 Summary Net income of 12.6 million, or 0.53 diluted earnings per share Total loans increased 463.2 million, or 10.6, from the end of the prior quarter Total deposits increased 292.5 million, or 6.3, from the end of the prior quarter Efficiency ratio of 58.5 Allowance for credit losses strengthened to 0.97 of total loans 276.0 million in Paycheck Protection Program loans as of June 30, 2020EFFINGHAM, Ill., July 23, 2020 GLOBE NEWSWIRE -- Midland States Bancorp, Inc. Nasdaq: MSBI the Company today reported net income of 12.6 million, or 0.53 diluted earnings per share, for the second quarter of 2020. This compares to net income of 1.5 million, or 0.06 diluted earnings per share, for the first quarter of 2020, which was impacted by an 8.5 million impairment on commercial mortgage servicing rights MSR and 1.0 million in integration and acquisition expenses, and net income of 16.4 million, or 0.67 diluted earnings per share, for the second quarter of 2019.Jeffrey G. Ludwig, President and Chief Executive Officer of the Company, said, Despite the ongoing impact of the COVID-19 pandemic, we saw a number of positive trends in the quarter including significant balance sheet growth, higher revenue, and lower expense levels, which combined to produce a strong quarter of earnings and an increase in our tangible book value per share.While a great deal of uncertainty remains regarding the duration of the pandemic, we are seeing some encouraging signs across our markets and customers. Overall asset quality remained relatively stable during the second quarter while requests for loan deferrals have slowed considerably in June and July. Approximately 60 to 65 of the loans we granted deferrals to in April and May are expected to resume making their scheduled payments once their deferral period ends. Our participation in the Small Business Administrations Paycheck Protection Program PPP has continued to be a valuable source of support to our communities. Through the end of June, we had more than 2,300 applications approved by the SBA totaling 276.0 million in loans for our customers, which will help support more than 28,000 employees in our markets.We continue to increase our allowance for credit losses and maintain strong capital and liquidity positions. We believe our strong balance sheet will enable us to continue supporting our clients through the duration of this crisis, while we focus on building upon the positive trends we are seeing in revenue generation and operating efficiencies, said Mr. Ludwig.Factors Affecting ComparabilityThe Company acquired HomeStar Financial Group, Inc. HomeStar in July 2019, with the core system conversion completed in October 2019. The financial position and results of operations of HomeStar prior to its acquisition date are not included in the Companys financial results. In addition, effective January 1, 2020, the Company adopted the new current expected credit loss CECL accounting standard, which replaces the incurred loss methodology with an estimated life of loan credit loss methodology.Adjusted Earnings Financial results for the second quarter of 2020 were impacted by a 0.4 million loss on residential mortgage servicing rights held-for-sale and 0.1 million in integration and acquisition expenses. Excluding these amounts and certain income, adjusted earnings were 12.9 million, or 0.55 diluted earnings per share, for the second quarter of 2020. Financial results for the first quarter of 2020 were impacted by 1.0 million in integration and acquisition expenses, a 0.5 million loss on residential mortgage servicing rights held-for-sale, and a 0.2 million loss on the repurchase of subordinated debt. Excluding these amounts and certain income, adjusted earnings were 2.8 million, or 0.11 diluted earnings per share, for the first quarter of 2020. A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States GAAP is provided in the financial tables at the end of this press release.Net Interest MarginNet interest margin for the second quarter of 2020 was 3.32, compared to 3.48 for the first quarter of 2020. The Companys net interest margin benefits from accretion income on purchased loan portfolios, which contributed 12 and 16 basis points to net interest margin in the second quarter of 2020 and first quarter of 2020, respectively. Excluding the impact of accretion income, net interest margin decreased 12 basis points from the first quarter of 2020, which was primarily attributable to excess liquidity invested in lower-yielding earning assets and the addition of low-yielding loans originated through the PPP program.Relative to the second quarter of 2019, net interest margin decreased from 3.76. Accretion income on purchased loan portfolios contributed 25 basis points to net interest margin in the second quarter of 2019. Excluding the impact of accretion income, net interest margin decreased 31 basis points compared to the second quarter of 2019, primarily due to the impact of new subordinated debt issued in September 2019 and a decline in the yield on earning assets. Net Interest IncomeNet interest income for the second quarter of 2020 was 49.0 million, an increase of 5.0 from 46.7 million for the first quarter of 2020. Excluding accretion income, net interest income increased 2.8 million from the prior quarter. Accretion income associated with purchased loan portfolios totaled 1.8 million for the second quarter of 2020, compared with 2.2 million for the first quarter of 2020. Relative to the second quarter of 2019, net interest income increased 2.9 million, or 6.3. Accretion income for the second quarter of 2019 was 3.4 million. Excluding the impact of accretion income, net interest income increased primarily due to the acquisition of HomeStars loans and securities and organic loan growth.Noninterest IncomeNoninterest income for the second quarter of 2020 was 19.4 million, an increase of 125.6 from 8.6 million for the first quarter of 2020, which included an 8.5 million impairment on commercial MSRs. Excluding the impairment, the increase was primarily attributable to higher commercial FHA and residential mortgage banking revenue.Relative to the second quarter of 2019, noninterest income decreased 1.0 from 19.6 million. The decrease was primarily attributable to lower commercial FHA revenue and service charges on deposit accounts, partially offset by higher residential mortgage banking revenue.Wealth management revenue for the second quarter of 2020 was 5.7 million, unchanged from the first quarter of 2020. Compared to the second quarter of 2019, wealth management revenue increased 3.5.Commercial FHA revenue for the second quarter of 2020 was 3.4 million, compared to 1.3 million in the first quarter of 2020. During the second quarter of 2020, the Company recorded a 0.1 million commercial MSR impairment, compared to a 8.5 million impairment recorded in the first quarter of 2020. The Company originated 134.8 million in rate lock commitments during the second quarter of 2020, compared to 13.3 million in the prior quarter. Compared to the second quarter of 2019, commercial FHA revenue decreased 0.9 million.Noninterest ExpenseNoninterest expense for the second quarter of 2020 was 40.8 million, which included a 0.4 million loss on residential MSRs held for sale and 0.1 million in integration and acquisition expenses, compared with 42.7 million for the first quarter of 2020, which included 1.0 million in integration and acquisition expenses, a 0.5 million loss on residential MSRs held for sale, and a 0.2 million loss on the repurchase of subordinated debt. Excluding losses on residential MSRs held for sale, integration and acquisition expenses, and the loss on the repurchase of subordinated debt, the 0.6 million decrease in noninterest expense primarily reflects lower salaries and employee benefits expense resulting from the staffing level adjustments made during the first quarter of 2020.Relative to the second quarter of 2019, noninterest expense increased 1.5 from 40.2 million, which included 0.3 million in integration and acquisition expenses and a 0.5 million gain on residential MSRs held for sale. Excluding integration and acquisition expenses and gainslosses on MSRs held for sale, noninterest expense was essentially unchanged from the prior year period.Loan PortfolioTotal loans outstanding were 4.84 billion at June 30, 2020, compared with 4.38 billion at March 31, 2020 and 4.07 billion at June 30, 2019. The increase in total loans from March 31, 2020 was primarily attributable to loans originated under the PPP program and an increase in consumer loans and equipment finance loans and leases.Equipment finance balances increased 78.2 million from March 31, 2020, which are booked within the commercial loans and leases portfolio, reflecting managements efforts to grow the equipment finance business. The increase in total loans from June 30, 2019 was primarily attributable to the addition of HomeStars loan portfolio, the growth in equipment finance balances, and loans originated under the PPP program.DepositsTotal deposits were 4.94 billion at June 30, 2020, compared with 4.65 billion at March 31, 2020, and 4.01 billion at June 30, 2019. The increase in total deposits from both prior periods was attributable to an increase in core deposits, primarily from commercial customers, partially driven by inflows of PPP-related funds, while the addition of HomeStars deposits also contributed to the increase from June 30, 2019. Asset QualityNonperforming loans totaled 60.5 million, or 1.25 of total loans, at June 30, 2020, compared with 58.2 million, or 1. 