Midland States Bancorp, Inc. (MSBI): History, Ownership, Mission, How It Works & Makes Money

Midland States Bancorp, Inc. (MSBI) just reported a sharp drop in Q3 net income-does that signal a fundamental problem, or a necessary strategic pivot in a tough credit environment?

You're seeing the headline that net income for Q3 2025 fell to $5.3 million, but that number actually reflects a calculated move to exit higher-risk lending, which drove a $20.5 million provision for credit losses as they cleaned up the balance sheet. Look closer, though, and you'll see the core business is holding up, with the Wealth Management Group hitting a record $8.0 million in quarterly revenue and nonperforming assets dropping to just 1.02% of total assets. So, how exactly does a community-focused bank with approximately $7.11 billion in total assets make money when it's actively shrinking a major lending arm, and what does this mean for its long-term stability?

Midland States Bancorp, Inc. (MSBI) History

Midland States Bancorp, Inc. (MSBI) is a financial holding company with a deep, community-focused history stretching back over 140 years. You need to know that this is not a new-economy startup; its roots are in the heartland of Illinois, starting as a single-location community bank. The company's current structure is the result of a deliberate, decades-long strategy of acquisitions and diversification, moving from a local bank to a regional player with approximately $7.11 billion in total assets as of June 30, 2025.

Given Company's Founding Timeline

Year established

The company's core banking subsidiary, Midland States Bank, was established in 1881.

Original location

The institution was originally founded as the Effingham State Bank in Effingham, Illinois, where its corporate headquarters remain today.

Founding team members

While the original Effingham State Bank was established in 1881, the specific names of the initial founding individuals are not a central part of the modern holding company's public narrative. The bank's longevity speaks to a consistent, local ownership and management focus for over a century, before its major expansion phase began in the 21st century.

Initial capital/funding

The initial capital from the 1881 founding is not publicly detailed in current financial reports, but the modern entity, Midland States Bank, has secured significant funding to support its growth strategy, raising a total of $102 million in funding over nine rounds since 2009.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's trajectory has been defined by strategic, often counter-cyclical, acquisitions and a recent, sharp focus on portfolio quality. The decision to go public in 2016 was a huge pivot, letting them use stock to fund the subsequent string of large bank acquisitions. They completed 14 transactions since 2008, which is defintely a high-growth playbook.

• Post-2008 Acquisition Strategy: Midland States Bancorp used the financial crisis to accelerate growth, completing multiple FDIC-assisted transactions that were both financially and operationally transformative, like the acquisitions of Strategic Capital Bank and AMCORE Bank.
• Revenue Diversification: The acquisition of Love Funding Corporation (FHA financing) in 2014 and ATG Trust Company in 2021 were key moves to build out non-interest income streams, specifically in wealth management and commercial FHA financing.
• 2025 Strategic Credit Shift: A major, near-term transformative decision was announced in Q3 2025. The company ceased new equipment finance originations effective September 30, 2025, after taking a significant $20.5 million provision for credit losses in that quarter. This move signals a clear, immediate shift to de-risk the balance sheet and focus on core community banking.
• Q3 2025 Performance Highlights: Despite the credit provision, the Wealth Management Group hit a record revenue of $8 million in the third quarter of 2025, showing the value of that diversification. Plus, the common equity tier 1 capital ratio improved to 9.37%, strengthening the company's foundation.

You can see the long-term vision in their core values and operating principles. It's all about balancing growth with stability. For more on the company's foundational beliefs, you should read Mission Statement, Vision, & Core Values of Midland States Bancorp, Inc. (MSBI).

Midland States Bancorp, Inc. (MSBI) Ownership Structure

Midland States Bancorp, Inc. is a publicly traded financial holding company, meaning its ownership is distributed among a diverse group of institutional and individual investors. This structure ensures a degree of transparency and regulatory oversight, but it also subjects the company to the market's daily scrutiny.

Midland States Bancorp, Inc.'s Current Status

Midland States Bancorp, Inc. (MSBI) is a community-based financial holding company, headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. The company is publicly traded on the NASDAQ Global Select Market (NASDAQ-GS) under the ticker symbol MSBI.

As of November 2025, the company has a market capitalization of approximately $341.16 million. Its financial strength is anchored by total assets of approximately $6.91 billion as of September 30, 2025. For the third quarter of 2025, the net income available to common shareholders was $5.3 million, or $0.24 per diluted share. That's a key number to watch, especially after the company's decision to cease equipment finance originations in Q3 2025.

Midland States Bancorp, Inc.'s Ownership Breakdown

The company's ownership is primarily held by institutional investors, which is typical for a bank of this size. This high level of institutional ownership-over 60%-means major investment firms and funds exert the greatest influence on strategic votes.

Here's the quick math on who holds the shares:

To be fair, institutional holdings can shift fast, but they defintely drive the stock's stability. For more on the long-term direction, you should check out the Mission Statement, Vision, & Core Values of Midland States Bancorp, Inc. (MSBI).

Midland States Bancorp, Inc.'s Leadership

The company's strategy is steered by an experienced leadership team, balancing community banking roots with broader financial services expertise. The executive team is responsible for managing the two core segments: Banking and Wealth Management.

The current key executive officers as of November 2025 include:

• Jeffrey G. Ludwig: President and Chief Executive Officer (CEO) of Midland States Bancorp, Inc.
• Jeffrey S. Mefford: President of Midland States Bank and Executive Vice President of the company. He is currently in a transition period, with a planned retirement date of June 30, 2026.
• Eric Lemke: Chief Financial Officer (CFO).
• Jeremy A. Jameson: Executive Vice President - Chief Credit Officer, who will be promoted to the new role of Executive Vice President - Chief Banking Officer upon Mr. Mefford's retirement, reporting directly to CEO Ludwig.

The upcoming transition, where Jeremy A. Jameson steps up to Chief Banking Officer, shows a clear focus on leadership continuity and deep credit expertise, which is crucial given the recent challenges in the equipment finance portfolio.

Midland States Bancorp, Inc. (MSBI) Mission and Values

Midland States Bancorp, Inc. (MSBI) anchors its strategy on community banking, aiming to move beyond simple transactions to genuinely enrich your financial life. Their cultural DNA is built on a set of core values that prioritize integrity, accountability, and a deep commitment to the communities they serve.

This focus is critical, especially when you look at the financials: a bank with approximately $7.11 billion in total assets as of June 30, 2025, must have a clear compass to navigate market shifts, like the net income of $9.8 million reported for the second quarter of 2025.

Midland States Bancorp, Inc.'s Core Purpose

The company's core purpose is defintely about creating long-term, shared value for all stakeholders-customers, employees, communities, and shareholders-by delivering tailored financial solutions.

Official Mission Statement

Midland States Bancorp, Inc.'s mission is to provide a superior experience to enrich their customer's financial journey. This isn't just about providing products; it's about making sure you get the right financial solutions exactly when and how you need them.

• Provide a superior experience for every customer.
• Enrich the customer's financial journey.
• Deliver high-quality products and services.
• Serve customers where, when, and how they want.

Vision Statement

While a single, formal vision statement is not always public, the company's actions and stated values point to a clear long-term aspiration: to be a leading community bank that fosters financial well-being and economic growth across the regions it serves. Their focus on community development is a key part of this vision, which you can see in their net positive sustainability impact, measured at a 35.5% net impact ratio by one third-party assessment.

This vision is operationalized through a commitment to core values:

• Integrity: Following through on commitments and treating others with respect.
• Accountability: Taking ownership and initiative for responsibilities.
• Teamwork: Committing to work cohesively to achieve shared goals.
• Empowerment: Encouraging confidence and trust in the knowledge of others.
• Creativity: Approaching challenges with forward-thinking and open minds.
• Achievement: Accomplishing company, team, and individual goals.

Midland States Bancorp, Inc. Slogan/Tagline

The company's tagline captures the essence of its community-focused, personalized approach to banking. It's a simple promise that translates their values into a tangible customer benefit.

• Providing strength you can count on with heart you can feel.

This blend of financial strength-like the $4.18 billion in assets under administration in their Wealth Management Group as of June 30, 2025-and a human touch is what they believe sets them apart. To understand the market's reaction to this strategy, you should read Exploring Midland States Bancorp, Inc. (MSBI) Investor Profile: Who's Buying and Why?

Midland States Bancorp, Inc. (MSBI) How It Works

Midland States Bancorp, Inc. (MSBI) operates as a diversified financial holding company, primarily generating revenue by taking deposits and using those funds to originate loans across its core community banking franchise, plus a growing non-interest income stream from its Wealth Management division. As of September 30, 2025, the company managed total assets of approximately $6.91 billion, with a clear strategic pivot toward core, relationship-based banking in its primary markets.

Given Company's Product/Service Portfolio

The company's model is built on three main pillars: commercial lending, retail banking, and fiduciary services, ensuring a stable mix of interest and non-interest income. You can see the revenue diversification at work here, which is defintely a smart move in this rate environment.

Given Company's Operational Framework

The operational framework is currently defined by a decisive risk-reduction and balance sheet clean-up strategy, which is the clear focus for the latter half of 2025. This meant taking a large provision for credit losses-$20.5 million in Q3 2025-to address legacy issues, mostly in the equipment finance portfolio.

The core process is simple: attract stable deposits, deploy capital into quality commercial and residential loans, and cross-sell wealth management services. Here's the quick math: the net interest margin (NIM) expanded to 3.79% in Q3 2025, partly because they successfully reduced higher-cost brokered and servicing deposits by $368.3 million in the quarter.

• Exited Non-Core Business: Ceased equipment finance originations effective September 30, 2025, to eliminate a significant source of credit risk.
• Deposit Restructuring: Intentionally decreased high-cost funding, which is expected to positively impact future NIM.
• Credit Quality Focus: Nonperforming assets dropped to 1.02% of total assets by September 30, 2025, down from 2.10% at the end of 2024, showing the tightening of underwriting standards is working.

Given Company's Strategic Advantages

Midland States Bancorp's competitive edge is not in scale, but in its regional focus and its successful, non-cyclical fee-based business. They are a community bank with a sophisticated wealth management arm. For a deeper dive into their guiding principles, check out Mission Statement, Vision, & Core Values of Midland States Bancorp, Inc. (MSBI).

• Wealth Management Revenue: The Midland Wealth Management division provides a consistent, non-interest income buffer, generating a record $8 million in revenue during the third quarter of 2025.
• Strong Capital Base: The company maintains a solid regulatory position, with a Common Equity Tier 1 capital ratio of 9.37% as of September 30, 2025, which gives them flexibility for future growth or buybacks.
• Regional Market Penetration: Deep roots and significant market share in key Illinois counties, allowing for strong, relationship-based commercial and retail deposit gathering.
• Focused Clean-up: The swift, decisive action to exit the equipment finance business and reduce nonperforming assets shows management's commitment to a lower-risk profile, which is a major advantage in a volatile credit cycle.

Midland States Bancorp, Inc. (MSBI) How It Makes Money

Midland States Bancorp, Inc. primarily generates revenue through two core functions: collecting interest on its loan portfolio and investment securities, which is Net Interest Income (NII), and earning fees from its various service lines, known as Noninterest Income. The company's financial health is fundamentally tied to the spread between the interest it earns on its $4.87 billion in loans and the interest it pays on its $5.60 billion in deposits as of Q3 2025.

Midland States Bancorp's Revenue Breakdown

As a financial holding company, the vast majority of Midland States Bancorp's revenue comes from traditional banking activities. For the third quarter of 2025, the company reported total revenue of $81.1 million.

Net Interest Income (NII) was $61.1 million in Q3 2025, representing the company's largest and most stable revenue stream. This stream saw an increase quarter-over-quarter, which is a good sign for core profitability. Noninterest Income, totaling $20.0 million for the quarter, includes all fee-based revenue like wealth management, service charges, and mortgage banking fees.

Business Economics

The core economic engine of Midland States Bancorp is its Net Interest Margin (NIM), which measures how efficiently the bank is lending money. In Q3 2025, the reported NIM expanded to 3.79%, or 3.69% when excluding a $1.6 million interest recovery from a nonaccrual loan payoff. This expansion was primarily driven by a drop in the cost of funding-specifically, the cost of deposits fell to 2.12% in the third quarter of 2025, a direct benefit from earlier Federal Reserve rate cuts.

• Loan Portfolio Strategy: The company is actively de-risking its portfolio. It strategically ceased originations in its equipment finance portfolio effective September 30, 2025, after taking a large $20.5 million provision for credit losses, mostly tied to that segment. This move reduces exposure to higher-risk assets, even if it cuts a revenue source.
• Fee-Based Strength: Wealth Management is a bright spot, generating a record $8.0 million in revenue in Q3 2025, up from $7.4 million in the prior quarter. This higher-margin, less cyclical revenue stream is a key strategic focus. You can find more on this focus in the Mission Statement, Vision, & Core Values of Midland States Bancorp, Inc. (MSBI).
• Deposit Management: Management is intentionally reducing higher-cost deposits, like servicing and brokered deposits, which decreased by $286.8 million and $81.5 million, respectively, in Q3 2025. Less expensive funding is defintely the key to a stronger NIM.

Midland States Bancorp's Financial Performance

Midland States Bancorp's Q3 2025 results reflect a period of significant credit clean-up, which temporarily depressed net income but strengthened the balance sheet. Net income available to common shareholders was $5.3 million, or $0.24 per diluted share, a sharp drop from the $9.8 million reported in Q2 2025, due to the large, non-recurring credit provision.

• Credit Quality: Nonperforming assets (NPAs) decreased to $70 million, or 1.02% of total assets, a pronounced decline from the 2.10% reported at the end of 2024. This is a material improvement in asset quality.
• Capital Position: Regulatory capital remains strong. The Common Equity Tier 1 (CET1) ratio stood at 9.37% and the Total Capital to Risk-Weighted Assets ratio was 14.29% as of September 30, 2025, both well above regulatory minimums. The company is focused on building its CET1 ratio toward a 10.0% target.
• Tangible Book Value: Tangible book value per share increased sequentially to $21.16 in Q3 2025. This is a critical metric for investors, showing the underlying value of the bank's assets after accounting for intangible items.

Here's the quick math: Pre-provision net revenue (PPNR)-which strips out the volatile provision for credit losses-was $31.3 million in Q3 2025. This number gives you a cleaner view of the bank's underlying operating profitability before the credit issues hit. The strategic actions taken this quarter, like exiting the equipment finance business, are clear moves to stabilize future earnings, even if they created a near-term earnings headwind.

Midland States Bancorp, Inc. (MSBI) Market Position & Future Outlook

Midland States Bancorp, Inc. is executing a focused strategy in late 2025 to shed higher-risk assets and boost core profitability, positioning itself as a resilient, community-focused bank with a rapidly growing Wealth Management platform. The company's total assets stood at approximately $6.91 billion as of September 30, 2025, with a clear near-term goal of improving its capital position and resolving operational issues to unlock significant forecasted earnings growth.

Competitive Landscape

Midland States Bancorp operates in the highly competitive Midwest regional banking market, where its strength lies in deep, localized market penetration, particularly in Illinois. While its total assets of $6.91 billion place it in the community bank category, it faces larger, more diversified regional players like First Busey Corporation and First Mid Bancshares, Inc. in its core operating footprint.

Here's the quick math: Midland States Bancorp's market capitalization of $0.34 billion as of November 2025 is significantly smaller than First Busey Corporation's $2.01 billion, reflecting the difference in scale and market perception of risk. The company's core strength remains its ability to capture outsized deposit and loan share in its home counties, like the 32.21% market share in Kankakee, Illinois.

Opportunities & Challenges

The company's future trajectory hinges on a successful pivot away from higher-risk specialty finance and a continued focus on its core community banking and wealth management operations. The forecast for annual earnings growth of 106.16% suggests a strong belief in this turnaround.

Industry Position

Midland States Bancorp is a mid-tier regional bank, but it's defintely not a small fish in its specific ponds. Its primary industry position is that of a dominant local community bank with a significant, growing fee-income business line. The strategic decision to cease equipment finance production and sell off the GreenSky loan portfolio (approximately $330 million) is a clear move to de-risk the balance sheet and focus on core banking.

• De-Risking & Credit Quality: Nonperforming assets have been aggressively reduced to 1.02% of total assets as of September 30, 2025, a pronounced decline from 2.10% at the end of 2024.
• Wealth Management Strength: The wealth management platform is a key differentiator, providing a stable, non-interest revenue stream that helps mitigate traditional lending volatility.
• Valuation Discount: The stock trades at a Price-to-Book ratio of 0.7x, which is below the US Banks industry average of 1x, suggesting the market is waiting for the successful execution of the credit clean-up and a return to consistent profitability.

The company's commitment to its core model is evident in its Mission Statement, Vision, & Core Values of Midland States Bancorp, Inc. (MSBI). The next step for management is to resolve the delayed filings and hit that 10.0% CET1 target. That's what will restore investor confidence and close that valuation gap.