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Midland States Bancorp, Inc. Announces 2016 Second Quarter Results

Second Quarter 2016 Summary

  • Successful initial public offering raises net proceeds of $71.7 million

  • Net income of $6.8 million, or $0.50 diluted earnings per share

  • Total loans increased $145 million, or 28.8% on an annualized basis

  • Non-interest income of $14.0 million, or 33.4% of total revenue

  • Return on average assets of 0.89%; Return on average equity of 10.18%

EFFINGHAM, Ill., July 28, 2016 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the “Company”) today reported net income of $6.8 million, or $0.50 diluted earnings per share, for the second quarter of 2016, compared with net income of $5.1 million, or $0.42 diluted earnings per share, for the first quarter of 2016, and net income of $6.7 million, or $0.55 diluted earnings per share, for the second quarter of 2015. Net income for the second quarter of 2016 included a $3.0 million charge for the impairment of residential mortgage servicing rights (MSR), compared to $2.0 million in the first quarter of 2016 and a reversal of impairment of $1.0 million in the second quarter of 2015. The effect of changes in residential MSR valuation negatively impacted diluted earnings per share by $0.14 and $0.10 for the second quarter of 2016 and first quarter of 2016, respectively, and positively impacted diluted earnings per share by $0.06 in the second quarter of 2015.

“We were very pleased to complete our initial public offering during the second quarter of 2016,” said Leon J. Holschbach, President and Chief Executive Officer of the Company. “The capital raised through the IPO will support the continued implementation of our organic and acquisitive growth strategies, which we believe will create additional value for our shareholders in the years ahead.

“We had an outstanding quarter of business development and through the first half of 2016 our total loan portfolio increased at an annualized rate of 16%. Our loan production was very well balanced in the second quarter and underscores the diverse business model we have built. We had strong growth in our consumer, equipment leasing, construction, commercial real estate and residential real estate portfolios, and also had a robust quarter of loan production in our commercial FHA lending business.

“We also had a significant increase in our residential mortgage loan production and the net gain on loan sales generated from this business. However, with the continued decline in interest rates, we recorded a $3.0 million impairment of our residential mortgage servicing rights, which offset much of the residential mortgage banking revenue generated this quarter.

“Looking ahead to the remainder of 2016, we believe that our markets are fundamentally healthy and we are seeing positive trends in loan demand and credit quality. We continue to have a robust loan pipeline, which should support continued quality balance sheet growth during the second half of the year,” said Mr. Holschbach.

Net Interest Income

Net interest income for the second quarter of 2016 was $28.0 million, an increase of 16.4% from $24.0 million for the first quarter of 2016. The Company’s net interest income benefits from accretion income associated with purchased loan portfolios. Accretion income totaled $4.9 million for the second quarter of 2016, compared with $1.9 million for the first quarter of 2016. In addition to higher accretion income, the increase in net interest income was primarily attributable to an increase in average loan balances.

Accretion income for the second quarter of 2016 was positively impacted by the payoff of purchased credit impaired loans (PCI) totaling $5.9 million. One of the PCI loans was an FDIC loss share loan, which resulted in the Company recording $1.8 million in net interest income, a $1.5 million expense for the amount payable to the FDIC within noninterest income, and an $808,000 reduction of provision for loan losses.

Relative to the second quarter of 2015, net interest income declined $328,000 due to a decline in accretion income, which totaled $5.9 million for the second quarter of 2015. The decline in accretion income was offset by an increase in average loan balances.

Net Interest Margin

Net interest margin for the second quarter of 2016 was 4.20%, compared to 3.80% for the first quarter of 2016. The Company’s net interest margin benefits from accretion income on purchased loan portfolios. Excluding accretion income, net interest margin was 3.52% for the second quarter of 2016, compared with 3.55% for the first quarter of 2016. The decrease in net interest margin excluding accretion income was primarily attributable to a decline in the average yield on loans.

Relative to the second quarter of 2015, the net interest margin declined from 4.79%, primarily due to lower accretion income. Excluding accretion income, net interest margin declined from 3.88%, which was primarily attributable to lower average yields on loans and investment securities and an increase in cost of funds.

Noninterest Income

Noninterest income for the second quarter of 2016 was $14.0 million, an increase of 11.1% from $12.6 million for the first quarter of 2016. The increase was primarily attributable to higher commercial FHA revenue and lower other-than-temporary impairment recorded on investment securities. This was partially offset by higher FDIC loss-sharing expense related to the $1.5 million payable to the FDIC as discussed above.

Commercial FHA revenue for the second quarter of 2016 was $8.5 million, an increase of 30.1% from $6.6 million in the first quarter of 2016. The Company originated $281.2 million in rate lock commitments during the second quarter of 2016, compared to $227.3 million in the prior quarter.

Residential mortgage banking revenue for the second quarter of 2016 was $1.0 million, a decrease of 6.8% from $1.1 million in the first quarter of 2016. During the second quarter of 2016, the Company recorded mortgage servicing rights impairment of $3.0 million due to a decline in long-term rates and the impact on prepayment speed assumptions compared to a $2.0 million impairment charge in the first quarter of 2016.

Relative to the second quarter of 2015, noninterest income declined 1.2% from $14.2 million. The decline was primarily due to lower residential mortgage banking revenue and higher FDIC loss-sharing expense, which was partially offset by higher commercial FHA revenue.

Noninterest Expense

Noninterest expense for the second quarter of 2016 was $30.9 million, an increase of 11.8% from $27.6 million for the first quarter of 2016. The increase was primarily driven by higher salaries resulting from annual salary increases that took effect in the second quarter, and higher bonus accrual. During the second quarter of 2016, the Company also recorded a $511,000 write-off of accounting discount related to the early payoff of subordinated debt.

Relative to the second quarter of 2015, noninterest expense was essentially unchanged. Higher salaries and benefits expense and the write-off of accounting discount related to the payoff of subordinated debt in the second quarter of 2016 were offset by a decline in professional fees.

Loan Portfolio

Total loans outstanding were $2.16 billion at June 30, 2016, compared with $2.02 billion at March 31, 2016, and $1.91 billion at June 30, 2015. The $145 million increase in the loan portfolio during the second quarter of 2016 was driven primarily by a $46.1 million increase in consumer loans, a $32.3 million increase in commercial real estate loans, a $22.2 million increase in construction and land development loans, a $21.0 million increase in residential real estate loans, and an $18.9 million increase in equipment lease financing loans.

Purchased Credit Impaired Loans

Purchased credit impaired (PCI) loans totaled $28.6 million at June 30, 2016, compared to $35.3 million at the end of the prior quarter and $42.5 million at June 30, 2015. The decreases in PCI loans were primarily due to repayments and pay-offs of PCI loans as the Company did not complete any bank acquisitions during 2015 or the first half of 2016.

Deposits

Total deposits were $2.35 billion at June 30, 2016, compared with $2.39 billion at March 31, 2016, and $2.24 billion at June 30, 2015. The decrease in total deposits from March 31, 2016 was primarily due to declines in non-interest bearing demand deposits and money market accounts, which were partially offset by an increase in NOW accounts. The decrease in demand deposits was primarily attributable to fluctuations in Commercial FHA servicing deposits caused by the timing of loan payoffs.

Asset Quality

Non-performing loans totaled $18.4 million, or 0.85% of total loans, at June 30, 2016, compared with $18.8 million, or 0.93% of total loans, at March 31, 2016.

Net charge-offs for the second quarter of 2016 were $448,000, or 0.09% of average loans on an annualized basis.

The Company recorded a provision for loan losses of $629,000 for the second quarter of 2016, primarily to reflect the growth in the loan portfolio. During the second quarter of 2016, the Company recorded a recovery of $808,000 on a PCI loan, which reduced the level of provision required for the quarter.

The Company’s allowance for loan losses was 0.68% of total loans and 80.0% of non-performing loans at June 30, 2016, compared with 0.72% and 77.6%, respectively, at March 31, 2016. Including the fair market value discounts recorded in connection with acquired loan portfolios, the allowance for loan losses to total loans ratio was 1.13% at June 30, 2016, compared with 1.18% at March 31, 2016.

Capital

At June 30, 2016, the Company exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

June 30, 2016Well Capitalized
Regulatory Requirements
Total capital to risk-weighted assets 13.91% 10.00%
Tier 1 capital to risk-weighted assets 11.23% 8.00%
Tier 1 leverage ratio 9.77% 5.00%
Tier 1 common capital to risk-weighted assets 9.24% 6.50%
Tangible common equity to tangible assets 8.89% NA

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 7:30 a.m. Central Time on Friday, July 29, 2016. During the call, management will review the second quarter results and operational highlights. The call can be accessed via telephone at (877) 516-3531 (passcode: 49066877). A recorded replay can be accessed through August 5, 2016 by dialing (855) 859-2056 (passcode: 49066877).

A slide presentation relating to the second quarter results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Webcasts and Presentations page of the Company’s investor relations website.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. Midland had assets of approximately $3.0 billion, and its Midland Wealth Management Group had assets under administration of approximately $1.2 billion as of June 30, 2016. Midland provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management, and insurance and financial planning services. In addition, commercial equipment leasing services are provided through Heartland Business Credit, and multi-family and healthcare facility FHA financing is provided through Love Funding, Midland's non-bank subsidiaries. Midland has more than 80 locations across the United States. For additional information, visit www.midlandsb.com or follow Midland on LinkedIn at https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Adjusted Earnings,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” “Adjusted Return on Average Tangible Common Equity,” “Yields on Loans Excluding Accretion Income, ” “Net Interest Margin Excluding Accretion Income,” “Tangible Common Equity to Tangible Assets,” “Tangible Book Value Per Share” and “Return on Average Tangible Common Equity.” The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," including but not limited to statements about the Company’s expected loan production and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.


MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
For the Quarter Ended
June 30, March 31, December 31, September 30, June 30,
(in thousands, except per share data) 2016 2016 2015 2015 2015
Earnings Summary
Net interest income $27,989 $ 24,041 $ 26,452 $ 25,437 $ 28,317
Provision for loan losses 629 1,125 1,052 6,699 2,379
Noninterest income 14,024 12,618 12,799 14,464 14,197
Noninterest expense 30,911 27,639 27,692 27,823 30,703
Income before income taxes 10,473 7,895 10,507 5,379 9,432
Income taxes 3,683 2,777 2,811 1,928 2,762
Net income 6,790 5,118 7,696 3,451 6,670
Net income (loss) attributable to noncontrolling
interest in subsidiaries 1 (1) 1 6 17
Net income attributable to Midland
States Bancorp, Inc. $ 6,789 $ 5,119 $ 7,695 $ 3,445 $ 6,653
Diluted earnings per common share $0.50 $ 0.42 $0.63 $0.28 $0.55
Weighted average shares outstanding - diluted 13,635,074 12,229,293 12,181,664 12,130,529 12,098,476
Return on average assets 0.89% 0.70 % 1.06% 0.49% 0.97%
Return on average shareholders' equity 10.18% 8.69 % 13.19% 5.88% 11.74%
Return on average tangible common
shareholders' equity 12.67% 11.22 % 17.26% 7.72% 15.56%
Net interest margin 4.20% 3.80 % 4.19% 4.18% 4.79%
Efficiency ratio 67.09% 67.72 % 68.83% 64.32% 67.61%
Adjusted Earnings Performance Summary
Adjusted earnings $7,107 $ 5,767 $7,525 $4,638 $8,026
Adjusted diluted earnings per common share $0.52 $ 0.47 $0.61 $0.38 $0.66
Adjusted return on average assets 0.93% 0.79 % 1.04% 0.66% 1.17%
Adjusted return on average shareholders' equity 10.66% 9.79 % 12.90% 7.92% 14.16%
Adjusted return on average tangible common
shareholders' equity 13.27% 12.64 % 16.77% 10.39% 18.77%
Net interest margin excluding accretion income 3.52% 3.55 % 3.56% 3.83% 3.88%






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) 2016 2016 2015 2015 2015
Net interest income:
Total interest income $ 32,115 $ 27,967 $ 30,300 $ 28,949 $ 31,242
Total interest expense 4,126 3,926 3,848 3,512 2,925
Net interest income 27,989 24,041 26,452 25,437 28,317
Provision for loan losses 629 1,125 1,052 6,699 2,379
Net interest income after provision
for loan losses 27,360 22,916 25,400 18,738 25,938
Noninterest income:
Commercial FHA revenue 8,538 6,562 3,045 5,914 4,101
Residential mortgage banking revenue 1,045 1,121 3,328 3,490 4,832
Wealth management revenue 1,870 1,785 1,831 1,808 1,857
Service charges on deposit accounts 965 907 979 1,022 950
Interchange revenue 945 964 858 895 863
FDIC loss sharing expense (1,608) (53) (212) (57) (204)
Gain on sales of investment securities, net 72 204 33 1 -
Other than temporary impairment on
investment securities - (824) - (299) -
Other income 2,197 1,952 2,937 1,690 1,798
Total noninterest income 14,024 12,618 12,799 14,464 14,197
Noninterest expense:
Salaries and employee benefits 17,020 15,387 13,725 14,932 16,437
Occupancy and equipment 3,233 3,310 3,424 3,114 3,317
Data processing 2,624 2,620 2,546 2,541 2,626
Professional 1,573 1,701 2,079 2,075 2,183
Intangible assets amortization 519 580 598 597 602
Other 5,942 4,041 5,320 4,564 5,538
Total noninterest expense 30,911 27,639 27,692 27,823 30,703
Income before income taxes 10,473 7,895 10,507 5,379 9,432
Income taxes 3,683 2,777 2,811 1,928 2,762
Net income 6,790 5,118 7,696 3,451 6,670
Net income (loss) attributable to
noncontrolling interest in subsidiaries 1 (1) 1 6 17
Net income attributable to Midland
States Bancorp, Inc. $ 6,789 $ 5,119 $ 7,695 $ 3,445 $ 6,653
Basic earnings per common share $ 0.51 $ 0.43 $ 0.64 $ 0.29 $ 0.56
Diluted earnings per common share $ 0.50 $ 0.42 $ 0.63 $ 0.28 $ 0.55






MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
As of
June 30, March 31, December 31, September 30, June 30,
(in thousands) 2016 2016 2015 2015 2015
Assets
Cash and cash equivalents $ 123,366 $ 162,416 $ 212,475 $ 206,664 $ 172,230
Investment securities available-for-sale at fair value 238,781 232,074 236,627 211,359 207,848
Investment securities held to maturity at amortized cost 84,756 88,085 87,521 92,011 94,637
Loans 2,161,041 2,016,034 1,995,589 1,972,844 1,909,943
Allowance for loan losses (14,752) (14,571) (15,988) (15,157) (16,206)
Total loans, net 2,146,289 2,001,463 1,979,601 1,957,687 1,893,737
Loans held for sale, at fair value 101,782 103,365 54,413 53,032 75,480
Premises and equipment, net 72,147 72,421 73,133 73,362 73,263
Other real estate owned 3,540 4,740 5,472 6,471 5,926
Mortgage servicing rights at lower of cost or market 62,808 65,486 66,651 65,417 64,921
Intangible assets 5,905 6,424 7,004 7,601 8,199
Goodwill 46,519 46,519 46,519 47,102 47,102
Cash surrender value of life insurance policies 73,665 53,173 52,729 52,271 51,814
Other assets 62,226 61,914 62,679 59,331 58,424
Total assets $ 3,021,784 $ 2,898,080 $ 2,884,824 $ 2,832,308 $ 2,753,581
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 528,966 $ 546,664 $ 543,401 $ 512,632 $ 566,966
Interest-bearing deposits 1,825,586 1,843,046 1,824,247 1,791,846 1,668,944
Total deposits 2,354,552 2,389,710 2,367,648 2,304,478 2,235,910
Short-term borrowings 125,014 101,649 107,538 108,823 117,314
FHLB advances and other borrowings 97,588 40,133 40,178 50,225 50,264
Subordinated debt 54,459 61,903 61,859 61,814 61,853
Trust preferred debentures 37,229 37,142 37,057 36,973 37,142
Other liabilities 36,627 28,982 37,488 38,370 22,523
Total liabilities 2,705,469 2,659,519 2,651,768 2,600,683 2,525,006
Midland States Bancorp, Inc. shareholders’ equity 316,268 238,386 232,880 231,415 228,371
Noncontrolling interest in subsidiaries 47 175 176 210 204
Total shareholders’ equity 316,315 238,561 233,056 231,625 228,575
Total liabilities and shareholders’ equity $ 3,021,784 $ 2,898,080 $ 2,884,824 $ 2,832,308 $ 2,753,581






MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
As of
June 30, March 31, December 31, September 30, June 30,
(in thousands) 2016 2016 2015 2015 2015
Loan Portfolio
Commercial loans $489,228 $484,618 $499,573 $521,983 $544,014
Commercial real estate loans 929,399 897,099 876,784 866,027 842,907
Construction and land development loans 181,667 159,507 150,266 131,083 121,314
Residential real estate loans 179,184 158,221 163,224 168,129 158,798
Consumer loans 205,060 158,938 161,512 157,521 122,116
Lease financing loans 176,503 157,651 144,230 128,101 120,794
Total loans $2,161,041 $2,016,034 $1,995,589 $1,972,844 $1,909,943
Purchase credit impaired loans $28,642 $35,262 $38,477 $39,992 $42,454
Deposit Portfolio
Noninterest-bearing demand deposits $528,966 $546,664 $543,401 $512,632 $566,966
NOW accounts 627,003 612,475 621,925 623,494 557,197
Money market accounts 374,537 415,130 377,654 350,398 360,303
Savings accounts 164,792 163,163 155,778 154,632 160,504
Time deposits 431,173 433,386 446,621 426,762 404,361
Brokered deposits 228,081 218,892 222,269 236,560 186,579
Total deposits $2,354,552 $2,389,710 $2,367,648 $2,304,478 $2,235,910






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) 2016 2016 2015 2015 2015
Average Balance Sheets
Cash and cash equivalents $232,362 $223,951 $184,072 $131,272 $170,046
Investment securities 338,224 327,267 345,114 317,886 319,294
Loans 2,171,814 2,063,568 2,039,046 2,032,122 1,940,698
Total interest-earning assets 2,742,400 2,614,786 2,568,232 2,481,280 2,430,038
Non-earning assets 324,880 317,648 312,154 314,959 314,518
Total assets $3,067,280 $2,932,434 $2,880,386 $2,796,239 $2,744,556
Interest-bearing deposits $1,844,493 $1,832,599 $1,813,974 $1,733,899 $1,680,728
Short-term borrowings 114,651 120,753 118,118 121,453 111,237
FHLB advances and other borrowings 185,195 99,499 48,583 54,056 73,517
Subordinated debt 61,677 61,878 61,835 62,830 22,785
Trust preferred debentures 37,182 37,094 37,013 37,083 37,075
Total interest-bearing liabilities 2,243,198 2,151,823 2,079,523 2,009,321 1,925,342
Noninterest-bearing deposits 522,632 511,019 529,196 509,259 555,287
Other noninterest-bearing liabilities 33,188 32,671 40,247 45,379 36,591
Shareholders' equity 268,262 236,921 231,420 232,280 227,336
Total liabilities and shareholders' equity $3,067,280 $2,932,434 $2,880,386 $2,796,239 $2,744,556
Yields
Cash and cash equivalents 0.50% 0.50% 0.27% 0.25% 0.22%
Investment securities 5.12% 5.31% 5.02% 5.33% 5.37%
Loans 5.22% 4.68% 5.15% 4.94% 5.70%
Total interest-earning assets 4.81% 4.40% 4.79% 4.74% 5.27%
Interest-bearing deposits 0.50% 0.49% 0.48% 0.44% 0.42%
Short-term borrowings 0.24% 0.23% 0.20% 0.18% 0.21%
FHLB advances and other borrowings 0.56% 0.55% 0.87% 0.81% 1.27%
Subordinated debt 6.87% 6.87% 6.79% 6.66% 7.68%
Trust preferred debentures 4.95% 4.80% 4.60% 3.96% 4.83%
Total interest-bearing liabilities 0.74% 0.73% 0.73% 0.69% 0.61%
Net interest margin 4.20% 3.80% 4.19% 4.18% 4.79%






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,
(in thousands, except per share data) 2016 2016 2015 2015 2015
Asset Quality
Loans 30-89 days past due $10,453 $6,616 $10,120 $11,079 $ 7,143
Nonperforming loans 18,430 18,787 24,891 24,223 36,048
Nonperforming assets 21,469 22,312 29,206 30,118 41,388
Net charge-offs (recoveries) 448 2,542 220 7,748 (578)
Loans 30-89 days past due to total loans 0.48 % 0.33 % 0.51 % 0.56 % 0.37 %
Nonperforming loans to total loans 0.85 % 0.93 % 1.25 % 1.23 % 1.89 %
Nonperforming assets to total assets 0.71 % 0.77 % 1.01 % 1.06 % 1.50 %
Allowance for loan losses to total loans 0.68 % 0.72 % 0.80 % 0.77 % 0.85 %
Allowance for loan losses to
nonperforming loans 80.04 % 77.56 % 64.23 % 62.57 % 44.96 %
Net charge-offs to average loans 0.09 % 0.51 % 0.04 % 1.57 % (0.14)%
Wealth Management
Trust assets under administration $1,198,044 $1,189,693 $1,181,128 $1,145,056 $ 1,183,807
Market Data
Book value per share $20.53 $20.19 $19.74 $19.68 $ 19.42
Tangible book value per share $17.13 $15.71 $15.20 $15.03 $ 14.72
Shares outstanding at period end 15,402,946 11,804,779 11,797,404 11,760,589 11,759,138
Weighted average shares outstanding:
Basic 13,358,289 11,957,381 11,924,072 11,911,414 11,899,919
Diluted 13,635,074 12,229,293 12,181,664 12,130,529 12,098,476
Capital
Total capital to risk-weighted assets 13.91 % 11.67 % 11.82 % 11.43 % 11.71 %
Tier 1 capital to risk-weighted assets 11.23 % 8.48 % 8.62 % 8.19 % 8.32 %
Tier 1 leverage ratio 9.77 % 7.25 % 7.49 % 7.41 % 7.52 %
Tier 1 common capital to
risk-weighted assets 9.24 % 6.40 % 6.50 % 6.16 % 6.27 %
Tangible common equity to tangible assets 8.89 % 6.52 % 6.33 % 6.36 % 6.41 %






MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
For the Quarter Ended
June 30, March 31, December 31, September 30, June 30,
(in thousands, except per share data) 2016 2016 2015 2015 2015
Adjusted Earnings Reconciliation
Income before income taxes - GAAP $ 10,473 $ 7,895 $ 10,507 $ 5,379 $ 9,432
Adjustments to other income:
Gain on sales of investment securities, net 72 204 33 1 -
Other-than-temporary impairment
on investment securities - (824) - (299) -
FDIC loss-sharing expense - - (212) (57) (204)
Amortization of FDIC indemnification asset, net - - (39) (121) (120)
Reversal of contingent consideration accrual 350 - - - -
Other income - - - 12 -
Total adjusted other income 422 (620) (218) (464) (324)
Adjustments to other expense:
Expenses associated with payoff
of subordinated debt 511 - - - -
Integration and acquisition expenses 406 385 214 898 1,910
Total adjusted other expense 917 385 214 898 1,910
Adjusted earnings pre tax 10,968 8,900 10,939 6,741 11,666
Adjusted earnings tax 3,861 3,133 3,414 2,103 3,640
Adjusted earnings - non-GAAP $ 7,107 $ 5,767 $ 7,525 $ 4,638 $ 8,026
Adjusted diluted EPS $ 0.52 $ 0.47 $ 0.61 $ 0.38 $ 0.66
Adjusted return on average assets 0.93 % 0.79 % 1.04 % 0.66 % 1.17 %
Adjusted return on average
shareholders' equity 10.66 % 9.79 % 12.90 % 7.92 % 14.16 %
Adjusted return on average
tangible common equity 13.27 % 12.64 % 16.77 % 10.39 % 18.77 %
Yield on Loans
Reported yield on loans 5.22 % 4.68 % 5.15 % 4.94 % 5.70 %
Effect of accretion income on acquired loans (0.85)% (0.30)% (0.78)% (0.41)% (1.13)%
Yield on loans excluding accretion income 4.37 % 4.38 % 4.37 % 4.53 % 4.57 %
Net Interest Margin
Reported net interest margin 4.20 % 3.80 % 4.19 % 4.18 % 4.79 %
Effect of accretion income on acquired loans (0.68)% (0.25)% (0.63)% (0.35)% (0.91)%
Net interest margin excluding accretion income 3.52 % 3.55 % 3.56 % 3.83 % 3.88 %






MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
As of
June 30, March 31, December 31, September 30, June 30,
(in thousands, except per share data) 2016 2016 2015 2015 2015
Shareholders' Equity to Tangible Common Equity:
Total shareholders' equity—GAAP $ 316,315 $ 238,561 $ 233,056 $ 231,625 $ 228,575
Adjustments:
Noncontrolling interest in subsidiaries (47) (175) (176) (210) (204)
Goodwill (46,519) (46,519) (46,519) (47,102) (47,102)
Other intangibles (5,905) (6,424) (7,004) (7,601) (8,199)
Tangible common equity $ 263,844 $ 185,443 $ 179,357 $ 176,712 $ 173,070
Total Assets to Tangible Assets:
Total assets—GAAP 3,021,784 2,898,080 2,884,824 2,832,308 2,753,581
Adjustments:
Goodwill (46,519) (46,519) (46,519) (47,102) (47,102)
Other intangibles (5,905) (6,424) (7,004) (7,601) (8,199)
Tangible assets $ 2,969,360 $ 2,845,137 $ 2,831,301 $ 2,777,605 $ 2,698,280
Common Shares Outstanding 15,402,946 11,804,779 11,797,404 11,760,589 11,759,138
Tangible Common Equity to Tangible Assets 8.89 % 6.52 % 6.33 % 6.36 % 6.41 %
Tangible Book Value Per Share $ 17.13 $ 15.71 $ 15.20 $ 15.03 $ 14.72
Return on Average Tangible Common Equity (ROATCE)
For the Quarter Ended
June 30, March 31, December 31, September 30, June 30,
(in thousands, except per share data) 2016 2016 2015 2015 2015
Net Income $ 6,789 $ 5,119 $ 7,695 $ 3,445 $ 6,653
Average total shareholders' equity—GAAP $ 268,262 $ 236,921 $ 231,420 $ 232,287 $ 227,336
Adjustments:
Noncontrolling interest in subsidiaries (121) (184) (204) (207) (175)
Goodwill (46,519) (46,519) (46,997) (47,102) (47,102)
Other intangibles (6,184) (6,740) (7,324) (7,917) (8,553)
Average tangible common equity $ 215,438 $ 183,478 $ 176,895 $ 177,061 $ 171,506
ROATCE 12.67 % 11.22 % 17.26 % 7.72 % 15.56 %



CONTACTS: Jeffrey G. Ludwig, Exec. V.P., Chief Financial Officer, at jludwig@midlandsb.com or (217) 342-7321 Douglas J. Tucker, Sr. V.P., Corporate Counsel, at dtucker@midlandsb.com or (217) 342-7321

Source:Midland States Bancorp, Inc.