MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2024

 | Source: MidWestOne Bank MidWestOne Bank

IOWA CITY, Iowa, Oct. 24, 2024 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the third quarter of 2024.

Third Quarter 2024 Summary1

  • Completed a common equity capital raise, resulting in net proceeds to the Company of $118.6 million to facilitate a balance sheet repositioning. $140.4 million of securities impairment related to the repositioning was recognized in pre-tax earnings.
  • Subsequent to quarter-end:
    • Sold $1.0 billion of debt securities with a weighted average yield of 1.58%, and a weighted average life of 5.6 years.
    • Purchased $589.8 million of debt securities, with a weighted average yield of 4.65%, and paid in full $418.7 million of Bank Term Funding Program borrowings with a weighted average cost of 4.77%.
    • The estimated earn back period for the securities losses is 4.5 years.
  • Recognized a net loss for the quarter of $95.7 million, or $(6.05) per diluted common share, reflecting the effects of the capital raise and balance sheet repositioning. Adjusted earnings were $9.1 million2, or $0.582 per diluted common share, which included a $1.2 million fraud loss related to a single incident.
  • Net interest margin (tax equivalent) expanded 10 basis points ("bps") to 2.51%.2
  • Annualized loan growth of 3.9%.
  • Noninterest bearing deposits increased 4.0% from the linked quarter.
  • Nonperforming assets ratio improved 8 bps to 0.39%; classified loans declined $14.5 million to $134.8 million; net charge-off ratio was 0.16%.

CEO Commentary

Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, "Our successful common equity capital raise and balance sheet repositioning are significant, transformational steps towards our goal of creating a high performing company. We were pleased with the market receptivity of the oversubscribed common equity offering and the balance sheet repositioning financial results exceeded our communicated expectations. We are appreciative of our existing and new shareholders who supported this transformation and our team who executed the strategy so well.”

Mr. Reeves continued, "We also kept our eye on the ball during the quarter, delivering positive results in a number of strategic initiatives. Our deposit franchise continues to show its strength as deposit costs rose minimally and our treasury management investments led to 4% linked quarter non-interest bearing deposit growth. Our commercial banking teams drove 4% annualized loan growth, improved asset quality, and good progress in our SBA lending and gain on sale initiatives. In addition, we continued to invest in our franchise, with both talent and technology, while maintaining expense discipline."

_________________________
1Third Quarter Summary compares to the second quarter of 2024 (the "linked quarter") unless noted.
2Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

 As of or for the quarter ended Nine Months Ended
(Dollars in thousands, except per share amounts and as noted)
September 30, June 30, September 30, September 30, September 30,
 2024   2024   2023   2024   2023 
Financial Results         
Revenue$(92,867) $57,901  $44,436  $9,515  $126,174 
Credit loss expense 1,535   1,267   1,551   7,491   4,081 
Noninterest expense 35,798   35,761   31,544   107,124   99,782 
Net (loss) income (95,707)  15,819   9,138   (76,619)  18,129 
Adjusted earnings(1) 9,141   8,132   8,875   21,762   28,046 
Per Common Share         
Diluted (loss) earnings per share$(6.05) $1.00  $0.58  $(4.86) $1.15 
Adjusted earnings per share(1) 0.58   0.52   0.56   1.38   1.79 
Book value 27.06   34.44   32.21   27.06   32.21 
Tangible book value(1) 22.43   28.27   26.60   22.43   26.60 
Balance Sheet & Credit Quality         
Loans In millions$4,328.8  $4,287.2  $4,066.0  $4,328.8  $4,066.0 
Investment securities In millions 1,623.1   1,824.1   1,958.5   1,623.1   1,958.5 
Deposits In millions 5,368.7   5,412.4   5,363.3   5,368.7   5,363.3 
Net loan charge-offs In millions 1.7   0.5   0.5   2.4   1.7 
Allowance for credit losses ratio 1.25%  1.26%  1.27%  1.25%  1.27%
Selected Ratios         
Return on average assets(5.78)%  0.95%  0.56% (1.54)%  0.37%
Net interest margin, tax equivalent(1) 2.51%  2.41%  2.35%  2.42%  2.54%
Return on average equity(69.05)%  11.91%  7.14% (19.03)%  4.81%
Return on average tangible equity(1)(82.78)%  15.74%  9.68% (22.17)%  7.03%
Efficiency ratio(1) 70.32%  56.29%  66.06%  65.20%  66.40%
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.


REVENUE REVIEW

Revenue

      Change Change
       3Q24 vs 3Q24 vs
(Dollars in thousands)3Q24 2Q24 3Q23 2Q24 3Q23
Net interest income$37,521  $36,347 $34,575 3% 9%
Noninterest (loss) income (130,388)  21,554  9,861 n/m n/m
Total revenue, net of interest expense$(92,867) $57,901 $44,436 n/m n/m
(n/m) - Not meaningful         


Total revenue for the third quarter of 2024 decreased $150.8 million from the second quarter of 2024 and decreased $137.3 million compared to the third quarter of 2023, due to lower noninterest income, partially offset by higher net interest income. Excluding the pre-tax securities loss of $140.4 million stemming from the balance sheet repositioning, total revenue for the third quarter was $47.5 million, a decline of $10.4 million from the second quarter of 2024 and an increase of $3.1 million from the third quarter of 2023.

Net interest income of $37.5 million for the third quarter of 2024 increased $1.2 million from the second quarter of 2024, due to higher earning asset yields and lower funding volumes, partially offset by lower earning asset volumes and higher funding costs. When compared to the third quarter of 2023, net interest income increased $2.9 million, due to higher earning asset volumes and yields, partially offset by higher funding costs and volumes. We expect net interest income to be higher going forward as a result of the balance sheet repositioning.

The Company's tax equivalent net interest margin was 2.51%3 in the third quarter of 2024, compared to 2.41%3 in the second quarter of 2024, as higher earning asset yields more than offset increased funding costs. Total earning assets yield during the third quarter of 2024 increased 10 bps from the second quarter of 2024 due primarily to an increase in loan yields of 17 bps. Funding costs during the third quarter of 2024 increased 2 bps to 2.87%, due primarily to the 4 bps increase in interest bearing deposit costs to 2.58%, which was partially offset by a reduction in short-term borrowing costs and long-term debt of 10 bps and 4 bps, to 4.76% and 6.91%, respectively from the second quarter of 2024.

The Company's tax equivalent net interest margin was 2.51%3 in the third quarter of 2024, compared to 2.35%3 in the third quarter of 2023, driven by higher earning asset volumes and yields, partially offset by higher funding costs and volumes. Total earning assets yield increased 58 bps from the third quarter of 2023, primarily from a 67 bps increase in loan yields. Funding costs increased 54 bps to 2.87%, due to interest bearing deposit costs of 2.58%, short-term borrowing costs of 4.76%, and long-term debt costs of 6.91%, which increased 53 bps, 47 bps and 13 bps, respectively from the third quarter of 2023.

_________________________
3 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

Noninterest (Loss) Income

      Change Change
      3Q24 vs 3Q24 vs
(In thousands)3Q24 2Q24 3Q23 2Q24 3Q23
Investment services and trust activities$3,410  $3,504 $3,004 (3)% 14 %
Service charges and fees 2,170   2,156  2,146 1 % 1 %
Card revenue 1,935   1,907  1,817 1 % 6 %
Loan revenue 760   1,525  1,462 (50)% (48)%
Bank-owned life insurance 879   668  626 32 % 40 %
Investment securities (losses) gains, net (140,182)  33  79 n/m n/m
Other 640   11,761  727 (95)% (12)%
Total noninterest (loss) income$(130,388) $21,554 $9,861 n/m n/m
          
MSR adjustment (included above in Loan revenue)$
(1,026) $
129 $
283 n/m n/m
Gain on branch sale (included above in Other) —   11,056  — n/m n/m
(n/m) - Not meaningful         


Noninterest income for the third quarter of 2024 decreased $151.9 million from the linked quarter, due primarily to the securities impairment of $140.4 million related to the Company's balance sheet repositioning and a decrease of $11.1 million in other revenue. The decrease in other revenue reflected the $11.1 million gain from the sale of our Florida banking operations in the second quarter of 2024 that did not recur in the third quarter of 2024. In addition, loan revenue decreased $765 thousand due to a $1.2 million unfavorable change in the value of our mortgage servicing rights, partially offset by an increase of $0.4 million in SBA gain on sale revenue.

Noninterest income for the third quarter of 2024 decreased $140.2 million from the third quarter of 2023, due primarily to the balance sheet repositioning-related securities impairment previously noted. Also contributing to the decline in noninterest income was a decrease in loan revenue stemming from the unfavorable year-over-year change in the fair value of our mortgage servicing rights, which was partially offset by an increase of $0.5 million in SBA gain on sale. Partially offsetting these decreases in noninterest income was an increase of $0.4 million in investment services and trust activities revenue, driven by growth in assets under administration and transaction fees, and an increase of $0.3 million in bank-owned life insurance due primarily to $0.2 million of death benefits recognized in the third quarter of 2024.

EXPENSE REVIEW

Noninterest Expense

      Change Change
      3Q24 vs 3Q24 vs
(In thousands)3Q24 2Q24 3Q23 2Q24 3Q23
Compensation and employee benefits$19,943 $20,985 $18,558 (5)% 7 %
Occupancy expense of premises, net 2,443  2,435  2,405 — % 2 %
Equipment 2,486  2,530  2,123 (2)% 17 %
Legal and professional 2,261  2,253  1,678 — % 35 %
Data processing 1,580  1,645  1,504 (4)% 5 %
Marketing 619  636  782 (3)% (21)%
Amortization of intangibles  1,470  1,593  1,460 (8)% 1 %
FDIC insurance 923  1,051  783 (12)% 18 %
Communications 159  191  206 (17)% (23)%
Foreclosed assets, net 330  138  2 139 % n/m
Other 3,584  2,304  2,043 56 % 75 %
Total noninterest expense$35,798 $35,761 $31,544 — % 13 %
(n/m) - Not meaningful         


Merger-related Expenses

     
     
(In thousands)3Q24 2Q24 3Q23
Compensation and employee benefits$— $73 $—
Occupancy expense of premises, net —  —  —
Equipment —  28  —
Legal and professional 127  462  11
Data processing —  251  —
Marketing —  —  —
Communications —  8  —
Other 6  32  —
Total merger-related expenses$133 $854 $11


Noninterest expense for the third quarter of 2024 compared to the linked quarter was stable at $35.8 million, with increases of $1.3 million and $0.2 million in other expense and foreclosed assets, net, respectively. The increase in other expense was primarily driven by a $1.2 million fraud loss related to a single instance recorded in the third quarter of 2024, while the increase in foreclosed assets, net, expense was attributable to a $0.3 million write-down and higher operating expenses of one other real estate owned relationship, partially offset by a $0.4 million gain on sale of a separate other real estate owned relationship. Partially offsetting these increases in noninterest expense were declines in all other noninterest expense categories, with the largest decrease in compensation and employee benefits, which stemmed from the sale of our Florida banking operations in the second quarter of 2024. Further decreases in noninterest expense categories were also driven by a $0.7 million decline in merger-related expenses.

Noninterest expense for the third quarter of 2024 increased $4.3 million from the third quarter of 2023 primarily due to increases in all noninterest expense categories, except marketing and communications. The largest contributors to the increase in noninterest expense were increases of $1.5 million, $1.4 million, and $0.6 million in other, compensation and employee benefits, and legal and professional expense, respectively. The increase in other expense was primarily driven by a $1.2 million fraud loss recorded in the third quarter of 2024. The increase in compensation and employee benefits expense was driven by annual compensation adjustments and increased incentive and commission expense. The increase in legal and professional expense stemmed from increased costs for legal fees, consulting, personnel procurement, merger-related expenses, and accounting and tax fees. Partially offsetting these increases was a decline of $0.2 million in marketing expense.

The Company's effective tax rate was 26.5% in the third quarter of 2024, compared to 24.2% in the linked quarter. The increase in the effective tax rate reflected the impact of the investment security impairments recorded in the third quarter of 2024 related to the balance sheet repositioning. The effective income tax rate for the fourth quarter of 2024 and full year 2025 is expected to be 22-23%.

BALANCE SHEET REVIEW

Total assets were $6.55 billion at September 30, 2024, compared to $6.58 billion at June 30, 2024 and $6.47 billion at September 30, 2023. The decrease from June 30, 2024 was primarily driven by lower securities balances stemming from impairment recognized in the third quarter of 2024 related to the balance sheet repositioning, fair value adjustments recognized in connection with the re-classification of securities from held-to-maturity to available-for-sale, and scheduled calls, maturities, and paydowns, partially offset by higher cash and loan balances. Compared to September 30, 2023, the increase was primarily driven by assets acquired in the Denver Bankshares, Inc. ("DNVB") transaction, as well as higher cash and loan balances, partially offset by the sale of assets associated with our Florida banking operations, and lower securities balances.

Loans Held for Investment

September 30, 2024 June 30, 2024 September 30, 2023 
Balance
 % of
Total
 Balance
 % of
Total
 Balance
 % of
Total
 
(Dollars in thousands)      
Commercial and industrial$1,149,758 26.6%$1,120,983 26.1%$1,078,773 26.5%
Agricultural 112,696 2.6  107,983 2.5  111,950 2.8 
Commercial real estate            
Construction and development 386,920 8.9  351,646 8.2  331,868 8.2 
Farmland 182,164 4.2  183,641 4.3  182,621 4.5 
Multifamily 409,544 9.5  430,054 10.0  337,509 8.3 
Other 1,353,513 31.2  1,348,515 31.5  1,324,019 32.5 
Total commercial real estate 2,332,141 53.8  2,313,856 54.0  2,176,017 53.5 
Residential real estate            
One-to-four family first liens 485,210 11.2  492,541 11.5  456,771 11.2 
One-to-four family junior liens 176,827 4.1  176,105 4.1  173,275 4.3 
Total residential real estate 662,037 15.3  668,646 15.6  630,046 15.5 
Consumer 72,124 1.7  75,764 1.8  69,183 1.7 
Loans held for investment, net of unearned income$4,328,756 100.0%$4,287,232 100.0%$4,065,969 100.0%
             
Total commitments to extend credit$1,149,815   $1,200,605   $1,251,345   


Loans held for investment, net of unearned income, increased $41.5 million, or 1.0%, to $4.33 billion from $4.29 billion at June 30, 2024. The increase from the second quarter of 2024 was driven primarily by organic loan growth and higher line of credit usage.

Loans held for investment, net of unearned income, increased $262.8 million, or 6.5%, to $4.33 billion from $4.07 billion at September 30, 2023. The increase from the third quarter of 2023 was driven primarily by the loans acquired in the DNVB transaction, organic loan growth, and higher line of credit usage. Partially offsetting these identified increases was a decline stemming from the sale of loans associated with our Florida banking operations.

Investment SecuritiesSeptember 30, 2024 June 30, 2024 September 30, 2023 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Available for sale$1,623,104 100.0%$771,034 42.3%$872,770 44.6%
Held to maturity — —% 1,053,080 57.7% 1,085,751 55.4%
Total investment securities$1,623,104   $1,824,114   $1,958,521   


Investment securities at September 30, 2024 were $1.62 billion, decreasing $201.0 million from June 30, 2024 and $335.4 million from September 30, 2023. The decrease from the second quarter of 2024 stemmed from impairment recognized in the third quarter of 2024 related to the balance sheet repositioning, fair value adjustments recognized in the third quarter of 2024 in connection with the re-classification of held-to-maturity securities to available-for-sale, and principal cash flows received from scheduled payments, calls, and maturities. The decrease from the third quarter of 2023 was primarily due to the balance sheet repositioning executed in the fourth quarter of 2023, impairment recognized in the third quarter of 2024 related to the balance sheet repositioning, fair value adjustments recognized in the third quarter of 2024 in connection with the re-classification of held-to-maturity securities to available-for-sale, and principal cash flows received from scheduled payments, calls, and maturities.

DepositsSeptember 30, 2024 June 30, 2024 September 30, 2023 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Noninterest bearing deposits$917,715 17.1%$882,472 16.3%$924,213 17.2%
Interest checking deposits 1,230,605 23.0  1,284,243 23.7  1,334,481 24.9 
Money market deposits 1,038,575 19.3  1,043,376 19.3  1,127,287 21.0 
Savings deposits 768,298 14.3  745,639 13.8  619,805 11.6 
Time deposits of $250 and under 844,298 15.7  803,301 14.8  703,646 13.1 
Total core deposits 4,799,491 89.4  4,759,031 87.9  4,709,432 87.8 
Brokered time deposits 200,000 3.7  196,000 3.6  220,063 4.1 
Time deposits over $250 369,236 6.9  457,388 8.5  433,829 8.1 
Total deposits$5,368,727 100.0%$5,412,419 100.0%$5,363,324 100.0%


Total deposits declined $43.7 million, or 0.8%, to $5.37 billion, from $5.41 billion at June 30, 2024. Noninterest bearing deposits increased $35.2 million, while core deposits increased $40.5 million from June 30, 2024. Time deposits over $250 decreased $88.2 million from June 30, 2024, primarily as a result of a decline in public funds. Total deposits increased $5.4 million, or 0.1%, from $5.36 billion at September 30, 2023, primarily due to $224.2 million of deposits assumed in the DNVB acquisition, partially offset by $133.3 million of deposits divested as part of the sale of our Florida banking operations and a decline of $20.1 million in brokered deposits.

Borrowed FundsSeptember 30, 2024 June 30, 2024 September 30, 2023 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Short-term borrowings$410,630 78.1%$414,684 78.3%$373,956 75.0%
Long-term debt 115,051 21.9% 114,839 21.7% 124,526 25.0%
Total borrowed funds$525,681   $529,523   $498,482   


Borrowed funds were $525.7 million at September 30, 2024, a decrease of $3.8 million from June 30, 2024 and an increase of $27.2 million from September 30, 2023. The decrease compared to the linked quarter was due to a decrease in overnight borrowings from the Federal Home Loan Bank ("FHLB") and scheduled payments on long-term debt, partially offset by an increase in long-term FHLB borrowings. The increase compared to September 30, 2023 was due to higher Bank Term Funding Program borrowings, partially offset by lower overnight borrowings from the Federal Home Loan Bank, securities sold under agreements to repurchase, and scheduled payments on long-term debt.

CapitalSeptember 30, June 30, September 30,
(Dollars in thousands)2024 (1) 2024 2023
Total shareholders' equity$562,238  $543,286  $505,411 
Accumulated other comprehensive loss (58,842)  (58,135)  (84,606)
MidWestOne Financial Group, Inc. Consolidated     
Tier 1 leverage to average assets ratio 8.78%  8.29%  8.58%
Common equity tier 1 capital to risk-weighted assets ratio 9.91%  9.56%  9.52%
Tier 1 capital to risk-weighted assets ratio 10.70%  10.35%  10.31%
Total capital to risk-weighted assets ratio 12.96%  12.62%  12.45%
MidWestOne Bank     
Tier 1 leverage to average assets ratio 9.69%  9.24%  9.51%
Common equity tier 1 capital to risk-weighted assets ratio 11.83%  11.55%  11.43%
Tier 1 capital to risk-weighted assets ratio 11.83%  11.55%  11.43%
Total capital to risk-weighted assets ratio 12.88%  12.61%  12.36%
(1) Regulatory capital ratios for September 30, 2024 are preliminary     


Total shareholders' equity at September 30, 2024 increased $19.0 million from June 30, 2024, primarily driven by an increase in the balance of common stock and additional paid-in-capital stemming from the common stock capital raise executed in the third quarter of 2024, partially offset by a decline in retained earnings. Total shareholders' equity at September 30, 2024 increased $56.8 million from September 30, 2023, primarily due to increases in common stock and additional paid-in-capital stemming from the common stock issuance previously described and decreases in accumulated other comprehensive loss and treasury stock, partially offset by a decline in retained earnings.

On October 23, 2024, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable December 16, 2024, to shareholders of record at the close of business on December 2, 2024.

No common shares were repurchased by the Company during the period June 30, 2024 through September 30, 2024 or for the subsequent period through October 24, 2024. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares. As of September 30, 2024, $15.0 million remained available under this program.

CREDIT QUALITY REVIEW

Credit Quality

As of or For the Three Months Ended
September 30, June 30, September 30,
(Dollars in thousands)2024 2024 2023
Credit loss expense related to loans$1,835  $467  $1,651 
Net charge-offs 1,735   524   451 
Allowance for credit losses 54,000   53,900   51,600 
Pass$4,016,683  $3,991,692  $3,785,908 
Special Mention / Watch 177,241   146,253   163,222 
Classified 134,832   149,287   116,839 
Loans greater than 30 days past due and accruing$11,940  $9,358  $6,449 
Nonperforming loans$21,954  $25,128  $28,987 
Nonperforming assets 25,537   31,181   28,987 
Net charge-off ratio(1) 0.16%  0.05%  0.04%
Classified loans ratio(2) 3.11%  3.48%  2.87%
Nonperforming loans ratio(3) 0.51%  0.59%  0.71%
Nonperforming assets ratio(4) 0.39%  0.47%  0.45%
Allowance for credit losses ratio(5) 1.25%  1.26%  1.27%
Allowance for credit losses to nonaccrual loans ratio(6) 260.84%  218.26%  178.63%
(1) Net charge-off ratio is calculated as annualized net charge-offs divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming loans ratio is calculated as nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(4) Nonperforming assets ratio is calculated as nonperforming assets divided by total assets at the end of the period.
(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.
(6)Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.


Compared to the linked quarter, the nonperforming loans and nonperforming assets ratios each declined 8 bps, to 0.51% and 0.39%, respectively, due to the proactive resolution of several large troubled assets. Special mention/watch loan balances increased $31.0 million, or 21%, from the linked quarter, while classified loan balances decreased $14.5 million, or 10%, from the linked quarter. When compared to the same period of the prior year, the nonperforming loans and nonperforming asset ratios decreased 20 bps and 6 bps, respectively. The net charge-off ratio increased 11 bps from the linked quarter and increased 12 bps from the same period in the prior year.

As of September 30, 2024, the allowance for credit losses was $54.0 million and the allowance for credit losses ratio was 1.25%, compared with $53.9 million and 1.26%, respectively, at June 30, 2024. Credit loss expense of $1.5 million in the third quarter of 2024 reflected an additional reserve taken to support organic loan growth, offset by a reduction of $0.3 million in the reserve for unfunded loan commitments.

Nonperforming Loans Roll ForwardNonaccrual
 90+ Days Past Due
& Still Accruing
 Total
(Dollars in thousands)  
Balance at June 30, 2024$24,695  $433  $25,128 
Loans placed on nonaccrual or 90+ days past due & still accruing 6,426   1,326
   7,752
 
Proceeds related to repayment or sale (7,761)  (1)  (7,762)
Loans returned to accrual status or no longer past due (500)  (339)  (839)
Charge-offs (1,609)  (167)  (1,776)
Transfers to foreclosed assets (549)  —   (549)
Balance at September 30, 2024$20,702  $1,252  $21,954 


CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 25, 2024. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=e1a9f566&confId=71942.

After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-470-1428 using an access code of 019041 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 23, 2025 by calling 1-866-813-9403 and using the replay access code of 718549. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

ABOUT MIDWESTONE FINANCIAL GROUP, INC.

MidWestOne Financial Group, Inc. is a financial holding company headquartered in Iowa City, Iowa. MidWestOne is the parent company of MidWestOne Bank, which operates banking offices in Iowa, Minnesota, Wisconsin, and Colorado. MidWestOne provides electronic delivery of financial services through its website, MidWestOne.bank. MidWestOne Financial Group, Inc. trades on the Nasdaq Global Select Market under the symbol “MOFG”.

Cautionary Note Regarding Forward-Looking Statements

This release contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “goals,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers or branch sales (including the recent sale of our Florida banking operations and the acquisition of DNVB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of changes in interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, and any changes in response to the failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the ongoing conflict in the Middle East and the Russian invasion of Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our or our third-party vendors' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; (25) the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

MIDWESTONE FINANCIAL GROUP, INC.
FIVE QUARTER CONSOLIDATED BALANCE SHEETS

 September 30, June 30, March 31, December 31, September 30,
(In thousands) 2024   2024   2024   2023   2023 
ASSETS         
Cash and due from banks$72,173  $66,228  $68,430  $76,237  $71,015 
Interest earning deposits in banks 129,695   35,340   29,328   5,479   3,773 
Federal funds sold —   —   4   11   — 
Total cash and cash equivalents 201,868   101,568   97,762   81,727   74,788 
Debt securities available for sale at fair value 1,623,104   771,034   797,230   795,134   872,770 
Held to maturity securities at amortized cost —   1,053,080   1,064,939   1,075,190   1,085,751 
Total securities 1,623,104   1,824,114   1,862,169   1,870,324   1,958,521 
Loans held for sale 3,283   2,850   2,329   1,045   2,528 
Gross loans held for investment 4,344,559   4,304,619   4,433,258   4,138,352   4,078,060 
Unearned income, net (15,803)  (17,387)  (18,612)  (11,405)  (12,091)
Loans held for investment, net of unearned income 4,328,756   4,287,232   4,414,646   4,126,947   4,065,969 
Allowance for credit losses (54,000)  (53,900)  (55,900)  (51,500)  (51,600)
Total loans held for investment, net 4,274,756   4,233,332   4,358,746   4,075,447   4,014,369 
Premises and equipment, net 90,750   91,793   95,986   85,742   85,589 
Goodwill 69,788   69,388   71,118   62,477   62,477 
Other intangible assets, net 26,469   27,939   29,531   24,069   25,510 
Foreclosed assets, net 3,583   6,053   3,897   3,929   — 
Other assets 258,881   224,621   226,477   222,780   244,036 
Total assets$6,552,482  $6,581,658  $6,748,015  $6,427,540  $6,467,818 
LIABILITIES          
Noninterest bearing deposits$917,715  $882,472  $920,764  $897,053  $924,213 
Interest bearing deposits 4,451,012   4,529,947   4,664,472   4,498,620   4,439,111 
Total deposits 5,368,727   5,412,419   5,585,236   5,395,673   5,363,324 
Short-term borrowings 410,630   414,684   422,988   300,264   373,956 
Long-term debt 115,051   114,839   122,066   123,296   124,526 
Other liabilities 95,836   96,430   89,685   83,929   100,601 
Total liabilities 5,990,244   6,038,372   6,219,975   5,903,162   5,962,407 
SHAREHOLDERS' EQUITY          
Common stock 21,580   16,581   16,581   16,581   16,581 
Additional paid-in capital 414,965   300,831   300,845   302,157   301,889 
Retained earnings 206,490   306,030   294,066   294,784   295,862 
Treasury stock (21,955)  (22,021)  (22,648)  (24,245)  (24,315)
Accumulated other comprehensive loss (58,842)  (58,135)  (60,804)  (64,899)  (84,606)
Total shareholders' equity 562,238   543,286   528,040   524,378   505,411 
Total liabilities and shareholders' equity$6,552,482  $6,581,658  $6,748,015  $6,427,540  $6,467,818 


MIDWESTONE FINANCIAL GROUP, INC.
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME

 Three Months Ended Nine Months Ended
(In thousands, except perSeptember 30, June 30, March 31, December 31, September 30, September 30, September 30,
 share data)2024 2024 2024 2023 2023 2024 2023
Interest income             
Loans, including fees$62,521  $61,643 $57,947 $54,093  $51,870 $182,111  $148,086 
Taxable investment securities 8,779   9,228  9,460  9,274   9,526  27,467   29,704 
Tax-exempt investment securities 1,611   1,663  1,710  1,789   1,802  4,984   5,751 
Other 785   242  418  230   374  1,445   686 
Total interest income 73,696   72,776  69,535  65,386   63,572  216,007   184,227 
Interest expense             
Deposits 29,117   28,942  27,726  27,200   23,128  85,785   58,564 
Short-term borrowings 5,043   5,409  4,975  3,496   3,719  15,427   7,623 
Long-term debt 2,015   2,078  2,103  2,131   2,150  6,196   6,427 
Total interest expense 36,175   36,429  34,804  32,827   28,997  107,408   72,614 
Net interest income 37,521   36,347  34,731  32,559   34,575  108,599   111,613 
Credit loss expense 1,535   1,267  4,689  1,768   1,551  7,491   4,081 
Net interest income after credit loss expense 35,986   35,080  30,042  30,791   33,024  101,108   107,532 
Noninterest income             
Investment services and trust activities 3,410   3,504  3,503  3,193   3,004  10,417   9,056 
Service charges and fees 2,170   2,156  2,144  2,148   2,146  6,470   6,201 
Card revenue 1,935   1,907  1,943  1,802   1,817  5,785   5,412 
Loan revenue 760   1,525  856  909   1,462  3,141   3,791 
Bank-owned life insurance 879   668  660  656   626  2,207   1,844 
Investment securities (losses) gains, net (140,182)  33  36  (5,696)  79  (140,113)  (13,093)
Other 640   11,761  608  850   727  13,009   1,350 
Total noninterest (loss) income (130,388)  21,554  9,750  3,862   9,861  (99,084)  14,561 
Noninterest expense             
Compensation and employee benefits 19,943   20,985  20,930  17,859   18,558  61,858   58,551 
Occupancy expense of premises, net 2,443   2,435  2,813  2,309   2,405  7,691   7,725 
Equipment 2,486   2,530  2,600  2,466   2,123  7,616   6,729 
Legal and professional 2,261   2,253  2,059  2,269   1,678  6,573   5,096 
Data processing 1,580   1,645  1,360  1,411   1,504  4,585   4,388 
Marketing 619   636  598  700   782  1,853   2,910 
Amortization of intangibles 1,470   1,593  1,637  1,441   1,460  4,700   4,806 
FDIC insurance 923   1,051  942  900   783  2,916   2,394 
Communications 159   191  196  183   206  546   727 
Foreclosed assets, net 330   138  358  45   2  826   (32)
Other 3,584   2,304  2,072  2,548   2,043  7,960   6,488 
Total noninterest expense 35,798   35,761  35,565  32,131   31,544  107,124   99,782 
(Loss) income before income tax expense (130,200)  20,873  4,227  2,522   11,341  (105,100)  22,311 
Income tax (benefit) expense (34,493)  5,054  958  (208)  2,203  (28,481)  4,182 
Net (loss) income $(95,707) $15,819 $3,269 $2,730  $9,138 $(76,619) $18,129 
              
Earnings (loss) per common share             
Basic$(6.05) $1.00 $0.21 $0.17  $0.58 $(4.86) $1.16 
Diluted$(6.05) $1.00 $0.21 $0.17  $0.58 $(4.86) $1.15 
Weighted average basic common shares outstanding 15,829   15,763  15,723  15,693   15,689  15,772   15,673 
Weighted average diluted common shares outstanding 15,829   15,781  15,774  15,756   15,711  15,772   15,696 
Dividends paid per common share$0.2425  $0.2425 $0.2425 $0.2425  $0.2425 $0.7275  $0.7275 


MIDWESTONE FINANCIAL GROUP, INC.
FINANCIAL STATISTICS

 As of or for the Three Months Ended As of or for the Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share amounts) 2024   2024   2023   2024   2023 
Earnings:         
Net interest income$37,521  $36,347  $34,575  $108,599  $111,613 
Noninterest (loss) income (130,388)  21,554   9,861   (99,084)  14,561 
Total revenue, net of interest expense (92,867)  57,901   44,436   9,515   126,174 
Credit loss expense 1,535   1,267   1,551   7,491   4,081 
Noninterest expense 35,798   35,761   31,544   107,124   99,782 
(Loss) income before income tax expense (130,200)  20,873   11,341   (105,100)  22,311 
Income tax (benefit) expense (34,493)  5,054   2,203   (28,481)  4,182 
Net (loss) income$(95,707) $15,819  $9,138  $(76,619) $18,129 
Adjusted earnings(1)$9,141  $8,132  $8,875  $21,762  $28,046 
Per Share Data:         
Diluted (loss) earnings$(6.05) $1.00  $0.58  $(4.86) $1.15 
Adjusted earnings(1) 0.58   0.52   0.56   1.38   1.79 
Book value 27.06   34.44   32.21   27.06   32.21 
Tangible book value(1) 22.43   28.27   26.60   22.43   26.60 
Ending Balance Sheet:         
Total assets$6,552,482  $6,581,658  $6,467,818  $6,552,482  $6,467,818 
Loans held for investment, net of unearned income 4,328,756   4,287,232   4,065,969   4,328,756   4,065,969 
Total securities 1,623,104   1,824,114   1,958,521   1,623,104   1,958,521 
Total deposits 5,368,727   5,412,419   5,363,324   5,368,727   5,363,324 
Short-term borrowings 410,630   414,684   373,956   410,630   373,956 
Long-term debt 115,051   114,839   124,526   115,051   124,526 
Total shareholders' equity 562,238   543,286   505,411   562,238   505,411 
Average Balance Sheet:         
Average total assets$6,583,404  $6,713,573  $6,452,815  $6,643,897  $6,480,636 
Average total loans 4,311,693   4,419,697   4,019,852   4,343,087   3,964,119 
Average total deposits 5,402,634   5,514,924   5,379,871   5,465,993   5,459,749 
Financial Ratios:         
Return on average assets(5.78)%  0.95%  0.56% (1.54)%  0.37%
Return on average equity(69.05)%  11.91%  7.14% (19.03)%  4.81%
Return on average tangible equity(1)(82.78)%  15.74%  9.68% (22.17)%  7.03%
Efficiency ratio(1) 70.32%  56.29%  66.06%  65.20%  66.40%
Net interest margin, tax equivalent(1) 2.51%  2.41%  2.35%  2.42%  2.54%
Loans to deposits ratio 80.63%  79.21%  75.81%  80.63%  75.81%
Common equity ratio 8.58%  8.25%  7.81%  8.58%  7.81%
Tangible common equity ratio(1) 7.22%  6.88%  6.54%  7.22%  6.54%
Credit Risk Profile:         
Total nonperforming loans$21,954  $25,128  $28,987  $21,954  $28,987 
Nonperforming loans ratio 0.51%  0.59%  0.71%  0.51%  0.71%
Total nonperforming assets$25,537  $31,181  $28,987  $25,537  $28,987 
Nonperforming assets ratio 0.39%  0.47%  0.45%  0.39%  0.45%
Net charge-offs$1,735  $524  $451  $2,448  $1,681 
Net charge-off ratio 0.16%  0.05%  0.04%  0.08%  0.06%
Allowance for credit losses$54,000  $53,900  $51,600  $54,000  $51,600 
Allowance for credit losses ratio 1.25%  1.26%  1.27%  1.25%  1.27%
Allowance for credit losses to nonaccrual ratio 260.84%  218.26%  178.63%  260.84%  178.63%
          
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.


MIDWESTONE FINANCIAL GROUP, INC.
AVERAGE BALANCE SHEET AND YIELD ANALYSIS

 Three Months Ended
 September 30, 2024 June 30, 2024 September 30, 2023
(Dollars in thousands)Average
Balance		 Interest
Income/
Expense		 Average
Yield/
Cost		 Average
Balance		 Interest
Income/
Expense		 Average
Yield/
Cost		 Average
Balance		 Interest
Income/
Expense		 Average
Yield/
Cost
ASSETS                 
Loans, including fees (1)(2)(3)$4,311,693 $63,472 5.86% $4,419,697 $62,581 5.69% $4,019,852 $52,605 5.19%
Taxable investment securities 1,489,843  8,779 2.34%  1,520,253  9,228 2.44%  1,637,259  9,526 2.31%
Tax-exempt investment securities (2)(4) 313,935  1,976 2.50%  322,092  2,040 2.55%  341,330  2,234 2.60%
Total securities held for investment(2) 1,803,778  10,755 2.37%  1,842,345  11,268 2.46%  1,978,589  11,760 2.36%
Other 52,054  785 6.00%  20,452  242 4.76%  34,195  374 4.34%
Total interest earning assets(2)$6,167,525 $75,012 4.84% $6,282,494 $74,091 4.74% $6,032,636 $64,739 4.26%
Other assets 415,879      431,079      420,179    
Total assets$6,583,404     $6,713,573     $6,452,815    
LIABILITIES AND SHAREHOLDERS’ EQUITY                 
Interest checking deposits$1,243,327 $3,041 0.97% $1,297,356 $3,145 0.97% $1,354,597 $2,179 0.64%
Money market deposits 1,047,081  7,758 2.95%  1,072,688  7,821 2.93%  1,112,149  7,402 2.64%
Savings deposits 761,922  3,128 1.63%  738,773  2,673 1.46%  603,628  749 0.49%
Time deposits 1,430,723  15,190 4.22%  1,470,956  15,303 4.18%  1,403,504  12,798 3.62%
Total interest bearing deposits 4,483,053  29,117 2.58%  4,579,773  28,942 2.54%  4,473,878  23,128 2.05%
Securities sold under agreements to repurchase 5,812  12 0.82%  5,300  10 0.76%  66,020  85 0.51%
Other short-term borrowings 415,961  5,031 4.81%  442,546  5,399 4.91%  277,713  3,634 5.19%
Total short-term borrowings 421,773  5,043 4.76%  447,846  5,409 4.86%  343,733  3,719 4.29%
Long-term debt 116,032  2,015 6.91%  120,256  2,078 6.95%  125,737  2,150 6.78%
Total borrowed funds 537,805  7,058 5.22%  568,102  7,487 5.30%  469,470  5,869 4.96%
Total interest bearing liabilities$5,020,858 $36,175 2.87% $5,147,875 $36,429 2.85% $4,943,348 $28,997 2.33%
Noninterest bearing deposits 919,581      935,151      905,993    
Other liabilities 91,551      96,553      95,408    
Shareholders’ equity 551,414      533,994      508,066    
Total liabilities and shareholders’ equity$6,583,404     $6,713,573     $6,452,815    
Net interest income(2)  $38,837     $37,662     $35,742  
Net interest spread(2)    1.97%     1.89%     1.93%
Net interest margin(2)    2.51%     2.41%     2.35%
                  
Total deposits(5)$5,402,634 $29,117 2.14% $5,514,924 $28,942 2.11% $5,379,871 $23,128 1.71%
Cost of funds(6)    2.42%     2.41%     1.97%
 
(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $378 thousand, $337 thousand, and $141 thousand for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Loan purchase discount accretion was $1.4 million, $1.3 million, and $0.8 million for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Tax equivalent adjustments were $951 thousand, $938 thousand, and $735 thousand for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $365 thousand, $377 thousand, and $432 thousand for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.


MIDWESTONE FINANCIAL GROUP, INC.
AVERAGE BALANCE SHEET AND YIELD ANALYSIS

 Nine Months Ended
 September 30, 2024 September 30, 2023
(Dollars in thousands)Average
Balance		 Interest
Income/
Expense		 Average
Yield/
Cost		 Average
Balance		 Interest
Income/
Expense		 Average
Yield/
Cost
ASSETS           
Loans, including fees (1)(2)(3)$4,343,087 $184,920 5.69% $3,964,119 $150,250 5.07%
Taxable investment securities 1,522,447  27,467 2.41%  1,714,912  29,704 2.32%
Tax-exempt investment securities (2)(4) 321,560  6,113 2.54%  361,254  7,136 2.64%
Total securities held for investment(2) 1,844,007  33,580 2.43%  2,076,166  36,840 2.37%
Other 34,435  1,445 5.61%  22,741  686 4.03%
Total interest earning assets(2)$6,221,529 $219,945 4.72% $6,063,026 $187,776 4.14%
Other assets 422,368      417,610    
Total assets$6,643,897     $6,480,636    
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Interest checking deposits$1,280,581 $9,076 0.95% $1,429,804 $5,999 0.56%
Money market deposits 1,074,006  23,644 2.94%  1,014,708  15,970 2.10%
Savings deposits 731,724  7,848 1.43%  620,011  1,309 0.28%
Time deposits 1,449,485  45,217 4.17%  1,437,122  35,286 3.28%
Total interest bearing deposits 4,535,796  85,785 2.53%  4,501,645  58,564 1.74%
Securities sold under agreements to repurchase 5,482  33 0.80%  123,512  958 1.04%
Other short-term borrowings 422,653  15,394 4.87%  174,448  6,665 5.11%
Total short-term borrowings 428,135  15,427 4.81%  297,960  7,623 3.42%
Long-term debt 119,837  6,196 6.91%  133,375  6,427 6.44%
Total borrowed funds 547,972  21,623 5.27%  431,335  14,050 4.36%
Total interest bearing liabilities$5,083,768 $107,408 2.82% $4,932,980 $72,614 1.97%
Noninterest bearing deposits 930,197      958,104    
Other liabilities 92,235      85,650    
Shareholders’ equity 537,697      503,902    
Total liabilities and shareholders’ equity$6,643,897     $6,480,636    
Net interest income(2)  $112,537     $115,162  
Net interest spread(2)    1.90%     2.17%
Net interest margin(2)    2.42%     2.54%
            
Total deposits(5)$5,465,993 $85,785 2.10% $5,459,749 $58,564 1.43%
Cost of funds(6)    2.39%     1.65%
 
(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $952 thousand and $315 thousand for the nine months ended September 30, 2024 and September 30, 2023, respectively. Loan purchase discount accretion was $3.8 million and $3.0 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Tax equivalent adjustments were $2.8 million and $2.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.1 million and $1.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.


Non-GAAP Measures

This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, adjusted earnings, and adjusted earnings per share. Management believes these measures provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure.

Tangible Common Equity/Tangible Book Value          
per Share/Tangible Common Equity Ratio September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data)  2024   2024   2024   2023   2023 
Total shareholders’ equity $562,238  $543,286  $528,040  $524,378  $505,411 
Intangible assets, net  (96,257)  (97,327)  (100,649)  (86,546)  (87,987)
Tangible common equity $465,981  $445,959  $427,391  $437,832  $417,424 
           
Total assets $6,552,482  $6,581,658  $6,748,015  $6,427,540  $6,467,818 
Intangible assets, net  (96,257)  (97,327)  (100,649)  (86,546)  (87,987)
Tangible assets $6,456,225  $6,484,331  $6,647,366  $6,340,994  $6,379,831 
           
Book value per share $27.06  $34.44  $33.53  $33.41  $32.21 
Tangible book value per share(1) $22.43  $28.27  $27.14  $27.90  $26.60 
Shares outstanding  20,774,919   15,773,468   15,750,471   15,694,306   15,691,738 
           
Common equity ratio  8.58%  8.25%  7.83%  8.16%  7.81%
Tangible common equity ratio(2)  7.22%  6.88%  6.43%  6.90%  6.54%
 
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.


  Three Months Ended Nine Months Ended
Return on Average Tangible Equity September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2024   2024   2023   2024   2023 
Net (loss) income $(95,707) $15,819  $9,138  $(76,619) $18,129 
Intangible amortization, net of tax(1)  1,090   1,195   1,095   3,487   3,605 
Tangible net (loss) income $(94,617) $17,014  $10,233  $(73,132) $21,734 
           
Average shareholders’ equity $551,414  $533,994  $508,066  $537,697  $503,902 
Average intangible assets, net  (96,706)  (99,309)  (88,699)  (97,102)  (90,308)
Average tangible equity $454,708  $434,685  $419,367  $440,595  $413,594 
           
Return on average equity (69.05)%  11.91%  7.14% (19.03)%  4.81%
Return on average tangible equity(2) (82.78)%  15.74%  9.68% (22.17)%  7.03%
 
(1) The income tax rate utilized was the blended marginal tax rate.
(2) Annualized tangible net income divided by average tangible equity.


Net Interest Margin, Tax Equivalent/
Core Net Interest Margin

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2024   2024   2023   2024   2023 
Net interest income $37,521  $36,347  $34,575  $108,599  $111,613 
Tax equivalent adjustments:          
Loans(1)  951   938   735   2,809   2,164 
Securities(1)  365   377   432   1,129   1,385 
Net interest income, tax equivalent $38,837  $37,662  $35,742  $112,537  $115,162 
Loan purchase discount accretion  (1,426)  (1,261)  (791)  (3,839)  (2,964)
Core net interest income $37,411  $36,401  $34,951  $108,698  $112,198 
           
Net interest margin  2.42%  2.33%  2.27%  2.33%  2.46%
Net interest margin, tax equivalent(2)  2.51%  2.41%  2.35%  2.42%  2.54%
Core net interest margin(3)  2.41%  2.33%  2.30%  2.33%  2.47%
Average interest earning assets $6,167,525  $6,282,494  $6,032,636  $6,221,529  $6,063,026 
 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent net interest income divided by average interest earning assets.
(3) Annualized core net interest income divided by average interest earning assets.


  Three Months Ended Nine Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2024   2024   2023   2024   2023 
Loan interest income, including fees $62,521  $61,643  $51,870  $182,111  $148,086 
Tax equivalent adjustment(1)  951   938   735   2,809   2,164 
Tax equivalent loan interest income $63,472  $62,581  $52,605  $184,920  $150,250 
Loan purchase discount accretion  (1,426)  (1,261)  (791)  (3,839)  (2,964)
Core loan interest income $62,046  $61,320  $51,814  $181,081  $147,286 
           
Yield on loans  5.77%  5.61%  5.12%  5.60%  4.99%
Yield on loans, tax equivalent(2)  5.86%  5.69%  5.19%  5.69%  5.07%
Core yield on loans(3)  5.72%  5.58%  5.11%  5.57%  4.97%
Average loans $4,311,693  $4,419,697  $4,019,852  $4,343,087  $3,964,119 
 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent loan interest income divided by average loans.
(3) Annualized core loan interest income divided by average loans.


  Three Months Ended Nine Months Ended
Efficiency Ratio September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2024   2024   2023   2024   2023 
Total noninterest expense $35,798  $35,761  $31,544  $107,124  $99,782 
Amortization of intangibles  (1,470)  (1,593)  (1,460)  (4,700)  (4,806)
Merger-related expenses  (133)  (854)  (11)  (2,301)  (147)
Noninterest expense used for efficiency ratio $34,195  $33,314  $30,073  $100,123  $94,829 
           
Net interest income, tax equivalent(1) $38,837  $37,662  $35,742  $112,537  $115,162 
Plus: Noninterest (loss) income  (130,388)  21,554   9,861   (99,084)  14,561 
Less: Investment securities (losses) gains, net  (140,182)  33   79   (140,113)  (13,093)
Net revenues used for efficiency ratio $48,631  $59,183  $45,524  $153,566  $142,816 
           
Efficiency ratio (2)  70.32%  56.29%  66.06%  65.20%  66.40%
 
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.


  Three Months Ended Nine Months Ended
Adjusted Earnings  September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share data) 2024 2024 2023 2024 2023
Net (loss) income $(95,707) $15,819 $9,138 $(76,619) $18,129 
Less: Investment securities (losses) gains, net of tax(1)  (103,988)  24  59  (103,937)  (9,820)
Less: Mortgage servicing rights (loss) gain, net of tax(1)  (761)  96  212  (938)  13 
Plus: Merger-related expenses, net of tax(1)  99   634  8  1,707   110 
Less: Gain on branch sale, net of tax(1)  —   8,201  —  8,201   — 
Adjusted earnings $9,141  $8,132 $8,875 $21,762  $28,046 
           
Weighted average diluted common shares outstanding  15,829   15,781  15,711  15,772   15,696 
           
Earnings per common share - diluted $(6.05) $1.00 $0.58 $(4.86) $1.15 
Adjusted earnings per common share(2) $0.58  $0.52 $0.56 $1.38  $1.79 
 
(1) The income tax rate utilized was the blended marginal tax rate.
(2) Adjusted earnings divided by weighted average diluted common shares outstanding.


Category: Earnings

This news release may be downloaded from https://www.midwestonefinancial.com/corporate-profile/default.aspx

Source: MidWestOne Financial Group, Inc.

Industry: Banks

Contact:  
 Charles N. Reeves
 Barry S. Ray
 Chief Executive Officer Chief Financial Officer
 319.356.5800 319.356.5800

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