On this page of StockholderLetter.com we present the 3/25/2024 shareholder letter from Midland States Bancorp, Inc. — ticker symbol MSBI. Reading current and past MSBI letters to shareholders can bring important insights into the investment thesis.
ANNUAL REPORT 2023
During the past five years, our team has focused on organic growth and on operational excellence to shape the Company into a strong, efficient, customer-centric organization. The Company has built a foundation of success upon which we will continue to evolve to meet our customers future needs. Moving into 2024, new Strategic Elements will guide our team s customer-centric focus as we continually work at being a high performing bank. These new elements focus our work toward providing superior customer experience and strong shareholder value in all economic environments. The Company s 2023 Annual Report to Shareholders is available on the Company s website, and printed copies are available by request. Please contact Ms. Dacia Albin, Assistant Secretary of the Company, at 217-342-7321 or dalbin@midlandsb.com for access/delivery information.
Our Strategic Plan We continue to focus on these five initiatives: Customer Centric Culture Operational Excellence Accretive Acquisitions Revenue Diversification Enterprise-Wide Risk Management Total Assets ($ in Billions) $8 CAGR: 16% $7 $6 CA $5 s GR inc e2 PO 6I 01 6% :1 $7.9 $7.9 2022 2023 $7.4 $6.9 $6.1 $5.6 $4.4 $4 $2.9 $2.7 $3 $2 $1.6 $1.5 $1.6 $1.7 2010 2011 2012 2013 $3.2 $1.1 $1 $0 2009 2014 2015 2016 2017 2018 2019 2020 2021 Selected Acquisitions (16 in Total) Selected Acquisitions: Total Assets at Time of Acquisition (in millions) 2009: Strategic Capital Bank ($540) 2014: Love Savings/Heartland Bank ($889) 2018: Alpine Bancorp. ($1,243) 2010: AMCORE Bank ($500) 2017: Centrue Financial ($990) 2019: HomeStar Financial Group ($366) Table of Contents Our Strategic Plan ..........................1 Letter to Shareholders ..................2 Financial Highlights ........................6 Summary Financial Information .....8 Our Environmental, Social and Governance Program (ESG) ......... 15 Board of Directors ....................... 16 Management Team ...................... 17 1
Letter to Shareholders Dear Shareholders: I am pleased to report that 2023 was another strong year for the Company. We saw strong net income available to common shareholders of $66.5 million and adjusted earnings per share of $3.42 for the year. As with the past few years, the primary drivers of this performance were: Our model of customer-centric service and relationship banking; A continued focus on reducing costs and increasing operating efficiencies; and Increased use of technology across our business sectors. Since I became CEO five years ago, we have managed through a pandemic, high inflation and interest rate increases totaling 525 basis points in 15 months. We also witnessed three significant bank failures in 2023, as well as unprecedented regulatory challenges, global economic volatility and shifting consumer behaviors, all of which have tested our resilience and capability. These past few years have truly been extraordinary. Despite the uncertainty caused by events in the broader world, our Company remained steadfast. We have focused on improving customer experience, controlling expenses and investing in technology. Thanks to our team s persistence, we enter 2024 in a strong position with increased levels of capital, liquidity and reserves. We finished 2023 with a Common Equity Tier 1 capital ratio of 8.40%, up from 7.77% at the end of 2022. Our allowance for credit losses on loans totaled $68.5 million, or 1.12% of total loans, at the end of 2023, which is up from $61.1 million at the end of 2022. We also estimate that uninsured deposits totaled 19% of total deposits at the end of 2023. At the end of 2018, the Company had grown its total asset size $5.2 billion from ten years of acquisitive growth. These acquisitions helped the Company achieve the size it needed to be relevant in the market and scale to meet the needs of our customers. Since 2018, our journey has included a focus on operational efficiency. We have invested in technology, become leaner and integrated our operations after years of acquisitions. And I am proud to report that we have lowered our efficiency ratio to 55.9% in 2023, compared to 66.1% in 2018. 2 Jeffrey G. Ludwig President and Chief Executive Officer Midland States Bancorp, Inc. Adjusted Diluted Earnings Per Share $4.00 $3.65 $3.79 $3.42 $3.50 $3.00 $2.54 $2.50 $2.00 $1.50 $1.70 2019 2020 2021 2022 2023 Adjusted Diluted Earnings Per Share is a non-GAAP financial measure. See page 11 for a reconciliation of this measure to its most comparable GAAP measure.
We have also continued to grow organically during the past five Tangible Book Value Per Share years. The Company has had 46% organic loan growth and 59% $24 organic deposit growth between 2018 and 2023. This organic growth occurred as our team deepened customer relationships $21.66 $22 and continued winning new business through our customer-centric service. These efforts have strengthened our franchise, enhanced $19.31 $20 $18.64 shareholder value and built a foundation upon which our future growth will be based. Our efforts again delivered strong results $18 during 2023. Financial Results $16 In 2023, our adjusted pre-tax, pre-provision earnings were $136.3 million, remaining relatively steady year-over-year, as compared to $137.5 million for 2022. Adjusted earnings available to common shareholders was $76.6 million, or $3.42 per fully diluted share in 2023 compared to adjusted earnings of $85.9 million, or $3.79 per fully diluted share in 2022. Adjusted earnings for 2023 compared to 2022 decreased primarily due to a $9.7 million decrease in net interest income, and a $5.7 million increase in preferred stock dividends. $14 $12 2019 2020 $23.35 $20.94 2021 2022 Tangible Book Value Per Share is a non-GAAP financial measure. See page 12 for a reconciliation of this measure to its most comparable GAAP measure. Tangible book value per share on December 31, 2023 was $23.35, Common Dividends Per Share an 11.5% increase from $20.94 a share in 2022. For the 23rd consecutive year, we increased our common dividend in 2023. When taking the share repurchases and common share dividends paid in 2023 together, we distributed $44.5 million to our common shareholders while also distributing $8.9 million of dividends to preferred shareholders. Total loans decreased by $175.4 million or 2.8%, to $6.13 billion, as the Company originated loans in a more selective and deliberate approach to balance liquidity and funding costs. Our total average loan yield increased to 5.84% during 2023, as compared with 4.77% during 2022. Total deposits decreased by $55.1 million, or 0.87%, to $6.31 billion. 2023 $1.20 G CA $1.00 R: $1.07 9% $1.12 $1.16 $1.20 $0.97 $0.88 $0.80 $0.72 $0.80 $0.60 $0.53 $0.59 $0.65 $0.40 $0.20 $0.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Operating Efficiency As noted above, our focus on efficiency has yielded strong results in an inflationary environment. In 2023, our efficiency ratio Ef ciency Ratio remained steady at 55.9% as compared to 55.4% in 2022, which 70.0% reflects our team s efforts to hold expenses flat over the prior year. 67.5% Additionally, the team continues to focus on process improvements to reduce operating costs and enhance the customer experience. 65.0% Technologies such as robotic processing automation (RPA) and 61.53% 62.5% application programming interface (API) have been key to our 60.0% improvements. Our Business Units 57.5% Community Banking. Loans in our Community Banking business increased to approximately $4.2 billion, an increase of $143.1 million or 3.5% over 2022. Increases in construction and land development loans, and residential real estate loans were offset by decreases in all other loan categories. Core deposits declined to $5.9 billion, a decrease of 3.7% year-over-year. Interest rate promotions we offered on time deposit products resulted in an increase in balances of time deposits of $213.3 million during the year. 55.0% 59.42% 57.05% 55.35% 55.91% 2022 2023 52.5% 50.0% 2019 2020 2021 Efficiency ratio is a non-GAAP financial measure. See page 13 for a reconciliation of this measure to its most comparable GAAP measure. 3
 • shareholder letter icon 3/25/2024 Letter Continued (Full PDF)
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MSBI 3/25/2024 Shareholder/Stockholder Letter Transcript:

ANNUAL
REPORT
2023

During the past five years, our team has focused
on organic growth and on operational excellence
to shape the Company into a strong, efficient,
customer-centric organization. The Company has
built a foundation of success upon which we will
continue to evolve to meet our customers    future
needs. Moving into 2024, new Strategic Elements
will guide our team   s customer-centric focus as
we continually work at being a high performing
bank. These new elements focus our work toward
providing superior customer experience and strong
shareholder value in all economic environments.
The Company   s 2023 Annual Report to Shareholders is available on the Company   s website, and
printed copies are available by request. Please contact Ms. Dacia Albin, Assistant Secretary of the
Company, at 217-342-7321 or dalbin@midlandsb.com for access/delivery information.

Our Strategic Plan
We continue to focus on these five initiatives:
    Customer Centric Culture
    Operational Excellence
    Accretive Acquisitions
    Revenue Diversification
    Enterprise-Wide Risk Management
Total Assets
($ in Billions)
$8
CAGR: 16%
$7
$6
CA
$5
s
GR
inc
e2
PO
6I
01
6%
:1
$7.9
$7.9
2022
2023
$7.4
$6.9
$6.1
$5.6
$4.4
$4
$2.9
$2.7
$3
$2
$1.6
$1.5
$1.6
$1.7
2010
2011
2012
2013
$3.2
$1.1
$1
$0
2009
2014
2015
2016
2017
2018
2019
2020
2021
Selected Acquisitions (16 in Total)
Selected Acquisitions: Total Assets at Time of Acquisition (in millions)
2009: Strategic Capital Bank ($540)
2014: Love Savings/Heartland Bank ($889)
2018: Alpine Bancorp. ($1,243)
2010: AMCORE Bank ($500)
2017: Centrue Financial ($990)
2019: HomeStar Financial Group ($366)
Table of Contents
Our Strategic Plan ..........................1
Letter to Shareholders ..................2
Financial Highlights ........................6
Summary Financial Information .....8
Our Environmental, Social and
Governance Program (ESG) ......... 15
Board of Directors ....................... 16
Management Team ...................... 17
1

Letter to
Shareholders
Dear Shareholders:
I am pleased to report that 2023 was another strong year for
the Company. We saw strong net income available to common
shareholders of $66.5 million and adjusted earnings per share of
$3.42 for the year. As with the past few years, the primary drivers
of this performance were:

Our model of customer-centric service and
relationship banking;

A continued focus on reducing costs and increasing
operating efficiencies; and

Increased use of technology across our business sectors.
Since I became CEO five years ago, we have managed through a
pandemic, high inflation and interest rate increases totaling 525
basis points in 15 months. We also witnessed three significant
bank failures in 2023, as well as unprecedented regulatory
challenges, global economic volatility and shifting consumer
behaviors, all of which have tested our resilience and capability.
These past few years have truly been extraordinary. Despite the
uncertainty caused by events in the broader world, our Company
remained steadfast. We have focused on improving customer
experience, controlling expenses and investing in technology.
Thanks to our team   s persistence, we enter 2024 in a strong
position with increased levels of capital, liquidity and reserves.
We finished 2023 with a Common Equity Tier 1 capital ratio of
8.40%, up from 7.77% at the end of 2022. Our allowance for
credit losses on loans totaled $68.5 million, or 1.12% of total
loans, at the end of 2023, which is up from $61.1 million at the
end of 2022. We also estimate that uninsured deposits totaled
19% of total deposits at the end of 2023.
At the end of 2018, the Company had grown its total asset size $5.2
billion from ten years of acquisitive growth. These acquisitions
helped the Company achieve the size it needed to be relevant in
the market and scale to meet the needs of our customers. Since
2018, our journey has included a focus on operational efficiency.
We have invested in technology, become leaner and integrated
our operations after years of acquisitions. And I am proud to
report that we have lowered our efficiency ratio to 55.9% in 2023,
compared to 66.1% in 2018.
2
Jeffrey G. Ludwig
President and
Chief Executive Officer
Midland States Bancorp, Inc.
Adjusted Diluted Earnings Per Share
$4.00
$3.65
$3.79
$3.42
$3.50
$3.00
$2.54
$2.50
$2.00
$1.50
$1.70
2019
2020
2021
2022
2023
Adjusted Diluted Earnings Per Share is a non-GAAP financial measure.
See page 11 for a reconciliation of this measure to its most comparable
GAAP measure.

We have also continued to grow organically during the past five Tangible Book Value Per Share
years. The Company has had 46% organic loan growth and 59%
$24
organic deposit growth between 2018 and 2023. This organic
growth occurred as our team deepened customer relationships
$21.66
$22
and continued winning new business through our customer-centric
service. These efforts have strengthened our franchise, enhanced
$19.31
$20
$18.64
shareholder value and built a foundation upon which our future
growth will be based. Our efforts again delivered strong results
$18
during 2023.
Financial Results
$16
In 2023, our adjusted pre-tax, pre-provision earnings were $136.3
million, remaining relatively steady year-over-year, as compared to
$137.5 million for 2022. Adjusted earnings available to common
shareholders was $76.6 million, or $3.42 per fully diluted share in
2023 compared to adjusted earnings of $85.9 million, or $3.79 per
fully diluted share in 2022. Adjusted earnings for 2023 compared
to 2022 decreased primarily due to a $9.7 million decrease in net
interest income, and a $5.7 million increase in preferred stock
dividends.
$14
$12
2019
2020
$23.35
$20.94
2021
2022
Tangible Book Value Per Share is a non-GAAP financial measure. See
page 12 for a reconciliation of this measure to its most comparable
GAAP measure.
Tangible book value per share on December 31, 2023 was $23.35, Common Dividends Per Share
an 11.5% increase from $20.94 a share in 2022.
For the 23rd consecutive year, we increased our common dividend
in 2023. When taking the share repurchases and common share
dividends paid in 2023 together, we distributed $44.5 million to
our common shareholders while also distributing $8.9 million of
dividends to preferred shareholders.
Total loans decreased by $175.4 million or 2.8%, to $6.13 billion, as
the Company originated loans in a more selective and deliberate
approach to balance liquidity and funding costs. Our total average
loan yield increased to 5.84% during 2023, as compared with 4.77%
during 2022. Total deposits decreased by $55.1 million, or 0.87%,
to $6.31 billion.
2023
$1.20
G
CA
$1.00
R:
$1.07
9%
$1.12
$1.16
$1.20
$0.97
$0.88
$0.80
$0.72
$0.80
$0.60 $0.53
$0.59
$0.65
$0.40
$0.20
$0.00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Operating Efficiency
As noted above, our focus on efficiency has yielded strong
results in an inflationary environment. In 2023, our efficiency ratio Ef   ciency Ratio
remained steady at 55.9% as compared to 55.4% in 2022, which
70.0%
reflects our team   s efforts to hold expenses flat over the prior year.
67.5%
Additionally, the team continues to focus on process improvements
to reduce operating costs and enhance the customer experience.
65.0%
Technologies such as robotic processing automation (RPA) and
61.53%
62.5%
application programming interface (API) have been key to our
60.0%
improvements.
Our Business Units
57.5%
Community Banking. Loans in our Community Banking business
increased to approximately $4.2 billion, an increase of $143.1
million or 3.5% over 2022. Increases in construction and land
development loans, and residential real estate loans were offset
by decreases in all other loan categories. Core deposits declined
to $5.9 billion, a decrease of 3.7% year-over-year. Interest rate
promotions we offered on time deposit products resulted in an
increase in balances of time deposits of $213.3 million during
the year.
55.0%
59.42%
57.05%
55.35%
55.91%
2022
2023
52.5%
50.0%
2019
2020
2021
Efficiency ratio is a non-GAAP financial measure. See page 13
for a reconciliation of this measure to its most comparable GAAP
measure.
3


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