• MidWestOne Financial Group, Inc. Reports Financial Results for the Second Quarter of 2021

    Source: Nasdaq GlobeNewswire / 22 Jul 2021 16:28:52   America/New_York

    Second Quarter Summary(1)

    • Net income for the second quarter was $17.3 million, or $1.08 per diluted common share.
      • Total revenue, net of interest expense, of $48.7 million.
      • Credit loss benefit of $2.1 million.
      • Noninterest expense of $28.7 million.
    • Excluding PPP loans, commercial loans were $2.61 billion,(2) as compared to $2.56 billion(2) for the first quarter of 2021 (the "linked quarter"), an increase of 2.2%.
    • Average total deposits were $4.88 billion, as compared to $4.57 billion for the linked quarter, an increase of 6.6%, while cost of average total deposits decreased to 0.28%.
    • Efficiency ratio of 54.83%(2).
    • Nonperforming assets declined 8.0% and the net charge-off ratio was 5 bps.

    IOWA CITY, Iowa, July 22, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the second quarter of 2021 of $17.3 million, or $1.08 per diluted common share, compared to net income of $21.6 million, or $1.35 per diluted common share, for the linked quarter.

    CEO COMMENTARY

    Charles Funk, Chief Executive Officer of the Company, commented, "This was another solid quarter for our Company with good core loan growth, improved asset quality, and a nice build in our tangible book value. Despite the continuation of very low credit line usage, our commercial bankers were able to produce a quarter of respectable core loan growth although potential headwinds remain."

    "The low interest rate environment continues to pressure commercial bank margins, and we are not immune. Our noninterest income results reflect a decrease in mortgage gain on sale margins; however, we continue to be running at an 'above normal' rate of mortgage originations. Our wealth management group continues to produce good results as well."

    "With respect to capital, we believe our stock currently represents a compelling value, and we are selectively repurchasing our stock at opportune moments. We returned $4.7 million of capital to shareholders during the second quarter of 2021, including $1.1 million from such stock repurchases."

    "Finally, we commend our fine staff for closing nearly one-half of a billion dollars of PPP loans. For some borrowers, these funds were literally the difference between survival and failure. Our bankers deserve much credit for their long hours and perseverance over the past twelve months."

    1Second Quarter Summary compares to the linked quarter unless noted.
    2Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

      

    FINANCIAL HIGHLIGHTS
    		 Three Months Ended Six Months Ended
      June 30, March 31, June 30, June 30, June 30,
    (Dollars in thousands, except per share amounts) 2021 2021 2020 2021 2020
    Net interest income $38,505   $38,617   $38,712  $77,122   $76,118 
    Noninterest income 10,218   11,824   8,269  22,042   18,424 
    Total revenue, net of interest expense 48,723   50,441   46,981  99,164   94,542 
    Credit loss (benefit) expense (2,144)  (4,734)  4,685  (6,878)  26,418 
    Noninterest expense 28,670   27,700   28,038  56,370   58,039 
    Income before income tax expense 22,197   27,475   14,258  49,672   10,085 
    Income tax expense 4,926   5,827   2,546  10,753   348 
    Net income $17,271   $21,648   $11,712  $38,919   $9,737 
    Diluted earnings per share $1.08   $1.35   $0.73  $2.43   $0.60 
    Return on average assets 1.18 % 1.59 % 0.92% 1.38 % 0.40%
    Return on average equity 13.24 % 17.01 % 9.21% 15.10 % 3.82%
    Return on average tangible equity(1) 16.75 % 21.52 % 13.50% 19.10 % 6.48%
    Efficiency ratio(1) 54.83 % 50.77 % 54.80% 52.76 % 56.24%
    (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.


    COVID-19 UPDATE

    Loan Modifications

    As of June 30, 2021, the outstanding balance of loans modified as a result of the COVID-19 pandemic totaled $21.0 million, an increase of 26% from $16.7 million at March 31, 2021. The increase from the end of the first quarter of 2021 was due to an additional deferral that was granted for one large commercial real estate loan. Of those modified loans at June 30, 2021, $0.7 million were in their first deferral period while $20.3 million were in a second deferral period.

    SBA Paycheck Protection Program (PPP) Loans

    The PPP Extension Act of 2021 set a deadline for PPP applications of May 31, 2021. The following table presents PPP loan measures as of the dates indicated:

      June 30, 2021 March 31, 2021
      Round 1 Round 2 Total Round 1 Round 2 Total
    (Dollars in millions) # $ # $ # $ # $ # $ # $
    Total PPP Loans Funded 2,681 348.5 2,175 149.3 4,856 497.8 2,681 348.5 1,623 125.7 4,304 474.2
    PPP Loan Forgiveness(1) 2,247 285.7 441 12.3 2,688 298.0 1,709 210.3 — — 1,709 210.3
    Outstanding PPP Loans(2) 416 53.9 1,734 130.5 2,150 184.4 954 128.2 1,623 120.5 2,577 248.7
    Unearned Income $0.5 $6.0 $6.5 $1.7 $5.2 $6.9
    (1) Excluded from the PPP Loan Forgiveness is $8.9 million as of June 30, 2021 and March 31, 2021 of PPP loans that were paid off by the borrower prior to forgiveness.
    (2) Outstanding loans are presented net of unearned income.

    Vulnerable Industries

    We believe loans to certain industries are uniquely vulnerable to credit deterioration stemming from the COVID-19 pandemic. The following table presents our exposure to those industries as of the dates indicated.

     June 30, 2021  March 31, 2021 
    (Dollars in millions) Balance % of Total
    Loans    		   Balance % of Total
    Loans    		 
    Non-essential Retail $78.4  2.4 %  $88.0  2.6 %
    Restaurants 51.3  1.5    56.1  1.7  
    Hotels 108.2  3.2    114.4  3.4  
    CRE-Retail 202.6  6.1    191.1  5.7  
    Arts, Entertainment & Gaming 23.0  0.7    23.5  0.7  
    Total Vulnerable Industries Loan Portfolio $463.5  13.9 %  $473.1  14.1 %


    INCOME STATEMENT HIGHLIGHTS

    Net Interest Income

    Net interest income of $38.5 million in the second quarter of 2021 was relatively flat compared to $38.6 million in the first quarter of 2021 and reflected the income benefit from higher average earning asset balances in the second quarter of 2021 offset by lower PPP loan fee income and loan purchase discount accretion. Average interest earning assets increased $323.6 million to $5.52 billion in the second quarter of 2021, compared to the first quarter of 2021, as cash on hand and cash inflows from deposit activity was used to purchase debt securities and fund loan originations. Net PPP loan fee accretion was $2.5 million in the second quarter of 2021 compared to $3.7 million in the linked quarter. Loan purchase discount accretion was $0.9 million in the second quarter of 2021, down from $1.1 million in the linked quarter.

    The Company's tax equivalent net interest margin was 2.88% in the second quarter of 2021 compared to 3.10% in the linked quarter as lower earning asset yields more than offset reduced funding costs. Total earning asset yields decreased 28 bps from the linked quarter due primarily to the decline in PPP loan fee income described above. The cost of interest bearing liabilities decreased 7 bps to 0.49%, primarily as a result of interest bearing deposit costs of 0.35%, which declined 5 bps from the linked quarter.

    Noninterest Income

    Noninterest income for the second quarter of 2021 decreased $1.6 million, or 14%, from the linked quarter. The decrease was primarily due to a $1.6 million decrease in loan revenue, coupled with a decrease of $0.4 million in other noninterest income. The decline in loan revenue included a $0.6 million reduction in mortgage origination fees from lower gain on sale margins as well as a $0.6 million decrease stemming from the fair value of our mortgage servicing rights. These decreases were partially offset by a $0.4 million increase in card revenue, which was primarily due to increased transaction volumes.

    The following table presents details of noninterest income for the periods indicated:

     Three Months Ended
    Noninterest IncomeJune 30, March 31, June 30,
    (In thousands)2021 2021 2020
    Investment services and trust activities$2,809  $2,836  $2,217 
    Service charges and fees1,475  1,487  1,290 
    Card revenue1,913  1,536  1,237 
    Loan revenue3,151  4,730  1,910 
    Bank-owned life insurance538  542  635 
    Investment securities gains, net42  27  6 
    Other290  666  974 
    Total noninterest income$10,218  $11,824  $8,269 

    Noninterest Expense

    Noninterest expense for the second quarter of 2021 increased $1.0 million, or 3.5%, from the linked quarter primarily due to increases in legal and professional, compensation and employee benefits, and other noninterest expenses of $0.6 million, $0.5 million, and $0.4 million, respectively. The increase in legal and professional expenses was due primarily to a legal insurance recovery of $0.4 million in the first quarter of 2021 that did not recur in the second quarter of 2021. The increase in compensation and employee benefits was due primarily to a $0.6 million reduction in the benefit from SBA PPP loan origination costs which are deferred and amortized over the life of the loan to which they relate. The increased noninterest expenses, as well as the decline in noninterest income noted above, were the primary drivers of the increase in the efficiency ratio, which increased 4.06 percentage points to 54.83%, as compared to the linked quarter efficiency ratio of 50.77%.

    The following table presents details of noninterest expense for the periods indicated:

     Three Months Ended
    Noninterest ExpenseJune 30, March 31, June 30,
    (In thousands)2021 2021 2020
    Compensation and employee benefits$17,404  $16,917  $15,682 
    Occupancy expense of premises, net2,198  2,318  2,253 
    Equipment1,861  1,793  2,010 
    Legal and professional1,375  783  1,382 
    Data processing1,347  1,252  1,240 
    Marketing873  1,006  910 
    Amortization of intangibles1,341  1,507  1,748 
    FDIC insurance245  512  445 
    Communications371  409  449 
    Foreclosed assets, net136  47  34 
    Other1,519  1,156  1,885 
    Total noninterest expense$28,670  $27,700  $28,038 

    Income Taxes

    The effective income tax rate was 22.2% in the second quarter of 2021 compared to 21.2% in the linked quarter. The effective income tax rate in the second quarter of 2021 reflected an increase in income taxes based on the statutory rate and state income taxes, net of federal income tax benefits, primarily due to the net income earned during the quarter, offset by benefits related to tax-exempt interest and bank-owned life insurance. The effective income tax rate for the full year 2021 is expected to be in the range of 20-22%.

    BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS

    		As of or for the Three Months Ended
    June 30, March 31, June 30,
    (Dollars in millions, except per share amounts)2021 2021 2020
    Ending Balance Sheet     
    Total assets$5,749.2  $5,737.3  $5,231.0 
    Loans held for investment, net of unearned income3,330.2  3,358.2  3,597.0 
    Total securities held for investment2,072.5  1,896.9  1,187.5 
    Total deposits4,792.7  4,794.6  4,265.4 
    Average Balance Sheet     
    Average total assets$5,851.7  $5,520.3  $5,098.8 
    Average total loans3,396.6  3,429.7  3,633.7 
    Average total deposits4,875.3  4,573.9  4,165.6 
    Funding and Liquidity     
    Short-term borrowings$212.3  $175.8  $162.2 
    Long-term debt169.8  201.7  190.0 
    Loans to deposits ratio69.48% 70.04% 84.33%
    Equity     
    Total shareholders' equity$530.3  $511.3  $520.8 
    Common equity ratio9.22% 8.91% 9.96%
    Tangible common equity(1)445.4  425.1  398.4 
    Tangible common equity ratio(1)7.86% 7.52% 7.80%
    Per Share Data     
    Book value$33.22  $32.00  $32.35 
    Tangible book value(1)$27.90  $26.60  $24.74 
    (1) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

    Loans Held for Investment

    Loans held for investment, net of unearned income, decreased $28.0 million, or 1%, to $3.33 billion from March 31, 2021, driven primarily by PPP loan forgiveness and lower line utilization.

    The following table presents the composition of loans held for investment, net of unearned income, as of the dates indicated:

    Loans Held for InvestmentJune 30, 2021 March 31, 2021 June 30, 2020 
     Balance
    		 % of
    Total
    		 Balance % of
    Total    		 Balance % of
    Total    		 
    (dollars in thousands)      
    Commercial and industrial$982,092  29.5 %$993,770  29.6 %$1,084,527  30.2 %
    Agricultural107,834  3.2  117,099  3.5  140,837  3.9  
    Commercial real estate            
    Construction and development168,070  5.0  164,927  4.9  199,950  5.6  
    Farmland134,877  4.1  138,199  4.1  161,897  4.5  
    Multifamily255,826  7.7  261,806  7.8  247,403  6.9  
    Other1,147,016  34.4  1,128,660  33.6  1,155,489  32.0  
    Total commercial real estate1,705,789  51.2  1,693,592  50.4  1,764,739  49.0  
    Residential real estate            
    One-to-four family first liens332,117  10.0  337,408  10.0  377,100  10.5  
    One-to-four family junior liens136,464  4.1  137,025  4.1  155,814  4.3  
    Total residential real estate468,581  14.1  474,433  14.1  532,914  14.8  
    Consumer65,860  2.0  79,267  2.4  74,022  2.1  
       Loans held for investment, net of unearned
       income    		$3,330,156  100.0 %$3,358,161  100.0 %$3,597,039  100.0 %

    Credit Loss Expense & Allowance for Credit Losses

    The following table shows the activity in the allowance for credit losses for the periods indicated:

     Three Months Ended Six Months Ended
    Allowance for Credit Losses Roll ForwardJune 30, March 31, June 30, June 30, June 30,
    (In thousands)2021 2021 2020 2021 2020
    Beginning balance$50,650   $55,500   $51,187   $55,500   $29,079  
    Cumulative effect of change in accounting principle - CECL—   —   —   —   3,984  
    Charge-offs(840)  (1,003)  (2,103)  (1,843)  (3,600) 
    Recoveries434   687   236   1,121   535  
    Net charge-offs(406)  (316)  (1,867)  (722)  (3,065) 
    Credit loss (benefit) expense related to loans(2,244)  (4,534)  6,324   (6,778)  25,646  
    Ending balance$48,000   $50,650   $55,644   $48,000   $55,644  

    As of June 30, 2021, the allowance for credit losses ("ACL") was $48.0 million, or 1.44% of loans held for investment, net of unearned income, compared with $50.7 million, or 1.51%, at March 31, 2021. After excluding net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income, decreased to 1.53%(1) as of June 30, 2021, from 1.63%(1) at March 31, 2021. The decline in the ACL during the second quarter reflected overall improvements in the economic forecast and an improved credit profile outlook when compared to the linked quarter.

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

    Deposits

    The following table presents the composition of our deposit portfolio as of the dates indicated:

    Deposit CompositionJune 30, 2021 March 31, 2021 June 30, 2020 
    (In thousands)Balance % of
    Total    		 Balance % of
    Total    		 Balance % of
    Total    		 
    Noninterest bearing deposits$952,764  19.9 %$958,526  20.0 %$867,637  20.3 %
    Interest checking deposits1,414,942  29.6  1,406,070  29.4  1,153,697  27.1  
    Money market deposits936,683  19.5  950,300  19.8  811,368  19.0  
    Savings deposits596,199  12.4  580,862  12.1  463,262  10.9  
    Total non-maturity deposits3,900,588  81.4  3,895,758  81.3  3,295,964  77.3  
    Time deposits of $250 and under538,331  11.2  558,338  11.6  656,723  15.4  
    Time deposits over $250353,747  7.4  340,467  7.1  312,748  7.3  
    Total time deposits892,078  18.6   898,805  18.7  969,471  22.7  
    Total deposits$4,792,666  100.0 %$4,794,563  100.0 %$4,265,435  100.0 %


    CREDIT RISK PROFILE

     As of or For the Three Months Ended
    HighlightsJune 30, March 31, June 30,
    (dollars in thousands)2021 2021 2020
    Credit loss (benefit) expense related to loans$(2,244)  $(4,534)  $6,324 
    Net charge-offs$406   $316   $1,867 
    Net charge-off ratio(1)0.05 % 0.04 % 0.21%
          
    At period-end     
    Pass$3,102,688   $3,112,728   $3,301,353 
    Special Mention / Watch115,414   130,052   204,442 
    Classified112,054   115,381   91,244 
    Total loans held for investment, net$3,330,156   $3,358,161   $3,597,039 
    Classified loans ratio(2)3.36 % 3.44 % 2.54%
    Nonaccrual loans held for investment$40,764   $43,874   $41,303 
    Accruing loans contractually past due 90 days or more665   508   3,238 
    Total nonperforming loans41,429   44,382   44,541 
    Foreclosed assets, net755   1,487   965 
    Total nonperforming assets$42,184   $45,869   $45,506 
    Nonperforming loans ratio(3)1.24 % 1.32 % 1.24%
    Nonperforming assets ratio(4)0.73 % 0.80 % 0.87%
    Allowance for credit losses$48,000   $50,650   $55,644 
    Allowance for credit losses ratio(5)1.44 % 1.51 % 1.55%
    Adjusted allowance for credit losses ratio(6)1.53 % 1.63 % 1.70%
    (1) Net charge-off ratio is calculated as annualized net charge-offs divided by average loans held for investment, net of unearned income, 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 total 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 total 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) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

    The following table presents a roll forward of nonperforming loans for the period indicated:

    Nonperforming Loans     
    (dollars in thousands)Nonaccrual 90+ Days Past Due
    & Still Accruing    		 Total
    Balance at March 31, 2021$43,874   $508   $44,382  
    Loans placed on nonaccrual or 90+ days past due & still accruing455   688   1,143  
    Repayments (including interest applied to principal)(2,669)  —   (2,669) 
    Loans returned to accrual status or no longer past due—   (503)  (503) 
    Charge-offs(766)  (28)  (794) 
    Transfers to foreclosed assets(130)  —   (130) 
    Balance at June 30, 2021$40,764   $665   $41,429  


    CAPITAL

    Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of the current expected credit losses (CECL) accounting standard. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. This cumulative amount will then be reduced from capital over the subsequent three-year period.

    Regulatory Capital Ratios

    		June 30, March 31, June 30,
    2021 (1) 2021 2020
    MidWestOne Financial Group, Inc. Consolidated     
    Tier 1 leverage ratio8.50% 8.78% 8.72%
    Common equity tier 1 capital ratio10.26% 10.16% 9.48%
    Tier 1 capital ratio11.21% 11.13% 10.48%
    Total capital ratio13.63% 13.75% 11.72%
    MidWestOne Bank     
    Tier 1 leverage ratio9.15% 9.60% 9.39%
    Common equity tier 1 capital ratio12.09% 12.19% 11.34%
    Tier 1 capital ratio12.09% 12.19% 11.34%
    Total capital ratio13.02% 13.19% 12.47%
    (1) Capital ratios for June 30, 2021 are preliminary     


    CORPORATE UPDATE

    Share Repurchase Program

    For the period April 1, 2021 through June 22, 2021, under the prior repurchase program that was announced on August 20, 2019, which allowed for the repurchase of up to $10.0 million of common stock, the Company repurchased 20,985 shares of its common stock at an average price of $29.66 per share and a total cost of $0.6 million, leaving $2.1 million of shares that were available to be repurchased under that repurchase program.

    On June 22, 2021, the Board of Directors of the Company approved a new share repurchase program which replaced the prior repurchase program, allowing for the repurchase of up to $15.0 million of the Company's common stock through December 31, 2023. For the period June 23, 2021 through June 30, 2021, the Company repurchased 17,790 shares of its common stock at an average price of $29.53 per share and a total cost of $0.5 million. At June 30, 2021, $14.5 million remained available to repurchase shares under the Company's new share repurchase program.

    Cash Dividend Announcement

    The Board of Directors of the Company declared a cash dividend of $0.2250 per common share on July 20, 2021. The dividend is payable September 15, 2021, to shareholders of record at the close of business on September 1, 2021.

    Subordinated Debenture Redemption

    On May 31, 2021, the Company exercised its option to redeem, in whole, $10.8 million of outstanding subordinated debentures (the "ATB Debentures") that were assumed upon the Company's acquisition of ATBancorp. The ATB Debentures had a stated maturity of May 31, 2023 and bore interest at a fixed annual rate of 6.5%. The amount of ATB Debentures qualifying as tier 2 regulatory capital would have been phased-out completely starting in the second quarter of 2022.

    CONFERENCE CALL DETAILS

    The Company will host a conference call for investors at 11:00 a.m. CT on Friday, July 23, 2021. To participate, please dial 866-233-3483 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until November 4, 2021, by calling 877-344-7529 and using the replay access code of 10157115. 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) effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act, 2021 and the American Rescue Plan; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (5) the effects of interest rates, including on our net income and the value of our securities portfolio; (6) 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; (7) fluctuations in the value of our investment securities; (8) governmental monetary and fiscal policies; (9) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR and the adoption of a substitute; (10) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (11) the ability to attract and retain key executives and employees experienced in banking and financial services; (12) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (13) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (14) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (15) 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; (16) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (17) the risks of mergers, 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; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; 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

     June 30, March 31, December 31, September 30, June 30,
    (In thousands)2021 2021 2020 2020 2020
    ASSETS         
    Cash and due from banks$52,297   $57,154   $65,078   $71,901   $65,863  
    Interest earning deposits in banks11,124   80,924   17,409   55,421   45,018  
    Federal funds sold13   7,691   172   7,540   6,329  
    Total cash and cash equivalents63,434   145,769   82,659   134,862   117,210  
    Debt securities available for sale at fair value2,072,452   1,896,894   1,657,381   1,366,344   1,187,455  
    Loans held for sale6,149   58,333   59,956   13,096   12,048  
    Gross loans held for investment3,344,156   3,374,076   3,496,790   3,555,969   3,618,675  
    Unearned income, net(14,000)  (15,915)  (14,567)  (18,537)  (21,636) 
    Loans held for investment, net of unearned income3,330,156   3,358,161   3,482,223   3,537,432   3,597,039  
    Allowance for credit losses(48,000)  (50,650)  (55,500)  (58,500)  (55,644) 
    Total loans held for investment, net3,282,156   3,307,511   3,426,723   3,478,932   3,541,395  
    Premises and equipment, net84,667   85,581   86,401   87,955   88,929  
    Goodwill62,477   62,477   62,477   62,477   93,977  
    Other intangible assets, net22,394   23,735   25,242   26,811   28,443  
    Foreclosed assets, net755   1,487   2,316   724   965  
    Other assets154,731   155,525   153,493   159,507   160,541  
    Total assets$5,749,215   $5,737,312   $5,556,648   $5,330,708   $5,230,963  
    LIABILITIES         
    Noninterest bearing deposits$952,764   $958,526   $910,655   $864,504   $867,637  
    Interest bearing deposits3,839,902   3,836,037   3,636,394   3,469,137   3,397,798  
    Total deposits4,792,666   4,794,563   4,547,049   4,333,641   4,265,435  
    Short-term borrowings212,261   175,785   230,789   183,893   162,224  
    Long-term debt169,839   201,696   208,691   245,481   189,973  
    Other liabilities44,156   53,948   54,869   68,612   92,550  
    Total liabilities5,218,922   5,225,992   5,041,398   4,831,627   4,710,182  
    SHAREHOLDERS' EQUITY         
    Common stock16,581   16,581   16,581   16,581   16,581  
    Additional paid-in capital299,888   299,747   300,137   299,939   299,542  
    Retained earnings219,884   206,230   188,191   175,017   198,382  
    Treasury stock(15,888)  (15,278)  (14,251)  (12,272)  (12,272) 
    Accumulated other comprehensive income9,828   4,040   24,592   19,816   18,548  
    Total shareholders' equity530,293   511,320   515,250   499,081   520,781  
    Total liabilities and shareholders' equity$5,749,215   $5,737,312   $5,556,648   $5,330,708   $5,230,963  



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

     Three Months Ended Six Months Ended
    (In thousands, except per share data)June 30,
    2021    		 March 31,
    2021    		 December 31,
    2020    		 September 30,
    2020    		 June 30,
    2020    		 June 30,
    2021    		 June 30,  
    2020
    Interest income             
    Loans, including fees$34,736  $36,542  $38,239  $38,191  $40,214  $71,278  $82,226 
    Taxable investment securities6,483  5,093  4,673  4,574  4,646  11,576  8,363 
    Tax-exempt investment securities2,549  2,555  2,529  2,360  1,858  5,104  3,370 
    Other19  14  29  29  40  33  204 
    Total interest income43,787  44,204  45,470  45,154  46,758  87,991  94,163 
    Interest expense             
    Deposits3,409  3,608  4,265  5,296  6,409  7,017  14,358 
    Short-term borrowings161  128  142  175  263  289  597 
    Long-term debt1,712  1,851  2,026  1,874  1,374  3,563  3,090 
    Total interest expense5,282  5,587  6,433  7,345  8,046  10,869  18,045 
    Net interest income38,505  38,617  39,037  37,809  38,712  77,122  76,118 
    Credit loss (benefit) expense(2,144) (4,734) (3,041) 4,992  4,685  (6,878) 26,418 
    Net interest income after credit loss (benefit) expense40,649  43,351  42,078  32,817  34,027  84,000  49,700 
    Noninterest income             
    Investment services and trust activities2,809  2,836  2,518  2,361  2,217  5,645  4,753 
    Service charges and fees1,475  1,487  1,571  1,491  1,290  2,962  3,116 
    Card revenue1,913  1,536  1,517  1,600  1,237  3,449  2,602 
    Loan revenue3,151  4,730  3,900  3,252  1,910  7,881  3,033 
    Bank-owned life insurance538  542  541  530  635  1,080  1,155 
    Investment securities gains, net42  27  30  106  6  69  48 
    Other290  666  549  230  974  956  3,717 
    Total noninterest income10,218  11,824  10,626  9,570  8,269  22,042  18,424 
    Noninterest expense             
    Compensation and employee benefits17,404  16,917  17,638  16,460  15,682  34,321  32,299 
    Occupancy expense of premises, net2,198  2,318  2,476  2,278  2,253  4,516  4,594 
    Equipment1,861  1,793  2,040  1,935  2,010  3,654  3,890 
    Legal and professional1,375  783  2,052  1,184  1,382  2,158  2,917 
    Data processing1,347  1,252  1,460  1,308  1,240  2,599  2,594 
    Marketing873  1,006  986  857  910  1,879  1,972 
    Amortization of intangibles1,341  1,507  1,569  1,631  1,748  2,848  3,776 
    FDIC insurance245  512  495  470  445  757  893 
    Communications371  409  412  428  449  780  906 
    Foreclosed assets, net136  47  (35) 13  34  183  172 
    Goodwill impairment—  —  —  31,500  —  —  — 
    Other1,519  1,156  2,822  1,875  1,885  2,675  4,026 
    Total noninterest expense28,670  27,700  31,915  59,939  28,038  56,370  58,039 
    Income (loss) before income tax expense22,197  27,475  20,789  (17,552) 14,258  49,672  10,085 
    Income tax expense4,926  5,827  4,079  2,272  2,546  10,753  348 
    Net income (loss)$17,271  $21,648  $16,710  $(19,824) $11,712  $38,919  $9,737 
                  
    Earnings (loss) per common share             
    Basic$1.08  $1.35  $1.04  $(1.23) $0.73  $2.43  $0.60 
    Diluted$1.08  $1.35  $1.04  $(1.23) $0.73  $2.43  $0.60 
    Weighted average basic common shares outstanding15,987  15,991  16,074  16,099  16,094  15,989  16,118 
    Weighted average diluted common shares outstanding16,012  16,021  16,092  16,099  16,100  16,016  16,125 
    Dividends paid per common share$0.2250  $0.2250  $0.2200  $0.2200  $0.2200  $0.4500  $0.4400 



    MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
    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)2021 2021 2020 2021 2020
    Earnings:         
    Net interest income$38,505   $38,617   $38,712  $77,122   $76,118 
    Noninterest income10,218   11,824   8,269  22,042   18,424 
    Total revenue, net of interest expense48,723   50,441   46,981  99,164   94,542 
    Credit loss (benefit) expense(2,144)  (4,734)  4,685  (6,878)  26,418 
    Noninterest expense28,670   27,700   28,038  56,370   58,039 
    Income before income tax expense22,197   27,475   14,258  49,672   10,085 
    Income tax expense4,926   5,827   2,546  10,753   348 
    Net income$17,271   $21,648   $11,712  $38,919   $9,737 
    Per Share Data:         
    Diluted earnings$1.08   $1.35   $0.73  $2.43   $0.60 
    Book value33.22   32.00   32.35  33.22   32.35 
    Tangible book value(1)27.90   26.60   24.74  27.90   24.74 
    Ending Balance Sheet:         
    Total assets$5,749,215   $5,737,312   $5,230,963  $5,749,215   $5,230,963 
    Loans held for investment, net of unearned income3,330,156   3,358,161   3,597,039  3,330,156   3,597,039 
    Total securities held for investment2,072,452   1,896,894   1,187,455  2,072,452   1,187,455 
    Total deposits4,792,666   4,794,563   4,265,435  4,792,666   4,265,435 
    Short-term borrowings212,261   175,785   162,224  212,261   162,224 
    Long-term debt169,839   201,696   189,973  169,839   189,973 
    Total shareholders' equity530,293   511,320   520,781  530,293   520,781 
    Average Balance Sheet:         
    Average total assets$5,851,736   $5,520,304   $5,098,847  $5,686,936   $4,884,285 
    Average total loans3,396,575   3,429,746   3,633,695  3,413,069   3,534,979 
    Average total deposits4,875,324   4,573,898   4,165,574  4,725,444   3,962,795 
    Financial Ratios:         
    Return on average assets1.18 % 1.59 % 0.92% 1.38 % 0.40%
    Return on average equity13.24 % 17.01 % 9.21% 15.10 % 3.82%
    Return on average tangible equity(1)16.75 % 21.52 % 13.50% 19.10 % 6.48%
    Efficiency ratio(1)54.83 % 50.77 % 54.80% 52.76 % 56.24%
    Net interest margin, tax equivalent(1)2.88 % 3.10 % 3.38% 2.99 % 3.48%
    Loans to deposits ratio69.48 % 70.04 % 84.33% 69.48 % 84.33%
    Common equity ratio9.22 % 8.91 % 9.96% 9.22 % 9.96%
    Tangible common equity ratio(1)7.86 % 7.52 % 7.80% 7.86 % 7.80%
    Credit Risk Profile:         
    Total nonperforming loans$41,429   $44,382   $44,541  $41,429   $44,541 
    Nonperforming loans ratio1.24 % 1.32 % 1.24% 1.24 % 1.24%
    Total nonperforming assets$42,184   $45,869   $45,506  $42,184   $45,506 
    Nonperforming assets ratio0.73 % 0.80 % 0.87% 0.73 % 0.87%
    Net charge-offs$406   $316   $1,867  $722   $3,065 
    Net charge-off ratio0.05 % 0.04 % 0.21% 0.04 % 0.17%
    Allowance for credit losses$48,000   $50,650   $55,644  $
    		48,000   $55,644 
    Allowance for credit losses ratio1.44 % 1.51 % 1.55% 1.44 % 1.55%
    Adjusted allowance for credit losses ratio(1)1.53 % 1.63 % 1.70% 1.53 % 1.70%
    PPP Loans:         
    Average PPP loans$233,982   $236,231   $257,664  $
    		234,515   $66,075 
    Fee Income(2)2,469   3,674   1,054  6,143   1,054 
              
    (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
    (2)The amount related to the first quarter of 2021 has been revised from previous disclosure.



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

     Three Months Ended
     June 30, 2021 March 31, 2021 June 30, 2020
    (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)$3,396,575 $35,255 4.16% $3,429,746 $37,073 4.38% $3,633,695 $40,721 4.51%
    Taxable investment securities1,604,463 6,483 1.62% 1,266,714 5,093 1.63% 731,699 4,646 2.55%
    Tax-exempt investment securities (2)(4)473,181 3,196 2.71% 465,793 3,203 2.79% 285,758 2,340 3.29%
    Total securities held for investment(2)2,077,644 9,679 1.87% 1,732,507 8,296 1.94% 1,017,457 6,986 2.76%
    Other48,208 19 0.16% 36,536 14 0.16% 67,429 40 0.24%
    Total interest earning assets(2)$5,522,427 44,953 3.26% $5,198,789 45,383 3.54% $4,718,581 47,747 4.07%
    Other assets329,309     321,515     380,266    
    Total assets$5,851,736     $5,520,304     $5,098,847    
    LIABILITIES AND SHAREHOLDERS’ EQUITY                 
    Interest checking deposits$1,469,853 $1,095 0.30% $1,349,671 $991 0.30% $1,091,565 $1,113 0.41%
    Money market deposits942,072 502 0.21% 913,087 478 0.21% 829,826 885 0.43%
    Savings deposits595,150 324 0.22% 553,824 286 0.21% 439,592 365 0.33%
    Time deposits896,169 1,488 0.67% 837,460 1,853 0.90% 990,797 4,046 1.64%
    Total interest bearing deposits3,903,244 3,409 0.35% 3,654,042 3,608 0.40% 3,351,780 6,409 0.77%
    Short-term borrowings218,491 161 0.30% 175,193 128 0.30% 159,157 263 0.66%
    Long-term debt189,644 1,712 3.62% 205,971 1,851 3.64% 201,240 1,374 2.75%
    Total borrowed funds408,135 1,873 1.84% 381,164 1,979 2.11% 360,397 1,637 1.83%
    Total interest bearing liabilities$4,311,379 $5,282 0.49% $4,035,206 $5,587 0.56% $3,712,177 $8,046 0.87%
    Noninterest bearing deposits972,080     919,856     813,794    
    Other liabilities45,035     49,003     61,637    
    Shareholders’ equity523,242     516,239     511,239    
    Total liabilities and shareholders’ equity$5,851,736     $5,520,304     $5,098,847    
    Net interest income(2)  $39,671     $39,796     $39,701  
    Net interest spread(2)    2.77%     2.98%     3.20%
    Net interest margin(2)    2.88%     3.10%     3.38%
                      
    Total deposits(5)$4,875,324 $3,409 0.28% $4,573,898 $3,608 0.32% $4,165,574 $6,409 0.62%
    Cost of funds(6)    0.40%     0.46%     0.72%

    (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 $2.3 million, $3.5 million, and $748 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Loan purchase discount accretion was $873 thousand, $1.1 million, and $2.6 million for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Tax equivalent adjustments were $519 thousand, $531 thousand, and $507 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
    (4)  Interest income includes tax equivalent adjustments of $647 thousand, $648 thousand, and $482 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, 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

     Six Months Ended
     June 30, 2021 June 30, 2020
    (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)$3,413,069  $72,328  4.27% $3,534,979  $83,230  4.73%
    Taxable investment securities1,436,522  11,576  1.63% 648,678  8,363  2.59%
    Tax-exempt investment securities (2)(4)469,507  6,399  2.75% 254,963  4,247  3.35%
    Total securities held for investment(2)1,906,029  17,975  1.90% 903,641  12,610  2.81%
    Other42,404  33  0.16% 62,304  204  0.66%
    Total interest earning assets(2)$5,361,502  90,336  3.40% $4,500,924  96,044  4.29%
    Other assets325,434      383,361     
    Total assets$5,686,936      $4,884,285     
    LIABILITIES AND SHAREHOLDERS’ EQUITY           
    Interest checking deposits$1,410,094  $2,086  0.30% $1,028,321  $2,428  0.47%
    Money market deposits927,660  980  0.21% 798,296  2,530  0.64%
    Savings deposits574,602  610  0.21% 416,713  756  0.36%
    Time deposits866,976  3,341  0.78% 993,966  8,644  1.75%
    Total interest bearing deposits3,779,332  7,017  0.37% 3,237,296  14,358  0.89%
    Short-term borrowings196,962  289  0.30% 140,550  597  0.85%
    Long-term debt197,762  3,563  3.63% 213,413  3,090  2.91%
    Total borrowed funds394,724  3,852  1.97% 353,963  3,687  2.09%
    Total interest bearing liabilities$4,174,056  $10,869  0.53% $3,591,259  $18,045  1.01%
    Noninterest bearing deposits946,112      725,499     
    Other liabilities47,008      54,323     
    Shareholders’ equity519,760      513,204     
    Total liabilities and shareholders’ equity$5,686,936      $4,884,285     
    Net interest income(2)  $79,467      $77,999   
    Net interest spread(2)    2.87%     3.28%
    Net interest margin(2)    2.99%     3.48%
                
    Total deposits(5)$4,725,444  $7,017  0.30% $3,962,795  $14,358  0.73%
    Cost of funds(6)    0.43%     0.84%

    (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 $5.8 million and $626 thousand for the six months ended June 30, 2021 and June 30, 2020, respectively. Loan purchase discount accretion was $2.0 million and $5.6 million for the six months ended June 30, 2021 and June 30, 2020, respectively. Tax equivalent adjustments were $1.0 million and $1.0 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
    (4)  Interest income includes tax equivalent adjustments of $1.3 million and $0.9 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
    (5)  Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
    (6)  Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.



    Non-GAAP Measures

    This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, adjusted allowance for credit losses ratio, core loans, and core commercial loans. 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) 2021 2021 2020 2020 2020
    Total shareholders’ equity $530,293   $511,320   $515,250   $499,081   $520,781  
    Intangible assets, net (84,871)  (86,212)  (87,719)  (89,288)  (122,420) 
    Tangible common equity $445,422   $425,108   $427,531   $409,793   $398,361  
               
    Total assets $5,749,215   $5,737,312   $5,556,648   $5,330,708   $5,230,963  
    Intangible assets, net (84,871)  (86,212)  (87,719)  (89,288)  (122,420) 
    Tangible assets $5,664,344   $5,651,100   $5,468,929   $5,241,420   $5,108,543  
               
    Book value per share $33.22   $32.00   $32.17   $31.00   $32.35  
    Tangible book value per share(1) $27.90   $26.60   $26.69   $25.45   $24.74  
    Shares outstanding 15,963,468   15,981,088   16,016,780   16,099,324   16,099,324  
    Common equity ratio 9.22 % 8.91 % 9.27 % 9.36 % 9.96 %
    Tangible common equity ratio(2) 7.86 % 7.52 % 7.82 % 7.82 % 7.80 %

    (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) 2021 2021 2020 2021 2020
    Net income $17,271   $21,648   $11,712   $38,919   $9,737  
    Intangible amortization, net of tax(1) 1,006   1,130   1,311   2,136   2,832  
    Tangible net income $18,277   $22,778   $13,023   $41,055   $12,569  
               
    Average shareholders’ equity $523,242   $516,239   $511,239   $519,760   $513,204  
    Average intangible assets, net (85,518)  (86,961)  (123,313)  (86,235)  (123,130) 
    Average tangible equity $437,724   $429,278   $387,926   $433,525   $390,074  
               
    Return on average equity 13.24 % 17.01 % 9.21 % 15.10 % 3.82 %
    Return on average tangible equity(2) 16.75 % 21.52 % 13.50 % 19.10 % 6.48 %

    (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) 2021 2021 2020 2021 2020
    Net interest income $38,505   $38,617   $38,712   $77,122   $76,118  
    Tax equivalent adjustments:          
    Loans(1) 519   531   507   1,050   1,004  
    Securities(1) 647   648   482   1,295   877  
    Net interest income, tax equivalent $39,671   $39,796   $39,701   $79,467   $77,999  
    Loan purchase discount accretion (873)  (1,098)  (2,610)  (1,971)  (5,633) 
    Core net interest income $38,798   $38,698   $37,091   $77,496   $72,366   
               
    Net interest margin 2.80 % 3.01 % 3.30 % 2.90 % 3.40 %
    Net interest margin, tax equivalent(2) 2.88 % 3.10 % 3.38 % 2.99 % 3.48 %
    Core net interest margin(3) 2.82 % 3.02 % 3.16 % 2.91 % 3.23 %
    Average interest earning assets $5,522,427   $5,198,789   $4,718,581   $5,361,502   $4,500,924  

    (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) 2021 2021 2020 2021 2020
    Loan interest income, including fees $34,736   $36,542   $40,214   $71,278   $82,226  
    Tax equivalent adjustment(1) 519   531   507   1,050   1,004  
    Tax equivalent loan interest income $35,255   $37,073   $40,721   $72,328   $83,230  
    Loan purchase discount accretion (873)  (1,098)  (2,610)  (1,971)  (5,633) 
    Core loan interest income $34,382   $35,975   $38,111   $70,357   $77,597  
               
    Yield on loans 4.10 % 4.32 % 4.45 % 4.21 % 4.68 %
    Yield on loans, tax equivalent(2) 4.16 % 4.38 % 4.51 % 4.27 % 4.73 %
    Core yield on loans(3) 4.06 % 4.25 % 4.22 % 4.16 % 4.41 %
    Average loans $3,396,575   $3,429,746   $3,633,695   $3,413,069   $3,534,979  

    (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) 2021 2021 2020 2021 2020
    Total noninterest expense $28,670   $27,700   $28,038   $56,370   $58,039  
    Amortization of intangibles (1,341)  (1,507)  (1,748)  (2,848)  (3,776) 
    Merger-related expenses —   —   (7)  —   (61) 
    Noninterest expense used for efficiency ratio $27,329   $26,193   $26,283   $53,522   $54,202  
               
    Net interest income, tax equivalent(1) $39,671   $39,796   $39,701   $79,467   $77,999  
    Noninterest income 10,218   11,824   8,269   22,042   18,424  
    Investment securities gains, net (42)  (27)  (6)  (69)  (48) 
    Net revenues used for efficiency ratio $49,847   $51,593   $47,964   $101,440   $96,375  
               
    Efficiency ratio (2) 54.83 % 50.77 % 54.80 % 52.76 % 56.24 %

    (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.


    Adjusted Allowance for Credit Losses Ratio June 30, March 31, December 31, September 30, June 30,
    (Dollars in thousands) 2021 2021 2020 2020 2020
    Loans held for investment, net of unearned income $3,330,156   $3,358,161   $3,482,223   $3,537,432   $3,597,039  
    PPP loans (184,390)  (248,682)  (259,260)  (331,703)  (327,648) 
    Core loans $3,145,766   $3,109,479   $3,222,963   $3,205,729   $3,269,391  
    Allowance for credit losses $48,000   $50,650   $55,500   $58,500   $55,644  
               
    Allowance for credit losses ratio 1.44 % 1.51 % 1.59 % 1.65 % 1.55 %
    Adjusted allowance for credit losses ratio(1) 1.53 % 1.63 % 1.72 % 1.82 % 1.70 %

    (1)  Allowance for credit losses divided by core loans.


    Core Loans/Core Commercial Loans June 30, March 31, December 31, September 30, June 30,
    (Dollars in thousands) 2021 2021 2020 2020 2020
    Commercial loans:          
    Commercial and industrial $982,092  $993,770  $1,055,488  $1,103,102  $1,084,527 
    Agricultural 107,834  117,099  116,392  129,453  140,837 
    Commercial real estate 1,705,789  1,693,592  1,732,361  1,707,035  1,764,739 
    Total commercial loans $2,795,715  $2,804,461  $2,904,241  $2,939,590  $2,990,103 
    Consumer loans:          
    Residential real estate $468,581  $474,433  $499,106  $521,570  $532,914 
    Other consumer 65,860  79,267  78,876  76,272  74,022 
    Total consumer loans $534,441  $553,700  $577,982  $597,842  $606,936 
    Loans held for investment, net of unearned income $3,330,156  $3,358,161  $3,482,223  $3,537,432  $3,597,039 
               
    PPP loans $184,390  $248,682  $259,260  $331,703  $327,648 
               
    Core loans(1) $3,145,766  $3,109,479  $3,222,963  $3,205,729  $3,269,391 
    Core commercial loans(2) $2,611,325  $2,555,779  $2,644,981  $2,607,887  $2,662,455 

    (1)  Core loans are calculated as loans held for investment, net of unearned income less PPP loans.
    (2)  Core commercial loans are calculated as total commercial loans less PPP loans.


    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. Funk Barry S. Ray
    Chief Executive Officer Senior Executive Vice President and Chief Financial Officer
    319.356.5800 319.356.5800

     


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