Midland States to wind down GreenSky portfolio

Midland States Bancorp in Effingham, Ill., will spend the next two years winding down a portfolio of point-of-sale loans. 

The $7.1 billion-asset company holds about $834 million of loans originated by GreenSky, a nonbank lender that agreed in September to be sold to Goldman Sachs. 

The company said loan originations should continue through mid-2022. After that, Midland States expects the portfolio to shrink by $400 million to $450 million until mid-2023, with slower runoff taking place after that. 

Midland States said in a presentation tied to quarterly earnings that it is “well positioned” to replace the GreenSky portfolio through a “combination of a larger commercial banking team, new direct consumer lending programs and other fintech partnership opportunities.”

“A record commercial pipeline should help” Midland States offset the lost GreenSky loans, Keefe, Bruyette & Woods analyst Michael Perito wrote in a note to clients. 

“Given Midland State’s involvement with the fintech arena, we wouldn't be surprised to see the company bring a couple new fintech partnerships into the fold on the consumer lending side over time,” Perito added. 

The GreenSky portfolio represents about 17% of Midland State’s total loans. The average GreenSky loan is for $2,141, while only 0.25% of the portfolio is more than 60 days delinquent. 

GreenSky received incentive fees in 32 of the past 33 months, including every month in 2020 and 2021.