Midland States Bancorp (MSBI) Q4 2025 earnings summary

Executive summary

• Completed sale of equipment finance portfolio, reducing specialty finance exposure and focusing on core commercial and community banking growth, resulting in a $21.4 million loss and a reported net loss of $5.1 million ($0.24 per diluted share) for Q4 2025; adjusted earnings were $11.9 million ($0.53 per diluted share).

• Continued credit remediation, reducing non-performing assets by $4.3 million in Q4, with NPAs to assets at 1.02%.

• Wealth Management reached record assets under administration of $4.5 billion and revenue of $8.3 million in Q4.

• Additional credit enhancement income of $6.6 million recognized, partially offset by $1.7 million in FDIC assessments.

Financial highlights

• Fully diluted EPS was ($0.24) for Q4 2025; adjusted diluted EPS was $0.53, with adjusted pre-provision net revenue at $31.4 million.

• Net interest income was $58.7 million, benefiting from a 17 bps reduction in deposit costs; net interest margin was 3.74%.

• Noninterest income rose to $26.9 million, driven by credit enhancement income; noninterest expense increased to $77.2 million due to loan sale losses and FDIC assessments.

• Loan balances decreased $515.6 million from the prior quarter, mainly due to the sale of equipment finance loans; equipment finance balances declined by $578.1 million.

• Deposits decreased $180.4 million, primarily from declines in high-cost public funds and brokered deposits.

Outlook and guidance

• Lower credit costs expected in 2026, with continued improvement in credit quality and further reduction in nonperforming assets.

• Focus remains on growing the Community Bank, building regulatory capital, and expanding fee income, with positive revenue trends and strong loan growth expected to continue.

• Near-term noninterest income expected at $19.0–$20.0 million per quarter; noninterest expense run-rate at $50.0–$51.0 million per quarter.

• Anticipates further improvement in funding costs as recent Federal Reserve rate cuts take effect in 2026.