Midland States Bancorp (MSBI) risk factors, FY2025 10-K

Macroeconomic and Credit Risks

1. 01A decline in general business and economic conditions and any regulatory responses to such conditions could have a material adverse effect on our business, financial position, results of operations and growth prospects
2. 02If we do not effectively manage our credit risk, we may experience increased levels of nonperforming loans, charge-offs and delinquencies, which could require increases in our provision for credit losses on loans
3. 03A significant portion of our loan portfolio is secured by real estate, the value and liquidity of which can be negatively affected by economic conditions and environmental issues
4. 04We may not be able to continue growing our business, particularly if we cannot increase loans through organic loan growth
5. 05Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans
6. 06The small to midsized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair a borrower’s ability to repay a loan, and such impairment could adversely affect our results of operations and financial condition
7. 07Real estate construction loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects
8. 08Real estate market volatility and future changes in our disposition strategies could result in net proceeds that differ significantly from our other real estate owned fair value appraisals
9. 09Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future27% rewritten

Operational, Strategic and Reputational Risks

1. 10The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects
2. 11We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition
3. 12We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors
4. 13Any acquisitions we may engage in could expose us to financial, execution and operational risks that could have a material adverse effect on our business, financial position, results of operations and growth prospects
5. 14We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects
6. 15We may be liable to purchasers of mortgage loans and mortgage servicing rights, including as a result of any breach of representations and warranties we make to the purchasers
7. 16Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our business and the value of our stock
8. 17We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology
9. 18We face strong competition from financial services companies and other companies that offer banking, mortgage, leasing, and wealth management services, which could harm our business
10. 19Consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations
11. 20The development of our BaaS platform may expose us to liability for compliance violations by BaaS partners or fall short of its targeted impact on our financial performance

Legal, Accounting and Compliance Risks

1. 21If we fail to design, implement and maintain effective internal control over financial reporting or fail to remediate any future material weakness in our internal control over financial reporting, we may be unable to report our financial results accuratelyNew
2. 22We may incur impairment charges to the goodwill that we recorded in connection with prior business acquisitions, which would negatively impact our business, financial condition and results of operations
3. 23Our risk management framework may not be effective in mitigating risks and/or losses to us
4. 24We are and may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences22% rewritten
5. 25The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way in which we conduct our business, or reputational harmNew
6. 26Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations
7. 27We are subject to stringent capital requirements, and failure to comply with these requirements may impact dividend payments and limit our activities
8. 28Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings
9. 29We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
10. 30We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
11. 31The Federal Reserve may require us to commit capital resources to support the Bank
12. 32The financial services industry, as well as the broader economy, may be subject to new legislation, regulation, and government policy42% rewritten

Market and Interest Rate Risks

1. 33Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations
2. 34Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations
3. 35We could recognize losses on securities held in our securities portfolio, particularly if interest rates continue to increase or economic and market conditions deteriorate71% rewritten
4. 36Our mortgage banking revenue has been and could continue to be adversely impacted by an elevated interest rate environment
5. 37Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations
6. 38We may be adversely affected by the soundness of other financial institutions