Midland States Bancorp Reports $38 Million Net Income for 2024, Down from $61.2 Million

Midland States Bancorp, Inc. reported net income of $38 million for the year ended December 31, 2024, a decrease from the $61.2 million reported in the prior year. Diluted earnings per common share were $1.32, compared to $2.33 in 2023. The decline in earnings was primarily attributed to a $12.5 million decrease in net interest income, a $37.8 million increase in the provision for credit losses, and a $14.8 million increase in noninterest expense. These negative impacts were partially offset by a $24 million increase in noninterest income and an $18 million decrease in income tax expense.

The company's net interest income, on a tax-equivalent basis, decreased to $237.2 million in 2024 from $249.6 million in 2023, with the tax-equivalent net interest margin declining to 3.35% from 3.43%. Average earning assets decreased to $7.08 billion from $7.27 billion, while average loans decreased by $452 million, partially offset by an increase in investment securities of $261.6 million. The provision for credit losses increased to $120.3 million in 2024 from $82.6 million in 2023, reflecting increased charge-offs in the specialty finance and equipment financing units.

Strategic actions taken during the fourth quarter of 2024 included accelerating the reduction of the non-core consumer loan portfolio through sales, resulting in net charge-offs of $17.3 million on the sale of the LendingPoint portfolio and $35 million on the transfer of the GreenSky portfolio to held for sale. The company also completed a strategic review of the Specialty Finance Group portfolio, resulting in charge-offs of $6.6 million on loans moved to nonperforming status and $18.8 million based on updated appraisals. Additionally, impairment expense of $3.6 million was recognized on an OREO property related to a former assisted living loan. The equipment finance portfolio also experienced elevated charge-offs of $15.3 million, along with impairment expense of $7.9 million related to leased assets and surrendered assets.

Looking ahead, the company anticipates recognizing a goodwill impairment expense between $135 million and $154 million in the first quarter of 2025, stemming from a quantitative impairment test on its Banking reporting unit as of March 31, 2025. This non-cash expense will not affect regulatory capital ratios, tangible common equity ratio, or liquidity position. The company is also continuing to assess the impact of the CRA Rule on its CRA lending and investment activities in its respective markets.