Loading...
•
Sep 30
Midland States Q3 2025 Earnings Report
Midland States Bancorp, Inc. announced its third quarter 2025 results, reporting a decrease in net income and diluted EPS compared to the previous quarter and the same period last year, primarily due to increased provision for credit losses in its equipment finance portfolio.
Key Takeaways
Midland States Bancorp, Inc. reported a net income of $5.3 million, or $0.24 per diluted share, for the third quarter of 2025. This represents a significant decline from $9.8 million, or $0.44 per diluted share, in the second quarter of 2025, and $18.2 million, or $0.83 per diluted share, in the third quarter of 2024. The decrease was largely attributed to a $15 million provision for credit losses in the equipment finance portfolio, reflecting increased loss given default assumptions. Despite the financial setback, the company made progress on strategic initiatives, including reducing nonperforming assets and improving its capital position, while also seeing positive revenue trends from an expanded net interest margin and strong wealth management performance.
Net income available to common shareholders decreased to $5.3 million, or $0.24 per diluted share, in Q3 2025, down from $9.8 million in Q2 2025 and $18.2 million in Q3 2024.
Provision for credit losses on loans increased to $20.5 million, primarily due to higher loss given default assumptions in the equipment finance portfolio.
Nonperforming assets decreased to $70.0 million, or 1.02% of total assets, a significant decline from 2.10% at December 31, 2024.
Wealth Management revenue reached a record $8.0 million, and net interest margin expanded to 3.79%, bolstered by a decline in funding costs.
Midland States
Midland States
Midland States Revenue by Segment
Revenue by Segment
Wealth Management Revenue
CapyFin.comService Charges on Deposit Accounts Revenue
CapyFin.comInterchange Revenue
CapyFin.comResidential Mortgage Banking Revenue
CapyFin.comIncome on Company-Owned Life Insurance Revenue
CapyFin.comOther Income Revenue
CapyFin.com Forward Guidance
Midland States Bancorp, Inc. is focused on improving credit quality, reducing exposure to higher-risk asset classes, and strengthening its capital position. The company anticipates further improvement in funding costs due to recent Federal Reserve rate cuts and expects continued strong performance from its wealth management platform and community bank deposits.
Positive Outlook
- Nonperforming assets decreased significantly, indicating improved credit quality.
- Common equity tier 1 capital ratio is on track to reach the 10.0% target.
- Net interest margin expanded due to declining cost of funding, with further improvement expected from recent rate cuts.
- Wealth Management platform posted a record quarter with strong revenue contribution and pipeline.
- Community Bank experienced solid deposit growth, particularly in commercial deposits.
Challenges Ahead
- Disappointing financial results for the quarter, primarily due to increased provision for credit losses.
- Ceased equipment finance production, indicating a reduction in a previous revenue stream.
- Net charge-offs were $12.3 million, with significant portions from equipment finance and specialty finance portfolios.
- Substandard accruing loans rose due to two specific relationships.
- Total loans decreased by $167.7 million, reflecting intentional reductions in specialty finance and equipment finance portfolios, and large payoffs in the Community Bank.