In its third-quarter earnings report, Midland States Bancorp Inc. noted the firm is continuing its "credit clean-up."

“Although we are disappointed in our financial results this quarter, we have made meaningful progress on several strategic initiatives. The financial results included $15 million of provision in our equipment finance portfolio reflecting an increase in our loss given default assumptions. Given our current outlook and the allowance held against this portfolio, we believe we are appropriately reserved for future credit losses," said President & CEO Jeffrey G. Ludwig.

“Reducing problem loans has been a priority this year and importantly, our nonperforming assets decreased to $70 million, or 1.02% of total assets," Ludwig added. "This represents a pronounced decline from 2.10% at December 31, 2024. Along with our previously discussed strategic decision to tighten underwriting standards in our specialty finance portfolio, we have made the decision to cease originations in equipment finance to further reduce our exposure to higher-risk asset classes."

The company noted that "as a continuation of steps taken to address our credit quality issues, including the sales of non-core loan portfolios and tightened underwriting standards in our specialty finance portfolio, we ceased originations in the equipment finance portfolio effective September 30, 2025."

Net charge-offs for the quarter were $12.3 million, including:

• $5.0 million of net charge-offs in Midland's equipment finance portfolio as the company continues to see credit issues, primarily in the trucking industry

• $1.7 million of fully reimbursed net charge-offs related to its third party lending program

• $3.5 million of net charge-offs in its specialty finance portfolio