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“Improving credit quality remains a strategic priority, and during the first quarter we had no significant new substandard or nonperforming loans identified, with two-thirds of net charge-offs in the quarter taking place within third party programs that were fully reimbursed. The previously disclosed sale of $330 million of GreenSky loans in April 2025, plus tighter underwriting standards in our equipment finance portfolio are expected to significantly reduce exposure to higher-risk portfolios over the balance of 2025.

“Our underlying profitability trends were favorable in the first quarter, with a strong net interest margin of 3.48%, solid loan growth in the Community Bank, and continued contribution from our wealth management revenue platform. We continue to expect stronger profitability over the balance of 2025 with growing capital ratios.”

Key Points for First Quarter and Outlook

Continued Credit Clean-up; Tightened Credit Standards

• The Company closed its sale of participation interests of consumer loans originated through the GreenSky program. The sale included approximately $330 million, or 89%, of the Company’s GreenSky portfolio. The remaining portfolio will be retained by the Company under a new servicing agreement.

• Substandard accruing loans and nonperforming loans decreased slightly to $75.7 million and $140.0 million at March 31, 2025, respectively. No significant new substandard or nonperforming loans were identified during the quarter.

• Net charge-offs were $16.9 million for the quarter, including $11.1 million of fully reimbursed charge-offs related to our third party lending programs. Net charge-offs in our equipment finance portfolio were approximately $4.5 million as we continue to see credit issues primarily in the trucking industry.

• Provision for credit losses on loans was $8.3 million for the first quarter of 2025, primarily as a result of continued trends in the equipment finance portfolio.

• Allowance for credit losses on loans was $90.5 million, or 1.80% of total loans.
  

The table below summarizes certain information regarding the Company’s loan portfolio asset quality as of March 31, 2025.

Solid Growth Trends in Community Bank & Wealth Management

• Total loans at March 31, 2025 were $5.02 billion, a decrease of $149.5 million from December 31, 2024. Key changes in the loan portfolio were as follows:

  • Loans originated by our Community Bank increased $56.8 million, or 1.8%, from December 31, 2024, pipelines remain strong

  • We continue to pursue an intentional decrease in our Specialty Finance loan portfolio, as we tighten credit standards. Balances in this loan portfolio decreased $159.3 million during the quarter.

  • Equipment finance portfolio balances declined $44.9 million during the quarter as we continue to reduce the overall balances in this unit and tighten underwriting standards.

• Total deposits were $5.94 billion at March 31, 2025, a decrease of $260.8 million from December 31, 2024. The decline in deposits reflects the following:

  • Noninterest-bearing deposits increased $35.1 million in the quarter.

  • Retail deposits increased by $96.8 million through a growth and marketing strategy implemented late in the first quarter of 2025, along with higher average deposits held by retail customers.

  • Brokered deposits, including both money market and time deposits decreased by $115.4 million.

  • Sweep accounts included in interest bearing checking decreased by $115.4 million, of which $80 million was related to normal first quarter distributions for one large depositor with the remainder due to seasonal adjustments.

  • Servicing deposits decreased by $53.9 million.

• Wealth Management revenue totaled $7.4 million in the first quarter of 2025. Assets under administration were $4.10 billion at March 31, 2025. The Company added six new sales positions in the first quarter of 2025 and continues to experience strong pipelines.
  

Net Interest Margin

• Net interest margin was 3.48%, and we saw a continued decline in the cost of funding. Rate cuts enacted by the Federal Reserve Bank in late 2024 continue to result in a lower cost of deposits for the Company, which fell to 2.29% in the first quarter of 2025.
  

The following table summarizes certain factors affecting the Company’s net interest margin for the first quarter of 2025.

Trends in Noninterest Income and Expense

• Noninterest income was $17.8 million for the first quarter of 2025 and included a loss on limited partnership investments of $0.6 million and credit enhancement losses of $0.6 million, offset by income from death benefits on life insurance policies of $0.3 million.

• As of the date of this earnings release, the Company expects noninterest income of approximately $17.0 million to $17.5 million in the near term quarters after consideration of credit enhancement income or losses.

• Noninterest expense was $48.9 million for the first quarter of 2025 and was impacted by an additional $1.4 million in severance expense and $0.7 million in professional fees. The Company continues to experience higher levels of legal fees and other expenses related to loan collections.

• As of the date of this earnings release, the Company expects the near term operating expense run rate to be approximately $48.0 million to $49.0 million.

First Quarter 2025 Financial Highlights and Key Performance Indicators (KPIs):

Capital

At March 31, 2025, Midland States Bank and the Company exceeded all regulatory capital requirements under Basel III, and Midland States Bank met the qualifications to be a ‘‘well-capitalized’’ financial institution, as summarized in the following table:

About Midland States Bancorp, Inc.

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. As of March 31, 2025, the Company had total assets of approximately $7.46 billion, and its Wealth Management Group had assets under administration of approximately $4.10 billion. The Company provides a full range of commercial and consumer banking products and services and business equipment financing, merchant credit card services, trust and investment management, insurance and financial planning services. For additional information, visit https://www.midlandsb.com/ or https://www.linkedin.com/company/midland-states-bank.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP.

These non-GAAP financial measures include “Pre-tax, pre-provision earnings,” “Pre-tax, pre-provision diluted earnings per share,” “Pre-tax, pre-provision return on average assets,” “Efficiency ratio,” “Tangible common equity to tangible assets,” and “Tangible book value per share.” The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s funding profile and profitability. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, the measures in this press release may not be comparable to other similarly titled measures as presented by other companies.

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 statements about the Company’s plans, objectives, future performance, goals and future earnings levels, including currently anticipated levels of noninterest income and operating expenses. These statements are subject to many risks and uncertainties, including the expected timing and results of the Company’s audit for the year ended December 31, 2024, and the Company’s ongoing evaluation of whether there is an impairment to its goodwill; the fact that the completion and filing of the 2024 Annual Report has taken, and may continue to take, longer than expected; changes in interest rates and other general economic, business and political conditions; the impact of federal trade policy, inflation, increased deposit volatility and potential regulatory developments; changes in the financial markets; changes in business plans as circumstances warrant; changes to U.S. tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACTS:
Jeffrey G. Ludwig, President and CEO, at jludwig@midlandsb.com or (217) 342-7321
Eric T. Lemke, Chief Financial Officer, at elemke@midlandsb.com or (217) 342-7321