• MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2023

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 15:15:07   America/Chicago

    IOWA CITY, Iowa, Oct. 26, 2023 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the third quarter of 2023.

    Third Quarter 2023 Highlights1

    • Net income of $9.1 million, or $0.58 per diluted common share, compared to net income of $7.6 million, or $0.48 per diluted common share, for the linked quarter.
    • Annualized loan growth of 4.8%.
    • Core deposits increased $83.2 million or 2%.
    • Nonperforming assets ratio of 0.45%; net charge-off ratio was 0.04%.
    • Efficiency ratio improved to 66.06%.
    • Announced sale of Florida operations and acquisition of Denver Bankshares, Inc. ("Denver Bankshares") in strategic geographic repositioning.

    Subsequent Events

    • On October 24, 2023, the Board of Directors declared a cash dividend of $0.2425 per common share.

    CEO COMMENTARY

    Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “Despite the difficult interest rate environment, which continues to compress our net interest margin, we had another strong quarter of strategic plan execution, highlighted by the September announcement of the sale of our Florida operations, with the proceeds reinvested into the acquisition of Denver Bankshares. These two transactions align our geographic footprint with our Strategic Plan, while accelerating our Denver market growth by three to four years. We are confident in our ability to integrate this low-risk merger, while continuing our growth trajectory in the attractive Denver MSA. Also, in the third quarter of 2023, our Treasury Management initiatives and client acquisition strategies resulted in balanced loan and deposit growth, providing ample flexibility for future, selective loan growth. Asset quality metrics were affected by one senior living credit moving to non-accrual, however, charge-offs and 30-89 day past dues remain at historically low levels. We remain diligent as uncertain economic conditions begin to normalize asset quality migration.”

    Mr. Reeves continued, “While we continue to invest for growth, we are also laser focused on improving our operational effectiveness. Expenses in the quarter were well-controlled and our cost savings initiative to reduce noninterest expense by 2.5% is well underway. To conclude, we've made substantial progress executing our strategic initiatives over the last two quarters, and while we have more to do, I could not be more pleased with our team and the execution of our strategic initiatives.”

    _______________
    1 Third Quarter Summary compares to the second quarter of 2023 (the "linked quarter") unless noted.

      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,
      2023   2023   2022   2023   2022 
    Financial Results          
    Revenue $44,436  $45,708  $58,321  $126,174  $159,373 
    Credit loss expense  1,551   1,597   638   4,081   3,920 
    Noninterest expense  31,544   34,919   34,623   99,782   98,348 
    Net income  9,138   7,594   18,317   18,129   44,833 
    Per Common Share          
    Diluted earnings per share $0.58  $0.48  $1.17  $1.15  $2.86 
    Book value  32.21   31.96   30.23   32.21   30.23 
    Tangible book value(1)  26.60   26.26   24.17   26.60   24.17 
    Balance Sheet & Credit Quality          
    Loans In millions $4,066.0  $4,018.6  $3,746.3  $4,066.0  $3,746.3 
    Investment securities In millions  1,958.5   2,003.1   2,299.9   1,958.5   2,299.9 
    Deposits In millions  5,363.3   5,445.4   5,476.8   5,363.3   5,476.8 
    Net loan charge-offs In millions  0.5   0.9   0.6   1.7   3.1 
    Allowance for credit losses ratio  1.27%  1.25%  1.39%  1.27%  1.39%
    Selected Ratios          
    Return on average assets  0.56%  0.47%  1.13%  0.37%  0.97%
    Net interest margin, tax equivalent(1)  2.35%  2.52%  3.08%  2.54%  2.92%
    Return on average equity  7.14%  6.03%  14.56%  4.81%  11.81%
    Return on average tangible equity(1)  9.68%  8.50%  19.32%  7.03%  15.28%
    Efficiency ratio(1)  66.06%  71.13%  53.67%  66.40%  56.70%
     

    (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 
           3Q23 vs  3Q23 vs 
    (Dollars in thousands) 3Q23 2Q23 3Q22 2Q23  3Q22 
    Net interest income $34,575  $36,962  $45,733   (6)%  (24)%
    Noninterest income  9,861   8,746   12,588   13%  (22)%
    Total revenue, net of interest expense $44,436  $45,708  $58,321   (3)%  (24)%
     

    Total revenue for the third quarter of 2023 decreased $1.3 million from the second quarter of 2023 as a result of lower net interest income, partially offset by higher noninterest income. Compared to the third quarter of 2022, total revenue decreased $13.9 million due to lower net interest income and noninterest income.

    Net interest income of $34.6 million for the third quarter of 2023 decreased $2.4 million from the second quarter of 2023 and $11.2 million from the third quarter of 2022 as a result of higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields.

    The Company's tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 2.52% in the second quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 35 basis points ("bps") to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 26 bps, 138 bps and 40 bps, respectively from the second quarter of 2023. Total interest earning assets yield increased 12 bps from the second quarter of 2023, as a result of an increase in loan and securities yields of 14 bps and 1 bp, respectively. Our cycle-to-date interest bearing deposit beta was 34%.

    The tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 3.08% in the third quarter of 2022, driven by higher funding costs and volumes, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 169 bps to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 159 bps, 295 bps and 208 bps, respectively from the third quarter of 2022. Total interest earning assets yield increased 67 bps from the third quarter of 2022, primarily as a result of an increase in loan and securities yields of 75 bps and 9 bps, respectively.

    Noninterest Income
    		      Change Change
           3Q23 vs 3Q23 vs
    (In thousands)3Q23 2Q23 3Q22 2Q23 3Q22
    Investment services and trust activities$3,004  $3,119  $2,876   (4)%  4%
    Service charges and fees 2,146   2,047   2,075   5%  3%
    Card revenue 1,817   1,847   1,898   (2)%  (4)%
    Loan revenue 1,462   909   1,722   61%  (15)%
    Bank-owned life insurance 626   616   579   2%  8%
    Investment securities gains (losses), net 79   (2)  (163)  n / m   (148)%
    Other 727   210   3,601   246%  (80)%
    Total noninterest income$9,861  $8,746  $12,588   13%  (22)%
    Results are not meaningful (n/m)                   

    Noninterest income for the third quarter of 2023 increased $1.1 million from the linked quarter due primarily to a $0.6 million favorable change in loan revenue, coupled with a $0.5 million increase in other revenue. Loan revenue reflected a favorable quarter-over quarter change in the fair value of our mortgage servicing rights of $0.9 million, partially offset by a decrease in loan sale gains generated by our governmental lending business and a decrease in revenue in our mortgage origination business. Other revenue reflected an increase of $0.6 million in swap origination fee income. Noninterest income decreased $2.7 million from the third quarter of 2022, primarily due to the decline of $2.9 million in other revenue stemming from a one-time settlement recognized in the third quarter of 2022.

    EXPENSE REVIEW

    Noninterest Expense
    		      Change Change
           3Q23 vs 2Q23 vs
    (In thousands)3Q23 2Q23 3Q22 2Q23 3Q22
    Compensation and employee benefits$18,558  $20,386  $20,046  (9)% (7)%
    Occupancy expense of premises, net 2,405   2,574   2,577  (7)% (7)%
    Equipment 2,123   2,435   2,358  (13)% (10)%
    Legal and professional 1,678   1,682   2,012  —% (17)%
    Data processing 1,504   1,521   1,731  (1)% (13)%
    Marketing 782   1,142   1,139  (32)% (31)%
    Amortization of intangibles 1,460   1,594   1,789  (8)% (18)%
    FDIC insurance 783   862   415  (9)% 89%
    Communications 206   260   302  (21)% (32)%
    Foreclosed assets, net 2   (6)  42  (133)% (95)%
    Other 2,043   2,469   2,212  (17)% (8)%
    Total noninterest expense$31,544  $34,919  $34,623  (10)% (9)%


    Merger-related Expenses
    		     
    (In thousands)3Q23 2Q23 3Q22
    Compensation and employee benefits$—  $—  $132 
    Equipment —   —   14 
    Legal and professional 11   —   193 
    Data processing —   —   304 
    Marketing —   —   90 
    Other —   —   30 
    Total merger-related expenses$11  $—  $763 

    Noninterest expense for the third quarter of 2023 decreased $3.4 million, or 9.7%, from the linked quarter with overall decreases in all noninterest expense categories except foreclosed assets, net. The decrease in compensation and employee benefits reflected a reduction of $1.1 million in severance expense, as well as a reduction of $1.1 million in medical insurance benefit expense, driven primarily by accrual adjustments. The $0.4 million decline in other noninterest expense was driven by various changes, including $0.2 million of executive relocation expense recognized in the linked quarter that did not recur and reduced loan expenses by $0.2 million. The $0.4 million decrease in marketing reflected a decline in advertising and sponsorships.

    Noninterest expense for the third quarter of 2023 decreased $3.1 million, or 8.9%, from the third quarter of 2022, with overall decreases in all noninterest expense categories except FDIC insurance. These decreases primarily reflected a $1.8 million decline in employee benefits and incentives and commission expense, coupled with a $0.8 million decrease in merger-related expenses.

    The Company's effective income tax rate increased to 19.4% in the third quarter of 2023 compared to 17.4% in the linked quarter. The higher effective income tax rate reflected an adjustment to the full-year 2023 estimated taxable income in the Company's annual effective tax rate calculation. The effective income tax rate for the full year 2023 is expected to be in the range of 18% - 20%.

    BALANCE SHEET REVIEW

    Total assets were $6.47 billion at September 30, 2023, compared to $6.52 billion at June 30, 2023 and $6.49 billion at September 30, 2022. The decrease from June 30, 2023 was driven by lower cash and securities balances, partially offset by higher loan balances. Compared to September 30, 2022, the decrease was due primarily to lower securities balances resulting from the balance sheet repositioning executed in the first quarter of 2023 as well as lower cash balances, partially offset by higher loan balances.

    Loans Held for Investment
    		September 30, 2023
    		 June 30, 2023 September 30, 2022 
    (Dollars in thousands) Balance   % of Total
    		   Balance
    		   % of Total
    		   Balance
    		   % of Total
    		 
    Commercial and industrial$1,078,773   26.5% $1,089,269   27.1% $1,041,662   27.8%
    Agricultural 111,950   2.8   106,148   2.6   116,229   3.1 
    Commercial real estate                 
    Construction and development 331,868   8.2   313,836   7.8   276,941   7.4 
    Farmland 182,621   4.5   183,378   4.6   183,581   4.9 
    Multifamily 337,509   8.3   305,519   7.6   222,592   5.9 
    Other 1,324,019   32.5   1,331,886   33.1   1,226,983   32.8 
    Total commercial real estate 2,176,017   53.5   2,134,619   53.1   1,910,097   51.0 
    Residential real estate                 
    One-to-four family first liens 456,771   11.2   448,096   11.2   446,373   11.9 
    One-to-four family junior liens 173,275   4.3   168,755   4.2   157,276   4.2 
    Total residential real estate 630,046   15.5   616,851   15.4   603,649   16.1 
    Consumer 69,183   1.7   71,762   1.8   74,652   2.0 
    Loans held for investment, net of unearned income$4,065,969   100.0% $4,018,649   100.0% $3,746,289   100.0%
                      
    Total commitments to extend credit$1,251,345      $1,296,719      $1,159,323     

    Loans held for investment, net of unearned income, increased $47.3 million, or 1.2%, to $4.07 billion from $4.02 billion at June 30, 2023. This increase was driven by new loan production in the third quarter of 2023.

    Investment SecuritiesSeptember 30, 2023 June 30, 2023 September 30, 2022 
    (Dollars in thousands)Balance  % of Total  Balance  % of Total  Balance  % of Total 
    Available for sale$872,770   44.6% $903,520   45.1% $1,153,304   50.1%
    Held to maturity 1,085,751   55.4%  1,099,569   54.9%  1,146,583   49.9%
    Total investment securities$1,958,521      $2,003,089      $2,299,887     

    Investment securities at September 30, 2023 were $1.96 billion, decreasing $44.6 million from June 30, 2023 and $341.4 million from September 30, 2022. The decrease from the second quarter of 2023 was due primarily to paydowns, calls, and maturities. The decrease from the third quarter of 2022 was due primarily to the balance sheet repositioning executed in the first quarter of 2023.

    DepositsSeptember 30, 2023 June 30, 2023 September 30, 2022 
    (Dollars in thousands)Balance  % of Total  Balance  % of Total  Balance  % of Total 
    Noninterest bearing deposits$924,213   17.2% $897,923   16.5% $1,139,694   20.8%
    Interest checking deposits 1,334,481   24.9   1,397,276   25.7   1,705,289   31.2 
    Money market deposits 1,127,287   21.0   1,096,432   20.1   991,783   18.1 
    Savings deposits 619,805   11.6   585,967   10.8   700,843   12.8 
    Time deposits of $250 and under 703,646   13.1   648,586   11.9   537,616   9.8 
    Total core deposits 4,709,432   87.8   4,626,184   85.0   5,075,225   92.7 
    Brokered time deposits 220,063   4.1   365,623   6.7   —   — 
    Time deposits over $250 433,829   8.1   453,640   8.3   401,557   7.3 
    Total deposits$5,363,324   100.0% $5,445,447   100.0% $5,476,782   100.0%

    Total deposits declined $82.1 million, or 1.5%, to $5.36 billion from $5.45 billion at June 30, 2023. Brokered deposits decreased $145.6 million from $365.6 million at June 30, 2023. Core deposits increased $83.2 million from June 30, 2023.

    Borrowed FundsSeptember 30, 2023 June 30, 2023 September 30, 2022 
    (Dollars in thousands)Balance  % of Total  Balance  % of Total  Balance  % of Total 
    Short-term borrowings$373,956   75.0% $362,054   74.2% $304,536   66.4%
    Long-term debt 124,526   25.0%  125,752   25.8%  154,190   33.6%
    Total borrowed funds$498,482      $487,806      $458,726     

    Total borrowed funds were $498.5 million at September 30, 2023 an increase of $10.7 million from June 30, 2023 and an increase of $39.8 million from September 30, 2022. The increase when compared to the linked quarter was due to increased Federal Home Loan Bank overnight borrowings, partially offset by a reduction in securities sold under agreements to repurchase. The increase when compared to September 30, 2022 was primarily due to Bank Term Funding Program borrowings of $225 million, as compared to no such borrowings in the prior year, partially offset by a reduction in securities sold under agreements to repurchase and Federal Home Loan Bank overnight borrowings.

    CapitalSeptember 30, June 30, September 30,
    (Dollars in thousands)2023 (1)  2023   2022 
    Total shareholders' equity$505,411  $501,341  $472,229 
    Accumulated other comprehensive loss (84,606)  (82,704)  (96,623)
    MidWestOne Financial Group, Inc. Consolidated     
    Tier 1 leverage to average assets ratio 8.58%  8.47%  8.24%
    Common equity tier 1 capital to risk-weighted assets ratio 9.52%  9.36%  9.18%
    Tier 1 capital to risk-weighted assets ratio 10.31%  10.15%  9.97%
    Total capital to risk-weighted assets ratio 12.45%  12.26%  12.10%
    MidWestOne Bank     
    Tier 1 leverage to average assets ratio 9.51%  9.42%  9.31%
    Common equity tier 1 capital to risk-weighted assets ratio 11.43%  11.31%  11.26%
    Tier 1 capital to risk-weighted assets ratio 11.43%  11.31%  11.26%
    Total capital to risk-weighted assets ratio 12.36%  12.22%  12.17%

    (1) Regulatory capital ratios for September 30, 2023 are preliminary

    Total shareholders' equity at September 30, 2023 increased $4.1 million from June 30, 2023, driven by the benefit of third quarter net income, partially offset by an increase in accumulated other comprehensive loss and dividends paid during the third quarter of 2023.

    Accumulated other comprehensive loss at September 30, 2023 increased $1.9 million compared to June 30, 2023, primarily due to a decrease in available for sale securities valuations. Accumulated other comprehensive loss decreased $12.0 million from September 30, 2022.

    On October 24, 2023, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable December 15, 2023, to shareholders of record at the close of business on December 1, 2023.

    No common shares were repurchased by the Company during the period June 30, 2023 through September 30, 2023 or for the subsequent period through October 26, 2023. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares.

    CREDIT QUALITY REVIEW

    Credit Quality

    		As of or For the Three Months Ended
    September 30, June 30, September 30,
    (Dollars in thousands) 2023   2023   2022 
    Credit loss expense related to loans$1,651  $1,497  $338 
    Net charge-offs 451   897   588 
    Allowance for credit losses 51,600   50,400   52,100 
    Pass$3,785,908  $3,769,309  $3,550,695 
    Special Mention / Watch 163,222   133,904   101,255 
    Classified 116,839   115,436   94,339 
    Loans greater than 30 days past due and accruing$6,449  $6,201  $5,960 
    Nonperforming loans$28,987  $14,448  $25,963 
    Nonperforming assets 28,987   14,448   26,066 
    Net charge-off ratio(1) 0.04%  0.09%  0.06%
    Classified loans ratio(2) 2.87%  2.87%  2.52%
    Nonperforming loans ratio(3) 0.71%  0.36%  0.69%
    Nonperforming assets ratio(4) 0.45%  0.22%  0.40%
    Allowance for credit losses ratio(5) 1.27%  1.25%  1.39%
    Allowance for credit losses to nonaccrual loans ratio(6) 178.63%  355.03%  208.18%

    (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, nonperforming loans and assets ratios increased 35 bps and 23 bps, respectively, and when compared to the prior year increased 2 bps and 5 bps, respectively, to 0.71% and 0.45%, primarily due to the downgrade of a single commercial relationship.   

    As of September 30, 2023, the allowance for credit losses was $51.6 million, or 1.27% of loans held for investment, net of unearned income, compared with $50.4 million, or 1.25% of loans held for investment, net of unearned income, at June 30, 2023. Credit loss expense of $1.6 million in the third quarter of 2023 was primarily attributable to loan growth.

    Nonperforming Loans Roll Forward
    (Dollars in thousands)    		 Nonaccrual   90+ Days Past Due & Still Accruing   Total 
    Balance at June 30, 2023$14,196  $252  $14,448 
    Loans placed on nonaccrual or 90+ days past due & still accruing 16,394   140   16,534 
    Proceeds related to repayment or sale (799)  (1)  (800)
    Loans returned to accrual status or no longer past due (298)  (252)  (550)
    Charge-offs (603)  (39)  (642)
    Transfers to foreclosed assets (3)  —   (3)
    Balance at September 30, 2023$28,887  $100  $28,987 

    CONFERENCE CALL DETAILS

    The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 27, 2023. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=03182047&confId=56188. 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 146099 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 25, 2024 by calling 1-866-813-9403 and using the replay access code of 205972. 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, Florida, 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 with Iowa First Bancshares Corp. and Denver Bankshares, Inc.), 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 recent and potential additional increases in inflation and 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, including the new 1.0% excise tax on stock buybacks by publicly traded companies 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 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 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) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; (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 at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

    MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
    FIVE QUARTER CONSOLIDATED BALANCE SHEETS

     September 30, June 30, March 31, December 31, September 30,
    (In thousands) 2023   2023   2023   2022   2022 
    ASSETS         
    Cash and due from banks$71,015  $75,955  $63,945  $83,990  $77,513 
    Interest earning deposits in banks 3,773   68,603   5,273   2,445   1,001 
    Total cash and cash equivalents 74,788   144,558   69,218   86,435   78,514 
    Debt securities available for sale at fair value 872,770   903,520   954,074   1,153,547   1,153,304 
    Held to maturity securities at amortized cost 1,085,751   1,099,569   1,117,709   1,129,421   1,146,583 
    Total securities 1,958,521   2,003,089   2,071,783   2,282,968   2,299,887 
    Loans held for sale 2,528   2,821   2,553   612   2,320 
    Gross loans held for investment 4,078,060   4,031,377   3,932,900   3,854,791   3,761,664 
    Unearned income, net (12,091)  (12,728)  (13,535)  (14,267)  (15,375)
    Loans held for investment, net of unearned income 4,065,969   4,018,649   3,919,365   3,840,524   3,746,289 
    Allowance for credit losses (51,600)  (50,400)  (49,800)  (49,200)  (52,100)
    Total loans held for investment, net 4,014,369   3,968,249   3,869,565   3,791,324   3,694,189 
    Premises and equipment, net 85,589   85,831   86,208   87,125   87,732 
    Goodwill 62,477   62,477   62,477   62,477   62,477 
    Other intangible assets, net 25,510   26,969   28,563   30,315   32,086 
    Foreclosed assets, net —   —   —   103   103 
    Other assets 244,036   227,495   219,585   236,517   233,753 
    Total assets$6,467,818  $6,521,489  $6,409,952  $6,577,876  $6,491,061 
    LIABILITIES          
    Noninterest bearing deposits$924,213  $897,923  $989,469  $1,053,450  $1,139,694 
    Interest bearing deposits 4,439,111   4,547,524   4,565,684   4,415,492   4,337,088 
    Total deposits 5,363,324   5,445,447   5,555,153   5,468,942   5,476,782 
    Short-term borrowings 373,956   362,054   143,981   391,873   304,536 
    Long-term debt 124,526   125,752   137,981   139,210   154,190 
    Other liabilities 100,601   86,895   72,187   85,058   83,324 
    Total liabilities 5,962,407   6,020,148   5,909,302   6,085,083   6,018,832 
    SHAREHOLDERS' EQUITY          
    Common stock 16,581   16,581   16,581   16,581   16,581 
    Additional paid-in capital 301,889   301,424   300,966   302,085   301,418 
    Retained earnings 295,862   290,548   286,767   289,289   276,998 
    Treasury stock (24,315)  (24,508)  (24,779)  (26,115)  (26,145)
    Accumulated other comprehensive loss (84,606)  (82,704)  (78,885)  (89,047)  (96,623)
    Total shareholders' equity 505,411   501,341   500,650   492,793   472,229 
    Total liabilities and shareholders' equity$6,467,818  $6,521,489  $6,409,952  $6,577,876  $6,491,061 
                        

    MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
    FIVE QUARTER AND YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME

     Three Months Ended Nine Months Ended
     September 30, June 30, March 31, December 31, September 30, September 30, September 30,
    (In thousands, except per share data) 2023   2023   2023   2022   2022   2023   2022 
    Interest income             
    Loans, including fees$51,870  $49,726  $46,490  $43,769  $40,451  $148,086  $104,515 
    Taxable investment securities 9,526   9,734   10,444   10,685   10,635   29,704   28,334 
    Tax-exempt investment securities 1,802   1,822   2,127   2,303   2,326   5,751   7,076 
    Other 374   68   244   —   9   686   77 
    Total interest income 63,572   61,350   59,305   56,757   53,421   184,227   140,002 
    Interest expense             
    Deposits 23,128   20,117   15,319   9,127   5,035   58,564   11,118 
    Short-term borrowings 3,719   2,118   1,786   1,955   767   7,623   1,115 
    Long-term debt 2,150   2,153   2,124   2,111   1,886   6,427   4,975 
    Total interest expense 28,997   24,388   19,229   13,193   7,688   72,614   17,208 
    Net interest income 34,575   36,962   40,076   43,564   45,733   111,613   122,794 
    Credit loss expense 1,551   1,597   933   572   638   4,081   3,920 
    Net interest income after credit loss expense 33,024   35,365   39,143   42,992   45,095   107,532   118,874 
    Noninterest income (loss)             
    Investment services and trust activities 3,004   3,119   2,933   2,666   2,876   9,056   8,557 
    Service charges and fees 2,146   2,047   2,008   2,028   2,075   6,201   5,449 
    Card revenue 1,817   1,847   1,748   1,784   1,898   5,412   5,426 
    Loan revenue 1,462   909   1,420   966   1,722   3,791   9,538 
    Bank-owned life insurance 626   616   602   637   579   1,844   1,668 
    Investment securities (losses) gains, net 79   (2)  (13,170)  (1)  (163)  (13,093)  272 
    Other 727   210   413   2,860   3,601   1,350   5,669 
    Total noninterest income (loss) 9,861   8,746   (4,046)  10,940   12,588   14,561   36,579 
    Noninterest expense             
    Compensation and employee benefits 18,558   20,386   19,607   20,438   20,046   58,551   57,665 
    Occupancy expense of premises, net 2,405   2,574   2,746   2,663   2,577   7,725   7,609 
    Equipment 2,123   2,435   2,171   2,327   2,358   6,729   6,366 
    Legal and professional 1,678   1,682   1,736   1,846   2,012   5,096   6,800 
    Data processing 1,504   1,521   1,363   1,375   1,731   4,388   4,199 
    Marketing 782   1,142   986   947   1,139   2,910   3,325 
    Amortization of intangibles 1,460   1,594   1,752   1,770   1,789   4,806   4,299 
    FDIC insurance 783   862   749   405   415   2,394   1,255 
    Communications 206   260   261   285   302   727   840 
    Foreclosed assets, net 2   (6)  (28)  48   42   (32)  (66)
    Other 2,043   2,469   1,976   2,336   2,212   6,488   6,056 
    Total noninterest expense 31,544   34,919   33,319   34,440   34,623   99,782   98,348 
    Income before income tax expense 11,341   9,192   1,778   19,492   23,060   22,311   57,105 
    Income tax expense 2,203   1,598   381   3,490   4,743   4,182   12,272 
    Net income $9,138  $7,594  $1,397  $16,002  $18,317  $18,129  $44,833 
                  
    Earnings per common share             
    Basic$0.58  $0.48  $0.09  $1.02  $1.17  $1.16  $2.86 
    Diluted$0.58  $0.48  $0.09  $1.02  $1.17  $1.15  $2.86 
    Weighted average basic common shares outstanding 15,689   15,680   15,650   15,624   15,623   15,673   15,658 
    Weighted average diluted common shares outstanding 15,711   15,689   15,691   15,693   15,654   15,696   15,686 
    Dividends paid per common share$0.2425  $0.2425  $0.2425  $0.2375  $0.2375  $0.7275  $0.7125 
                                

    MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
    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) 2023   2023   2022   2023   2022 
    Earnings:         
    Net interest income$34,575  $36,962  $45,733  $111,613  $122,794 
    Noninterest income 9,861   8,746   12,588   14,561   36,579 
    Total revenue, net of interest expense 44,436   45,708   58,321   126,174   159,373 
    Credit loss expense 1,551   1,597   638   4,081   3,920 
    Noninterest expense 31,544   34,919   34,623   99,782   98,348 
    Income before income tax expense 11,341   9,192   23,060   22,311   57,105 
    Income tax expense 2,203   1,598   4,743   4,182   12,272 
    Net income$9,138  $7,594  $18,317  $18,129  $44,833 
    Per Share Data:         
    Diluted earnings$0.58  $0.48  $1.17  $1.15  $2.86 
    Book value 32.21   31.96   30.23   32.21   30.23 
    Tangible book value(1) 26.60   26.26   24.17   26.60   24.17 
    Ending Balance Sheet:         
    Total assets$6,467,818  $6,521,489  $6,491,061  $6,467,818  $6,491,061 
    Loans held for investment, net of unearned income 4,065,969   4,018,649   3,746,289   4,065,969   3,746,289 
    Total securities 1,958,521   2,003,089   2,299,887   1,958,521   2,299,887 
    Total deposits 5,363,324   5,445,447   5,476,782   5,363,324   5,476,782 
    Short-term borrowings 373,956   362,054   304,536   373,956   304,536 
    Long-term debt 124,526   125,752   154,190   124,526   154,190 
    Total shareholders' equity 505,411   501,341   472,229   505,411   472,229 
    Average Balance Sheet:         
    Average total assets$6,452,815  $6,465,810  $6,457,647  $6,480,636  $6,152,390 
    Average total loans 4,019,852   4,003,717   3,673,379   3,964,119   3,416,600 
    Average total deposits 5,379,871   5,454,517   5,507,482   5,459,749   5,246,183 
    Financial Ratios:         
    Return on average assets 0.56%  0.47%  1.13%  0.37%  0.97%
    Return on average equity 7.14%  6.03%  14.56%  4.81%  11.81%
    Return on average tangible equity(1) 9.68%  8.50%  19.32%  7.03%  15.28%
    Efficiency ratio(1) 66.06%  71.13%  53.67%  66.40%  56.70%
    Net interest margin, tax equivalent(1) 2.35%  2.52%  3.08%  2.54%  2.92%
    Loans to deposits ratio 75.81%  73.80%  68.40%  75.81%  68.40%
    Common equity ratio 7.81%  7.69%  7.28%  7.81%  7.28%
    Tangible common equity ratio(1) 6.54%  6.40%  5.90%  6.54%  5.90%
    Credit Risk Profile:         
    Total nonperforming loans$28,987  $14,448  $25,963  $28,987  $25,963 
    Nonperforming loans ratio 0.71%  0.36%  0.69%  0.71%  0.69%
    Total nonperforming assets$28,987  $14,448  $26,066  $28,987  $26,066 
    Nonperforming assets ratio 0.45%  0.22%  0.40%  0.45%  0.40%
    Net charge-offs$451  $897  $588  $1,681  $3,091 
    Net charge-off ratio 0.04%  0.09%  0.06%  0.06%  0.12%
    Allowance for credit losses$51,600  $50,400  $52,100  $51,600  $52,100 
    Allowance for credit losses ratio 1.27%  1.25%  1.39%  1.27%  1.39%
    Allowance for credit losses to nonaccrual ratio 178.63%  355.03%  208.18%  178.63%  208.18%
              

     (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.  

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

     Three Months Ended
     September 30, 2023 June 30, 2023 September 30, 2022
    (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)$4,019,852 $52,605 5.19% $4,003,717 $50,439 5.05% $3,673,379 $41,124 4.44%
    Taxable investment securities 1,637,259  9,526 2.31%  1,698,003  9,734 2.30%  1,939,517  10,635 2.18%
    Tax-exempt investment securities (2)(4) 341,330  2,234 2.60%  345,934  2,253 2.61%  431,898  2,922 2.68%
    Total securities held for investment(2) 1,978,589  11,760 2.36%  2,043,937  11,987 2.35%  2,371,415  13,557 2.27%
    Other 34,195  374 4.34%  9,078  68 3.00%  6,070  9 0.59%
    Total interest earning assets(2)$6,032,636 $64,739 4.26% $6,056,732 $62,494 4.14% $6,050,864 $54,690 3.59%
    Other assets 420,179      409,078      406,783    
    Total assets$6,452,815     $6,465,810     $6,457,647    
    LIABILITIES AND SHAREHOLDERS’ EQUITY                 
    Interest checking deposits$1,354,597 $2,179 0.64% $1,420,741 $1,971 0.56% $1,725,000 $1,463 0.34%
    Money market deposits 1,112,149  7,402 2.64%  999,436  5,299 2.13%  1,016,005  1,268 0.50%
    Savings deposits 603,628  749 0.49%  603,905  288 0.19%  710,836  297 0.17%
    Time deposits 1,403,504  12,798 3.62%  1,490,332  12,559 3.38%  913,307  2,007 0.87%
    Total interest bearing deposits 4,473,878  23,128 2.05%  4,514,414  20,117 1.79%  4,365,148  5,035 0.46%
    Securities sold under agreements to repurchase 66,020  85 0.51%  159,583  423 1.06%  144,628  228 0.63%
    Other short-term borrowings 277,713  3,634 5.19%  132,495  1,695 5.13%  83,086  539 2.57%
    Short-term borrowings 343,733  3,719 4.29%  292,078  2,118 2.91%  227,714  767 1.34%
    Long-term debt 125,737  2,150 6.78%  135,329  2,153 6.38%  159,125  1,886 4.70%
    Total borrowed funds 469,470  5,869 4.96%  427,407  4,271 4.01%  386,839  2,653 2.72%
    Total interest bearing liabilities$4,943,348 $28,997 2.33% $4,941,821 $24,388 1.98% $4,751,987 $7,688 0.64%
    Noninterest bearing deposits 905,993      940,103      1,142,334    
    Other liabilities 95,408      78,898      64,063    
    Shareholders’ equity 508,066      504,988      499,263    
    Total liabilities and shareholders’ equity$6,452,815     $6,465,810     $6,457,647    
    Net interest income(2)  $35,742     $38,106     $47,002  
    Net interest spread(2)    1.93%     2.16%     2.95%
    Net interest margin(2)    2.35%     2.52%     3.08%
                      
    Total deposits(5)$5,379,871 $23,128 1.71% $5,454,517 $20,117 1.48% $5,507,482 $5,035 0.36%
    Cost of funds(6)    1.97%     1.66%     0.52%
                         

    (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 $141 thousand, $79 thousand, and $35 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Loan purchase discount accretion was $791 thousand, $1.0 million, and $2.0 million for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Tax equivalent adjustments were $735 thousand, $713 thousand, and $673 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
    (4) Interest income includes tax equivalent adjustments of $432 thousand, $431 thousand, and $596 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, 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. AND SUBSIDIARIES
    AVERAGE BALANCE SHEET AND YIELD ANALYSIS

     Nine Months Ended
     September 30, 2023 September 30, 2022
    (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)$3,964,119  $150,250   5.07% $3,416,600  $106,297   4.16%
    Taxable investment securities 1,714,912   29,704   2.32%  1,899,907   28,334   1.99%
    Tax-exempt investment securities (2)(4) 361,254   7,136   2.64%  440,542   8,895   2.70%
    Total securities held for investment(2) 2,076,166   36,840   2.37%  2,340,449   37,229   2.13%
    Other 22,741   686   4.03%  25,972   77   0.40%
    Total interest earning assets(2)$6,063,026  $187,776   4.14% $5,783,021  $143,603   3.32%
    Other assets 417,610       369,369     
    Total assets$6,480,636      $6,152,390     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Interest checking deposits$1,429,804  $5,999   0.56% $1,642,849  $3,713   0.30%
    Money market deposits 1,014,708   15,970   2.10%  991,338   2,338   0.32%
    Savings deposits 620,011   1,309   0.28%  671,917   863   0.17%
    Time deposits 1,437,122   35,286   3.28%  877,923   4,204   0.64%
    Total interest bearing deposits 4,501,645   58,564   1.74%  4,184,027   11,118   0.36%
    Securities sold under agreements to repurchase 123,512   958   1.04%  152,663   435   0.38%
    Other short-term borrowings 174,448   6,665   5.11%  42,952   680   2.12%
    Short-term borrowings 297,960   7,623   3.42%  195,615   1,115   0.76%
    Long-term debt 133,375   6,427   6.44%  148,053   4,975   4.49%
    Total borrowed funds 431,335   14,050   4.36%  343,668   6,090   2.37%
    Total interest bearing liabilities$4,932,980  $72,614   1.97% $4,527,695  $17,208   0.51%
    Noninterest bearing deposits 958,104       1,062,156     
    Other liabilities 85,650       54,775     
    Shareholders’ equity 503,902       507,764     
    Total liabilities and shareholders’ equity$6,480,636      $6,152,390     
    Net interest income(2)  $115,162      $126,395   
    Net interest spread(2)     2.17%      2.81%
    Net interest margin(2)     2.54%      2.92%
                
    Total deposits(5)$5,459,749  $58,564   1.43% $5,246,183  $11,118   0.28%
    Cost of funds(6)     1.65%      0.41%
                    

    (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 $315 thousand and $678 thousand for the nine months ended September 30, 2023 and September 30, 2022, respectively. Loan purchase discount accretion was $3.0 million and $3.3 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. Tax equivalent adjustments were $2.2 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
    (4) Interest income includes tax equivalent adjustments of $1.4 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, 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, and adjusted earnings. 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)  2023   2023   2023   2022   2022 
    Total shareholders’ equity $505,411  $501,341  $500,650  $492,793  $472,229 
    Intangible assets, net  (87,987)  (89,446)  (91,040)  (92,792)  (94,563)
    Tangible common equity $417,424  $411,895  $409,610  $400,001  $377,666 
               
    Total assets $6,467,818  $6,521,489  $6,409,952  $6,577,876  $6,491,061 
    Intangible assets, net  (87,987)  (89,446)  (91,040)  (92,792)  (94,563)
    Tangible assets $6,379,831  $6,432,043  $6,318,912  $6,485,084  $6,396,498 
               
    Book value per share $32.21  $31.96  $31.94  $31.54  $30.23 
    Tangible book value per share(1) $26.60  $26.26  $26.13  $25.60  $24.17 
    Shares outstanding  15,691,738   15,685,123   15,675,325   15,623,977   15,622,825 
               
    Common equity ratio  7.81%  7.69%  7.81%  7.49%  7.28%
    Tangible common equity ratio(2)  6.54%  6.40%  6.48%  6.17%  5.90%
                         

    (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)  2023   2023   2022   2023   2022 
    Net income $9,138  $7,594  $18,317  $18,129  $44,833 
    Intangible amortization, net of tax(1)  1,095   1,196   1,342   3,605   3,224 
    Tangible net income $10,233  $8,790  $19,659  $21,734  $48,057 
               
    Average shareholders’ equity $508,066  $504,988  $499,263  $503,902  $507,764 
    Average intangible assets, net  (88,699)  (90,258)  (95,499)  (90,308)  (87,318)
    Average tangible equity $419,367  $414,730  $403,764  $413,594  $420,446 
               
    Return on average equity  7.14%  6.03%  14.56%  4.81%  11.81%
    Return on average tangible equity(2)  9.68%  8.50%  19.32%  7.03%  15.28%
                         

    (1) The combined income tax rate utilized was 25%.
    (2) Annualized tangible net income divided by average tangible equity.

    Net Interest Margin, Tax Equivalent/
    		 Three Months Ended Nine Months Ended
    Core Net Interest Margin
    		 September 30, June 30, September 30, September 30, September 30,
    (Dollars in thousands)  2023   2023   2022   2023   2022 
    Net interest income $34,575  $36,962  $45,733  $111,613  $122,794 
    Tax equivalent adjustments:          
    Loans(1)  735   713   673   2,164   1,782 
    Securities(1)  432   431   596   1,385   1,819 
    Net interest income, tax equivalent $35,742  $38,106  $47,002  $115,162  $126,395 
    Loan purchase discount accretion  (791)  (984)  (2,015)  (2,964)  (3,275)
    Core net interest income $34,951  $37,122  $44,987  $112,198  $123,120 
               
    Net interest margin  2.27%  2.45%  3.00%  2.46%  2.84%
    Net interest margin, tax equivalent(2)  2.35%  2.52%  3.08%  2.54%  2.92%
    Core net interest margin(3)  2.30%  2.46%  2.95%  2.47%  2.85%
    Average interest earning assets $6,032,636  $6,056,732  $6,050,864  $6,063,026  $5,783,021 
                         

    (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)  2023   2023   2022   2023   2022 
    Loan interest income, including fees $51,870  $49,726  $40,451  $148,086  $104,515 
    Tax equivalent adjustment(1)  735   713   673   2,164   1,782 
    Tax equivalent loan interest income $52,605  $50,439  $41,124  $150,250  $106,297 
    Loan purchase discount accretion  (791)  (984)  (2,015)  (2,964)  (3,275)
    Core loan interest income $51,814  $49,455  $39,109  $147,286  $103,022 
               
    Yield on loans  5.12%  4.98%  4.37%  4.99%  4.09%
    Yield on loans, tax equivalent(2)  5.19%  5.05%  4.44%  5.07%  4.16%
    Core yield on loans(3)  5.11%  4.95%  4.22%  4.97%  4.03%
    Average loans $4,019,852  $4,003,717  $3,673,379  $3,964,119  $3,416,600 
                         

    (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)  2023   2023   2022   2023   2022 
    Total noninterest expense $31,544  $34,919  $34,623  $99,782  $98,348 
    Amortization of intangibles  (1,460)  (1,594)  (1,789)  (4,806)  (4,299)
    Merger-related expenses  (11)  —   (763)  (147)  (1,792)
    Noninterest expense used for efficiency ratio $30,073  $33,325  $32,071  $94,829  $92,257 
               
    Net interest income, tax equivalent(1) $35,742  $38,106  $47,002  $115,162  $126,395 
    Plus: Noninterest income  9,861   8,746   12,588   14,561   36,579 
    Less: Investment securities (losses) gains, net  79   (2)  (163)  (13,093)  272 
    Net revenues used for efficiency ratio $45,524  $46,854  $59,753  $142,816  $162,702 
               
    Efficiency ratio (2)  66.06%  71.13%  53.67%  66.40%  56.70%
                         

    (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)  2023   2023   2022   2023   2022 
    Net income $9,138  $7,594  $18,317  $18,129  $44,833 
    After tax loss on sale of debt securities(1)  —   —   125   9,837   — 
    Adjusted earnings $9,138  $7,594  $18,442  $27,966  $44,833 
               
    Weighted average diluted common shares outstanding  15,711   15,689   15,654   15,696   15,686 
               
    Earnings per common share          
    Earnings per common share - diluted $0.58  $0.48  $1.17  $1.15  $2.86 
    Adjusted earnings per common share - diluted (2) $0.58  $0.48  $1.18  $1.78  $2.86 
                         

    (1) The income tax rate utilized was 25.3%.
    (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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