On this page of StockholderLetter.com we present the 7/8/2025 shareholder letter from Midland States Bancorp, Inc. — ticker symbol MSBI. Reading current and past MSBI letters to shareholders can bring important insights into the investment thesis.


Letter to Shareholders Dear Shareholders: We faced a challenging year in 2024, and I want to address what happened and how we responded. Late in the year, we faced credit issues that required close attention and swift action. Separately, we identified technical accounting matters related to certain loan portfolios with credit enhancements, which led to a restatement of our financial statements. That restatement delayed our 10-K filing by more than four months and demanded an extraordinary effort from our Finance team-I want to thank them for their hard work and dedication throughout the process. Credit Issues During the fourth quarter of 2024, we took several actions to address our credit quality issues and exit non-core consumer loan portfolios. These credit quality issues primarily affected three of our lines of business: non-core consumer loans, Specialty Finance Group, and Midland Equipment Finance. First, after identifying these issues we decided to accelerate the reduction of our non-core consumer loan portfolio through sales. These loans were originated by our fintech partners, LendingPoint and Greensky. In December 2024, we 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 $317.5 million of our Greensky consumer loan portfolio and recognized net charge-offs of $35.0 million when these loans were transferred to held for sale in the fourth quarter. We completed the sale of participation interests for most of the Greensky portfolio in April 2025. Second, we completed a strategic review of our Specialty Finance Group portfolio, which provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and often require short-term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company's primary market areas. We obtained updated appraisals on loans that had shown elevated credit risk in the third and fourth quarters. As a result of this review, five loans with balances of $57.8 million were moved from substandard to non-performing with recognized charge-offs of $6.6 million. In addition, updated appraisals were obtained for five non-performing loans with balances of $55.8 million which resulted in charge-offs of $18.8 million. In addition, we recognized an impairment expense on an OREO property related to a former assisted living loan of $3.6 million. We also closely evaluated all criticized loans, construction loans, and credits that failed our internal stress tests across all portfolios, including the Community Bank. We have since taken proactive steps to strengthen our credit risk profile, including tightening underwriting standards and ceasing new construction lending in our Specialty Finance Group. These changes, combined with new talent we have added to our credit team, are already having a positive impact on our credit culture-something I will expand on later in this letter.
Finally, we also experienced elevated charge-offs in yield on the portfolio. In April 2025, we determined that our Midland Equipment Finance portfolio during 2024, these payments should be accounted for separately or on a primarily driven by continued stress in the trucking gross basis. While the change in accounting methodology industry. In the fourth quarter alone, charge-offs totaled had an impact to previously reported net income, most $15.3 million, as we reassessed equipment values tied of the loan balances impacted by the change have been to nonaccrual assets. Given further deterioration in the sold and moved off our balance sheet through the sale sector, we evaluated the collateral salvage values of loans of our Greensky and LendingPoint portfolios discussed and leases, along with the carrying value of repossessed above. Going forward, we will utilize the new accounting and off-lease equipment, resulting in a $7.9 million on any third-party originated loans, which are expected impairment expense. In response, we have taken decisive to represent a smaller portion of total loans in the future. action-tightening credit standards, ceasing originations When the new accounting methodology is used, however, to the trucking sector, and actively reducing the overall loan yields and interest income will be recognized at the size of the equipment finance portfolio. gross borrower loan rate, while credit losses and provisions will be recorded on a gross basis. Credit enhancement Improving credit quality and payments will be accounted for separately as a credit evolving our credit culture is a indemnification derivative. top priority. A key part of that effort is adding experienced The effect of the restatement related to third-party loan talent team. programs had a significant positive impact on our 2024 In July 2024, we welcomed to our Credit earnings as compared to the initial results reported in Jeremy Jameson as our new late January, changing from a net loss of $13.4 million to Chief Credit Officer, and he has already made a meaningful Jeremy Jameson net income of $38.0 million. However, the restatement required that losses initially recorded in the fourth quarter Cheif Credit Officer Midland States Bank and disclosed in our January earnings release be recorded brought on two Regional Credit Officers-Fritz Gebhard fourth quarter 2024 loss to prior periods. Although the impact in his first year. To further support this transformation, we in the year that the loans were originated, thus moving the and David Ouagliana-and Emmett Reidner as Director restatement had significant effects on net income in 2024 of Credit Projects. We have also implemented a regional and 2023 and various income statement line items, the net credit strategy and made important enhancements to our impact to our retained earnings at December 31, 2024 was underwriting process. Jeremy and the team are driving limited to a $5 million reduction. real progress, and I have full confidence in their leadership and the changes underway. Despite the challenges we faced during 2024, the fundamentals of the Company remain strong. We finished Restatement the year with a total risk-based capital ratio of 13.07%, The restatement related to our accounting for loans compared to 12.37% in 2023, reflecting our continued originated through third-party loan origination programs well-capitalized position. Additionally, our net interest dating back to 2012. Under these programs, the third margin expanded to 3.35%, demonstrating our disciplined party provider offered various credit enhancements balance sheet management. Wealth management revenue such as reserve account contributions, yield maintenance, increased to $28.7 million, driven in part by new client and other payments-to support loan performance. additions. Historically, we accounted for borrower payments and credit enhancement payments on a net basis, recognizing We were also successful in adding significant talent them together as interest income representing the effective throughout the Company in 2024. II Our Community
Bank team welcomed Tom Lally as Regional President and Meg Fisher Market as President in St. Louis while also adding Tom Lally Meg Fisher Andy Patel as Regional President in Northern Illinois. We added Tom Ormseth as Chief Deposit Officer as well as numerous other hires to key Andy Patel Tom Ormseth roles to add depth throughout our Community Bank. We also hired several new wealth advisors to enhance the reach and service capabilities of our Wealth Management group. These hires represent a significant investment in strengthening our team, who together are well-suited to generate revenue for the Company in 2025 and beyond. Financial Results The results below reflect our restated financials. In 2024, our adjusted pre-tax, pre-provision earnings were $167. 2 million, compared to $178.1 million for 2023. Adjusted earnings available to common shareholders was $29.1 million, or $1.32 per fully diluted share in 2024 compared to adjusted earnings of $62.3 million, or $2.78 per fully diluted share in 2023. Adjusted earnings for 2024 compared to 2023 decreased primarily due to a $12.5 million decrease in net interest income, and a $37.8 million increase in provision for credit losses. Tangible book value per share on December 31, 2024 was $19.83, a 0.2% increase from $19.79 a share in 2023. We continued our tradition of paying dividends, and when taking share repurchases and common share dividends paid in 2024 together, we distributed $32.5 million to our common shareholders while also distributing $8.9 million of dividends to preferred shareholders. Capital Ratios 15.00% 10.00% 5.00% 2022 2023 2024 Total Risk Based Capital Ratio Common Equity Tier 1 Risk Based Capital Ratio Adjusted Pre-Tax Pre-Provision Earnings $250 $200 $195.7 $150 $100 $50 $0 2022 2023 2024 Tangible Book Value Per Share $25 $20 $19.79 $19.83 2023 2024 $15 $10 $5 $0 2022 II
 • shareholder letter icon 7/8/2025 Letter Continued (Full PDF)
 • stockholder letter icon 3/24/2023 MSBI Stockholder Letter
 • stockholder letter icon 3/25/2024 MSBI Stockholder Letter
 • stockholder letter icon 4/3/2026 MSBI Stockholder Letter
 • stockholder letter icon More "Banking & Savings" Category Stockholder Letters
 • Benford's Law Stocks icon MSBI Benford's Law Stock Score = 100


MSBI 7/8/2025 Shareholder/Stockholder Letter Transcript:



Letter to
Shareholders
Dear Shareholders:
We faced a challenging year in 2024, and I want to address
what happened and how we responded. Late in the year,
we faced credit issues that required close attention and
swift action. Separately, we identified technical accounting
matters related to certain loan portfolios with credit
enhancements, which led to a restatement of our financial
statements. That restatement delayed our 10-K filing by
more than four months and demanded an extraordinary
effort from our Finance team-I want to thank them for
their hard work and dedication throughout the process.
Credit Issues
During the fourth quarter of 2024, we took several actions
to address our credit quality issues and exit non-core
consumer loan portfolios. These credit quality issues
primarily affected three of our lines of business: non-core
consumer loans, Specialty Finance Group, and Midland
Equipment Finance.
First, after identifying these issues we decided to
accelerate the reduction of our non-core consumer loan
portfolio through sales. These loans were originated
by our fintech partners, LendingPoint and Greensky. In
December 2024, we 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 $317.5 million
of our Greensky consumer loan portfolio and recognized
net charge-offs of $35.0 million when these loans were
transferred to held for sale in the fourth quarter. We
completed the sale of participation interests for most of
the Greensky portfolio in April 2025.
Second, we completed a strategic review of our Specialty
Finance Group portfolio, which provides bridge loan
financing for commercial real estate projects, primarily
multi-family and healthcare. These projects can include
construction and often require short-term financing in
anticipation of obtaining permanent secondary market
financing. The loans are typically outside of the Company's
primary market areas. We obtained updated appraisals on
loans that had shown elevated credit risk in the third and
fourth quarters. As a result of this review, five loans with
balances of $57.8 million were moved from substandard
to non-performing with recognized charge-offs of $6.6
million. In addition, updated appraisals were obtained for
five non-performing loans with balances of $55.8 million
which resulted in charge-offs of $18.8 million. In addition,
we recognized an impairment expense on an OREO
property related to a former assisted living loan of $3.6
million.
We also closely evaluated all criticized loans, construction
loans, and credits that failed our internal stress tests  
across all portfolios, including the Community Bank. We
have since taken proactive steps to strengthen our credit
risk profile, including tightening underwriting standards
and ceasing new construction lending in our Specialty
Finance Group. These changes, combined with new talent
we have added to our credit team, are already having a
positive impact on our credit culture-something I will
expand on later in this letter.

Finally, we also experienced elevated charge-offs in
yield on the portfolio. In April 2025, we determined that
our Midland Equipment Finance portfolio during 2024,
these payments should be accounted for separately or on a
primarily driven by continued stress in the trucking
gross basis. While the change in accounting methodology
industry. In the fourth quarter alone, charge-offs totaled
had an impact to previously reported net income, most
$15.3 million, as we reassessed equipment values tied
of the loan balances impacted by the change have been
to nonaccrual assets. Given further deterioration in the
sold and moved off our balance sheet through the sale
sector, we evaluated the collateral salvage values of loans
of our Greensky and LendingPoint portfolios discussed
and leases, along with the carrying value of repossessed
above. Going forward, we will utilize the new accounting
and off-lease equipment, resulting in a $7.9 million
on any third-party originated loans, which are expected
impairment expense. In response, we have taken decisive
to represent a smaller portion of total loans in the future.
action-tightening credit standards, ceasing originations
When the new accounting methodology is used, however,
to the trucking sector, and actively reducing the overall
loan yields and interest income will be recognized at the
size of the equipment finance portfolio.
gross borrower loan rate, while credit losses and provisions
will be recorded on a gross basis. Credit enhancement
Improving credit quality and
payments will be accounted for separately as a credit
evolving our credit culture is a
indemnification derivative.
top priority. A key part of that
effort is adding experienced
The effect of the restatement related to third-party loan
talent
team.
programs had a significant positive impact on our 2024
In July 2024, we welcomed
to
our
Credit
earnings as compared to the initial results reported in
Jeremy Jameson as our new
late January, changing from a net loss of $13.4 million to
Chief Credit Officer, and he
has already made a meaningful
Jeremy Jameson
net income of $38.0 million.
However, the restatement
required that losses initially recorded in the fourth quarter
Cheif Credit Officer
Midland States Bank
and disclosed in our January earnings release be recorded
brought on two Regional Credit Officers-Fritz Gebhard
fourth quarter 2024 loss to prior periods. Although the
impact in his first year. To further
support this transformation, we
in the year that the loans were originated, thus moving the
and David Ouagliana-and Emmett Reidner as Director
restatement had significant effects on net income in 2024
of Credit Projects. We have also implemented a regional
and 2023 and various income statement line items, the net
credit strategy and made important enhancements to our
impact to our retained earnings at December 31, 2024 was
underwriting process. Jeremy and the team are driving
limited to a $5 million reduction.
real progress, and I have full confidence in their leadership
and the changes underway.
Despite the challenges we faced during 2024, the
fundamentals of the Company remain strong. We finished
Restatement
the year with a total risk-based capital ratio of 13.07%,
The restatement related to our accounting for loans
compared to 12.37% in 2023, reflecting our continued
originated through third-party loan origination programs
well-capitalized position.
Additionally, our net interest
dating back to 2012. Under these programs, the third  
margin expanded to 3.35%, demonstrating our disciplined
party provider offered various credit enhancements  
balance sheet management. Wealth management revenue
such as reserve account contributions, yield maintenance,
increased to $28.7 million, driven in part by new client
and other payments-to support loan performance.
additions.
Historically, we accounted for borrower payments and
credit enhancement payments on a net basis, recognizing
We were also successful in adding significant talent
them together as interest income representing the effective
throughout the Company in 2024.
II
Our
Community

Bank team welcomed
Tom Lally as Regional
President and Meg
Fisher
Market
as
President in St. Louis
while also adding
Tom Lally
Meg Fisher
Andy Patel as Regional
President in Northern
Illinois. We added
Tom
Ormseth as
Chief Deposit Officer
as well as numerous
other hires to key
Andy Patel
Tom Ormseth
roles to add depth
throughout our Community Bank. We also hired several new
wealth advisors to enhance the reach and service capabilities
of our Wealth Management group. These hires represent a
significant investment in strengthening our team, who together
are well-suited to generate revenue for the Company in 2025
and beyond.
Financial Results
The results below reflect our restated financials.
In 2024, our adjusted pre-tax, pre-provision earnings were $167. 2
million, compared to $178.1 million for 2023. Adjusted earnings
available to common shareholders was $29.1 million, or $1.32
per fully diluted share in 2024 compared to adjusted earnings of
$62.3 million, or $2.78 per fully diluted share in 2023. Adjusted
earnings for 2024 compared to 2023 decreased primarily due
to a $12.5 million decrease in net interest income, and a $37.8
million increase in provision for credit losses.
Tangible book value per share on December 31, 2024 was $19.83,
a 0.2% increase from $19.79 a share in 2023.
We continued our tradition of paying dividends, and when
taking share repurchases and common share dividends paid
in 2024 together, we distributed $32.5 million to our common
shareholders while also distributing $8.9 million of dividends to
preferred shareholders.
Capital Ratios
15.00%
10.00%
5.00%

2022
2023
2024
    Total Risk   Based Capital Ratio     Common Equity Tier 1 Risk   Based Capital Ratio
Adjusted Pre-Tax Pre-Provision Earnings
$250
$200
$195.7
$150
$100
$50
$0
2022
2023
2024
Tangible Book Value Per Share
$25
$20
$19.79
$19.83
2023
2024
$15
$10
$5
$0
2022
II


shareholder letter icon 7/8/2025 Letter Continued (Full PDF)
 

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