Midland States Bancorp, Inc.

What they do

Midland States Bank, formed in 1881 and chartered in Illinois, provides commercial and consumer banking, merchant credit card services, trust and investment management, insurance and financial planning. Community banking is primarily commercial and retail lending and deposit taking to individuals, businesses and municipalities. Its wealth management group had approximately $4.48 billion of assets under administration as of December 31, 2025.

Revenue drivers

• Community Banking lending — Commercial, commercial real estate, construction and consumer loans originated from branch offices in its Illinois and St. Louis market areas, focused on middle market businesses.
• Commercial real estate and construction — At December 31, 2025 the largest property types in this portfolio were multi-family ($430.4 million, 16.4%), retail ($459.2 million, 17.5%) and hotel/motel ($290.1 million, 11.0%).
• Deposit taking — Funds the loan book through branch deposits; total deposits increased $267 million in the second quarter of 2026 while brokered deposit reliance was reduced.
• Wealth management and trust — Trust assets under administration of $4.78 billion at June 30, 2026, up from $4.18 billion a year earlier; management called the second quarter a record quarter for wealth management.

Recent performance

Second quarter 2026 net income available to common shareholders was $17.7 million, or $0.82 per diluted share, versus $16.2 million, or $0.74, in the first quarter and $9.8 million, or $0.44, in the second quarter of 2025. Net interest margin was 3.98% versus 3.91% in the prior quarter, and adjusted pre-provision net revenue was $32.8 million, or 2.01% of average assets. Total loans fell $94.9 million on anticipated runoff in specialty finance and non-core portfolios, while Community Bank loans rose $6.3 million. Net charge-offs to average loans rose to 1.17% annualized from 0.64%, tied to resolution of a previously identified nonperforming commercial real estate credit. Full-year 2025 results included a net loss of $124.3 million and diluted loss per share of $6.12.

Strategy

Management describes an ongoing transformation of Midland into a higher-performing community bank, centered on the Community Bank, deposit growth and customer relationships. It is simplifying the balance sheet by running off specialty finance and non-core loan portfolios. Capital is above the company's near-term target, with total capital to risk-weighted assets of 15.77% and common equity tier 1 of 10.39% at June 30, 2026, and capital is being returned through share repurchases. Priorities include expanding wealth management after a record quarter and disciplined growth in the Community Bank.

Risks

• Concentrated CRE exposure — Commercial real estate and construction loans are concentrated in multifamily, retail and hotel/motel property types and the company recently resolved a nonperforming commercial real estate credit.
• Elevated charge-offs — Net charge-offs to average loans were 1.17% annualized in the second quarter of 2026, up from 0.64% in the prior quarter and 3.69% in the fourth quarter of 2025.
• Regional economic sensitivity — The 10-K states the business is sensitive to conditions in the United States generally and Illinois and the St. Louis metropolitan area in particular.
• Credit risk management — The 10-K warns that failure to effectively manage credit risk could increase nonperforming loans, charge-offs and delinquencies and require higher provisions.

Outlook

CEO Jeffrey G. Ludwig said the company remains focused on disciplined growth across the Community Bank, expanding wealth management following a record quarter, and leveraging its stronger financial position. Management cited continued improvement in broader credit trends, including reductions in past due and substandard loans, despite the higher charge-off. The stated aim is consistent earnings growth and long-term shareholder value.