What Midland’s $5 Million Write-Off Teaches About the Next Phase of the Trucking Slow Down

The company reported its equipment finance loan balance down 26.1% year-over-year, falling to $326.9 million, with leases dipping another 25.5% to $311 million. By September 30, Midland officially stopped writing new equipment finance deals.

Chief Executive Jeffrey Ludwig didn’t sugarcoat it — he said the move was designed to “reduce exposure to higher-risk asset classes.”

In plain terms: they’re done with trucking paper.

This wasn’t an overnight decision. Midland started quietly backing away from the trucking and specialty vehicle space in 2023, part of what Ludwig called a “credit clean-up.” Translation — they’d been watching too many accounts go south.

In Q3 alone, trucking losses made up nearly half of the bank’s total $12.3 million in charge-offs, even though that figure is down nearly 45% from last year. And while Midland’s total provisions for credit losses rose 11.6% to $20 million, $15 million of that came from its equipment portfolio alone.

Ludwig said the bank believes it’s “appropriately reserved for future losses,” but pulling the plug says it all. When a bank like Midland decides it’s safer to stop lending than to keep collecting, it’s a signal — the small-carrier crisis has officially become a lender problem.

Beacon’s Warning — Nonperforming Loans on the Rise

Boston-based Beacon Financial — the product of the merger between Brookline Bancorp and Berkshire Hills — is facing its own equipment headaches.

Beacon’s equipment loan book dropped 10.6% year-over-year to $1.2 billion, but the more concerning stat is this: nonperforming equipment loans climbed 12.3% to $41.8 million.

After merging two regional banks, Beacon inherited troubled assets from Brookline’s subsidiary, Eastern Funding, which has deep exposure to older commercial vehicles and small operators.

The result? Their provision for credit losses exploded from $4.8 million to $87.5 million year-over-year. That’s not a typo — that’s what happens when you mix aging trucks, overextended fleets, and an unforgiving freight market.

Chief Credit Officer Mark Meiklejohn admitted during their earnings call that charge-offs — which have already jumped 316% year-over-year to $15.9 million — could keep rising, driven mainly by those same distressed transportation loans.

That’s not just a bank problem. It’s a reflection of what’s happening at the street level — carriers holding on longer than their revenue can support, and lenders running out of patience.

Banc of California — Quiet Retreat, Same Struggle

On the West Coast, Banc of California is also cutting its exposure, though they’re not saying it outright.

Their equipment lease portfolio dropped nearly 11% year-over-year to $632 million, and income from that business fell a sharp 39.9% to $10.3 million.

While they haven’t declared a full exit, the direction is clear — fewer deals, less appetite for risk, and more selectivity in which industries they’ll finance. The lender still lists construction, manufacturing, and material handling among its focus areas, but it’s not hard to guess which one’s getting trimmed first.

Transportation equipment, especially used tractors, is volatile. When freight demand drops, resale value tanks, and that equipment becomes a liability instead of collateral.

First Citizens — Tightening the Belt, Not Walking Away

Then there’s First Citizens BancShares out of Raleigh, North Carolina — one of the few leaning in, but cautiously.

While its equipment lease income ticked up 3% year-over-year to $9.4 billion, CFO Craig Nix made it clear they’re feeling the same pressure. He cited “stress” in both their equipment and commercial real estate portfolios but said trends were “moving toward long-term expectations.”

The company’s net charge-offs still ballooned 96.6% year-over-year to $234 million.

Their approach? Not retreat, but reinforcement — tightening underwriting standards and beefing up collection staff to chase past-due accounts. It’s the difference between trimming exposure and fighting to manage it.

The Bigger Picture — When Banks Stop Trusting Truckers

Here’s the reality: when banks start backing out of truck financing, it’s because they no longer believe the industry’s risk-to-reward ratio makes sense.

For lenders, equipment finance is supposed to be predictable. A $150,000 truck secures the note — simple math. But when that truck drops in resale value in less than a year and the carrier behind it misses payments due to $1.50 spot rates, it’s no longer “secured.”

And that’s exactly what’s happening right now.

Midland’s decision to completely halt new originations is one more domino in a string of tightening credit across the trucking landscape. For small carriers trying to refinance, buy used equipment, or expand, the lending door is closing fast.

We’re not just in a freight recession — we’re in a credit recession for truckers.

What Small Carriers Should Take From This

1. Banks are pulling back. Expect stricter credit checks, higher interest rates, and tougher terms. Used equipment isn’t a safety net anymore. Book values are falling faster than finance rates can adjust. If you’re already financed, protect your relationship. Make payments on time, communicate, and keep your financials current — lenders are reviewing risk profiles monthly now.
   
2. Have a clear lens on your revenue. Lenders love stability. The more diversified your freight mix (spot and contract), the lower your perceived credit risk.
   

The carriers who survive this will be the ones who treat their financials like their logbooks — tight, clean, and consistent.

Q&A Section

Q: Why are banks pulling out of trucking equipment finance?

A: Because loan losses are rising, resale values are falling, and the risk outweighs the reward. Trucking’s freight recession has turned many “secured” loans into high-risk paper.

Q: Does this mean financing is dead for small carriers?

A: Not dead, but it’s shrinking. Independent lenders and credit unions may still lend, but the terms will be tougher, and approvals slower.

Q: How can carriers prepare for tighter credit?

A: Build cash reserves, pay down high-interest debt, and maintain a spotless payment record. Those with strong financials will still find capital — but it’ll take proof, not promises.

Final Thought

When a bank like Midland walks away from trucking altogether, it’s not just a business move — it’s a warning shot.

The industry’s financial backbone is cracking under the weight of low rates, high equipment costs, and delayed recoveries.

Carriers who understand this early will start running leaner, building reserves, and tightening operations before credit fully dries up. Because when lenders lose confidence in the trucking market, the fallout always hits small fleets first — and hardest.