Midland States Bancorp, Inc. (MSBI): Business Model Canvas [Dec-2025 Updated]

You're analyzing how regional banks are strategically resetting after the recent market shifts, and Midland States Bancorp, Inc. (MSBI) offers a textbook case of decisive action. Honestly, the firm has clearly pivoted, shedding higher-risk assets to focus hard on core community banking and a wealth management segment that is really paying off, pulling in a record $8.0 million in fees in Q3 2025 alone. With total assets sitting at $6.91 billion as of September 30, 2025, their Business Model Canvas reveals a deliberate strategy to build stability through core deposits and advisory services, moving away from costly wholesale funding. See the full breakdown below to understand the nine building blocks driving this new, de-risked Midland States Bancorp, Inc. (MSBI) model.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Key Partnerships

You're looking at how Midland States Bancorp, Inc. structures its external relationships to support its community banking focus, especially after recent portfolio adjustments. Here's the breakdown of the key partnerships as of late 2025, grounded in the latest reported figures.

North Mill Equipment Finance LLC (NMEF) for Portfolio Sale

Midland States Bancorp, Inc. finalized a significant divestiture, moving away from its equipment finance segment to concentrate capital. This transaction closed on November 28, 2025.

The core of this partnership was the sale of substantially all of the equipment finance portfolio to an affiliate of North Mill Equipment Finance LLC (NMEF).

This strategic move impacts the balance sheet; as of September 30, 2025, Midland States Bancorp, Inc. reported total assets of approximately $6.91 billion, with its Wealth Management Group holding assets under administration of approximately $4.36 billion.

Fintech Partners for Evolving Tech-Forward Strategy

Midland States Bancorp, Inc. is actively pursuing a tech-forward strategy, which includes expanding its Banking-as-a-Service (BaaS) initiative. The company has a history of successful fintech relationships, including a partnership with Synctera to broaden its fintech connections, aiming for low-cost deposits and increased payment solution customers. The Q3 2025 presentation noted the presence of 'Portfolios originated by Fintech partners.'

The focus here is on scaling efficiently and growing revenues through these technology alliances. The firm has also had a successful fintech partnership with a consumer loan originator over the last decade.

• Goal: Contribute to low-cost deposits.
• Goal: Increase customers using payment solutions.
• Strategy: Leverage BaaS capabilities.

Community Development Financial Institutions (CDFIs) for Local Investment

While specific 2025 commitments to CDFIs weren't immediately available, Midland States Bancorp, Inc.'s history shows a commitment to community reinvestment. A historical agreement from 2014 involved a total commitment of $16.6 million to low- and moderate-income and minority communities, which included a specific allocation for real estate loans.

This historical data provides a benchmark for the type of local investment activity the bank prioritizes, which aligns with its community banking core.

Local Chambers of Commerce and Community Organizations

Partnerships with local chambers of commerce and community organizations are integral to Midland States Bancorp, Inc.'s community banking footprint in Illinois and Missouri. These relationships help drive local commercial growth opportunities, particularly in markets like St. Louis and Chicago. The bank's strategy involves investing in the community where it operates its 53 branch/office locations.

• Supports commercial growth in St. Louis and Chicago.
• Maintains presence across Illinois and Missouri markets.

Insurance Carriers for Financial Planning Services

The Wealth Management Group at Midland States Bancorp, Inc. partners with insurance carriers to offer risk management tools, specifically life insurance, as part of goals-based financial planning. This service is offered alongside trust and investment management. As of September 30, 2025, the Wealth Management Group had assets under administration of approximately $4.36 billion.

Advisors use these partnerships to objectively review client plans and coverage. Life insurance is positioned as a valuable tool for managing risk and achieving generational or philanthropic benefits.

Finance: draft 13-week cash view by Friday.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Key Activities

Commercial and consumer loan origination and servicing.

Total loans at Midland States Bancorp, Inc. stood at $4.87 billion as of September 30, 2025. Loans originated by the Community Bank decreased by $39.2 million from June 30, 2025, in the third quarter of 2025. Origination of new equipment finance loans and leases ceased effective September 30, 2025. The servicing deposits component of funding saw a decrease of $286.8 million from June 30, 2025, to September 30, 2025.

Deposit gathering and management across retail and commercial.

Total deposits for Midland States Bancorp, Inc. were $5.60 billion at September 30, 2025, representing a sequential decrease of $342.1 million from June 30, 2025. Brokered deposits specifically decreased by $81.5 million over the same period. The cost of deposits for the third quarter of 2025 fell to 2.12%. The loan to deposit ratio remained stable at 87% as of the third quarter of 2025.

Trust and investment advisory services (Wealth Management).

The Wealth Management division achieved record revenue of $8 million for the third quarter of 2025. Assets Under Administration (AUA) grew to $4.36 billion by the end of the third quarter of 2025.

Strategic balance sheet de-risking and capital building.

Nonperforming Assets (NPAs) as a percentage of total assets improved, decreasing to 1.02% as of September 30, 2025. The Consolidated Common Equity Tier 1 (CET1) ratio was 9.37% at the end of Q3 2025, with the Total Capital ratio at 14.29%. Tangible Book Value per share was $21.16 as of the third quarter of 2025. The company redeemed $50.75 million in subordinated notes during the third quarter using existing liquidity.

The recent sale of substantially all of the equipment finance portfolio, which had approximately $599.0 million in loans and leases outstanding as of October 31, 2025, is a key part of this activity. The transaction is expected to be accretive to capital by 55-60 basis points to the CET1 Ratio.

Reducing $350 million of high-cost wholesale funding.

The Company intends to use the majority of the proceeds from the equipment finance sale to pay down approximately $350 million of high-cost wholesale funding. This action is part of a strategy to focus resources on core community banking operations.

Here's a quick look at key portfolio and capital metrics as of late 2025:

The company also authorized a new stock repurchase program of up to $25 million, effective immediately and lasting through November 2, 2026. The quarterly cash dividend declared was $0.32 per common share, payable on November 21, 2025.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Key Resources

You're looking at the tangible assets Midland States Bancorp, Inc. relies on to execute its strategy, especially after recent portfolio adjustments. Honestly, the balance sheet figures right now tell a clear story about where they are focusing their capital.

The sheer scale of the operation is anchored by its total assets. As of September 30, 2025, Midland States Bancorp, Inc. held total assets of approximately $6.91 billion. This figure reflects the strategic decision to exit the equipment finance origination business effective September 30, 2025, to sharpen the focus on core community banking and wealth management.

The Wealth Management Group is a significant, high-value resource. At the same reporting date, September 30, 2025, this group managed assets under administration totaling approximately $4.36 billion. That's a substantial pool of client assets they are responsible for stewarding.

Physical presence remains a core asset for community banking. Midland States Bancorp, Inc. maintains a network of 53 full-service banking offices strategically located across Illinois and Missouri. This footprint supports their presence in stable, lower deposit cost midwestern markets.

Funding stability comes from the deposit base. While the company actively reduced higher-cost funding sources, the core deposit base remains vital. Total deposits stood at $5.60 billion at September 30, 2025. This resource is managed with a goal to increase noninterest DDA (demand deposit accounts) from 18% of the total mix, which is a clear action point for resource optimization.

Technology underpins the modern banking experience. Midland States Bancorp, Inc. deploys a proprietary digital banking platform and technology tools to serve clients. This is part of their evolving tech-forward strategy, which also includes a Fintech initiative. Here's a quick look at the key financial scale points as of that late-2025 snapshot:

The firm's resources are also defined by what they are focusing on now. They are actively growing commercial banking relationships and managing credit exposures. You can see this focus reflected in their operational priorities:

• Focusing on originating Community Bank loans with full banking relationships.
• Reducing exposure to higher-risk asset classes, evidenced by ceasing equipment finance production on September 30, 2025.
• Maintaining a strong capital position, with the Common Equity Tier 1 capital ratio at 9.37% as of September 30, 2025.
• Leveraging a comprehensive wealth and trust product offering.

Finance: draft the Q4 2025 resource utilization report by next Wednesday.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Value Propositions

You're looking at how Midland States Bancorp, Inc. delivers value in late 2025, especially after making some big portfolio moves. The core value is built around being a focused, regional financial partner.

Full-service, community-based commercial and consumer banking remains central. As of September 30, 2025, the Community Bank segment held 67.3% of the total loan portfolio, amounting to $3.275 billion in balances. This segment is supported by a physical presence of 53 branch/office locations across Illinois and Missouri. The value here is local service; for instance, loans in the Eastern region grew by $30.6 million in the third quarter of 2025.

The bank offers comprehensive wealth management and trust services, which is a clear growth driver. For the third quarter of 2025, the Wealth Management Group generated a record $8.0 million in revenue. Furthermore, Assets Under Administration (AUM/A) stood at $4.36 billion as of September 30, 2025. This shows the market trusts them with significant assets, even while the core bank navigates credit adjustments.

Local decision-making is a key differentiator, focusing on regional economic growth in markets like St. Louis and Chicago, where commercial growth opportunities are noted. This local touch supports the financial solutions for small and mid-sized businesses. Commercial deposits showed strength, rising 9.0% linked-quarter in Q3 2025, signaling deepening commercial relationships.

A major part of the current value proposition is the enhanced credit quality and risk profile post-divestiture. Midland States Bancorp, Inc. completed the sale of substantially all of its equipment finance portfolio on November 28, 2025, for $502 million in cash. This portfolio was valued at approximately $599 million in loans and leases outstanding just before the sale. This strategic move directly supports the goal of reducing higher-risk credit exposures. The result is a cleaner balance sheet; Nonperforming Assets (NPAs) to total assets fell to 1.02% as of September 30, 2025, a significant improvement from 2.10% at the end of 2024. The company is also actively reducing its Specialty Finance exposure, targeting less than 10% of total loans.

Here's a quick look at how the loan portfolio composition reflects this strategic shift as of the end of Q3 2025, before the full impact of the sale is reflected in the next period's segment breakdown:

The bank is also maintaining a solid capital base to support its operations, with the Consolidated CET1 ratio at 9.37% and the Total Capital ratio at 14.29% as of Q3 2025. The focus now is on building that CET1 ratio over 10%.

Finance: draft 13-week cash view by Friday.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Customer Relationships

You're looking at how Midland States Bancorp, Inc. (MSBI) builds and keeps its customer base, especially after that big portfolio sale. The core idea here is that they are doubling down on direct, personal interaction for high-value services while expecting digital tools to handle the routine stuff.

Relationship-driven model through dedicated branch staff and advisors

Midland States Bancorp, Inc. emphasizes a relationship-first approach, which you can see reflected in their deposit growth, even as they simplify their balance sheet. For instance, in the first quarter of 2025, their retail deposits grew by $96.8 million, which they attributed directly to a growth and marketing strategy implemented late in that quarter. Also, noninterest-bearing deposits increased by $35.1 million in Q1 2025, suggesting a deeper, non-interest-bearing relationship with core commercial and retail customers. This isn't just about transactions; it's about embedding the bank into the customer's financial life.

Personalized service for Wealth Management clients

For clients needing trust, fiduciary, or investment management services, the service model is definitely high-touch. The Wealth Management Group is a key focus area, especially after the strategic decision to exit equipment finance. As of September 30, 2025, this group was managing assets worth approximately $4.36 billion. To support this high-value segment, the Company added three new sales positions in the second quarter of 2025, showing a direct investment in adding relationship capacity. This focus on dedicated personnel is how they aim to retain and grow assets under administration, which stood at $4.18 billion as of June 30, 2025.

High-touch commercial banking for business clients

The commercial side, which they call the Community Bank, relies on loan officers and relationship managers to drive growth. You see this in their consistent, intentional growth in core lending. Loans originated by the Community Bank increased by $56.8 million, or 1.8%, between December 31, 2024, and March 31, 2025. This momentum continued, with Community Bank originated loans increasing another $58.9 million, or 1.8%, from March 31, 2025, to June 30, 2025. They are actively pursuing growth in this relationship-based lending area, which suggests they are prioritizing these direct business banking relationships.

Digital self-service tools for everyday banking

While Midland States Bancorp, Inc. focuses on relationships, they operate in a market where digital is the expectation for daily tasks. Industry-wide, over 83% of U.S. adults used digital banking services as of 2025, and 72% of global banking customers prefer using mobile apps for core services. Midland States Bancorp, Inc. must meet this baseline expectation, offering digital tools for convenience, even if the high-value interactions remain personal. The goal here is defintely to make routine tasks frictionless so that staff time is freed up for complex, relationship-building activities.

Community commitment and financial empowerment programs

The strategic shift, highlighted by the November 28, 2025, sale of substantially all of its equipment finance portfolio for $502 million in cash, clearly signals a sharpening of focus on core community banking and wealth management. This move allows the company to concentrate resources and capital on local markets. While I don't have the specific dollar amount for their 2025 community investment programs, the strategic realignment itself is the biggest indicator of commitment-directing capital away from specialty finance and toward community-focused operations.

Here's a quick look at the scale of the customer-facing segments as of mid-to-late 2025:

Finance: draft 13-week cash view by Friday.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Channels

Midland States Bancorp, Inc. deploys its services across a mix of physical presence and digital platforms to reach its customer segments.

The physical branch network of 53 locations serves customers across Illinois and Missouri, providing a tangible touchpoint for Community Bank and Personal Banking services. This physical footprint is complemented by dedicated teams for specialized services.

The digital channel includes online and mobile banking platforms, supporting the bank's evolving tech-forward strategy. While specific active user counts aren't public, this forms the backbone for modern customer engagement.

Private Client Services are delivered through dedicated Wealth Advisors. The Assets Under Administration (AUA) for the Wealth Management Group showed growth, reaching approximately $4.364 billion as of September 30, 2025. The quarterly revenue from this segment hit $8.02 million in the third quarter of 2025, which was noted as a record quarter. The firm is actively expanding this channel, having added one wealth advisor during the third quarter of 2025, following the addition of three new sales positions in the second quarter of 2025.

Commercial loan officers and business development teams focus on growth opportunities, particularly in the St. Louis and Chicago markets, supporting the Commercial Banking segment. Community Bank deposits rose by $69.9 million in the third quarter of 2025, driven by increases in commercial deposits.

The ATM network access is available to customers for basic transactions.

Here are the key quantitative metrics related to these channels as of the third quarter of 2025:

The delivery mechanisms also include specialized services:

• Physical branch network of 53 locations in Illinois and Missouri.
• Online and mobile banking platforms for digital transactions.
• Dedicated Wealth Advisors supporting Private Wealth Management.
• Commercial loan officers and business development teams targeting St. Louis and Chicago.
• Access to an ATM network.

The bank is also investing in technology tools and data to drive customer engagement and cross sell opportunities with the Community Bank. The company ceased equipment finance production effective September 30, 2025, which impacts one of its prior distribution channels.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Customer Segments

Midland States Bancorp, Inc. serves distinct customer groups across its core community banking and wealth management operations, following a strategic pivot away from its equipment finance portfolio as of late 2025.

The primary customer segments targeted for lending and deposit gathering are:

• Small and mid-sized commercial businesses.
• Individual retail consumers in Illinois and Missouri.
• High-net-worth individuals and families (Wealth Management).
• Municipalities and public funds.

The lending focus heavily features Commercial Real Estate (CRE) borrowers, which is a significant portion of the loan book.

Here's a look at the scale of the key segments as of September 30, 2025, based on the latest available data:

The geographic footprint for the community banking side is concentrated, with Midland States Bank operating 53 branch/office locations in Illinois and Missouri.

For individual retail consumers, there were positive trends in certain deposit categories, such as retail deposits increasing by $96.8 million in the first quarter of 2025 as part of a growth strategy. Deposits from municipalities and public funds were noted as declining in Q3 2025, alongside brokered deposits, as part of a strategy to reduce higher-cost funding sources.

The High-net-worth individuals and families segment, managed through the Private Wealth Management group, is a critical component, evidenced by its $4.36 billion in Assets Under Administration as of September 30, 2025. This group is targeted for deeper relationships, with a focus to cross-sell wealth and trust products with commercial clients.

The Commercial Real Estate (CRE) segment is clearly defined by its weighting in the loan portfolio:

• CRE loans represented 48.0% of Total Loans as of September 30, 2025.
• The overall loan portfolio stood at $4.87 billion at that date.

The small and mid-sized commercial businesses are the core of the Community Bank lending, with new loan production focused on high-quality commercial clients that bring full banking relationships.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Cost Structure

You're looking at the expense side of Midland States Bancorp, Inc.'s operations as of late 2025. The cost structure is heavily influenced by funding costs, personnel to support the Community Bank and Wealth Management growth, and managing credit risk exposure, especially after the strategic exit from equipment finance originations effective September 30, 2025.

Interest expense on deposits and borrowings remains a primary cost, though there's been positive movement. The cost of deposits has been falling, which helps the Net Interest Margin (NIM). For the three months ended June 30, 2025, the cost of deposits fell to 2.19%, down from 2.29% in Q1 2025. By the third quarter of 2025, the cost of deposits fell further to 2.12%. This reduction is attributed to the rate cuts enacted by the Federal Reserve Bank in late 2024 and the intentional reduction of higher-cost deposits, like brokered deposits, which decreased by $81.5 million from June 30, 2025, to September 30, 2025. The interest expense on total interest-bearing liabilities for Q2 2025 was $41,065 thousand.

Personnel costs reflect the investment in relationship banking and advisory services. While specific Q3 2025 personnel costs aren't broken out granularly, Q1 2025 showed Salaries and employee benefits expense at $26,416 thousand. The focus on the Wealth Management Group is clear: they added one wealth advisor during the third quarter of 2025, following the addition of six new sales positions in Q1 2025. Also, 3 new commercial bankers were added in Q3 2025, supporting Community Bank deposit growth.

The Provision for credit losses saw a significant step-up to address specific portfolio risks. As you noted, the Provision for credit losses for the third quarter of 2025 was $20.0 million. A substantial part of this, about $15 million, was due to an increase in loss given default assumptions related to the equipment finance portfolio. This compares to a provision of $17.4 million in Q2 2025 and $8.25 million in Q1 2025. The Allowance for credit losses on loans stood at $100.9 million as of September 30, 2025.

For technology and other operational overhead, we look at the noninterest expense components from earlier in the year, which management guided to a near-term run rate of approximately $48.0 million to $49.0 million in Q1 2025. Midland States Bancorp, Inc. is actively investing in technology tools and data to enhance customer engagement and cross-selling opportunities.

Here's a look at the detailed noninterest expense components from the first quarter of 2025, which gives you a baseline for the fixed and semi-variable costs:

Regulatory compliance and general administrative costs include items like professional services and FDIC insurance. Professional services were $2,741 thousand in Q1 2025, with management noting higher levels of legal fees related to loan collections during that period. FDIC insurance was $1,463 thousand in Q1 2025. On the regulatory front, Midland States Bancorp, Inc. received a deficiency notification from Nasdaq in November 2025 for not filing its Q2 2025 report on time, indicating non-compliance with Listing Rule 5250(c)(1).

The overall noninterest expense for Q3 2025 was reported in aggregate, with Total Noninterest Expenses at $49.8 million in Q3 2025, compared to $50.0 million in Q2 2025.

• Total Noninterest Expenses (Q3 2025): $49.8 million
• Total Noninterest Expenses (Q2 2025): $50.0 million
• Noninterest Expense to average assets (Q2 2025): 2.80%
• Noninterest Expense to average assets (Q1 2025): 2.65%

Finance: draft 13-week cash view by Friday.

Midland States Bancorp, Inc. (MSBI) - Canvas Business Model: Revenue Streams

You're looking at the revenue generation engine for Midland States Bancorp, Inc. as of late 2025. It's a mix of traditional lending income, fee-based services, and wealth management growth.

Net Interest Income from the loan portfolio remains the primary driver, though the portfolio composition is shifting following strategic decisions. Total loans stood at $4.87 billion as of September 30, 2025. The Net Interest Income for the third quarter of 2025 was $61.1 million. The Net Interest Margin for Q3 2025 was reported at 3.79%, or 3.69% when excluding a $1.6 million interest recovery.

The Wealth Management fees segment achieved a record performance in Q3 2025. Wealth Management revenue totaled $8.0 million for the quarter. Assets under administration (AUA) for this group were $4.36 billion at September 30, 2025.

Non-interest income, which bundles service charges, merchant services, and commissions, totaled $20.0 million for the third quarter of 2025. This figure reflects a dynamic where non-interest income rose 2.9% sequentially when excluding credit enhancement income.

Here's a quick look at the key revenue components from the third quarter of 2025:

The remaining revenue streams feed into that total non-interest income figure. You should track these specific areas as they relate to the $20.0 million total:

• Non-interest income from service charges and merchant services.
• Insurance and financial planning service commissions.
• Interest income from investment securities.

The loan portfolio size as of September 30, 2025, was $4.87 billion. Following the sale of substantially all of the equipment finance portfolio, the pro forma loan portfolio total as of a pro forma September 30 was $4.3 billion.