Midland States Bancorp, Inc.
For the period ended Jun 30, 2025. Filed Sep 8, 2025.
View on SEC.govAbout this filing
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.
Jun 30, 2025 · Filed Sep 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 2025-03-31; filed 2025-08-08.
0001466026-25-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-09-08.
0001466026-25-000038
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 139 previous paragraphs and 155 current paragraphs.
82 unchanged; 53 reworded; 15 added; 4 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 23 previous and 24 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 (15)
Current report
During the six months ended June 30, 2025, we generated a net loss of $129.0 million, or diluted loss per common share of$6.13, compared to net income of $48.4 million, or diluted earnings per common share of $1.99, in the six months ended June 30, 2024. Earnings for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, included a $1.7 million decrease in net interest income, a $28.5 million decrease in noninterest income, and a $153.6 million increase in noninterest expense, primarily as a result of $154.0 million of goodwill impairment recognized in the first quarter of 2025. These results were partially offset by a $6.5 million decrease in income tax expense.
Current report
At its September 2024 FOMC meeting, the Federal Reserve cut its benchmark interest rate by 0.50 percentage points, marking the first reduction in four years.
Current report
During thesix months ended June 30, 2025, net interest income, on a tax-equivalent basis, decreased to $117.5 million with a tax-equivalent net interest margin of 3.52% compared to net interest income, on a tax-equivalent basis, of $119.1 million with a tax-equivalent net interest margin of 3.36% for thesix months ended June 30, 2024.
Current report
Average earning assets decreased to $6.64 billion in the second quarter of 2025 from $7.13 billion in the same quarter in 2024. A decrease in average loans of $792.0 million was partially offset by an increase in investment securities of $268.7 million.
Current report
For the six months ended June 30, 2025, interest income, on a tax-equivalent basis, decreased $15.3 million to $197.8 million as compared to the same period in 2024, primarily due to a decline in earning assets. The yield on earning assets decreased nine basis points to 5.93% from 6.02%.
Current report
Average loans decreased $873.1 million in the first half of 2025 compared to the same period of 2024. Average consumer loans decreased $724.8 million due to the sale of our non-core consumer loan portfolios. Average equipment finance loan and lease balances decreased $187.9 million to $758.3 million.
Current report
For the six month period ended June 30, 2025, interest expense decreased$13.7 million to$80.3 million compared to the six months ended June 30, 2024. The cost of interest-bearing liabilities increased to 2.95% for the first six months of 2025 compared to 3.29% for the same period of 2024. Interest expense on deposits decreased to $66.9 million from $78.7 million for the comparable period in 2024, primarily due to decreases in interest rates on deposits.
Current report
Interest expense on FHLB advances and other borrowings decreased $1.9 million for thesix months ended June 30, 2025, from the comparable period in 2024. Average balances decreased $75.2 million for thesix months ended June 30, 2025, from the comparable period in 2024 as the reduction in earning assets allowed the Company to reduce its reliance on this higher-costing funding source.
Current report
Provision for Credit Losses. The Company's provision for credit losses totaled $17.4 million for the three months ended June 30, 2025, compared to $8.3 million for thethree months ended June 30, 2024. Net charge-offs in the second quarter of 2025 totaled $29.9 million, $22.5 million which were related to commercial real estate loans. Three relationships totaling $8.4 million were not previously reserved for, resulting in the increase in provision expense. For thesix months ended June 30, 2025 and 2024, the provision for credit losses was $28.2 million for both periods, respectively.
Current report
Salaries and employee benefits. For the three months ended June 30, 2025, salaries and employee benefits expense increased $2.8 million, as compared to the same period in 2024, primarily due to annual salary increases, severance expense of $0.8 million, and increased variable compensation expense, including commissions and annual bonuses. Severance expense accounts for $2.4 million of the $5.1 million increase in salaries and employee benefits expense for the six months ended June 30, 2025, compared to the same period of 2024. The Company employed 880 employees at June 30, 2025 compared to 895 employees at June 30, 2024.
Current report
Impairment on goodwill. As mentioned previously, the Company recognized $154.0 million of goodwill impairment expense during the first quarter of 2025, in its Banking reporting unit.
Current report
Other expense. Total noninterest expense decreased $3.6 million and $3.7 million in the three and six months ended June 30, 2025, as compared to the same period of 2024. Other expense for the second quarter of 2024 included $4.1 million related to OREO impairment, OREO property taxes, and expenses related to various legal actions.
Current report
Income Tax Expense. The Company's effective tax rates were 19.1% and 19.4% for the three and six months ended June 30, 2025, respectively, compared to 19.2% and 20.5% for the three and six months ended June 30, 2024, respectively. The effective tax rate calculation for the six months June 30, 2025, excludes the goodwill impairment charge of $154.0 million, as this item is not deductible for tax purposes.
Current report
Charge-offs in the six months ended June 30, 2025 were $51.4 million compared to $35.3 million in the same period one year prior. Community Bank commercial real estate charge-offs were related to four separate relationships, with one being partially reserved for in a prior period. Charge-offs within the Specialty finance sector were primarily related to two relationships, both of which were reserved for in 2024. Our equipment finance business saw charge-offs increase $3.1 million in the six months ended June 30, 2025 compared to the same period last year. The non-core sector saw charge-offs decrease $8.2 million in the six months ended June 30, 2025 compared to the same period last year primarily due to the sales of the LendingPoint and GreenSky portfolios in the fourth quarter of 2024 and first quarter of 2025, respectively.
Current report
Loans Held for Sale. Loans held for sale totaled $37.3 million at June 30, 2025, comprised of $29.4 million of commercial real estate loans and $7.9 million of residential real estate loans. The commercial real estate loans were three credit-deteriorated loans that were ultimately sold in July 2025. Loans held for sale totaled $344.9 million at December 31, 2024, comprised of $336.7 million of consumer loans and $8.2 million of residential real estate loans. At December 31, 2024, we committed to a plan to sell our GreenSky consumer loan portfolio and transferred these loans to held for sale. The sale was completed in April 2025.
Removed paragraphs (4)
Previous 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%.
Previous 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.
Previous report
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 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.
Reworded paragraphs (53)
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 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.
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 June 30, 2025, as compared to December 31, 2024, and unaudited consolidated operating results for the three and six months ended June 30, 2025 and 2024. This disclosure 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, 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.
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 greatest 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
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 wording
The method employed was a discounted cash flow analysis. Significant judgment is necessary in the determination of the fair value of a reporting unit. This 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.
Previous wording
At March 31, 2025 and December 31, 2024, loans outstanding in this program were $53.3 million and $62.3 million, respectively.
Current wording
At June 30, 2025 and December 31, 2024, loans outstanding in this program were $53.7 million and $62.3 million, respectively.
Previous wording
Overview. The following table sets forth condensed income statement information of the Company for the three months ended March 31, 2025 and 2024:
Current wording
Overview. The following table sets forth condensed income statement information of the Company for the three and six months ended June 30, 2025 and 2024:
Previous 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.
Current wording
During the three months ended June 30, 2025, we generated net income of $12.0 million, or diluted earnings per common share of $0.44, compared to net income of $25.7 million, or diluted earnings per common share of $1.06, in the three months ended June 30, 2024. Earnings for thesecond quarter of 2025 compared to thesecond quarter of 2024 decreased primarily due to a $0.2 million decrease in net interest income, a $9.1 million increase in provision for credit losses, and an $8.4 million decrease in noninterest income. These results were partially offset by a $0.8 million decrease in noninterest expense, and a $3.2 million decrease in income tax expense.
Previous wording
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 wording
At its July 2025 meeting, the FOMC kept its key borrowing rate targeted in a range between 4.25%-4.50%, where it has been since December 2024. The post-meeting statement stated "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.” Federal Reserve Chair Jerome Powell said at a news conference that the committee had not yet determined whether it would cut rates at its September meeting. He stated that he believes their obligation is to keep longer term inflation expectations well anchored and to prevent a one time increase in the price level from becoming an ongoing inflation problem. The benchmark federal funds rate began 2024 at a target range between 5.25%-5.50%.
Previous 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.
Current wording
During the three months ended June 30, 2025, net interest income, on a tax-equivalent basis, totaled $59.0 million compared to $59.1 million for the three months ended June 30, 2024. The tax-equivalent net interest margin increased to 3.56% for the second quarter of 2025 compared to 3.33% in the second 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 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.
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 and six months ended June 30, 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 both the three months ended March 31, 2025 and 2024.
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 $0.3 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively.
Previous 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%.
Current wording
Interest Income. Interest income, on a tax-equivalent basis, decreased $9.1 million to $98.2 million in the three months ended June 30, 2025 as compared to the same quarter in 2024, primarily due to a decline in earning assets. The yield on earning assets decreased 12 basis points to 5.93% from 6.05%.
Previous 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.
Current wording
Average loans decreased $792.0 million in the second quarter of 2025 compared to the same quarter of 2024. Average consumer loans decreased $665.8 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 second quarter of 2024, the average balances of the LendingPoint and GreenSky portfolios were $100.0 million and $534.1 million, respectively. Average equipment finance loan and lease balances decreased $184.9 million to $732.7 million as the Company continued to reduce its concentration of this product within the overall loan portfolio.
Previous 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.
Current wording
Average earning assets decreased to $6.72 billion in the first six months of 2025 from $7.12 billion in the same period in 2024. Average loans decreased $873.1 million. This decrease was partially offset by increases in investment securities and loans held for sale of $296.1 million and $180.6 million, respectively.
Previous wording
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 wording
Average loans held for sale for the first half of 2025 primarily reflected the GreenSky consumer loans which were transferred to held for sale in December 2024. The Company completed the sale of this portfolio in April 2025.
Previous 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.
Current wording
Interest Expense. Interest expense decreased$9.0 million to$39.2 million for thethree months ended June 30, 2025 from the comparable period in 2024. The cost of interest-bearing liabilities decreased to 2.91% for the second quarter of 2025, compared to 3.36% for the second quarter of 2024, due to the decrease in deposit costs as a result of the rate decreases announced by the Federal Reserve in late 2024.
Previous 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.
Current wording
Interest expense on deposits decreased $7.2 million to $32.3 million for thethree months ended June 30, 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 $255.8 million, or 5.0%, to$4.85 billion for thethree months ended June 30, 2025 compared to the same period one year earlier. Decreases in interest-bearing checking account, savings account, and time account balances of $213.6 million, $28.9 million, and $25.2 million, respectively, were partially offset by an increase in brokered time deposits of $11.9 million.
Previous 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.
Current wording
The provision for credit losses on loans recognized during the three and six months ended June 30, 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 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:
Current wording
Noninterest Income. The following table sets forth the major components of our noninterest income for the three and six months ended June 30, 2025 and 2024:
Previous 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.
Current wording
Wealth management revenue. Wealth management revenue increased $0.6 million and $0.8 million for the three and six months ended June 30, 2025 respectively, as compared to the same periods in 2024. Assets under administration increased to $4.18 billion at June 30, 2025 from $4.00 billion at June 30, 2024.
Previous 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.
Current wording
Income on company-owned life insurance. Income on company-owned life insurance increased $0.7 million for the six months ended June 30, 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
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 wording
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 $10.5 million and $27.7 million for the three and six months ended June 30, 2025 compared to the same periods of 2024 as a result of loan payoffs and a cessation in loans originated through the GreenSky and LendingPoint programs.
Previous wording
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 wording
Other noninterest income. Other income decreased $2.9 million for the six months ended June 30, 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.
Previous wording
Noninterest Expense. The following table sets forth the major components of noninterest expense for the three months ended March 31, 2025 and 2024:
Current wording
Noninterest Expense. The following table sets forth the major components of noninterest expense for the three and six months ended June 30, 2025 and 2024:
Previous wording
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 wording
Occupancy and equipment expense. For the three and six months ended June 30, 2025, occupancy and equipment expense increased $0.2 million and $0.6 million, respectively, as compared to the same periods in 2024 due primarily to the investments made to upgrade ATM fleet that was completed in the fourth quarter of 2024.
Previous wording
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 wording
Professional services expense. The $0.5 million and $1.0 million increases in professional services expense for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, were 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.
Previous 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.
Current wording
Loan expense. The $0.7 million and $0.8 million increase in loan expense for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, is primarily for loan collection expenses due to the volume of nonperforming loans and assets.
Previous wording
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 wording
Loan servicing fees. Loan servicing fees expense represents servicing fees paid to third parties associated with our third party lending programs. The decline in servicing fees was a result of loan payoffs and a cessation in loans originated through the GreenSky and LendingPoint programs.
Previous wording
Assets. Total assets were $7.28 billion at March 31, 2025, as compared to $7.51 billion at December 31, 2024.
Current wording
Assets. Total assets were $7.11 billion at June 30, 2025, as compared to $7.51 billion at December 31, 2024.
Previous 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.
Current wording
Loans secured by office space totaled $138.3 million and $146.3 million at June 30, 2025 and December 31, 2024, respectively, primarily located in suburban locations in Illinois and Missouri.
Previous wording
•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 wording
•Specialty Finance provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and short term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company’s primary market areas.
Previous wording
•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 wording
•Equipment finance portfolio includes loans and leases originated to varying types of businesses throughout the United States for purchases of business equipment and software. As previously disclosed, management has determined to reduce the overall size of the Company's equipment finance portfolio following elevated charge-offs in the portfolio during 2024.
Previous wording
•Non-core and other includes our third-party origination and servicing programs, capital market credits, and FHA warehouse lines of credit.
Current wording
•Non-core and other includes our third-party origination and servicing programs, and capital market credits, including loans to finance the sale of the GreenSky portfolio.
Previous wording
Total loans decreased $149.5 million, or 2.9%, to $5.02 billion at March 31, 2025, as compared to December 31, 2024. Community bank portfolio increased $69.9 million, or 2.2%, during the first quarter of 2025. This growth partially offset the strategic declines in the Specialty finance and Equipment finance portfolios of $158.5 million and $44.9 million, respectively.
Current wording
Total loans decreased $132.3 million, or 2.6%, to $5.04 billion at June 30, 2025, as compared to December 31, 2024. Community bank portfolio increased $141.0 million, or 4.4%, during the first half of 2025. This growth partially offset the strategic declines in the Specialty finance and Equipment finance portfolios of $355.9 million and $96.7 million, respectively. The increase in our Non-core and other business sector is the due to the financing we provided related to the sale of the GreenSky portfolio.
Previous 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:
Current wording
Analysis of the Allowance for Credit Losses on Loans. The allowance for credit losses on loans was $92.7 million, or 1.84% of total loans, at June 30, 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 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.
Current wording
In estimating expected credit losses as of June 30, 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 1.0% to 1.6% over the next four quarters; (ii) the 10-year treasury rate ranging from 4.5% to 4.9% over the next four quarters; and (iii) Illinois unemployment rate averaging 5.2% through the second quarter of 2026.
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 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.
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 June 30, 2025, was approximately 60 basis points of total loans, decreasing slightly from 62 basis points at December 31, 2024.
Previous wording
The allowance allocated to commercial loans totaled $33.6 million, or 2.64% of total commercial loans, at March 31, 2025, compared to $42.8 million, or 3.15%, at December 31, 2024. Charge-offs related to the non-core loan program of $11.1 million resulted in the significant decrease in the allowance allocated to commercial loans. Excluding these charge-offs, modeled expected credit losses increased $1.5 million. Qualitative factor adjustments related to commercial loans decreased $0.3 million and specific allocations for commercial loans that were evaluated for expected credit losses on an individual basis increased $0.6 million.
Current wording
The allowance allocated to commercial loans totaled $34.2 million, or 2.21% of total commercial loans, at June 30, 2025, compared to $42.8 million, or 3.15%, at December 31, 2024. First quarter of 2025 charge-offs related to the non-core loan program of $11.1 million resulted in a significant decrease in the allowance allocated to commercial loans. Excluding these charge-offs, modeled expected credit losses increased $2.3 million. Specific allocations for commercial loans that were evaluated for expected credit losses on an individual basis increased $0.3 million.
Previous 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.
Current wording
The allowance allocated to commercial real estate loans totaled $27.4 million, or 1.15% of total commercial real estate loans, at June 30, 2025, decreasing $9.4 million, from $36.8 million, or 1.42% of total commercial real estate loans, at December 31, 2024. Outstanding loan balances decreased $208.3 million, or 8.0%, during the first half of 2025. Specific allocations for loans that were individually evaluated decreased $9.8 million as three relationships totaling $10.9 million were charged-off in the second quarter of 2025. 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 $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.
Current wording
The allowance allocated to construction and land development loans totaled $2.9 million, or 1.11% of total construction and land development loans, at June 30, 2025, decreasing $0.7 million, from $3.6 million, or 1.18% of total constructions loans, at December 31, 2024. Modeled expected credit losses decreased $0.3 million and qualitative factor adjustments related to construction loans decreased $0.4 million. There were no specific allocations for construction loans that were evaluated for expected credit losses on an individual basis at December 31, 2024.
Previous wording
The allowance allocated to residential real estate loans totaled $7.9 million, or 2.11% of total residential real estate loans, at March 31, 2025, decreasing $0.1 million, from $8.0 million, or 2.10% of total residential real estate loans, at December 31, 2024. Qualitative factor adjustments decreased $0.1 million. There were no specific allocations for residential real estate loans that were evaluated for expected credit losses on an individual basis at March 31, 2025 or December 31, 2024.
Current wording
The allowance allocated to residential real estate loans totaled $7.1 million, or 1.97% of total residential real estate loans, at June 30, 2025, decreasing $0.9 million, from $8.0 million, or 2.10% of total residential real estate loans, at December
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Current report — wording carried from 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 $0.5 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
(2)Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
31, 2024. Modeled expected credit losses and qualitative factor adjustments decreased $0.8 million and $0.1 million, respectively. There were no specific allocations for residential real estate loans that were evaluated for expected credit losses on an individual basis at June 30, 2025, or December 31, 2024.
Current report — wording carried from elsewhere
The following tables present charge-offs by business sector for the six months ended June 30, 2025 and 2024: