Highlights

  • Net interest margin expands to 3.79% from 3.56% in prior quarter.
  • Nonperforming assets decline to 1.02% of total assets from 1.15%.
  • Ceased equipment finance production to reduce exposure to higher-risk assets.

Midland States Bancorp, Inc. (Nasdaq:MSBI) reported net income available to common shareholders of USD 5.3 million, or USD 0.24 per diluted share, for the third quarter of 2025. This compares to USD 9.8 million, or USD 0.44 per diluted share, for the second quarter of 2025, and USD 18.2 million, or USD 0.83 per diluted share, for the third quarter of 2024. Pre-provision net revenue stood at USD 31.3 million, compared to USD 32.2 million in the prior quarter. The net interest margin (NIM) increased to 3.79% from 3.56%, primarily driven by lower funding costs. Excluding interest recoveries, NIM was 3.69%. Nonperforming assets decreased to 1.02% of total assets, down from 1.15% in the previous quarter, while total capital to risk-weighted assets was 14.29% and common equity Tier 1 capital ratio stood at 9.37%.

Management Commentary

Jeffrey G. Ludwig, President and Chief Executive Officer, stated:

“Although we are disappointed in our financial results this quarter, we have made meaningful progress on several strategic initiatives. The financial results included USD 15 million of provision in our equipment finance portfolio reflecting an increase in our loss given default assumptions. Given our current outlook and the allowance held against this portfolio, we believe we are appropriately reserved for future credit losses.”

Reducing problem loans has been a priority this year and importantly, our nonperforming assets decreased to USD 70 million, or 1.02% of total assets. Along with our decision to tighten underwriting standards in our specialty finance portfolio, we have made the decision to cease originations in equipment finance to further reduce our exposure to higher-risk asset classes.”

Credit Quality and Portfolio Actions

The company recorded USD 20.5 million in provision for credit losses on loans, mainly related to updated assumptions in the equipment finance portfolio. Net charge-offs totaled USD 12.3 million, including USD 5.0 million in the equipment finance segment and USD 3.5 million in specialty finance.

Allowance for credit losses on loans was USD 100.9 million, representing 2.07% of total loans. Nonperforming loans declined to USD 68.7 million, while loans 30–89 days past due fell to USD 26.0 million.

Community Banking and Wealth Management Trends

Total loans were USD 4.87 billion at September 30, 2025, reflecting a USD 167.7 million decrease from the previous quarter. Community Bank deposits increased USD 69.9 million, offset by reductions in higher-cost brokered and servicing deposits. Total deposits stood at USD 5.60 billion.

Wealth Management revenue reached a record USD 8.0 million, with assets under administration increasing to USD 4.36 billion, up from USD 4.18 billion in the previous quarter.

Capital and Liquidity Position

On September 30, 2025, Midland States Bancorp redeemed USD 50.75 million in subordinated notes using existing liquidity. The company’s common equity Tier 1 capital ratio rose to 9.37%, with the bank maintaining “well-capitalized” status under regulatory standards.