Midland States Bancorp, Inc. Announces 2025 Second Quarter Results
EFFINGHAM, Ill., July 24, 2025 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported net income available to common shareholders of $9.8 million, or $0.44 per diluted share, for the second quarter of 2025, compared to net income available to common shareholders of $23.5 million, or $1.06 per diluted share, for the second quarter of 2024.
This also compares to a net loss of $143.2 million, or $6.58 per diluted share, for the first quarter of 2025, which included impairment of goodwill of $154.0 million.
2025 Second Quarter Results
Net income available to common shareholders of $9.8 million, or $0.44 per diluted share, for the second quarter of 2025
Adjusted earnings of $9.8 million, or $0.44 per diluted share, compared to $10.8 million, or $0.49 per diluted share, in prior quarter
Pre-provision net revenue of $32.2 million, or $1.48 per diluted share, for the second quarter of 2025 compared to $27.0 million, or $1.24 per diluted share, for the first quarter of 2025
Net interest margin of 3.56%, compared to 3.49% in prior quarter
Nonperforming assets to total assets of 1.56%, compared to 2.08% in prior quarter
Total capital to risk-weighted assets of 14.50% and common equity tier 1 capital of 9.02%
Discussion of Outlook; President & Chief Executive Officer, Jeffrey G. Ludwig:
"Second quarter marked a notable step in returning Midland to a more normalized operating environment, with progress on several strategic initiatives ranging from growing our community bank to further improving our credit quality. Capital levels increased quarter-over-quarter, and we continue to target growing our common equity tier 1 capital ratio to our target of 10.0%.
During the quarter, we had limited new substandard or nonperforming loans identified, and importantly saw our non-performing assets decrease to $111 million, or 1.56% of total assets, versus $151 million, or 2.08% of total assets in the first quarter. After quarter-end, the bank successfully exited two larger non-performing relationships in July totaling $29 million, which all else equal would bring our non-performing asset ratio down another 41 basis points. Tighter underwriting standards in our equipment finance and specialty finance portfolios have already begun to meaningfully reduce our exposure to these higher-risk portfolios. In addition, we completed the previously announced sale of our GreenSky loans in April further improving our capital and liquidity.
Profitability trends were also favorable in the second quarter, with net interest margin expanding 7 basis points to 3.56%, pre-provision net revenue growing to $32.2 million, and strong contribution from our wealth management platform. We expect further improvement in profitability over the balance of 2025."
Key Points for Second Quarter and Outlook
Acceleration of Credit Clean-up; Tightened Underwriting Standards
Substandard accruing loans and nonperforming loans decreased to $58.5 million and $109.5 million at June 30, 2025, respectively. No significant new substandard or nonperforming loans were identified during the quarter.
Net charge-offs were $29.9 million for the quarter, including:
$13.9 million of charge-offs in our specialty finance portfolio, of which $10.2 million was specifically reserved for in a prior quarter
$4.7 million of fully reimbursed charge-offs related to our third party lending programs
$3.9 million of charge-offs in our equipment finance portfolio as we continue to see credit issues primarily in the trucking industry
Provision for credit losses on loans was $17.4 million for the second quarter of 2025, primarily as a result of continued trends in the equipment finance portfolio.
Allowance for credit losses on loans was $92.7 million, or 1.83% of total loans.
The table below summarizes certain information regarding the Company's loan portfolio asset quality as of June 30, 2025.
As of and for the Three Months Ended
(dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2025
2025
2024
2024
2024
Asset Quality
Loans 30-89 days past due
$
40,959
$
48,221
$
43,681
$
55,329
$
54,045
Nonperforming loans
109,512
145,690
150,907
114,556
112,124
Nonperforming assets
111,174
151,264
157,409
126,771
123,774
Substandard accruing loans
58,478
77,620
84,058
167,549
135,555
Net charge-offs
29,854
16,878
112,776
22,302
13,883
Loans 30-89 days past due to total loans
0.81
%
0.96
%
0.85
%
0.97
%
0.93
%
Nonperforming loans to total loans
2.16
%
2.90
%
2.92
%
2.00
%
1.92
%
Nonperforming assets to total assets
1.56
%
2.08
%
2.10
%
1.65
%
1.61
%
Allowance for credit losses to total loans
1.83
%
2.10
%
2.15
%
2.64
%
2.67
%
Allowance for credit losses to nonperforming loans
84.64
%
72.19
%
73.69
%
131.87
%
138.63
%
Net charge-offs to average loans
2.34
%
1.35
%
7.94
%
1.53
%
0.94
%
Solid Growth Trends in Community Bank & Wealth Management
Total loans at June 30, 2025 were $5.06 billion, an increase of $46.6 million from March 31, 2025. Key changes in the loan portfolio were as follows:
Loans originated by our Community Bank increased $58.9 million, or 1.8%, from March 31, 2025. Pipelines remain strong and we continued to add to our sales teams in the second quarter.
Non-core loans originated through third-party programs increased $212.8 million from March 31, 2025, as a result of the financing of the sale of the GreenSky portfolio.
We continue to pursue an intentional decrease in our Specialty Finance loan portfolio, as we tighten credit standards. Balances in this loan portfolio decreased $173.3 million during the quarter.
Equipment finance portfolio balances declined $51.8 million during the quarter as we continue to reduce the overall balances in this unit and tighten underwriting standards.
Total deposits were $5.95 billion at June 30, 2025, an increase of $10.5 million from March 31, 2025. The increase in deposits reflects the following:
Commercial and public fund deposits increased $70.5 million and $127.8 million, respectively, in the quarter.
Noninterest-bearing deposits decreased $16.5 million in the quarter.
Retail and servicing deposits decreased $34.7 million and $56.9 million, respectively, in the quarter.
Brokered deposits, including both money market and time deposits, decreased by $109.4 million.
Servicing deposits decreased $284.4 million in July 2025 due to the acquisition of one of our servicing customers, expected to positively impact future margin.
Wealth Management revenue totaled $7.4 million in the second quarter of 2025. Assets under administration were $4.18 billion at June 30, 2025. The Company added three new sales positions in the second quarter of 2025 and continues to experience strong pipelines.
Net Interest Margin
Net interest margin was 3.56%, up 7 basis points compared to the first quarter, and we saw a continued decline in the cost of funding. Rate cuts enacted by the Federal Reserve Bank in late 2024 continue to result in a lower cost of deposits for the Company, which fell to 2.19% in the second quarter of 2025.
The following table summarizes certain factors affecting the Company's net interest margin for the second quarter of 2025.
For the Three Months Ended
(dollars in thousands)
June 30, 2025
March 31, 2025
June 30, 2024
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
$
67,326
$
716
4.27
%
$
68,671
$
718
4.24
%
$
65,250
$
875
5.40
%
Investment securities(1)
1,367,180
17,164
5.04
1,311,887
15,517
4.80
1,098,452
12,805
4.69
Loans(1)(2)
5,123,558
79,240
6.20
5,057,394
78,118
6.26
5,915,523
92,581
6.29
Loans held for sale
44,642
377
3.39
326,348
4,563
5.67
4,910
84
6.84
Nonmarketable equity securities
38,803
694
7.17
35,614
647
7.37
44,216
963
8.76
Total interest-earning assets
6,641,509
98,191
5.93
6,799,914
99,563
5.94
7,128,351
107,308
6.05
Noninterest-earning assets
513,801
667,940
669,370
Total assets
$
7,155,310
$
7,467,854
$
7,797,721
Interest-Bearing Liabilities
Interest-bearing deposits
$
4,845,609
$
32,290
2.67
%
$
5,074,007
$
34,615
2.77
%
$
5,101,365
$
39,476
3.11
%
Short-term borrowings
60,117
573
3.82
73,767
700
3.85
30,449
308
4.07
FHLB advances & other borrowings
363,505
3,766
4.16
299,578
3,163
4.28
500,758
5,836
4.69
Subordinated debt
77,757
1,394
7.19
77,752
1,387
7.23
93,090
1,265
5.47
Trust preferred debentures
51,439
1,206
9.40
51,283
1,200
9.49
50,921
1,358
10.73
Total interest-bearing liabilities
5,398,427
39,229
2.91
5,576,387
41,065
2.99
5,776,583
48,243
3.36
Noninterest-bearing deposits
1,075,945
1,052,181
1,132,451
Other noninterest-bearing liabilities
108,819
123,613
104,841
Shareholders' equity
572,119
715,673
783,846
Total liabilities and shareholder's equity
$
7,155,310
$
7,467,854
$
7,797,721
Net Interest Margin
$
58,962
3.56
%
$
58,498
3.49
%
$
59,065
3.33
%
Cost of Deposits
2.19
%
2.29
%
2.55
%
(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 $0.3 million, $0.2 million and $0.2 million for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively.
(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
Trends in Noninterest Income and Expense
Noninterest income was $23.5 million for the second quarter of 2025, compared to $17.8 million for the first quarter of 2025. Noninterest income for the second quarter of 2025 included credit enhancement income of $3.8 million, primarily related to an increase in charge-offs in our third-party loan origination and servicing program which were fully reimbursed by our program sponsor.
Noninterest expense was $50.0 million for the second quarter of 2025, compared to $203.0 million for the first quarter of 2025, which included goodwill impairment of $154.0 million. The Company continues to experience higher levels of professional services, legal fees and other expenses related to loan collections and the restatement of our financial statements.
Second Quarter 2025 Financial Highlights and Key Performance Indicators (KPIs):
As of and for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2025
2025
2024
2024
2024
Return on average assets
0.67
%
(7.66
)%
(1.59
)%
1.05
%
1.33
%
Pre-provision net revenue to average assets(1)
1.81
%
1.47
%
1.83
%
2.21
%
2.07
%
Net interest margin
3.56
%
3.49
%
3.34
%
3.34
%
3.33
%
Efficiency ratio (1)
60.60
%
64.29
%
62.31
%
53.61
%
55.79
%
Noninterest expense to average assets
2.80
%
11.02
%
3.04
%
2.56
%
2.62
%
Net charge-offs to average loans
2.34
%
1.35
%
7.94
%
1.53
%
0.94
%
Tangible book value per share at period end (1)
$
20.68
$
20.54
$
19.83
$
22.70
$
21.07
Diluted earnings (loss) per common share
$
0.44
$
(6.58
)
$
(1.52
)
$
0.83
$
1.06
Common shares outstanding at period end
21,515,138
21,503,036
21,494,485
21,393,905
21,377,215
Trust assets under administration
$
4,181,180
$
4,101,414
$
4,153,080
$
4,268,539
$
3,996,175
(1) Non-GAAP financial measures. Refer to page 10 for a reconciliation to the comparable GAAP financial measures.
Capital
At June 30, 2025, 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 June 30, 2025
Midland States Bank
Midland States Bancorp, Inc.
Minimum Regulatory Requirements (2)
Total capital to risk-weighted assets
13.74%
14.50%
10.50%
Tier 1 capital to risk-weighted assets
12.49%
12.07%
8.50%
Common equity Tier 1 capital to risk-weighted assets
12.49%
9.02%
7.00%
Tier 1 leverage ratio
9.93%
9.59%
4.00%
Tangible common equity to tangible assets (1)
N/A
6.27%
N/A
(1) A non-GAAP financial measure. Refer to page 10 for a reconciliation to the comparable GAAP financial measure.(2) Includes the capital conservation buffer of 2.5%, as applicable.
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 June 30, 2025, the Company had total assets of approximately $7.11 billion, and its Wealth Management Group had assets under administration of approximately $4.18 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 "Pre-provision net revenue," "Pre-provision net revenue per diluted share," "Pre-provision net revenue to average assets," "Efficiency ratio," "Tangible common equity to tangible assets," and "Tangible book value per share." 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, including currently anticipated levels of noninterest income and operating expenses. 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 federal trade policy, inflation, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; 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 or (217) 342-7321Eric T. Lemke, Chief Financial Officer, at or (217) 342-7321
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
As of
June 30,
March 31,
December 31,
September 30,
June 30,
(dollars in thousands)
2025
2025
2024
2024
2024
Assets
Cash and cash equivalents
$
176,587
$
102,006
$
114,766
$
121,873
$
124,646
Investment securities
1,354,652
1,368,405
1,212,366
1,216,795
1,099,654
Loans
5,064,695
5,018,053
5,167,574
5,728,237
5,829,057
Allowance for credit losses on loans
(92,690
)
(105,176
)
(111,204
)
(151,067
)
(155,443
)
Total loans, net
4,972,005
4,912,877
5,056,370
5,577,170
5,673,614
Loans held for sale
7,899
