Midland States Bancorp, Inc.
For the period ended Mar 31, 2025. Filed Aug 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Aug 8, 2025
MSBI$31.72+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001466026-24-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-08-08.
0001466026-25-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 122 previous paragraphs and 139 current paragraphs.
45 unchanged; 43 reworded; 50 added; 29 removed; 5 previous and 1 current paragraphs rearranged.
Tables are not compared: 21 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (50)
Current report
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Current report
Management’s evaluation process used to determine the appropriateness of the allowance for credit losses on loans is subject to the use of estimates, assumptions, and judgments. The evaluation process combines many factors: management’s ongoing review and grading of the loan portfolio leveraging probability of default and loss given default, consideration of historical loan loss and delinquency experience, trends in past due and nonaccrual loans, risk characteristics of the various classifications of loans, concentrations of loans to specific borrowers or industries, existing economic conditions and forecasts, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect future credit losses. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the allowance for credit losses on loans, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. As an integral part of their examination process, various regulatory agencies also review the allowance for credit losses on loans. Such agencies may require additions to the allowance for credit losses on loans or may require that certain loan balances be charged-off or downgraded into criticized loan categories when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examination. The Company believes the level of the allowance for credit losses on loans is appropriate.
Current report
Goodwill
Current report
Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill is subject to impairment testing, which must be conducted at least annually or upon the occurrence of a triggering event. Various factors, such as the Company’s results of operations, the trading price of the Company’s common stock relative to the book value per share, macroeconomic conditions and conditions in the banking sector, inform whether a triggering event for an interim goodwill impairment test has occurred. Goodwill is recorded and evaluated for impairment at its reporting units, Banking and Wealth Management. The Company's policy is to test goodwill for impairment annually as of August 31, or on an interim basis if an event triggering an impairment assessment is determined to have occurred.
Current report
Testing of goodwill impairment comprises a two-step process. First, the Company performs a qualitative assessment to evaluate relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that an impairment has occurred, it proceeds to the quantitative impairment test, whereby it calculates the fair value of the reporting unit and compares it with its carrying amount, including goodwill. In its performance of impairment testing, the Company has the unconditional option to proceed directly to the quantitative impairment test, bypassing the qualitative assessment. If the carrying amount of the reporting unit exceeds the fair value, the amount by which the carrying amount exceeds fair value, up to the carrying value of goodwill, is recorded through earnings as an impairment charge. If the results of the qualitative assessment indicate that it is not more likely than not that an impairment has occurred, or if the quantitative impairment test results in a fair value of the reporting unit that is greater than the carrying amount, then no impairment charge is recorded.
Current report
The Company performed a quantitative impairment test on its Banking reporting unit as of December 31, 2024, and engaged a third-party service provider to assist Management with the determination of the fair value. The resulting calculation indicated that the fair value exceeded the carrying amount of the Company's Banking reporting unit by approximately 7% as of December 31, 2024, which resulted in a determination of no impairment loss.
Current report
The method employed was a discounted cash flow analysis. Significant judgment is necessary in the determination of the fair value of a reporting unit. The income valuation methodology requires an estimation of future cash flows, considering the after-tax results of operations, the extent and timing of credit losses, and appropriate discount and growth rates. Actual future cash flows may differ from forecasted results based on the assumptions used.
Current report
In performing the discounted cash flow analysis, the Company utilized multi-year cash projections that rely on internal forecasts of loan and deposit growth, bond mix, financing composition, market pricing of securities, credit performance, forward interest rates, future returns driven by net interest margin, fee generation and expense incurrence, industry and economic trends, and other relevant considerations. The long-term growth rate used in the calculation of fair value was derived from published projections of the inflation rate, along with Management estimates.
Current report
The discount rate was calculated as the cost of equity capital using the modified capital asset pricing model, which includes variables including the risk-free interest rate, beta, equity risk premium, size premium and company-specific risk premium.
Current report
Subsequently, during the first quarter of 2025, Management determined that a triggering event had occurred at its Banking reporting unit as a result of further deteriorated credit quality coupled with the trends in the Company's stock price. The Company performed a quantitative impairment test on its Banking reporting unit as of March 31, 2025, and, with the assistance of a third-party service provider, utilized a discounted cash flow analysis to calculate the fair value. Projected near-term earnings were lowered resulting from higher projected provisions for loan losses and lower projected noninterest income. In addition, the interim quantitative impairment test performed as of March 31, 2025 used a 15.9% discount rate (vs. 13.4% at December 31, 2024) as the Company specific risk premium increased from 2.5% to 6.0%. The resulting calculation indicated that the carrying amount exceeded the fair value of the Company's Banking reporting unit. As a result of the assessment, the Company recognized goodwill impairment expense $154.0 million in the first quarter of 2025. This non-cash impairment expense did not impact our regulatory capital ratios, tangible common equity ratio or our liquidity position.
Current report
Third-party loan origination and servicing programs
Current report
Prior to March 31, 2025, the Company operated three significant programs to originate and service unsecured commercial and consumer loans. Loan options under the programs included traditional fully-amortizing loans and promotional loans with no interest, or “same-as-cash”, features if the loan was fully repaid in the promotional window. The loans were originated at par in the Company’s name and had terms ranging from five months to 25 years with a much shorter effective life due to amortization and prepayments. As of March 31, 2025, the Company is operating only one such program.
Current report
The program is governed by multiple interrelated agreements including the loan agreements between the Company and the customer, the Company and the program sponsor, and the Company and the servicer. Key characteristics of the program with a sponsor include:
Current report
•The program sponsor guarantees a targeted return which is paid first by customer payments and, if necessary, supplemented by the program sponsor.
Current report
•Excess yield on the portfolio after realized charge-offs and above an agreed upon target rate due to the Company is paid to the program sponsor as a “performance fee.”
Current report
•In the event charge-offs exceed the amount available as a performance fee the program sponsor reimburses the Company for all excess charge-offs.
Current report
Under U.S. GAAP, agreements with multiple counterparties, such as the customer, servicer and program sponsor, are generally required to be accounted for separately even if the agreements are highly interrelated. As a result, we account for the program as multiple units of account with the following impacts:
Current report
•The loans are accounted for as one unit of account under U.S. GAAP including revenue recognition and inclusion in our CECL allowance methodology.
Current report
•The agreement that governs the yield maintenance or credit enhancement from the program sponsor is a separate unit of account and meets the definition of a derivative under U.S. GAAP and is accounted for at fair value in our financial statements. The primary drivers of the derivative value include estimated prepayment activity on promotional loans that would trigger reimbursement from the third-party program sponsor to us and estimated excess yield above projected credit losses that would lead to performance fee payments from us to the third-party program sponsor. The credit risk of the third-party and discount rates used in the calculation also impact the value of the derivative. Changes in the fair value of the derivative are recorded as gains or losses in noninterest income.
Current report
•Noninterest income each period includes actual amounts received during the period from the program sponsor for interest income guarantees and credit enhancements described above, offset by amounts paid during the period for performance fees as defined in our agreement with the program sponsor.
Current report
•Noninterest expense each period includes actual amounts paid during the period for servicing fees as defined in our agreement with the servicer.
Current report
At March 31, 2025 and December 31, 2024, loans outstanding in this program were $53.3 million and $62.3 million, respectively.
Current report
Factors Affecting Comparability
Current report
Goodwill impairment. During the first quarter of 2025, Management determined that a triggering event had occurred at its Banking reporting unit as a result of further deteriorated credit quality coupled with the trends in the stock price. The Company performed a quantitative impairment test on its Banking reporting unit as of March 31, 2025, and engaged a third-party service provider to assist Management with the determination of the fair value. The resulting calculation indicated that the carrying amount exceeded the fair value of the Company's Banking reporting unit. As a result of the assessment, the Company recognized $154.0 million of goodwill impairment expense. The impairment expense did not impact our regulatory capital ratios, tangible common equity ratio or our liquidity position.
Current report
Sale of non-core consumer loan portfolios. During the fourth quarter of 2024, the Company sold our $87.1 million LendingPoint portfolio, recognizing net charge-offs of $17.3 million on the sale. We also committed to a plan to sell our GreenSky consumer loan portfolio and recognized net charge-offs of $35.0 million when these loans were transferred to held for sale. On April 9, 2025, we sold participation interests in $317.5 million of our GreenSky consumer loan portfolio, with the intent to retain the remaining portion of the portfolio.
Current report
The Federal Open Market Committee concluded its May 2025 meeting with the Federal Reserve maintaining its target range for the federal funds rate at 4.25%-4.50%, as expected. This was the third consecutive meeting that the Federal Reserve held interest rates steady, based in part on concerns over the potential impact of tariffs. The FOMC updated its statement to reflect its view that risks to both of its mandates, the potential for higher unemployment and higher inflation, have risen. We believe that a healthy labor market, with unemployment low at 4.2%, likely gives the Fed some flexibility to further assess the potential impact of tariffs on inflation and the economy before implementing changes to the federal funds rate. Inflation has been approaching the Federal Reserve's 2.0% target, but tariffs are expected to result in at least a one-time rise in prices. The central bank’s preferred gauge, personal consumption expenditure, showed headline inflation at 2.3%.
Current report
At its June 2025 meeting, the FOMC kept interest rates steady amid expectations of higher inflation and lower economic growth ahead, and still pointed to two potential reductions later this year. The FOMC kept its key borrowing rate targeted in a range between 4.25%-4.50%, where it has been since December.
Current report
The $326.3 million of average loans held for sale in the first quarter of 2025 included $320.9 million of GreenSky consumer loans. The Company completed the sale of this portfolio in April 2025.
Current report
Provision for Credit Losses. The Company's provision for credit losses was $10.9 million for the three months ended March 31, 2025, compared to $19.9 million for the three months ended March 31, 2024. The Company recorded a specific reserve of $8.0 million on one large construction and land development loan in the first quarter of 2024.
Current report
Credit enhancement income. The Company is party to third-party loan origination programs. As part of these programs, the third-party providers offer various credit enhancements with respect to loans originated under the programs, including contributions to reserve accounts, yield maintenance and certain other payments. Credit enhancement income declined $17.2 million in the first quarter of 2025 compared to the first quarter of 2024 as a result of loan payoffs and a cessation in loans originated through the GreenSky and LendingPoint programs.
Current report
Other noninterest income. Other income decreased $3.7 million for the three months ended March 31, 2025, as compared to the same period in 2024. The Company recognized incremental servicing revenues related to the GreenSky portfolio of $0.3 million in the first quarter of 2025 compared to $3.7 million in the same period of 2024.
Current report
Occupancy and equipment expense. The $0.4 million increase in expense for the three months ended March 31, 2025, as compared to the same period in 2024, is primarily related to the investments made to upgrade ATM fleet that was completed in the fourth quarter of 2024.
Current report
Professional services expense. The $0.5 million increase in professional services expense for the three months ended March 31, 2025, respectively, as compared to the same period in 2024, was primarily the result of increased audit and consulting fees related to the evaluation of the accounting and reporting of the Company's third-party lending and servicing programs.
Current report
Loan servicing fees. Loan servicing fees expense represents servicing fees paid to third parties associated with our third party lending programs. Servicing fees in the first quarters of 2025 and 2024 were $0.1 million and $3.7 million, respectively, as a result of loan payoffs and a cessation in loans originated through the GreenSky and LendingPoint programs.
Current report
Income Tax Expense. Income tax expense was $3.2 million for the three months ended March 31, 2025, as compared to $6.4 million for the three months ended March 31, 2024. The goodwill impairment recognized in the first quarter of 2025 was not deductible for tax purposes.
Current report
The Company's loan portfolio is assigned to the following internal business sectors:
Current report
•Community bank represents predominately in-market loans originated through our banking center network.
Current report
•Specialty Finance provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and seek short term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company’s primary market areas.
Current report
•Equipment finance portfolio includes loans and leases originated to varying types of businesses throughout the United States for purchases of business equipment and software.
Current report
•Non-core and other includes our third-party origination and servicing programs, capital market credits, and FHA warehouse lines of credit.
Showing the first 40 of 50 passages. Open the source sections for the rest.
Removed paragraphs (29)
Previous report
Critical Accounting Policies
Previous report
Significant Developments and Transactions
Previous report
Each item listed below affects the comparability of our results of operations for the three and nine months ended September 30, 2024 and 2023, and our financial condition as of September 30, 2024 and December 31, 2023, and may affect the comparability of financial information we report in future fiscal periods.
Previous report
Balance sheet repositioning. The Company took advantage of certain market conditions during 2023 and the first nine months of 2024 to reposition out of lower yielding securities into other structures, which were expected to result in improved overall margin, liquidity and capital allocations. These transactions resulted in losses of $0.2 million in the nine months ended September 30, 2024 compared to losses of $5.0 million and $6.5 million in the three and nine months ended September 30, 2023, respectively.
Previous report
In addition, in the third quarter of 2023, the Company surrendered certain low-yielding life insurance policies and purchased additional policies resulting in improved income. The Company recognized a $4.5 million income tax charge related to the surrender of the policies.
Previous report
Redemption of Subordinated Notes. In the second and third quarters of 2024, the Company redeemed a total of $11.0 million of outstanding subordinated notes. The weighted average redemption price was 97.7% of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest. The Company recorded gains totaling $0.2 million on these redemptions.
Previous report
In addition, in the second quarter of 2023, the Company redeemed $6.6 million of outstanding subordinated notes. The weighted average redemption price was 89.2% of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest. The Company recorded gains totaling $0.7 million on these redemptions.
Previous report
The Federal Reserve announced at its September 2024 FOMC meeting that it is cutting its benchmark interest rate by 0.50 percentage points, marking the first reduction in four years. This rate cut lowers the federal funds rate into a range of 4.75% to 5.00%, down from its prior range of 5.25% to 5.50%, which had been its highest level in 23 years. The half-point move signals that the Federal Reserve is acting aggressively to keep the U.S. economy from stalling, given that historically most rate cuts are 0.25 percentage points.
Previous report
The FOMC statement indicated that the Committee has gained greater confidence that inflation is moving sustainably toward two percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The committee noted that “job gains have slowed and the unemployment rate has moved up but remains low.” FOMC officials raised their expected unemployment rate this year to 4.4%, from the 4.0% projection at the last update in June, and lowered the inflation outlook to 2.3% from 2.6%.
Previous report
During thenine months ended September 30, 2024, net interest income, on a tax-equivalent basis, decreased to $166.5 million with a tax-equivalent net interest margin of 3.13% compared to net interest income, on a tax-equivalent basis, of $178.6 million and a tax-equivalent net interest margin of 3.27% for thenine months ended September 30, 2023.
Previous report
$504.6 million, compared to the third quarter of 2023. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint.
Previous report
For the nine months ended September 30, 2024, interest income, on a tax-equivalent basis, increased $10.1 million to $310.4 million as compared to the same period in 2023, primarily due to the increase in market rates year over year. The yield on earning assets increased 34 basis points to 5.84% from 5.50%, primarily due to the impact of increasing market interest rates.
Previous report
Average earning assets decreased to $7.10 billion in the first nine months of 2024 from $7.29 billion in the same period in 2023. Average loans decreased $421.4 million, which was partially offset by an increase in investment securities of $238.7 million. The changes in average loan mix on a year-to-date basis is consistent with the quarter-to-date changes described previously.
Previous report
For the nine month period ended September 30, 2024, interest expense increased$22.2 million to$143.9 million compared to the nine months ended September 30, 2023. The cost of interest-bearing liabilities increased to 3.34% for the first nine months of 2024 compared to 2.77% for the same period of 2023. Interest expense on deposits increased to $120.7 million from $97.8 million for the comparable period in 2023, primarily due to increases in interest rates on deposits.
Previous report
Interest expense on FHLB advances and other borrowings decreased $2.3 million for the nine months ended September 30, 2024, from the comparable period in 2023. Average balances decreased $56.8 million for the nine months ended September 30, 2024, from the comparable period in 2023, as loan paydowns permitted a decrease in the use of this funding source.
Previous report
Provision for Credit Losses. The Company's provision for credit losses totaled $5.0 million for the three months ended September 30, 2024, compared to $5.2 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, the Company recorded provision expense of $35.8 million and $14.2 million, respectively. The provision expense was attributable to loans, as further described below, with the exception of $0.2 million recapture attributable to unfunded commitments in the three and nine months ended September 30, 2024.
Previous report
The elevated provision for credit losses for the nine months ended September 30, 2024, was primarily due to credit deterioration and servicing issues involving one of our FinTech partners, LendingPoint, subsequent to their system conversion in late 2023. The Company recognized provision expense of $14.0 million in the second quarter of 2024 related to this portfolio. In addition, the provision expense for the first quarter of 2024 included a specific reserve of $8.0 million on a multi-family construction project.
Previous report
Data processing fees. The $0.5 million and $1.6 million increases in data processing fees for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, were primarily the result of our continuing investments in technology to better serve our growing customer base and increased transaction volumes.
Previous report
Other expense. Other expense increased $3.8 million for the nine months ended September 30, 2024, as compared to the same period in 2023. OREO expenses, including impairment and property taxes, increased $1.8 million. In addition, the Company recognized expenses of $3.1 million related to various legal actions.
Previous report
Income Tax Expense. The Company's effective tax rates were 18.1% and 20.6% for the three and nine months ended September 30, 2024, respectively, compared to 50.3% and 31.9% for the three and nine months ended September 30, 2023, respectively. The decrease in the effective tax rate from the three and nine months ended September 30, 2023 is due primarily to tax expense of $4.5 million associated with a surrender of company-owned life insurance policies recognized in the third quarter of 2023, as previously discussed, and a $1.4 million return to provision adjustment also recognized in the third quarter of 2023.
Previous report
Total loans decreased $382.3 million to $5.75 billion at September 30, 2024, as compared to December 31, 2023. Increases in commercial FHA warehouse lines and commercial real estate loans of $50.2 million and $103.6 million, respectively, were offset by decreases in all other loan categories. The Company continued to shrink its equipment financing and consumer loan portfolios, and focus on commercial loan opportunities in our community bank footprint.
Previous report
Equipment finance loan and lease balances decreased $144.4 million to $860.1 million at September 30, 2024 compared to December 31, 2023 as the Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $271.9 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated loan balances decreased $208.2 million during the first nine months of 2024 to $475.3 million at September 30, 2024. In addition, as previously disclosed, during the fourth quarter of 2023, the Company ceased originating loans through LendingPoint. As of September 30, 2024, the Company had $96.5 million in loans that were originated through and serviced by LendingPoint. Equipment financing and consumer loans comprised 15.0% and 11.5%, respectively, of the loan portfolio at September 30, 2024, compared to 16.4% and 15.2%, respectively, at December 31, 2023.
Previous report
The allowance allocated to commercial loans totaled $24.1 million, or 1.78% of total commercial loans, at September 30, 2024, compared to $21.8 million, or 1.47%, at December 31, 2023. Modeled expected credit losses increased $0.5 million and qualitative factor adjustments related to commercial loans increased $2.7 million. A certain portion of the LendingPoint portfolio is classified as commercial loans. The Company recognized provision expense of $3.2 million on this portfolio during the nine months ended September 30, 2024. Specific allocations for commercial loans that were evaluated for expected credit losses on an individual basis decreased $1.0 million from $1.8 million at December 31, 2023.
Previous report
The allowance allocated to consumer loans totaled $8.0 million, or 1.21% of total consumer loans, at September 30, 2024, compared to $3.8 million, or 0.40%, at December 31, 2023. Credit deterioration and servicing related issues with the LendingPoint portfolio, as previously discussed, resulted in an increase of the allowance of $5.0 million at September 30, 2024 compared to December 31, 2023. The Company's consumer portfolios benefit from credit enhancements provided by LendingPoint and Greensky. The Company calculated its expected loss estimate based on delinquent loans, as reported by LendingPoint, net of expected credit enhancements. The Company expects to recognize charge offs over the remaining life of this portfolio, and believes that it has properly reserved for expected losses based upon the data that is currently known and available. Specific allocations for consumer loans that were evaluated for expected credit losses on an individual basis decreased $0.1 million.
Previous report
Net charge-offs for the three months ended September 30, 2024 totaled $11.4 million, compared to $3.4 million for the same period one year ago. The Company recorded $6.2 million of charge-offs of consumer loans originated and serviced by LendingPoint. Net charge-offs of equipment financing loans and leases for the three months ended September 30, 2024 and 2023, totaled $4.9 million and $2.2 million, respectively, primarily due to continued weakness within the trucking and transportation sector.
Previous report
Net charge-offs for the nine months ended September 30, 2024 totaled $18.7 million, compared to $8.6 million for the same period one year ago. Net charge-offs of equipment financing loans and leases totaled $12.1 million for the nine months ended September 30, 2024, compared to $4.9 million for the same period one year ago. The Company recorded $6.2 million of charge-offs of consumer loans originated and serviced by LendingPoint in the nine months ended September 30, 2024. The Company recognized a $2.0 million partial recovery in the second quarter of 2024 related to a third quarter of 2023 charge off.
Previous report
Non-performing loans increased $58.2 million to $114.6 million at September 30, 2024, compared to $56.4 million at December 31, 2023. Five loans totaling $51.0 million account for the increase. Of these, three loans totaling $40.9 million are multi-family construction or multi-family projects. Nonperforming consumer loans increased to $3.9 million as $3.8 million of loans servicing by LendingPoint were transferred to nonaccrual status.
Previous report
Collateral Dependent Financial Assets
Previous report
On December 5, 2023, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through December 31, 2024. During the nine months ended September 30, 2024, the Company repurchased 228,266 shares of its common stock at a weighted average price of $23.93 under its stock repurchase program, with approximately $19.5 million of remaining repurchase authority.
Reworded paragraphs (43)
Previous wording
The following is management's discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of September 30, 2024, as compared to December 31, 2023, and unaudited consolidated operating results for the three and nine months ended September 30, 2024 and 2023. These comments should be read in conjunction with the Company's unaudited consolidated financial statements and accompanying notes appearing elsewhere herein and the audited financial statements and accompanying notes provided in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024.
Current wording
The following is Management's discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of March 31, 2025, as compared to December 31, 2024, and unaudited consolidated operating results for the three months ended March 31, 2025 and 2024. These comments should be read in conjunction with the Company's unaudited consolidated financial statements and accompanying notes appearing elsewhere herein and the audited financial statements and accompanying notes provided in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on July 1, 2025.
Previous wording
The preparation of our consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under current circumstances. These estimates form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes have the most effect on the Company’s reported financial position and results of operations are set forth in “Note 1 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2023.
Current wording
The preparation of our consolidated financial statements requires Management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under current circumstances. These estimates form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes have the most effect on the Company’s reported financial position and results of operations are set forth in “Note 1 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the Company's critical accounting policies as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, except as indicated in "Accounting Standards Adopted in 2025" in Note 1 to the Consolidated Financial Statements in the report.
Previous wording
Overview. The following table sets forth condensed income statement information of the Company for the three and nine months ended September 30, 2024 and 2023:
Current wording
Overview. The following table sets forth condensed income statement information of the Company for the three months ended March 31, 2025 and 2024:
Previous wording
During the three months ended September 30, 2024, we generated net income of $18.5 million, or diluted earnings per common share of $0.74, compared to net income of $11.4 million, or diluted earnings per common share of $0.41, in the three months ended September 30, 2023. Earnings for thethird quarter of 2024 compared to thethird quarter of 2023 increased primarily due to a $7.8 million increase in noninterest income, a $7.5 million decrease in income tax expense and a $0.2 million decrease in provision for credit losses. These results were partially offset by a $3.6 million decrease in net interest income, and a $4.7 million increase in noninterest expense.
Current wording
During the three months ended March 31, 2025, we generated net loss of $141.0 million, or diluted loss per common share of $6.58, compared to net income of $22.7 million, or diluted earnings per common share of $0.92, in the three months ended March 31, 2024. Earnings for thefirst quarter of 2025 compared to thefirst quarter of 2024 decreased primarily due to a $154.4 million increase in noninterest expense, a $1.5 million decrease in net interest income and a $20.1 million decrease in noninterest income. These results were partially offset by a $9.1 million decrease in provision for credit losses, and a $3.2 million decrease in income tax expense.
Previous wording
Net Interest Income and Margin. Our primary source of revenue is net interest income, which is the difference between interest income from interest-earning assets (primarily loans and securities) and interest expense of funding sources (primarily interest-bearing deposits and borrowings). Net interest income is influenced by many factors, primarily the volume and mix of interest-earning assets, funding sources and interest rate fluctuations. Noninterest-bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. Net interest margin is calculated as net interest income divided by average interest-earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pretax-equivalent income, assuming a federal income tax rate of 21% for 2024 and 2023.
Current wording
Net Interest Income and Margin. Our primary source of revenue is net interest income, which is the difference between interest income from interest-earning assets (primarily loans and securities) and interest expense of funding sources (primarily interest-bearing deposits and borrowings). Net interest income is influenced by many factors, primarily the volume and mix of interest-earning assets, funding sources and interest rate fluctuations. Noninterest-bearing sources of funds, such as demand deposits and shareholders’ equity, also support interest-earning assets. Net interest margin is calculated as net interest income divided by average interest-earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pretax-equivalent income, assuming a federal income tax rate of 21% for 2025 and 2024.
Previous wording
During the three months ended September 30, 2024, net interest income, on a tax-equivalent basis, decreased to $55.2 million compared to $58.8 million for the three months ended September 30, 2023. The tax-equivalent net interest margin decreased to 3.10% for the third quarter of 2024 compared to 3.20% for the third quarter of 2023.
Current wording
During the three months ended March 31, 2025, net interest income, on a tax-equivalent basis, decreased to $58.5 million compared to $60.0 million for the three months ended March 31, 2024. The tax-equivalent net interest margin increased to 3.49% for the first quarter of 2025 compared to 3.39% in the first quarter of 2024.
Previous wording
Average Balance Sheet, Interest and Yield/Rate Analysis. The following tables present the average balance sheets, interest income, interest expense and the corresponding average yields earned and rates paid for the three and nine months ended September 30, 2024 and 2023. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments.
Current wording
Average Balance Sheet, Interest and Yield/Rate Analysis. The following tables present the average balance sheets, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended March 31, 2025 and 2024. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments.
Previous wording
(1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million for each of the three months ended September 30, 2024 and 2023.
Current wording
(1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.2 million for both the three months ended March 31, 2025 and 2024.
Previous wording
Interest Income. Interest income, on a tax-equivalent basis, increased $1.2 million to $105.0 million in the three months ended September 30, 2024 as compared to the same quarter in 2023, primarily due to improved yields on earning assets. The yield on earning assets increased 26 basis points to 5.91% from 5.65% primarily due to the impact of increasing market interest rates.
Current wording
Interest Income. Interest income, on a tax-equivalent basis, decreased $6.2 million to $99.6 million in the three months ended March 31, 2025, as compared to the same quarter in 2024, primarily due to a decrease in average earning assets. The yield on earning assets decreased four basis points to 5.94% from 5.98%.
Previous wording
Average earning assets decreased to $7.07 billion in the third quarter of 2024 from $7.28 billion in the same quarter of 2023. The decrease in average loans of $514.2 million was partially offset by a $299.8 million increase in investment securities.
Current wording
Average earning assets decreased to $6.80 billion in the first quarter of 2025 from $7.11 billion in the same quarter of 2024. Average loans decreased $954.6 million, which was partially offset by increases in investment securities and loans held for sale of $323.2 million and $322.9 million, respectively.
Previous wording
Average loans decreased $514.2 million to $5.78 billion in the third quarter of 2024 compared to the same quarter of 2023, due primarily to continued reductions in our equipment financing and consumer loan portfolios. Average equipment finance loan and lease balances decreased $215.3 million to $868.2 million in the third quarter of 2024, compared to the third quarter of 2023. The Company continued to reduce its concentration of this product within the overall loan portfolio. Consumer loans decreased $358.7 million during the third quarter to $722.1 million due to loan payoffs and a cessation in loans originated through GreenSky. Our Greensky-originated average loan balances decreased $280.0 million in the third quarter of 2024 to
Current wording
Average loans decreased $954.6 million in the first quarter of 2025 compared to the same quarter of 2024. Average consumer loans decreased $772.4 million. In the fourth quarter of 2024, the Company accelerated the reduction of our non-core consumer loan portfolio through sales. In December 2024, we sold our LendingPoint portfolio, and committed to a plan to sell the majority of our GreenSky consumer loan portfolio, transferring these loans to held for sale. In the first quarter of 2024, the average balances of the LendingPoint and GreenSky portfolios were $123.8 million and $643.0 million, respectively. Average equipment finance loan and lease balances decreased $190.7 million to $784.1 million as the Company continued to reduce its concentration of this product within the overall loan portfolio.
Previous wording
Interest Expense. Interest expense increased $4.9 million to $49.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The cost of interest-bearing liabilities increased to 3.45% for the third quarter of 2024 compared to 3.01% for the third quarter of 2023 due to the increase in deposit costs as a result of the rate increases previously enacted by the Federal Reserve.
Current wording
Interest Expense. Interest expense decreased$4.7 million to$41.1 million for the three months ended March 31, 2025 from the comparable period in 2024. The cost of interest-bearing liabilities decreased to 2.99% for the first quarter of 2025, compared to 3.22% for the first quarter of 2024, due to the decrease in deposit costs as a result of the rate decreases announced by the Federal Reserve.
Previous wording
Interest expense on deposits increased $4.2 million to $42.0 million for thethree months ended September 30, 2024 from the comparable period in 2023. The increase was primarily due to an increase in rates paid on deposits. Average balances of interest-bearing deposit accounts decreased $221.7 million, or 4.1%, to $5.13 billion for thethree months ended September 30, 2024 compared to the same period one year earlier.
Current wording
Interest expense on deposits decreased $4.6 million to $34.6 million for the three months ended March 31, 2025 from the comparable period in 2024. The decrease was primarily due to a decrease in rates paid on deposits. Average balances of interest-bearing deposit accounts decreased $121.1 million, or 2.3%, to $5.07 billion for the three months ended March 31, 2025 compared to the same period one year earlier. Decreases in interest checking account, savings account and time account balances of $96.1 million, $38.9 million and $30.7 million, respectively, were partially offset by an increase in brokered time deposits of $44.6 million.
Previous wording
The provision for credit losses on loans recognized during the three and nine months ended September 30, 2024 was made at a level deemed necessary by management to absorb estimated losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for credit losses is completed quarterly by management, the results of which are used to determine provision for credit losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and reasonable and supportable forecasts along with other qualitative and quantitative factors.
Current wording
The provision for credit losses on loans recognized during the three months ended March 31, 2025 was made at a level deemed necessary by management to absorb estimated losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for credit losses is completed quarterly by management, the results of which are used to determine provision for credit losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and reasonable and supportable forecasts along with other qualitative and quantitative factors.
Previous wording
Noninterest Income. Noninterest income increased $7.8 million and $12.1 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods one year prior. The following table sets forth the major components of our noninterest income for the three and nine months ended September 30, 2024 and 2023:
Current wording
Noninterest Income. Noninterest income decreased 53.1% for the three months ended March 31, 2025, compared to the same period one year prior. The following table sets forth the major components of our noninterest income for the three months ended March 31, 2025 and 2024:
Previous wording
Wealth management revenue. Wealth management revenue increased $0.8 million and $2.1 million for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. Assets under administration increased to $4.27 billion at September 30, 2024 from $3.50 billion at September 30, 2023, primarily due to improved sales activity and an increase in market performance.
Current wording
Wealth management revenue. Wealth management revenue increased $0.2 million, or 3.1%, for the three months ended March 31, 2025, as compared to the same period in 2024. Assets under administration increased to $4.10 billion at March 31, 2025 from $3.89 billion at March 31, 2024.
Previous wording
Income on company-owned life insurance. Income on company-owned life insurance increased $1.1 million and $3.0 million for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. As previously discussed, the Company surrendered certain low-yielding life insurance policies and purchased additional policies in the third quarter of 2023, resulting in the increase in revenue.
Current wording
Income on company-owned life insurance. Income on company-owned life insurance increased $0.5 million for the three months ended March 31, 2025, as compared to the same period in 2024 primarily due to death benefits of $0.3 million received in the first quarter of 2025.
Previous wording
Noninterest Expense. The following table sets forth the major components of noninterest expense for the three and nine months ended September 30, 2024 and 2023:
Current wording
Noninterest Expense. The following table sets forth the major components of noninterest expense for the three months ended March 31, 2025 and 2024:
Previous wording
Salaries and employee benefits. For the three and nine months ended September 30, 2024, salaries and employee benefits expense increased $2.1 million and $1.9 million, respectively, as compared to the same period in 2023, primarily due to annual salary increases and increased incentive expense. The Company employed 907 employees at September 30, 2024 compared to 911 employees at September 30, 2023.
Current wording
Salaries and employee benefits. For the three months ended March 31, 2025, salaries and employee benefits expense increased $2.3 million, as compared to the same period in 2024. Of this increase, $1.4 million was related to severance expense as the Company reduced its headcount by 25 employees. The Company employed 892 employees at March 31, 2025.
Previous wording
Loan expense. The $1.1 million and $1.3 million increases in loan expense for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, were primarily for loan collection expenses due to the increased volume of nonperforming loans and assets.
Current wording
Loan expense. The $0.1 million increase in loan expense for the three months ended March 31, 2025, as compared to the same period in 2024, is primarily for loan collection expenses due to the elevated volume of nonperforming loans and assets.
Previous wording
Assets. Total assets were $7.75 billion at September 30, 2024, as compared to $7.87 billion at December 31, 2023.
Current wording
Assets. Total assets were $7.28 billion at March 31, 2025, as compared to $7.51 billion at December 31, 2024.
Previous wording
The principal segments of our loan portfolio are discussed below:
Current wording
Loans. The loan portfolio is the largest category of our assets. The principal segments of our loan portfolio are discussed below:
Previous wording
Loans secured by office space totaled $147.2 million and $153.8 million at September 30, 2024 and December 31, 2023, respectively, primarily located in suburban locations in Illinois and Missouri.
Current wording
Loans secured by office space totaled $142.6 million and $146.3 million at March 31, 2025 and December 31, 2024, respectively, primarily located in suburban locations in Illinois and Missouri.
Previous wording
Loans. The loan portfolio is the largest category of our assets. The following table presents the balance and associated percentage of each major category in our loan portfolio at September 30, 2024 and December 31, 2023:
Current wording
The following table presents the balance and associated percentage of each major category in our loan portfolio at March 31, 2025 and December 31, 2024:
Previous wording
Analysis of the Allowance for Credit Losses on Loans. The allowance for credit losses on loans was $85.8 million, or 1.49% of total loans, at September 30, 2024 compared to $68.5 million, or 1.12% of total loans, at December 31, 2023. The following table allocates the allowance for credit losses on loans by loan category:
Current wording
Analysis of the Allowance for Credit Losses on Loans. The allowance for credit losses on loans was $105.2 million, or 2.10% of total loans, at March 31, 2025, compared to $111.2 million, or 2.15% of total loans, at December 31, 2024. The following table allocates the allowance for credit losses on loans by loan category:
Previous wording
In estimating expected credit losses as of September 30, 2024, we utilized certain forecasted macroeconomic variables from Oxford Economics in our models. The forecasted projections included, among other things, (i) U.S. gross domestic product ranging from 2.5% to 3.1% over the next four quarters; (ii) the 10-year treasury rate decreasing from 4.0% in the third quarter of 2024 to 3.9% by the fourth quarter of 2025; and (iii) Illinois unemployment rate averaging 5.5% through the fourth quarter of 2025.
Current wording
In estimating expected credit losses as of March 31, 2025, we utilized certain forecasted macroeconomic variables from Oxford Economics in our models. The forecasted projections included, among other things, (i) U.S. gross domestic product ranging from 2.5% to 2.6% over the next four quarters; (ii) the 10-year treasury rate ranging from 4.2% to 4.3% over the next four quarters; and (iii) Illinois unemployment rate averaging 5.5% through the fourth quarter of 2025.
Previous wording
We qualitatively adjust the model results based on this scenario for various risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These Q-Factor adjustments are based upon management judgment and current assessment as to the impact of risks related to changes in lending policies and procedures; economic and business conditions; loan portfolio attributes and credit concentrations; and external factors, among other things, that are not already fully captured within the modeling inputs, assumptions and other processes. Management assesses the potential impact of such items within a range of severely negative impact to positive impact and adjusts the modeled expected credit loss by an aggregate adjustment percentage based upon the assessment. The qualitative factor adjustment at September 30, 2024, was approximately 56 basis points of total loans. The additional provision expense related to the LendingPoint portfolio resulted in the increase in the qualitative factor adjustment when compared to 41 basis points at December 31, 2023.
Current wording
We qualitatively adjust the model results based on this scenario for various risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These Q-Factor adjustments are based upon management judgment and current assessment as to the impact of risks related to changes in lending policies and procedures; economic and business conditions; loan portfolio attributes and credit concentrations; and external factors, among other things, that are not already fully captured within the modeling inputs, assumptions and other processes. Management assesses the potential impact of such items within a range of severely negative impact to positive impact and adjusts the modeled expected credit loss by an aggregate adjustment percentage based upon the assessment. The qualitative factor adjustment at March 31, 2025, was approximately 63 basis points of total loans, increasing slightly from 62 basis points at December 31, 2024. The Q-Factor adjustment at March 31, 2025 was based primarily on declining credit quality indicators and increased collateral valuation risks within the commercial real estate secured loan segments.
Previous wording
The allowance allocated to commercial real estate loans totaled $22.5 million, or 0.90% of total commercial real estate loans, at September 30, 2024, increasing $2.3 million, from $20.2 million, or 0.84% of total commercial real estate loans, at December 31, 2023. Modeled expected credit losses increased $0.7 million and qualitative factor adjustments decreased $0.1 million. Specific allocations for commercial real estate loans that were evaluated for expected credit losses on an individual basis increased from $0.7 million at December 31, 2023, to $1.5 million at September 30, 2024. The commercial real estate portfolio does not include significant exposure to urban office properties.
Current wording
The allowance allocated to commercial real estate loans totaled $39.1 million, or 1.51% of total commercial real estate loans, at March 31, 2025, increasing $2.3 million, from $36.8 million, or 1.42% of total commercial real estate loans, at December 31, 2024. Modeled expected credit losses and qualitative factor adjustments increased $0.5 and $0.1 million, respectively. Specific allocations for loans that were individually evaluated increased $1.7 million due to allowances required on three in-market, multi-family projects. The commercial real estate portfolio does not include significant exposure to urban office properties.
Previous wording
The allowance allocated to construction and land development loans totaled $12.1 million, or 2.86% of total construction and land development loans, at September 30, 2024, increasing $7.9 million, from $4.2 million, or 0.92% of total constructions loans, at December 31, 2023. Specific allocations for construction loans that were evaluated for expected credit losses on an individual basis totaled $8.0 million and $0.0 million at September 30, 2024 and December 31, 2023, respectively. This represents the specific reserve on one large construction and land development loan recognized in the first quarter of 2024 provision for credit losses. Modeled expected credit losses decreased $0.4 million and qualitative factor adjustments related to construction loans increased $0.3 million.
Current wording
The allowance allocated to construction and land development loans totaled $3.0 million, or 1.14% of total construction and land development loans, at March 31, 2025, decreasing $0.6 million, from $3.6 million, or 1.18% of total constructions loans, at December 31, 2024. Modeled expected credit losses decreased $0.2 million and qualitative factor adjustments related to construction loans decreased $0.3 million. There were no specific allocations for construction loans that were evaluated for expected credit losses on an individual basis at March 31, 2025 or December 31, 2024.
Previous wording
The allowance allocated to the lease portfolio totaled $13.7 million, or 3.29% of total commercial leases, at September 30, 2024, increasing $0.8 million, from $12.9 million, or 2.73% of total commercial leases at December 31, 2023. Modeled expected credit losses and specific allocation reserves increased $0.8 million and $0.4 million, respectively. Qualitative factor adjustments related to commercial leases decreased $0.1 million.
Current wording
The allowance allocated to the lease portfolio totaled $15.7 million, or 4.21% of total commercial leases, at March 31, 2025, increasing $1.1 million, from $14.6 million, or 3.74% of total commercial leases at December 31, 2024. Modeled expected credit losses increased $1.3 million as recent charge-off activity led to an increase in loss given default factors in the model. Qualitative factor adjustments and specific allocation reserves each decreased $0.1 million.
Previous wording
The following table provides an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following table provides an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs for the three months ended March 31, 2025 and 2024:
Previous wording
The following table presents the change in our non-performing loans for the nine months ended September 30, 2024:
Current wording
The following table presents the change in our non-performing loans for the three months ended March 31, 2025:
Previous wording
We did not recognize interest income on nonaccrual loans during the three months ended September 30, 2024 or 2023 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $2.7 million and $6.3 million for the three and nine months ended September 30, 2024, respectively, and $0.8 million and $2.5 million for the three and nine months ended September 30, 2023, respectively.
Current wording
We did not recognize interest income on nonaccrual loans during the years ended March 31, 2025 or 2024 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $3.4 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
The following table sets forth the book value and associated percentage of each category of investment securities at September 30, 2024 and December 31, 2023.
Current wording
The following table sets forth the book value and percentage of each category of investment securities at March 31, 2025 and December 31, 2024.
Previous wording
Liabilities. At September 30, 2024, liabilities totaled $6.93 billion compared to $7.08 billion at December 31, 2023.
Current wording
Liabilities. At March 31, 2025, liabilities totaled $6.71 billion compared to $6.80 billion at December 31, 2024.
Previous wording
Total deposits decreased $52.7 million to $6.26 billion at September 30, 2024, as compared to December 31, 2023. Decreases in noninterest-bearing demand account, interest-bearing checking account, and savings account balances of $94.8 million, $121.9 million and $49.0 million, respectively, during this period, were partially offset by increases in money market account and time deposit account balances. Brokered time deposit account balances increased to $269.4 million at September 30, 2024 from $94.5 million at December 31, 2023, accounting for the increase in time deposit account balances. Deposit outflows were primarily related to certain larger commercial clients moving funds to the Company's wealth management business, in addition to seasonal outflows of public funds.
Current wording
Total deposits decreased $260.8 million to $5.94 billion at March 31, 2025, as compared to December 31, 2024. Decreases in interest-bearing checking account, money market account and time deposit account balances of $217.0 million, $19.2 million and $75.1 million, respectively, during this period, were partially offset by increases in noninterest-bearing demand account and savings account balances. Brokered time deposit account balances decreased to $188.6 million at March 31, 2025 from $259.5 million at December 31, 2024, accounting for the decrease in time deposit account balances.
Previous wording
Shareholders’ equity increased $26.4 million to $818.3 million at September 30, 2024 as compared to December 31, 2023. The change in shareholders’ equity was the result of the generation of net income of $39.1 million, offset by dividends to common shareholders of $20.3 million, dividends to preferred shareholders of $6.7 million, the repurchases of common stock of $5.5 million and decrease in accumulated other comprehensive losses of $16.1 million.
Current wording
Shareholders’ equity decreased $139.4 million to $571.4 million at March 31, 2025, as compared to December 31, 2024. The change in shareholders’ equity was the result of the net loss of $141.0 million, dividends to common shareholders of $6.8 million, dividends to preferred shareholders of $2.2 million and decrease in accumulated other comprehensive losses of $9.6 million.
Previous wording
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction, which represents the amount of the Bank’s obligation. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. Investment securities with a carrying amount of $14.0 million and $20.9 million at September 30, 2024 and December 31, 2023, respectively, were pledged for securities sold under agreements to repurchase.
Current wording
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction, which represents the amount of the Bank’s obligation. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. Investment securities with a carrying amount of $15.0 million and $20.9 million at March 31, 2025 and December 31, 2024, respectively, were pledged for securities sold under agreements to repurchase.
Previous wording
The Company adopted the five-year CECL transition option in 2020 provided for by the Office of the Comptroller of the Currency, the Federal Reserve, and the FDIC in March 2020. At the end of 2024 this transition will be complete.
Current wording
The Company adopted the five-year CECL transition option in 2020 provided for by the Office of the Comptroller of the Currency, the Federal Reserve, and the FDIC in March 2020. This transition terminated December 31, 2024.
Previous wording
At September 30, 2024, the Company and the Bank exceeded the regulatory minimums and met the regulatory definition of well-capitalized.
Current wording
At March 31, 2025, the Company and the Bank exceeded the regulatory minimums and met the regulatory definition of well-capitalized. The following table presents the Company's and the Bank’s capital ratios and the minimum requirements at March 31, 2025:
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Allowance for Credit Losses on Loans
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
During the nine months ended September 30, 2024, we generated net income of $39.1 million, or diluted earnings per common share of $1.47, compared to net income of $54.7 million, or diluted earnings per common share of $2.14, in the nine months ended September 30, 2023. Earnings for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 decreased primarily due to a $21.6 million increase in provision for credit losses, a $12.0 million decrease in net interest income and a $9.7 million increase in noninterest expense. These results were partially offset by a $12.1 million increase in noninterest income, and a $15.6 million decrease in income tax expense.
Previous report — wording carried elsewhere
(1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.6 million for each of the nine months ended September 30, 2024 and 2023, respectively.
Previous report — wording carried elsewhere
(2)Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
Previous report — wording carried elsewhere
(3)Net interest margin during the periods presented represents: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.
Previous report — wording carried elsewhere
The following table presents the Company's and the Bank’s capital ratios and the minimum requirements at September 30, 2024: