Midland States Bancorp Inc., which operates several locations in and around Metro East, says it will close several branches and reduce corporate office space as part of cost-savings moves.
Midland announced last week that it will close or consolidate 13 branches, or 20 percent of its branch network, and vacate approximately 23,000 square feet of corporate office space by the end of 2020. It has not yet publicly identified any affected locations.
The company estimates that the branch and corporate office reductions will result in annual cost savings of approximately $5 million.
Additionally, Midland plans to renovate and upgrade five other branches to reduce the size and better utilize those facilities to serve retail and commercial customers. These renovations and upgrades are expected to cost approximately $4 million. The company estimates that these renovations and upgrades will result in annual cost savings of approximately $1 million beginning in 2022.
The overall branch and facilities plan is expected to result in approximately $13-$15 million in one-time costs, primarily related to asset impairment charges, lease write-downs and severance. These charges include an approximately $1.1 million valuation adjustment related to property and vacant bank branches from past acquisitions that are held for sale.
“The actions announced today reflect our ongoing efforts to evaluate all aspects of our operations for opportunities to enhance efficiencies,” said Jeffrey G. Ludwig, president and chief executive officer. “The ongoing COVID-19 pandemic has accelerated the shift towards digital banking and reduced the need for several of our smaller branches. Given the proximity of other branches, we believe that these adjustments to our branch network will have a minimal impact on our ability to provide customers with a convenient location to do their in-person banking.”
Ludwig said the cost savings from these branch reductions, taken together with the recent sale of its FHA origination platform, “are intended to drive further improvement in our efficiency ratio and result in a more consistent and predictable earnings stream.”
About Midland States Bancor Inc.
Midland States Bancor, Inc. is a community-based financial holding company headquartered in Effingham and is the sole shareholder of Midland States Bank. As of June 30, 2020, the company had total assets of approximately $6.64 billion, and its Wealth Management Group had assets under administration of approximately $3.25 billion.