Midland States Bancorp, Inc. (MSBI): Boston Consulting Group Matrix [10-2024 Updated]

As we delve into the financial landscape of Midland States Bancorp, Inc. (MSBI) for 2024, the Boston Consulting Group Matrix reveals critical insights into its business segments. With strong growth in Wealth Management revenue and a stable net interest income of $54.95 million, Midland showcases promising Stars and Cash Cows. However, challenges loom with declining consumer loans and elevated non-performing loans, categorizing them as Dogs. Meanwhile, the potential for growth in commercial loans positions Question Marks on the horizon. Discover more about how these dynamics shape Midland's strategic outlook below.

Background of Midland States Bancorp, Inc. (MSBI)

Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois. It is the sole shareholder of Midland States Bank. As of September 30, 2024, the company reported total assets of approximately $7.75 billion.

The company offers a comprehensive range of commercial and consumer banking products and services, including business equipment financing, merchant credit card services, trust and investment management, insurance, and financial planning services. Its Wealth Management Group had assets under administration amounting to approximately $4.27 billion as of the same date.

For the third quarter of 2024, Midland States Bancorp achieved a net income available to common shareholders of $16.2 million, which translates to $0.74 per diluted share. This marks a significant increase compared to $4.5 million or $0.20 per diluted share from the previous quarter.

The company has been actively managing its balance sheet and focusing on enhancing profitability. Notably, it reported a tangible book value per share of $24.90, an increase from $23.36 at the end of the previous quarter. Additionally, Midland States Bancorp has maintained a strong capital position, with a common equity tier 1 capital ratio of 9.00%.

Midland States Bancorp's strategy includes a focus on commercial loan opportunities and a reduction in equipment financing and consumer loan portfolios. This approach has been reflected in their loan portfolio, which stood at $5.75 billion as of September 30, 2024. The company continues to emphasize improving credit quality and proactive management of non-performing loans.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Stars

Strong growth in Wealth Management revenue

Wealth management revenue totaled $7.1 million in the third quarter of 2024, reflecting an increase of $0.3 million, or 4.5%, compared to the second quarter of 2024. This growth is attributed to improved sales activity and increased assets under administration.

Increasing assets under administration, reaching approximately $4.27 billion

As of September 30, 2024, assets under administration increased to $4.27 billion from $4.00 billion at June 30, 2024. This marks a significant rise from $3.50 billion at the same time last year.

Positive trends in net interest margin, expected to improve with lower interest rates

The net interest margin for the third quarter of 2024 was reported at 3.10%, slightly down from 3.12% in the previous quarter, but analysts expect improvements as interest rates stabilize. The yield on interest-earning assets increased to 5.91% in the third quarter of 2024.

Robust return on average tangible common equity at 12.69%

The return on average tangible common equity stood at 12.69% as of September 30, 2024, up from 3.66% in the prior quarter. This performance indicates effective utilization of equity capital in generating profits.

Consistent growth in commercial loans, especially in FHA warehouse lines and commercial real estate

As of September 30, 2024, commercial loans amounted to $863.9 million, with notable increases in FHA warehouse lines ($50.2 million) and commercial real estate loans ($89.0 million). This growth is part of a strategic focus on enhancing commercial lending activities.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Cash Cows

Stable net interest income of $54.95 million in Q3 2024

In the third quarter of 2024, Midland States Bancorp reported a stable net interest income of $54.95 million. This figure reflects the company's ability to maintain profitability through its interest-earning assets despite the fluctuating interest rate environment.

High efficiency ratio of 62.76%, indicating effective cost management

The efficiency ratio for the third quarter of 2024 was 62.76%. This high efficiency ratio demonstrates Midland States Bancorp's effective cost management strategies, allowing it to generate substantial revenue while controlling operational expenses.

Significant noninterest income growth, reaching $19.34 million in Q3 2024

Midland States Bancorp experienced significant growth in noninterest income, which reached $19.34 million in the third quarter of 2024. This growth can be attributed to various revenue streams, including wealth management and service charges on deposit accounts.

Return on average assets at 0.95%, showing solid profitability

The return on average assets (ROAA) for the third quarter of 2024 was 0.95%. This metric indicates solid profitability for the bank, showcasing its ability to generate earnings relative to its total assets.

Strong capital position with total capital to risk-weighted assets at 13.98%

As of September 30, 2024, Midland States Bancorp maintained a strong capital position, with total capital to risk-weighted assets at 13.98%. This solid capital ratio reflects the bank's financial stability and its capacity to absorb potential losses while supporting growth initiatives.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Dogs

Declining Consumer Loans

Consumer loans have decreased to $663.23 million, indicating reduced demand in this segment.

Elevated Non-Performing Loans

As of September 30, 2024, non-performing loans stood at $114.56 million, raising credit quality concerns.

Decrease in Equipment Financing Loans

The equipment financing loans have also seen a decline, now totaling $442.55 million.

Accumulated Other Comprehensive Loss

Midland States Bancorp reported an accumulated other comprehensive loss of $60.6 million, impacting the tangible book value.

Challenges in Maintaining Competitive Interest Rates on Deposits

The company is facing challenges in maintaining competitive interest rates on deposits, with the cost of interest-bearing deposits rising to 3.25% as of the third quarter of 2024.

Midland States Bancorp, Inc. (MSBI) - BCG Matrix: Question Marks

Uncertain future for equipment financing and consumer loan portfolios.

As of September 30, 2024, Midland States Bancorp reported a decline in its equipment finance loans, which stood at $442.6 million, down from $578.9 million a year earlier. Consumer loans also decreased to $663.2 million from $1.02 billion during the same period. The company has been strategically reducing its concentration in these areas to better manage risk and allocate resources to more profitable segments.

Potential for growth in commercial loan segments but requires strategic focus.

The commercial loan portfolio showed some growth, with commercial loans at $863.9 million as of September 30, 2024, compared to $943.8 million a year prior. However, the company needs to focus on enhancing its market share in this segment, which has potential for higher yields and profitability, especially as they expand their efforts in regions like St. Louis where loan balances increased at an annualized rate of 12%.

Need for innovation in digital banking services to compete effectively.

Midland States Bancorp has acknowledged the importance of investing in digital banking services to stay competitive. The bank's net interest income was $54.9 million for the third quarter of 2024, showing a slight decrease from $58.6 million in the same quarter of 2023. Innovations in digital services can enhance customer experience and potentially lead to increased adoption of their offerings.

Risks associated with rising interest rates affecting loan demand.

Rising interest rates have created a challenging environment for loan demand. The cost of deposits increased to 2.69% as of September 30, 2024, up from 2.32% a year earlier. This uptick in costs can deter potential borrowers, affecting the overall loan growth of the bank. The bank's management has indicated a cautious approach to new loan production while monitoring economic conditions.

Exploration of new markets or products to drive future growth.

Midland States Bancorp is exploring opportunities in new markets to drive future growth. Total assets were reported at $7.75 billion as of September 30, 2024, indicating a stable base from which to launch new initiatives. The bank also reported a tangible book value per share of $24.90, reflecting its commitment to building shareholder value. Investment in high-quality loans generated from their community bank could further enhance growth prospects.

In summary, Midland States Bancorp, Inc. (MSBI) exhibits a dynamic portfolio characterized by Stars such as its robust Wealth Management growth and commercial loan expansion, while its Cash Cows provide stable income and strong capital positions. However, the company faces challenges with Dogs, including declining consumer loans and rising non-performing loans, which could impact its overall health. The Question Marks signal potential areas for growth, particularly in commercial loans and digital banking, but require strategic innovation and market exploration to unlock their value. Balancing these elements will be crucial for MSBI's sustained success in the competitive banking landscape.

Article updated on 8 Nov 2024

Resources:

1. Midland States Bancorp, Inc. (MSBI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Midland States Bancorp, Inc. (MSBI)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Midland States Bancorp, Inc. (MSBI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.