Financial Performance - Net income available to common shareholders for Q3 2025 was $5.3 million, or $0.24 per diluted share, down from $9.8 million, or $0.44 per diluted share in Q2 2025[2] - Diluted earnings per common share for the third quarter of 2025 were $0.24, compared to $0.44 in the previous quarter[21] - Adjusted earnings available to common shareholders were $5,318 thousand for the three months ended September 30, 2025, compared to $9,796 thousand in the previous quarter, reflecting a decline of 45.24%[37] - Basic earnings per common share were $0.24, down from $0.44 in the previous quarter, reflecting a decrease of 45.45%[33] - Return on average assets for the third quarter of 2025 was 0.43%, down from 0.67% in the previous quarter[21] Asset and Liability Management - Total assets as of September 30, 2025, were approximately $6.91 billion, a decrease from $7.15 billion in the previous quarter[25] - Total liabilities decreased to $6,327,514 thousand, down from $6,534,173 thousand in the previous quarter, representing a decline of 3.17%[31] - Total deposits were $5.60 billion, a decrease of $342.1 million from the previous quarter[15] - Total deposits decreased to $5,604,825 thousand, down from $5,946,919 thousand in the previous quarter, a decline of 5.75%[31] - Total loans decreased by $167.7 million to $4.87 billion as of September 30, 2025[12] - Total loans decreased to $4,867,587 thousand as of September 30, 2025, down from $5,035,295 thousand in the previous quarter, representing a decline of 3.34%[35] Credit Quality - Nonperforming assets decreased to $70 million, or 1.02% of total assets, down from 2.10% at December 31, 2024[6] - Provision for credit losses on loans was $20.5 million for Q3 2025, primarily due to increased loss given default assumptions[13] - Net charge-offs for the quarter were $12.3 million, including $5.0 million from the equipment finance portfolio[13] - Provision for credit losses increased to $20,005 thousand, compared to $17,369 thousand in the previous quarter, indicating a rise in expected credit losses[38] Revenue and Expenses - Noninterest income for the third quarter of 2025 was $20.0 million, down from $23.5 million in the second quarter of 2025, primarily due to a loss on credit enhancement income[19] - Noninterest income for the quarter was $20,016 thousand, down from $23,534 thousand in the previous quarter, a decrease of 15.56%[40] - Noninterest expense for the third quarter of 2025 was $49.8 million, including $1.0 million in severance expenses related to ceasing equipment finance originations[24] - Noninterest expense for the quarter was $49,814 thousand, slightly down from $49,992 thousand in the previous quarter, a decrease of 0.36%[33] Capital and Ratios - The common equity tier 1 capital ratio improved to 9.4%, with a target of 10.0%[7] - The Company redeemed $50.75 million in subordinated notes on September 30, 2025, and exceeded all regulatory capital requirements under Basel III[22] - Tangible Common Equity to Tangible Assets Ratio increased to 6.61% as of September 30, 2025, up from 6.27% in June 2025[41] - Tangible Book Value Per Share rose to $21.16 in September 2025, compared to $20.68 in June 2025[41] - The efficiency ratio for the third quarter of 2025 was 61.25%, compared to 60.60% in the second quarter of 2025[21] - The efficiency ratio for the quarter was 61.25%, an increase from 60.60% in the previous quarter, indicating a decline in operational efficiency[40] - The effective tax rate for the third quarter of 2025 was 33.2%, up from 19.1% in the previous quarter[24] Wealth Management - Wealth management revenue reached a record $8 million in Q3 2025, with assets under administration increasing to $4.36 billion[15] - Trust assets under administration increased to $4.36 billion as of September 30, 2025, from $4.18 billion in the previous quarter[21]

Midland States Bancorp, Inc. Third Quarter 2025 Earnings Presentation October 30, 2025 Forward Looking Statement 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 ...

Group 1 - Midland States Bancorp, Inc. will release its third quarter 2025 financial results after market close on October 30, 2025 [1] - An investor presentation will accompany the financial results and will be available on the company's investor relations website [1] Group 2 - Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois [2] - The company had total assets of approximately $7.11 billion as of June 30, 2025 [2] - The Wealth Management Group of the company had assets under administration of approximately $4.18 billion [2] - The company offers a full range of commercial and consumer banking products and services, including business equipment financing, merchant credit card services, trust and investment management, insurance, and financial planning services [2]

Financial Performance - For the three months ended June 30, 2025, the company reported net income of $12.0 million, a decrease from $25.7 million in the same period of 2024, resulting in diluted earnings per common share of $0.44 compared to $1.06[168]. - For the six months ended June 30, 2025, the company reported a net loss of $129.0 million, or diluted loss per common share of $6.13, compared to net income of $48.4 million, or diluted earnings per common share of $1.99 for the same period in 2024[169]. - The return on average assets for Q2 2025 was 0.67%, down from 1.33% in Q2 2024, while the return on average shareholders' equity dropped to 8.43% from 13.20%[168]. Income and Expenses - Interest income for the three months ended June 30, 2025, was $97.9 million, down from $107.1 million in 2024, while interest expense decreased to $39.2 million from $48.2 million[168]. - Noninterest income fell to $23.5 million in Q2 2025 from $32.0 million in Q2 2024, reflecting a decrease of approximately 26.5%[168]. - The company experienced a $1.7 million decrease in net interest income, a $28.5 million decrease in noninterest income, and a $153.6 million increase in noninterest expense, primarily due to a $154.0 million goodwill impairment recognized in Q1 2025[169]. Credit Losses and Provisions - The provision for credit losses increased significantly to $17.4 million in Q2 2025 from $8.3 million in Q2 2024, indicating a rise in expected credit losses[168]. - Provision for credit losses totaled $17.4 million for the three months ended June 30, 2025, compared to $8.5 million in 2024[228]. - The allowance for credit losses on loans was $92.7 million, or 1.84% of total loans, at June 30, 2025, down from $111.2 million, or 2.15% at December 31, 2024[217]. Asset and Loan Performance - As of June 30, 2025, loans outstanding in a significant loan origination program were $53.7 million, down from $62.3 million at the end of 2024[164]. - Total loans decreased by $132.3 million, or 2.6%, to $5.04 billion at June 30, 2025, compared to December 31, 2024[214]. - Nonperforming loans decreased to $80.1 million at June 30, 2025, from $150.9 million at December 31, 2024, a reduction of 47%[232]. Goodwill and Impairment - The company recognized a goodwill impairment expense of $154.0 million in Q1 2025 due to deteriorated credit quality and stock price trends, which did not impact regulatory capital ratios[161][165]. - The discount rate used in the quantitative impairment test increased to 15.9% in Q1 2025 from 13.4% in Q4 2024, reflecting a rise in the company-specific risk premium[161]. Deposits and Equity - Total deposits decreased by $250.3 million to $5.95 billion at June 30, 2025, compared to $6.20 billion at December 31, 2024, a decline of approximately 4.0%[245]. - Shareholders' equity decreased by $137.1 million to $573.7 million at June 30, 2025, primarily due to a net loss of $128.9 million[248]. Interest Rate and Risk Management - The Federal Reserve maintained its key borrowing rate in a range between 4.25%-4.50% since December 2024, impacting the company's interest income and expenses[171]. - Interest rate risk management is actively monitored, with quarterly reporting to the Risk Policy and Compliance Committee to ensure compliance with risk limits[261]. - The company maintains a balance sheet position that is sensitive to interest rate changes, with asset sensitivity expected to generate higher net interest income in rising rate environments[260]. Investment Securities - The investment securities available for sale totaled $1.35 billion at June 30, 2025, up from $1.21 billion at December 31, 2024[237]. - Total investment securities available for sale decreased to $1.35 billion at June 30, 2025, from $1.45 billion at December 31, 2024, reflecting a decline of approximately 6.5%[241].

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides the unaudited consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Midland States Bancorp, Inc., including balance sheets, income statements, comprehensive income, shareholders' equity, and cash flows for the periods ended March 31, 2025, and December 31, 2024 (or March 31, 2024 for income/cash flow statements). It also includes detailed notes explaining significant accounting policies, investment securities, loans, goodwill impairment, derivatives, deposits, borrowings, and segment information [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity, as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------- | :-------------------------- | :------------------ | | Total assets | $7,284,804 | $7,506,809 | | Total loans, net | $4,912,877 | $5,056,370 | | Investment securities available for sale, at fair value | $1,364,201 | $1,207,574 | | Goodwill | $7,927 | $161,904 | | Total deposits | $5,936,434 | $6,197,243 | | Federal Home Loan Bank advances and other borrowings | $498,000 | $258,000 | | Total liabilities | $6,713,367 | $6,795,962 | | Total shareholders' equity | $571,437 | $710,847 | - Total assets decreased by **$222.0 million** from December 31, 2024, to March 31, 2025, primarily due to a significant reduction in goodwill and net loans, partially offset by an increase in investment securities[12](index=12&type=chunk) - Goodwill saw a substantial decrease from **$161.9 million** to **$7.9 million**, reflecting an impairment charge[12](index=12&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the company's revenues, expenses, and net income (loss) for the three months ended March 31, 2025, and March 31, 2024 Consolidated Statements of Income Highlights (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 (Unaudited) | March 31, 2024 (Unaudited) | Change (YoY) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Total interest income | $99,355 | $105,526 | $(6,171) | | Total interest expense | $41,065 | $45,755 | $(4,690) | | Net interest income | $58,290 | $59,771 | $(1,481) | | Provision for credit losses | $10,850 | $19,942 | $(9,092) | | Total noninterest income | $17,763 | $37,841 | $(20,078) | | Total noninterest expense | $203,005 | $48,608 | $154,397 | | Net (loss) income | $(140,974) | $22,663 | $(163,637) | | Basic (loss) earnings per common share | $(6.58) | $0.92 | $(7.50) | | Diluted (loss) earnings per common share | $(6.58) | $0.92 | $(7.50) | - The company reported a net loss of **$140.97 million** in Q1 2025, a significant decline from a net income of **$22.66 million** in Q1 2024, primarily driven by a **$154.0 million** goodwill impairment charge[14](index=14&type=chunk) - Noninterest expense surged by **$154.4 million** year-over-year, largely due to the goodwill impairment[14](index=14&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section reports the company's comprehensive income (loss), including net income and other comprehensive income (loss), for the three months ended March 31, 2025, and March 31, 2024 Consolidated Statements of Comprehensive Income Highlights (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 (Unaudited) | March 31, 2024 (Unaudited) | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income | $(140,974) | $22,663 | | Other comprehensive income (loss), net of tax | $9,621 | $(4,666) | | Total comprehensive (loss) income | $(131,353) | $17,997 | - Total comprehensive loss for Q1 2025 was **$(131.35) million**, a substantial decrease from comprehensive income of **$17.99 million** in Q1 2024, primarily due to the net loss[16](index=16&type=chunk) - Other comprehensive income, net of tax, improved significantly to **$9.62 million** in Q1 2025 from a loss of $(4.67) million in Q1 2024, driven by unrealized gains on investment securities available for sale[16](index=16&type=chunk) [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in shareholders' equity, including net loss, other comprehensive income, and dividends, between December 31, 2024, and March 31, 2025 Consolidated Statements of Shareholders' Equity Highlights (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | December 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------------ | :-------------------------- | | Total shareholders' equity | $710,847 | $571,437 | | Net loss | — | $(140,974) | | Other comprehensive income | — | $9,621 | | Common dividends declared | — | $(6,782) | | Preferred dividends declared | — | $(2,228) | - Total shareholders' equity decreased by **$139.41 million** from December 31, 2024, to March 31, 2025, primarily due to the net loss of **$140.97 million** and dividend payments, partially offset by other comprehensive income[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and March 31, 2024 Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Cash Flow Activity | March 31, 2025 (Unaudited) | March 31, 2024 (Unaudited) | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $24,700 | $43,072 | | Net cash provided by investing activities | $39,465 | $26,914 | | Net cash used in financing activities | $(76,925) | $(37,731) | | Net (decrease) increase in cash and cash equivalents | $(12,760) | $32,255 | | Cash and cash equivalents, end of period | $102,006 | $167,316 | - Net cash provided by operating activities decreased to **$24.70 million** in Q1 2025 from **$43.07 million** in Q1 2024, despite a significant goodwill impairment adjustment[21](index=21&type=chunk) - Net cash used in financing activities increased to **$(76.93) million** in Q1 2025 from **$(37.73) million** in Q1 2024, primarily due to a net decrease in deposits and an increase in FHLB borrowings[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, specific financial instruments, and segment information [Note 1: Summary of Significant Accounting Policies](index=9&type=section&id=Note%201:%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the company's business operations and significant accounting policies, including recent accounting pronouncements - Midland States Bancorp, Inc. is a diversified financial holding company offering commercial and consumer banking, equipment financing, merchant services, trust, investment management, and insurance/financial planning services[23](index=23&type=chunk) - The company's primary income sources are interest on loans and investment securities, supplemented by noninterest income from various services[24](index=24&type=chunk) - New accounting guidance (ASU No. 2023-09) on income tax disclosures is effective for fiscal years beginning after December 15, 2024, with no material impact beyond additional disclosures[28](index=28&type=chunk) - FASB ASU No. 2024-03, requiring disaggregation of income statement expenses, is effective for annual periods beginning after December 15, 2026, with early adoption permitted[29](index=29&type=chunk) [Note 2: Investment Securities](index=11&type=section&id=Note%202:%20Investment%20Securities) This note provides details on the company's investment securities portfolio, including fair values and unrealized gains or losses Investment Securities Available for Sale (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Category | March 31, 2025 Fair Value | December 31, 2024 Fair Value | | :--------------------------------- | :-------------------------- | :-------------------------- | | U.S. Treasury securities | $1,000 | $0 | | U.S. government sponsored entities and U.S. agency securities | $25,100 | $20,141 | | Mortgage-backed securities - agency | $1,006,339 | $847,056 | | Mortgage-backed securities - non-agency | $95,188 | $101,012 | | Asset-backed student loans | $47,401 | $49,973 | | State and municipal securities | $69,111 | $69,061 | | Collateralized loan obligations | $39,212 | $40,450 | | Corporate securities | $80,850 | $79,881 | | Total available for sale securities | $1,364,201 | $1,207,574 | Unrealized Losses on Investment Securities Available for Sale (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 Unrealized Loss | December 31, 2024 Unrealized Loss | | :--------------------------------- | :-------------------------- | :-------------------------- | | Total available for sale securities (Gross unrealized losses) | $(99,944) | $(112,358) | | Aggregate depreciation from amortized cost basis | 10.68% | N/A | - At March 31, 2025, 263 investment securities had unrealized losses, with aggregate depreciation of **10.68%** from their amortized cost, primarily due to changes in interest rates. These losses are considered temporary as the company does not intend to sell and is not required to sell prior to anticipated recovery[36](index=36&type=chunk) [Note 3: Loans](index=13&type=section&id=Note%203:%20Loans) This note presents a detailed breakdown of the loan portfolio, allowance for credit losses, and nonaccrual loans Total Loans Outstanding by Portfolio Class (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Portfolio Class | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Commercial | $772,876 | $818,496 | | Commercial other | $496,686 | $541,324 | | Commercial real estate non-owner occupied | $1,597,251 | $1,628,961 | | Commercial real estate owner occupied | $441,910 | $440,806 | | Multi-family | $486,141 | $454,249 | | Farmland | $67,023 | $67,648 | | Construction and land development | $264,966 | $299,842 | | Residential first lien | $312,367 | $315,775 | | Other residential | $60,728 | $64,782 | | Consumer | $91,371 | $96,202 | | Consumer other | $53,566 | $48,099 | | Lease financing | $373,168 | $391,390 | | Total loans | $5,018,053 | $5,167,574 | Allowance for Credit Losses on Loans (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | $111,204 | $159,319 | | Provision for credit losses on loans | $10,850 | $19,942 | | Charge-offs | $(17,996) | $(19,008) | | Recoveries | $1,118 | $591 | | Balance, end of period | $105,176 | $160,844 | - The allowance for credit losses on loans decreased to **$105.18 million** at March 31, 2025, from **$111.20 million** at December 31, 2024, with a provision for credit losses of **$10.85 million** in Q1 2025[46](index=46&type=chunk) - Total nonaccrual loans were **$139.49 million** at March 31, 2025, slightly down from **$140.14 million** at December 31, 2024[57](index=57&type=chunk) - Loan restructurings totaled **$1.44 million** in Q1 2025, primarily involving term extensions and interest rate reductions for borrowers experiencing financial difficulties[64](index=64&type=chunk) [Note 4: Premises, Equipment and Leases](index=26&type=section&id=Note%204:%20Premises,%20Equipment%20and%20Leases) This note details the company's premises, equipment, and operating lease assets and liabilities Premises, Equipment and Leases (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Premises and equipment, net | $86,719 | $85,710 | | Operating lease right-of-use assets | $9,246 | $8,830 | | Operating lease liabilities | $10,519 | $10,100 | | Depreciation expense (Q1) | $1,200 | $1,200 | - Net premises and equipment increased slightly to **$86.72 million** at March 31, 2025, from **$85.71 million** at December 31, 2024[80](index=80&type=chunk) - Operating lease right-of-use assets and liabilities also saw minor increases, reflecting ongoing lease arrangements for banking offices and facilities[81](index=81&type=chunk) [Note 5: Operating Leases - Lessor](index=27&type=section&id=Note%205:%20Operating%20Leases%20-%20Lessor) This note provides information on the company's role as a lessor in operating lease arrangements, including leased equipment and related income Operating Leases - Lessor Highlights (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Equipment leased to others, net (period end) | $26,800 | N/A | | Lease income | $3,100 | $4,500 | | Depreciation expense related to leased equipment | $2,300 | $3,600 | - The company's equipment leased to others (net) was **$26.8 million** at March 31, 2025, down from **$30.7 million** at December 31, 2024[83](index=83&type=chunk) - Lease income from operating leases decreased to **$3.1 million** in Q1 2025 from **$4.5 million** in Q1 2024[83](index=83&type=chunk) [Note 6: Goodwill](index=28&type=section&id=Note%206:%20Goodwill) This note explains the company's goodwill balance, including the significant impairment charge recognized in the current quarter Goodwill by Segment (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Segment | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Banking | $3,181 | $157,158 | | Wealth management | $4,746 | $4,746 | | Total goodwill | $7,927 | $161,904 | - The company recognized a **$154.0 million** goodwill impairment expense in Q1 2025 for its Banking reporting unit[86](index=86&type=chunk) - The impairment was triggered by deteriorated credit quality and trends in the company's stock price, leading to the carrying amount exceeding the fair value of the Banking unit[86](index=86&type=chunk) - The impairment did not affect regulatory capital ratios, tangible common equity ratio, or liquidity position[86](index=86&type=chunk) [Note 7: Derivative Instruments](index=28&type=section&id=Note%207:%20Derivative%20Instruments) This note describes the company's use of derivative instruments for risk management and their fair value - The company uses derivative instruments, including interest rate swaps and options, to manage interest rate risk, converting fixed-rate instruments to variable-rate and vice versa[90](index=90&type=chunk)[91](index=91&type=chunk) Fair Value of Derivative Instruments (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Category | March 31, 2025 Fair Value Assets | March 31, 2025 Fair Value Liabilities | December 31, 2024 Fair Value Assets | December 31, 2024 Fair Value Liabilities | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total derivatives designated as accounting hedges | $5,184 | $6,222 | $3,516 | $5,437 | | Total derivatives not designated as accounting hedges | $376 | $203 | $321 | $218 | - Credit enhancement derivatives, associated with third-party loan programs, had a fair value of **$5.6 million** at March 31, 2025, down from **$16.8 million** at December 31, 2024[105](index=105&type=chunk) - The decrease in credit enhancement derivative value was due to **$11.1 million** in charge-offs on a third-party loan origination program, which were fully reimbursed by the partner[227](index=227&type=chunk) [Note 8: Deposits](index=31&type=section&id=Note%208:%20Deposits) This note provides a detailed classification of the company's deposit accounts Classification of Deposits (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Noninterest-bearing demand | $1,090,707 | $1,055,564 | | Interest-bearing checking | $2,161,282 | $2,378,256 | | Money market | $1,154,403 | $1,173,630 | | Savings | $522,663 | $507,305 | | Time | $1,007,379 | $1,082,488 | | Total deposits | $5,936,434 | $6,197,243 | - Total deposits decreased by **$260.81 million** to **$5.94 billion** at March 31, 2025, compared to December 31, 2024[229](index=229&type=chunk) - Interest-bearing checking, money market, and time deposits decreased, while noninterest-bearing demand and savings accounts increased[229](index=229&type=chunk) [Note 9: FHLB Advances and Other Borrowings](index=31&type=section&id=Note%209:%20FHLB%20Advances%20and%20Other%20Borrowings) This note details the company's Federal Home Loan Bank advances and other borrowing arrangements FHLB Advances and Other Borrowings (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Borrowing Type | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | FHLB advances – fixed rate, fixed term | $133,000 | $133,000 | | FHLB advances – putable fixed rate | $125,000 | $125,000 | | FHLB advances – Short term fixed rate | $240,000 | $0 | | Total FHLB advances and other borrowings | $498,000 | $258,000 | - Total FHLB advances and other borrowings increased significantly to **$498.0 million** at March 31, 2025, from **$258.0 million** at December 31, 2024, primarily due to **$240.0 million** in short-term fixed-rate FHLB advances[108](index=108&type=chunk) - These advances are collateralized by qualifying mortgage, home equity, and commercial real estate loans, totaling approximately **$3.10 billion** at March 31, 2025[108](index=108&type=chunk) [Note 10: Subordinated Debt](index=32&type=section&id=Note%2010:%20Subordinated%20Debt) This note provides information on the company's subordinated debt, including outstanding amounts and interest rates Subordinated Debt (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Outstanding amount | $78,000 | $78,000 | | Carrying amount | $77,754 | $77,749 | | Current rate (Fixed to Float, Issued Sept 2019) | 7.91% | 7.94% | | Current rate (Fixed to Float, Issued Sept 2019) | 5.50% | 5.50% | - The company's subordinated debt remained stable at an outstanding amount of **$78.0 million**, with a carrying amount of **$77.75 million** at March 31, 2025[109](index=109&type=chunk) - These debentures may be included in Tier 2 capital under current regulatory guidelines[109](index=109&type=chunk) [Note 11: Accumulated Other Comprehensive Income (Loss)](index=33&type=section&id=Note%2011:%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the changes in accumulated other comprehensive income (loss) and its components Changes in AOCI (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | $(81,960) | $(76,753) | | Other comprehensive income (loss) before reclassifications | $9,004 | $(5,653) | | Amounts reclassified from AOCI to income | $617 | $987 | | Balance, end of period | $(72,339) | $(81,419) | - AOCI improved to a loss of **$(72.34) million** at March 31, 2025, from **$(81.96) million** at December 31, 2024, primarily due to other comprehensive income before reclassifications of **$9.00 million**[111](index=111&type=chunk) - Gains and losses on cash flow hedges were reclassified from AOCI to income, impacting interest income/expense[112](index=112&type=chunk) [Note 12: Earnings per Common Share](index=34&type=section&id=Note%2012:%20Earnings%20per%20Common%20Share) This note presents the calculation of basic and diluted earnings (loss) per common share Earnings Per Common Share (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income available to common shareholders | $(143,202) | $20,435 | | Basic (loss) earnings per common share | $(6.58) | $0.92 | | Diluted (loss) earnings per common share | $(6.58) | $0.92 | | Weighted average common shares outstanding, basic | 21,795,570 | 21,774,647 | | Weighted average common shares outstanding, diluted | 21,795,570 | 21,787,691 | - Basic and diluted loss per common share was **$(6.58)** in Q1 2025, a significant decrease from earnings of **$0.92** in Q1 2024, reflecting the net loss available to common shareholders[113](index=113&type=chunk) [Note 13: Fair Value of Financial Instruments](index=34&type=section&id=Note%2013:%20Fair%20Value%20of%20Financial%20Instruments) This note outlines the fair value measurements of financial instruments, categorized by input levels - The company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[114](index=114&type=chunk)[115](index=115&type=chunk) Assets Measured at Fair Value on a Recurring Basis (March 31, 2025) ($ in thousands) | Asset Category | Carrying Amount | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Investment securities available for sale | $1,364,201 | $1,000 | $1,363,201 | $0 | | Equity securities | $4,204 | $4,204 | $0 | $0 | | Residential loans held for sale | $7,510 | $0 | $7,510 | $0 | | Credit enhancement asset | $5,615 | $0 | $0 | $5,615 | | Derivative assets | $5,260 | $0 | $5,260 | $0 | | Total | $1,386,790 | $5,204 | $1,375,971 | $5,615 | Assets Measured at Fair Value on a Non-Recurring Basis (March 31, 2025) ($ in thousands) | Asset Category | Carrying Amount | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Nonperforming loans | $106,354 | $0 | $0 | $106,354 | | Consumer loans held for sale | $280,311 | $0 | $0 | $280,311 | | Other real estate owned | $4,183 | $0 | $0 | $4,183 | - Nonperforming loans, consumer loans held for sale, and other real estate owned are measured at fair value on a non-recurring basis, primarily using Level 3 unobservable inputs[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) [Note 14: Commitments, Contingencies and Credit Risk](index=39&type=section&id=Note%2014:%20Commitments,%20Contingencies%20and%20Credit%20Risk) This note discloses the company's outstanding commitments, contingent liabilities, and credit risk exposures - The company has outstanding contingent liabilities from claims and legal actions, but no other material losses are anticipated[130](index=130&type=chunk) Loan Commitments (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Commitment Type | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Commitments to extend credit | $782,808 | $754,202 | | Financial guarantees – standby letters of credit | $19,139 | $22,298 | - Commitments to extend credit increased to **$782.81 million** at March 31, 2025, from **$754.20 million** at December 31, 2024[133](index=133&type=chunk) [Note 15: Segment Information](index=40&type=section&id=Note%2015:%20Segment%20Information) This note provides financial information by the company's operating segments: Banking, Wealth Management, and Corporate - The company operates through three reportable segments: Banking, Wealth Management, and Corporate[134](index=134&type=chunk) - The Banking segment provides commercial, real estate, mortgage, and consumer loan products, equipment financing, deposit products, and treasury management services[135](index=135&type=chunk) - The Wealth Management segment offers trust and fiduciary services, brokerage, and retirement planning[136](index=136&type=chunk) Net Income (Loss) by Segment (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Segment | March 31, 2025 Net Income (Loss) | March 31, 2024 Net Income (Loss) | | :--------------------------------- | :-------------------------- | :-------------------------- | | Banking | $(140,281) | $22,926 | | Wealth Management | $1,078 | $1,022 | | Corporate | $(1,771) | $(1,285) | | Total | $(140,974) | $22,663 | [Note 16: Revenue from Contracts with Customers](index=42&type=section&id=Note%2016:%20Revenue%20from%20Contracts%20with%20Customers) This note details noninterest income streams derived from contracts with customers, categorized under Topic 606 Noninterest Income - In-Scope of Topic 606 (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Revenue Stream | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Trust management/administration fees | $6,444 | $6,267 | | Investment advisory and brokerage fees | $483 | $423 | | Nonsufficient fund fees | $1,953 | $1,822 | | Interchange revenues | $3,151 | $3,358 | | Merchant services revenue | $338 | $344 | | Total noninterest income - in-scope | $13,781 | $12,212 | - Wealth management revenue, service charges on deposit accounts, and interchange revenue are key noninterest income streams within the scope of Topic 606[142](index=142&type=chunk) - Wealth management revenue is primarily from fees for managing trusts and customer assets, recognized monthly based on market value[143](index=143&type=chunk) - Service charges on deposit accounts include non-sufficient fund fees and other account-related charges, recognized over time or at the point of service[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting key factors that influenced results for the three months ended March 31, 2025, compared to December 31, 2024, and March 31, 2024. It covers critical accounting policies, factors affecting comparability (like goodwill impairment and loan portfolio sales), detailed results of operations, and an analysis of financial condition including assets, liabilities, capital, and liquidity [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses key accounting policies and estimates, particularly those related to allowance for credit losses and goodwill impairment - Management's evaluation of the allowance for credit losses on loans (ACL) involves significant estimates, assumptions, and judgments, considering historical losses, economic forecasts, and collateral values[151](index=151&type=chunk) - Goodwill is subject to impairment testing at least annually or upon a triggering event, with a quantitative test performed if impairment is more likely than not[152](index=152&type=chunk)[153](index=153&type=chunk) - A **$154.0 million** goodwill impairment expense was recognized in Q1 2025 for the Banking reporting unit due to deteriorated credit quality and stock price trends, using a discounted cash flow analysis with a higher discount rate (**15.9%** vs. **13.4%** at Dec 31, 2024)[158](index=158&type=chunk) [Factors Affecting Comparability](index=46&type=section&id=Factors%20Affecting%20Comparability) This section highlights significant events, such as goodwill impairment and loan portfolio sales, that impact the comparability of financial results - A **$154.0 million** goodwill impairment expense was recognized in Q1 2025 for the Banking reporting unit, which did not impact regulatory capital ratios, tangible common equity, or liquidity[162](index=162&type=chunk) - The company sold its LendingPoint portfolio in Q4 2024, recognizing **$17.3 million** in net charge-offs, and committed to sell its GreenSky consumer loan portfolio, resulting in **$35.0 million** in net charge-offs when transferred to held for sale[163](index=163&type=chunk) - As of March 31, 2025, the company operates only one third-party loan origination and servicing program, down from three previously[160](index=160&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including net interest income, noninterest income, and expenses [Overview](index=47&type=section&id=Overview) This overview summarizes the company's key financial performance metrics for the three months ended March 31, 2025, compared to the prior year Key Performance Metrics (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income | $(140,974) | $22,663 | | Diluted (loss) earnings per common share | $(6.58) | $0.92 | | Return on average assets | (7.66)% | 1.17% | | Return on average shareholders' equity | (79.89)% | 11.54% | - The company reported a net loss of **$141.0 million** in Q1 2025, a significant decrease from net income of **$22.7 million** in Q1 2024, primarily due to a **$154.4 million** increase in noninterest expense (goodwill impairment), a **$1.5 million** decrease in net interest income, and a **$20.1 million** decrease in noninterest income[165](index=165&type=chunk) [Net Interest Income and Margin](index=47&type=section&id=Net%20Interest%20Income%20and%20Margin) This section analyzes the company's net interest income and margin, including factors affecting interest income and expense Net Interest Income and Margin (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net interest income (tax-equivalent) | $58,498 | $59,986 | | Tax-equivalent net interest margin | 3.49% | 3.39% | | Total interest income | $99,563 | $105,741 | | Total interest expense | $41,065 | $45,755 | - Net interest income (tax-equivalent basis) decreased by **$1.5 million** to **$58.5 million** in Q1 2025, while the tax-equivalent net interest margin increased to **3.49%** from **3.39%**[169](index=169&type=chunk) - Average earning assets decreased by **$309.48 million**, primarily due to a **$954.6 million** decrease in average loans, partially offset by increases in investment securities and loans held for sale[176](index=176&type=chunk)[177](index=177&type=chunk) - Interest expense decreased by **$4.7 million**, driven by a decrease in deposit costs due to Federal Reserve rate decreases, despite a **$121.1 million** decrease in average interest-bearing deposit accounts[179](index=179&type=chunk)[180](index=180&type=chunk) [Provision for Credit Losses](index=51&type=section&id=Provision%20for%20Credit%20Losses) This section discusses the provision for credit losses, reflecting management's assessment of the allowance for credit losses Provision for Credit Losses (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Provision for credit losses | $10,850 | $19,942 | - The provision for credit losses decreased to **$10.9 million** in Q1 2025 from **$19.9 million** in Q1 2024, with Q1 2024 including an **$8.0 million** specific reserve on a large construction loan[181](index=181&type=chunk) - The provision is determined quarterly based on management's evaluation of the allowance for credit losses, considering past loss experience, portfolio characteristics, economic conditions, and forecasts[182](index=182&type=chunk) [Noninterest Income](index=51&type=section&id=Noninterest%20Income) This section details the components of noninterest income and significant year-over-year changes Noninterest Income Components (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Noninterest Income Category | March 31, 2025 | March 31, 2024 | Change (YoY) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------- | | Wealth management revenue | $7,350 | $7,132 | $218 | | Service charges on deposit accounts | $3,305 | $3,116 | $189 | | Interchange revenue | $3,151 | $3,358 | $(207) | | Residential mortgage banking revenue | $676 | $527 | $149 | | Income on company-owned life insurance | $2,334 | $1,801 | $533 | | Credit enhancement (loss) income | $(578) | $16,654 | $(17,232) | | Other income | $1,525 | $5,253 | $(3,728) | | Total noninterest income | $17,763 | $37,841 | $(20,078) | - Total noninterest income decreased by **53.1%** (**$20.08 million**) in Q1 2025 compared to Q1 2024, primarily due to a **$17.23 million** decline in credit enhancement income[183](index=183&type=chunk)[186](index=186&type=chunk) - Credit enhancement income declined due to loan payoffs and the cessation of loan originations through the GreenSky and LendingPoint programs[186](index=186&type=chunk) - Wealth management revenue increased by **3.1%** to **$7.35 million**, and income on company-owned life insurance increased by **$0.5 million**, partly due to death benefits[184](index=184&type=chunk)[185](index=185&type=chunk) [Noninterest Expense](index=52&type=section&id=Noninterest%20Expense) This section analyzes the company's noninterest expenses, highlighting the impact of goodwill impairment and other operational costs Noninterest Expense Components (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Noninterest Expense Category | March 31, 2025 | March 31, 2024 | Increase (decrease) | | :--------------------------------- | :-------------------------- | :-------------------------- | :------------------ | | Salaries and employee benefits | $26,416 | $24,102 | $2,314 | | Occupancy and equipment | $4,498 | $4,142 | $356 | | Professional services | $2,741 | $2,255 | $486 | | Loan servicing fees | $750 | $3,741 | $(2,991) | | Impairment on goodwill | $153,977 | $0 | $153,977 | | Total noninterest expense | $203,005 | $48,608 | $154,397 | - Total noninterest expense increased by **$154.4 million** to **$203.0 million** in Q1 2025, primarily due to a **$154.0 million** goodwill impairment charge[187](index=187&type=chunk) - Salaries and employee benefits increased by **$2.3 million**, including **$1.4 million** in severance expense from a 25-employee headcount reduction[187](index=187&type=chunk) - Loan servicing fees decreased by **$3.0 million** due to loan payoffs and the cessation of third-party lending programs[191](index=191&type=chunk) [Income Tax Expense](index=53&type=section&id=Income%20Tax%20Expense) This section discusses the company's income tax expense and the tax implications of the goodwill impairment Income Tax Expense (Three Months Ended March 31, 2025 vs. 2024) ($ in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Income tax expense | $3,172 | $6,399 | - Income tax expense decreased to **$3.2 million** in Q1 2025 from **$6.4 million** in Q1 2024[192](index=192&type=chunk) - The goodwill impairment recognized in Q1 2025 was not deductible for tax purposes[192](index=192&type=chunk) [Financial Condition](index=53&type=section&id=Financial%20Condition) This section provides an in-depth analysis of the company's balance sheet, including assets, liabilities, and capital resources [Assets](index=53&type=section&id=Assets) This section details the composition and changes in the company's asset base, including loans and investment securities - Total assets decreased to **$7.28 billion** at March 31, 2025, from **$7.51 billion** at December 31, 2024[193](index=193&type=chunk) [Loans](index=53&type=section&id=Loans) This section provides a detailed breakdown of the loan portfolio by class and an analysis of nonperforming loans Loan Portfolio Composition (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Loan Category | March 31, 2025 Balance | March 31, 2025 Percent | December 31, 2024 Balance | December 31, 2024 Percent | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commercial | $1,269,562 | 25.3% | $1,359,820 | 26.3% | | Commercial other | $496,686 | 9.9% | $541,324 | 10.5% | | Commercial real estate non-owner occupied | $1,597,251 | 31.8% | $1,628,961 | 31.5% | | Commercial real estate owner occupied | $441,910 | 8.8% | $440,806 | 8.5% | | Multi-family | $486,141 | 9.7% | $454,249 | 8.8% | | Farmland | $67,023 | 1.3% | $67,648 | 1.3% | | Construction and land development | $264,966 | 5.3% | $299,842 | 5.8% | | Residential first lien | $312,367 | 6.2% | $315,775 | 6.1% | | Other residential | $60,728 | 1.2% | $64,782 | 1.3% | | Consumer | $91,371 | 1.8% | $96,202 | 1.9% | | Consumer other | $53,566 | 1.1% | $48,099 | 0.9% | | Lease financing | $373,168 | 7.4% | $391,390 | 7.6% | | Total loans, gross | $5,018,053 | 100.0% | $5,167,574 | 100.0% | - Total loans decreased by **$149.5 million** (**2.9%**) to **$5.02 billion** at March 31, 2025, compared to December 31, 2024[198](index=198&type=chunk) - Community bank portfolio grew by **$69.9 million**, offsetting strategic declines in Specialty finance (**$158.5 million**) and Equipment finance (**$44.9 million**) portfolios[198](index=198&type=chunk) Nonperforming Assets (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Total nonperforming loans | $145,690 | $150,907 | | Other real estate owned and other repossessed assets | $5,574 | $6,502 | | Nonperforming assets | $151,264 | $157,409 | | Nonperforming loans to total loans | 2.90% | 2.92% | | Allowance for credit losses to nonperforming loans | 72.19% | 73.69% | - Nonperforming loans decreased to **$145.7 million** at March 31, 2025, from **$150.9 million** at December 31, 2024, as the company focuses on improving credit quality[216](index=216&type=chunk) [Investment Securities](index=60&type=section&id=Investment%20Securities) This section details the composition and changes in the company's investment securities portfolio Investment Securities Available for Sale (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Category | March 31, 2025 Balance | March 31, 2025 Percent | December 31, 2024 Balance | December 31, 2024 Percent | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Mortgage-backed securities - agency | $1,006,339 | 73.7% | $847,056 | 70.1% | | Corporate securities | $80,850 | 5.9% | $79,881 | 6.6% | | State and municipal securities | $69,111 | 5.1% | $69,061 | 5.7% | | Total investment securities | $1,364,201 | 100.0% | $1,207,574 | 100.0% | - Total investment securities available for sale increased to **$1.36 billion** at March 31, 2025, from **$1.21 billion** at December 31, 2024[221](index=221&type=chunk) - The portfolio is primarily composed of mortgage-backed securities (**73.7%**) and has an average credit rating of AAA for a significant portion[221](index=221&type=chunk)[225](index=225&type=chunk) [Credit enhancement asset](index=62&type=section&id=Credit%20enhancement%20asset) This section discusses the fair value and changes in the company's credit enhancement derivative asset Credit Enhancement Asset Fair Value (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Fair value of derivative | $5,600 | $16,800 | | Charge-offs recognized on third-party loan program (Q1 2025) | $11,100 | N/A | | Decrease in credit enhancement derivative (Q1 2025) | $11,200 | N/A | - The fair value of credit enhancement derivatives decreased to **$5.6 million** at March 31, 2025, from **$16.8 million** at December 31, 2024[227](index=227&type=chunk) - This decrease was primarily due to **$11.1 million** in charge-offs on a third-party loan origination program, which were fully recovered from the third-party partner[227](index=227&type=chunk) [Liabilities](index=62&type=section&id=Liabilities) This section details the composition and changes in the company's liabilities, primarily focusing on deposits - Total liabilities decreased to **$6.71 billion** at March 31, 2025, from **$6.80 billion** at December 31, 2024[228](index=228&type=chunk) [Deposits](index=62&type=section&id=Deposits) This section provides a detailed breakdown of the company's deposit composition and changes over the period Deposit Composition (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Deposit Type | March 31, 2025 Balance | March 31, 2025 Percent | December 31, 2024 Balance | December 31, 2024 Percent | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Noninterest-bearing demand | $1,090,707 | 18.4% | $1,055,564 | 17.0% | | Interest-bearing checking | $2,161,282 | 36.4% | $2,378,256 | 38.4% | | Money market | $1,154,403 | 19.4% | $1,173,630 | 18.9% | | Savings | $522,663 | 8.8% | $507,305 | 8.2% | | Time | $1,007,379 | 17.0% | $1,082,488 | 17.5% | | Total deposits | $5,936,434 | 100.0% | $6,197,243 | 100.0% | - Total deposits decreased by **$260.8 million** to **$5.94 billion** at March 31, 2025, compared to December 31, 2024[229](index=229&type=chunk) - Decreases in interest-bearing checking, money market, and time deposit accounts were partially offset by increases in noninterest-bearing demand and savings accounts[229](index=229&type=chunk) [Capital Resources and Liquidity Management](index=62&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) This section analyzes the company's capital adequacy, liquidity position, and regulatory capital ratios [Capital Resources](index=62&type=section&id=Capital%20Resources) This section details the changes in shareholders' equity and factors affecting the company's capital base Shareholders' Equity (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Shareholders' equity | $571,437 | $710,847 | | Net loss | $(140,974) | N/A | | Dividends to common shareholders | $(6,782) | N/A | | Dividends to preferred shareholders | $(2,228) | N/A | | Decrease in accumulated other comprehensive losses | $9,621 | N/A | - Shareholders' equity decreased by **$139.4 million** to **$571.4 million** at March 31, 2025, primarily due to the net loss and dividend payments, partially offset by a decrease in accumulated other comprehensive losses (**$9.6 million**)[232](index=232&type=chunk) [Liquidity Management](index=63&type=section&id=Liquidity%20Management) This section outlines the company's liquidity sources and management strategies to meet financial obligations Sources of Liquidity (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Source | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $102,006 | $114,766 | | Unpledged securities | $880,920 | $672,399 | | FHLB committed liquidity | $1,015,704 | $1,290,246 | | FRB discount window availability | $504,205 | $538,835 | | Total Estimated Liquidity | $2,502,835 | $2,616,246 | | Additional credit facility | $392,000 | $360,000 | | Brokered CDs (additional capacity) | $400,000 | $350,000 | | ICS One Way Buy (additional capacity) | $350,000 | $0 | - Total estimated liquidity decreased to **$2.50 billion** at March 31, 2025, from **$2.62 billion** at December 31, 2024, primarily due to a decrease in FHLB committed liquidity[236](index=236&type=chunk) - The company maintains various liquidity sources, including cash, unpledged securities, FHLB committed liquidity, and FRB discount window availability[236](index=236&type=chunk) [Regulatory Capital Requirements](index=63&type=section&id=Regulatory%20Capital%20Requirements) This section presents the company's regulatory capital ratios and compliance with 'well-capitalized' requirements Regulatory Capital Ratios (March 31, 2025) | Ratio | Actual (Midland States Bancorp, Inc.) | Minimum Regulatory Requirements | Well Capitalized | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total risk-based capital ratio | 13.51% | 10.50% | N/A | | Tier 1 risk-based capital ratio | 11.16% | 8.50% | N/A | | Common equity tier 1 risk-based capital ratio | 8.32% | 7.00% | N/A | | Tier 1 leverage ratio | 9.11% | 4.00% | N/A | - At March 31, 2025, both the Company and Midland States Bank exceeded all regulatory minimum capital requirements and met the regulatory definition of 'well-capitalized'[238](index=238&type=chunk) - The capital conservation buffer of 2.5% is included in the total risk-based, Tier 1 risk-based, and Common equity tier 1 risk-based capital ratios[239](index=239&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section provides disclosures on the company's exposure to market risks, primarily interest rate risk and price risk [Market Risk](index=64&type=section&id=Market%20Risk) This section identifies the primary market risks the company is exposed to, including interest rate and price risk - The company is primarily exposed to interest rate risk and secondarily to price risk from investments in securities[240](index=240&type=chunk) [Interest Rate Risk](index=64&type=section&id=Interest%20Rate%20Risk) This section details the company's interest rate risk exposure and its assessment using Net Interest Income at Risk modeling - Interest rate risk arises from timing differences in repricings and maturities of assets/liabilities, embedded options, yield curve changes, and spread relationships[241](index=241&type=chunk) - The company uses Net Interest Income (NII) at Risk modeling to assess interest rate sensitivity under various scenarios, including parallel shifts in market interest rates[246](index=246&type=chunk)[247](index=247&type=chunk) Net Interest Income Sensitivity (Shocks) (March 31, 2025 vs. December 31, 2024) ($ in thousands) | Immediate Change in Rates | March 31, 2025 Dollar Change | March 31, 2025 Percent Change | December 31, 2024 Dollar Change | December 31, 2024 Percent Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | -200 bps | $8,078 | 3.6% | $2,395 | 1.1% | | -100 bps | $3,490 | 1.6% | $1,395 | 0.6% | | +100 bps | $(1,619) | (0.7)% | $(2,727) | (1.2)% | | +200 bps | $(3,430) | (1.5)% | $(5,596) | (2.5)% | - NII at Risk results for March 31, 2025, project increasing profitability in a declining rate environment, consistent with December 31, 2024, and within board policy limits[249](index=249&type=chunk) [Price Risk](index=65&type=section&id=Price%20Risk) This section describes the company's exposure to price risk from adverse movements in the fair values of financial instruments - Price risk is the risk of loss from adverse movements in the fair values of financial instruments, including investment securities, derivative instruments, and equity investments[250](index=250&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to the market risk disclosures provided in Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures about Market Risk' - The quantitative and qualitative disclosures about market risk are incorporated by reference from Item 2 of this report[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to ongoing remediation of previously identified material weaknesses in internal controls over financial reporting. Despite this, the consolidated financial statements fairly present the company's financial condition, results of operations, and cash flows - The company's disclosure controls and procedures were deemed not effective as of March 31, 2025, due to un-remediated material weaknesses in internal controls over financial reporting[254](index=254&type=chunk) - Despite the material weaknesses, management concluded that the consolidated financial statements in this Form 10-Q fairly present the company's financial condition, results of operations, and cash flows[255](index=255&type=chunk) - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's internal control over financial reporting during the quarter[256](index=256&type=chunk) [PART II. OTHER INFORMATION](index=66&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material pending legal proceedings other than ordinary routine litigation incidental to its business. No other material losses are anticipated from these actions or claims - There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business[258](index=258&type=chunk) - No other material losses are anticipated as a result of these actions or claims[130](index=130&type=chunk) [Item 1A. Risk Factors](index=66&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[260](index=260&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company had no unregistered sales of equity securities during the period. It repurchased 543 shares of common stock in February 2025 at an average price of $21.42 per share, primarily under employee stock purchase programs and for tax withholding obligations - No unregistered sales of equity securities occurred during the first quarter of 2025[262](index=262&type=chunk) Issuer Purchases of Equity Securities (Q1 2025) | Period | Total number of shares purchased | Average price paid per share | | :--------------------------------- | :-------------------------- | :-------------------------- | | February 1 - 28, 2025 | 543 | $21.42 | | Total | 543 | $21.42 | - Shares repurchased were under the employee stock purchase program and for tax withholding obligations upon vesting of restricted stock awards[264](index=264&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) During the three months ended March 31, 2025, no director or officer of the company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during Q1 2025[266](index=266&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (Rule 13(a)-14(a) and 18 U.S.C. Section 1350), and financial information formatted in iXBRL - Includes CEO and CFO certifications required by Rule 13(a)-14(a) and 18 U.S.C. Section 1350[269](index=269&type=chunk) - Financial information from the Quarterly Report on Form 10-Q is formatted in iXBRL[269](index=269&type=chunk) [SIGNATURES](index=69&type=section&id=SIGNATURES) This section contains the official signatures of the company's President, Chief Executive Officer, and Chief Financial Officer, certifying the report - The report is duly signed on August 8, 2025, by Jeffrey G. Ludwig, President and Chief Executive Officer, and Eric T. Lemke, Chief Financial Officer[274](index=274&type=chunk)

Group 1 - Midland States Bancorp, Inc. declared a quarterly cash dividend of $0.32 per share, marking a 3.2% increase from the previous dividend of $0.31 per share [1] - The dividend is payable on August 22, 2025, to shareholders of record as of August 15, 2025 [1] - The Board also declared a cash dividend of $0.4844 per depository share on its 7.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, payable on September 30, 2025 [2] Group 2 - This dividend declaration represents the 25th consecutive year of increased quarterly cash dividends for Midland States Bancorp [3] - The company's capital ratios are strong, with significant improvements in earnings and asset quality noted in the second quarter [3] - The increase in the quarterly dividend is part of the company's capital return strategy to shareholders while retaining sufficient capital for growth [3] Group 3 - As of June 30, 2025, Midland States Bancorp had total assets of approximately $7.11 billion, with its Wealth Management Group managing about $4.18 billion in assets [4] - The company offers a comprehensive range of commercial and consumer banking products and services, including business equipment financing and trust and investment management [4]

Core Points - Midland States Bancorp, Inc. declared a quarterly cash dividend of $0.32 per share, marking a 3.2% increase from the previous dividend of $0.31 per share [1] - The company has increased its quarterly cash dividend for 25 consecutive years, indicating a strong commitment to returning capital to shareholders [3] - The bank's capital ratios are strong, with significant improvements in earnings and asset quality noted in the second quarter [3] Dividend Details - The cash dividend of $0.32 per share is payable on August 22, 2025, to shareholders of record as of August 15, 2025 [1] - Additionally, a cash dividend of $0.4844 per depository share on its 7.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will be payable on September 30, 2025, to stockholders of record as of September 15, 2025 [2] Company Overview - Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank [4] - As of June 30, 2025, the company had total assets of approximately $7.11 billion, with its Wealth Management Group managing approximately $4.18 billion in assets [4] - The company offers a full range of commercial and consumer banking products and services, including business equipment financing, merchant credit card services, trust and investment management, insurance, and financial planning services [4]

Core Insights - Midland States Bancorp (MSBI) reported revenue of $82.23 million for the quarter ended June 2025, marking a year-over-year increase of 13.1% and a surprise of +6.24% over the Zacks Consensus Estimate of $77.4 million [1] - The earnings per share (EPS) for the same period was $0.44, compared to $0.20 a year ago, although it fell short of the consensus EPS estimate of $0.63, resulting in an EPS surprise of -30.16% [1] Financial Performance Metrics - Net Interest Margin was reported at 3.6%, slightly above the two-analyst average estimate of 3.5% [4] - Net charge-offs to average loans stood at 2.3%, significantly higher than the 0.6% average estimate [4] - Efficiency Ratio was 60.6%, better than the estimated 63.3% [4] - Average Balance of Total interest-earning assets was $6.64 billion, below the estimated $6.86 billion [4] - Residential mortgage banking revenue was $0.76 million, lower than the $0.85 million average estimate [4] - Wealth management revenue reached $7.38 million, slightly above the $7.23 million average estimate [4] - Net Interest Income (FTE)/Adjusted net interest income was $58.96 million, below the estimated $60.26 million [4] - Total Noninterest Income was $23.53 million, exceeding the two-analyst average estimate of $17.26 million [4] - Service charges on deposit accounts were $3.35 million, above the $3.09 million estimate [4] - Interchange revenue was reported at $3.46 million, compared to the $3.09 million average estimate [4] Stock Performance - Shares of Midland States Bancorp have returned +8.4% over the past month, outperforming the Zacks S&P 500 composite's +5.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Midland States Bancorp (MSBI) reported quarterly earnings of $0.44 per share, missing the Zacks Consensus Estimate of $0.63 per share, representing a -30.16% earnings surprise [1] - The company posted revenues of $82.23 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 6.24% [2] Financial Performance - Earnings per share (EPS) for the same quarter last year was $0.20, indicating a significant year-over-year increase [1] - The company has surpassed consensus revenue estimates four times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $77.8 million, and for the current fiscal year, it is $2.51 on revenues of $309.25 million [7] Market Performance - Midland States Bancorp shares have declined approximately 24% since the beginning of the year, contrasting with the S&P 500's gain of 8.1% [3] - The company's Zacks Rank is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The Banks - Northeast industry, to which Midland States Bancorp belongs, is currently in the top 23% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Core Viewpoint - Midland States Bancorp, Inc. reported a significant decrease in net income for the second quarter of 2025, reflecting a recovery from a substantial loss in the previous quarter, with ongoing improvements in credit quality and profitability expected for the remainder of the year [1][2][4]. Financial Performance - Net income available to common shareholders for Q2 2025 was $9.8 million, or $0.44 per diluted share, down from $23.5 million, or $1.06 per diluted share in Q2 2024 [1][7]. - Compared to Q1 2025, which had a net loss of $143.2 million due to goodwill impairment, the company showed a recovery in profitability [2][19]. - Pre-provision net revenue increased to $32.2 million in Q2 2025 from $27.0 million in Q1 2025 [7]. - The net interest margin expanded by 7 basis points to 3.56% in Q2 2025, compared to 3.49% in Q1 2025 [7][15]. Credit Quality - Non-performing assets decreased to $111 million, or 1.56% of total assets, down from $151 million, or 2.08% in Q1 2025 [5][7]. - The company reported limited new substandard or non-performing loans during the quarter, with substandard accruing loans and non-performing loans decreasing to $58.5 million and $109.5 million, respectively [8][19]. - Net charge-offs for the quarter were $29.9 million, with significant charge-offs in the specialty finance portfolio [8][21]. Capital and Liquidity - Capital levels increased quarter-over-quarter, with a common equity tier 1 capital ratio of 9.02% and total capital to risk-weighted assets at 14.50% [7][20]. - The company successfully exited two larger non-performing relationships totaling $29 million after the quarter-end, which is expected to further improve the non-performing asset ratio [5][19]. Loan Portfolio and Deposits - Total loans as of June 30, 2025, were $5.06 billion, reflecting an increase of $46.6 million from March 31, 2025 [14]. - Total deposits were $5.95 billion, a slight increase of $10.5 million from the previous quarter, with notable increases in commercial and public fund deposits [14][29]. Wealth Management - Wealth management revenue totaled $7.4 million in Q2 2025, with assets under administration reaching $4.18 billion [14][21].