Midland, Banc of Cal slash equipment finance portfolios
Brookline’s nonperforming equipment loans rose 70% in Q2
Midland States Bancorp, Brookline Bancorp and Banc of California pulled back on equipment lending in the second quarter, while First Citizens BancShares saw a boost in leasing income.
The lenders’ Q2 results reflect an uneven first half of 2025 for the equipment finance industry, with new business volume and credit conditions fluctuating in the wake of tariff uncertainty and lingering high interest rates.
Midland charge-offs jump 115%
Effingham, Ill.-based Midland States Bancorp reported $364.5 million in equipment finance loans at midyear, down 21% year over year, according to its July 24 earnings release.
The company’s equipment leases fell 19% YoY to $347.2 million, bringing its total equipment leasing and finance portfolio down 20% YoY to $711.7 million.
Tighter underwriting standards in Midland’s equipment and specialty finance portfolios have “already begun to meaningfully reduce our exposure to these higher-risk portfolios,” President and Chief Executive Jeffrey Ludwig stated in the release.
Moreover, Midland’s net charge-offs surged 115% YoY in Q2 to $29.9 million. Equipment finance charge-offs totaled $3.9 million amid credit issues “primarily in the trucking industry,” the release stated.
Shares of Midland States Bancorp [NASDAQ: MSBI] were up 0.7% from market open to $18.09 as of market close today. It has a market capitalization of $389.2 million.
Banc of Cal equipment leases drop 14.1%
Banc of California’s equipment finance portfolio declined 6.9% YoY in Q2 to $645 million, according to its July 24 earnings presentation.
The Los Angeles-based lender reported $288.7 million in equipment leases, down 14.1% YoY, and $10.2 million in equipment lease income, down 10.9% YoY.
In Q2, $506.7 million of loans were sold or held for sale as the company prioritizes “managing credit risk and quickly identifying any credit concerns,” President and CEO Jared Wolff said during the earnings call.
Shares of Banc of California [NYSE: BANC] were up 0.1% from market open to $15.13 as of market close today. It has a market capitalization of $2.2 billion.
First Citizens equipment lease income spikes
Raleigh, N.C.-based First Citizens saw a 5.8% YoY jump in equipment lease operating income to $9.5 billion, according to its July 24 earnings supplement.
Rental income on leasing equipment rose 5% YoY to $272 million, and net gain on sales of leasing equipment doubled YoY to $8 million.
Despite the uptick in equipment leasing, net charge-offs were “mostly concentrated in the general office, investor-dependent and equipment finance portfolios,” Chief Financial Officer Craig Nix said during the company’s earnings call.
Net charge-offs declined 9.8% YoY to $119 million.
Shares of First Citizens BancShares [NASDAQ: FCNCA] were down 2.2% from market open to $2,050.04 as of market close today. The lender has a market capitalization of $26.4 billion.
Brookline equipment loans sink
Boston-based Brookline Bancorp’s equipment finance loans totaled $1.2 billion at the end of Q2, down 9.8% YoY, according to its July 23 earnings release. Nonperforming equipment finance loans soared 69.8% YoY to $46.1 million.
The drop in equipment financing was “driven by the continued runoff of the specialty vehicle portfolio, which decreased by $27 million during the quarter to $240 million,” co-President and CFO Carl Carlson said during the company’s earnings call.
Meanwhile, Brookline’s merger with Berkshire Hills Bancorp is expected to be finalized in the second half of 2025.
Shares of Brookline Bancorp [NASDAQ: BRKL] were down 0.1% from market open to $10.81 as of market close today. It has a market capitalization of $972.5 million.
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