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

MOFG

IOWA CITY, Iowa, July 25, 2024 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the second quarter of 2024.

SecondQuarter 2024Summary1

  • Completed sale of our Florida banking operations for a 7.5% deposit premium.
    • Included in the sale were $133.3 million of deposits and $163.6 million of loans.
  • Net income of $15.8 million, or $1.00 per diluted common share.
    • Revenue of $57.9 million, which included gain on sale of $11.1 million and a positive MSR valuation adjustment of $129 thousand.
    • Noninterest expense of $35.8 million, which included merger-related costs of $854 thousand.
  • Net interest margin (tax equivalent) expanded 8 bps to 2.41%2.
  • Classified loans declined 9%; net charge-off ratio was 0.05%.
  • Tangible book value per share of $28.272, an increase of $1.13 or 4%

CEO Commentary

Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “We delivered another solid quarter of strategic plan execution highlighted by the divestiture of our Florida operations for a 7.5% net deposit premium, which completed our geographic re-alignment announced last September, and will allow complete focus on our targeted growth regions. Our net interest margin, which inflected in the first quarter of 2024, expanded an additional 8 bps in the second quarter of 2024 through a combination of solid, well-priced loan originations, continued earning asset mix shift, and well-controlled deposit costs. Our fee generating products and services showed nice year-over-year increases, including a 12% improvement in wealth management revenues and a $476 thousand improvement from our customer back-to-back swap product. Asset quality metrics improved in the quarter led by a 9% reduction in classified assets.

I’m also very pleased with the level of talent acquisition in the first half of 2024 and second quarter highlights included our new EVP, Chief Information Officer and new SVP, Chief Marketing Officer. Even with significant talent, product and platform investments, our core noninterest expense levels approximate year ago levels.

These accomplishments are due to the engagement and expertise of our collective MOFG team, and we are humbled to once again receive the honor of being an Iowa, and USA, Top Workplace."

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

As of or for the quarter ended Six Months Ended
(Dollars in thousands, except per share amounts and as noted)

June 30, March 31, June 30, June 30, June 30,
2024 2024 2023 2024 2023
Financial Results
Revenue $ 57,901 $ 44,481 $ 45,708 $ 102,382 $ 81,738
Credit loss expense 1,267 4,689 1,597 5,956 2,530
Noninterest expense 35,761 35,565 34,919 71,326 68,238
Net income 15,819 3,269 7,594 19,088 8,991
Per Common Share
Diluted earnings per share $ 1.00 $ 0.21 $ 0.48 $ 1.21 $ 0.57
Book value 34.44 33.53 31.96 34.44 31.96
Tangible book value(1) 28.27 27.14 26.26 28.27 26.26
Balance Sheet & Credit Quality
LoansIn millions $ 4,287.2 $ 4,414.6 $ 4,018.6 $ 4,287.2 $ 4,018.6
Investment securities In millions 1,824.1 1,862.2 2,003.1 1,824.1 2,003.1
DepositsIn millions 5,412.4 5,585.2 5,445.4 5,412.4 5,445.4
Net loan charge-offs In millions 0.5 0.2 0.9 0.7 1.2
Allowance for credit losses ratio 1.26 % 1.27 % 1.25 % 1.26 % 1.25 %
Selected Ratios
Return on average assets 0.95 % 0.20 % 0.47 % 0.58 % 0.28 %
Net interest margin, tax equivalent(1) 2.41 % 2.33 % 2.52 % 2.37 % 2.63 %
Return on average equity 11.91 % 2.49 % 6.03 % 7.23 % 3.61 %
Return on average tangible equity(1) 15.74 % 4.18 % 8.50 % 9.98 % 5.65 %
Efficiency ratio(1) 56.29 % 71.28 % 71.13 % 62.83 % 66.56 %
(1)Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

GEOGRAPHIC RE-ALIGNMENT

Florida Banking Operations Divestiture

On June 7, 2024, we completed the sale of our Florida banking operations for a 7.5% deposit premium, which consisted of one bank branch in each of Naples and Ft. Myers, Florida. The sale included all premises and equipment at those locations. In addition, the sale involved the assignment of deposits totaling $133.3 million and loans totaling $163.6 million.

Denver Bankshares, Inc. Acquisition

On January 31, 2024, we completed our acquisition of Denver Bankshares, Inc. ("DNVB") and its wholly-owned banking subsidiary, the Bank of Denver. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the January 31, 2024 acquisition date, net of any applicable tax effects. The Company considers all purchase accounting estimates provisional and fair values are subject to refinement for up to one year after the close date.

The table below summarizes the amounts recognized at the acquisition date for each major class of assets acquired and liabilities assumed:

(In thousands) As of January 31, 2024
Merger consideration
Cash consideration $ 32,600
Identifiable net assets acquired, at fair value
Assets acquired
Cash and due from banks 462
Interest earning deposits in banks 3,517
Debt securities 52,493
Loans held for investment 207,095
Premises and equipment 13,470
Core deposit intangible 7,100
Other assets 4,987
Total assets acquired 289,124
Liabilities assumed
Deposits (224,248 )
Short-term borrowings (37,500 )
Other liabilities (3,417 )
Total liabilities assumed (265,165 )
Identifiable net assets acquired, at fair value 23,959
Goodwill $ 8,641

REVENUE REVIEW

Revenue

Change Change
2Q24 vs 2Q24 vs
(Dollars in thousands) 2Q24 1Q24 2Q23 1Q24 2Q23
Net interest income $ 36,347 $ 34,731 $ 36,962 5 % (2 )%
Noninterest income 21,554 9,750 8,746 121 % 146 %
Total revenue, net of interest expense $ 57,901 $ 44,481 $ 45,708 30 % 27 %

Total revenue for the second quarter of 2024 increased $13.4 million from the first quarter of 2024 due to higher noninterest income and net interest income during the quarter. When compared to the second quarter of 2023, total revenue increased $12.2 million due to higher noninterest income, due primarily to the gain on sale from our Florida banking operations, partially offset by lower net interest income due primarily to net interest margin compression.

Net interest income of $36.3 million for the second quarter of 2024 increased $1.6 million from the first quarter of 2024, primarily due to higher interest earning asset volumes and yields, partially offset by higher interest-bearing liability volumes and costs. When compared to the second quarter of 2023, net interest income decreased $0.6 million, primarily due to higher funding costs and volumes, partially offset by higher interest earning asset volumes and yields.

The Company's tax equivalent net interest margin was 2.41%3 in the second quarter of 2024, compared to 2.33%3 in the first quarter of 2024, as higher earning asset yields more than offset increased funding costs. Total interest earning assets yield during the second quarter of 2024 increased 16 bps from the first quarter of 2024 as a result of an increase in loan yields of 18 bps. The cost of interest-bearing liabilities during the second quarter of 2024 increased 10 bps, to 2.85%, due primarily to interest bearing deposit costs of 2.54%, short-term borrowing costs of 4.86%, and long-term debt of 6.95%, which increased 9 bps, 4 bps, and 9 bps, respectively, from the first quarter of 2024. Our cycle-to-date interest bearing deposit beta was 43%.

The Company's tax equivalent net interest margin was 2.41%3 in the second quarter of 2024, compared to 2.52%3 in the second quarter of 2023, driven by higher funding costs, partially offset by higher interest earning asset yields. The cost of interest-bearing liabilities increased 87 bps to 2.85%, primarily due to interest bearing deposit costs of 2.54%, short-term borrowing costs of 4.86%, and long-term debt costs of 6.95%, which increased 75 bps, 195 bps and 57 bps, respectively from the second quarter of 2023. Total interest earning assets yield increased 60 bps from the second quarter of 2023, primarily as a result of an increase in loan yields of 64 bps.

Noninterest Income

Change Change
2Q24 vs 2Q24 vs
(In thousands) 2Q24 1Q24 2Q23 1Q24 2Q23
Investment services and trust activities $ 3,504 $ 3,503 $ 3,119 % 12 %
Service charges and fees 2,156 2,144 2,047 1 % 5 %
Card revenue 1,907 1,943 1,847 (2 )% 3 %
Loan revenue 1,525 856 909 78 % 68 %
Bank-owned life insurance 668 660 616 1 % 8 %
Investment securities gains (losses), net 33 36 (2 ) (8 )% n/m
Other 11,761 608 210 n/m n/m
Total noninterest income $ 21,554 $ 9,750 $ 8,746 121 % 146 %
MSR adjustment (included above in Loan revenue) 129 (368 ) (581 ) (135 )% (122 )%
Gain on branch sale (included above in Other) 11,056 n/m n/m
(n/m) - Not meaningful

Noninterest income for the second quarter of 2024 increased $11.8 million from the linked quarter, primarily due to the sale of our Florida banking operations, which resulted in a gain on sale of $11.1 million that was recorded in other revenue, coupled with an increase of $0.7 million in loan revenue. The increase in loan revenue primarily reflected a favorable quarter-over-quarter change in the fair value of our mortgage servicing rights, from a negative adjustment of $368 thousand in the first quarter of 2024 to a positive adjustment of $129 thousand in the second quarter of 2024. Also contributing to the increase in noninterest income compared to the linked quarter was an increase of $0.3 million in customer back-to-back swap origination fee income, which was recorded in other revenue.

Noninterest income for the second quarter of 2024 increased $12.8 million from the second quarter of 2023, primarily due to the gain on sale of $11.1 million previously noted. Loan revenue increased $0.6 million and reflected the favorable year-over-year change in the fair value of our mortgage servicing rights, from a negative adjustment of $581 thousand in the second quarter of 2023 to a positive adjustment of $129 thousand in the second quarter of 2024. Also contributing to the increase in noninterest income compared to the second quarter of 2023 was an increase of $0.5 million in customer back-to-back swap origination fee income, which was recorded in other revenue, and an increase of $0.4 million in investment services and trust activities revenue, driven by growth in assets under administration and market valuation.

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

EXPENSE REVIEW

Noninterest Expense

Change Change
2Q24 vs 2Q24 vs
(In thousands) 2Q24 1Q24 2Q23 1Q24 2Q23
Compensation and employee benefits $ 20,985 $ 20,930 $ 20,386 % 3 %
Occupancy expense of premises, net 2,435 2,813 2,574 (13 )% (5 )%
Equipment 2,530 2,600 2,435 (3 )% 4 %
Legal and professional 2,253 2,059 1,682 9 % 34 %
Data processing 1,645 1,360 1,521 21 % 8 %
Marketing 636 598 1,142 6 % (44 )%
Amortization of intangibles 1,593 1,637 1,594 (3 )% %
FDIC insurance 1,051 942 862 12 % 22 %
Communications 191 196 260 (3 )% (27 )%
Foreclosed assets, net 138 358 (6 ) (61 )% n/m
Other 2,304 2,072 2,469 11 % (7 )%
Total noninterest expense $ 35,761 $ 35,565 $ 34,919 1 % 2 %
(n/m) - Not meaningful

Merger-related Expenses

(In thousands) 2Q24 1Q24 2Q23
Compensation and employee benefits $ 73 $ 241 $
Occupancy expense of premises, net 152
Equipment 28 149
Legal and professional 462 573
Data processing 251 61
Marketing 32
Communications 8 1
Other 32 105
Total merger-related expenses $ 854 $ 1,314 $

Noninterest expense for the second quarter of 2024 increased $0.2 million from the linked quarter primarily due to increases of $0.3 million, $0.2 million and $0.2 million in data processing, other, and legal and professional expenses, respectively. The increase in data processing expense was primarily driven by merger-related expenses. The increase in other expense was primarily driven by increases in operating losses and loan expenses. The increase in legal and professional expense was due to increased costs for other outside services, consulting, and audit expense. Partially offsetting these increases was a decline in occupancy expense of premises, net, of $0.4 million, primarily due to a decrease in rental expense and grounds upkeep, and $0.2 million of foreclosed assets, net, stemming from the first quarter of 2024 write-down of other real estate owned, which did not recur in the second quarter of 2024.

Noninterest expense for the second quarter of 2024 increased $0.8 million from the second quarter of 2023 primarily due to increases of $0.6 million in both compensation and employee benefits and legal and professional expenses. The increase in compensation and employee benefits expense was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in legal and professional expense stemmed primarily from higher merger-related expenses. Partially offsetting these increases was a decline of $0.5 million in marketing.

The Company's effective tax rate was 24.0% in the second quarter of 2024, compared to 22.7% in the linked quarter. The increase in the effective tax rate reflected higher taxable income from the Florida banking operations gain on sale previously noted, which has a higher effective tax rate due to the non-taxable allocation of goodwill. The effective income tax rate for 2024 is expected to be 21-23%.

BALANCE SHEET REVIEW

Total assets were $6.58 billion at June 30, 2024, compared to $6.75 billion at March 31, 2024 and $6.52 billion at June 30, 2023. The decrease from March 31, 2024 was primarily driven by the sale of our Florida banking operations and lower securities balances. Compared to June 30, 2023, the increase was primarily driven by the assets acquired from the acquisition of DNVB, organic loan growth, and higher line of credit usage, partially offset by the sale of our Florida banking operations and lower securities balances due to balance sheet repositioning executed in fourth quarter of 2023 and calls, maturities, and paydowns.

Loans Held for Investment

June 30, 2024 March 31, 2024 June 30, 2023
Balance

% of Total

Balance

% of Total

Balance

% of Total

(Dollars in thousands)
Commercial and industrial $ 1,120,983 26.1 % $ 1,105,718 25.0 % $ 1,089,269 27.1 %
Agricultural 107,983 2.5 113,029 2.6 106,148 2.6
Commercial real estate
Construction and development 351,646 8.2 403,571 9.1 313,836 7.8
Farmland 183,641 4.3 184,109 4.2 183,378 4.6
Multifamily 430,054 10.0 409,504 9.3 305,519 7.6
Other 1,348,515 31.5 1,440,645 32.7 1,331,886 33.1
Total commercial real estate 2,313,856 54.0 2,437,829 55.3 2,134,619 53.1
Residential real estate
One-to-four family first liens 492,541 11.5 495,408 11.2 448,096 11.2
One-to-four family junior liens 176,105 4.1 182,001 4.1 168,755 4.2
Total residential real estate 668,646 15.6 677,409 15.3 616,851 15.4
Consumer 75,764 1.8 80,661 1.8 71,762 1.8
Loans held for investment, net of unearned income $ 4,287,232 100.0 % $ 4,414,646 100.0 % $ 4,018,649 100.0 %
Total commitments to extend credit $ 1,200,605 $ 1,230,612 $ 1,296,719

Loans held for investment, net of unearned income, decreased $127.4 million, or 2.9%, to $4.29 billion from $4.41 billion at March 31, 2024. The decrease from the first quarter of 2024 was driven primarily by $163.6 million of loans divested as part of the sale of our Florida banking operations and lower line of credit usage.

Loans held for investment, net of unearned income, increased $268.6 million, or 6.7%, to $4.29 billion from $4.02 billion at June 30, 2023. The increase from the second quarter of 2023 was driven primarily by the loans acquired in the DNVB acquisition, organic loan growth, and higher line of credit usage. Partially offsetting these identified increases was a decline in loans held for investment, net of unearned income stemming from the divestiture of our Florida banking operations.

Investment Securities June 30, 2024 March 31, 2024 June 30, 2023
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Available for sale $ 771,034 42.3 % $ 797,230 42.8 % $ 903,520 45.1 %
Held to maturity 1,053,080 57.7 % 1,064,939 57.2 % 1,099,569 54.9 %
Total investment securities $ 1,824,114 $ 1,862,169 $ 2,003,089

Investment securities at June 30, 2024 were $1.82 billion, decreasing $38.1 million from March 31, 2024 and $179.0 million from June 30, 2023. The decrease from the first quarter of 2024 was primarily due to principal cash flows received from scheduled payments, calls, and maturities. The decrease from the second quarter of 2023 was primarily due to balance sheet repositioning executed in fourth quarter of 2023 and principal cash flows received from scheduled payments, calls, and maturities.

Deposits June 30, 2024 March 31, 2024 June 30, 2023
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Noninterest bearing deposits $ 882,472 16.3 % $ 920,764 16.5 % $ 897,923 16.5 %
Interest checking deposits 1,284,243 23.7 1,349,823 24.2 1,397,276 25.7
Money market deposits 1,043,376 19.3 1,122,717 20.1 1,096,432 20.1
Savings deposits 745,639 13.8 728,276 13.0 585,967 10.8
Time deposits of $250 and under 803,301 14.8 787,851 14.1 648,586 11.9
Total core deposits 4,759,031 87.9 4,909,431 87.9 4,626,184 85.0
Brokered time deposits 196,000 3.6 205,000 3.7 365,623 6.7
Time deposits over $250 457,388 8.5 470,805 8.4 453,640 8.3
Total deposits $ 5,412,419 100.0 % $ 5,585,236 100.0 % $ 5,445,447 100.0 %

Deposits declined $172.8 million, or 3.1%, to $5.41 billion, from $5.59 billion at March 31, 2024, primarily due to $133.3 million of deposits divested as part of the sale of our Florida banking operations. Included in the deposits that were sold were $31.8 million of noninterest bearing deposits. Total deposits decreased $33.0 million, or 0.6%, from $5.45 billion at June 30, 2023 primarily due to the sale of our Florida banking operations and a decline of $169.6 million in brokered deposits, partially offset by deposits assumed in the DNVB acquisition.

Borrowed Funds June 30, 2024 March 31, 2024 June 30, 2023
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Short-term borrowings $ 414,684 78.3 % $ 422,988 77.6 % $ 362,054 74.2 %
Long-term debt 114,839 21.7 % 122,066 22.4 % 125,752 25.8 %
Total borrowed funds $ 529,523 $ 545,054 $ 487,806

Borrowed funds were $529.5 million at June 30, 2024, a decrease of $15.5 million from March 31, 2024 and an increase of $41.7 million from June 30, 2023. The decrease compared to the linked quarter was due to a $13 million payoff of a revolving credit facility and scheduled payments on long-term debt, partially offset by an increase in overnight borrowings from the Federal Home Loan Bank and securities sold under agreements to repurchase. The increase compared to June 30, 2023 was primarily due to higher Bank Term Funding Program borrowings, partially offset by lower securities sold under agreements to repurchase, overnight borrowings from the Federal Home Loan Bank, and scheduled payments on long-term debt.

Capital June 30, March 31, June 30,
(Dollars in thousands) 2024(1) 2024 2023
Total shareholders' equity $ 543,286 $ 528,040 $ 501,341
Accumulated other comprehensive loss (58,135 ) (60,804 ) (82,704 )
MidWestOneFinancial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio 8.29 % 8.16 % 8.47 %
Common equity tier 1 capital to risk-weighted assets ratio 9.56 % 8.98 % 9.36 %
Tier 1 capital to risk-weighted assets ratio 10.35 % 9.75 % 10.15 %
Total capital to risk-weighted assets ratio 12.62 % 11.97 % 12.26 %
MidWestOneBank
Tier 1 leverage to average assets ratio 9.24 % 9.36 % 9.42 %
Common equity tier 1 capital to risk-weighted assets ratio 11.55 % 11.20 % 11.31 %
Tier 1 capital to risk-weighted assets ratio 11.55 % 11.20 % 11.31 %
Total capital to risk-weighted assets ratio 12.61 % 12.25 % 12.22 %
(1) Regulatory capital ratios for June 30, 2024 are preliminary

Total shareholders' equity at June 30, 2024 increased $15.2 million from March 31, 2024, driven by an increase in retained earnings and decreases in accumulated other comprehensive loss and treasury stock. Total shareholders' equity at June 30, 2024 increased $41.9 million from June 30, 2023, driven by decreases in accumulated other comprehensive loss and treasury stock, coupled with an increase in retained earnings.

Accumulated other comprehensive loss at June 30, 2024 decreased $2.7 million compared to March 31, 2024, primarily due to an increase in available for sale securities valuations. Accumulated other comprehensive loss decreased $24.6 million from June 30, 2023, primarily due to an increase in available for sale securities valuations and the recognition of the loss from the fourth quarter 2023 sale of securities as part of a balance sheet repositioning.

On July 23, 2024, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable September 17, 2024, to shareholders of record at the close of business on September 3, 2024.

No common shares were repurchased by the Company during the period March 31, 2024 through June 30, 2024 or for the subsequent period through July 25, 2024. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares. As of June 30, 2024, $15.0 million was available under this program.

CREDIT QUALITY REVIEW

Credit Quality

As of or For the Three Months Ended
June 30, March 31, June 30,
(Dollars in thousands) 2024 2024 2023
Credit loss expense related to loans $ 467 $ 4,589 $ 1,497
Net charge-offs 524 189 897
Allowance for credit losses 53,900 55,900 50,400
Pass $ 3,991,692 $ 4,098,102 $ 3,769,309
Special Mention / Watch 146,253 152,604 133,904
Classified 149,287 163,940 115,436
Loans greater than 30 days past due and accruing $ 9,358 $ 8,772 $ 6,201
Nonperforming loans $ 25,128 $ 29,267 $ 14,448
Nonperforming assets 31,181 33,164 14,448
Net charge-off ratio(1) 0.05 % 0.02 % 0.09 %
Classified loans ratio(2) 3.48 % 3.71 % 2.87 %
Nonperforming loans ratio(3) 0.59 % 0.66 % 0.36 %
Nonperforming assets ratio(4) 0.47 % 0.49 % 0.22 %
Allowance for credit losses ratio(5) 1.26 % 1.27 % 1.25 %
Allowance for credit losses to nonaccrual loans ratio(6) 218.26 % 197.53 % 355.03 %
(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 declined 7 bps and 2 bps, to 0.59% and 0.47%, respectively. Special mention/watch loan balances decreased $6.4 million, or 4%, from the linked quarter, while classified loan balances decreased $14.7 million, or 9%, from the linked quarter due to the proactive management of troubled assets. When compared to the same period of the prior year, the nonperforming loans and nonperforming asset ratios increased 23 bps and 25 bps, respectively. Further, the net charge-off ratio increased 3 bps from the linked quarter and decreased 4 bps from the same period in the prior year.

As of June 30, 2024, the allowance for credit losses was $53.9 million and the allowance for credit losses ratio was 1.26%, compared with $55.9 million and 1.27% at March 31, 2024. Credit loss expense of $1.3 million in the second quarter of 2024 reflected an additional reserve of $0.8 million on unfunded loan commitments, coupled with an additional reserve taken to support organic loan growth. Credit loss expense in the linked quarter reflected $3.2 million of day 1 credit loss expense related to the DNVB acquisition, as well as additional reserve taken to support organic loan growth.

Nonperforming Loans Roll Forward Nonaccrual

90+ Days Past Due & Still Accruing

Total

(Dollars in thousands)
Balance at March 31, 2024 $ 28,300 $ 967 $ 29,267
Loans placed on nonaccrual or 90+ days past due & still accruing 964 446 1,410
Proceeds related to repayment or sale (1,856 ) (1 ) (1,857 )
Loans returned to accrual status or no longer past due (25 ) (596 ) (621 )
Charge-offs (508 ) (158 ) (666 )
Transfers to foreclosed assets (2,180 ) (2,180 )
Transfer to nonaccrual (225 ) (225 )
Balance at June 30, 2024 $ 24,695 $ 433 $ 25,128

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, July 26, 2024. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=25afc13e&confId=68332. 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 162387 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until October 24, 2024 by calling 1-866-813-9403 and using the replay access code of 323537. 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 sustained high 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 recent 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 Israeli-Palestinian conflict 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 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

June 30, March 31, December 31, September 30, June 30,
(In thousands) 2024 2024 2023 2023 2023
ASSETS
Cash and due from banks $ 66,228 $ 68,430 $ 76,237 $ 71,015 $ 75,955
Interest earning deposits in banks 35,340 29,328 5,479 3,773 68,603
Federal funds sold 4 11
Total cash and cash equivalents 101,568 97,762 81,727 74,788 144,558
Debt securities available for sale at fair value 771,034 797,230 795,134 872,770 903,520
Held to maturity securities at amortized cost 1,053,080 1,064,939 1,075,190 1,085,751 1,099,569
Total securities 1,824,114 1,862,169 1,870,324 1,958,521 2,003,089
Loans held for sale 2,850 2,329 1,045 2,528 2,821
Gross loans held for investment 4,304,619 4,433,258 4,138,352 4,078,060 4,031,377
Unearned income, net (17,387 ) (18,612 ) (11,405 ) (12,091 ) (12,728 )
Loans held for investment, net of unearned income 4,287,232 4,414,646 4,126,947 4,065,969 4,018,649
Allowance for credit losses (53,900 ) (55,900 ) (51,500 ) (51,600 ) (50,400 )
Total loans held for investment, net 4,233,332 4,358,746 4,075,447 4,014,369 3,968,249
Premises and equipment, net 91,793 95,986 85,742 85,589 85,831
Goodwill 69,388 71,118 62,477 62,477 62,477
Other intangible assets, net 27,939 29,531 24,069 25,510 26,969
Foreclosed assets, net 6,053 3,897 3,929
Other assets 224,621 226,477 222,780 244,036 227,495
Total assets $ 6,581,658 $ 6,748,015 $ 6,427,540 $ 6,467,818 $ 6,521,489
LIABILITIES
Noninterest bearing deposits $ 882,472 $ 920,764 $ 897,053 $ 924,213 $ 897,923
Interest bearing deposits 4,529,947 4,664,472 4,498,620 4,439,111 4,547,524
Total deposits 5,412,419 5,585,236 5,395,673 5,363,324 5,445,447
Short-term borrowings 414,684 422,988 300,264 373,956 362,054
Long-term debt 114,839 122,066 123,296 124,526 125,752
Other liabilities 96,430 89,685 83,929 100,601 86,895
Total liabilities 6,038,372 6,219,975 5,903,162 5,962,407 6,020,148
SHAREHOLDERS' EQUITY
Common stock 16,581 16,581 16,581 16,581 16,581
Additional paid-in capital 300,831 300,845 302,157 301,889 301,424
Retained earnings 306,030 294,066 294,784 295,862 290,548
Treasury stock (22,021 ) (22,648 ) (24,245 ) (24,315 ) (24,508 )
Accumulated other comprehensive loss (58,135 ) (60,804 ) (64,899 ) (84,606 ) (82,704 )
Total shareholders' equity 543,286 528,040 524,378 505,411 501,341
Total liabilities and shareholders' equity $ 6,581,658 $ 6,748,015 $ 6,427,540 $ 6,467,818 $ 6,521,489

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

Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
(In thousands, except per share data) 2024 2024 2023 2023 2023 2024 2023
Interest income
Loans, including fees $ 61,643 $ 57,947 $ 54,093 $ 51,870 $ 49,726 $ 119,590 $ 96,216
Taxable investment securities 9,228 9,460 9,274 9,526 9,734 18,688 20,178
Tax-exempt investment securities 1,663 1,710 1,789 1,802 1,822 3,373 3,949
Other 242 418 230 374 68 660 312
Total interest income 72,776 69,535 65,386 63,572 61,350 142,311 120,655
Interest expense
Deposits 28,942 27,726 27,200 23,128 20,117 56,668 35,436
Short-term borrowings 5,409 4,975 3,496 3,719 2,118 10,384 3,904
Long-term debt 2,078 2,103 2,131 2,150 2,153 4,181 4,277
Total interest expense 36,429 34,804 32,827 28,997 24,388 71,233 43,617
Net interest income 36,347 34,731 32,559 34,575 36,962 71,078 77,038
Credit loss expense 1,267 4,689 1,768 1,551 1,597 5,956 2,530
Net interest income after credit loss expense 35,080 30,042 30,791 33,024 35,365 65,122 74,508
Noninterest income
Investment services and trust activities 3,504 3,503 3,193 3,004 3,119 7,007 6,052
Service charges and fees 2,156 2,144 2,148 2,146 2,047 4,300 4,055
Card revenue 1,907 1,943 1,802 1,817 1,847 3,850 3,595
Loan revenue 1,525 856 909 1,462 909 2,381 2,329
Bank-owned life insurance 668 660 656 626 616 1,328 1,218
Investment securities gains (losses), net 33 36 (5,696 ) 79 (2 ) 69 (13,172 )
Other 11,761 608 850 727 210 12,369 623
Total noninterest income 21,554 9,750 3,862 9,861 8,746 31,304 4,700
Noninterest expense
Compensation and employee benefits 20,985 20,930 17,859 18,558 20,386 41,915 39,993
Occupancy expense of premises, net 2,435 2,813 2,309 2,405 2,574 5,248 5,320
Equipment 2,530 2,600 2,466 2,123 2,435 5,130 4,606
Legal and professional 2,253 2,059 2,269 1,678 1,682 4,312 3,418
Data processing 1,645 1,360 1,411 1,504 1,521 3,005 2,884
Marketing 636 598 700 782 1,142 1,234 2,128
Amortization of intangibles 1,593 1,637 1,441 1,460 1,594 3,230 3,346
FDIC insurance 1,051 942 900 783 862 1,993 1,611
Communications 191 196 183 206 260 387 521
Foreclosed assets, net 138 358 45 2 (6 ) 496 (34 )
Other 2,304 2,072 2,548 2,043 2,469 4,376 4,445
Total noninterest expense 35,761 35,565 32,131 31,544 34,919 71,326 68,238
Income before income tax expense 20,873 4,227 2,522 11,341 9,192 25,100 10,970
Income tax expense (benefit) 5,054 958 (208 ) 2,203 1,598 6,012 1,979
Net income $ 15,819 $ 3,269 $ 2,730 $ 9,138 $ 7,594 $ 19,088 $ 8,991
Earnings per common share
Basic $ 1.00 $ 0.21 $ 0.17 $ 0.58 $ 0.48 $ 1.21 $ 0.57
Diluted $ 1.00 $ 0.21 $ 0.17 $ 0.58 $ 0.48 $ 1.21 $ 0.57
Weighted average basic common shares outstanding 15,763 15,723 15,693 15,689 15,680 15,743 15,665
Weighted average diluted common shares outstanding 15,781 15,774 15,756 15,711 15,689 15,775 15,688
Dividends paid per common share $ 0.2425 $ 0.2425 $ 0.2425 $ 0.2425 $ 0.2425 $ 0.4850 $ 0.4850

MIDWESTONE FINANCIAL GROUP, INC.
FINANCIAL STATISTICS

As of or for the Three Months Ended As of or for the Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share amounts) 2024 2024 2023 2024 2023
Earnings:
Net interest income $ 36,347 $ 34,731 $ 36,962 $ 71,078 $ 77,038
Noninterest income 21,554 9,750 8,746 31,304 4,700
Total revenue, net of interest expense 57,901 44,481 45,708 102,382 81,738
Credit loss expense 1,267 4,689 1,597 5,956 2,530
Noninterest expense 35,761 35,565 34,919 71,326 68,238
Income before income tax expense 20,873 4,227 9,192 25,100 10,970
Income tax expense 5,054 958 1,598 6,012 1,979
Net income $ 15,819 $ 3,269 $ 7,594 $ 19,088 $ 8,991
Per Share Data:
Diluted earnings $ 1.00 $ 0.21 $ 0.48 $ 1.21 $ 0.57
Book value 34.44 33.53 31.96 34.44 31.96
Tangible book value(1) 28.27 27.14 26.26 28.27 26.26
Ending Balance Sheet:
Total assets $ 6,581,658 $ 6,748,015 $ 6,521,489 $ 6,581,658 $ 6,521,489
Loans held for investment, net of unearned income 4,287,232 4,414,646 4,018,649 4,287,232 4,018,649
Total securities 1,824,114 1,862,169 2,003,089 1,824,114 2,003,089
Total deposits 5,412,419 5,585,236 5,445,447 5,412,419 5,445,447
Short-term borrowings 414,684 422,988 362,054 414,684 362,054
Long-term debt 114,839 122,066 125,752 114,839 125,752
Total shareholders' equity 543,286 528,040 501,341 543,286 501,341
Average Balance Sheet:
Average total assets $ 6,713,573 $ 6,635,379 $ 6,465,810 $ 6,674,476 $ 6,494,777
Average total loans 4,419,697 4,298,216 4,003,717 4,358,957 3,935,791
Average total deposits 5,514,924 5,481,114 5,454,517 5,498,020 5,500,350
Financial Ratios:
Return on average assets 0.95 % 0.20 % 0.47 % 0.58 % 0.28 %
Return on average equity 11.91 % 2.49 % 6.03 % 7.23 % 3.61 %
Return on average tangible equity(1) 15.74 % 4.18 % 8.50 % 9.98 % 5.65 %
Efficiency ratio(1) 56.29 % 71.28 % 71.13 % 62.83 % 66.56 %
Net interest margin, tax equivalent(1) 2.41 % 2.33 % 2.52 % 2.37 % 2.63 %
Loans to deposits ratio 79.21 % 79.04 % 73.80 % 79.21 % 73.80 %
Common equity ratio 8.25 % 7.83 % 7.69 % 8.25 % 7.69 %
Tangible common equity ratio(1) 6.88 % 6.43 % 6.40 % 6.88 % 6.40 %
Credit Risk Profile:
Total nonperforming loans $ 25,128 $ 29,267 $ 14,448 $ 25,128 $ 14,448
Nonperforming loans ratio 0.59 % 0.66 % 0.36 % 0.59 % 0.36 %
Total nonperforming assets $ 31,181 $ 33,164 $ 14,448 $ 31,181 $ 14,448
Nonperforming assets ratio 0.47 % 0.49 % 0.22 % 0.47 % 0.22 %
Net charge-offs $ 524 $ 189 $ 897 $ 713 $ 1,230
Net charge-off ratio 0.05 % 0.02 % 0.09 % 0.03 % 0.06 %
Allowance for credit losses $ 53,900 $ 55,900 $ 50,400 $ 53,900 $ 50,400
Allowance for credit losses ratio 1.26 % 1.27 % 1.25 % 1.26 % 1.25 %
Allowance for credit losses to nonaccrual ratio 218.26 % 197.53 % 355.03 % 218.26 % 355.03 %
(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
June 30, 2024 March 31, 2024 June 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) $ 4,419,697 $ 62,581 5.69 % $ 4,298,216 $ 58,867 5.51 % $ 4,003,717 $ 50,439 5.05 %
Taxable investment securities 1,520,253 9,228 2.44 % 1,557,603 9,460 2.44 % 1,698,003 9,734 2.30 %
Tax-exempt investment securities(2)(4) 322,092 2,040 2.55 % 328,736 2,097 2.57 % 345,934 2,253 2.61 %
Total securities held for investment(2) 1,842,345 11,268 2.46 % 1,886,339 11,557 2.46 % 2,043,937 11,987 2.35 %
Other 20,452 242 4.76 % 30,605 418 5.49 % 9,078 68 3.00 %
Total interest earning assets(2) $ 6,282,494 $ 74,091 4.74 % $ 6,215,160 $ 70,842 4.58 % $ 6,056,732 $ 62,494 4.14 %
Other assets 431,079 420,219 409,078
Total assets $ 6,713,573 $ 6,635,379 $ 6,465,810
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits $ 1,297,356 $ 3,145 0.97 % $ 1,301,470 $ 2,890 0.89 % $ 1,420,741 $ 1,971 0.56 %
Money market deposits 1,072,688 7,821 2.93 % 1,102,543 8,065 2.94 % 999,436 5,299 2.13 %
Savings deposits 738,773 2,673 1.46 % 694,143 2,047 1.19 % 603,905 288 0.19 %
Time deposits 1,470,956 15,303 4.18 % 1,446,981 14,724 4.09 % 1,490,332 12,559 3.38 %
Total interest bearing deposits 4,579,773 28,942 2.54 % 4,545,137 27,726 2.45 % 4,514,414 20,117 1.79 %
Securities sold under agreements to repurchase 5,300 10 0.76 % 5,330 11 0.83 % 159,583 423 1.06 %
Other short-term borrowings 442,546 5,399 4.91 % 409,525 4,964 4.88 % 132,495 1,695 5.13 %
Total short-term borrowings 447,846 5,409 4.86 % 414,855 4,975 4.82 % 292,078 2,118 2.91 %
Long-term debt 120,256 2,078 6.95 % 123,266 2,103 6.86 % 135,329 2,153 6.38 %
Total borrowed funds 568,102 7,487 5.30 % 538,121 7,078 5.29 % 427,407 4,271 4.01 %
Total interest bearing liabilities $ 5,147,875 $ 36,429 2.85 % $ 5,083,258 $ 34,804 2.75 % $ 4,941,821 $ 24,388 1.98 %
Noninterest bearing deposits 935,151 935,977 940,103
Other liabilities 96,553 88,611 78,898
Shareholders’ equity 533,994 527,533 504,988
Total liabilities and shareholders’ equity $ 6,713,573 $ 6,635,379 $ 6,465,810
Net interest income(2) $ 37,662 $ 36,038 $ 38,106
Net interest spread(2) 1.89 % 1.83 % 2.16 %
Net interest margin(2) 2.41 % 2.33 % 2.52 %
Total deposits(5) $ 5,514,924 $ 28,942 2.11 % $ 5,481,114 $ 27,726 2.03 % $ 5,454,517 $ 20,117 1.48 %
Cost of funds(6) 2.41 % 2.33 % 1.66 %
(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 $337 thousand, $237 thousand, and $79 thousand for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Loan purchase discount accretion was $1.3 million, $1.2 million, and $1.0 million for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. Tax equivalent adjustments were $938 thousand, $920 thousand, and $713 thousand for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $377 thousand, $387 thousand, and $431 thousand for the three months ended June 30, 2024, March 31, 2024, and June 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

Six Months Ended
June 30, 2024 June 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) $ 4,358,957 $ 121,448 5.60 % $ 3,935,791 $ 97,645 5.00 %
Taxable investment securities 1,538,928 18,688 2.44 % 1,754,382 20,178 2.32 %
Tax-exempt investment securities(2)(4) 325,414 4,137 2.56 % 371,381 4,902 2.66 %
Total securities held for investment(2) 1,864,342 22,825 2.46 % 2,125,763 25,080 2.38 %
Other 25,529 660 5.20 % 16,919 312 3.72 %
Total interest earning assets(2) $ 6,248,828 $ 144,933 4.66 % $ 6,078,473 $ 123,037 4.08 %
Other assets 425,648 416,304
Total assets $ 6,674,476 $ 6,494,777
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits $ 1,299,413 $ 6,035 0.93 % $ 1,468,030 $ 3,820 0.52 %
Money market deposits 1,087,616 15,886 2.94 % 965,180 8,568 1.79 %
Savings deposits 716,458 4,720 1.32 % 628,338 560 0.18 %
Time deposits 1,458,969 30,027 4.14 % 1,454,210 22,488 3.12 %
Total interest bearing deposits 4,562,456 56,668 2.50 % 4,515,758 35,436 1.58 %
Securities sold under agreements to repurchase 5,315 21 0.79 % 152,734 873 1.15 %
Other short-term borrowings 426,036 10,363 4.89 % 121,959 3,031 5.01 %
Total short-term borrowings 431,351 10,384 4.84 % 274,693 3,904 2.87 %
Long-term debt 121,761 4,181 6.91 % 137,258 4,277 6.28 %
Total borrowed funds 553,112 14,565 5.30 % 411,951 8,181 4.00 %
Total interest bearing liabilities $ 5,115,568 $ 71,233 2.80 % $ 4,927,709 $ 43,617 1.78 %
Noninterest bearing deposits 935,564 984,592
Other liabilities 92,581 80,690
Shareholders’ equity 530,763 501,786
Total liabilities and shareholders’ equity $ 6,674,476 $ 6,494,777
Net interest income(2) $ 73,700 $ 79,420
Net interest spread(2) 1.86 % 2.30 %
Net interest margin(2) 2.37 % 2.63 %
Total deposits(5) $ 5,498,020 $ 56,668 2.07 % $ 5,500,350 $ 35,436 1.30 %
Cost of funds(6) 2.37 % 1.49 %
(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 $574 thousand and $174 thousand for the six months ended June 30, 2024 and June 30, 2023, respectively. Loan purchase discount accretion was $2.4 million and $2.2 million for the six months ended June 30, 2024 and June 30, 2023, respectively. Tax equivalent adjustments were $1.9 million and $1.4 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $0.8 million and $1.0 million for the six months ended June 30, 2024 and June 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, and efficiency ratio. 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 June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2024 2024 2023 2023 2023
Total shareholders’ equity $ 543,286 $ 528,040 $ 524,378 $ 505,411 $ 501,341
Intangible assets, net (97,327 ) (100,649 ) (86,546 ) (87,987 ) (89,446 )
Tangible common equity $ 445,959 $ 427,391 $ 437,832 $ 417,424 $ 411,895
Total assets $ 6,581,658 $ 6,748,015 $ 6,427,540 $ 6,467,818 $ 6,521,489
Intangible assets, net (97,327 ) (100,649 ) (86,546 ) (87,987 ) (89,446 )
Tangible assets $ 6,484,331 $ 6,647,366 $ 6,340,994 $ 6,379,831 $ 6,432,043
Book value per share $ 34.44 $ 33.53 $ 33.41 $ 32.21 $ 31.96
Tangible book value per share(1) $ 28.27 $ 27.14 $ 27.90 $ 26.60 $ 26.26
Shares outstanding 15,773,468 15,750,471 15,694,306 15,691,738 15,685,123
Common equity ratio 8.25 % 7.83 % 8.16 % 7.81 % 7.69 %
Tangible common equity ratio(2) 6.88 % 6.43 % 6.90 % 6.54 % 6.40 %
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.


Three Months Ended Six Months Ended
Return on Average Tangible Equity June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2024 2024 2023 2024 2023
Net income $ 15,819 $ 3,269 $ 7,594 $ 19,088 $ 8,991
Intangible amortization, net of tax(1) 1,195 1,228 1,196 2,423 2,510
Tangible net income $ 17,014 $ 4,497 $ 8,790 $ 21,511 $ 11,501
Average shareholders’ equity $ 533,994 $ 527,533 $ 504,988 $ 530,763 $ 501,786
Average intangible assets, net (99,309 ) (95,296 ) (90,258 ) (97,302 ) (91,125 )
Average tangible equity $ 434,685 $ 432,237 $ 414,730 $ 433,461 $ 410,661
Return on average equity 11.91 % 2.49 % 6.03 % 7.23 % 3.61 %
Return on average tangible equity(2) 15.74 % 4.18 % 8.50 % 9.98 % 5.65 %
(1) The combined income tax rate utilized was 25%.
(2) Annualized tangible net income divided by average tangible equity.


Net Interest Margin, Tax Equivalent/
Core Net Interest Margin

Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2024 2024 2023 2024 2023
Net interest income $ 36,347 $ 34,731 $ 36,962 $ 71,078 $ 77,038
Tax equivalent adjustments:
Loans(1) 938 920 713 1,858 1,429
Securities(1) 377 387 431 764 953
Net interest income, tax equivalent $ 37,662 $ 36,038 $ 38,106 $ 73,700 $ 79,420
Loan purchase discount accretion (1,261 ) (1,152 ) (984 ) (2,413 ) (2,173 )
Core net interest income $ 36,401 $ 34,886 $ 37,122 $ 71,287 $ 77,247
Net interest margin 2.33 % 2.25 % 2.45 % 2.29 % 2.56 %
Net interest margin, tax equivalent(2) 2.41 % 2.33 % 2.52 % 2.37 % 2.63 %
Core net interest margin(3) 2.33 % 2.26 % 2.46 % 2.29 % 2.56 %
Average interest earning assets $ 6,282,494 $ 6,215,160 $ 6,056,732 $ 6,248,828 $ 6,078,473
(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 Six Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2024 2024 2023 2024 2023
Loan interest income, including fees $ 61,643 $ 57,947 $ 49,726 $ 119,590 $ 96,216
Tax equivalent adjustment(1) 938 920 713 1,858 1,429
Tax equivalent loan interest income $ 62,581 $ 58,867 $ 50,439 $ 121,448 $ 97,645
Loan purchase discount accretion (1,261 ) (1,152 ) (984 ) (2,413 ) (2,173 )
Core loan interest income $ 61,320 $ 57,715 $ 49,455 $ 119,035 $ 95,472
Yield on loans 5.61 % 5.42 % 4.98 % 5.52 % 4.93 %
Yield on loans, tax equivalent(2) 5.69 % 5.51 % 5.05 % 5.60 % 5.00 %
Core yield on loans(3) 5.58 % 5.40 % 4.95 % 5.49 % 4.89 %
Average loans $ 4,419,697 $ 4,298,216 $ 4,003,717 $ 4,358,957 $ 3,935,791
(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 Six Months Ended
Efficiency Ratio June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2024 2024 2023 2024 2023
Total noninterest expense $ 35,761 $ 35,565 $ 34,919 $ 71,326 $ 68,238
Amortization of intangibles (1,593 ) (1,637 ) (1,594 ) (3,230 ) (3,346 )
Merger-related expenses (854 ) (1,314 ) (2,168 ) (136 )
Noninterest expense used for efficiency ratio $ 33,314 $ 32,614 $ 33,325 $ 65,928 $ 64,756
Net interest income, tax equivalent(1) $ 37,662 $ 36,038 $ 38,106 $ 73,700 $ 79,420
Plus: Noninterest income 21,554 9,750 8,746 31,304 4,700
Less: Investment securities (losses) gains, net 33 36 (2 ) 69 (13,172 )
Net revenues used for efficiency ratio $ 59,183 $ 45,752 $ 46,854 $ 104,935 $ 97,292
Efficiency ratio(2) 56.29 % 71.28 % 71.13 % 62.83 % 66.56 %
(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.

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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