Midland States Bancorp, Inc. Announces 2025 Fourth Quarter Results
EFFINGHAM, Ill., Jan. 22, 2026 (GLOBE NEWSWIRE) -- Midland States Bancorp, Inc. (NASDAQ:MSBI) (the "Company") today reported a net loss available to common shareholders of $5.1 million, or $0.24 per diluted share, for the fourth quarter of 2025, compared to net income available to common shareholders of $5.3 million, or $0.24 per diluted share, for the third quarter of 2025. This also compares to a net loss of $33.0 million, or $1.52 per diluted share, for the fourth quarter of 2024.
Financial results for the fourth quarter of 2025 included the previously announced loss on the sale of substantially all of the Company's equipment finance portfolio of $21.4 million, in addition to a $1.6 million loss on the sale of a small consumer loan portfolio. Excluding these transactions, adjusted earnings available to common shareholders were $11.9 million, or $0.53 per diluted share, for the fourth quarter of 2025.
The Company also recognized additional credit enhancement income of $6.6 million during the fourth quarter of 2025 resulting from contractual changes in its third-party lending and servicing arrangements, which was partially offset by $1.7 million in additional FDIC assessments related to prior years' amended call reports due to the restatements of prior years' financial statements.
2025 Fourth Quarter Results
Net loss available to common shareholders of $5.1 million, or $0.24 per diluted share; Adjusted earnings available to common shareholders of $11.9 million, or $0.53 per diluted share
Sale of substantially all of the equipment finance portfolio for $21.4 million loss
Adjusted pre-provision net revenue of $31.4 million, or $1.44 per diluted share, compared to $31.3 million, or $1.43 per diluted share, for the third quarter of 2025
Net interest margin of 3.74% compared to 3.79% in the prior quarter, which included interest recoveries of $1.6 million
Ratio of nonperforming assets to total assets of 1.02%, consistent with the prior quarter
Total capital to risk-weighted assets of 15.16% and common equity tier 1 capital of 9.89%
Provision for credit losses on loans was $11.8 million for the fourth quarter of 2025, compared to $20.5 million for the third quarter of 2025
Discussion of Outlook; President & Chief Executive Officer, Jeffrey G. Ludwig:
"Entering 2025, improving credit quality was our number one priority and throughout the year, we took significant steps to reduce our risk in the loan portfolio and strengthen our balance sheet. We have significantly enhanced our credit talent, culture, and underwriting standards in 2025, and while non-performing assets remain above our 0.75% target, we believe the actions taken in 2025 position us well for continued improvement. We accomplished this without raising any additional capital while also continuing to invest in our core businesses.
"Our capital position improved, with the common equity tier 1 capital ratio rising to 9.89% and approaching our 10.0% target. With the Company's shares trading near tangible book value during the quarter, we repurchased $9.6 million of common stock.
"Revenue trends remained positive in the fourth quarter, highlighted by a strong net interest margin and roughly 6.5% annualized loan growth in our Community Bank. Also, our wealth management business posted another record quarter. We continue to invest in these businesses and expect solid momentum to continue in 2026."
Key Points for Fourth Quarter and Outlook
Sale of substantially all of the equipment finance portfolio; Continuation of credit clean-up
As previously announced, the Company sold substantially all of its equipment finance loan and lease portfolio during the fourth quarter of 2025, resulting in a loss on sale of $21.4 million.
Nonperforming loans and loans 30-89 days past due decreased to $65.5 million and $17.1 million, respectively, at December 31, 2025.
Net charge-offs, excluding the impact of $29.8 million of the allowance for credit losses which were charged off as part of the equipment finance portfolio sale, were $13.7 million for the fourth quarter of 2025, which included:
$5.3 million of net charge-offs in the retained portion of our equipment finance portfolio
$3.7 million of net charge-offs on non-performing commercial real estate loans included in our Community Bank portfolio due to the receipt of updated appraisals
$2.0 million of fully reimbursed net charge-offs related to our third-party lending portfolio
$1.1 million of charge-offs related to a commercial real estate loan that moved to non-accrual during the quarter.
Provision for credit losses on loans was $11.8 million for the fourth quarter of 2025. The provision for credit losses on loans resulted from the replenishment of reserve balances following higher net charge-offs during the quarter and a modest reserve build related to growth in the Community Bank portfolio.
Allowance for credit losses on loans was $69.2 million, or 1.59% of total loans at December 31, 2025 compared to an allowance of $100.9 million at September 30, 2025, or 2.07% of total loans. The decrease was primarily driven by the reduction in the allowance for credit losses associated with the portion of the equipment finance portfolio that was sold during the quarter.
The table below summarizes certain information regarding the Company's loan portfolio asset quality for the periods presented.
As of and for the Three Months Ended
(dollars in thousands)
December 31,
September 30,
June 30,
March 31,
December 31,
2025
2025
2025
2025
2024
Asset Quality
Loans 30-89 days past due
$
17,079
$
26,019
$
40,959
$
48,221
$
43,681
Nonperforming loans
65,483
68,703
80,112
145,690
150,907
Nonperforming assets
66,089
70,369
81,775
151,264
157,409
Substandard accruing loans
76,000
78,901
58,478
77,620
84,058
Net charge-offs
43,492
12,309
29,854
16,878
112,776
Loans 30-89 days past due to total loans
0.39
%
0.53
%
0.81
%
0.96
%
0.85
%
Nonperforming loans to total loans
1.50
%
1.41
%
1.59
%
2.90
%
2.92
%
Nonperforming assets to total assets
1.02
%
1.02
%
1.15
%
2.08
%
2.10
%
Allowance for credit losses to total loans
1.59
%
2.07
%
1.84
%
2.10
%
2.15
%
Allowance for credit losses to nonperforming loans
105.71
%
146.84
%
115.70
%
72.19
%
73.69
%
Net charge-offs to average loans (annualized)
3.69
%
0.99
%
2.34
%
1.35
%
7.94
%
Solid Growth Trends in Community Bank & Wealth Management
Total loans at December 31, 2025 were $4.35 billion, a decrease of $515.6 million from September 30, 2025. Key changes in the loan portfolio were as follows:
Community Bank balances increased $53.7 million, or 1.6%, from September 30, 2025. We originated $180 million of new loans during the fourth quarter of 2025, which benefited from growth in commercial clients with full banking relationships, increasing from $129 million during the third quarter of 2025. This growth was partially offset by payoffs of $161.2 million, increasing from $146.0 million during the third quarter of 2025. Pipelines continued to remain strong through the end of the fourth quarter of 2025 and to begin 2026.
Equipment finance balances declined $578.1 million compared to balances at September 30, 2025, primarily due to the sale of substantially all of the portfolio during the quarter.
Non-core loans decreased $17.2 million to $295.8 million from September 30, 2025.
Total deposits were $5.42 billion at December 31, 2025, a decrease of $180.4 million from September 30, 2025. The decrease in deposits reflected the following:
Community Bank deposits decreased $154.9 million from balances as of September 30, 2025, driven by seasonality in public funds and ordinary fluctuations in liquidity related to certain of our larger deposit customer relationships.
Brokered deposits decreased $24.0 million from balances as of September 30, 2025. The reduction in higher-cost deposit funding improved our net interest margin by 4 basis points during the quarter.
Wealth Management revenue totaled $8.3 million in the fourth quarter of 2025. Assets under administration were $4.48 billion at December 31, 2025, an increase from $4.36 billion at September 30, 2025. The Company continued to experience strong pipelines through the end of the fourth quarter of 2025.
Net Interest Margin
Net interest margin was 3.74%, down 5 basis points compared to the third quarter of 2025. The third quarter of 2025 included a $1.6 million interest recovery due to the payoff of a nonaccrual loan. Excluding this, the net interest margin increased 5 basis points in the fourth quarter of 2025. Our cost of funding continues to decline, as rate cuts enacted by the Federal Reserve beginning in late 2024 continue to result in a lower cost of deposits for the Company, which fell by 17 basis points to 1.95% in the fourth quarter of 2025. The rate cuts in December 2025 had a limited effect on the fourth quarter's results but should result in additional improvement in funding costs into 2026.
The following table presents the Company's net interest margin for the fourth quarter of 2025 compared to the third quarter of 2025 and the fourth quarter of 2024.
For the Three Months Ended
(dollars in thousands)
December 31, 2025
September 30, 2025
December 31, 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
$
81,080
$
802
3.92
%
$
78,567
$
849
4.29
%
$
96,676
$
1,101
4.53
%
Investment securities(1)
1,457,778
16,807
4.57
1,338,997
15,979
4.73
1,213,248
14,417
4.73
Loans(1)(2)
4,671,538
73,889
6.28
4,947,675
81,012
6.50
5,652,586
88,412
6.22
Loans held for sale
11,035
145
5.21
9,268
147
6.29
12,854
129
4.00
Nonmarketable equity securities
36,053
673
7.41
38,559
715
7.36
35,171
632
7.15
Total interest-earning assets
6,257,484
92,316
5.85
6,413,066
98,702
6.11
7,010,535
104,691
5.94
Noninterest-earning assets
486,216
498,875
669,300
Total assets
$
6,743,700
$
6,911,941
$
7,679,835
Interest-Bearing Liabilities
Interest-bearing deposits
$
4,501,366
$
27,147
2.39
%
$
4,644,455
$
30,219
2.58
%
$
5,241,702
$
40,016
3.04
%
Short-term borrowings
110,069
1,035
3.73
54,839
499
3.61
31,853
214
2.68
FHLB advances & other borrowings
359,380
3,648
4.03
386,772
4,044
4.15
284,033
2,880
4.03
Subordinated debt
27,017
380
5.58
77,210
1,393
7.16
80,410
1,498
7.41
Trust preferred debentures
51,771
1,183
9.07
51,602
1,221
9.39
51,132
1,292
10.05
Total interest-bearing liabilities
5,049,603
33,393
2.62
5,214,878
37,376
2.84
5,689,130
45,900
3.21
Noninterest-bearing deposits
1,015,629
1,020,196
1,066,520
Other noninterest-bearing liabilities
95,770
100,436
117,478
Shareholders' equity
582,698
576,431
806,707
Total liabilities and shareholder's equity
$
6,743,700
$
6,911,941
$
7,679,835
Net Interest Margin
$
58,923
3.74
%
$
61,326
3.79
%
$
58,791
3.34
%
Cost of Deposits
1.95
%
2.12
%
2.52
%
(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, 2025, September 30, 2025 and December 31, 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 $26.9 million for the fourth quarter of 2025 compared to $20.0 million for the third quarter of 2025. Noninterest income for the fourth quarter of 2025 included $6.6 million of additional credit enhancement income driven by contractual changes in our third-party lending and servicing arrangements.
Noninterest expense was $77.2 million for the fourth quarter of 2025 compared to $49.8 million of noninterest expense for the third quarter of 2025. Noninterest expense for the fourth quarter of 2025 included $23.0 million of losses on the sale of loans (of which $21.4 million related to the equipment finance portfolio sale) and $1.7 million in additional FDIC assessments related to prior years' amended call reports due to the restatements of prior years' financial statements.
Income tax benefit was $0.4 million for the fourth quarter of 2025, compared to income tax expense of $3.8 million for the third quarter of 2025 and income tax benefit of $8.2 million for the fourth quarter of 2024. The resulting effective tax rates were 11.1%, 33.2% and 21.0%, respectively. The effective tax rate for the fourth quarter of 2025 reflected the impact of the loss on the sale of substantially all of our equipment finance portfolio.
Fourth Quarter 2025 Financial Highlights and Key Performance Indicators
As of and for the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
2025
2025
2025
2025
2024
Return on average assets (annualized)
(0.17)
%
0.43
%
0.67
%
(7.66)
%
(1.59)
%
Adjusted pre-provision net revenue to average assets(1)
1.85
%
1.80
%
1.81
%
1.47
%
1.83
%
Net interest margin (annualized)
3.74
%
3.79
%
3.56
%
3.49
%
3.34
%
Efficiency ratio(1)
63.11
%
61.25
%
60.60
%
64.29
%
62.31
%
Noninterest expense to average assets
4.54
%
2.86
%
2.80
%
11.02
%
3.04
%
Net charge-offs to average loans (annualized)
3.69
%
0.99
%
2.34
%
1.35
%
7.94
%
Tangible book value per share at period end(1)
$
20.70
$
21.16
$
20.68
$
20.54
$
19.83
Diluted earnings (loss) per common share
$
(0.24
)
$
0.24
$
0.44
$
(6.58
)
$
(1.52
)
Common shares outstanding at period end
21,169,854
21,543,557
21,515,138
21,503,036
21,494,485
Trust assets under administration
$
4,478,999
$
4,363,756
$
4,181,180
$
4,101,414
$
4,153,080
(1)
Non-GAAP financial measures. Refer to pages 11-12 for a reconciliation to the comparable GAAP financial measures.
Capital
As previously announced, on November 3, 2025, the Company's board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of its common stock through November 2, 2026. During the fourth quarter of 2025, the Company repurchased $9.6 million of its common stock (457,222 shares of its common stock at a weighted average price of $20.96), resulting in approximately $15 million in remaining repurchase authority under the program.
The Company and Midland States Bank 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, 2025
Midland States Bank
Midland States Bancorp, Inc.
Minimum Regulatory Requirements(2)
Total capital to risk-weighted assets
14.27%
15.16%
10.50%
Tier 1 capital to risk-weighted assets
13.02%
13.37%
8.50%
Common equity Tier 1 capital to risk-weighted assets
13.02%
9.89%
7.00%
Tier 1 leverage ratio
9.63%
9.90%
4.00%
Tangible common equity to tangible assets(1)
N/A
6.75%
N/A
(1)
A non-GAAP financial measure. Refer to pages 11-12 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 December 31, 2025, the Company had total assets of approximately $6.51 billion, and its Wealth Management Group had assets under administration of approximately $4.48 billion. The Company provides a full range of commercial and consumer banking products and services, 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 pre-provision net revenue," "Adjusted pre-provision net revenue per diluted share," "Adjusted pre-provision net revenue to average assets," "Adjusted earnings (loss)," "Adjusted earnings (loss) available to common shareholders," "Adjusted diluted earnings (loss) per common share," "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," "should," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," "outlook," "trends," 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
A PDF accompanying this announcement is available at: http://ml.globenewswire.com/Resource/Download/702332a6-12ec-467f-885d-49be38ecac58
MIDLAND STATES BANCORP, INC.
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
As of
December 31,
September 30,
June 30,
March 31,
December 31,
(dollars in thousands)
2025
2025
2025
2025
2024
Assets
Cash and cash equivalents
$
127,811
$
166,147
$
176,587
$
102,006
$
114,766
Investment securities
1,524,943
1,383,121
1,354,652
1,368,405
1,212,366
Loans
4,352,004
4,867,587
5,035,295
5,018,053
5,167,574
Allowance for credit losses on loans
(69,219
)
(100,886
)
(92,690
)
(105,176
)
(111,204
)
Total loans, net
4,282,785
4,766,701
4,942,605
4,912,877
5,056,370
Loans held for sale
7,781
7,535
37,299
287,821
344,947
Premises and equipment, net
