Midland and Banc of Cal cut equipment finance portfolios

The equipment finance landscape has experienced notable shifts recently, particularly among several key players in the industry. Midland States Bancorp, Banc of California, and Brookline Bancorp have all made significant adjustments to their equipment lending strategies in the second quarter of 2025. As economic conditions evolve with ongoing tariff uncertainties and persistent high interest rates, lenders are navigating a complex environment that impacts both new business volumes and credit conditions. This article examines the recent performance of these banks’ equipment finance portfolios, shedding light on their financial health and strategic decisions.

Midland States Bancorp: A Significant Pullback in Lending

Effingham, Illinois-based Midland States Bancorp reported a substantial decline in its equipment finance loans during the second quarter of 2025. The company announced $364.5 million in equipment finance loans at midyear, reflecting a 21% decrease from the previous year. Additionally, its total equipment leasing portfolio shrank by 20% year over year to $711.7 million.

The company attributed this downturn to stricter underwriting standards aimed at reducing exposure to higher-risk portfolios within its equipment and specialty finance sectors. President and CEO Jeffrey Ludwig noted that these measures have already begun to significantly mitigate risks associated with such portfolios.

Another noteworthy metric was Midland’s net charge-offs, which surged by 115% year over year in Q2, totaling $29.9 million for the period. Charge-offs related specifically to equipment financing amounted to $3.9 million, primarily due to credit challenges within the trucking sector.

Despite these setbacks, shares of Midland States Bancorp saw a slight increase of 0.7%, closing at $18.09 as of market close today. The company currently holds a market capitalization of approximately $389.2 million.

Banc of California: Maintaining Caution Amid Declining Leases

Banc of California also experienced setbacks in its equipment finance portfolio during Q2 2025, reporting a decline of 6.9% year over year to reach $645 million as per their July earnings presentation.

The Los Angeles-based lender disclosed that its equipment leases fell by 14.1% from last year, totaling approximately $288.7 million while lease income dropped by around 10.9%. In response to current economic conditions, Banc of California has prioritized managing credit risk effectively while quickly identifying any emerging credit concerns.

President and CEO Jared Wolff emphasized this cautious approach during the company’s earnings call when discussing their strategy involving loans sold or held for sale totaling $506.7 million in Q2.

The shares for Banc of California saw a modest rise as well—up by 0.1%, closing at $15.13 with an overall market capitalization estimated at $2.2 billion.

First Citizens Bank: An Unexpected Surge

In contrast to its competitors, First Citizens Bank based in Raleigh, North Carolina witnessed positive momentum within its leasing segment during this same period—reporting a remarkable increase in operating income related to equipment leases by 5.8% year over year, reaching approximately $9.5 million according to their latest earnings supplement.

This uptick was complemented by an increase in rental income on leased equipment amounting to about 5% year over year ($272 million) while net gains from leasing sales doubled compared to last year’s figures—now sitting at roughly $8 million.

However, it’s important to note that despite this growth within certain segments; net charge-offs remained prevalent across general office and investor-dependent portfolios resulting in a decline of about 9.8% from last year’s total down to around $119 million.
Shares for First Citizens BancShares ended down by about 2% from market open at approximately $2,050 with a market capitalization around $26 billion.

Berkshire Hills & Brookline: Challenges Ahead

Boston-based Brookline Bancorp faced considerable challenges as well; concluding Q2 with total outstanding equipment finance loans amounting to approximately $1.2 billion—a decrease of nearly 9.8% compared yearly figures reported earlier.
A significant concern arose regarding nonperforming loans which spiked dramatically—soaring nearly seventy percent (69%) up annually reaching about $46 million.
This reduction stemmed largely due to reductions within specialty vehicle portfolios experiencing continued runoff declining further down into specific figures showing decreases up-to-$27 million just this quarter alone bringing totals closer toward $240 Million overall.\n\nBrookline’s ongoing merger process with Berkshire Hills is anticipated for completion sometime later into H22025^source.

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A Look Ahead: Navigating Uncertainty

\n\nThe recent shifts across various lenders highlight an evolving landscape influenced heavily by external factors such as tariffs combined alongside rising interest rates altering how institutions approach lending practices surrounding capital expenditures particularly within specialized industries like trucking or agriculture respectively.\n\nAs organizations navigate through potential pitfalls created amidst ongoing uncertainty; maintaining vigilance when it comes towards analyzing credit risks remains crucial moving forward if they hope capitalize upon opportunities presented throughout these turbulent times ahead.”