Earnings

Midland States Margin Reaches 4.03% as Loans Turn Higher

The Tip Desk · November 8, 2026 · 3 min read

Net income available to common shareholders was $20.6 million, or $0.95 a share, as the net interest margin expanded five basis points and Community Bank loans grew 2.8% annualized.

Midland States Bancorp, Inc. (MSBI), the Effingham, Illinois community-based financial holding company, reported net income available to common shareholders of $20.6 million, or $0.95 a diluted share, for the third quarter of 2026, compared with $17.7 million, or $0.82 a share, in the second quarter.

The net interest margin expanded five basis points to 4.03% after a seven-basis-point expansion to 3.98% in the second quarter. The company said the latest move benefited from a $1.6 million interest recovery on the payoff of a nonaccrual loan and continued balance-sheet and interest-rate-risk management, partially offset by higher funding costs. Cost of deposits rose four basis points to 1.82%. Net interest income increased to $62.7 million from $59.6 million in the second quarter.

Total loans rose $39.1 million to $4.28 billion at September 30, 2026, reversing a $94.9 million decline in the second quarter. Community Bank loans increased $23.7 million, or 2.8% annualized, after a $6.3 million, or 0.7% annualized, increase in the second quarter. Specialty finance loans increased $28.0 million to $560.1 million after an $81.4 million decline in the second quarter. Non-core loans, which include third-party lending and servicing programs and the remaining equipment finance portfolio, decreased $12.7 million to $295.7 million.

Total deposits decreased $89.8 million to $5.62 billion, reversing a $267 million increase in the second quarter. Retail deposits fell $112.7 million, primarily reflecting $115.7 million of balance reductions from actions to manage liquidity and deposit pricing. Commercial and public funds deposits increased $35.7 million and $33.7 million. Servicing and higher-cost brokered deposits decreased $26.5 million and $7.9 million.

Credit quality continued to improve. Net charge-offs were $5.4 million, or 0.50% of average loans annualized, including $3.2 million of charge-offs on two previously identified nonperforming commercial real estate relationships in the Community Bank portfolio, partially offset by a $0.8 million recovery on the payoff of another previously identified nonperforming CRE relationship. The provision for credit losses on loans was $3.7 million. Nonperforming loans decreased to $58.7 million, or 1.37% of loans. Nonperforming assets to total assets fell five basis points to 0.86%. Loans 30-89 days past due declined to $9.1 million, or 0.21% of loans. The allowance for credit losses on loans was $60.9 million, or 1.42% of loans.

Noninterest income was $23.2 million. Wealth management revenue was $8.7 million, with assets under administration essentially unchanged at $4.77 billion. Noninterest expense rose to $52.8 million from $50.8 million, driven by an increase in variable compensation expense. The efficiency ratio increased to 61.34% from 60.61%. Income tax expense was $6.6 million, for an effective tax rate of 22.4%. The company said it currently expects the effective tax rate to be approximately 23% for the full year, subject to changes in earnings mix, state tax legislation, and other factors.

Common equity tier 1 capital at the holding company declined to 10.36% from 10.39% at June 30, 2026, and total capital to risk-weighted assets fell to 15.60% from 15.77%. The company repurchased $10.6 million of common stock year-to-date 2026, leaving about $24.8 million of a $45.0 million authorization through December 31, 2026. Midland States Bank remained well-capitalized under Basel III.

President and Chief Executive Officer Jeffrey G. Ludwig said the company entered the fourth quarter with solid momentum and remained focused on profitable relationship growth, continued credit normalization and disciplined capital deployment.

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