Midland States to record 2Q gain from settling tax issue

Midland States Bancorp in Effingham, Ill., will report an after-tax gain of $2.9 million in the second quarter after settling a tax issue tied to government-assisted acquisitions in the wake of the 2008 financial crisis.

The $6.9 billion-asset company said in a press release Tuesday that it will recognize a nearly $6.8 million tax benefit, partially offset by $3.6 million in legal and consulting expenses.

Midland States bought two failed banks: Strategic Capital Bank in May 2009 and WestBridge Bank and Trust in October 2010.

Midland States also announced that it prepaid an $85 million longer-term FHLB advance, which will result in a $3.7 million pretax charge in the second quarter. The move should reduce interest expense by $2.2 million annually, while adding 6 basis points to the company’s net interest margin.

The company also redeemed $31 million of fixed-to-floating rate subordinated notes that would have been due in June 2025. The redemption will reduce interest expense by about $1.4 million annually and add 4 basis points to the margin.