36	%		1.29	%		0.85	%
Nonperforming assets to total assets		0.74	%		0.94	%		1.07	%		1.06	%		0.71	%
Allowance for loan losses to total loans		0.48	%		0.64	%		0.64	%		0.67	%		0.68	%
Allowance for loan losses to nonperforming loans		55.81	%		54.62	%		47.03	%		51.99	%		80.04	%
Net charge-offs to average loans		0.13	%		0.10	%		0.54	%		0.11	%		0.09	%

Wealth Management
Trust assets under administration	$	1,929,513		$	1,869,314		$	1,658,235		$	1,235,132		$	1,198,044

Market Data
Book value per share at period end	$	23.51		$	21.19		$	20.78		$	20.89		$	20.53
Tangible book value per share at period end	$	17.47		$	17.42		$	17.16		$	17.52		$	17.13
Market price at period end	$	33.52		$	34.39		$	36.18		$	25.34		$	21.69
Shares outstanding at period end		19,087,409			15,780,651			15,483,499			15,404,423			15,402,946

Capital
Total capital to risk-weighted assets		12.34	%		13.48	%		13.85	%		13.53	%		13.91	%
Tier 1 capital to risk-weighted assets		10.45	%		10.97	%		11.27	%		10.94	%		11.23	%
Tier 1 leverage ratio		11.04	%		9.61	%		9.76	%		9.82	%		9.77	%
Common equity Tier 1 capital ratio		8.68	%		9.10	%		9.35	%		9.03	%		9.24	%
Tangible common equity to tangible assets		7.62	%		8.29	%		8.36	%		8.44	%		8.89	%

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)	2017			2017			2016			2016			2016
Adjusted Earnings Reconciliation
Income before income taxes - GAAP	$	4,916		$	11,473		$	19,910		$	12,153		$	10,472
Adjustments to other income:
Gain on sales of investment securities, net		55			67			14,387			39			72
Reversal of contingent consideration accrual		-			-			-			-			350
Gain (loss) on sale of other assets		(91	)		(58	)		-			-			-
Total adjusted other income		(36	)		9			14,387			39			422
Adjustments to other expense:
Expenses associated with payoff of subordinated debt		-			-			-			-			511
Net expense from loss share termination agreement		-			-			351			-			-
Branch network optimization plan charges		-			-			2,099			-			-
Integration and acquisition expenses		7,450			1,251			1,200			352			406
Total adjusted other expense		7,450			1,251			3,650			352			917
Adjusted earnings pre tax		12,402			12,715			9,173			12,466			10,967
Adjusted earnings tax		3,473			3,306			2,871			4,189			3,861
Adjusted earnings - non-GAAP	$	8,929		$	9,409		$	6,302		$	8,277		$	7,106
Adjusted diluted EPS	$	0.51		$	0.57		$	0.39		$	0.52		$	0.52
Adjusted return on average assets		0.99	%		1.16	%		0.78	%		1.06	%		0.93	%
Adjusted return on average shareholders' equity		9.91	%		11.73	%		7.64	%		10.33	%		10.66	%
Adjusted return on average tangible common equity		12.39	%		14.16	%		9.16	%		12.35	%		13.27	%


Yield on Loans
Reported yield on loans		4.71	%		4.91	%		4.65	%		4.83	%		5.24	%
Effect of accretion income on acquired loans		(0.17	)%		(0.43	)%		(0.33	)%		(0.43	)%		(0.88	)%
Yield on loans excluding accretion income		4.54	%		4.48	%		4.32	%		4.40	%		4.36	%

Net Interest Margin
Reported net interest margin		3.70	%		3.87	%		3.70	%		4.00	%		4.20	%
Effect of accretion income on acquired loans		(0.13	)%		(0.35	)%		(0.28	)%		(0.34	)%		(0.68	)%
Net interest margin excluding accretion income		3.57	%		3.52	%		3.42	%		3.66	%		3.52	%

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,
(dollars in thousands, except per share data)	2017			2017			2016			2016			2016

*Shareholders' Equity to Tangible Common Equity*
Total shareholders' equity—GAAP	$	451,952		$	334,333		$	321,770		$	321,749		$	316,268
Adjustments:
Preferred stock		(3,134	)		-			-			-			-
Goodwill		(96,940	)		(50,807	)		(48,836	)		(46,519	)		(46,519	)
Other intangibles		(18,459	)		(8,633	)		(7,187	)		(5,391	)		(5,905	)
Tangible common equity	$	333,419		$	274,893		$	265,747		$	269,839		$	263,844

*Total Assets to Tangible Assets:*
Total assets—GAAP		4,491,642			3,373,577			3,233,723			3,247,727			3,021,784
Adjustments:
Goodwill		(96,940	)		(50,807	)		(48,836	)		(46,519	)		(46,519	)
Other intangibles		(18,459	)		(8,633	)		(7,187	)		(5,391	)		(5,905	)
Tangible assets	$	4,376,243		$	3,314,137		$	3,177,700		$	3,195,817		$	2,969,360

Common Shares Outstanding		19,087,409			15,780,651			15,483,499			15,404,423			15,402,946

*Tangible Common Equity to Tangible Assets*		7.62	%		8.29	%		8.36	%		8.44	%		8.89	%
*Tangible Book Value Per Share*	$	17.47		$	17.42		$	17.16		$	17.52		$	17.13


Return on Average Tangible Common Equity (ROATCE)
	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)	2017			2017			2016			2016			2016

Net Income	$	3,539		$	8,490		$	11,583		$	8,051		$	6,789

Average total shareholders' equity—GAAP	$	361,335		$	325,442		$	327,886		$	318,860		$	268,141
Adjustments:
Goodwill		(61,424	)		(48,836	)		(46,594	)		(46,519	)		(46,519	)
Other intangibles		(10,812	)		(7,144	)		(7,718	)		(5,656	)		(6,184	)
Average tangible common equity	$	289,099		$	269,462		$	273,574		$	266,685		$	215,438
ROATCE		4.91	%		12.78	%		16.84	%		12.01	%		12.67	%

CONTACTS:
Jeffrey G. Ludwig, Exec. V.P., at jludwig@midlandsb.com or (217) 342-7321
Kevin L. Thompson, Chief Financial Officer, at kthompson@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 2017 Second Quarter Results