Fourth Quarter 2023 Highlights:

Net income available to common shareholders of $18.5 million, or $0.84 per diluted share
Adjusted earnings available to common shareholders of $19.8 million, or $0.89 per diluted share
Tangible book value per share increased 7.8% from prior quarter to $23.35
Common equity tier 1 capital ratio improved to 8.40% from 8.07%
Net interest margin of 3.21%, compared to 3.20% in prior quarter
Efficiency ratio of 55.2% compared to 55.8% in prior quarter

EFFINGHAM, Ill., Jan. 25, 2024 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported net income available to common shareholders of $18.5 million, or $0.84 per diluted share, for the fourth quarter of 2023, compared to $9.2 million, or $0.41 per diluted share, for the third quarter of 2023. This also compares to net income available to common shareholders of $29.7 million, or $1.30 per diluted share, for the fourth quarter of 2022.

Financial results for the fourth quarter of 2023 included a $1.1 million gain on the sale of shares of VISA B stock, offset by $2.9 million of losses on the sale of investment securities. Results for the third quarter of 2023 included a $4.5 million tax charge related to the surrender of certain company-owned life insurance policies, and $5.0 million of losses on the sale of investment securities. Results for the fourth quarter of 2022 included a $17.5 million gain on the termination of forward starting interest rate swaps and a $3.3 million loss on commercial mortgage servicing rights held for sale.

Excluding these transactions, adjusted earnings available to common shareholders were $19.8 million and $17.3 million, or $0.89 and $0.78 per diluted share, for the fourth and third quarters of 2023, respectively. Adjusted earnings available to common shareholders for the fourth quarter of 2022 was $19.3 million or $0.85 per diluted share.

The Company revised its accounting for the one-time enhancement fee related to the surrender and purchase of company-owned life insurance policies acquired in the third quarter of 2023. As a result, the $6.6 million enhancement fee on the replacement policies that was previously recorded in income on company-owned life insurance in the third quarter of 2023 has been reversed. The revision did not have an impact on adjusted earnings (a non-GAAP financial measure) for that period. The Company reflected this revision in its September 30, 2023 quarter to date and December 31, 2023 year to date income on company-owned life insurance. Additionally, the revision impacts the company-owned life insurance asset for the applicable period.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "While continuing to prioritize prudent risk management, we delivered another quarter of strong financial results with a higher level of earnings and returns than the prior quarter, as well as a slight increase in our net interest margin and improvement in our efficiency ratio. Our strong financial performance and prudent balance sheet management helped us to achieve our objective to further increase our capital ratios, while we also had a 7.8% increase in tangible book value per share during the quarter.

"Our business development focus remains on high quality commercial relationships in our markets, and the new clients we are adding in our targeted areas helped to offset the intentional runoff of equipment finance and consumer loans. The new and expanded client relationships are also resulting in inflows of commercial deposits, which has enabled us to improve our overall deposit mix by running off higher cost time deposits.

"While we will remain conservative in our new loan production until economic conditions improve, we believe that we can continue to deliver strong financial performance for our shareholders, particularly given our relatively neutral interest rate sensitivity that positions us well for whatever rate environment we see going forward. We will remain disciplined in our expense management while also investing in areas that we believe will enhance the long-term value of our franchise. One area is our Wealth Management business, where we have made improvements to our technology platform that we believe will enhance our business development capabilities. A second area is expanding our presence in the higher growth St. Louis market where we recently added a new market president that we believe will help accelerate our efforts to add new commercial, retail and wealth management clients. And a third area is our Banking-as-a-Service initiative, which we expect to begin making a meaningful contribution to our deposit gathering and fee income during 2024. Given the strength of the franchise we have built, we believe we are well positioned to continue delivering strong financial results in the near-term while continuing to operate with a long-term approach and executing on the strategies that we believe will further enhance shareholder value in the coming years," said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.87 billion at December 31, 2023, compared to $7.97 billion at September 30, 2023, and $7.86 billion at December 31, 2022. At December 31, 2023, portfolio loans were $6.13 billion, compared to $6.28 billion at September 30, 2023, and $6.31 billion at December 31, 2022.

Loans

During the fourth quarter of 2023, outstanding loans declined by $149.8 million, or 2.4%, from September 30, 2023, as the Company continued to originate loans in a more selective and deliberate approach to balance liquidity and funding costs. Increases in construction and land development loans, and residential real estate loans of $35.8 million and $5.4 million, respectively, were offset by decreases in all other loan categories. Equipment finance loan and lease balances decreased $59.9 million during the fourth quarter of 2023 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $84.8 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $70.4 million during the fourth quarter to $688.0 million at December 31, 2023. In addition, during the fourth quarter, the Company ceased originating loans through LendingPoint. As of December 31, 2023, the Company had $121.0 million in loans that were originated through LendingPoint, which will continue to be serviced by LendingPoint.

	As of
	December 31,		September 30,		June 30,		March 31,		December 31,
(in thousands)	2023		2023		2023		2023		2022
Loan Portfolio
Commercial loans	$	951,387	$	943,761	$	962,756	$	937,920	$	872,794
Equipment finance loans		531,143		578,931		614,633		632,205		616,751
Equipment finance leases		473,350		485,460		500,485		510,029		491,744
Commercial FHA warehouse lines		—		48,547		30,522		10,275		25,029
Total commercial loans and leases		1,955,880		2,056,699		2,108,396		2,090,429		2,006,318
Commercial real estate		2,406,845		2,412,164		2,443,995		2,448,158		2,433,159
Construction and land development		452,593		416,801		366,631		326,836		320,882
Residential real estate		380,583		375,211		371,486		369,910		366,094
Consumer		935,178		1,020,008		1,076,836		1,118,938		1,180,014
Total loans	$	6,131,079	$	6,280,883	$	6,367,344	$	6,354,271	$	6,306,467

Loan Quality

Credit quality metrics declined this quarter compared the third quarter of 2023. Loans 30-89 days past due increased $36.2 million to $82.8 million as of December 31, 2023, compared to prior quarter end. Four commercial loans totaling $42.0 million accounted for this increase, of which $16.9 million was brought current in early January. Non-performing loans remained flat at $56.4 million at December 31, 2023, compared to $56.0 million as of September 30, 2023, and non-performing assets were 0.86% of total assets at the end of the fourth quarter of 2023, compared to 0.74% at September 30, 2023. An $8.7 million non-performing loan was transferred to OREO, and three commercial real estate loans totaling $9.0 million were placed on non-accrual in the fourth quarter of 2023.

At December 31, 2022, loans 30-89 days past due totaled $32.4 million, non-performing loans were $49.4 million, and non-performing assets as a percentage of total assets were 0.74%.

	As of and for the Three Months Ended
(in thousands)	December 31,			September 30,			June 30,			March 31,			December 31,
(in thousands)		2023			2023			2023			2023			2022
Asset Quality
Loans 30-89 days past due	$	82,778		$	46,608		$	44,161		$	30,895		$	32,372
Nonperforming loans		56,351			55,981			54,844			50,713			49,423
Nonperforming assets		67,701			58,677			57,688			58,806			57,824
Substandard loans		184,224			143,793			130,707			99,819			101,044
Net charge-offs		5,117			3,449			2,996			2,119			538
Loans 30-89 days past due to total loans		1.35	%		0.74	%		0.69	%		0.49	%		0.51	%
Nonperforming loans to total loans		0.92	%		0.89	%		0.86	%		0.80	%		0.78	%
Nonperforming assets to total assets		0.86	%		0.74	%		0.72	%		0.74	%		0.74	%
Allowance for credit losses to total loans		1.12	%		1.06	%		1.02	%		0.98	%		0.97	%
Allowance for credit losses to nonperforming loans		121.56	%		119.09	%		118.43	%		122.39	%		123.53	%
Net charge-offs to average loans		0.33	%		0.22	%		0.19	%		0.14	%		0.03	%

The Company continued to increase its allowance for credit losses on loans due to increased delinquencies and losses within our equipment finance portfolio. The allowance totaled $68.5 million at December 31, 2023, compared to $66.7 million at September 30, 2023, and $61.1 million at December 31, 2022. The allowance as a percentage of portfolio loans was 1.12% at December 31, 2023, compared to 1.06% at September 30, 2023, and 0.97% at December 31, 2022.

Deposits

Total deposits were $6.31 billion at December 31, 2023, compared with $6.41 billion at September 30, 2023 and $6.36 billion at December 31, 2022. The deposit mix continues to shift from noninterest-bearing deposits to interest-bearing deposits due to the rate increases announced by the Federal Reserve in 2023 and the expectation that rates will remain high for a longer period. Interest rate promotions offered during the fourth quarter of 2023 on money market deposit products contributed to the increase in balances of $44.7 million at December 31, 2023, compared to September 30, 2023.

	As of
	December 31,		September 30,		June 30,		March 31,		December 31,
(in thousands)	2023		2023		2023		2023		2022
Deposit Portfolio
Noninterest-bearing demand	$	1,145,395	$	1,154,515	$	1,162,909	$	1,215,758	$	1,362,158
Interest-bearing:
Checking		2,511,840		2,572,224		2,499,693		2,502,827		2,494,073
Money market		1,135,629		1,090,962		1,226,470		1,263,813		1,184,101
Savings		559,267		582,359		624,005		636,832		661,932
Time		862,865		885,858		840,734		766,884		649,552
Brokered time		94,533		119,084		72,737		39,087		12,836
Total deposits	$	6,309,529	$	6,405,002	$	6,426,548	$	6,425,201	$	6,364,652

The Company estimates that uninsured deposits⁽¹⁾ totaled $1.22 billion, or 19% of total deposits, at December 31, 2023 compared to $1.28 billion, or 20% of total deposits, at September 30, 2023.

(1) Uninsured deposits include the Call Report estimate of uninsured deposits less affiliate company deposits, estimated insured portion of servicing deposits, additional structured FDIC coverage and collateralized deposits.

Results of Operations Highlights

Net Interest Income and Margin

During the fourth quarter of 2023, net interest income, on a tax-equivalent basis, totaled $58.3 million, a decrease of $0.5 million, or 0.9%, compared to $58.8 million for the third quarter of 2023. The tax-equivalent net interest margin for the fourth quarter of 2023 was 3.21%, compared with 3.20% in the third quarter of 2023. Net interest income and related margin, on a tax-equivalent basis, was $63.8 million and 3.50%, respectively, in the fourth quarter of 2022. The decline in the net interest income and margin was largely attributable to increased market interest rates resulting in the cost of funding liabilities increasing at a faster rate than the yield on earning assets.

Average interest-earning assets for the fourth quarter of 2023 were $7.20 billion, compared to $7.28 billion for the third quarter of 2023. The yield increased 13 basis points to 5.78% compared to the third quarter of 2023. Interest-earning assets averaged $7.25 billion for the fourth quarter of 2022.

Average loans were $6.20 billion for the fourth quarter of 2023, compared to $6.30 billion for the third quarter of 2023 and $6.24 billion for the fourth quarter of 2022. The yield on loans was 6.00% and 5.93% for the fourth and third quarters of 2023, respectively.

Investment securities averaged $883.2 million for the fourth quarter of 2023, and yielded 4.16%, compared to an average balance and yield of $863.0 million and 3.60%, respectively, for the third quarter of 2023. The Company purchased additional investments and repositioned out of lower-yielding securities in favor of higher-yielding instruments resulting in the increased average balance and yield. The Company incurred net losses on sales of investments of $2.9 million and $5.0 million in the fourth and third quarters of 2023, respectively. The repositioning is expected to improve the overall margin, liquidity, and capital allocations. Investment securities averaged $736.6 million for the fourth quarter of 2022.

Average interest-bearing deposits were $5.30 billion for the fourth quarter of 2023, compared to $5.35 billion for the third quarter of 2023, and $5.05 billion for the fourth quarter of 2022. Cost of interest-bearing deposits was 2.93% in the fourth quarter of 2023, which represented a 13 basis point increase from the third quarter of 2023. A competitive market, driven by rising interest rates and increased competition, contributed to the increase in deposit costs.

	For the Three Months Ended
(dollars in thousands)		December 31, 2023						September 30, 2023						December 31, 2022
Interest-earning assets	Average Balance		Interest & Fees		Yield/Rate		Average Balance		Interest & Fees		Yield/Rate		Average Balance		Interest & Fees		Yield/Rate
Cash and cash equivalents	$	77,363	$	1,054	5.41	%	$	78,391	$	1,036	5.24	%	$	220,938	$	2,143	3.85	%
Investment securities		883,153		9,257	4.16			862,998		7,822	3.60			736,579		4,824	2.62
Loans		6,196,362		93,757	6.00			6,297,568		94,118	5.93			6,240,277		82,810	5.26
Loans held for sale		4,429		81	7.26			6,078		104	6.80			3,883		47	4.86
Nonmarketable equity securities		41,192		715	6.89			39,347		710	7.16			43,618		677	6.16
Total interest-earning assets	$	7,202,499	$	104,864	5.78	%	$	7,284,382	$	103,790	5.65	%	$	7,245,295	$	90,501	4.96	%
Noninterest-earning assets		695,293						622,969						609,866
Total assets	$	7,897,792					$	7,907,351					$	7,855,161

Interest-Bearing Liabilities
Interest-bearing deposits	$	5,295,296	$	39,156	2.93	%	$	5,354,356	$	37,769	2.80	%	$	5,053,158	$	19,841	1.56	%
Short-term borrowings		13,139		15	0.47			20,127		14	0.28			47,391		31	0.26
FHLB advances & other borrowings		430,207		4,750	4.38			402,500		4,557	4.49			460,598		4,264	3.67
Subordinated debt		93,512		1,281	5.43			93,441		1,280	5.43			107,374		1,463	5.45
Trust preferred debentures		50,541		1,402	11.00			50,379		1,369	10.78			49,902		1,066	8.47
Total interest-bearing liabilities	$	5,882,695	$	46,604	3.14	%	$	5,920,803	$	44,989	3.01	%	$	5,718,423	$	26,665	1.85	%
Noninterest-bearing deposits		1,142,062						1,116,988						1,336,620
Other noninterest-bearing liabilities		108,245						97,935						50,935
Shareholders' equity		764,790						771,625						749,183
Total liabilities and shareholder's equity	$	7,897,792					$	7,907,351					$	7,855,161

Net Interest Margin			$	58,260	3.21	%			$	58,801	3.20	%			$	63,836	3.50	%

Cost of Deposits					2.41	%					2.32	%					1.23	%

(1) Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million, $0.2 million and $0.3 million for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.

For the year ended December 31, 2023, net interest income, on a tax-equivalent basis, decreased to $236.8 million, with a tax-equivalent net interest margin of 3.26%, compared to net interest income, on a tax-equivalent basis, of $247.0 million, and a tax-equivalent net interest margin of 3.57% for the year ended December 31, 2022.

The yield on earning assets increased 119 basis points to 5.57% for the year ended December 31, 2023 compared to prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 183 basis points to 2.87% for the year ended December 31, 2023.

	For the Years Ended
	December 31,						December 31,
(dollars in thousands)		2023						2022
Interest-earning assets	Average Balance		Interest & Fees		Yield/Rate		Average Balance		Interest & Fees		Yield/Rate
Cash and cash equivalents	$	77,046	$	3,922	5.09	%	$	256,221	$	3,907	1.52	%
Investment securities		854,576		30,361	3.55			799,218		19,277	2.41
Loans		6,292,260		367,762	5.84			5,811,403		277,252	4.77
Loans held for sale		4,034		260	6.45			12,669		404	3.19
Nonmarketable equity securities		43,318		2,819	6.51			38,543		2,198	5.70
Total interest-earning assets	$	7,271,234	$	405,124	5.57	%	$	6,918,054	$	303,038	4.38	%
Noninterest-earning assets		635,490						618,593
Total assets	$	7,906,724					$	7,536,647

Interest-Bearing Liabilities
Interest-bearing deposits	$	5,241,723	$	136,947	2.61	%	$	4,802,130	$	36,061	0.75	%
Short-term borrowings		23,406		68	0.29			58,688		104	0.18
FHLB advances & other borrowings		460,781		20,709	4.49			355,282		9,335	2.63
Subordinated debt		95,986		5,266	5.49			131,203		7,495	5.71
Trust preferred debentures		50,298		5,289	10.52			49,678		3,025	6.09
Total interest-bearing liabilities	$	5,872,194	$	168,279	2.87	%	$	5,396,981	$	56,020	1.04	%
Noninterest-bearing deposits		1,173,873						1,386,251
Other noninterest-bearing liabilities		90,562						65,539
Shareholders' equity		770,095						687,876
Total liabilities and shareholders' equity	$	7,906,724					$	7,536,647

Net Interest Margin			$	236,845	3.26	%			$	247,018	3.57	%

Cost of Deposits					2.13	%					0.58	%

(1) Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.8 million and $1.3 million for the years ended December 31, 2023 and 2022, respectively.

Noninterest Income

Noninterest income was $20.5 million for the fourth quarter of 2023, compared to $11.5 million for the third quarter of 2023. Noninterest income for the fourth quarter of 2023 included incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. Also included was a $1.1 million one-time gain from the sale of Visa B stock, offset by $2.9 million of losses on the sale of investment securities. The third quarter of 2023 included $5.0 million of losses on the sale of investment securities. Excluding these transactions, noninterest income for the fourth quarter of 2023 and the third quarter of 2023 was $18.5 million and $16.5 million, respectively. Noninterest income for the fourth quarter of 2022 was $33.8 million and included $17.5 million gain on the termination of hedged interest rate swaps.

	For the Three Months Ended								For the Years Ended
	December 31,			September 30,			December 31,		December 31,			December 31,
(in thousands)		2023		2023⁽¹⁾				2022		2023			2022
Noninterest income
Wealth management revenue	$	6,604		$	6,288		$	6,227	$	25,572		$	25,708
Residential mortgage banking revenue		451			507			316		1,903			1,509
Service charges on deposit accounts		3,246			3,149			2,879		11,990			10,237
Interchange revenue		3,585			3,609			3,478		14,302			13,879
Income on company-owned life insurance		1,753			918			796		4,439			3,584
Loss on sales of investment securities, net		(2,894	)		(4,961	)		—		(9,372	)		(230	)
Gain (loss) on sales of other real estate owned, net		6			—			—		825			(118	)
Gain on termination of hedged interest rate swaps		—			—			17,531		—			17,531
Gain on repurchase of subordinated debt, net		—			—			—		676			—
Impairment on commercial mortgage servicing rights		—			—			—		—			(1,263	)
Other income		7,762			2,035			2,612		16,255			9,054
Total noninterest income	$	20,513		$	11,545		$	33,839	$	66,590		$	79,891

(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

Noninterest Expense

Noninterest expense was $44.5 million in the fourth quarter of 2023, compared to $42.0 million in the third quarter of 2023, and $49.9 million in the fourth quarter of 2022. The efficiency ratio improved to 55.22% for the quarter ended December 31, 2023, compared to 55.82% for the quarter ended September 30, 2023, and 58.26% for the quarter ended December 31, 2022.

	For the Three Months Ended						For the Years Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
(in thousands)	2023		2023		2022		2023		2022
Noninterest expense
Salaries and employee benefits	$	24,031	$	22,307	$	22,901	$	93,438	$	90,305
Occupancy and equipment		3,934		3,730		3,748		15,986		14,842
Data processing		6,963		6,468		6,302		26,286		24,350
Professional		2,072		1,554		1,726		7,049		6,907
Amortization of intangible assets		1,130		1,129		1,333		4,758		5,410
Other real estate owned		8		—		3,779		333		5,188
Loss on mortgage servicing rights held for sale		—		—		3,250		—		3,250
FDIC insurance		1,147		1,107		703		4,779		3,336
Other expense		5,203		5,743		6,201		21,273		22,074
Total noninterest expense	$	44,488	$	42,038	$	49,943	$	173,902	$	175,662

Salaries and employee benefits expenses were $24.0 million in the fourth quarter of 2023, compared to $22.3 million in the third quarter of 2023 and $22.9 million in the fourth quarter of 2022. The Company recognized a $1.1 million benefit related to claiming the Employees Retention Tax Credit in the fourth quarter of 2023. This was offset by increased incentive and performance-based expense accruals and increased medical costs of $1.7 million and $0.6 million, respectively. Employees numbered 914 at December 31, 2023, compared to 911 at September 30, 2023, and 935 at December 31, 2022.

Income Tax Expense

Income tax expense was $6.4 million for the fourth quarter of 2023, as compared to $11.5 million for the third quarter of 2023 and $11.0 million for the fourth quarter of 2022. The resulting effective tax rates were 23.7%, 50.3% and 25.1% respectively. The third quarter of 2023 included tax charges of $4.5 million associated with the surrender of certain company-owned life insurance policies and $1.4 million related to the finalization of the 2022 federal and state tax returns. Exclusive of these items our effective tax rate was 24.6% for the third quarter of 2023.

Capital

At December 31, 2023, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized'' financial institution, as summarized in the following table:

	As of December 31, 2023
	Midland States Bank	Midland States Bancorp, Inc.	Minimum Regulatory Requirements⁽²⁾
Total capital to risk-weighted assets	12.40%	13.20%	10.50%
Tier 1 capital to risk-weighted assets	11.44%	10.91%	8.50%
Tier 1 leverage ratio	10.18%	9.71%	4.00%
Common equity Tier 1 capital	11.44%	8.40%	7.00%
Tangible common equity to tangible assets⁽¹⁾	N/A	6.55%	N/A

(1) A non-GAAP financial measure. Refer to page 15 for a reconciliation to the comparable GAAP financial measure.

(2) Includes the capital conservation buffer of 2.5%.

The impact of rising interest rates on the Company's investment portfolio and cash flow hedges resulted in a $76.8 million accumulated other comprehensive loss at December 31, 2023, which reduces tangible book value by $3.56 per share.

Stock Repurchase Program

On December 5, 2023, the Company's board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2024. The new stock repurchase program became effective on January 1, 2024. The Company's previous stock repurchase program expired on December 31, 2023. During the fourth quarter of 2023, the Company repurchased 135,685 shares of its common stock at a weighted average price of $21.11 under its stock repurchase program.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of December 31, 2023, the Company had total assets of approximately $7.87 billion, and its Wealth Management Group had assets under administration of approximately $3.73 billion. The Company provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP.

These non-GAAP financial measures include "Adjusted Earnings," "Adjusted Earnings Available to Common Shareholders," "Adjusted Diluted Earnings Per Common Share," "Adjusted Return on Average Assets," "Adjusted Return on Average Shareholders' Equity," "Adjusted Return on Average Tangible Common Equity," "Adjusted Pre-Tax, Pre-Provision Earnings," "Adjusted Pre-Tax, Pre-Provision Return on Average Assets," "Efficiency Ratio," "Tangible Common Equity to Tangible Assets," "Tangible Book Value Per Share," "Tangible Book Value Per Share excluding Accumulated Other Comprehensive Income," and "Return on Average Tangible Common Equity." The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company's funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, the measures in this press release may not be comparable to other similarly titled measures as presented by other companies.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company's plans, objectives, future performance, goals and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the impact of inflation, continuing effects of the failures of Silicon Valley Bank and Signature Bank, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:

Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321

Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321

Douglas J. Tucker, SVP and Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

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

	As of and for the Three Months Ended									As of and for the Years Ended
(dollars in thousands, except per share data)	December 31, 2023			September 30, 2023⁽²⁾			December 31, 2022			December 31, 2023			December 31, 2022
Earnings Summary
Net interest income	$	58,077		$	58,596		$	63,550		$	236,017		$	245,735
Provision for credit losses		6,950			5,168			3,544			21,132			20,126
Noninterest income		20,513			11,545			33,839			66,590			79,891
Noninterest expense		44,488			42,038			49,943			173,902			175,662
Income before income taxes		27,152			22,935			43,902			107,573			129,838
Income taxes		6,441			11,533			11,030			32,113			30,813
Net income		20,711			11,402			32,872			75,460			99,025
Preferred dividends		2,228			2,229			3,169			8,913			3,169
Net income available to common shareholders	$	18,483		$	9,173		$	29,703		$	66,547		$	95,856

Diluted earnings per common share	$	0.84		$	0.41		$	1.30		$	2.97		$	4.23
Weighted average common shares outstanding - diluted		21,822,328			21,977,196			22,503,611			22,124,402			22,395,698
Return on average assets		1.04	%		0.57	%		1.66	%		0.95	%		1.31	%
Return on average shareholders' equity		10.74	%		5.86	%		17.41	%		9.80	%		14.40	%
Return on average tangible common equity⁽¹⁾		15.41	%		7.56	%		25.89	%		13.89	%		20.76	%
Net interest margin		3.21	%		3.20	%		3.50	%		3.26	%		3.57	%
Efficiency ratio⁽¹⁾		55.22	%		55.82	%		58.26	%		55.91	%		55.35	%

Adjusted Earnings Performance Summary⁽¹⁾
Adjusted earnings available to common shareholders	$	19,793		$	17,278		$	19,278		$	76,576		$	85,852
Adjusted diluted earnings per common share	$	0.89		$	0.78		$	0.85		$	3.42		$	3.79
Adjusted return on average assets		1.11	%		0.98	%		1.13	%		1.08	%		1.18	%
Adjusted return on average shareholders' equity		11.42	%		10.03	%		11.89	%		11.10	%		12.94	%
Adjusted return on average tangible common equity		16.51	%		14.24	%		16.80	%		15.98	%		18.59	%
Adjusted pre-tax, pre-provision earnings	$	35,898		$	33,064		$	33,165		$	136,303		$	137,523
Adjusted pre-tax, pre-provision return on average assets		1.80	%		1.66	%		1.68	%		1.72	%		1.82	%

Market Data
Book value per share at period end	$	31.61		$	29.96		$	29.17
Tangible book value per share at period end⁽¹⁾	$	23.35		$	21.67		$	20.94
Tangible book value per share excluding accumulated other comprehensive income at period end⁽¹⁾	$	26.91		$	26.35		$	24.72
Market price at period end	$	27.56		$	20.54		$	26.62
Common shares outstanding at period end		21,551,402			21,594,546			22,214,913

Capital
Total capital to risk-weighted assets		13.20	%		12.76	%		12.38	%
Tier 1 capital to risk-weighted assets		10.91	%		10.53	%		10.21	%
Tier 1 common capital to risk-weighted assets		8.40	%		8.07	%		7.77	%
Tier 1 leverage ratio		9.71	%		9.59	%		9.43	%
Tangible common equity to tangible assets⁽¹⁾		6.55	%		6.01	%		6.06	%

Wealth Management
Trust assets under administration	$	3,733,355		$	3,501,225		$	3,505,372

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

(2) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

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

	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
(in thousands)		2023		2023⁽¹⁾				2023			2023			2022
Assets
Cash and cash equivalents	$	135,061		$	132,132		$	160,695		$	138,310		$	160,631
Investment securities		920,396			839,344			887,003			821,005			776,860
Loans		6,131,079			6,280,883			6,367,344			6,354,271			6,306,467
Allowance for credit losses on loans		(68,502	)		(66,669	)		(64,950	)		(62,067	)		(61,051	)
Total loans, net		6,062,577			6,214,214			6,302,394			6,292,204			6,245,416
Loans held for sale		3,811			6,089			5,632			2,747			1,286
Premises and equipment, net		82,814			82,741			81,006			80,582			78,293
Other real estate owned		9,112			480			202			6,729			6,729
Loan servicing rights, at lower of cost or fair value		20,253			20,933			21,611			1,117			1,205
Commercial FHA mortgage loan servicing rights held for sale		—			—			—			20,745			20,745
Goodwill		161,904			161,904			161,904			161,904			161,904
Other intangible assets, net		16,108			17,238			18,367			19,575			20,866
Company-owned life insurance		203,485			201,750			152,210			151,319			150,443
Other assets		251,347			292,460			243,697			233,937			231,123
Total assets	$	7,866,868		$	7,969,285		$	8,034,721		$	7,930,174		$	7,855,501

Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits	$	1,145,395		$	1,154,515		$	1,162,909		$	1,215,758		$	1,362,158
Interest-bearing deposits		5,164,134			5,250,487			5,263,639			5,209,443			5,002,494
Total deposits		6,309,529			6,405,002			6,426,548			6,425,201			6,364,652
Short-term borrowings		34,865			17,998			21,783			31,173			42,311
FHLB advances and other borrowings		476,000			538,000			575,000			482,000			460,000
Subordinated debt		93,546			93,475			93,404			99,849			99,772
Trust preferred debentures		50,616			50,457			50,296			50,135			49,975
Other liabilities		110,459			106,743			90,869			66,173			80,217
Total liabilities		7,075,015			7,211,675			7,257,900			7,154,531			7,096,927
Total shareholders' equity		791,853			757,610			776,821			775,643			758,574
Total liabilities and shareholders' equity	$	7,866,868		$	7,969,285		$	8,034,721		$	7,930,174		$	7,855,501

(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

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

	For the Three Months Ended								For the Years Ended
	December 31,			September 30,			December 31,		December 31,			December 31,
(in thousands, except per share data)		2023		2023⁽¹⁾				2022		2023			2022
Net interest income:
Interest income	$	104,681		$	103,585		$	90,215	$	404,296		$	301,755
Interest expense		46,604			44,989			26,665		168,279			56,020
Net interest income		58,077			58,596			63,550		236,017			245,735
Provision for credit losses:
Provision for credit losses on loans		6,950			5,168			2,950		21,132			18,797
Provision for credit losses on unfunded commitments		—			—			594		—			1,550
Provision for other credit losses		—			—			—		—			(221	)
Total provision for credit losses		6,950			5,168			3,544		21,132			20,126
Net interest income after provision for credit losses		51,127			53,428			60,006		214,885			225,609
Noninterest income:
Wealth management revenue		6,604			6,288			6,227		25,572			25,708
Residential mortgage banking revenue		451			507			316		1,903			1,509
Service charges on deposit accounts		3,246			3,149			2,879		11,990			10,237
Interchange revenue		3,585			3,609			3,478		14,302			13,879
Income on company-owned life insurance		1,753			918			796		4,439			3,584
Loss on sales of investment securities, net		(2,894	)		(4,961	)		—		(9,372	)		(230	)
Gain (loss) on sales of other real estate owned, net		6			—			—		825			(118	)
Gain on termination of hedged interest rate swaps		—			—			17,531		—			17,531
Gain on repurchase of subordinated debt, net		—			—			—		676			—
Impairment on commercial mortgage servicing rights		—			—			—		—			(1,263	)
Other income		7,762			2,035			2,612		16,255			9,054
Total noninterest income		20,513			11,545			33,839		66,590			79,891
Noninterest expense:
Salaries and employee benefits		24,031			22,307			22,901		93,438			90,305
Occupancy and equipment		3,934			3,730			3,748		15,986			14,842
Data processing		6,963			6,468			6,302		26,286			24,350
Professional		2,072			1,554			1,726		7,049			6,907
Amortization of intangible assets		1,130			1,129			1,333		4,758			5,410
Other real estate owned		8			—			3,779		333			5,188
Loss on mortgage servicing rights held for sale		—			—			3,250		—			3,250
FDIC insurance		1,147			1,107			703		4,779			3,336
Other expense		5,203			5,743			6,201		21,273			22,074
Total noninterest expense		44,488			42,038			49,943		173,902			175,662
Income before income taxes		27,152			22,935			43,902		107,573			129,838
Income taxes		6,441			11,533			11,030		32,113			30,813
Net income		20,711			11,402			32,872		75,460			99,025
Preferred stock dividends		2,228			2,229			3,169		8,913			3,169
Net income available to common shareholders	$	18,483		$	9,173		$	29,703	$	66,547		$	95,856

Basic earnings per common share	$	0.84		$	0.41		$	1.31	$	2.97		$	4.24
Diluted earnings per common share	$	0.84		$	0.41		$	1.30	$	2.97		$	4.23

(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

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

Adjusted Earnings Reconciliation

	For the Three Months Ended									For the Years Ended
(dollars in thousands, except per share data)	December 31, 2023			September 30, 2023⁽¹⁾			December 31, 2022			December 31, 2023			December 31, 2022
Income before income taxes - GAAP	$	27,152		$	22,935		$	43,902		$	107,573		$	129,838
Adjustments to noninterest income:
Loss on sales of investment securities, net		2,894			4,961			—			9,372			230
(Gain) on termination of hedged interest rate swaps		—			—			(17,531	)		—			(17,531	)
(Gain) on sale of Visa B shares		(1,098	)		—			—			(1,098	)		—
(Gain) on repurchase of subordinated debt		—			—			—			(676	)		—
Total adjustments to noninterest income		1,796			4,961			(17,531	)		7,598			(17,301	)
Adjustments to noninterest expense:
(Loss) on mortgage servicing rights held for sale		—			—			(3,250	)		—			(3,250	)
Integration and acquisition expenses		—			—			—			—			(347	)
Total adjustments to noninterest expense		—			—			(3,250	)		—			(3,597	)
Adjusted earnings pre tax - non-GAAP		28,948			27,896			29,621			115,171			116,134
Adjusted earnings tax		6,927			8,389			7,174			29,682			27,113
Adjusted earnings - non-GAAP		22,021			19,507			22,447			85,489			89,021
Preferred stock dividends		2,228			2,229			3,169			8,913			3,169
Adjusted earnings available to common shareholders	$	19,793		$	17,278		$	19,278		$	76,576		$	85,852
Adjusted diluted earnings per common share	$	0.89		$	0.78		$	0.85		$	3.42		$	3.79
Adjusted return on average assets		1.11	%		0.98	%		1.13	%		1.08	%		1.18	%
Adjusted return on average shareholders' equity		11.42	%		10.03	%		11.89	%		11.10	%		12.94	%
Adjusted return on average tangible common equity		16.51	%		14.24	%		16.80	%		15.98	%		18.59	%
(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.


Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

	For the Three Months Ended									For the Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars in thousands)		2023			2023			2022			2023			2022
Adjusted earnings pre tax - non-GAAP	$	28,948		$	27,896		$	29,621		$	115,171		$	116,134
Provision for credit losses		6,950			5,168			3,544			21,132			20,126
Impairment on commercial mortgage servicing rights		—			—			—			—			1,263
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	35,898		$	33,064		$	33,165		$	136,303		$	137,523
Adjusted pre-tax, pre-provision return on average assets		1.80	%		1.66	%		1.68	%		1.72	%		1.82	%

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

Efficiency Ratio Reconciliation

	For the Three Months Ended									For the Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars in thousands)		2023		2023⁽¹⁾				2022			2023			2022
Noninterest expense - GAAP	$	44,488		$	42,038		$	49,943		$	173,902		$	175,662
Loss on mortgage servicing rights held for sale		—			—			(3,250	)		—			(3,250	)
Integration and acquisition expenses		—			—			—			—			(347	)
Adjusted noninterest expense	$	44,488		$	42,038		$	46,693		$	173,902		$	172,065

Net interest income - GAAP	$	58,077		$	58,596		$	63,550		$	236,017		$	245,735
Effect of tax-exempt income		183			205			286			828			1,283
Adjusted net interest income		58,260			58,801			63,836			236,845			247,018

Noninterest income - GAAP		20,513			11,545			33,839			66,590			79,891
Impairment on commercial mortgage servicing rights		—			—			—			—			1,263
Loss on sales of investment securities, net		2,894			4,961			—			9,372			230
(Gain) on termination of hedged interest rate swaps		—			—			(17,531	)		—			(17,531	)
(Gain) on repurchase of subordinated debt		—			—			—			(676	)		—
(Gain) on sale of Visa B shares		(1,098	)		—			—			(1,098	)		—
Adjusted noninterest income		22,309			16,506			16,308			74,188			63,853

Adjusted total revenue	$	80,569		$	75,307		$	80,144		$	311,033		$	310,871

Efficiency ratio		55.22	%		55.82	%		58.26	%		55.91	%		55.35	%

Return on Average Tangible Common Equity (ROATCE)

	For the Three Months Ended									For the Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars in thousands)		2023		2023⁽¹⁾				2022			2023			2022
Net income available to common shareholders	$	18,483		$	9,173		$	29,703		$	66,547		$	95,856

Average total shareholders' equity—GAAP	$	764,790		$	771,625		$	749,183		$	770,095		$	687,876
Adjustments:
Preferred Stock		(110,548	)		(110,548	)		(110,548	)		(110,548	)		(41,493	)
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(16,644	)		(17,782	)		(22,859	)		(18,376	)		(22,637	)
Average tangible common equity	$	475,694		$	481,391		$	453,872		$	479,267		$	461,842
ROATCE		15.41	%		7.56	%		25.89	%		13.89	%		20.76	%

(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

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
(dollars in thousands, except per share data)	December 31, 2023			September 30, 2023⁽¹⁾			June 30, 2023			March 31, 2023			December 31, 2022
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP	$	791,853		$	757,610		$	776,821		$	775,643		$	758,574
Adjustments:
Preferred Stock		(110,548	)		(110,548	)		(110,548	)		(110,548	)		(110,548	)
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(16,108	)		(17,238	)		(18,367	)		(19,575	)		(20,866	)
Tangible common equity		503,293			467,920			486,002			483,616			465,256

Less: Accumulated other comprehensive income (AOCI)		(76,753	)		(101,181	)		(84,719	)		(77,797	)		(83,797	)
Tangible common equity excluding AOCI	$	580,046		$	569,101		$	570,721		$	561,413		$	549,053

Total Assets to Tangible Assets:
Total assets—GAAP	$	7,866,868		$	7,969,285		$	8,034,721		$	7,930,174		$	7,855,501
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(161,904	)
Other intangible assets, net		(16,108	)		(17,238	)		(18,367	)		(19,575	)		(20,866	)
Tangible assets	$	7,688,856		$	7,790,143		$	7,854,450		$	7,748,695		$	7,672,731

Common Shares Outstanding		21,551,402			21,594,546			21,854,800			22,111,454			22,214,913

Tangible Common Equity to Tangible Assets		6.55	%		6.01	%		6.19	%		6.24	%		6.06	%
Tangible Book Value Per Share	$	23.35		$	21.67		$	22.24		$	21.87		$	20.94
Tangible Book Value Per Share, excluding AOCI	$	26.91		$	26.35		$	26.11		$	25.39		$	24.72

(1) September 30, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

Midland States Bancorp, Inc. Announces 2023 Fourth Quarter Results