Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net income available to common shareholders of $16.2 million, or $0.74 per diluted share, for the third quarter of 2024, compared to $4.5 million, or $0.20 per diluted share, for the second quarter of 2024. This also compares to net income available to common shareholders of $9.2 million, or $0.41 per diluted share, for the third quarter of 2023.

Provision expense was $5.0 million in the third quarter of 2024 compared to $16.8 million and $5.2 million in the second quarter of 2024 and the third quarter of 2023, respectively. The elevated provision expense in the second quarter of 2024 was primarily due to credit deterioration and servicing issues involving one of our fintech partners, LendingPoint, subsequent to their system conversion in late 2023.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “We executed well in the third quarter and delivered a higher level of profitability while making continued progress on our balance sheet management strategies, which resulted in further increases in all of our capital ratios, an increase in our tangible book value per share, and an increase in our level of liquidity with a reduction in our loan-to-deposit ratio. We continue to utilize the payoffs resulting from the intentional reduction of our equipment finance and consumer portfolios to fund high quality loans generated in our community bank and the purchase of investment securities. We are also seeing good results from the investments we have made in the business, such as increasing our presence and business development efforts in the St. Louis market, where our loan balances increased at an annualized rate of 12% during the third quarter, and growth in our Wealth Management revenues due to an increase in assets under administration, partially driven by the new wealth advisors we have added in recent quarters.

Improving our credit quality is a priority and we are taking proactive steps to resolve problem loans in order to reduce our level of non-performing and classified loans going forward. We continue to closely monitor the health of our borrowers and be conservative in downgrading loans where we see the potential for weakness. We also recently added a new Chief Credit Officer whose background and experience is consistent with our increased focus on in-market relationship lending in our community bank, which will continue to result in a higher quality, lower risk loan portfolio.

“While we will remain conservative in new loan production while economic conditions remain uncertain, we are well positioned to benefit from lower interest rates and we expect positive trends in our net interest margin and revenue generated from our Wealth Management business. While maintaining disciplined expense control, we are continuing to make investments in talent and technology that will further enhance our ability to increase our market share, add attractive new client relationships in our community bank, and generate profitable growth. With the stronger balance sheet we are building, including a Total Capital Ratio of approximately 14%, we believe we are well positioned to support the continued growth of our franchise as economic conditions improve in the future and create additional value for our shareholders in the process,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.75 billion at September 30, 2024, compared to $7.76 billion at June 30, 2024, and $7.97 billion at September 30, 2023. At September 30, 2024, portfolio loans were $5.75 billion, compared to $5.85 billion at June 30, 2024, and $6.28 billion at September 30, 2023.

Loans

During the third quarter of 2024, outstanding loans declined by $103.2 million, or 1.8%, from June 30, 2024, as the Company continued to shrink its equipment financing and consumer loan portfolios, and focus on commercial loan opportunities in our community banking regions.

Equipment finance loan and lease balances decreased $30.0 million during the third quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $82.8 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $63.0 million during the third quarter to $475.3 million at September 30, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of September 30, 2024, the Company had $96.5 million in loans that were originated through and serviced by LendingPoint. Equipment financing and consumer loans comprised 15.0% and 11.5%, respectively, of the loan portfolio at September 30, 2024, compared to 15.2% and 12.7%, respectively, at June 30, 2024.

Increases in commercial FHA warehouse lines and commercial real estate loans of $50.2 million and $89.0 million, respectively, were offset by decreases in all other loan categories.

    As of
    September 30,   June 30,   March 31,   December 31,   September 30,
(in thousands)   2024   2024   2024   2023   2023
Loan Portfolio                    
Commercial loans   $ 863,922   $ 939,458   $ 913,564   $ 951,387   $ 943,761
Equipment finance loans     442,552     461,409     494,068     531,143     578,931
Equipment finance leases     417,531     428,659     455,879     473,350     485,460
Commercial FHA warehouse lines     50,198         8,035         48,547
Total commercial loans and leases     1,774,203     1,829,526     1,871,546     1,955,880     2,056,699
Commercial real estate     2,510,472     2,421,505     2,397,113     2,406,845     2,412,164
Construction and land development     422,253     476,528     474,128     452,593     416,801
Residential real estate     378,657     378,393     378,583     380,583     375,211
Consumer     663,234     746,042     837,092     935,178     1,020,008
Total loans   $ 5,748,819   $ 5,851,994   $ 5,958,462   $ 6,131,079   $ 6,280,883

Loan Quality

Overall, credit quality metrics remained consistent this quarter compared to the second quarter of 2024, albeit, nonperforming loans were still at elevated levels. Non-performing loans increased $2.4 million to $114.6 million at September 30, 2024, compared to $112.1 million as of June 30, 2024. Substandard loans increased $32.0 million to $167.5 million at September 30, 2024, as compared to June 30, 2024, primarily due to two multi-family projects that were downgraded this past quarter.

    As of and for the Three Months Ended
(in thousands)   September 30,   June 30,   March 31,   December 31,   September 30,
    2024       2024       2024       2023       2023  
Asset Quality                    
Loans 30-89 days past due   $ 55,329     $ 54,045     $ 58,854     $ 82,778     $ 46,608  
Nonperforming loans     114,556       112,124       104,979       56,351       55,981  
Nonperforming assets     126,771       123,774       116,721       67,701       58,677  
Substandard loans     167,549       135,555       149,049       184,224       143,793  
Net charge-offs     11,379       2,874       4,445       5,117       3,449  
Loans 30-89 days past due to total loans     0.96 %     0.92 %     0.99 %     1.35 %     0.74 %
Nonperforming loans to total loans     1.99 %     1.92 %     1.76 %     0.92 %     0.89 %
Nonperforming assets to total assets     1.64 %     1.60 %     1.49 %     0.86 %     0.74 %
Allowance for credit losses to total loans     1.49 %     1.58 %     1.31 %     1.12 %     1.06 %
Allowance for credit losses to nonperforming loans     74.90 %     82.22 %     74.35 %     121.56 %     119.09 %
Net charge-offs to average loans     0.78 %     0.20 %     0.30 %     0.33 %     0.22 %

The allowance for credit losses on loans totaled $85.8 million at September 30, 2024, compared to $92.2 million at June 30, 2024, and $66.7 million at September 30, 2023. The allowance as a percentage of total loans was 1.49% at September 30, 2024, compared to 1.58% at June 30, 2024, and 1.06% at September 30, 2023.

Notably, the Company recognized provision expense of $14.0 million in the second quarter of 2024 related to the loans originated and serviced by LendingPoint, increasing the allowance to $14.6 million on this portfolio. Credit deterioration and servicing issues following their system conversion have resulted in increased losses within this portfolio. In the third quarter of 2024, loans totaling $6.2 million were charged off. At September 30, 2024, the Company had an allowance of $8.3 million on the $96.5 million of loans serviced by LendingPoint.

Deposits

Total deposits were $6.26 billion at September 30, 2024, compared with $6.12 billion at June 30, 2024. Noninterest-bearing deposits decreased $57.9 million to $1.05 billion at September 30, 2024, while interest-bearing deposits increased $196.7 million to $5.21 billion at September 30, 2024. Brokered time deposits increased $138.0 million to $269.4 million, and represented 4.31% of total deposits at September 30, 2024.

    As of
    September 30,   June 30,   March 31,   December 31,   September 30,
(in thousands)   2024   2024   2024   2023   2023
Deposit Portfolio                    
Noninterest-bearing demand   $ 1,050,617   $ 1,108,521   $ 1,212,382   $ 1,145,395   $ 1,154,515
Interest-bearing:                    
Checking     2,389,970     2,343,533     2,394,163     2,511,840     2,572,224
Money market     1,187,139     1,143,668     1,128,463     1,135,629     1,090,962
Savings     510,260     538,462     555,552     559,267     582,359
Time     849,413     852,415     845,190     862,865     885,858
Brokered time     269,437     131,424     188,234     94,533     119,084
Total deposits   $ 6,256,836   $ 6,118,023   $ 6,323,984   $ 6,309,529   $ 6,405,002

Results of Operations Highlights

Net Interest Income and Margin

During the third quarter of 2024, net interest income and net interest margin, on a tax-equivalent basis, were $55.2 million and 3.10%, respectively, compared to $55.2 million and 3.12%, respectively, in the second quarter of 2024. Net interest income and net interest margin, on a tax-equivalent basis, were $58.8 million and 3.20%, respectively, in the third quarter of 2023.

Average interest-earning assets for the third quarter of 2024 were $7.07 billion, compared to $7.13 billion for the second quarter of 2024. The yield on interest-earning assets increased 7 basis points to 5.91% compared to the second quarter of 2024. Interest-earning assets averaged $7.28 billion for the third quarter of 2023.

Average loans were $5.78 billion for the third quarter of 2024, compared to $5.92 billion for the second quarter of 2024 and $6.30 billion for the third quarter of 2023. The yield on loans was 6.15% for the third quarter of 2024, up from 6.03% for the second quarter of 2024 and 5.93% for the third quarter of 2023.

Investment securities averaged $1.16 billion for the third quarter of 2024, and yielded 4.71%, compared to an average balance and yield of $1.10 billion and 4.69%, respectively, for the second quarter of 2024. The Company purchased additional higher-yielding investments resulting in the increased average balance and yield. Investment securities averaged $863.0 million for the third quarter of 2023.

Average interest-bearing liabilities for the third quarter of 2024 were $5.76 billion, compared to $5.78 billion for the second quarter of 2024. The cost of funds increased 9 basis points to 3.45% compared to the second quarter of 2024. Interest-bearing liabilities averaged $5.92 billion for the third quarter of 2023.

Average interest-bearing deposits were $5.13 billion for the third quarter of 2024, compared to $5.10 billion for the second quarter of 2024, and $5.35 billion for the third quarter of 2023. Cost of interest-bearing deposits was 3.25% in the third quarter of 2024, which represented a 14 basis point increase from the second quarter of 2024, due to increased competition.

    For the Three Months Ended
(dollars in thousands)   September 30, 2024   June 30, 2024   September 30, 2023
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   $ 75,255   $ 1,031   5.45 %   $ 65,250   $ 875   5.40 %   $ 78,391   $ 1,036   5.24 %
Investment securities(1)     1,162,751     13,752   4.71       1,098,452     12,805   4.69       862,998     7,822   3.60  
Loans(1)(2)     5,783,408     89,344   6.15       5,915,523     88,738   6.03       6,297,568     94,118   5.93  
Loans held for sale     7,505     124   6.57       4,910     84   6.84       6,078     104   6.80  
Nonmarketable equity securities     41,137     788   7.62       44,216     963   8.76       39,347     710   7.16  
Total interest-earning assets     7,070,056     105,039   5.91       7,128,351     103,465   5.84       7,284,382     103,790   5.65  
Noninterest-earning assets     653,279             669,370             622,969        
Total assets   $ 7,723,335           $ 7,797,721           $ 7,907,351        
                                     
Interest-Bearing Liabilities                                    
Interest-bearing deposits   $ 5,132,640   $ 41,970   3.25 %   $ 5,101,365   $ 39,476   3.11 %   $ 5,354,356   $ 37,769   2.80 %
Short-term borrowings     53,577     602   4.47       30,449     308   4.07       20,127     14   0.28  
FHLB advances & other borrowings     428,739     4,743   4.40       500,758     5,836   4.69       402,500     4,557   4.49  
Subordinated debt     89,120     1,228   5.48       93,090     1,265   5.47       93,441     1,280   5.43  
Trust preferred debentures     50,990     1,341   10.46       50,921     1,358   10.73       50,379     1,369   10.78  
Total interest-bearing liabilities     5,755,066     49,884   3.45       5,776,583     48,243   3.36       5,920,803     44,989   3.01  
Noninterest-bearing deposits     1,075,712             1,132,451             1,116,988        
Other noninterest-bearing liabilities     97,235             104,841             97,935        
Shareholders’ equity     795,322             783,846             771,625        
Total liabilities and shareholder’s equity   $ 7,723,335           $ 7,797,721           $ 7,907,351        
                                     
Net Interest Margin       $ 55,155   3.10 %       $ 55,222   3.12 %       $ 58,801   3.20 %
                                     
Cost of Deposits           2.69 %           2.55 %           2.32 %

(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 for each of the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

For the nine months ended September 30, 2024, net interest income, on a tax-equivalent basis, decreased to $166.5 million, with a tax-equivalent net interest margin of 3.13%, compared to net interest income, on a tax-equivalent basis, of $178.6 million, and a tax-equivalent net interest margin of 3.27% for the nine months ended September 30, 2023.

The yield on earning assets increased 34 basis points to 5.84% for the nine months ended September 30, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 57 basis points to 3.34% for the nine months ended September 30, 2024.

    For the Nine Months Ended
(dollars in thousands)   September 30, 2024   September 30, 2023
Interest-earning assets   Average Balance   Interest & Fees   Yield/Rate   Average Balance   Interest & Fees   Yield/Rate
Cash and cash equivalents   $ 69,960   $ 2,857   5.45 %   $ 76,939   $ 2,868   4.98 %
Investment securities(1)     1,083,597     37,265   4.59       844,946     21,103   3.33  
Loans(1)(2)     5,903,216     267,570   6.05       6,324,578     274,005   5.79  
Loans held for sale     5,281     263   6.65       3,900     179   6.14  
Nonmarketable equity securities     40,429     2,438   8.06       44,034     2,104   6.39  
Total interest-earning assets     7,102,483     310,393   5.84       7,294,397     300,259   5.50  
Noninterest-earning assets     663,967             615,383        
Total assets   $ 7,766,450           $ 7,909,780        
                         
Interest-Bearing Liabilities                        
Interest-bearing deposits   $ 5,142,979   $ 120,660   3.13 %   $ 5,223,852   $ 97,791   2.50 %
Short-term borrowings     49,750     1,746   4.69       26,865     53   0.26  
FHLB advances & other borrowings     414,259     13,615   4.39       471,084     15,959   4.53  
Subordinated debt     91,921     3,773   5.48       96,820     3,985   5.49  
Trust preferred debentures     50,873     4,088   10.73       50,216     3,887   10.35  
Total interest-bearing liabilities     5,749,782     143,882   3.34       5,868,837     121,675   2.77  
Noninterest-bearing deposits     1,119,764             1,184,410        
Other noninterest-bearing liabilities     107,192             84,650        
Shareholders’ equity     789,712             771,883        
Total liabilities and shareholders’ equity   $ 7,766,450           $ 7,909,780        
                         
Net Interest Margin       $ 166,511   3.13 %       $ 178,584   3.27 %
                         
Cost of Deposits           2.57 %           2.04 %

(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 $0.6 million for each of the nine months ended September 30, 2024 and 2023, respectively.(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Noninterest Income

Noninterest income was $19.3 million for the third quarter of 2024, compared to $17.7 million for the second quarter of 2024. Noninterest income for the second quarter of 2024 included a $0.2 million gain on the repurchase of subordinated debt, offset by $0.2 million of net 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 third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 was $19.3 million, $17.6 million, and $16.5 million, respectively.

    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(in thousands)     2024       2024       2023       2024       2023  
Noninterest income                    
Wealth management revenue   $ 7,104     $ 6,801     $ 6,288     $ 21,037     $ 18,968  
Service charges on deposit accounts     3,411       3,121       3,149       9,648       8,744  
Interchange revenue     3,506       3,563       3,609       10,427       10,717  
Residential mortgage banking revenue     697       557       507       1,781       1,452  
Income on company-owned life insurance     1,982       1,925       918       5,708       2,685  
Loss on sales of investment securities, net     (44 )     (152 )     (4,961 )     (196 )     (6,478 )
Other income     2,683       1,841       2,035       9,777       9,989  
Total noninterest income   $ 19,339     $ 17,656     $ 11,545     $ 58,182     $ 46,077  

Wealth management revenue totaled $7.1 million in the third quarter of 2024, an increase of $0.3 million, or 4.5%, as compared to the second quarter of 2024, due to increases in assets under administration and estate fees. Assets under administration increased to $4.27 billion at September 30, 2024 from $4.00 billion at June 30, 2024, primarily due to improved sales activity. Assets under administration totaled $3.50 billion at September 30, 2023.

Income on company-owned life insurance income totaled $2.0 million, $1.9 million and $0.9 million for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023, respectively. The Company surrendered certain low-yielding life insurance policies and purchased additional policies in the third quarter of 2023, resulting in the increase in revenue.

Other income totaled $2.7 million in the third quarter of 2024 compared to $1.8 million in the second quarter of 2024. Income from the sale of SBA loans in the third quarter of 2024 of $0.2 million and losses from the disposition of repossessed leased assets in the second quarter of 2024 of $0.6 million resulted in the quarter over quarter increase in other income.

Noninterest Expense

Noninterest expense was $46.7 million in the third quarter of 2024, compared to $47.5 million in the second quarter of 2024 and $42.0 million in the third quarter of 2023. Noninterest expense for the second quarter of 2024 included $4.1 million of aggregate expenses related to OREO impairment and property taxes, and accruals related to various legal proceedings. Excluding these items, noninterest expense for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 was $46.7 million, $43.4 million, and $42.0 million, respectively. Costs related to increased staffing levels, upgrades to our ATM fleet, and loan collection and OREO expenses drove the increase in noninterest expense in the third quarter of 2024 compared to the prior quarter.

The efficiency ratio improved to 62.76% for the quarter ended September 30, 2024, compared to 65.16% for the quarter ended June 30, 2024. The efficiency ratio for the third quarter of 2023 was 55.82%.

    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(in thousands)   2024   2024   2023   2024   2023
Noninterest expense                    
Salaries and employee benefits   $ 24,382   $ 22,872   $ 22,307   $ 71,356   $ 69,407
Occupancy and equipment     4,393     3,964     3,730     12,499     12,052
Data processing     6,955     7,205     6,468     20,882     19,323
Professional services     1,744     2,243     1,554     6,242     4,977
Amortization of intangible assets     951     1,016     1,129     3,056     3,628
FDIC insurance     1,402     1,219     1,107     3,895     3,632
Other expense     6,906     8,960     5,743     21,149     16,395
Total noninterest expense   $ 46,733   $ 47,479   $ 42,038   $ 139,079   $ 129,414

Income Tax Expense

Income tax expense was $4.1 million for the third quarter of 2024, compared to $1.7 million for the second quarter of 2024 and $11.5 million for the third quarter of 2023. The resulting effective tax rates were 18.1%, 19.9% and 50.3%, respectively. Tax expense for the third quarter of 2023 included a $1.4 million return to provision adjustment and $4.5 million associated with the surrender of company-owned life insurance policies, as previously discussed.

Capital

At September 30, 2024, 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 September 30, 2024
  Midland States Bank   Midland States Bancorp, Inc.   Minimum Regulatory Requirements(2)
Total capital to risk-weighted assets 13.34%   13.98%   10.50%
Tier 1 capital to risk-weighted assets 12.09%   11.65%   8.50%
Common equity Tier 1 capital to risk-weighted assets 12.09%   9.00%   7.00%
Tier 1 leverage ratio 10.47%   10.10%   4.00%
Tangible common equity to tangible assets(1) N/A   7.03%   N/A

(1) A non-GAAP financial measure. Refer to page 16 for a reconciliation to the comparable GAAP financial measure.(2) Includes the capital conservation buffer of 2.5%, as applicable.

The impact of rising interest rates on the Company’s investment portfolio and cash flow hedges resulted in an accumulated other comprehensive loss of $60.6 million at September 30, 2024, which reduced tangible book value by $2.84 per share.

Stock Repurchase Program

As previously disclosed, 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. During the third quarter of 2024, the Company repurchased 23,113 shares of its common stock at a weighted average price of $22.54 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 September 30, 2024, the Company had total assets of approximately $7.75 billion, and its Wealth Management Group had assets under administration of approximately $4.27 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, 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) 342-7321Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321Douglas 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 andfor the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(dollars in thousands, except per share data)     2024       2024       2023       2024       2023  
Earnings Summary                    
Net interest income   $ 54,950     $ 55,052     $ 58,596     $ 165,922     $ 177,940  
Provision for credit losses     5,000       16,800       5,168       35,800       14,182  
Noninterest income     19,339       17,656       11,545       58,182       46,077  
Noninterest expense     46,733       47,479       42,038       139,079       129,414  
Income before income taxes     22,556       8,429       22,935       49,225       80,421  
Income taxes     4,080       1,679       11,533       10,114       25,672  
Net income     18,476       6,750       11,402       39,111       54,749  
Preferred dividends     2,229       2,228       2,229       6,685       6,685  
Net income available to common shareholders   $ 16,247     $ 4,522     $ 9,173     $ 32,426     $ 48,064  
                     
Diluted earnings per common share   $ 0.74     $ 0.20     $ 0.41     $ 1.47     $ 2.14  
Weighted average common shares outstanding - diluted     21,678,242       21,734,849       21,977,196       21,732,093       22,223,986  
Return on average assets     0.95 %     0.35 %     0.57 %     0.67 %     0.93 %
Return on average shareholders' equity     9.24 %     3.46 %     5.86 %     6.62 %     9.48 %
Return on average tangible common equity(1)     12.69 %     3.66 %     7.56 %     8.62 %     13.37 %
Net interest margin     3.10 %     3.12 %     3.20 %     3.13 %     3.27 %
Efficiency ratio(1)     62.76 %     65.16 %     55.82 %     61.91 %     56.15 %
                     
Adjusted Earnings Performance Summary(1)                    
Adjusted earnings available to common shareholders   $ 16,223     $ 4,511     $ 17,278     $ 32,391     $ 56,783  
Adjusted diluted earnings per common share   $ 0.74     $ 0.20     $ 0.78     $ 1.47     $ 2.53  
Adjusted return on average assets     0.95 %     0.35 %     0.98 %     0.67 %     1.07 %
Adjusted return on average shareholders' equity     9.23 %     3.46 %     10.03 %     6.61 %     10.99 %
Adjusted return on average tangible common equity     12.67 %     3.65 %     14.24 %     8.61 %     15.80 %
Adjusted pre-tax, pre-provision earnings   $ 27,523     $ 25,214     $ 33,064     $ 84,977     $ 100,405  
Adjusted pre-tax, pre-provision return on average assets     1.42 %     1.30 %     1.66 %     1.46 %     1.70 %
                     
Market Data                    
Book value per share at period end   $ 33.08     $ 31.59     $ 29.96          
Tangible book value per share at period end(1)   $ 24.90     $ 23.36     $ 21.67          
Tangible book value per share excluding accumulated other comprehensive income at period end(1)   $ 27.74     $ 27.22     $ 26.35          
Market price at period end   $ 22.38     $ 22.65     $ 20.54          
Common shares outstanding at period end     21,393,905       21,377,215       21,594,546          
                     
Capital                    
Total capital to risk-weighted assets     13.98 %     13.83 %     12.76 %        
Tier 1 capital to risk-weighted assets     11.65 %     11.23 %     10.53 %        
Common equity tier 1capital to risk-weighted assets     9.00 %     8.64 %     8.07 %        
Tier 1 leverage ratio     10.10 %     9.84 %     9.59 %        
Tangible common equity to tangible assets(1)     7.03 %     6.59 %     6.01 %        
                     
Wealth Management                    
Trust assets under administration   $ 4,268,539     $ 3,996,175     $ 3,501,225          

(1) Non-GAAP financial measures. Refer to pages 14 - 16 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    As of
    September 30,   June 30,   March 31,   December 31,   September 30,
(in thousands)     2024       2024       2024       2023       2023  
Assets                    
Cash and cash equivalents   $ 121,873     $ 124,646     $ 167,316     $ 135,061     $ 132,132  
Investment securities     1,216,795       1,099,654       1,044,900       920,396       839,344  
Loans     5,748,819       5,851,994       5,958,462       6,131,079       6,280,883  
Allowance for credit losses on loans     (85,804 )     (92,183 )     (78,057 )     (68,502 )     (66,669 )
Total loans, net     5,663,015       5,759,811       5,880,405       6,062,577       6,214,214  
Loans held for sale     8,001       5,555       5,043       3,811       6,089  
Premises and equipment, net     84,672       83,040       81,831       82,814       82,741  
Other real estate owned     8,646       8,304       8,920       9,112       480  
Loan servicing rights, at lower of cost or fair value     18,400       18,902       19,577       20,253       20,933  
Goodwill     161,904       161,904       161,904       161,904       161,904  
Other intangible assets, net     13,052       14,003       15,019       16,108       17,238  
Company-owned life insurance     209,193       207,211       205,286       203,485       201,750  
Other assets     245,932       274,244       241,608       251,347       292,460  
Total assets   $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285  
                     
Liabilities and Shareholders' Equity                    
Noninterest-bearing demand deposits   $ 1,050,617     $ 1,108,521     $ 1,212,382     $ 1,145,395     $ 1,154,515  
Interest-bearing deposits     5,206,219       5,009,502       5,111,602       5,164,134       5,250,487  
Total deposits     6,256,836       6,118,023       6,323,984       6,309,529       6,405,002  
Short-term borrowings     13,849       7,208       214,446       34,865       17,998  
FHLB advances and other borrowings     425,000       600,000       255,000       476,000       538,000  
Subordinated debt     82,744       91,656       93,617       93,546       93,475  
Trust preferred debentures     51,058       50,921       50,790       50,616       50,457  
Other liabilities     103,737       103,694       102,966       110,459       106,743  
Total liabilities     6,933,224       6,971,502       7,040,803       7,075,015       7,211,675  
Total shareholders’ equity     818,259       785,772       791,006       791,853       757,610  
Total liabilities and shareholders’ equity   $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285  
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
                     
    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(in thousands, except per share data)     2024       2024       2023       2024       2023  
Net interest income:                    
Interest income   $ 104,834     $ 103,295     $ 103,585     $ 309,804     $ 299,615  
Interest expense     49,884       48,243       44,989       143,882       121,675  
Net interest income     54,950       55,052       58,596       165,922       177,940  
Provision for credit losses on loans     5,000       17,000       5,168       36,000       14,182  
Provision for credit losses on unfunded commitments           (200 )           (200 )      
Total provision for credit losses     5,000       16,800       5,168       35,800       14,182  
Net interest income after provision for credit losses     49,950       38,252       53,428       130,122       163,758  
Noninterest income:                    
Wealth management revenue     7,104       6,801       6,288       21,037       18,968  
Service charges on deposit accounts     3,411       3,121       3,149       9,648       8,744  
Interchange revenue     3,506       3,563       3,609       10,427       10,717  
Residential mortgage banking revenue     697       557       507       1,781       1,452  
Income on company-owned life insurance     1,982       1,925       918       5,708       2,685  
Loss on sales of investment securities, net     (44 )     (152 )     (4,961 )     (196 )     (6,478 )
Other income     2,683       1,841       2,035       9,777       9,989  
Total noninterest income     19,339       17,656       11,545       58,182       46,077  
Noninterest expense:                    
Salaries and employee benefits     24,382       22,872       22,307       71,356       69,407  
Occupancy and equipment     4,393       3,964       3,730       12,499       12,052  
Data processing     6,955       7,205       6,468       20,882       19,323  
Professional services     1,744       2,243       1,554       6,242       4,977  
Amortization of intangible assets     951       1,016       1,129       3,056       3,628  
FDIC insurance     1,402       1,219       1,107       3,895       3,632  
Other expense     6,906       8,960       5,743       21,149       16,395  
Total noninterest expense     46,733       47,479       42,038       139,079       129,414  
Income before income taxes     22,556       8,429       22,935       49,225       80,421  
Income taxes     4,080       1,679       11,533       10,114       25,672  
Net income     18,476       6,750       11,402       39,111       54,749  
Preferred stock dividends     2,229       2,228       2,229       6,685       6,685  
Net income available to common shareholders   $ 16,247     $ 4,522     $ 9,173     $ 32,426     $ 48,064  
                     
Basic earnings per common share   $ 0.74     $ 0.20     $ 0.41     $ 1.47     $ 2.14  
Diluted earnings per common share   $ 0.74     $ 0.20     $ 0.41     $ 1.47     $ 2.14  
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
                     
Adjusted Earnings Reconciliation
                     
    For the Three Months Ended   For the Nine Months Ended
(dollars in thousands, except per share data)    September 30,2024     June 30,2024     September 30,2023     September 30,2024     September 30,2023 
Income before income taxes - GAAP   $ 22,556     $ 8,429     $ 22,935     $ 49,225     $ 80,421  
Adjustments to noninterest income:                    
Loss on sales of investment securities, net     44       152       4,961       196       6,478  
(Gain) on repurchase of subordinated debt     (77 )     (167 )           (244 )     (676 )
Total adjustments to noninterest income     (33 )     (15 )     4,961       (48 )     5,802  
Adjusted earnings pre tax - non-GAAP     22,523       8,414       27,896       49,177       86,223  
Adjusted earnings tax     4,071       1,675       8,389       10,101       22,755  
Adjusted earnings - non-GAAP     18,452       6,739       19,507       39,076       63,468  
Preferred stock dividends     2,229       2,228       2,229       6,685       6,685  
Adjusted earnings available to common shareholders   $ 16,223     $ 4,511     $ 17,278     $ 32,391     $ 56,783  
Adjusted diluted earnings per common share   $ 0.74     $ 0.20     $ 0.78     $ 1.47     $ 2.53  
Adjusted return on average assets     0.95 %     0.35 %     0.98 %     0.67 %     1.07 %
Adjusted return on average shareholders' equity     9.23 %     3.46 %     10.03 %     6.61 %     10.99 %
Adjusted return on average tangible common equity     12.67 %     3.65 %     14.24 %     8.61 %     15.80 %
 
                     
                     
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
                     
    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Adjusted earnings pre tax - non-GAAP   $ 22,523     $ 8,414     $ 27,896     $ 49,177     $ 86,223  
Provision for credit losses     5,000       16,800       5,168       35,800       14,182  
Adjusted pre-tax, pre-provision earnings - non-GAAP   $ 27,523     $ 25,214     $ 33,064     $ 84,977     $ 100,405  
Adjusted pre-tax, pre-provision return on average assets     1.42 %     1.30 %     1.66 %     1.46 %     1.70 %
MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
                     
Efficiency Ratio Reconciliation
                     
    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Noninterest expense - GAAP   $ 46,733     $ 47,479     $ 42,038     $ 139,079     $ 129,414  
                     
Net interest income - GAAP   $ 54,950     $ 55,052     $ 58,596     $ 165,922     $ 177,940  
Effect of tax-exempt income     205       170       205       589       644  
Adjusted net interest income     55,155       55,222       58,801       166,511       178,584  
                     
Noninterest income - GAAP     19,339       17,656       11,545       58,182       46,077  
Loss on sales of investment securities, net     44       152       4,961       196       6,478  
(Gain) on repurchase of subordinated debt     (77 )     (167 )           (244 )     (676 )
Adjusted noninterest income     19,306       17,641       16,506       58,134       51,879  
                     
Adjusted total revenue   $ 74,461     $ 72,863     $ 75,307     $ 224,645     $ 230,463  
                     
Efficiency ratio     62.76 %     65.16 %     55.82 %     61.91 %     56.15 %
                     
Return on Average Tangible Common Equity (ROATCE)
                     
    For the Three Months Ended   For the Nine Months Ended
    September 30,   June 30,   September 30,   September 30,   September 30,
(dollars in thousands)     2024       2024       2023       2024       2023  
Net income available to common shareholders   $ 16,247     $ 4,522     $ 9,173     $ 32,426     $ 48,064  
                     
Average total shareholders' equity—GAAP   $ 795,322     $ 783,846     $ 771,625     $ 789,712     $ 771,883  
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     (13,506 )     (14,483 )     (17,782 )     (14,501 )     (18,959 )
Average tangible common equity   $ 509,364     $ 496,911     $ 481,391     $ 502,759     $ 480,472  
ROATCE     12.69 %     3.66 %     7.56 %     8.62 %     13.37 %
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)    September 30,2024     June 30,2024     March 31,2024     December 31,2023     September 30,2023 
Shareholders' Equity to Tangible Common Equity                
Total shareholders' equity—GAAP   $ 818,259     $ 785,772     $ 791,006     $ 791,853     $ 757,610  
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     (13,052 )     (14,003 )     (15,019 )     (16,108 )     (17,238 )
Tangible common equity     532,755       499,317       503,535       503,293       467,920  
                     
Less: Accumulated other comprehensive loss (AOCI)     (60,640 )     (82,581 )     (81,419 )     (76,753 )     (101,181 )
Tangible common equity excluding AOCI   $ 593,395     $ 581,898     $ 584,954     $ 580,046     $ 569,101  
                     
Total Assets to Tangible Assets:                    
Total assets—GAAP   $ 7,751,483     $ 7,757,274     $ 7,831,809     $ 7,866,868     $ 7,969,285  
Adjustments:                    
Goodwill     (161,904 )     (161,904 )     (161,904 )     (161,904 )     (161,904 )
Other intangible assets, net     (13,052 )     (14,003 )     (15,019 )     (16,108 )     (17,238 )
Tangible assets   $ 7,576,527     $ 7,581,367     $ 7,654,886     $ 7,688,856     $ 7,790,143  
                     
Common Shares Outstanding     21,393,905       21,377,215       21,485,231       21,551,402       21,594,546  
                     
Tangible Common Equity to Tangible Assets     7.03 %     6.59 %     6.58 %     6.55 %     6.01 %
Tangible Book Value Per Share   $ 24.90     $ 23.36     $ 23.44     $ 23.35     $ 21.67  
Tangible Book Value Per Share, excluding AOCI   $ 27.74     $ 27.22     $ 27.23     $ 26.91     $ 26.35  
Midland States Bancorp (NASDAQ:MSBI)
Historical Stock Chart
From Nov 2024 to Dec 2024 Click Here for more Midland States Bancorp Charts.
Midland States Bancorp (NASDAQ:MSBI)
Historical Stock Chart
From Dec 2023 to Dec 2024 Click Here for more Midland States Bancorp Charts.