In this Spotlight on Community Banks article, we spoke with Jeffrey G. Ludwig, President and Chief Executive Officer of Midland States Bancorp, Inc. Mr. Ludwig discusses the bank’s growth initiatives and the importance of community involvement.
Midland States Bancorp, Inc. is a community-based financial holding company headquartered in Effingham, Illinois, and is the sole shareholder of Midland States Bank. Established in 1881, Midland States Bank is a well-capitalized community bank taking pride in maintaining strong relationships with its customers and is committed to serving the financial needs of its communities. Midlands State Bancorp, Inc. has been listed on Nasdaq since 2016 and trades under the symbol “MSBI”.
How has your mission evolved over the last three years?
Our mission of serving customers where, when and how they want has never changed. After I first arrived at Midland as Chief Financial Officer, we crafted a plan that envisioned being able to provide better service and a broader set of products and services by achieving greater scale, increasing our footprint and building out certain revenue lines, such as commercial banking, wealth management and small business lending.
This growth initiative was, in my opinion, a great success as MSBI went from a bank with roughly $350 million in assets in 2007 to more than $6 billion by 2020. After I became CEO roughly four years ago, we shifted from a “let’s build scale” mindset to one of “let’s get efficient”.
Part of this effort was to begin utilizing the significant investments we had made in IT across our company, the other part was reexamining how we did things, especially from a customer service perspective. Over that time, we have significantly streamlined many of our processes, including account openings, online mortgage applications and so on, which continues to be our focus today.
How important is community involvement for a regional bank? What are some of the ways you’re working to better the communities you serve?
It is vital. Everything we do, including the trust we ask our customers to place in us to handle their financial needs in a responsible and transparent manner, is based on the actions and reputation of our team and of our communities.
Midland has always played a strong role in the communities we serve, and our employees have always shown great enthusiasm for participating in community activities. Of the many things we do, two that really run across all our markets are the Midland Foundation and our Community Investment Impact Statement.
Through the Midland Foundation we donate a portion of our earnings to various non-profit organizations identified by our employees that have a significant need for funding and have a high impact on the health, safety and well-being of the people in their respective communities. These donations are frequently multi-year commitments for specific projects we deem as especially high value in that community and are separate and in addition to the normal community donations we make each year to support parks, schools, hospitals, youth sports, etc.
Our Community Investment Impact Statement (CIIS) is a separate effort to help us gauge what our communities need, not only through financial assistance to non-profits but also in more direct assistance to families, such as financial literacy programs, low or no down-payment mortgages, easier or no qualifying home repair loans and other programs.
We developed our CIIS after discussions with well over 100 community groups, and this helps us to develop results-oriented metrics and a level of accountability that may not be in less focused community development efforts. I am extremely proud of the work we are doing under these programs and I know our employees are as well.
What’s been the biggest surprise during your seven years as a publicly traded company?
We’ve had no big surprises since going public and it has brought us the benefits we expected: increased liquidity for our shareholders, access to capital to take advantage of opportunities and increased credibility with larger potential customers.
That said, we have made adjustments over the years that we may not have made had we remained private. One example is our FHA lending business. We liked that business very much, and it was quite profitable for us. However, there were aspects of it that our larger investors found difficult, including the unpredictable timing of revenue and the quarterly markups and markdowns of the value of the servicing portfolio. When we had the opportunity to sell that business to a competitor with whom we felt comfortable while still retaining the low-cost servicing deposits that business generates, we took it.
Who is the ideal Midland States Bancorp, Inc. customer? How do you build customer loyalty?
That’s a tough question because we have so many wonderful customers across our retail, commercial and wealth management platforms. To me, the ideal customer is one who values the personal touch and digital excellence that we offer and ones that are committed to supporting our shared communities— that’s really our driving force.