Midland States Bancorp, Inc. (MSBI): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Midland States Bancorp, Inc.'s (MSBI) portfolio, and honestly, the recent strategic moves make this BCG analysis pretty straightforward. We're seeing a deliberate shift to core banking and fee income, so let's map out where the capital is going and where it's being harvested. The Wealth Management Group is clearly a Star, hitting record $8.0 million in Q3 revenue against $4.36 billion in Assets Under Administration, while the stable loan book totaling $4.87 billion and a 3.79% Net Interest Margin anchor the Cash Cows. Meanwhile, the bank is decisively cutting bait on the Equipment Finance segment-a clear Dog that drove a $20.5 million provision-and is now deciding the fate of riskier assets like Specialty Finance, which land squarely in the Question Mark quadrant as they tighten credit standards.

Background of Midland States Bancorp, Inc. (MSBI)

Midland States Bancorp, Inc. is a community-based financial holding company. It is headquartered in Effingham, Illinois, and acts as the sole shareholder of Midland States Bank. The company provides a comprehensive suite of services across its main segments: Banking, Wealth Management, and Corporate activities. These services include commercial and consumer banking, trust and investment management, and financial planning services. As of June 30, 2025, Midland States Bancorp reported total assets of approximately $7.11 billion.

The business model has recently undergone a significant strategic realignment as of late 2025. Midland States Bancorp, Inc. announced the sale of substantially all of its equipment finance portfolio to an affiliate of North Mill Equipment Finance LLC. This transaction closed on November 28, 2025, for $502 million in cash. This move supports the stated strategy to concentrate resources and capital on the core community banking operations. The company had already stopped originating new equipment finance loans and leases effective September 30, 2025.

Looking at the third quarter of 2025 (Q3 2025), the company reported net income available to common shareholders of $5.3 million, which translated to $0.24 per diluted share. This performance followed a Q2 2025 result of $9.8 million in net income, or $0.44 per diluted share. A major factor impacting Q3 2025 earnings was a provision for credit losses on loans totaling $20.5 million, primarily linked to the equipment finance portfolio.

Despite the earnings pressure, core banking metrics showed some positive movement. The Net Interest Margin (NIM) for Q3 2025 improved to 3.79%, up from 3.56% in the prior quarter, driven by a decline in funding costs. Furthermore, the Wealth Management Group saw its revenue reach a record $8.0 million in the third quarter of 2025, with Assets Under Administration growing to $4.36 billion by September 30, 2025. The overall loan book stood at $4.87 billion as of September 30, 2025.

Credit quality showed improvement, as nonperforming assets to total assets decreased to 1.02% by the end of Q3 2025, down from 1.15% in the prior quarter. From a capital perspective, the company maintained a solid position, reporting a Common Equity Tier 1 capital ratio of 9.37% as of September 30, 2025, moving toward its internal target of 10.0%. Total deposits were reported at $5.60 billion at that same date.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Stars

You're looking at the engine that's currently leading the charge in market penetration for Midland States Bancorp, Inc. (MSBI). In the Boston Consulting Group (BCG) framework, Stars are those business units operating in high-growth markets where Midland States Bancorp, Inc. (MSBI) already commands a strong market share. These units are leaders, but honestly, they still soak up significant cash to maintain that growth trajectory and fend off competitors.

For Midland States Bancorp, Inc. (MSBI), the Wealth Management Group clearly fits this high-potential, high-investment profile. This segment is generating substantial fee income, which is exactly what you want from a Star-it's a leader in its space, even if it requires ongoing investment to keep that lead. Here's a quick look at the key performance indicators for this unit as of the third quarter of 2025.

That record revenue of $8.0 million in Q3 2025 shows the momentum this group has. It's a high-growth, non-interest income stream, which is key because it diversifies the bank's overall revenue base away from pure lending margins. To be fair, while the revenue is strong, the AUA growth from $4.18 billion to $4.36 billion quarter-over-quarter shows the capital deployment is working to build the asset base, which is the necessary support Stars need.

The strategic implication here is clear: this is where Midland States Bancorp, Inc. (MSBI) needs to continue deploying capital to solidify its leadership. If this market growth slows down later, this unit is perfectly positioned to transition into a Cash Cow, but for now, it demands investment. This focus area is central to the firm's near-term strategy.

• Strategic focus area for future capital deployment and growth.
• High-growth, non-interest income stream that diversifies the bank's revenue base.
• Continued investment in team and technology to deepen relationships.
• Cross-sell efforts with commercial clients are a key growth driver.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Cash Cows

The Core Community Bank Deposit Base of Midland States Bancorp, Inc. represents a classic Cash Cow component. This base provides stable, lower-cost funding, which is crucial when the market is mature and growth prospects for the overall banking sector are tempered. You see this stability reflected in the cost of funding, which fell to 2.12% in the third quarter of 2025.

The main engine of profitability, the Net Interest Margin (NIM), hit 3.79% in Q3 2025. Excluding a one-time interest recovery of $1.6 million, the margin was 3.69%. This margin expansion, despite a decrease in total deposits, shows effective management of the core funding sources.

You saw strong evidence of this core strength in the second quarter of 2025, where Commercial and public fund deposits increased by $70.5 million and $127.8 million, respectively, in that quarter. By the third quarter, the focus shifted to maintaining quality, with high-cost servicing and brokered deposits declining, while Community Bank deposits increased by $69.9 million quarter-over-quarter.

The overall loan portfolio, totaling $4.87 billion as of September 30, 2025, remains the largest asset base, though it decreased by $167.7 million from the prior quarter. The Community Bank portion of the loan portfolio saw a smaller decrease of $39.2 million. This portfolio generates the high cash flow characteristic of a Cash Cow, even as the bank intentionally reduces exposure in areas like Specialty Finance.

Here's a look at the composition of the core funding, showing where the stable, lower-cost funds reside:

The Cash Cow status is supported by the fact that the loan to deposit ratio remained stable at 87% in Q3 2025, indicating a balanced asset-liability structure. You want to maintain this productivity by investing just enough to keep the infrastructure efficient, like expanding data and analytics capabilities or strengthening credit processes, rather than pouring capital into high-growth marketing.

Key financial metrics supporting the Cash Cow classification for Midland States Bancorp, Inc. as of the latest reporting periods include:

• Net Interest Margin (NIM) in Q3 2025: 3.79%.
• Cost of Deposits in Q3 2025: 2.12%.
• Total Loans as of September 30, 2025: $4.87 billion.
• Total Deposits as of Q3 2025 end: $5.60 billion.
• Pre-Provision Net Revenue (PPNR) in Q3 2025: $31.3 million.

The strategy here is to 'milk' these gains passively while ensuring the infrastructure supports efficiency, for instance, by automating back-office processes using AI and RPA. You're definitely looking to harvest the cash flow generated by this established market position.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

The Equipment Finance Portfolio of Midland States Bancorp, Inc. fits this profile, leading to decisive action to exit the segment.

The strategic move involved ceasing all new equipment finance originations effective September 30, 2025.

This segment drove a significant portion of the $20.5 million total Q3 2025 provision for credit losses, with approximately $15 million of that provision specifically tied to higher loss-given-default assumptions within the equipment finance portfolio.

The sale of substantially all of the $599 million portfolio, which closed on November 28, 2025, is a defintely a strategic exit.

Here are the key financial details surrounding this Dog unit's exit:

The decision to divest was clearly aimed at reducing exposure to higher-risk asset classes and simplifying operations to sharpen focus on core community banking and wealth management.

The impact of this unit on Midland States Bancorp, Inc.'s recent credit metrics is clear:

• Provision for credit losses in Q3 2025: $20.5 million.
• Net charge-offs in Q3 2025 attributed to equipment finance: $5.0 million.
• Net charge-offs averaged quarterly for 2025: $4.4 million.
• Total assets for Midland States Bancorp, Inc. (as of 9/30/2025): Approximately $6.91 billion.

The goal of this action is to improve asset quality and capital ratios, as the transaction is expected to be accretive to capital, showing a 55-60 basis point improvement to the CET1 Ratio.

The expected pro forma impact on net interest income is a decline of $3.0-$4.0 million per quarter after retiring wholesale funding.

The unit's low market share and low growth, coupled with credit quality issues primarily in the trucking industry, made expensive turn-around plans unviable.

The strategic exit involved several concrete steps:

• Ceased new originations on September 30, 2025.
• Sold substantially all the portfolio on November 28, 2025.
• Anticipated a $20 million pre-tax loss in Q4 2025.
• Planned to retire $350 million of wholesale funding.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Question Marks

These business segments fit the Question Marks quadrant because they operate in markets that may have growth prospects, but Midland States Bancorp, Inc. currently holds a low market share or is actively shrinking the segment due to risk profile, consuming cash without guaranteed returns.

The Specialty Finance Loan Portfolio is a prime example of a segment requiring a clear decision. Midland States Bancorp, Inc. is pursuing an intentional decrease in this portfolio, reflecting tightened credit standards as a strategic priority for improving credit quality. You see this reduction trend clearly across the 2025 quarters.

Here's the quick math on the portfolio reduction:

The GreenSky consumer loan portfolio is another area demanding attention. Midland States Bancorp, Inc. closed the sale of participation interests in consumer loans originated through the GreenSky program in April 2025. This transaction involved approximately $330 million, which was 89% of the total GreenSky portfolio, leaving a smaller portion to be retained under a new servicing agreement. Divesting the majority of this portfolio signals a move away from a high-risk area, which aligns with the strategy for Question Marks: either invest heavily or divest.

Deposit trends also show volatility that places certain funding sources in this quadrant, as they consume cash but may not be sticky enough for long-term stability without significant investment.

• Retail and servicing deposits decreased $34.7 million in Q2 2025.
• Retail deposits had previously increased by $96.8 million in Q1 2025 from a growth push.
• Brokered deposits decreased by $109.4 million in Q2 2025.
• Servicing deposits decreased by $286.8 million from June 30, 2025, to September 30, 2025.

The Specialty Finance segment is explicitly targeted for reduction, with a stated goal to get exposure to less than 10% of total loans, which stood at $4.87 billion as of September 30, 2025. These segments are high-risk or underperforming right now, meaning they require a decision: either heavy investment to quickly capture market share and turn them into Stars, or complete divestiture to stop the cash drain. Honestly, the actions taken suggest divestiture is the current path for the largest components of this group.