Midland States Bancorp(US:MSBI)2025-09-08 20:05Financial 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].