MSBI Midland States Bancorp Inc

Midland States Bancorp, Inc. (Nasdaq: MSBI) (the “Company”) today reported net loss available to common shareholders of $54.8 million, or $2.52 per diluted share, for the fourth quarter of 2024, compared to net income of $16.2 million, or $0.74 per diluted share, for the third quarter of 2024. This also compares to net income available to common shareholders of $18.5 million, or $0.84 per diluted share, for the fourth quarter of 2023.

During the fourth quarter of 2024, the Company took several actions to address its credit quality issues and exit its non-core consumer loan portfolios. Our deteriorating credit quality issues were primarily within three sectors of our business: non-core consumer loans, Specialty Finance Group, and Midland Equipment Financing.

In the quarter, the Company decided to accelerate the reduction of our non-core consumer loan portfolio through sales. These loans were originated by our Fintech partners, LendingPoint and Greensky. As a result of LendingPoint’s system conversion in the third quarter of 2023, our portfolio experienced significant credit deterioration and servicing-related deficiencies. In December 2024, we sold our $87.1 million LendingPoint portfolio, recognizing net charge-offs and provision for credit losses of $17.3 million on the sale. We also committed to a plan to sell $371.7 million of our Greensky consumer loan portfolio and recognized net charge-offs and provision for credit losses of $33.4 million when these loans were transferred to held for sale. We expect to provide partial financing on the sale with senior secured loans to a special purpose entity with credit subordination and a 20% risk weighting.

The Specialty Finance Group provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and seek short term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company’s primary market areas. We completed a strategic review of this portfolio including obtaining updated appraisals on loans that had shown elevated credit risk in the third and fourth quarters. As a result of this review, five loans with balances of $57.8 million were moved from substandard to non-performing with recognized charge-offs of $6.6 million. In addition, updated appraisals were obtained for five non-performing loans with balances of $55.8 million which resulted in charge-offs of $18.8 million recognized in the fourth quarter of 2024. In addition, we recognized impairment expense on an OREO property related to a former assisted living loan of $2.1 million in the fourth quarter of 2024.

The strategic review also included all criticized loans, construction loans and loans that failed our stress test in all portfolios, including our community bank. This resulted in charge-offs of almost all specific reserves. In addition, the Company tightened credit standards going forward and will not originate new construction loans in the Specialty Finance Group. Our strategic actions around credit administration will better position the Company going forward.

The equipment finance portfolio includes loans and leases originated to customers throughout the United States. During 2024, we experienced elevated charge-offs primarily within the trucking industry. Charge-offs in this portfolio were $15.3 million in the fourth quarter of 2024 as we evaluated equipment values for nonaccrual assets. Nonaccrual loans and leases in the finance portfolio decreased to $11.3 million from $21.4 million at September 30, 2024. Additionally, based on further deterioration in the industry, we evaluated salvage values of the leases and loans related to this industry, along with the carrying values of repossessed and off-lease equipment, and recognized impairment expense of $7.6 million.

Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, “Improving credit quality is our number one priority and in the fourth quarter we took significant steps to reduce credit risk and address our underlying credit issues. During the quarter we made the difficult decision to exit our non-core consumer portfolio and charge-off deteriorating credits in an effort to better position the Company to grow our core community banking business. Our team also reviewed our credit risk appetite profile and tightened standards going forward. On a positive note, substandard accruing loans decreased significantly in the quarter with minimal downgrades to substandard accruing. Delinquencies decreased during the quarter as well.

“We are seeing positive trends in new client additions in both our community bank and wealth management, net interest margin expanded in the quarter and with the actions we took in the quarter to reduce credit risk, we believe we are well positioned to deliver solid financial performance in 2025. We will continue to make investments in talent, technology, and marketing to further enhance our ability to generate profitable growth in the coming years,” said Mr. Ludwig.

Balance Sheet Highlights

Total assets were $7.53 billion at December 31, 2024, compared to $7.75 billion at September 30, 2024, and $7.87 billion at December 31, 2023. At December 31, 2024, portfolio loans were $5.17 billion, compared to $5.75 billion at September 30, 2024, and $6.13 billion at December 31, 2023.

Loans

During the fourth quarter of 2024, outstanding loans declined by $581.2 million, or 10.1%, from September 30, 2024, primarily as a result of the Company’s decision to sell the Greensky and LendingPoint consumer loan portfolios, and the continuation of the Company’s plan to decrease its equipment financing portfolio to focus on commercial loan opportunities in our community banking regions.

Consumer loans decreased $506.0 million to $157.2 million at December 31, 2024, primarily due to the loan portfolio sale, transfer to held for sale, and loan paydowns. Equipment finance loan and lease balances decreased $51.7 million during the fourth quarter of 2024 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Equipment financing and consumer loans comprised 15.6% and 3.0%, respectively, of the loan portfolio at December 31, 2024, compared to 15.0% and 11.5%, respectively, at September 30, 2024.

		As of
		December 31,			September 30,			June 30,			March 31,			December 31,
(in thousands)		2024			2024			2024			2024			2023
Loan Portfolio
Commercial loans		$	921,930		$	863,922		$	939,458		$	913,564		$	951,387
Equipment finance loans			416,969			442,552			461,409			494,068			531,143
Equipment finance leases			391,390			417,531			428,659			455,879			473,350
Commercial FHA warehouse lines			8,004			50,198			—			8,035			—
Total commercial loans and leases			1,738,293			1,774,203			1,829,526			1,871,546			1,955,880
Commercial real estate			2,591,664			2,510,472			2,421,505			2,397,113			2,406,845
Construction and land development			299,842			422,253			476,528			474,128			452,593
Residential real estate			380,557			378,657			378,393			378,583			380,583
Consumer			157,218			663,234			746,042			837,092			935,178
Total loans		$	5,167,574		$	5,748,819		$	5,851,994		$	5,958,462		$	6,131,079

Loan Quality

Substandard accruing loans decreased $88.7 million to $78.8 million at December 31, 2024, as compared to September 30, 2024. This decrease was the result of a payoff of a $15.4 million relationship and the transfer of $75.1 million of problem loans to nonaccrual status. No significant new substandard loans were identified during the quarter.

Nonperforming loans increased $25.6 million to $140.1 million at December 31, 2024, as compared to September 30, 2024. Charged off nonperforming loans in the fourth quarter of 2024 totaled $48.9 million, partially offsetting the amount of loans transferred to nonaccrual status in the quarter.

		As of and for the Three Months Ended
(in thousands)		December 31,				September 30,				June 30,				March 31,				December 31,
			2024				2024				2024				2024				2023
Asset Quality
Loans 30-89 days past due		$	36,522			$	55,329			$	54,045			$	58,854			$	82,778
Nonperforming loans			140,138				114,556				112,124				104,979				56,351
Nonperforming assets			148,290				126,771				123,774				116,721				67,701
Substandard accruing loans			78,800				167,549				135,555				149,049				184,224
Net charge-offs			102,660				11,379				2,874				4,445				5,117
Loans 30-89 days past due to total loans			0.71	%			0.96	%			0.92	%			0.99	%			1.35	%
Nonperforming loans to total loans			2.71	%			1.99	%			1.92	%			1.76	%			0.92	%
Nonperforming assets to total assets			1.97	%			1.64	%			1.60	%			1.49	%			0.86	%
Allowance for credit losses to total loans			1.46	%			1.49	%			1.58	%			1.31	%			1.12	%
Allowance for credit losses to nonperforming loans			53.81	%			74.90	%			82.22	%			74.35	%			121.56	%
Net charge-offs to average loans			7.23	%			0.78	%			0.20	%			0.30	%			0.33	%

The Company recognized provision expense for credit losses on loans of $93.5 million in the fourth quarter of 2024, and recorded net loan charge-offs of $102.7 million. Provision expense for credit losses on loans was $5.0 million and $7.0 million in the third quarter of 2024 and fourth quarter of 2023, respectively. For the year ended December 31, 2024, the Company recognized provision expense for credit losses of $129.3 million and recorded net charge-offs of $121.4 million.

The allowance for credit losses on loans totaled $75.4 million at December 31, 2024, compared to $85.8 million at September 30, 2024, and $68.5 million at December 31, 2023. The allowance as a percentage of total loans was 1.46% at December 31, 2024, compared to 1.49% at September 30, 2024, and 1.12% at December 31, 2023.

Deposits

Total deposits were $6.20 billion at December 31, 2024, compared with $6.26 billion at September 30, 2024. Noninterest-bearing deposits increased $4.9 million while interest-bearing deposits decreased $64.5 million. Brokered time deposits represented 4.2% of total deposits at December 31, 2024.

		As of
		December 31,			September 30,			June 30,			March 31,			December 31,
(in thousands)		2024			2024			2024			2024			2023
Deposit Portfolio
Noninterest-bearing demand		$	1,055,564		$	1,050,617		$	1,108,521		$	1,212,382		$	1,145,395
Interest-bearing:
Checking			2,378,256			2,389,970			2,343,533			2,394,163			2,511,840
Money market			1,173,630			1,187,139			1,143,668			1,128,463			1,135,629
Savings			507,305			510,260			538,462			555,552			559,267
Time			822,981			849,413			852,415			845,190			862,865
Brokered time			259,507			269,437			131,424			188,234			94,533
Total deposits		$	6,197,243		$	6,256,836		$	6,118,023		$	6,323,984		$	6,309,529

Results of Operations Highlights

Net Interest Income and Margin

During the fourth quarter of 2024, net interest income and net interest margin, on a tax-equivalent basis, increased to $56.3 million and 3.19%, respectively, compared to $55.2 million and 3.10%, respectively, in the third quarter of 2024. The actions taken by the Federal Reserve Bank to lower short term interest rates resulted in lower funding costs for the Company. Net interest income and net interest margin, on a tax-equivalent basis, were $58.3 million and 3.21%, respectively, in the fourth quarter of 2023.

Average interest-earning assets for the fourth quarter of 2024 were $7.01 billion, compared to $7.07 billion for the third quarter of 2024. The yield on interest-earning assets decreased 11 basis points to 5.80% compared to the third quarter of 2024, due in part to interest reversals of $1.5 million on substandard loans transferred to nonaccrual status in the fourth quarter and the impact of interest rate cuts enacted by the Federal Reserve Bank. Interest-earning assets averaged $7.20 billion for the fourth quarter of 2023.

Average loans were $5.65 billion for the fourth quarter of 2024, compared to $5.78 billion for the third quarter of 2024 and $6.20 billion for the fourth quarter of 2023. The yield on loans was 6.04% for the fourth quarter of 2024, compared to 6.15% for the third quarter of 2024 and 6.00% for the fourth quarter of 2023.

Investment securities averaged $1.21 billion for the fourth quarter of 2024, and yielded 4.73%, compared to an average balance and yield of $1.16 billion and 4.71%, respectively, for the third quarter of 2024. Investment securities averaged $883.2 million and yielded 4.16% for the fourth quarter of 2023. The Company purchased additional higher-yielding investments during 2024, resulting in the increased average balance and yield.

Average interest-bearing liabilities for the fourth quarter of 2024 were $5.69 billion, compared to $5.76 billion for the third quarter of 2024. The cost of funds decreased 24 basis points to 3.21% compared to the third quarter of 2024. Interest-bearing liabilities averaged $5.88 billion for the fourth quarter of 2023.

Average interest-bearing deposits were $5.24 billion for the fourth quarter of 2024, compared to $5.13 billion for the third quarter of 2024, and $5.30 billion for the fourth quarter of 2023. Cost of interest-bearing deposits was 3.04% in the fourth quarter of 2024, which represented a 21 basis point decrease from the third quarter of 2024, due to the recent rate cuts enacted by the Federal Reserve Bank.

		For the Three Months Ended
(dollars in thousands)		December 31, 2024									September 30, 2024									December 31, 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		$	96,676		$	1,101		4.53	%		$	75,255		$	1,031		5.45	%		$	77,363		$	1,054		5.41	%
Investment securities(1)			1,213,248			14,417		4.73				1,162,751			13,752		4.71				883,153			9,257		4.16
Loans(1)(2)			5,652,586			85,877		6.04				5,783,408			89,344		6.15				6,196,362			93,757		6.00
Loans held for sale			12,854			129		4.00				7,505			124		6.57				4,429			81		7.26
Nonmarketable equity securities			35,171			632		7.15				41,137			788		7.62				41,192			715		6.89
Total interest-earning assets			7,010,535			102,156		5.80				7,070,056			105,039		5.91				7,202,499			104,864		5.78
Noninterest-earning assets			669,300									653,279									695,293
Total assets		$	7,679,835								$	7,723,335								$	7,897,792
Interest-Bearing Liabilities
Interest-bearing deposits		$	5,241,702		$	40,016		3.04	%		$	5,132,640		$	41,970		3.25	%		$	5,295,296		$	39,156		2.93	%
Short-term borrowings			31,853			214		2.68				53,577			602		4.47				13,139			15		0.47
FHLB advances & other borrowings			284,033			2,880		4.03				428,739			4,743		4.40				430,207			4,750		4.38
Subordinated debt			80,410			1,498		7.41				89,120			1,228		5.48				93,512			1,281		5.43
Trust preferred debentures			51,132			1,292		10.05				50,990			1,341		10.46				50,541			1,402		11.00
Total interest-bearing liabilities			5,689,130			45,900		3.21				5,755,066			49,884		3.45				5,882,695			46,604		3.14
Noninterest-bearing deposits			1,066,520									1,075,712									1,142,062
Other noninterest-bearing liabilities			117,478									97,235									108,245
Shareholders’ equity			806,707									795,322									764,790
Total liabilities and shareholder’s equity		$	7,679,835								$	7,723,335								$	7,897,792
Net Interest Margin					$	56,256		3.19	%					$	55,155		3.10	%					$	58,260		3.21	%
Cost of Deposits								2.52	%								2.69	%								2.41	%

(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 December 31, 2024, September 30, 2024 and December 31, 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 year ended December 31, 2024, net interest income, on a tax-equivalent basis, decreased to $222.8 million, with a tax-equivalent net interest margin of 3.15%, compared to net interest income, on a tax-equivalent basis, of $236.8 million, and a tax-equivalent net interest margin of 3.26% for the year ended December 31, 2023.

The yield on earning assets increased 26 basis points to 5.83% for the year ended December 31, 2024 compared to the prior year. However, the cost of interest-bearing liabilities increased at a faster rate during this period, increasing 44 basis points to 3.31% for the year ended December 31, 2024.

		For the Years Ended
(dollars in thousands)		December 31, 2024									December 31, 2023
Interest-earning assets		Average Balance			Interest &Fees			Yield/Rate			Average Balance			Interest & Fees			Yield/Rate
Cash and cash equivalents		$	76,675		$	3,958		5.16	%		$	77,046		$	3,922		5.09	%
Investment securities(1)			1,116,186			51,682		4.63				854,576			30,361		3.55
Loans(1)(2)			5,840,216			353,447		6.05				6,292,260			367,762		5.84
Loans held for sale			7,185			392		5.45				4,034			260		6.45
Nonmarketable equity securities			39,108			3,070		7.85				43,318			2,819		6.51
Total interest-earning assets			7,079,370			412,549		5.83				7,271,234			405,124		5.57
Noninterest-earning assets			665,308									635,490
Total assets		$	7,744,678								$	7,906,724
Interest-Bearing Liabilities
Interest-bearing deposits		$	5,167,787		$	160,676		3.11	%		$	5,241,723		$	136,947		2.61	%
Short-term borrowings			45,251			1,960		4.33				23,406			68		0.29
FHLB advances & other borrowings			381,525			16,495		4.32				460,781			20,709		4.49
Subordinated debt			89,028			5,271		5.92				95,986			5,266		5.49
Trust preferred debentures			50,938			5,380		10.56				50,298			5,289		10.52
Total interest-bearing liabilities			5,734,529			189,782		3.31				5,872,194			168,279		2.87
Noninterest-bearing deposits			1,106,388									1,173,873
Other noninterest-bearing liabilities			109,777									90,562
Shareholders’ equity			793,984									770,095
Total liabilities and shareholders’ equity		$	7,744,678								$	7,906,724
Net Interest Margin					$	222,767		3.15	%					$	236,845		3.26	%
Cost of Deposits								2.56	%								2.13	%

(1) Interest income and average rates for tax-exempt loans and investment securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.8 million for each of the years ended December 31, 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 $19.6 million for the fourth quarter of 2024, compared to $19.3 million for the third quarter of 2024. Noninterest income for the fourth quarter of 2023 was $20.5 million, and included incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. Also included was a $1.1 million one-time gain from the sale of Visa B stock, offset by $2.9 million of losses on the sale of investment securities. Excluding these transactions, noninterest income for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023 was $19.6 million, $19.3 million, and $18.5 million, respectively.

		For the Three Months Ended												For the Years Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(in thousands)			2024				2024				2023				2024				2023
Noninterest income
Wealth management revenue		$	7,660			$	7,104			$	6,604			$	28,697			$	25,572
Service charges on deposit accounts			3,506				3,411				3,246				13,154				11,990
Interchange revenue			3,528				3,506				3,585				13,955				14,302
Residential mortgage banking revenue			637				697				451				2,418				1,903
Income on company-owned life insurance			1,975				1,982				1,753				7,683				4,439
Loss on sales of investment securities, net			(34	)			(44	)			(2,894	)			(230	)			(9,372	)
Other income			2,289				2,683				7,768				12,066				17,756
Total noninterest income		$	19,561			$	19,339			$	20,513			$	77,743			$	66,590

Wealth management revenue totaled $7.7 million in the fourth quarter of 2024, an increase of $0.6 million, or 7.8%, as compared to the third quarter of 2024, due to increases in trust and estate fees. Assets under administration were $4.15 billion at December 31, 2024 compared to $4.27 billion and $3.73 billion at September 30, 2024 and December 31, 2023, respectively.

Income on company-owned life insurance income totaled $2.0 million, $2.0 million and $1.8 million for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023, respectively.

On a full year basis, noninterest income increased $11.2 million, or 16.7%. Wealth management revenue increased $3.1 million due to increases in assets under administration and estate fees. Income on company-owned life insurance increased $3.2 million. 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. In 2024, we recognized net losses on the sales of investment securities of $0.2 million compared to $9.4 million in 2023, as we took advantage of certain market conditions last year to reposition out of lower yielding securities into other structures, which resulted in improved overall margin, liquidity and capital allocations. Several one-time transactions were recognized in other noninterest income in 2023, including incremental servicing revenues of $2.2 million and $1.6 million related to our commercial FHA servicing portfolio and the Greensky portfolio, respectively. In addition, the Company recognized a $1.1 million one-time gain from the sale of Visa B stock, a gain of $0.7 million on the redemption of subordinated debt and a gain of $0.8 million on the sale of OREO.

Noninterest Expense

Noninterest expense was $54.2 million in the fourth quarter of 2024, compared to $46.7 million in the third quarter of 2024 and $44.5 million in the fourth quarter of 2023. Noninterest expense for the fourth quarter of 2024 included $7.6 million of impairment on equipment financing operating lease collateral and surrendered equipment, and $2.1 million of impairment on an OREO property. Excluding these items, noninterest expense for the fourth quarter of 2024, the third quarter of 2024, and the fourth quarter of 2023 was $44.5 million, $46.7 million, and $44.5 million, respectively.

On a full year basis, in addition to the fourth quarter expenses previously described, costs related to upgrades to our ATM fleet, loan collection expenses, and settlement of various lawsuits drove the increase in noninterest expense as compared to the prior year.

The efficiency ratio for the quarter ended December 31, 2024 was 71.42% compared to 62.76% for the quarter ended September 30, 2024, and 55.22% for the fourth quarter of 2023.

		For the Three Months Ended									For the Years Ended
		December 31,			September 30,			December 31,			December 31,			December 31,
(in thousands)		2024			2024			2023			2024			2023
Noninterest expense
Salaries and employee benefits		$	22,283		$	24,382		$	24,031		$	93,639		$	93,438
Occupancy and equipment			4,286			4,393			3,934			16,785			15,986
Data processing			7,278			6,955			6,963			28,160			26,286
Professional services			1,580			1,744			2,072			7,822			7,049
Amortization of intangible assets			952			951			1,130			4,008			4,758
Impairment on leased assets and surrendered assets			7,601			—			—			7,601			—
FDIC insurance			1,383			1,402			1,147			5,278			4,779
Other expense			8,820			6,906			5,211			29,969			21,606
Total noninterest expense		$	54,183		$	46,733		$	44,488		$	193,262		$	173,902

Income Tax Expense

Income tax benefit was $19.6 million for the fourth quarter of 2024, compared to expenses of $4.1 million for the third quarter of 2024 and $6.4 million for the fourth quarter of 2023. The resulting effective tax rates were 27.2%, 18.1% and 23.7%, respectively.

Capital

At December 31, 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 December 31, 2024
	Midland States Bank		Midland States Bancorp, Inc.		Minimum Regulatory Requirements(2)
Total capital to risk-weighted assets	12.75%		13.38%		10.50%
Tier 1 capital to risk-weighted assets	11.54%		11.11%		8.50%
Common equity Tier 1 capital to risk-weighted assets	11.54%		8.37%		7.00%
Tier 1 leverage ratio	9.71%		9.36%		4.00%
Tangible common equity to tangible assets(1)	N/A		6.14%		N/A

(1) A non-GAAP financial measure. Refer to page 17 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 $82.0 million at December 31, 2024, which reduced tangible book value by $3.81 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 was authorized to repurchase up to $25.0 million of common stock through December 31, 2024. During the fourth quarter of 2024, the Company did not repurchased any shares of its common stock. The program terminated effective December 31, 2024.

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of December 31, 2024, the Company had total assets of approximately $7.53 billion, and its Wealth Management Group had assets under administration of approximately $4.15 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) 342-7321

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
		As of and for the Three Months Ended												As of andfor the Years Ended
(dollars in thousands, except per share data)		December 31,2024				September 30, 2024				December 31, 2023				December 31,2024				December 31,2023
Earnings Summary
Net interest income		$	56,035			$	54,950			$	58,077			$	221,957			$	236,017
Provision for credit losses			93,540				5,000				6,950				129,340				21,132
Noninterest income			19,561				19,339				20,513				77,743				66,590
Noninterest expense			54,183				46,733				44,488				193,262				173,902
(Loss) income before income taxes			(72,127	)			22,556				27,152				(22,902	)			107,573
Income tax (benefit) expense			(19,586	)			4,080				6,441				(9,472	)			32,113
Net (loss) income			(52,541	)			18,476				20,711				(13,430	)			75,460
Preferred dividends			2,228				2,229				2,228				8,913				8,913
Net (loss) income available to common shareholders		$	(54,769	)		$	16,247			$	18,483			$	(22,343	)		$	66,547
Diluted (loss) earnings per common share		$	(2.52	)		$	0.74			$	0.84			$	(1.05	)		$	2.97
Weighted average common shares outstanding - diluted			21,753,711				21,678,242				21,822,328				21,737,958				22,124,402
(Loss) return on average assets		(2.72		)%			0.95	%			1.04	%		(0.17		)%			0.95	%
(Loss) return on average shareholders' equity		(25.91		)%			9.24	%			10.74	%		(1.69		)%			9.80	%
(Loss) return on average tangible common equity(1)		(41.76		)%			12.69	%			15.41	%		(4.40		)%			13.89	%
Net interest margin			3.19	%			3.10	%			3.21	%			3.15	%			3.26	%
Efficiency ratio(1)			71.42	%			62.76	%			55.22	%			64.31	%			55.91	%
Adjusted Earnings Performance Summary(1)
Adjusted (loss) earnings available to common shareholders		$	(54,735	)		$	16,223			$	19,793			$	(22,344	)		$	76,576
Adjusted diluted (loss) earnings per common share		$	(2.52	)		$	0.74			$	0.89			$	(1.05	)		$	3.42
Adjusted (loss) return on average assets		(2.72		)%			0.95	%			1.11	%		(0.17		)%			1.08	%
Adjusted (loss) return on average shareholders' equity		(25.89		)%			9.23	%			11.42	%		(1.69		)%			11.10	%
Adjusted (loss) return on average tangible common equity		(41.74		)%			12.67	%			16.51	%		(4.40		)%			15.98	%
Adjusted pre-tax, pre-provision earnings		$	21,460			$	27,523			$	35,898			$	106,437			$	136,303
Adjusted pre-tax, pre-provision return on average assets			1.11	%			1.42	%			1.80	%			1.37	%			1.72	%
Market Data
Book value per share at period end		$	29.10			$	33.08			$	31.61
Tangible book value per share at period end(1)		$	21.01			$	24.90			$	23.35
Tangible book value per share excluding accumulated other comprehensive income at period end(1)		$	24.82			$	27.74			$	26.91
Market price at period end		$	24.40			$	22.38			$	27.56
Common shares outstanding at period end			21,494,485				21,393,905				21,551,402
Capital
Total capital to risk-weighted assets			13.38	%			13.98	%			13.20	%
Tier 1 capital to risk-weighted assets			11.11	%			11.65	%			10.91	%
Common equity tier 1capital to risk-weighted assets			8.37	%			9.00	%			8.40	%
Tier 1 leverage ratio			9.36	%			10.10	%			9.71	%
Tangible common equity to tangible assets(1)			6.14	%			7.03	%			6.55	%
Wealth Management
Trust assets under administration		$	4,153,080			$	4,268,539			$	3,733,355

(1) Non-GAAP financial measures. Refer to pages 15 - 17 for a reconciliation to the comparable GAAP financial measures.

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		As of
		December 31,				September 30,				June 30,				March 31,				December 31,
(in thousands)			2024				2024				2024				2024				2023
Assets
Cash and cash equivalents		$	114,766			$	121,873			$	124,646			$	167,316			$	135,061
Investment securities			1,212,366				1,216,795				1,099,654				1,044,900				920,396
Loans			5,167,574				5,748,819				5,851,994				5,958,462				6,131,079
Allowance for credit losses on loans			(75,414	)			(85,804	)			(92,183	)			(78,057	)			(68,502	)
Total loans, net			5,092,160				5,663,015				5,759,811				5,880,405				6,062,577
Loans held for sale			346,565				8,001				5,555				5,043				3,811
Premises and equipment, net			85,710				84,672				83,040				81,831				82,814
Other real estate owned			6,413				8,646				8,304				8,920				9,112
Loan servicing rights, at lower of cost or fair value			17,842				18,400				18,902				19,577				20,253
Goodwill			161,904				161,904				161,904				161,904				161,904
Other intangible assets, net			12,100				13,052				14,003				15,019				16,108
Company-owned life insurance			211,168				209,193				207,211				205,286				203,485
Other assets			268,061				245,932				274,244				241,608				251,347
Total assets		$	7,529,055			$	7,751,483			$	7,757,274			$	7,831,809			$	7,866,868
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits		$	1,055,564			$	1,050,617			$	1,108,521			$	1,212,382			$	1,145,395
Interest-bearing deposits			5,141,679				5,206,219				5,009,502				5,111,602				5,164,134
Total deposits			6,197,243				6,256,836				6,118,023				6,323,984				6,309,529
Short-term borrowings			87,499				13,849				7,208				214,446				34,865
FHLB advances and other borrowings			258,000				425,000				600,000				255,000				476,000
Subordinated debt			77,749				82,744				91,656				93,617				93,546
Trust preferred debentures			51,205				51,058				50,921				50,790				50,616
Other liabilities			121,246				103,737				103,694				102,966				110,459
Total liabilities			6,792,942				6,933,224				6,971,502				7,040,803				7,075,015
Total shareholders’ equity			736,113				818,259				785,772				791,006				791,853
Total liabilities and shareholders’ equity		$	7,529,055			$	7,751,483			$	7,757,274			$	7,831,809			$	7,866,868

MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
		For the Three Months Ended												For the Years Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(in thousands, except per share data)			2024				2024				2023				2024				2023
Net interest income:
Interest income		$	101,935			$	104,834			$	104,681			$	411,739			$	404,296
Interest expense			45,900				49,884				46,604				189,782				168,279
Net interest income			56,035				54,950				58,077				221,957				236,017
Provision for credit losses on loans			92,270				5,000				6,950				128,270				21,132
Provision for credit losses on unfunded commitments			1,270				—				—				1,070				—
Total provision for credit losses			93,540				5,000				6,950				129,340				21,132
Net interest income after provision for credit losses			(37,505	)			49,950				51,127				92,617				214,885
Noninterest income:
Wealth management revenue			7,660				7,104				6,604				28,697				25,572
Service charges on deposit accounts			3,506				3,411				3,246				13,154				11,990
Interchange revenue			3,528				3,506				3,585				13,955				14,302
Residential mortgage banking revenue			637				697				451				2,418				1,903
Income on company-owned life insurance			1,975				1,982				1,753				7,683				4,439
Loss on sales of investment securities, net			(34	)			(44	)			(2,894	)			(230	)			(9,372	)
Other income			2,289				2,683				7,768				12,066				17,756
Total noninterest income			19,561				19,339				20,513				77,743				66,590
Noninterest expense:
Salaries and employee benefits			22,283				24,382				24,031				93,639				93,438
Occupancy and equipment			4,286				4,393				3,934				16,785				15,986
Data processing			7,278				6,955				6,963				28,160				26,286
Professional services			1,580				1,744				2,072				7,822				7,049
Amortization of intangible assets			952				951				1,130				4,008				4,758
Impairment on leased assets and surrendered assets			7,601				—				—				7,601				—
FDIC insurance			1,383				1,402				1,147				5,278				4,779
Other expense			8,820				6,906				5,211				29,969				21,606
Total noninterest expense			54,183				46,733				44,488				193,262				173,902
(Loss) income before income taxes			(72,127	)			22,556				27,152				(22,902	)			107,573
Income tax (benefit) expense			(19,586	)			4,080				6,441				(9,472	)			32,113
Net (loss) income			(52,541	)			18,476				20,711				(13,430	)			75,460
Preferred stock dividends			2,228				2,229				2,228				8,913				8,913
Net (loss) income available to common shareholders		$	(54,769	)		$	16,247			$	18,483			$	(22,343	)		$	66,547
Basic (loss) earnings per common share		$	(2.52	)		$	0.74			$	0.84			$	(1.05	)		$	2.97
Diluted (loss) earnings per common share		$	(2.52	)		$	0.74			$	0.84			$	(1.05	)		$	2.97

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Earnings Reconciliation
		For the Three Months Ended												For the Years Ended
(dollars in thousands, except per share data)		December 31,2024				September 30,2024				December 31, 2023				December 31, 2024				December 31, 2023
(Loss) income before income tax (benefit) expense - GAAP		$	(72,127	)		$	22,556			$	27,152			$	(22,902	)		$	107,573
Adjustments to noninterest income:
Loss on sales of investment securities, net			34				44				2,894				230				9,372
(Gain) on sale of Visa B shares			—				—				(1,098	)			—				(1,098	)
Loss (gain) on repurchase of subordinated debt			13				(77	)			—				(231	)			(676	)
Total adjustments to noninterest income			47				(33	)			1,796				(1	)			7,598
Adjusted (loss) earnings pre tax - non-GAAP			(72,080	)			22,523				28,948				(22,903	)			115,171
Adjusted (loss) earnings tax (benefit) expense			(19,573	)			4,071				6,927				(9,472	)			29,682
Adjusted (loss) earnings - non-GAAP			(52,507	)			18,452				22,021				(13,431	)			85,489
Preferred stock dividends			2,228				2,229				2,228				8,913				8,913
Adjusted (loss) earnings available to common shareholders		$	(54,735	)		$	16,223			$	19,793			$	(22,344	)		$	76,576
Adjusted diluted (loss) earnings per common share		$	(2.52	)		$	0.74			$	0.89			$	(1.05	)		$	3.42
Adjusted (loss) return on average assets		(2.72		)%			0.95	%			1.11	%		(0.17		)%			1.08	%
Adjusted (loss) return on average shareholders' equity		(25.89		)%			9.23	%			11.42	%		(1.69		)%			11.10	%
Adjusted (loss) return on average tangible common equity		(41.74		)%			12.67	%			16.51	%		(4.40		)%			15.98	%
Adjusted Pre-Tax, Pre-Provision Earnings Reconciliation
		For the Three Months Ended												For the Years Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(dollars in thousands)			2024				2024				2023				2024				2023
Adjusted (loss) earnings pre tax - non-GAAP		$	(72,080	)		$	22,523			$	28,948			$	(22,903	)		$	115,171
Provision for credit losses			93,540				5,000				6,950				129,340				21,132
Adjusted pre-tax, pre-provision earnings - non-GAAP		$	21,460			$	27,523			$	35,898			$	106,437			$	136,303
Adjusted pre-tax, pre-provision return on average assets			1.11	%			1.42	%			1.80	%			1.37	%			1.72	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited)
Efficiency Ratio Reconciliation
		For the Three Months Ended												For the Years Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(dollars in thousands)			2024				2024				2023				2024				2023
Noninterest expense - GAAP		$	54,183			$	46,733			$	44,488			$	193,262			$	173,902
Net interest income - GAAP		$	56,035			$	54,950			$	58,077			$	221,957			$	236,017
Effect of tax-exempt income			221				205				183				810				828
Adjusted net interest income			56,256				55,155				58,260				222,767				236,845
Noninterest income - GAAP			19,561				19,339				20,513				77,743				66,590
Loss on sales of investment securities, net			34				44				2,894				230				9,372
(Gain) on sale of Visa B shares			—				—				(1,098	)			—				(1,098	)
Loss (gain) on repurchase of subordinated debt			13				(77	)			—				(231	)			(676	)
Adjusted noninterest income			19,608				19,306				22,309				77,742				74,188
Adjusted total revenue		$	75,864			$	74,461			$	80,569			$	300,509			$	311,033
Efficiency ratio			71.42	%			62.76	%			55.22	%			64.31	%			55.91	%
Return on Average Tangible Common Equity
		For the Three Months Ended												For the Years Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(dollars in thousands)			2024				2024				2023				2024				2023
Net (loss) income available to common shareholders		$	(54,769	)		$	16,247			$	18,483			$	(22,343	)		$	66,547
Average total shareholders' equity—GAAP		$	806,707			$	795,322			$	764,790			$	793,984			$	770,095
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			(12,551	)			(13,506	)			(16,644	)			(14,011	)			(18,376	)
Average tangible common equity		$	521,704			$	509,364			$	475,694			$	507,521			$	479,267
(Loss) return on average tangible common equity		(41.76)        %					12.69	%			15.41	%		(4.40)        %					13.89	%

MIDLAND STATES BANCORP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued)
Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share
		As of
(dollars in thousands, except per share data)		December 31,2024				September 30,2024				June 30, 2024				March 31, 2024				December 31, 2023
Shareholders' Equity to Tangible Common Equity
Total shareholders' equity—GAAP		$	736,113			$	818,259			$	785,772			$	791,006			$	791,853
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			(12,100	)			(13,052	)			(14,003	)			(15,019	)			(16,108	)
Tangible common equity			451,561				532,755				499,317				503,535				503,293
Less: Accumulated other comprehensive loss (AOCI)			(81,960	)			(60,640	)			(82,581	)			(81,419	)			(76,753	)
Tangible common equity excluding AOCI		$	533,521			$	593,395			$	581,898			$	584,954			$	580,046
Total Assets to Tangible Assets:
Total assets—GAAP		$	7,529,055			$	7,751,483			$	7,757,274			$	7,831,809			$	7,866,868
Adjustments:
Goodwill			(161,904	)			(161,904	)			(161,904	)			(161,904	)			(161,904	)
Other intangible assets, net			(12,100	)			(13,052	)			(14,003	)			(15,019	)			(16,108	)
Tangible assets		$	7,355,051			$	7,576,527			$	7,581,367			$	7,654,886			$	7,688,856
Common Shares Outstanding			21,494,485				21,393,905				21,377,215				21,485,231				21,551,402
Tangible Common Equity to Tangible Assets			6.14	%			7.03	%			6.59	%			6.58	%			6.55	%
Tangible Book Value Per Share		$	21.01			$	24.90			$	23.36			$	23.44			$	23.35
Tangible Book Value Per Share, excluding AOCI		$	24.82			$	27.74			$	27.22			$	27.23			$	26.91