Midland States Bancorp, Inc. Announces 2021 First Quarter Results

Summary

Net income of $18.5 million, or $0.81 diluted earnings per share
Efficiency ratio improved to 56.88% from 58.55% in Q4 2020
Return on average shareholders’ equity of 12.04%
Return on average tangible common equity of 17.28%
Tier 1 leverage ratio increased 29 bps to 7.79%
Book value and tangible book value per share increased 2.2% and 3.5%, respectively

EFFINGHAM, Ill., April 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021. This compares to net income of $8.3 million, or $0.36 diluted earnings per share, for the fourth quarter of 2020, which was negatively impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on mortgage servicing rights (“MSRs”) held-for-sale, and $0.2 million in integration and acquisition expenses, and to net income of $1.5 million, or $0.06 diluted earnings per share, for the first quarter of 2020, which was negatively impacted by an $8.5 million impairment on commercial MSRs and $0.9 million in integration and acquisition expenses.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Our first quarter results reflect a significant increase in our level of profitability resulting from the actions we took last year to increase efficiencies and optimize our business model. Despite operating in a low growth, low interest rate environment, we are seeing substantial improvement in our performance metrics including our efficiency ratio, return on average assets, and return on average tangible equity, as well as strong increases in our capital ratios and book value.

“We continued to execute on our strategy to increase our recurring fee income with the announcement of our acquisition of ATG Trust Company, which we expect to close during the second quarter of 2021. The addition of ATG Trust will further increase our assets under administration and provide additional expertise in specialized areas that will improve our ability to attract new clients to our wealth management business.

“During the first quarter, we saw an elevated level of loan payoffs and paydowns, which impacted our total loan balances. However, we are seeing encouraging signs of improving economic conditions in our markets and a growing loan pipeline. As a result, we believe that we will see stronger loan production and loan growth as we move through the year. The stronger loan growth and redeployment of our excess liquidity into higher yielding assets should enable us to realize additional operating leverage and generate further improvement in our level of profitability going forward,” said Mr. Ludwig.

Adjusted Earnings

Financial results for the fourth quarter of 2020 were impacted by $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.5 million, or $0.54 per share, for the fourth quarter of 2020.

Financial results for the first quarter of 2020 were impacted by $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding these amounts and certain income and other expenses, adjusted earnings were $2.8 million, or $0.11 diluted earnings per share, for the first quarter of 2020.

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 Margin

Net interest margin for the first quarter of 2021 was 3.45%, compared to 3.47% for the fourth quarter of 2020. The Company’s net interest margin benefits from accretion income on purchased loan portfolios, which contributed 8 and 10 basis points to net interest margin in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin was unchanged from the fourth quarter of 2020, as a favorable shift in the mix of earning assets and a reduction in the average cost of funds was offset by a decline in the average yield on loans and securities.

Relative to the first quarter of 2020, net interest margin decreased from 3.48%. Accretion income on purchased loan portfolios contributed 16 basis points to net interest margin in the first quarter of 2020. Excluding the impact of accretion income, net interest margin increased 5 basis points compared to the first quarter of 2020, primarily due to a reduction in the average cost of deposits and the accelerated recognition of Paycheck Protection Program (“PPP”) loan income upon forgiveness.

Net Interest Income

Net interest income for the first quarter of 2021 was $51.9 million, a decrease of 3.1% from $53.5 million for the fourth quarter of 2020. Excluding accretion income, net interest income decreased $1.2 million from the prior quarter, which was primarily due to lower PPP loan income. Accretion income associated with purchased loan portfolios totaled $1.2 million for the first quarter of 2021, compared with $1.6 million for the fourth quarter of 2020. PPP loan income totaled $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021, compared to $3.7 million, including loan origination fees of $3.1 million, in the fourth quarter of 2020.

Relative to the first quarter of 2020, net interest income increased $5.2 million, or 11.2%. Accretion income for the first quarter of 2020 was $2.2 million. Excluding the impact of accretion income, net interest income increased primarily due to organic loan growth and a significant decline in the cost of funds.

Noninterest Income

Noninterest income for the first quarter of 2021 was $14.8 million, an increase of 3.3% from $14.3 million for the fourth quarter of 2020. Impairment on commercial MSRs impacted noninterest income by $1.3 million and $2.3 million in the first quarter of 2021 and fourth quarter of 2020, respectively. Excluding the impairments, noninterest income decreased 3.5% primarily due to lower levels of residential mortgage banking revenue and service charges on deposit accounts.

Relative to the first quarter of 2020, noninterest income increased 72.3% from $8.6 million. The increase was primarily attributable to a lower level of impairment on commercial MSRs.

Wealth management revenue for the first quarter of 2021 was $5.9 million, an increase of 1.1% from the fourth quarter of 2020. Compared to the first quarter of 2020, wealth management revenue increased 4.5%.

Noninterest Expense

Noninterest expense for the first quarter of 2021 was $39.1 million, which included $0.2 million in integration and acquisition expenses, compared with $47.0 million in the fourth quarter of 2020, which included $4.9 million of charges related to the prepayment of FHLB advances, a $0.6 million loss on residential MSRs held-for sale, and $0.2 million in integration and acquisition expenses. Excluding the FHLB prepayment charges, losses on MSRs held-for sale, and integration and acquisition expenses, noninterest expense decreased by $2.5 million, primarily due to lower salaries and employee benefits expense resulting from the Company’s branch network and facilities optimization initiative implemented during the fourth quarter of 2020, as well as a one-time vacation rollover accrual recorded in the prior quarter.

Relative to the first quarter of 2020, noninterest expense decreased 6.2% from $41.7 million, which included $0.9 million in integration and acquisition expenses, a $0.5 million loss on residential MSRs held-for-sale, and a $0.2 million loss on the repurchase of subordinated debt. Excluding the integration and acquisition expenses, the losses on residential MSRs held-for-sale and the loss on the repurchase of subordinated debt, noninterest expense declined $1.1 million, primarily due to lower salaries and employee benefits expense and lower occupancy and equipment expense resulting from the Company’s branch network and facilities optimization initiative.

Loan Portfolio

Total loans outstanding were $4.91 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020 and $4.38 billion at March 31, 2020. The decrease in total loans from December 31, 2020 was primarily attributable to elevated payoffs and paydowns across most of the Company’s major portfolios, as well as lower end-of-period balances on commercial FHA warehouse lines of credit, which was partially offset by an increase in PPP loans following the origination of $79.3 million of loans in the second round of the program.

Equipment finance balances decreased $2.9 million from December 31, 2020 to $858.6 million at March 31, 2021, which are booked within the commercial loans and leases portfolio.

The increase in total loans from March 31, 2020 was primarily attributable to the growth in equipment finance balances, consumer loans, and PPP loans.

Deposits

Total deposits were $5.34 billion at March 31, 2021, compared with $5.10 billion at December 31, 2020, and $4.65 billion at March 31, 2020. The increase in total deposits from the end of the prior quarter was primarily attributable to strong inflows of retail deposits resulting from federal government stimulus payments and PPP-related commercial deposits.

Asset Quality

Nonperforming loans totaled $52.8 million, or 1.08% of total loans, at March 31, 2021, compared with $54.1 million, or 1.06% of total loans, at December 31, 2020. The decrease in nonperforming loans was primarily attributable to the resolution of long-term problem loans. At March 31, 2020, nonperforming loans totaled $58.2 million, or 1.33% of total loans.

Net charge-offs for the first quarter of 2021 were $1.7 million, or 0.14% of average loans on an annualized basis.

The Company recorded a provision for credit losses of $3.6 million for the first quarter of 2021, which was primarily related to additions to specific reserves.

The Company’s allowance for credit losses on loans was 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021, compared with 1.18% of total loans and 111.8% of nonperforming loans at December 31, 2020. Approximately 90.3% of the allowance for credit losses on loans at March 31, 2021 was allocated to general reserves.

Capital

At March 31, 2021, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

	Bank Level Ratios as of March 31, 2021	Consolidated Ratios as of March 31, 2021	Minimum Regulatory Requirements ⁽²⁾
Total capital to risk-weighted assets	12.18%	13.73%	10.50%
Tier 1 capital to risk-weighted assets	11.15%	9.62%	8.50%
Tier 1 leverage ratio	9.03%	7.79%	4.00%
Common equity Tier 1 capital	11.15%	8.39%	7.00%
Tangible common equity to tangible assets ⁽¹⁾	NA	6.67%	NA

(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.
(2) Includes the capital conservation buffer of 2.5%.

Stock Repurchase Program

During the first quarter of 2021, the Company repurchased 65,840 shares of its common stock at a weighted average price of $18.35 under its stock repurchase program, which authorized the repurchase of up to $50 million of its common stock. As of March 31, 2021, the Company had $5.2 million remaining under the current stock repurchase authorization.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, April 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 9390877. A recorded replay can be accessed through April 30, 2021, by dialing (855) 859-2056; conference ID: 9390877.

A slide presentation relating to the first quarter 2021 financial results will be accessible prior to the scheduled conference call. This earnings release should be read together with the slide presentation, which contains important information related to the impact of COVID-19. 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 at investors.midlandsb.com under the “News and Events” tab.

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 March 31, 2021, the Company had total assets of approximately $6.88 billion, and its Wealth Management Group had assets under administration of approximately $3.56 billion. Midland provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Common Share,” “Adjusted Pre-Tax, Pre-Provision Earnings,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Adjusted Pre-Tax, Pre-Provision Return on Average Assets,” “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" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; developments and uncertainty related to the future use and availability of some reference rates, such as the London Inter-Bank Offered Rate, as well as other alternative reference rates, and the adoption of a substitute; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321
Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321


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

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Earnings Summary
Net interest income	$	51,868		$	53,516		$	49,980		$	48,989		$	46,651
Provision for credit losses		3,565			10,058			11,728			10,997			11,578
Noninterest income		14,816			14,336			18,919			19,396			8,598
Noninterest expense		39,079			47,048			53,901			41,395			41,666
Income before income taxes		24,040			10,746			3,270			15,993			2,005
Income taxes		5,502			2,413			3,184			3,424			456
Net income	$	18,538		$	8,333		$	86		$	12,569		$	1,549

Diluted earnings per common share	$	0.81		$	0.36		$	-		$	0.53		$	0.06
Weighted average shares outstanding - diluted		22,578,553			22,656,343			22,937,837			23,339,964			24,538,002
Return on average assets		1.11	%		0.49	%		0.01	%		0.77	%		0.10	%
Return on average shareholders' equity		12.04	%		5.32	%		0.05	%		8.00	%		0.96	%
Return on average tangible common equity ⁽¹⁾		17.28	%		7.68	%		0.08	%		11.84	%		1.39	%
Net interest margin		3.45	%		3.47	%		3.33	%		3.32	%		3.48	%
Efficiency ratio ⁽¹⁾		56.88	%		58.55	%		57.74	%		59.42	%		62.21	%

Adjusted Earnings Performance Summary ⁽¹⁾
Adjusted earnings	$	18,662		$	12,471		$	12,023		$	12,884		$	2,806
Adjusted diluted earnings per common share	$	0.82		$	0.54		$	0.52		$	0.55		$	0.11
Adjusted return on average assets		1.12	%		0.73	%		0.72	%		0.78	%		0.19	%
Adjusted return on average shareholders' equity		12.12	%		7.97	%		7.56	%		8.20	%		1.73	%
Adjusted return on average tangible common equity		17.39	%		11.50	%		11.04	%		12.14	%		2.53	%
Adjusted pre-tax, pre-provision earnings	$	29,051		$	28,855		$	28,751		$	27,531		$	23,785
Adjusted pre-tax, pre-provision return on average assets		1.75	%		1.69	%		1.72	%		1.68	%		1.58	%

(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.


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

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(in thousands, except per share data)	2021			2020			2020			2020			2020
Net interest income:
Interest income	$	60,503		$	62,712		$	60,314		$	60,548		$	61,314
Interest expense		8,635			9,196			10,334			11,559			14,663
Net interest income		51,868			53,516			49,980			48,989			46,651
Provision for credit losses:
Provision for credit losses on loans		3,950			10,000			10,970			11,610			10,569
Provision for credit losses on unfunded commitments		(535	)		-			577			(665	)		934
Provision for other credit losses		150			58			181			52			75
Total provision for credit losses		3,565			10,058			11,728			10,997			11,578
Net interest income after provision for credit losses		48,303			43,458			38,252			37,992			35,073
Noninterest income:
Wealth management revenue		5,931			5,868			5,559			5,698			5,677
Commercial FHA revenue		292			400			926			3,414			1,267
Residential mortgage banking revenue		1,574			2,285			3,049			2,723			1,755
Service charges on deposit accounts		1,826			2,149			2,092			1,706			2,656
Interchange revenue		3,375			3,137			3,283			3,013			2,833
Gain on sales of investment securities, net		-			-			1,721			-			-
Impairment on commercial mortgage servicing rights		(1,275	)		(2,344	)		(1,418	)		(107	)		(8,468	)
Company-owned life insurance		860			893			897			892			900
Other income		2,233			1,948			2,810			2,057			1,978
Total noninterest income		14,816			14,336			18,919			19,396			8,598
Noninterest expense:
Salaries and employee benefits		20,528			22,636			21,118			20,740			21,063
Occupancy and equipment		3,940			3,531			4,866			4,286			4,869
Data processing		5,993			5,987			5,721			5,458			5,477
Professional		2,185			1,912			1,861			1,606			1,855
Amortization of intangible assets		1,515			1,556			1,557			1,629			1,762
Loss on mortgage servicing rights held for sale		-			617			188			391			496
Impairment related to facilities optimization		-			(10	)		12,651			60			146
FHLB advances prepayment fees		8			4,872			-			-			-
Other expense		4,910			5,947			5,939			7,225			5,998
Total noninterest expense		39,079			47,048			53,901			41,395			41,666
Income before income taxes		24,040			10,746			3,270			15,993			2,005
Income taxes		5,502			2,413			3,184			3,424			456
Net income	$	18,538		$	8,333		$	86		$	12,569		$	1,549

Basic earnings per common share	$	0.81		$	0.36		$	0.00		$	0.53		$	0.06
Diluted earnings per common share	$	0.81		$	0.36		$	0.00		$	0.53		$	0.06


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

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
(in thousands)	2021			2020			2020			2020			2020
Assets
Cash and cash equivalents	$	631,219		$	341,640		$	461,196		$	519,868		$	449,396
Investment securities		690,390			686,135			618,974			639,693			661,894
Loans		4,910,806			5,103,331			4,941,466			4,839,423			4,376,204
Allowance for credit losses on loans		(62,687	)		(60,443	)		(52,771	)		(47,093	)		(38,545	)
Total loans, net		4,848,119			5,042,888			4,888,695			4,792,330			4,337,659
Loans held for sale		55,174			138,090			62,500			32,403			113,852
Premises and equipment, net		73,255			74,124			74,967			89,046			90,118
Other real estate owned		20,304			20,247			15,961			12,728			7,892
Loan servicing rights, at lower of cost or fair value		36,876			39,276			42,465			44,239			44,566
Goodwill		161,904			161,904			161,904			172,796			172,796
Other intangible assets, net		26,867			28,382			29,938			31,495			33,124
Cash surrender value of life insurance policies		146,864			146,004			145,112			144,215			143,323
Other assets		193,814			189,850			198,333			165,685			153,610
Total assets	$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498		$	6,208,230

Liabilities and Shareholders' Equity
Noninterest-bearing deposits	$	1,522,433		$	1,469,579		$	1,355,188		$	1,273,267		$	1,052,726
Interest-bearing deposits		3,818,080			3,631,437			3,673,548			3,669,840			3,597,914
Total deposits		5,340,513			5,101,016			5,028,736			4,943,107			4,650,640
Short-term borrowings		71,728			68,957			58,625			77,136			43,578
FHLB advances and other borrowings		529,171			779,171			693,640			693,865			593,089
Subordinated debt		169,888			169,795			169,702			169,610			169,505
Trust preferred debentures		48,954			48,814			48,682			48,551			48,420
Other liabilities		89,065			79,396			78,780			78,640			71,838
Total liabilities		6,249,319			6,247,149			6,078,165			6,010,909			5,577,070
Total shareholders’ equity		635,467			621,391			621,880			633,589			631,160
Total liabilities and shareholders’ equity	$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498		$	6,208,230


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

	As of
	March 31,		December 31,		September 30,		June 30,		March 31,
(in thousands)	2021		2020		2020		2020		2020
Loan Portfolio
Commercial loans and leases	$	1,977,440	$	2,095,639	$	1,938,691	$	1,856,435	$	1,439,145
Commercial real estate		1,494,031		1,525,973		1,496,758		1,495,183		1,507,280
Construction and land development		191,870		172,737		177,894		207,593		208,361
Residential real estate		398,501		442,880		470,829		509,453		548,014
Consumer		848,964		866,102		857,294		770,759		673,404
Total loans	$	4,910,806	$	5,103,331	$	4,941,466	$	4,839,423	$	4,376,204

Deposit Portfolio
Noninterest-bearing demand	$	1,522,433	$	1,469,579	$	1,355,188	$	1,273,267	$	1,052,726
Interest-bearing:
Checking		1,601,449		1,568,888		1,581,216		1,484,728		1,425,022
Money market		819,455		785,871		826,454		877,675		849,642
Savings		653,256		597,966		580,748		594,685		534,457
Time		718,788		655,620		661,872		689,841		765,870
Brokered time		25,132		23,092		23,258		22,911		22,923
Total deposits	$	5,340,513	$	5,101,016	$	5,028,736	$	4,943,107	$	4,650,640


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

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands)	2021			2020			2020			2020			2020
Average Balance Sheets
Cash and cash equivalents	$	350,061		$	415,686		$	491,728		$	489,941		$	337,851
Investment securities		680,202			672,937			628,705			650,356			662,450
Loans		4,992,802			4,998,912			4,803,940			4,696,288			4,384,206
Loans held for sale		65,365			45,196			44,880			99,169			19,844
Nonmarketable equity securities		55,935			51,906			50,765			50,661			45,124
Total interest-earning assets		6,144,365			6,184,637			6,020,018			5,986,415			5,449,475
Non-earning assets		602,017			602,716			625,522			619,411			624,594
Total assets	$	6,746,382		$	6,787,353		$	6,645,540		$	6,605,826		$	6,074,069

Interest-bearing deposits	$	3,757,108		$	3,680,645		$	3,656,833		$	3,651,406		$	3,549,515
Short-term borrowings		75,544			62,432			64,010			59,103			55,616
FHLB advances and other borrowings		617,504			682,981			693,721			692,470			532,733
Subordinated debt		169,844			169,751			169,657			169,560			170,026
Trust preferred debentures		48,887			48,751			48,618			48,487			48,357
Total interest-bearing liabilities		4,668,887			4,644,560			4,632,839			4,621,026			4,356,247
Noninterest-bearing deposits		1,370,604			1,446,359			1,303,963			1,280,983			986,178
Other noninterest-bearing liabilities		82,230			73,840			75,859			71,853			78,943
Shareholders' equity		624,661			622,594			632,879			631,964			652,701
Total liabilities and shareholders' equity	$	6,746,382		$	6,787,353		$	6,645,540		$	6,605,826		$	6,074,069

Yields
Earning Assets
Cash and cash equivalents		0.11	%		0.12	%		0.10	%		0.14	%		1.26	%
Investment securities		2.51	%		2.65	%		2.86	%		3.05	%		3.23	%
Loans		4.50	%		4.58	%		4.57	%		4.64	%		5.01	%
Loans held for sale		2.74	%		3.14	%		2.92	%		4.07	%		3.87	%
Nonmarketable equity securities		4.93	%		5.22	%		5.26	%		5.40	%		5.39	%
Total interest-earning assets		4.02	%		4.06	%		4.01	%		4.10	%		4.56	%

Interest-Bearing Liabilities
Interest-bearing deposits		0.34	%		0.36	%		0.46	%		0.61	%		0.95	%
Short-term borrowings		0.13	%		0.14	%		0.17	%		0.19	%		0.73	%
FHLB advances and other borrowings		1.69	%		1.71	%		1.85	%		1.69	%		2.24	%
Subordinated debt		5.57	%		5.60	%		5.58	%		5.85	%		5.90	%
Trust preferred debentures		4.08	%		4.03	%		4.16	%		4.86	%		6.02	%
Total interest-bearing liabilities		0.75	%		0.79	%		0.89	%		1.01	%		1.35	%

Cost of Deposits		0.25	%		0.26	%		0.34	%		0.45	%		0.74	%

Net Interest Margin		3.45	%		3.47	%		3.33	%		3.32	%		3.48	%


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

	As of and for the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Asset Quality
Loans 30-89 days past due	$	24,819		$	31,460		$	28,188		$	36,551		$	40,392
Nonperforming loans		52,826			54,070			67,443			60,513			58,166
Nonperforming assets		75,004			75,432			84,795			74,707			67,158
Net charge-offs		1,706			2,328			5,292			3,062			12,835
Loans 30-89 days past due to total loans		0.51	%		0.62	%		0.57	%		0.76	%		0.92	%
Nonperforming loans to total loans		1.08	%		1.06	%		1.36	%		1.25	%		1.33	%
Nonperforming assets to total assets		1.09	%		1.10	%		1.27	%		1.12	%		1.08	%
Allowance for credit losses to total loans		1.28	%		1.18	%		1.07	%		0.97	%		0.88	%
Allowance for credit losses to nonperforming loans		118.67	%		111.79	%		78.25	%		77.82	%		66.27	%
Net charge-offs to average loans		0.14	%		0.19	%		0.44	%		0.26	%		1.18	%

Wealth Management
Trust assets under administration	$	3,560,427		$	3,480,759		$	3,260,893		$	3,253,784		$	2,967,536

Market Data
Book value per share at period end	$	28.43		$	27.83		$	27.51		$	27.62		$	26.99
Tangible book value per share at period end ⁽¹⁾	$	19.98		$	19.31		$	19.03		$	18.72		$	18.19
Market price at period end	$	27.74		$	17.87		$	12.85		$	14.95		$	17.49
Shares outstanding at period end		22,351,740			22,325,471			22,602,844			22,937,296			23,381,496

Capital
Total capital to risk-weighted assets		13.73	%		13.24	%		13.34	%		13.67	%		13.73	%
Tier 1 capital to risk-weighted assets		9.62	%		9.20	%		9.40	%		9.71	%		9.76	%
Tier 1 common capital to risk-weighted assets		8.39	%		7.99	%		8.18	%		8.44	%		8.47	%
Tier 1 leverage ratio		7.79	%		7.50	%		7.72	%		7.75	%		8.39	%
Tangible common equity to tangible assets ⁽¹⁾		6.67	%		6.46	%		6.61	%		6.67	%		7.08	%

(1) Non-GAAP financial measures. Refer to pages 13 - 15 for a reconciliation to the comparable GAAP financial measures.


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

Adjusted Earnings Reconciliation

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Income before income taxes - GAAP	$	24,040		$	10,746		$	3,270		$	15,993		$	2,005
Adjustments to noninterest income:
Gain on sales of investment securities, net		-			-			1,721			-			-
Other		75			3			(17	)		11			(13	)
Total adjustments to noninterest income		75			3			1,704			11			(13	)
Adjustments to noninterest expense:
Loss on mortgage servicing rights held for sale		-			617			188			391			496
Loss on repurchase of subordinated debt		-			-			-			-			193
Impairment related to facilities optimization		-			(10	)		12,651			60			146
FHLB advances prepayment fees		8			4,872			-			-			-
Integration and acquisition expenses		238			231			1,200			(6	)		886
Total adjustments to noninterest expense		246			5,710			14,039			445			1,721
Adjusted earnings pre tax		24,211			16,453			15,605			16,427			3,739
Adjusted earnings tax		5,549			3,982			3,582			3,543			933
Adjusted earnings - non-GAAP	$	18,662		$	12,471		$	12,023		$	12,884		$	2,806
Adjusted diluted earnings per common share	$	0.82		$	0.54		$	0.52		$	0.55		$	0.11
Adjusted return on average assets		1.12	%		0.73	%		0.72	%		0.78	%		0.19	%
Adjusted return on average shareholders' equity		12.12	%		7.97	%		7.56	%		8.20	%		1.73	%
Adjusted return on average tangible common equity		17.39	%		11.50	%		11.04	%		12.14	%		2.53	%


Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands)	2021			2020			2020			2020			2020
Adjusted earnings pre tax - non-GAAP	$	24,211		$	16,453		$	15,605		$	16,427		$	3,739
Provision for credit losses		3,565			10,058			11,728			10,997			11,578
Impairment on commercial mortgage servicing rights		1,275			2,344			1,418			107			8,468
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	29,051		$	28,855		$	28,751		$	27,531		$	23,785
Adjusted pre-tax, pre-provision return on average assets		1.75	%		1.69	%		1.72	%		1.68	%		1.58	%


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)


Efficiency Ratio Reconciliation
	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands)	2021			2020			2020			2020			2020
Noninterest expense - GAAP	$	39,079		$	47,048		$	53,901		$	41,395		$	41,666
Loss on mortgage servicing rights held for sale		-			(617	)		(188	)		(391	)		(496	)
Loss on repurchase of subordinated debt		-			-			-			-			(193	)
Impairment related to facilities optimization		-			10			(12,651	)		(60	)		(146	)
FHLB advances prepayment fees		(8	)		(4,872	)		-			-			-
Integration and acquisition expenses		(238	)		(231	)		(1,200	)		6			(885	)
Adjusted noninterest expense	$	38,833		$	41,338		$	39,862		$	40,950		$	39,946

Net interest income - GAAP	$	51,868		$	53,516		$	49,980		$	48,989		$	46,651
Effect of tax-exempt income		386			413			430			438			485
Adjusted net interest income		52,254			53,929			50,410			49,427			47,136

Noninterest income - GAAP		14,816			14,336			18,919			19,396			8,598
Impairment on commercial mortgage servicing rights		1,275			2,344			1,418			107			8,468
Gain on sales of investment securities, net		-			-			(1,721	)		-			-
Other		(75	)		(3	)		17			(11	)		13
Adjusted noninterest income		16,016			16,677			18,633			19,492			17,079

Adjusted total revenue	$	68,270		$	70,606		$	69,043		$	68,919		$	64,215

Efficiency ratio		56.88	%		58.55	%		57.74	%		59.42	%		62.21	%


MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)

Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands, except per share data)	2021			2020			2020			2020			2020
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP	$	635,467		$	621,391		$	621,880		$	633,589		$	631,160
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(172,796	)		(172,796	)
Other intangible assets, net		(26,867	)		(28,382	)		(29,938	)		(31,495	)		(33,124	)
Tangible common equity	$	446,696		$	431,105		$	430,038		$	429,298		$	425,240

Total Assets to Tangible Assets:
Total assets—GAAP	$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498		$	6,208,230
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(172,796	)		(172,796	)
Other intangible assets, net		(26,867	)		(28,382	)		(29,938	)		(31,495	)		(33,124	)
Tangible assets	$	6,696,015		$	6,678,254		$	6,508,203		$	6,440,207		$	6,002,310

Common Shares Outstanding		22,351,740			22,325,471			22,602,844			22,937,296			23,381,496

Tangible Common Equity to Tangible Assets		6.67	%		6.46	%		6.61	%		6.67	%		7.08	%
Tangible Book Value Per Share	$	19.98		$	19.31		$	19.03		$	18.72		$	18.19

Return on Average Tangible Common Equity (ROATCE)

	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands)	2021			2020			2020			2020			2020
Net income available to common shareholders	$	18,538		$	8,333		$	86		$	12,569		$	1,549

Average total shareholders' equity—GAAP	$	624,661		$	622,594		$	632,879		$	631,964		$	652,701
Adjustments:
Goodwill		(161,904	)		(161,904	)		(168,771	)		(172,796	)		(171,890	)
Other intangible assets, net		(27,578	)		(29,123	)		(30,690	)		(32,275	)		(33,951	)
Average tangible common equity	$	435,179		$	431,567		$	433,418		$	426,893		$	446,860
ROATCE		17.28	%		7.68	%		0.08	%		11.84	%		1.39	%

Source: Midland States Bancorp, Inc.

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Midland States Bancorp, Inc. Announces 2021 First Quarter Results