Summary

Net income of $20.1 million, or $0.88 diluted earnings per share
Return on average shareholders' equity of 12.59%
Return on average tangible common equity of 17.85%
Tangible common equity to tangible assets ratio increased 45 bps to 7.12%
Book value and tangible book value per share increased 1.9% and 2.5%, respectively
Acquisition of ATG Trust Company completed in June 2021

EFFINGHAM, Ill., July 22, 2021 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported net income of $20.1 million, or $0.88 diluted earnings per share, for the second quarter of 2021, which included a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. This compares to net income of $18.5 million, or $0.81 diluted earnings per share, for the first quarter of 2021, and to net income of $12.6 million, or $0.53 diluted earnings per share, for the second quarter of 2020.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, "We continue to see strong improvement in our level of profitability resulting from the changes we have made in our operations to generate a more consistent revenue mix and increase our focus on businesses that produce higher returns. The higher level of profitability we are generating is strengthening our capital ratios and enhancing our ability to support organic and acquisitive growth in the future.

"Economic conditions are steadily improving and creating more loan demand. During the second quarter, we saw increased production in our equipment finance, construction, and commercial real estate lending areas, which helped offset continued runoff in PPP loans and a decline in utilization of commercial FHA warehouse lines of credit. Excluding PPP loans and commercial FHA warehouse lines of credit, total loans increased at an annualized rate of 6% during the second quarter, which was at the high end of our expected range. The increased economic activity is also leading to higher levels of non-interest income, which increased 18% from the prior quarter. The increase in non-interest income was partially driven by a 10% increase in wealth management revenue resulting from our acquisition of ATG Trust Company in June.

"We continue to expect an increase in loan growth during the second half of the year. The loan pipeline in our Community Banking group is approximately 14% higher than it was at the end of the first quarter, which reflects improving loan demand and the contributions we are seeing from new bankers added over the past several months. As loan growth increases, we expect that we will see further improvement in our level of profitability driven by additional operating leverage and a favorable shift in our mix of earning assets," said Mr. Ludwig.

Adjusted Earnings

Financial results for the second quarter of 2021 were impacted by a $6.8 million tax benefit related to the settlement of a prior tax issue, $3.8 million of integration and acquisition expenses inclusive of the $3.6 million in professional fees related to the settlement, and a $3.7 million charge related to the prepayment of a longer-term FHLB advance. Excluding these amounts and certain other income and expense, adjusted earnings were $19.8 million, or $0.86 diluted earnings per share, for the second quarter of 2021.

Financial results for the second quarter of 2020 were impacted by a $0.4 million loss on residential mortgage servicing rights ("MSRs") held-for-sale and $0.1 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were $12.9 million, or $0.55 diluted earnings per share, for the second 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 second quarter of 2021 was 3.29%, compared to 3.45% for the first quarter of 2021. The Company's net interest margin benefits from accretion income on purchased loan portfolios, which contributed 9 and 8 basis points to net interest margin in the second quarter of 2021 and first quarter of 2021, respectively. Excluding the impact of accretion income, net interest margin declined 17 basis points from the first quarter of 2021, due primarily to an unfavorable shift in the mix of earning assets.

Relative to the second quarter of 2020, net interest margin decreased from 3.32%. Accretion income on purchased loan portfolios contributed 12 basis points to net interest margin in the second quarter of 2020. Excluding the impact of accretion income, net interest margin was unchanged compared to the second quarter of 2020.

Net Interest Income

Net interest income for the second quarter of 2021 was $50.1 million, a decrease of 3.4% from $51.9 million for the first quarter of 2021. Excluding accretion income, net interest income decreased $1.9 million from the prior quarter, which was primarily due to lower levels of loan prepayment fees, an unfavorable shift in the mix of earning assets, and the recovery of interest on a previously charged-off loan during the first quarter of 2021. Accretion income associated with purchased loan portfolios totaled $1.3 million for the second quarter of 2021, compared with $1.2 million for the first quarter of 2021. PPP loan income totaled $2.5 million, including loan origination fees of $2.0 million, in the second quarter of 2021, compared to $2.6 million, including loan origination fees of $2.1 million, in the first quarter of 2021.

Relative to the second quarter of 2020, net interest income increased $1.1 million, or 2.3%. Accretion income for the second quarter of 2020 was $1.8 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 second quarter of 2021 was $17.4 million, an increase of 17.6% from $14.8 million for the first quarter of 2021. Impairment on commercial MSRs impacted noninterest income by $1.1 million and $1.3 million in the second quarter of 2021 and first quarter of 2021, respectively. Excluding the impairments, noninterest income increased 15.4% primarily due to higher levels of wealth management and interchange revenue, as well as gains on the sale of investment securities and other real estate owned.

Relative to the second quarter of 2020, noninterest income decreased 10.2% from $19.4 million. The decrease was primarily attributable to a lower level of commercial FHA revenue due to the sale of the loan origination platform, partially offset by higher wealth management revenue.

Wealth management revenue for the second quarter of 2021 was $6.5 million, an increase of 10.1% from the first quarter of 2021, primarily due to the one month contribution of ATG Trust Company following its acquisition at the beginning of June. Compared to the second quarter of 2020, wealth management revenue increased 14.6%, primarily due to the increase in assets under administration over the past year and the one month contribution of ATG Trust Company.

Noninterest Expense

Noninterest expense for the second quarter of 2021 was $48.9 million, which included $3.6 million in professional fees related to the settlement of the prior tax issue and $3.7 million in FHLB advance prepayment fees, compared with $39.1 million in the first quarter of 2021, which included $0.2 million in integration and acquisition expenses. Excluding the professional fees related to the settlement of the prior tax issue, FHLB advance prepayment fees, and integration and acquisition expenses, noninterest expense increased by $2.5 million, primarily due to an increase in salaries and employees benefit expense resulting from higher incentive compensation.

Relative to the second quarter of 2020, noninterest expense increased 18.2% from $41.4 million, which included a $0.4 million loss on residential MSRs held for sale and $0.1 million in integration and acquisition expenses. Excluding the professional fees related to the settlement of the prior tax issue, FHLB advance prepayment fees, loss on residential MSRs held for sale, and integration and acquisition expenses, noninterest expense increased $0.4 million, primarily due to higher salaries and employee benefits expense.

Loan Portfolio

Total loans outstanding were $4.84 billion at June 30, 2021, compared with $4.91 billion at March 31, 2021 and $4.84 billion at June 30, 2020. The decrease in total loans from March 31, 2021 was primarily attributable to lower end-of-period balances on commercial FHA warehouse lines of credit, forgiveness of PPP loans, and runoff in the residential real estate portfolio resulting from refinancings, which was partially offset by higher commercial real estate, construction and consumer loans.

Equipment finance balances increased $12.9 million from March 31, 2021 to $871.5 million at June 30, 2021, which are booked within the commercial loans and leases portfolio.

Compared to loan balances at June 30, 2020, growth in equipment finance balances, commercial real estate, and consumer loans was offset by declines in residential real estate loans and PPP loans held in the commercial portfolio.

Deposits

Total deposits were $5.20 billion at June 30, 2021, compared with $5.34 billion at March 31, 2021, and $4.94 billion at June 30, 2020. The decrease in total deposits from the end of the prior quarter was primarily attributable to a decline in commercial FHA servicing deposits and outflows of retail deposits consistent with the increase in economic activity in the Company's markets.

Asset Quality

Nonperforming loans totaled $61.4 million, or 1.27% of total loans, at June 30, 2021, compared with $52.8 million, or 1.08% of total loans, at March 31, 2021. The increase in nonperforming loans was primarily attributable to three loans in the hotel/motel portfolio placed on nonaccrual during the quarter. At June 30, 2020, nonperforming loans totaled $60.5 million, or 1.25% of total loans.

Net charge-offs for the second quarter of 2021 were $4.0 million, or 0.33% of average loans on an annualized basis, compared to net charge-offs of $1.7 million, or 0.14% of average loans on an annualized basis, for the first quarter of 2021 and $3.1 million, or 0.26% of average loans on an annualized basis, for the second quarter of 2020.

The Company recorded a negative provision for credit losses of $0.5 million for the second quarter of 2021. No provision for credit losses on loans was recorded due to general improvement in portfolio mix and economic forecasts, while a negative provision of $0.5 million was recorded for credit losses on unfunded commitments and available-for-sale securities.

The Company's allowance for credit losses on loans was 1.21% of total loans and 95.6% of nonperforming loans at June 30, 2021, compared with 1.28% of total loans and 118.7% of nonperforming loans at March 31, 2021. Approximately 91.6% of the allowance for credit losses on loans at June 30, 2021 was allocated to general reserves.

Capital

At June 30, 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 June 30, 2021	Consolidated Ratios as of June 30, 2021	Minimum Regulatory Requirements ⁽²⁾
Total capital to risk-weighted assets	11.98%	13.11%	10.50%
Tier 1 capital to risk-weighted assets	11.06%	9.64%	8.50%
Tier 1 leverage ratio	9.19%	8.00%	4.00%
Common equity Tier 1 capital	11.06%	8.44%	7.00%
Tangible common equity to tangible assets ⁽¹⁾	NA	7.12%	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 second quarter of 2021, the Company did not repurchase any shares of its common stock. As of June 30, 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, July 23, 2021, to discuss its financial results. The call can be accessed via telephone at (877) 516-3531; conference ID: 6112677. A recorded replay can be accessed through July 30, 2021, by dialing (855) 859-2056; conference ID: 6112677.

A slide presentation relating to the second 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 June 30, 2021, the Company had total assets of approximately $6.63 billion, and its Wealth Management Group had assets under administration of approximately $4.08 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
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020			2020
Earnings Summary
Net interest income	$	50,110		$	51,868		$	53,516		$	49,980		$	48,989
Provision for credit losses		(455	)		3,565			10,058			11,728			10,997
Noninterest income		17,417			14,816			14,336			18,919			19,396
Noninterest expense		48,941			39,079			47,048			53,901			41,395
Income before income taxes		19,041			24,040			10,746			3,270			15,993
Income taxes		(1,083	)		5,502			2,413			3,184			3,424
Net income	$	20,124		$	18,538		$	8,333		$	86		$	12,569

Diluted earnings per common share	$	0.88		$	0.81		$	0.36		$	-		$	0.53
Weighted average shares outstanding - diluted		22,677,515			22,578,553			22,656,343			22,937,837			23,339,964
Return on average assets		1.20	%		1.11	%		0.49	%		0.01	%		0.77	%
Return on average shareholders' equity		12.59	%		12.04	%		5.32	%		0.05	%		8.00	%
Return on average tangible common equity⁽¹⁾		17.85	%		17.28	%		7.68	%		0.08	%		11.84	%
Net interest margin		3.29	%		3.45	%		3.47	%		3.33	%		3.32	%
Efficiency ratio ⁽¹⁾		60.19	%		56.88	%		58.55	%		57.74	%		59.42	%

Adjusted Earnings Performance Summary ⁽¹⁾
Adjusted earnings	$	19,755		$	18,662		$	12,471		$	12,023		$	12,884
Adjusted diluted earnings per common share	$	0.86		$	0.82		$	0.54		$	0.52		$	0.55
Adjusted return on average assets		1.17	%		1.12	%		0.73	%		0.72	%		0.78	%
Adjusted return on average shareholders' equity		12.36	%		12.12	%		7.97	%		7.56	%		8.20	%
Adjusted return on average tangible common equity		17.52	%		17.39	%		11.50	%		11.04	%		12.14	%
Adjusted pre-tax, pre-provision earnings	$	26,967		$	29,051		$	28,855		$	28,751		$	27,531
Adjusted pre-tax, pre-provision return on average assets		1.60	%		1.75	%		1.69	%		1.72	%		1.68	%

(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
	June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands, except per share data)	2021			2021			2020			2020			2020
Net interest income:
Interest income	$	58,397		$	60,503		$	62,712		$	60,314		$	60,548
Interest expense		8,287			8,635			9,196			10,334			11,559
Net interest income		50,110			51,868			53,516			49,980			48,989
Provision for credit losses:
Provision for credit losses on loans		-			3,950			10,000			10,970			11,610
Provision for credit losses on unfunded commitments		(265	)		(535	)		-			577			(665	)
Provision for other credit losses		(190	)		150			58			181			52
Total provision for credit losses		(455	)		3,565			10,058			11,728			10,997
Net interest income after provision for credit losses		50,565			48,303			43,458			38,252			37,992
Noninterest income:
Wealth management revenue		6,529			5,931			5,868			5,559			5,698
Commercial FHA revenue		342			292			400			926			3,414
Residential mortgage banking revenue		1,562			1,574			2,285			3,049			2,723
Service charges on deposit accounts		1,916			1,826			2,149			2,092			1,706
Interchange revenue		3,797			3,375			3,137			3,283			3,013
Gain on sales of investment securities, net		377			-			-			1,721			-
Impairment on commercial mortgage servicing rights		(1,148	)		(1,275	)		(2,344	)		(1,418	)		(107	)
Company-owned life insurance		863			860			893			897			892
Other income		3,179			2,233			1,948			2,810			2,057
Total noninterest income		17,417			14,816			14,336			18,919			19,396
Noninterest expense:
Salaries and employee benefits		22,071			20,528			22,636			21,118			20,740
Occupancy and equipment		3,796			3,940			3,531			4,866			4,286
Data processing		6,288			5,993			5,987			5,721			5,458
Professional		5,549			2,185			1,912			1,861			1,606
Amortization of intangible assets		1,470			1,515			1,556			1,557			1,629
Loss on mortgage servicing rights held for sale		143			-			617			188			391
Impairment related to facilities optimization		-			-			(10	)		12,651			60
FHLB advances prepayment fees		3,669			8			4,872			-			-
Other expense		5,955			4,910			5,947			5,939			7,225
Total noninterest expense		48,941			39,079			47,048			53,901			41,395
Income before income taxes		19,041			24,040			10,746			3,270			15,993
Income taxes		(1,083	)		5,502			2,413			3,184			3,424
Net income	$	20,124		$	18,538		$	8,333		$	86		$	12,569

Basic earnings per common share	$	0.88		$	0.81		$	0.36		$	0.00		$	0.53
Diluted earnings per common share	$	0.88		$	0.81		$	0.36		$	0.00		$	0.53

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

	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)	2021			2021			2020			2020			2020
Assets
Cash and cash equivalents	$	425,100		$	631,219		$	341,640		$	461,196		$	519,868
Investment securities		756,831			690,390			686,135			618,974			639,693
Loans		4,835,866			4,910,806			5,103,331			4,941,466			4,839,423
Allowance for credit losses on loans		(58,664	)		(62,687	)		(60,443	)		(52,771	)		(47,093	)
Total loans, net		4,777,202			4,848,119			5,042,888			4,888,695			4,792,330
Loans held for sale		12,187			55,174			138,090			62,500			32,403
Premises and equipment, net		71,803			73,255			74,124			74,967			89,046
Other real estate owned		12,768			20,304			20,247			15,961			12,728
Loan servicing rights, at lower of cost or fair value		34,577			36,876			39,276			42,465			44,239
Goodwill		161,904			161,904			161,904			161,904			172,796
Other intangible assets, net		27,900			26,867			28,382			29,938			31,495
Cash surrender value of life insurance policies		148,277			146,864			146,004			145,112			144,215
Other assets		201,461			193,814			189,850			198,333			165,685
Total assets	$	6,630,010		$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498

Liabilities and Shareholders' Equity
Noninterest-bearing deposits	$	1,366,453		$	1,522,433		$	1,469,579		$	1,355,188		$	1,273,267
Interest-bearing deposits		3,829,898			3,818,080			3,631,437			3,673,548			3,669,840
Total deposits		5,196,351			5,340,513			5,101,016			5,028,736			4,943,107
Short-term borrowings		75,985			71,728			68,957			58,625			77,136
FHLB advances and other borrowings		440,171			529,171			779,171			693,640			693,865
Subordinated debt		138,906			169,888			169,795			169,702			169,610
Trust preferred debentures		49,094			48,954			48,814			48,682			48,551
Other liabilities		81,317			89,065			79,396			78,780			78,640
Total liabilities		5,981,824			6,249,319			6,247,149			6,078,165			6,010,909
Total shareholders' equity		648,186			635,467			621,391			621,880			633,589
Total liabilities and shareholders' equity	$	6,630,010		$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498

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

	As of
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2021		2021		2020		2020		2020
Loan Portfolio
Commercial loans and leases	$	1,831,241	$	1,977,440	$	2,095,639	$	1,938,691	$	1,856,435
Commercial real estate		1,540,489		1,494,031		1,525,973		1,496,758		1,495,183
Construction and land development		212,508		191,870		172,737		177,894		207,593
Residential real estate		366,612		398,501		442,880		470,829		509,453
Consumer		885,016		848,964		866,102		857,294		770,759
Total loans	$	4,835,866	$	4,910,806	$	5,103,331	$	4,941,466	$	4,839,423

Deposit Portfolio
Noninterest-bearing demand	$	1,366,453	$	1,522,433	$	1,469,579	$	1,355,188	$	1,273,267
Interest-bearing:
Checking		1,619,436		1,601,449		1,568,888		1,581,216		1,484,728
Money market		787,688		819,455		785,871		826,454		877,675
Savings		669,277		653,256		597,966		580,748		594,685
Time		721,502		718,788		655,620		661,872		689,841
Brokered time		31,995		25,132		23,092		23,258		22,911
Total deposits	$	5,196,351	$	5,340,513	$	5,101,016	$	5,028,736	$	4,943,107

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

	For the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
Average Balance Sheets
Cash and cash equivalents	$	509,886		$	350,061		$	415,686		$	491,728		$	489,941
Investment securities		734,462			680,202			672,937			628,705			650,356
Loans		4,826,234			4,992,802			4,998,912			4,803,940			4,696,288
Loans held for sale		36,299			65,365			45,196			44,880			99,169
Nonmarketable equity securities		49,388			55,935			51,906			50,765			50,661
Total interest-earning assets		6,156,269			6,144,365			6,184,637			6,020,018			5,986,415
Non-earning assets		589,336			602,017			602,716			625,522			619,411
Total assets	$	6,745,605		$	6,746,382		$	6,787,353		$	6,645,540		$	6,605,826

Interest-bearing deposits	$	3,815,179		$	3,757,108		$	3,680,645		$	3,656,833		$	3,651,406
Short-term borrowings		65,727			75,544			62,432			64,010			59,103
FHLB advances and other borrowings		519,490			617,504			682,981			693,721			692,470
Subordinated debt		165,155			169,844			169,751			169,657			169,560
Trust preferred debentures		49,026			48,887			48,751			48,618			48,487
Total interest-bearing liabilities		4,614,577			4,668,887			4,644,560			4,632,839			4,621,026
Noninterest-bearing deposits		1,411,428			1,370,604			1,446,359			1,303,963			1,280,983
Other noninterest-bearing liabilities		78,521			82,230			73,840			75,859			71,853
Shareholders' equity		641,079			624,661			622,594			632,879			631,964
Total liabilities and shareholders' equity	$	6,745,605		$	6,746,382		$	6,787,353		$	6,645,540		$	6,605,826

Yields
Earning Assets
Cash and cash equivalents		0.11	%		0.11	%		0.12	%		0.10	%		0.14	%
Investment securities		2.43	%		2.51	%		2.65	%		2.86	%		3.05	%
Loans		4.43	%		4.50	%		4.58	%		4.57	%		4.64	%
Loans held for sale		2.88	%		2.74	%		3.14	%		2.92	%		4.07	%
Nonmarketable equity securities		4.94	%		4.93	%		5.22	%		5.26	%		5.40	%
Total interest-earning assets		3.83	%		4.02	%		4.06	%		4.01	%		4.10	%

Interest-Bearing Liabilities
Interest-bearing deposits		0.31	%		0.34	%		0.36	%		0.46	%		0.61	%
Short-term borrowings		0.12	%		0.13	%		0.14	%		0.17	%		0.19	%
FHLB advances and other borrowings		1.91	%		1.69	%		1.71	%		1.85	%		1.69	%
Subordinated debt		5.61	%		5.57	%		5.60	%		5.58	%		5.85	%
Trust preferred debentures		4.00	%		4.08	%		4.03	%		4.16	%		4.86	%
Total interest-bearing liabilities		0.72	%		0.75	%		0.79	%		0.89	%		1.01	%

Cost of Deposits		0.23	%		0.25	%		0.26	%		0.34	%		0.45	%

Net Interest Margin		3.29	%		3.45	%		3.47	%		3.33	%		3.32	%

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)	2021			2021			2020			2020			2020
Asset Quality
Loans 30-89 days past due	$	20,224		$	24,819		$	31,460		$	28,188		$	36,551
Nonperforming loans		61,363			52,826			54,070			67,443			60,513
Nonperforming assets		76,926			75,004			75,432			84,795			74,707
Net charge-offs		4,023			1,706			2,328			5,292			3,062
Loans 30-89 days past due to total loans		0.42	%		0.51	%		0.62	%		0.57	%		0.76	%
Nonperforming loans to total loans		1.27	%		1.08	%		1.06	%		1.36	%		1.25	%
Nonperforming assets to total assets		1.16	%		1.09	%		1.10	%		1.27	%		1.12	%
Allowance for credit losses to total loans		1.21	%		1.28	%		1.18	%		1.07	%		0.97	%
Allowance for credit losses to nonperforming loans		95.60	%		118.67	%		111.79	%		78.25	%		77.82	%
Net charge-offs to average loans		0.33	%		0.14	%		0.19	%		0.44	%		0.26	%

Wealth Management
Trust assets under administration	$	4,077,581		$	3,560,427		$	3,480,759		$	3,260,893		$	3,253,784

Market Data
Book value per share at period end	$	28.96		$	28.43		$	27.83		$	27.51		$	27.62
Tangible book value per share at period end ⁽¹⁾	$	20.48		$	19.98		$	19.31		$	19.03		$	18.72
Market price at period end	$	26.27		$	27.74		$	17.87		$	12.85		$	14.95
Shares outstanding at period end		22,380,492			22,351,740			22,325,471			22,602,844			22,937,296

Capital
Total capital to risk-weighted assets		13.11	%		13.73	%		13.24	%		13.34	%		13.67	%
Tier 1 capital to risk-weighted assets		9.64	%		9.62	%		9.20	%		9.40	%		9.71	%
Tier 1 common capital to risk-weighted assets		8.44	%		8.39	%		7.99	%		8.18	%		8.44	%
Tier 1 leverage ratio		8.00	%		7.79	%		7.50	%		7.72	%		7.75	%
Tangible common equity to tangible assets ⁽¹⁾		7.12	%		6.67	%		6.46	%		6.61	%		6.67	%

(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
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020			2020
Income before income taxes - GAAP	$	19,041		$	24,040		$	10,746		$	3,270		$	15,993
Adjustments to noninterest income:
Gain on sales of investment securities, net		377			-			-			1,721			-
Other income		(27	)		75			3			(17	)		11
Total adjustments to noninterest income		350			75			3			1,704			11
Adjustments to noninterest expense:
Loss on mortgage servicing rights held for sale		143			-			617			188			391
Impairment related to facilities optimization		-			-			(10	)		12,651			60
FHLB advances prepayment fees		3,669			8			4,872			-			-
Integration and acquisition expenses		3,771			238			231			1,200			(6	)
Total adjustments to noninterest expense		7,583			246			5,710			14,039			445
Adjusted earnings pre tax		26,274			24,211			16,453			15,605			16,427
Adjusted earnings tax		6,519			5,549			3,982			3,582			3,543
Adjusted earnings - non-GAAP	$	19,755		$	18,662		$	12,471		$	12,023		$	12,884
Adjusted diluted earnings per common share	$	0.86		$	0.82		$	0.54		$	0.52		$	0.55
Adjusted return on average assets		1.17	%		1.12	%		0.73	%		0.72	%		0.78	%
Adjusted return on average shareholders' equity		12.36	%		12.12	%		7.97	%		7.56	%		8.20	%
Adjusted return on average tangible common equity		17.52	%		17.39	%		11.50	%		11.04	%		12.14	%


Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation

	For the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
Adjusted earnings pre tax - non- GAAP	$	26,274		$	24,211		$	16,453		$	15,605		$	16,427
Provision for credit losses		(455	)		3,565			10,058			11,728			10,997
Impairment on commercial mortgage servicing rights		1,148			1,275			2,344			1,418			107
Adjusted pre-tax, pre-provision earnings - non-GAAP	$	26,967		$	29,051		$	28,855		$	28,751		$	27,531
Adjusted pre-tax, pre-provision return on average assets		1.60	%		1.75	%		1.69	%		1.72	%		1.68	%

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


Efficiency Ratio Reconciliation
	For the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
Noninterest expense - GAAP	$	48,941		$	39,079		$	47,048		$	53,901		$	41,395
Loss on mortgage servicing rights held for sale		(143	)		-			(617	)		(188	)		(391	)
Impairment related to facilities optimization		-			-			10			(12,651	)		(60	)
FHLB advances prepayment fees		(3,669	)		(8	)		(4,872	)		-			-
Integration and acquisition expenses		(3,771	)		(238	)		(231	)		(1,200	)		6
Adjusted noninterest expense	$	41,358		$	38,833		$	41,338		$	39,862		$	40,950

Net interest income - GAAP	$	50,110		$	51,868		$	53,516		$	49,980		$	48,989
Effect of tax-exempt income		383			386			413			430			438
Adjusted net interest income		50,493			52,254			53,929			50,410			49,427

Noninterest income - GAAP		17,417			14,816			14,336			18,919			19,396
Impairment on commercial mortgage servicing rights		1,148			1,275			2,344			1,418			107
Gain on sales of investment securities, net		(377	)		-			-			(1,721	)		-
Other		27			(75	)		(3	)		17			(11	)
Adjusted noninterest income		18,215			16,016			16,677			18,633			19,492

Adjusted total revenue	$	68,709		$	68,270		$	70,607		$	69,043		$	68,919

Efficiency ratio		60.19	%		56.88	%		58.55	%		57.74	%		59.42	%

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
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020			2020
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP	$	648,186		$	635,467		$	621,391		$	621,880		$	633,589
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(172,796	)
Other intangible assets, net		(27,900	)		(26,867	)		(28,382	)		(29,938	)		(31,495	)
Tangible common equity	$	458,382		$	446,696		$	431,105		$	430,038		$	429,298

Total Assets to Tangible Assets:
Total assets—GAAP	$	6,630,010		$	6,884,786		$	6,868,540		$	6,700,045		$	6,644,498
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(161,904	)		(172,796	)
Other intangible assets, net		(27,900	)		(26,867	)		(28,382	)		(29,938	)		(31,495	)
Tangible assets	$	6,440,206		$	6,696,015		$	6,678,254		$	6,508,203		$	6,440,207

Common Shares Outstanding		22,380,492			22,351,740			22,325,471			22,602,844			22,937,296

Tangible Common Equity to Tangible Assets		7.12	%		6.67	%		6.46	%		6.61	%		6.67	%
Tangible Book Value Per Share	$	20.48		$	19.98		$	19.31		$	19.03		$	18.72

Return on Average Tangible Common Equity (ROATCE)

	For the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
Net income available to common shareholders	$	20,124		$	18,538		$	8,333		$	86		$	12,569

Average total shareholders' equity—GAAP	$	641,079		$	624,661		$	622,594		$	632,879		$	631,964
Adjustments:
Goodwill		(161,904	)		(161,904	)		(161,904	)		(168,771	)		(172,796	)
Other intangible assets, net		(26,931	)		(27,578	)		(29,123	)		(30,690	)		(32,275	)
Average tangible common equity	$	452,244		$	435,179		$	431,567		$	433,418		$	426,893
ROATCE		17.85	%		17.28	%		7.68	%		0.08	%		11.84	%

Midland States Bancorp, Inc. Announces 2021 Second Quarter Results