MIDLAND STS(MSBIP) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument details, and segment information for the periods ended March 31, 2025, and December 31, 2024 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | Change (%) | | :-------------------------------- | :------------- | :---------------- | :----- | :--------- | | Total Assets | $7,284,804 | $7,506,809 | $(222,005) | -2.96% | | Total Liabilities | $6,713,367 | $6,795,962 | $(82,595) | -1.21% | | Total Shareholders' Equity | $571,437 | $710,847 | $(139,410) | -19.61% | | Goodwill | $7,927 | $161,904 | $(153,977) | -95.10% | | Total Loans, net | $4,912,877 | $5,056,370 | $(143,493) | -2.84% | | Total Deposits | $5,936,434 | $6,197,243 | $(260,809) | -4.21% | Consolidated Statements of Income Consolidated Statements of Income Highlights (dollars in thousands, except per share data): | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Change (%) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :--------- | | Total Interest Income | $99,355 | $105,526 | $(6,171) | -5.85% | | Total Interest Expense | $41,065 | $45,755 | $(4,690) | -10.25% | | Net Interest Income | $58,290 | $59,771 | $(1,481) | -2.48% | | Provision for Credit Losses | $10,850 | $19,942 | $(9,092) | -45.59% | | Total Noninterest Income | $17,763 | $37,841 | $(20,078) | -53.06% | | Total Noninterest Expense | $203,005 | $48,608 | $154,397 | 317.64% | | (Loss) Income Before Income Taxes | $(137,802) | $29,062 | $(166,864) | -574.16% | | Net (Loss) Income | $(140,974) | $22,663 | $(163,637) | -722.05% | | Net (Loss) Income Available to Common Shareholders | $(143,202) | $20,435 | $(163,637) | -800.77% | | Basic (Loss) Earnings Per Common Share | $(6.58) | $0.92 | $(7.50) | -815.22% | | Diluted (Loss) Earnings Per Common Share | $(6.58) | $0.92 | $(7.50) | -815.22% | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Highlights (dollars in thousands): | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Net (Loss) Income | $(140,974) | $22,663 | $(163,637) | | Change in Investment Securities Available for Sale, net of tax | $8,354 | $(4,451) | $12,805 | | Change in Cash Flow Hedges, net of tax | $1,267 | $(215) | $1,482 | | Other Comprehensive Income (Loss), net of tax | $9,621 | $(4,666) | $14,287 | | Total Comprehensive (Loss) Income | $(131,353) | $17,997 | $(149,650) | Consolidated Statements of Shareholders' Equity Consolidated Statements of Shareholders' Equity Highlights (dollars in thousands): | Metric | December 31, 2024 | March 31, 2025 | Change | | :-------------------------------- | :---------------- | :------------- | :----- | | Balances, beginning of period | $710,847 | $710,847 | $0 | | Net loss | — | $(140,974) | $(140,974) | | Other comprehensive income | — | $9,621 | $9,621 | | Common dividends declared | — | $(6,782) | $(6,782) | | Preferred dividends declared | — | $(2,228) | $(2,228) | | Share-based compensation expense | — | $784 | $784 | | Issuance of common stock | — | $169 | $169 | | Balances, end of period | $710,847 | $571,437 | $(139,410) | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (dollars in thousands): | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Net Cash Provided by Operating Activities | $24,700 | $43,072 | $(18,372) | | Net Cash Provided by Investing Activities | $39,465 | $26,914 | $12,551 | | Net Cash Used in Financing Activities | $(76,925) | $(37,731) | $(39,194) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(12,760) | $32,255 | $(45,015) | | Cash and Cash Equivalents, End of Period | $102,006 | $167,316 | $(65,310) | Notes to Consolidated Financial Statements Note 1: Summary of Significant Accounting Policies - Midland States Bancorp, Inc. is a diversified financial holding company offering commercial and consumer banking, equipment financing, merchant services, trust, investment management, insurance, and financial planning services[23] - Principal income is derived from interest on loans and investment securities, supplemented by noninterest sources like fees from lending/deposit services, wealth management, and mortgage activities[24] - FASB ASU No. 2023-09 (Income Taxes) was adopted in 2025, with no material impact beyond additional disclosures; FASB ASU No. 2024-03 (Expense Disaggregation Disclosures) is not yet adopted, effective for annual periods beginning after December 15, 2026[28][29] Note 2: Investment Securities Investment Securities Available for Sale (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------- | :---------------- | :----- | | Total Available for Sale Securities (Fair Value) | $1,364,201 | $1,207,574 | $156,627 | | Gross Unrealized Gains | $4,125 | $5,142 | $(1,017) | | Gross Unrealized Losses | $(99,944) | $(112,358) | $12,414 | - Unrealized losses on investment securities are primarily due to changes in interest rates and market conditions, considered temporary, with no intent to sell prior to anticipated recovery[36] Note 3: Loans Total Loans Outstanding by Portfolio Class (dollars in thousands): | Loan Class | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Commercial | $772,876 | $818,496 | $(45,620) | | Commercial other | $496,686 | $541,324 | $(44,638) | | Commercial real estate non-owner occupied | $1,597,251 | $1,628,961 | $(31,710) | | Commercial real estate owner occupied | $441,910 | $440,806 | $1,104 | | Multi-family | $486,141 | $454,249 | $31,892 | | Farmland | $67,023 | $67,648 | $(625) | | Construction and land development | $264,966 | $299,842 | $(34,876) | | Residential first lien | $312,367 | $315,775 | $(3,408) | | Other residential | $60,728 | $64,782 | $(4,054) | | Consumer | $91,371 | $96,202 | $(4,831) | | Consumer other | $53,566 | $48,099 | $5,467 | | Lease financing | $373,168 | $391,390 | $(18,222) | | Total Loans | $5,018,053 | $5,167,574 | $(149,511) | Allowance for Credit Losses on Loans (dollars in thousands): | Loan Class | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Commercial Loan Portfolio | $75,644 | $83,163 | $(7,519) | | Other Loan Portfolio | $29,532 | $28,041 | $1,491 | | Total Allowance for Credit Losses on Loans | $105,176 | $111,204 | $(6,028) | | Provision for Credit Losses on Loans (Q1) | $10,850 | $19,942 | $(9,092) | Nonaccrual Loans (dollars in thousands): | Loan Class | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Total Commercial Loans | $128,509 | $128,548 | $(39) | | Residential first lien | $3,441 | $2,992 | $449 | | Other residential | $468 | $446 | $22 | | Consumer | $67 | $20 | $47 | | Lease financing | $7,004 | $8,132 | $(1,128) | | Total Nonaccrual Loans | $139,489 | $140,138 | $(649) | - Loan restructurings for Q1 2025 totaled $1,440 thousand across 7 loans, primarily involving term extensions[64] Note 4: Premises, Equipment and Leases Premises, Equipment and Leases (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Premises and Equipment, net | $86,719 | $85,710 | $1,009 | | Lease right-of-use assets | $9,246 | $8,830 | $416 | | Depreciation expense (Q1) | $1,238 | $1,231 | $7 | Note 5: Operating Leases - Lessor Operating Leases - Lessor (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Equipment leased to others, net | $26,800 | $30,700 | $(3,900) | | Lease income (Q1) | $3,100 | $4,500 | $(1,400) | Note 6: Goodwill Goodwill by Segment (dollars in thousands): | Segment | March 31, 2025 | December 31, 2024 | Change | | :-------------- | :------------- | :---------------- | :----- | | Banking | $3,181 | $157,158 | $(153,977) | | Wealth management | $4,746 | $4,746 | $0 | | Total Goodwill | $7,927 | $161,904 | $(153,977) | - The Company recognized $154.0 million of goodwill impairment expense in Q1 2025 for its Banking reporting unit, triggered by deteriorated credit quality and trends in the Company's stock price; this non-cash impairment did not impact regulatory capital ratios, tangible common equity ratio, or liquidity[86] Note 7: Derivative Instruments - The Company uses derivative instruments, including interest rate swaps and options, to manage interest rate risk, with a mix of accounting and economic hedges[90][91] Fair Value of Derivative Instruments (dollars in thousands): | Category | March 31, 2025 (Assets) | March 31, 2025 (Liabilities) | December 31, 2024 (Assets) | December 31, 2024 (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 | | Total Derivative Assets | $5,560 | N/A | $3,837 | N/A | | Total Derivative Liabilities | N/A | $6,425 | N/A | $5,655 | Credit Enhancement Derivative Fair Value (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Fair Value of Derivative | $5,600 | $16,800 | $(11,200) | | Credit enhancement (loss) income (Q1) | $(578) | $16,654 | $(17,232) | Note 8: Deposits Classification of Deposits (dollars in thousands): | Deposit Type | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Noninterest-bearing demand | $1,090,707 | $1,055,564 | $35,143 | | Interest-bearing checking | $2,161,282 | $2,378,256 | $(216,974) | | Money market | $1,154,403 | $1,173,630 | $(19,227) | | Savings | $522,663 | $507,305 | $15,358 | | Time | $1,007,379 | $1,082,488 | $(75,109) | | Total Deposits | $5,936,434 | $6,197,243 | $(260,809) | Note 9: FHLB Advances and Other Borrowings FHLB Advances and Other Borrowings (dollars in thousands): | Borrowing Type | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | FHLB advances – fixed rate, fixed term | $133,000 | $133,000 | $0 | | FHLB advances – putable fixed rate | $125,000 | $125,000 | $0 | | FHLB advances – Short term fixed rate | $240,000 | — | $240,000 | | Total FHLB Advances and Other Borrowings | $498,000 | $258,000 | $240,000 | - The Company's FHLB advances are collateralized by qualifying mortgage, home equity, and certain commercial real estate loans, totaling approximately $3.10 billion at March 31, 2025[108] Note 10: Subordinated Debt Subordinated Debt (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :---------------- | :------------- | :---------------- | :----- | | Outstanding amount | $78,000 | $78,000 | $0 | | Carrying amount | $77,754 | $77,749 | $5 | | Current rate (Fixed to Float) | 7.91% | 7.94% | -0.03% | | Current rate (Fixed) | 5.50% | 5.50% | 0.00% | Note 11: Accumulated Other Comprehensive Income (Loss) Changes in AOCI (Loss), net of tax (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Balance, beginning of period | $(81,960) | $(76,753) | $(5,207) | | Other comprehensive income before reclassifications | $9,004 | $(5,653) | $14,657 | | Amounts reclassified from AOCI to income | $617 | $987 | $(370) | | Balance, end of period | $(72,339) | $(81,419) | $9,080 | Note 12: Earnings per Common Share Earnings Per Common Share (dollars in thousands, except per share data): | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net (Loss) Income Available to Common Shareholders | $(143,202) | $20,435 | $(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) | Note 13: Fair Value of Financial Instruments - The Company uses a three-level hierarchy (Level 1, 2, 3) to measure the fair value of assets and liabilities, with Level 3 inputs reflecting unobservable assumptions[114][115] Assets Measured at Fair Value on a Recurring Basis (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Total Assets | $1,386,790 | $1,241,235 | $145,555 | | Level 1 Assets | $5,204 | $4,792 | $412 | | Level 2 Assets | $1,375,971 | $1,219,639 | $156,332 | | Level 3 Assets | $5,615 | $16,804 | $(11,189) | Assets Measured at Fair Value on a Non-Recurring Basis (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Nonperforming loans | $106,354 | $120,222 | $(13,868) | | Consumer loans held for sale | $280,311 | $336,719 | $(56,408) | | Other real estate owned | $4,183 | $4,941 | $(758) | | Total | $390,848 | $461,882 | $(71,034) | | Losses on Nonperforming Loans (Q1) | $2,012 | $4,834 | $(2,822) | Note 14: Commitments, Contingencies and Credit Risk Commitments and Financial Guarantees (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Commitments to extend credit | $782,808 | $754,202 | $28,606 | | Financial guarantees – standby letters of credit | $19,139 | $22,298 | $(3,159) | - The Company is subject to various contingent liabilities, claims, and legal actions in the normal course of business, but no other material losses are anticipated[130] Note 15: Segment Information - The Company's reportable segments are Banking, Wealth Management, and Corporate, with performance assessed by the Chief Executive Officer[134] Net Income (Loss) by Segment (dollars in thousands): | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :---------------- | :-------------------------------- | :-------------------------------- | :----- | | Banking | $(140,281) | $22,926 | $(163,207) | | Wealth Management | $1,078 | $1,022 | $56 | | Corporate | $(1,771) | $(1,285) | $(486) | | Total Net Income (Loss) | $(140,974) | $22,663 | $(163,637) | Note 16: Revenue from Contracts with Customers Noninterest Income Segregated by Topic 606 Scope (dollars in thousands): | Revenue Stream | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Wealth management revenue | $7,350 | $7,132 | $218 | | Service charges on deposit accounts | $3,305 | $3,116 | $189 | | Interchange revenues | $3,151 | $3,358 | $(207) | | Other income (in-scope) | $631 | $442 | $189 | | Noninterest income - in-scope of Topic 606 | $14,437 | $14,048 | $389 | | Noninterest income - out-of-scope of Topic 606 | $3,326 | $23,793 | $(20,417) | | Total Noninterest Income | $17,763 | $37,841 | $(20,078) | - Wealth management revenue, service charges on deposit accounts, and interchange revenue are key in-scope revenue streams, with wealth management and service charges showing increases, while interchange revenue slightly decreased[142][143][144][145] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis provides an overview of the Company's financial performance and condition, highlighting a significant net loss in Q1 2025 primarily due to a goodwill impairment charge. It details changes in net interest income, noninterest income, provision for credit losses, and expenses, alongside an analysis of the loan portfolio, capital resources, and liquidity management Critical Accounting Policies and Estimates - The preparation of financial statements involves significant estimates and judgments, particularly for the allowance for credit losses on loans and goodwill impairment[150] - A $154.0 million goodwill impairment expense was recognized in Q1 2025 for the Banking reporting unit, triggered by 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] - The Company accelerated the reduction of its non-core consumer loan portfolio in Q4 2024 through sales, including the LendingPoint portfolio and a commitment to sell the GreenSky portfolio, resulting in significant net charge-offs[163] Results of Operations Key Performance Metrics (dollars in thousands, except per share data): | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Change (%) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :--------- | | Net (Loss) Income | $(140,974) | $22,663 | $(163,637) | -722.05% | | Diluted (Loss) Earnings Per Common Share | $(6.58) | $0.92 | $(7.50) | -815.22% | | Net Interest Income | $58,290 | $59,771 | $(1,481) | -2.48% | | Provision for Credit Losses | $10,850 | $19,942 | $(9,092) | -45.59% | | Noninterest Income | $17,763 | $37,841 | $(20,078) | -53.06% | | Noninterest Expense | $203,005 | $48,608 | $154,397 | 317.64% | | Return on Average Assets | (7.66)% | 1.17% | -8.83% | -754.70% | | Return on Average Shareholders' Equity | (79.89)% | 11.54% | -91.43% | -792.29% | - Net interest margin (tax-equivalent) increased to 3.49% in Q1 2025 from 3.39% in Q1 2024, despite a decrease in net interest income[169] - Average loans decreased by $954.6 million in Q1 2025 compared to Q1 2024, primarily due to the accelerated reduction and sales of non-core consumer loan portfolios (LendingPoint and GreenSky)[177] - Credit enhancement income declined by $17.2 million in Q1 2025 compared to Q1 2024 due to loan payoffs and the cessation of GreenSky and LendingPoint programs[186] - Salaries and employee benefits increased by $2.3 million in Q1 2025, including $1.4 million in severance expense from a 25-employee headcount reduction[187] Financial Condition Loan Portfolio Composition (dollars in thousands): | Loan Type | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Commercial | $1,269,562 | $1,359,820 | $(90,258) | | Commercial real estate | $2,592,325 | $2,591,664 | $661 | | Construction and land development | $264,966 | $299,842 | $(34,876) | | Residential real estate | $373,095 | $380,557 | $(7,462) | | Consumer | $144,937 | $144,301 | $636 | | Lease financing | $373,168 | $391,390 | $(18,222) | | Total Loans, gross | $5,018,053 | $5,167,574 | $(149,521) | | Allowance for credit losses on loans | $(105,176) | $(111,204) | $6,028 | | Total Loans, net | $4,912,877 | $5,056,370 | $(143,493) | Nonperforming Assets (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Total Nonperforming Loans | $145,690 | $150,907 | $(5,217) | | Other real estate owned and other repossessed assets | $5,574 | $6,502 | $(928) | | Nonperforming Assets | $151,264 | $157,409 | $(6,145) | | Nonperforming loans to total loans | 2.90% | 2.92% | -0.02% | | Allowance for credit losses to nonperforming loans | 72.19% | 73.69% | -1.50% | - The qualitative factor adjustment for expected credit losses increased slightly to 63 basis points of total loans at March 31, 2025, from 62 basis points at December 31, 2024, driven by declining credit quality indicators and increased collateral valuation risks in commercial real estate[204] Capital Resources and Liquidity Management Capital Resources and Liquidity (dollars in thousands): | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------------- | :------------- | :---------------- | :----- | | Shareholders' Equity | $571,437 | $710,847 | $(139,410) | | Total Estimated Liquidity | $2,502,835 | $2,616,246 | $(113,411) | | Cash and cash equivalents | $102,006 | $114,766 | $(12,760) | | Unpledged securities | $880,920 | $672,399 | $208,521 | | FHLB committed liquidity | $1,015,704 | $1,290,246 | $(274,542) | | FRB discount window availability | $504,205 | $538,835 | $(34,630) | - The decrease in shareholders' equity was primarily due to the net loss of $141.0 million and dividends to common and preferred shareholders[232] Regulatory Capital Requirements - Both Midland States Bancorp, Inc. and Midland States Bank exceeded all regulatory minimums and met the 'well-capitalized' definition at March 31, 2025[238] Regulatory Capital Ratios at March 31, 2025: | Ratio | Midland States Bancorp, Inc. (Actual) | Midland States Bank (Actual) | Minimum Regulatory Requirements (1) | Well Capitalized | | :--------------------------------------- | :------------------------------------ | :--------------------------- | :---------------------------------- | :--------------- | | Total risk-based capital ratio | 13.51% | 12.83% | 10.50% | 10.00% | | Tier 1 risk-based capital ratio | 11.16% | 11.57% | 8.50% | 8.00% | | Common equity tier 1 risk-based capital ratio | 8.32% | 11.57% | 7.00% | 6.50% | | Tier 1 leverage ratio | 9.11% | 9.45% | 4.00% | 5.00% | Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the Company's exposure to market risk, primarily interest rate risk, and its management strategies. It highlights the use of NII at Risk modeling to assess sensitivity to interest rate changes, indicating an increasing profitability in a declining rate environment - The Company's primary market risk exposure is interest rate risk, with secondary exposure to price risk from investments[240] - Interest rate risk management involves monitoring loan and deposit flows, complemented by investment, funding, and hedging activities, overseen by the Board of Directors' Risk Policy and Compliance Committee[242][243] Net Interest Income (NII) at Risk Sensitivity (Shocks) (dollars 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)% | - The Company was within board policy limits for all NII at Risk scenarios at March 31, 2025, and projections indicate increasing profitability in a declining rate environment[248][249] Item 4. Controls and Procedures 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 are deemed to fairly present the Company's financial condition - Disclosure controls and procedures were not effective as of March 31, 2025, due to continued remediation of material weaknesses in internal controls over financial reporting[254] - Despite the material weaknesses, management concluded that the consolidated financial statements for Q1 2025 fairly present the Company's financial condition, results of operations, and cash flows[255] - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the Company's internal control during the fiscal quarter[256] PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company reports no material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business[258] Item 1A. Risk Factors The Company states that there have been no material changes to the risk factors previously disclosed in its 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company reported no unregistered sales of equity securities and detailed a minimal repurchase of common stock during February 2025, primarily for employee benefit plans and tax withholding obligations - No unregistered sales of equity securities occurred during the period[262] 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 | Note: These purchases were under the employee stock purchase program and for tax withholding obligations upon vesting of restricted stock awards. Item 5. Other Information The Company confirmed that no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the first quarter of 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[266] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including required certifications from the Chief Executive Officer and Chief Financial Officer, as well as financial information formatted in iXBRL - Includes Chief Executive Officer's and Chief Financial Officer's Certifications (Exhibits 31.1, 31.2, 32.1, 32.2)[269] - Financial information from the Quarterly Report on Form 10-Q is filed in iXBRL format (Exhibit 101 and 104)[269] SIGNATURES This section contains the official signatures of the Company's President and Chief Executive Officer and Chief Financial Officer, certifying the filing of the report - The report was duly signed on August 8, 2025, by Jeffrey G. Ludwig, President and Chief Executive Officer, and Eric T. Lemke, Chief Financial Officer[274]