MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or
the "Company”) today reported results for the second quarter of
2023.
Second Quarter
2023 Highlights1
-
Net income of $7.6 million, or $0.48 per diluted common share,
compared to net income of $1.4 million, or $0.09 per diluted common
share, for the linked quarter.
-
Annualized loan growth of 10.6%.
-
Expenses of $34.9 million included $1.4 million of costs stemming
from a voluntary early retirement program and executive
relocation.
-
Nonperforming assets ratio improved 1 basis point (“bps”) to 0.22%;
net charge-off ratio was 0.09%.
Subsequent Events
-
On July 25, 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, “On our first quarter earnings call, we
introduced a comprehensive strategic plan designed to transform our
operations and become a higher performing bank over the medium
term. Though we are facing a challenging operating environment
driven by rising interest rates, we have made solid progress across
the five pillars of our plan highlighted by 10% loan growth,
annualized, that we achieved in the quarter. We have been adding
bankers in our major markets of the Twin Cities, Denver, and Metro
Iowa, which has been a major factor in this strong loan growth. So
far this year, we have added bankers in the Twin Cities and we will
continue to add bankers in our major markets as we continue to
build scale and take market share. Late in the second quarter, as
part of our specialty commercial loan growth initiative, we
recruited an established agribusiness team from a regional bank as
we strive to ‘up-tier’ in this attractive segment of the market.
This team has already started to bring full relationship business
to MidWestOne. We are also starting to see momentum in our
governmental lending group, where we have improved our focus and
execution. Lastly, we are seeing a nice increase in our wealth
management assets under management and revenues, as compared to the
first quarter, driven by the teams recruited in 2021 and 2022.”
Mr. Reeves concluded, “I’m very pleased with the
early results that we are achieving as we execute our strategic
plan. We are beginning to make investments in talent and our
platform to drive growth, while keeping our noninterest expense
relatively steady from the first quarter. We are driving
significant change across our organization, and I would like to
thank our employees for their hard work and dedication to our
Company, customers, and communities. Our results would not be
possible without their tireless efforts. I remain confident that we
are on a strong path to significantly improved financial
results.”
_____________________1 Second Quarter Summary
compares to the first quarter of 2023 (the “linked quarter”) unless
noted.
|
As of or for the quarter ended |
|
Six Months Ended |
(Dollars in thousands,
except per share amounts and as noted) |
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Financial
Results |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
45,708 |
|
|
$ |
36,030 |
|
|
$ |
52,072 |
|
|
$ |
81,738 |
|
|
$ |
101,052 |
|
Credit loss expense |
|
1,597 |
|
|
|
933 |
|
|
|
3,282 |
|
|
|
2,530 |
|
|
|
3,282 |
|
Noninterest expense |
|
34,919 |
|
|
|
33,319 |
|
|
|
32,082 |
|
|
|
68,238 |
|
|
|
63,725 |
|
Net
income |
|
7,594 |
|
|
|
1,397 |
|
|
|
12,621 |
|
|
|
8,991 |
|
|
|
26,516 |
|
Per Common Share |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.48 |
|
|
$ |
0.09 |
|
|
$ |
0.80 |
|
|
$ |
0.57 |
|
|
$ |
1.69 |
|
Book value |
|
31.96 |
|
|
|
31.94 |
|
|
|
31.26 |
|
|
|
31.96 |
|
|
|
31.26 |
|
Tangible book value(1) |
|
26.26 |
|
|
|
26.13 |
|
|
|
25.10 |
|
|
|
26.26 |
|
|
|
25.10 |
|
Balance Sheet & Credit Quality |
|
|
|
|
|
|
|
|
|
Loans In millions |
$ |
4,018.6 |
|
|
$ |
3,919.4 |
|
|
$ |
3,611.2 |
|
|
$ |
4,018.6 |
|
|
$ |
3,611.2 |
|
Investment securities In
millions |
|
2,003.1 |
|
|
|
2,071.8 |
|
|
|
2,402.8 |
|
|
|
2,003.1 |
|
|
|
2,402.8 |
|
Deposits In millions |
|
5,445.4 |
|
|
|
5,555.2 |
|
|
|
5,537.4 |
|
|
|
5,445.4 |
|
|
|
5,537.4 |
|
Net loan charge-offs In
millions |
|
0.9 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
1.2 |
|
|
|
2.5 |
|
Allowance for credit losses ratio |
|
1.25 |
% |
|
|
1.27 |
% |
|
|
1.45 |
% |
|
|
1.25 |
% |
|
|
1.45 |
% |
Selected Ratios |
|
|
|
|
|
|
|
|
|
Return on average assets |
|
0.47 |
% |
|
|
0.09 |
% |
|
|
0.83 |
% |
|
|
0.28 |
% |
|
|
0.89 |
% |
Net interest margin, tax
equivalent(1) |
|
2.52 |
% |
|
|
2.75 |
% |
|
|
2.87 |
% |
|
|
2.63 |
% |
|
|
2.83 |
% |
Return on average equity |
|
6.03 |
% |
|
|
1.14 |
% |
|
|
10.14 |
% |
|
|
3.61 |
% |
|
|
10.44 |
% |
Return on average tangible
equity(1) |
|
8.50 |
% |
|
|
2.70 |
% |
|
|
13.13 |
% |
|
|
5.65 |
% |
|
|
13.35 |
% |
Efficiency ratio(1) |
|
71.13 |
% |
|
|
62.32 |
% |
|
|
56.57 |
% |
|
|
66.56 |
% |
|
|
58.46 |
% |
(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 |
|
|
|
|
|
|
|
2Q23 vs |
2Q23 vs |
(Dollars in
thousands) |
2Q23 |
1Q23 |
2Q22 |
1Q23 |
2Q22 |
Net interest income |
$ |
36,962 |
|
$ |
40,076 |
|
$ |
39,725 |
|
(8 |
)% |
(7 |
)% |
Noninterest
income (loss) |
|
8,746 |
|
|
(4,046 |
) |
|
12,347 |
|
n / m |
|
(29 |
)% |
Total revenue, net of interest expense |
$ |
45,708 |
|
$ |
36,030 |
|
$ |
52,072 |
|
27 |
% |
(12 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results
are not meaningful (n/m) |
|
|
Total revenue for the second quarter of 2023
increased $9.7 million from the first quarter of 2023 as a result
of increased noninterest income, partially offset by lower net
interest income. Compared to the second quarter of 2022, total
revenue decreased $6.4 million due to lower net interest income and
noninterest income.
Net interest income of $37.0 million for the
second quarter of 2023 decreased from $40.1 million in the first
quarter of 2023, due primarily to higher funding costs and volumes
and lower interest earning asset volumes, partially offset by
higher interest earning asset yields. Compared to the second
quarter of 2022, net interest income decreased $2.8 million as a
result of higher funding costs and volumes, partially offset by
higher interest earning asset yields and volumes.
The Company’s tax equivalent net interest margin
was 2.52% in the second quarter of 2023 compared to 2.75% in the
first quarter of 2023, as higher earning asset yields were more
than offset by increased funding costs. The cost of interest
bearing liabilities increased 39 bps to 1.98%, due to interest
bearing deposit costs of 1.79%, short-term borrowing costs of
2.91%, and long-term debt costs of 6.38%, which increased 41 bps, 9
bps and 19 bps, respectively from the first quarter of 2023. Total
interest earning assets yield increased 12 bps primarily as a
result of an increase in loan yield of 10 bps, partially offset by
a decrease in investment security yield of 5 bps, respectively. Our
cycle-to-date interest bearing deposit beta was 31%.
The tax equivalent net interest margin was 2.52%
in the second quarter of 2023 compared to 2.87% in the second
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 153 bps to 1.98%, due to
interest bearing deposit costs of 1.79%, short-term borrowing costs
of 2.91%, and long-term debt costs of 6.38%, which increased 148
bps, 244 bps and 193 bps, respectively from the second quarter of
2022. Total interest earning assets yield increased 92 bps
primarily as a result of an increase in loan and securities yields
of 103 bps and 22 bps, respectively.
Noninterest Income (Loss) |
|
|
|
|
|
|
Change |
|
Change |
|
|
|
|
|
|
2Q23 vs |
|
2Q23 vs |
(In
thousands) |
2Q23 |
|
1Q23 |
|
2Q22 |
|
1Q23 |
|
2Q22 |
Investment
services and trust activities |
$ |
3,119 |
|
|
$ |
2,933 |
|
|
$ |
2,670 |
|
6 |
% |
|
17 |
% |
Service charges and fees |
|
2,047 |
|
|
|
2,008 |
|
|
|
1,717 |
|
2 |
% |
|
19 |
% |
Card revenue |
|
1,847 |
|
|
|
1,748 |
|
|
|
1,878 |
|
6 |
% |
|
(2 |
)% |
Loan revenue |
|
909 |
|
|
|
1,420 |
|
|
|
3,523 |
|
(36 |
)% |
|
(74 |
)% |
Bank-owned life insurance |
|
616 |
|
|
|
602 |
|
|
|
558 |
|
2 |
% |
|
10 |
% |
Investment securities (losses) gains, net |
|
(2 |
) |
|
|
(13,170 |
) |
|
|
395 |
|
n / m |
|
(101 |
)% |
Other |
|
210 |
|
|
|
413 |
|
|
|
1,606 |
|
(49 |
)% |
|
(87 |
)% |
Total noninterest income (loss) |
$ |
8,746 |
|
|
$ |
(4,046 |
) |
|
$ |
12,347 |
|
n / m |
|
(29 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income for the second quarter of
2023 increased $12.8 million from the linked quarter due primarily
to $13.2 million of investment security losses recognized in the
linked quarter, partially offset by a $0.5 million unfavorable
change in loan revenue. Loan revenue reflected an unfavorable
quarter-over-quarter change in the fair value of our mortgage
servicing rights of $0.9 million, partially offset by a $0.5
million favorable change in loan sale gains generated by our
governmental lending and mortgage origination businesses.
Noninterest income decreased $3.6 million from the second quarter
of 2022. The largest driver was a $0.6 million decrease in the fair
value of our mortgage servicing rights in the current quarter
compared to a $2.4 million increase in the second quarter of
2022.
EXPENSE REVIEW
Noninterest Expense |
|
|
|
Change |
Change |
|
|
|
|
2Q23 vs |
2Q23 vs |
(In
thousands) |
2Q23 |
1Q23 |
2Q22 |
1Q23 |
2Q22 |
Compensation and employee benefits |
$ |
20,386 |
|
$ |
19,607 |
|
$ |
18,955 |
4 |
% |
8 |
% |
Occupancy expense of premises,
net |
|
2,574 |
|
|
2,746 |
|
|
2,253 |
(6 |
)% |
14 |
% |
Equipment |
|
2,435 |
|
|
2,171 |
|
|
2,107 |
12 |
% |
16 |
% |
Legal and professional |
|
1,682 |
|
|
1,736 |
|
|
2,435 |
(3 |
)% |
(31 |
)% |
Data processing |
|
1,521 |
|
|
1,363 |
|
|
1,237 |
12 |
% |
23 |
% |
Marketing |
|
1,142 |
|
|
986 |
|
|
1,157 |
16 |
% |
(1 |
)% |
Amortization of
intangibles |
|
1,594 |
|
|
1,752 |
|
|
1,283 |
(9 |
)% |
24 |
% |
FDIC insurance |
|
862 |
|
|
749 |
|
|
420 |
15 |
% |
105 |
% |
Communications |
|
260 |
|
|
261 |
|
|
266 |
— |
% |
(2 |
)% |
Foreclosed assets, net |
|
(6 |
) |
|
(28 |
) |
|
4 |
(79 |
)% |
(250 |
)% |
Other |
|
2,469 |
|
|
1,976 |
|
|
1,965 |
25 |
% |
26 |
% |
Total noninterest expense |
$ |
34,919 |
|
$ |
33,319 |
|
$ |
32,082 |
5 |
% |
9 |
% |
Merger-related Expenses |
|
|
|
|
|
|
|
|
|
|
|
(In
thousands) |
2Q23 |
1Q23 |
2Q22 |
Compensation and employee benefits |
$ |
— |
|
$ |
70 |
|
$ |
150 |
Occupancy expense of premises,
net |
|
— |
|
|
— |
|
|
1 |
Equipment |
|
— |
|
|
— |
|
|
6 |
Legal and professional |
|
— |
|
|
— |
|
|
638 |
Data processing |
|
— |
|
|
65 |
|
|
38 |
Marketing |
|
— |
|
|
— |
|
|
65 |
Communications |
|
— |
|
|
— |
|
|
2 |
Other |
|
— |
|
|
1 |
|
|
1 |
Total merger-related expenses |
$ |
— |
|
$ |
136 |
|
$ |
901 |
Noninterest expense for the second quarter of
2023 increased $1.6 million, or 4.8%, from the linked quarter with
overall increases in all noninterest expense categories except
occupancy, legal and professional, amortization of intangibles, and
communications. The increase in compensation and employee benefits
reflected severance expense of $1.2 million in the current period,
as compared to $0.1 million in the first quarter of 2023. The
largest driver in the increase in ’other’ noninterest expense was
executive relocation expenses of $0.2 million.
Noninterest expense for the second quarter of
2023 increased $2.8 million, or 8.8%, from the second quarter of
2022. The increase primarily reflected costs associated with the
acquired operations of Iowa First Bancshares Corp. ("IOFB"), which
closed in the second quarter of 2022. Partially offsetting the
increases above was a decline of $0.8 million in legal and
professional expenses, primarily due to a decrease in legal and
professional merger-related expenses.
The Company’s effective income tax rate
decreased to 17.4% in the second quarter of 2023 compared to 21.4%
in the linked quarter. The decrease reflected an adjustment to
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 $6.52 billion at June 30,
2023 compared to $6.41 billion at March 31, 2023 and $6.44
billion at June 30, 2022. The increase from March 31,
2023 was driven by higher loan balances from organic growth and an
increase in cash and cash equivalents, partially offset by lower
investment security balances. In comparison to June 30, 2022,
the increase was primarily due to higher loan balances from organic
growth and an increase in cash and cash equivalents, partially
offset by lower security balances as a result of the balance sheet
repositioning executed in the first quarter of 2023.
Loans Held for Investment |
June 30, 2023 |
March 31, 2023 |
June 30, 2022 |
(Dollars in thousands) |
Balance |
% of Total |
Balance |
% of Total |
Balance |
% of Total |
Commercial and industrial |
$ |
1,089,269 |
|
27.1 |
% |
$ |
1,080,514 |
|
27.6 |
% |
$ |
986,137 |
|
27.3 |
% |
Agricultural |
|
106,148 |
|
2.6 |
|
|
106,641 |
|
2.7 |
|
|
110,263 |
|
3.1 |
|
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development |
|
313,836 |
|
7.8 |
|
|
320,924 |
|
8.2 |
|
|
224,470 |
|
6.2 |
|
Farmland |
|
183,378 |
|
4.6 |
|
|
182,528 |
|
4.7 |
|
|
181,820 |
|
5.0 |
|
Multifamily |
|
305,519 |
|
7.6 |
|
|
255,065 |
|
6.5 |
|
|
239,676 |
|
6.6 |
|
Other |
|
1,331,886 |
|
33.1 |
|
|
1,290,454 |
|
33.0 |
|
|
1,213,974 |
|
33.7 |
|
Total commercial real estate |
|
2,134,619 |
|
53.1 |
|
|
2,048,971 |
|
52.4 |
|
|
1,859,940 |
|
51.5 |
|
Residential real estate |
|
|
|
|
|
|
|
|
|
|
|
|
One-to-four family first liens |
|
448,096 |
|
11.2 |
|
|
448,459 |
|
11.4 |
|
|
430,157 |
|
11.9 |
|
One-to-four family junior liens |
|
168,755 |
|
4.2 |
|
|
162,403 |
|
4.1 |
|
|
148,647 |
|
4.1 |
|
Total residential real estate |
|
616,851 |
|
15.4 |
|
|
610,862 |
|
15.5 |
|
|
578,804 |
|
16.0 |
|
Consumer |
|
71,762 |
|
1.8 |
|
|
72,377 |
|
1.8 |
|
|
76,008 |
|
2.1 |
|
Loans held for investment, net of unearned income |
$ |
4,018,649 |
|
100.0 |
% |
$ |
3,919,365 |
|
100.0 |
% |
$ |
3,611,152 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commitments to extend credit |
$ |
1,296,719 |
|
|
|
$ |
1,205,902 |
|
|
|
$ |
1,117,754 |
|
|
|
Loans held for investment, net of unearned
income, increased $99.3 million, or 2.5%, to $4.02 billion from
$3.92 billion at March 31, 2023. This increase was driven by
new loan production in the second quarter of 2023.
Investment Securities |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(Dollars in
thousands) |
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Available for sale |
$ |
903,520 |
|
45.1 |
% |
$ |
954,074 |
|
46.1 |
% |
$ |
1,234,789 |
|
51.4 |
% |
Held to maturity |
|
1,099,569 |
|
54.9 |
% |
|
1,117,709 |
|
53.9 |
% |
|
1,168,042 |
|
48.6 |
% |
Total investment securities |
$ |
2,003,089 |
|
|
|
$ |
2,071,783 |
|
|
|
$ |
2,402,831 |
|
|
|
Investment securities at June 30, 2023 were
$2.00 billion, decreasing $68.7 million from March 31, 2023
and $399.7 million from June 30, 2022. The decrease from the
first quarter of 2023 was primarily due to paydowns, calls, and
maturities. The decrease from the second quarter of 2022 was
primarily due to the balance sheet repositioning completed in the
first quarter of 2023.
Deposits |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(Dollars in
thousands) |
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Noninterest bearing deposits |
$ |
897,923 |
|
16.5 |
% |
$ |
989,469 |
|
17.8 |
% |
$ |
1,114,825 |
|
20.1 |
% |
Interest checking
deposits |
|
1,397,276 |
|
25.7 |
|
|
1,476,948 |
|
26.6 |
|
|
1,749,748 |
|
31.7 |
|
Money market deposits |
|
1,096,432 |
|
20.1 |
|
|
969,238 |
|
17.4 |
|
|
1,070,912 |
|
19.3 |
|
Savings deposits |
|
585,967 |
|
10.8 |
|
|
631,811 |
|
11.4 |
|
|
715,829 |
|
12.9 |
|
Time deposits of $250 and
under |
|
648,586 |
|
11.9 |
|
|
599,302 |
|
10.8 |
|
|
547,427 |
|
9.9 |
|
Total core deposits |
|
4,626,184 |
|
85.0 |
|
|
4,666,768 |
|
84.0 |
|
|
5,198,741 |
|
93.9 |
|
Brokered time deposits |
|
365,623 |
|
6.7 |
|
|
366,539 |
|
6.6 |
|
|
— |
|
— |
|
Time deposits over $250 |
|
453,640 |
|
8.3 |
|
|
521,846 |
|
9.4 |
|
|
338,700 |
|
6.1 |
|
Total deposits |
$ |
5,445,447 |
|
100.0 |
% |
$ |
5,555,153 |
|
100.0 |
% |
$ |
5,537,441 |
|
100.0 |
% |
Total deposits declined $109.7 million, or 2.0%,
to $5.45 billion from $5.56 billion at March 31, 2023.
Brokered deposits decreased $0.9 million from $366.5 million at
March 31, 2023. Total uninsured deposits were estimated to be
$1.68 billion, which included $591.8 million of collateralized
municipal deposits at June 30, 2023. Total uninsured deposits,
excluding collateralized municipal deposits, represented
approximately 20.0% of total deposits.
Borrowed Funds |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(Dollars in
thousands) |
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Balance |
|
% of Total |
|
Short-term borrowings |
$ |
362,054 |
|
74.2 |
% |
$ |
143,981 |
|
51.1 |
% |
$ |
193,894 |
|
54.9 |
% |
Long-term debt |
|
125,752 |
|
25.8 |
% |
|
137,981 |
|
48.9 |
% |
|
159,168 |
|
45.1 |
% |
Total borrowed funds |
$ |
487,806 |
|
|
|
$ |
281,962 |
|
|
|
$ |
353,062 |
|
|
|
Total borrowed funds were $487.8 million at
June 30, 2023 an increase of $205.8 million from
March 31, 2023 and $134.7 million from June 30, 2022. The
increase was primarily due to Bank Term Funding Program borrowings
of $225 million, as compared to no borrowings in the prior periods,
and increased Federal Home Loan Bank overnight borrowings.
Capital |
June 30, |
|
March 31, |
|
June 30, |
(Dollars in
thousands) |
2023 (1) |
|
|
2023 |
|
|
|
2022 |
|
Total shareholders’ equity |
$ |
501,341 |
|
|
$ |
500,650 |
|
|
$ |
488,832 |
|
Accumulated other comprehensive loss |
|
(82,704 |
) |
|
|
(78,885 |
) |
|
|
(65,231 |
) |
MidWestOne Financial
Group, Inc. Consolidated |
|
|
|
|
|
Tier 1 leverage to average
assets ratio |
|
8.47 |
% |
|
|
8.30 |
% |
|
|
8.51 |
% |
Common equity tier 1 capital
to risk-weighted assets ratio |
|
9.36 |
% |
|
|
9.39 |
% |
|
|
8.82 |
% |
Tier 1 capital to
risk-weighted assets ratio |
|
10.15 |
% |
|
|
10.18 |
% |
|
|
9.61 |
% |
Total capital to risk-weighted
assets ratio |
|
12.26 |
% |
|
|
12.31 |
% |
|
|
11.73 |
% |
MidWestOne
Bank |
|
|
|
|
|
Tier 1 leverage to average
assets ratio |
|
9.42 |
% |
|
|
9.28 |
% |
|
|
9.70 |
% |
Common equity tier 1 capital
to risk-weighted assets ratio |
|
11.31 |
% |
|
|
11.40 |
% |
|
|
10.99 |
% |
Tier 1 capital to
risk-weighted assets ratio |
|
11.31 |
% |
|
|
11.40 |
% |
|
|
10.99 |
% |
Total
capital to risk-weighted assets ratio |
|
12.22 |
% |
|
|
12.31 |
% |
|
|
11.90 |
% |
(1) Regulatory capital ratios for June 30, 2023 are
preliminary |
|
|
|
|
|
Total shareholders’ equity at June 30, 2023
increased $0.7 million from March 31, 2023, driven by the
benefit of second quarter net income, partially offset by an
increase in accumulated other comprehensive loss and dividends paid
during the second quarter of 2023.
Accumulated other comprehensive loss at
June 30, 2023 increased $3.8 million compared to
March 31, 2023, primarily due to a decrease in available for
sale securities valuations. Accumulated other comprehensive loss
increased $17.5 million from June 30, 2022, driven by the
impact of higher interest rates on available for sale securities
valuations.
On July 25, 2023, the Board of Directors of
the Company declared a cash dividend of $0.2425 per common share.
The dividend is payable September 15, 2023, to shareholders of
record at the close of business on September 1, 2023.
No common shares were repurchased by the Company
during the period March 31, 2023 through June 30, 2023 or for the
subsequent period through August 1, 2023. The current share
repurchase program allows for the repurchase of up to $15.0
million.
CREDIT QUALITY
REVIEW
Credit Quality |
As of or For the Three Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
(Dollars in thousands) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
Credit loss expense related to
loans |
$ |
1,497 |
|
|
$ |
933 |
|
|
$ |
3,060 |
|
Net charge-offs |
|
897 |
|
|
|
333 |
|
|
|
281 |
|
Allowance for credit losses |
|
50,400 |
|
|
|
49,800 |
|
|
|
52,350 |
|
Pass |
$ |
3,769,309 |
|
|
$ |
3,728,522 |
|
|
$ |
3,402,508 |
|
Special Mention / Watch |
|
133,904 |
|
|
|
92,075 |
|
|
|
111,893 |
|
Classified |
|
115,436 |
|
|
|
98,768 |
|
|
|
96,751 |
|
Loans greater than 30 days past due and accruing |
$ |
6,201 |
|
|
$ |
4,932 |
|
|
$ |
12,349 |
|
Nonperforming loans |
$ |
14,448 |
|
|
$ |
14,442 |
|
|
$ |
27,337 |
|
Nonperforming assets |
|
14,448 |
|
|
|
14,442 |
|
|
|
27,621 |
|
Net charge-off ratio(1) |
|
0.09 |
% |
|
|
0.03 |
% |
|
|
0.03 |
% |
Classified loans ratio(2) |
|
2.87 |
% |
|
|
2.52 |
% |
|
|
2.68 |
% |
Nonperforming loans
ratio(3) |
|
0.36 |
% |
|
|
0.37 |
% |
|
|
0.76 |
% |
Nonperforming assets
ratio(4) |
|
0.22 |
% |
|
|
0.23 |
% |
|
|
0.43 |
% |
Allowance for credit losses
ratio(5) |
|
1.25 |
% |
|
|
1.27 |
% |
|
|
1.45 |
% |
Allowance for credit losses to
nonaccrual loans ratio(6) |
|
355.03 |
% |
|
|
344.88 |
% |
|
|
201.52 |
% |
(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 nonperforming assets ratios remained stable and improved
from the prior year period. The nonperforming loans ratio declined
1 bps from the linked quarter and 40 bps from the prior year to
0.36%. The classified loans ratio increased 35 bps from the linked
quarter and 19 bps from the prior year. The linked quarter increase
in classified loans was primarily due to the deterioration of two
non-owner occupied commercial real estate loans. Further, the net
charge-off ratio increased 6 bps from the linked quarter and 6 bps
from the prior year.
As of June 30, 2023, the allowance for
credit losses was $50.4 million, or 1.25% of loans held for
investment, net of unearned income, compared with $49.8 million, or
1.27% of loans held for investment, net of unearned income, at
March 31, 2023. Credit loss expense of $1.6 million in the
second 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
March 31, 2023 |
$ |
14,440 |
|
|
$ |
2 |
|
|
$ |
14,442 |
|
Loans placed on nonaccrual or
90+ days past due & still accruing |
|
1,828 |
|
|
|
333 |
|
|
|
2,161 |
|
Proceeds related to repayment
or sale |
|
(1,054 |
) |
|
|
— |
|
|
|
(1,054 |
) |
Loans returned to accrual
status or no longer past due |
|
(45 |
) |
|
|
— |
|
|
|
(45 |
) |
Charge-offs |
|
(973 |
) |
|
|
(80 |
) |
|
|
(1,053 |
) |
Transfer to nonaccrual |
|
— |
|
|
|
(3 |
) |
|
|
(3 |
) |
Balance at June 30,
2023 |
$ |
14,196 |
|
|
$ |
252 |
|
|
$ |
14,448 |
|
CONFERENCE CALL DETAILS
The Company will host a conference call for
investors at 11:00 a.m. CT on Tuesday, August 1, 2023. To
participate, you may pre-register for this call utilizing the
following link:
https://www.netroadshow.com/events/login?show=c7140c96&confId=51647.
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 231141 at least fifteen
minutes before the call start time. If you are unable to
participate on the call, a replay will be available until October
26, 2023, by calling 1-866-813-9403 and using the replay access
code of 868948. 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
(including with IOFB), 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 actual
and expected 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 war in 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
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
(In thousands) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
75,955 |
|
|
$ |
63,945 |
|
|
$ |
83,990 |
|
|
$ |
77,513 |
|
|
$ |
60,622 |
|
Interest earning deposits in
banks |
|
68,603 |
|
|
|
5,273 |
|
|
|
2,445 |
|
|
|
1,001 |
|
|
|
23,242 |
|
Total cash and cash equivalents |
|
144,558 |
|
|
|
69,218 |
|
|
|
86,435 |
|
|
|
78,514 |
|
|
|
83,864 |
|
Debt securities available for
sale at fair value |
|
903,520 |
|
|
|
954,074 |
|
|
|
1,153,547 |
|
|
|
1,153,304 |
|
|
|
1,234,789 |
|
Held to maturity securities at
amortized cost |
|
1,099,569 |
|
|
|
1,117,709 |
|
|
|
1,129,421 |
|
|
|
1,146,583 |
|
|
|
1,168,042 |
|
Total securities |
|
2,003,089 |
|
|
|
2,071,783 |
|
|
|
2,282,968 |
|
|
|
2,299,887 |
|
|
|
2,402,831 |
|
Loans held for sale |
|
2,821 |
|
|
|
2,553 |
|
|
|
612 |
|
|
|
2,320 |
|
|
|
4,991 |
|
Gross loans held for
investment |
|
4,031,377 |
|
|
|
3,932,900 |
|
|
|
3,854,791 |
|
|
|
3,761,664 |
|
|
|
3,627,728 |
|
Unearned income, net |
|
(12,728 |
) |
|
|
(13,535 |
) |
|
|
(14,267 |
) |
|
|
(15,375 |
) |
|
|
(16,576 |
) |
Loans held for investment, net of unearned income |
|
4,018,649 |
|
|
|
3,919,365 |
|
|
|
3,840,524 |
|
|
|
3,746,289 |
|
|
|
3,611,152 |
|
Allowance for credit
losses |
|
(50,400 |
) |
|
|
(49,800 |
) |
|
|
(49,200 |
) |
|
|
(52,100 |
) |
|
|
(52,350 |
) |
Total loans held for investment, net |
|
3,968,249 |
|
|
|
3,869,565 |
|
|
|
3,791,324 |
|
|
|
3,694,189 |
|
|
|
3,558,802 |
|
Premises and equipment,
net |
|
85,831 |
|
|
|
86,208 |
|
|
|
87,125 |
|
|
|
87,732 |
|
|
|
89,048 |
|
Goodwill |
|
62,477 |
|
|
|
62,477 |
|
|
|
62,477 |
|
|
|
62,477 |
|
|
|
62,477 |
|
Other intangible assets,
net |
|
26,969 |
|
|
|
28,563 |
|
|
|
30,315 |
|
|
|
32,086 |
|
|
|
33,874 |
|
Foreclosed assets, net |
|
— |
|
|
|
— |
|
|
|
103 |
|
|
|
103 |
|
|
|
284 |
|
Other assets |
|
227,495 |
|
|
|
219,585 |
|
|
|
236,517 |
|
|
|
233,753 |
|
|
|
206,320 |
|
Total assets |
$ |
6,521,489 |
|
|
$ |
6,409,952 |
|
|
$ |
6,577,876 |
|
|
$ |
6,491,061 |
|
|
$ |
6,442,491 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Noninterest bearing
deposits |
$ |
897,923 |
|
|
$ |
989,469 |
|
|
$ |
1,053,450 |
|
|
$ |
1,139,694 |
|
|
$ |
1,114,825 |
|
Interest bearing deposits |
|
4,547,524 |
|
|
|
4,565,684 |
|
|
|
4,415,492 |
|
|
|
4,337,088 |
|
|
|
4,422,616 |
|
Total deposits |
|
5,445,447 |
|
|
|
5,555,153 |
|
|
|
5,468,942 |
|
|
|
5,476,782 |
|
|
|
5,537,441 |
|
Short-term borrowings |
|
362,054 |
|
|
|
143,981 |
|
|
|
391,873 |
|
|
|
304,536 |
|
|
|
193,894 |
|
Long-term debt |
|
125,752 |
|
|
|
137,981 |
|
|
|
139,210 |
|
|
|
154,190 |
|
|
|
159,168 |
|
Other liabilities |
|
86,895 |
|
|
|
72,187 |
|
|
|
85,058 |
|
|
|
83,324 |
|
|
|
63,156 |
|
Total liabilities |
|
6,020,148 |
|
|
|
5,909,302 |
|
|
|
6,085,083 |
|
|
|
6,018,832 |
|
|
|
5,953,659 |
|
SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
Common stock |
|
16,581 |
|
|
|
16,581 |
|
|
|
16,581 |
|
|
|
16,581 |
|
|
|
16,581 |
|
Additional paid-in
capital |
|
301,424 |
|
|
|
300,966 |
|
|
|
302,085 |
|
|
|
301,418 |
|
|
|
300,859 |
|
Retained earnings |
|
290,548 |
|
|
|
286,767 |
|
|
|
289,289 |
|
|
|
276,998 |
|
|
|
262,395 |
|
Treasury stock |
|
(24,508 |
) |
|
|
(24,779 |
) |
|
|
(26,115 |
) |
|
|
(26,145 |
) |
|
|
(25,772 |
) |
Accumulated other
comprehensive loss |
|
(82,704 |
) |
|
|
(78,885 |
) |
|
|
(89,047 |
) |
|
|
(96,623 |
) |
|
|
(65,231 |
) |
Total shareholders’ equity |
|
501,341 |
|
|
|
500,650 |
|
|
|
492,793 |
|
|
|
472,229 |
|
|
|
488,832 |
|
Total liabilities and shareholders’ equity |
$ |
6,521,489 |
|
|
$ |
6,409,952 |
|
|
$ |
6,577,876 |
|
|
$ |
6,491,061 |
|
|
$ |
6,442,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MIDWESTONE FINANCIAL
GROUP, INC. AND SUBSIDIARIES FIVE QUARTER AND YEAR
TO DATE CONSOLIDATED STATEMENTS OF INCOME
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
June 30, |
|
June 30, |
(In thousands, except per share data) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
$ |
49,726 |
|
|
$ |
46,490 |
|
|
$ |
43,769 |
|
|
$ |
40,451 |
|
|
$ |
32,746 |
|
$ |
96,216 |
|
|
$ |
64,064 |
|
Taxable investment securities |
|
9,734 |
|
|
|
10,444 |
|
|
|
10,685 |
|
|
|
10,635 |
|
|
|
9,576 |
|
|
20,178 |
|
|
|
17,699 |
|
Tax-exempt investment securities |
|
1,822 |
|
|
|
2,127 |
|
|
|
2,303 |
|
|
|
2,326 |
|
|
|
2,367 |
|
|
3,949 |
|
|
|
4,750 |
|
Other |
|
68 |
|
|
|
244 |
|
|
|
— |
|
|
|
9 |
|
|
|
40 |
|
|
312 |
|
|
|
68 |
|
Total interest income |
|
61,350 |
|
|
|
59,305 |
|
|
|
56,757 |
|
|
|
53,421 |
|
|
|
44,729 |
|
|
120,655 |
|
|
|
86,581 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
20,117 |
|
|
|
15,319 |
|
|
|
9,127 |
|
|
|
5,035 |
|
|
|
3,173 |
|
|
35,436 |
|
|
|
6,083 |
|
Short-term borrowings |
|
2,118 |
|
|
|
1,786 |
|
|
|
1,955 |
|
|
|
767 |
|
|
|
229 |
|
|
3,904 |
|
|
|
348 |
|
Long-term debt |
|
2,153 |
|
|
|
2,124 |
|
|
|
2,111 |
|
|
|
1,886 |
|
|
|
1,602 |
|
|
4,277 |
|
|
|
3,089 |
|
Total interest expense |
|
24,388 |
|
|
|
19,229 |
|
|
|
13,193 |
|
|
|
7,688 |
|
|
|
5,004 |
|
|
43,617 |
|
|
|
9,520 |
|
Net interest income |
|
36,962 |
|
|
|
40,076 |
|
|
|
43,564 |
|
|
|
45,733 |
|
|
|
39,725 |
|
|
77,038 |
|
|
|
77,061 |
|
Credit loss expense |
|
1,597 |
|
|
|
933 |
|
|
|
572 |
|
|
|
638 |
|
|
|
3,282 |
|
|
2,530 |
|
|
|
3,282 |
|
Net interest income after credit loss expense |
|
35,365 |
|
|
|
39,143 |
|
|
|
42,992 |
|
|
|
45,095 |
|
|
|
36,443 |
|
|
74,508 |
|
|
|
73,779 |
|
Noninterest income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment services and trust activities |
|
3,119 |
|
|
|
2,933 |
|
|
|
2,666 |
|
|
|
2,876 |
|
|
|
2,670 |
|
|
6,052 |
|
|
|
5,681 |
|
Service charges and fees |
|
2,047 |
|
|
|
2,008 |
|
|
|
2,028 |
|
|
|
2,075 |
|
|
|
1,717 |
|
|
4,055 |
|
|
|
3,374 |
|
Card revenue |
|
1,847 |
|
|
|
1,748 |
|
|
|
1,784 |
|
|
|
1,898 |
|
|
|
1,878 |
|
|
3,595 |
|
|
|
3,528 |
|
Loan revenue |
|
909 |
|
|
|
1,420 |
|
|
|
966 |
|
|
|
1,722 |
|
|
|
3,523 |
|
|
2,329 |
|
|
|
7,816 |
|
Bank-owned life insurance |
|
616 |
|
|
|
602 |
|
|
|
637 |
|
|
|
579 |
|
|
|
558 |
|
|
1,218 |
|
|
|
1,089 |
|
Investment securities (losses) gains, net |
|
(2 |
) |
|
|
(13,170 |
) |
|
|
(1 |
) |
|
|
(163 |
) |
|
|
395 |
|
|
(13,172 |
) |
|
|
435 |
|
Other |
|
210 |
|
|
|
413 |
|
|
|
2,860 |
|
|
|
3,601 |
|
|
|
1,606 |
|
|
623 |
|
|
|
2,068 |
|
Total noninterest income (loss) |
|
8,746 |
|
|
|
(4,046 |
) |
|
|
10,940 |
|
|
|
12,588 |
|
|
|
12,347 |
|
|
4,700 |
|
|
|
23,991 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
20,386 |
|
|
|
19,607 |
|
|
|
20,438 |
|
|
|
20,046 |
|
|
|
18,955 |
|
|
39,993 |
|
|
|
37,619 |
|
Occupancy expense of premises, net |
|
2,574 |
|
|
|
2,746 |
|
|
|
2,663 |
|
|
|
2,577 |
|
|
|
2,253 |
|
|
5,320 |
|
|
|
5,032 |
|
Equipment |
|
2,435 |
|
|
|
2,171 |
|
|
|
2,327 |
|
|
|
2,358 |
|
|
|
2,107 |
|
|
4,606 |
|
|
|
4,008 |
|
Legal and professional |
|
1,682 |
|
|
|
1,736 |
|
|
|
1,846 |
|
|
|
2,012 |
|
|
|
2,435 |
|
|
3,418 |
|
|
|
4,788 |
|
Data processing |
|
1,521 |
|
|
|
1,363 |
|
|
|
1,375 |
|
|
|
1,731 |
|
|
|
1,237 |
|
|
2,884 |
|
|
|
2,468 |
|
Marketing |
|
1,142 |
|
|
|
986 |
|
|
|
947 |
|
|
|
1,139 |
|
|
|
1,157 |
|
|
2,128 |
|
|
|
2,186 |
|
Amortization of intangibles |
|
1,594 |
|
|
|
1,752 |
|
|
|
1,770 |
|
|
|
1,789 |
|
|
|
1,283 |
|
|
3,346 |
|
|
|
2,510 |
|
FDIC insurance |
|
862 |
|
|
|
749 |
|
|
|
405 |
|
|
|
415 |
|
|
|
420 |
|
|
1,611 |
|
|
|
840 |
|
Communications |
|
260 |
|
|
|
261 |
|
|
|
285 |
|
|
|
302 |
|
|
|
266 |
|
|
521 |
|
|
|
538 |
|
Foreclosed assets, net |
|
(6 |
) |
|
|
(28 |
) |
|
|
48 |
|
|
|
42 |
|
|
|
4 |
|
|
(34 |
) |
|
|
(108 |
) |
Other |
|
2,469 |
|
|
|
1,976 |
|
|
|
2,336 |
|
|
|
2,212 |
|
|
|
1,965 |
|
|
4,445 |
|
|
|
3,844 |
|
Total noninterest expense |
|
34,919 |
|
|
|
33,319 |
|
|
|
34,440 |
|
|
|
34,623 |
|
|
|
32,082 |
|
|
68,238 |
|
|
|
63,725 |
|
Income before income tax expense |
|
9,192 |
|
|
|
1,778 |
|
|
|
19,492 |
|
|
|
23,060 |
|
|
|
16,708 |
|
|
10,970 |
|
|
|
34,045 |
|
Income tax expense |
|
1,598 |
|
|
|
381 |
|
|
|
3,490 |
|
|
|
4,743 |
|
|
|
4,087 |
|
|
1,979 |
|
|
|
7,529 |
|
Net income |
$ |
7,594 |
|
|
$ |
1,397 |
|
|
$ |
16,002 |
|
|
$ |
18,317 |
|
|
$ |
12,621 |
|
$ |
8,991 |
|
|
$ |
26,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.48 |
|
|
$ |
0.09 |
|
|
$ |
1.02 |
|
|
$ |
1.17 |
|
|
$ |
0.81 |
|
$ |
0.57 |
|
|
$ |
1.69 |
|
Diluted |
$ |
0.48 |
|
|
$ |
0.09 |
|
|
$ |
1.02 |
|
|
$ |
1.17 |
|
|
$ |
0.80 |
|
$ |
0.57 |
|
|
$ |
1.69 |
|
Weighted average basic common
shares outstanding |
|
15,680 |
|
|
|
15,650 |
|
|
|
15,624 |
|
|
|
15,623 |
|
|
|
15,668 |
|
|
15,665 |
|
|
|
15,675 |
|
Weighted average diluted
common shares outstanding |
|
15,689 |
|
|
|
15,691 |
|
|
|
15,693 |
|
|
|
15,654 |
|
|
|
15,688 |
|
|
15,688 |
|
|
|
15,703 |
|
Dividends paid per common
share |
$ |
0.2425 |
|
|
$ |
0.2425 |
|
|
$ |
0.2375 |
|
|
$ |
0.2375 |
|
|
$ |
0.2375 |
|
$ |
0.4850 |
|
|
$ |
0.4750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Earnings: |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
36,962 |
|
|
$ |
40,076 |
|
|
$ |
39,725 |
|
|
$ |
77,038 |
|
|
$ |
77,061 |
|
Noninterest (loss) income |
|
8,746 |
|
|
|
(4,046 |
) |
|
|
12,347 |
|
|
|
4,700 |
|
|
|
23,991 |
|
Total revenue, net of interest
expense |
|
45,708 |
|
|
|
36,030 |
|
|
|
52,072 |
|
|
|
81,738 |
|
|
|
101,052 |
|
Credit loss expense |
|
1,597 |
|
|
|
933 |
|
|
|
3,282 |
|
|
|
2,530 |
|
|
|
3,282 |
|
Noninterest expense |
|
34,919 |
|
|
|
33,319 |
|
|
|
32,082 |
|
|
|
68,238 |
|
|
|
63,725 |
|
Income before income tax
expense |
|
9,192 |
|
|
|
1,778 |
|
|
|
16,708 |
|
|
|
10,970 |
|
|
|
34,045 |
|
Income tax expense |
|
1,598 |
|
|
|
381 |
|
|
|
4,087 |
|
|
|
1,979 |
|
|
|
7,529 |
|
Net income |
$ |
7,594 |
|
|
$ |
1,397 |
|
|
$ |
12,621 |
|
|
$ |
8,991 |
|
|
$ |
26,516 |
|
Per Share
Data: |
|
|
|
|
|
|
|
|
|
Diluted earnings |
$ |
0.48 |
|
|
$ |
0.09 |
|
|
$ |
0.80 |
|
|
$ |
0.57 |
|
|
$ |
1.69 |
|
Book value |
|
31.96 |
|
|
|
31.94 |
|
|
|
31.26 |
|
|
|
31.96 |
|
|
|
31.26 |
|
Tangible book value(1) |
|
26.26 |
|
|
|
26.13 |
|
|
|
25.10 |
|
|
|
26.26 |
|
|
|
25.10 |
|
Ending Balance
Sheet: |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
6,521,489 |
|
|
$ |
6,409,952 |
|
|
$ |
6,442,491 |
|
|
$ |
6,521,489 |
|
|
$ |
6,442,491 |
|
Loans held for investment, net
of unearned income |
|
4,018,649 |
|
|
|
3,919,365 |
|
|
|
3,611,152 |
|
|
|
4,018,649 |
|
|
|
3,611,152 |
|
Total securities |
|
2,003,089 |
|
|
|
2,071,783 |
|
|
|
2,402,831 |
|
|
|
2,003,089 |
|
|
|
2,402,831 |
|
Total deposits |
|
5,445,447 |
|
|
|
5,555,153 |
|
|
|
5,537,441 |
|
|
|
5,445,447 |
|
|
|
5,537,441 |
|
Short-term borrowings |
|
362,054 |
|
|
|
143,981 |
|
|
|
193,894 |
|
|
|
362,054 |
|
|
|
193,894 |
|
Long-term debt |
|
125,752 |
|
|
|
137,981 |
|
|
|
159,168 |
|
|
|
125,752 |
|
|
|
159,168 |
|
Total shareholders’
equity |
|
501,341 |
|
|
|
500,650 |
|
|
|
488,832 |
|
|
|
501,341 |
|
|
|
488,832 |
|
Average Balance
Sheet: |
|
|
|
|
|
|
|
|
|
Average total assets |
$ |
6,465,810 |
|
|
$ |
6,524,065 |
|
|
$ |
6,078,950 |
|
|
$ |
6,494,777 |
|
|
$ |
5,997,231 |
|
Average total loans |
|
4,003,717 |
|
|
|
3,867,110 |
|
|
|
3,326,269 |
|
|
|
3,935,791 |
|
|
|
3,286,083 |
|
Average total deposits |
|
5,454,517 |
|
|
|
5,546,694 |
|
|
|
5,181,927 |
|
|
|
5,500,350 |
|
|
|
5,113,368 |
|
Financial
Ratios: |
|
|
|
|
|
|
|
|
|
Return on average assets |
|
0.47 |
% |
|
|
0.09 |
% |
|
|
0.83 |
% |
|
|
0.28 |
% |
|
|
0.89 |
% |
Return on average equity |
|
6.03 |
% |
|
|
1.14 |
% |
|
|
10.14 |
% |
|
|
3.61 |
% |
|
|
10.44 |
% |
Return on average tangible
equity(1) |
|
8.50 |
% |
|
|
2.70 |
% |
|
|
13.13 |
% |
|
|
5.65 |
% |
|
|
13.35 |
% |
Efficiency ratio(1) |
|
71.13 |
% |
|
|
62.32 |
% |
|
|
56.57 |
% |
|
|
66.56 |
% |
|
|
58.46 |
% |
Net interest margin, tax
equivalent(1) |
|
2.52 |
% |
|
|
2.75 |
% |
|
|
2.87 |
% |
|
|
2.63 |
% |
|
|
2.83 |
% |
Loans to deposits ratio |
|
73.80 |
% |
|
|
70.55 |
% |
|
|
65.21 |
% |
|
|
73.80 |
% |
|
|
65.21 |
% |
Uninsured deposits excluding
collateralized municipal deposits ratio |
|
20.05 |
% |
|
|
18.54 |
% |
|
|
24.11 |
% |
|
|
20.05 |
% |
|
|
24.11 |
% |
Common equity ratio |
|
7.69 |
% |
|
|
7.81 |
% |
|
|
7.59 |
% |
|
|
7.69 |
% |
|
|
7.59 |
% |
Tangible common equity
ratio(1) |
|
6.40 |
% |
|
|
6.48 |
% |
|
|
6.18 |
% |
|
|
6.40 |
% |
|
|
6.18 |
% |
Credit Risk
Profile: |
|
|
|
|
|
|
|
|
|
Total nonperforming loans |
$ |
14,448 |
|
|
$ |
14,442 |
|
|
$ |
27,337 |
|
|
$ |
14,448 |
|
|
$ |
27,337 |
|
Nonperforming loans ratio |
|
0.36 |
% |
|
|
0.37 |
% |
|
|
0.76 |
% |
|
|
0.36 |
% |
|
|
0.76 |
% |
Total nonperforming
assets |
$ |
14,448 |
|
|
$ |
14,442 |
|
|
$ |
27,621 |
|
|
$ |
14,448 |
|
|
$ |
27,621 |
|
Nonperforming assets
ratio |
|
0.22 |
% |
|
|
0.23 |
% |
|
|
0.43 |
% |
|
|
0.22 |
% |
|
|
0.43 |
% |
Net charge-offs |
$ |
897 |
|
|
$ |
333 |
|
|
$ |
281 |
|
|
$ |
1,230 |
|
|
$ |
2,503 |
|
Net charge-off ratio |
|
0.09 |
% |
|
|
0.03 |
% |
|
|
0.03 |
% |
|
|
0.06 |
% |
|
|
0.15 |
% |
Allowance for credit
losses |
$ |
50,400 |
|
|
$ |
49,800 |
|
|
$ |
52,350 |
|
|
$ |
50,400 |
|
|
$ |
52,350 |
|
Allowance for credit losses
ratio |
|
1.25 |
% |
|
|
1.27 |
% |
|
|
1.45 |
% |
|
|
1.25 |
% |
|
|
1.45 |
% |
Allowance for credit losses to
nonaccrual ratio |
|
355.03 |
% |
|
|
344.88 |
% |
|
|
201.52 |
% |
|
|
355.03 |
% |
|
|
201.52 |
% |
|
|
|
|
|
|
|
|
|
|
(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 SUBSIDIARIESAVERAGE BALANCE SHEET
AND YIELD ANALYSIS
|
Three Months Ended |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
(Dollars in
thousands) |
AverageBalance |
|
InterestIncome/Expense |
|
AverageYield/Cost |
|
AverageBalance |
|
InterestIncome/Expense |
|
AverageYield/Cost |
|
Average Balance |
|
InterestIncome/Expense |
|
AverageYield/Cost |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees (1)(2)(3) |
$ |
4,003,717 |
|
$ |
50,439 |
|
5.05 |
% |
|
$ |
3,867,110 |
|
$ |
47,206 |
|
4.95 |
% |
|
$ |
3,326,269 |
|
$ |
33,315 |
|
4.02 |
% |
Taxable investment
securities |
|
1,698,003 |
|
|
9,734 |
|
2.30 |
% |
|
|
1,811,388 |
|
|
10,444 |
|
2.34 |
% |
|
|
1,923,155 |
|
|
9,576 |
|
2.00 |
% |
Tax-exempt investment
securities (2)(4) |
|
345,934 |
|
|
2,253 |
|
2.61 |
% |
|
|
397,110 |
|
|
2,649 |
|
2.71 |
% |
|
|
439,385 |
|
|
2,975 |
|
2.72 |
% |
Total securities held for investment(2) |
|
2,043,937 |
|
|
11,987 |
|
2.35 |
% |
|
|
2,208,498 |
|
|
13,093 |
|
2.40 |
% |
|
|
2,362,540 |
|
|
12,551 |
|
2.13 |
% |
Other |
|
9,078 |
|
|
68 |
|
3.00 |
% |
|
|
24,848 |
|
|
244 |
|
3.98 |
% |
|
|
30,016 |
|
|
40 |
|
0.53 |
% |
Total interest earning assets(2) |
$ |
6,056,732 |
|
$ |
62,494 |
|
4.14 |
% |
|
$ |
6,100,456 |
|
$ |
60,543 |
|
4.02 |
% |
|
$ |
5,718,825 |
|
$ |
45,906 |
|
3.22 |
% |
Other assets |
|
409,078 |
|
|
|
|
|
|
423,609 |
|
|
|
|
|
|
360,125 |
|
|
|
|
Total assets |
$ |
6,465,810 |
|
|
|
|
|
$ |
6,524,065 |
|
|
|
|
|
$ |
6,078,950 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking
deposits |
$ |
1,420,741 |
|
$ |
1,971 |
|
0.56 |
% |
|
$ |
1,515,845 |
|
$ |
1,849 |
|
0.49 |
% |
|
$ |
1,641,337 |
|
$ |
1,189 |
|
0.29 |
% |
Money market deposits |
|
999,436 |
|
|
5,299 |
|
2.13 |
% |
|
|
930,543 |
|
|
3,269 |
|
1.42 |
% |
|
|
1,003,386 |
|
|
571 |
|
0.23 |
% |
Savings deposits |
|
603,905 |
|
|
288 |
|
0.19 |
% |
|
|
653,043 |
|
|
272 |
|
0.17 |
% |
|
|
662,449 |
|
|
287 |
|
0.17 |
% |
Time deposits |
|
1,490,332 |
|
|
12,559 |
|
3.38 |
% |
|
|
1,417,688 |
|
|
9,929 |
|
2.84 |
% |
|
|
836,143 |
|
|
1,126 |
|
0.54 |
% |
Total interest bearing deposits |
|
4,514,414 |
|
|
20,117 |
|
1.79 |
% |
|
|
4,517,119 |
|
|
15,319 |
|
1.38 |
% |
|
|
4,143,315 |
|
|
3,173 |
|
0.31 |
% |
Securities sold under
agreements to repurchase |
|
159,583 |
|
|
423 |
|
1.06 |
% |
|
|
145,809 |
|
|
450 |
|
1.25 |
% |
|
|
154,107 |
|
|
111 |
|
0.29 |
% |
Other short-term
borrowings |
|
132,495 |
|
|
1,695 |
|
5.13 |
% |
|
|
111,306 |
|
|
1,336 |
|
4.87 |
% |
|
|
41,859 |
|
|
118 |
|
1.13 |
% |
Short-term borrowings |
|
292,078 |
|
|
2,118 |
|
2.91 |
% |
|
|
257,115 |
|
|
1,786 |
|
2.82 |
% |
|
|
195,966 |
|
|
229 |
|
0.47 |
% |
Long-term debt |
|
135,329 |
|
|
2,153 |
|
6.38 |
% |
|
|
139,208 |
|
|
2,124 |
|
6.19 |
% |
|
|
144,440 |
|
|
1,602 |
|
4.45 |
% |
Total borrowed funds |
|
427,407 |
|
|
4,271 |
|
4.01 |
% |
|
|
396,323 |
|
|
3,910 |
|
4.00 |
% |
|
|
340,406 |
|
|
1,831 |
|
2.16 |
% |
Total interest bearing liabilities |
$ |
4,941,821 |
|
$ |
24,388 |
|
1.98 |
% |
|
$ |
4,913,442 |
|
$ |
19,229 |
|
1.59 |
% |
|
$ |
4,483,721 |
|
$ |
5,004 |
|
0.45 |
% |
Noninterest bearing
deposits |
|
940,103 |
|
|
|
|
|
|
1,029,575 |
|
|
|
|
|
|
1,038,612 |
|
|
|
|
Other liabilities |
|
78,898 |
|
|
|
|
|
|
82,501 |
|
|
|
|
|
|
57,157 |
|
|
|
|
Shareholders’ equity |
|
504,988 |
|
|
|
|
|
|
498,547 |
|
|
|
|
|
|
499,460 |
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
6,465,810 |
|
|
|
|
|
$ |
6,524,065 |
|
|
|
|
|
$ |
6,078,950 |
|
|
|
|
Net interest income(2) |
|
|
$ |
38,106 |
|
|
|
|
|
$ |
41,314 |
|
|
|
|
|
$ |
40,902 |
|
|
Net interest spread(2) |
|
|
|
|
2.16 |
% |
|
|
|
|
|
2.43 |
% |
|
|
|
|
|
2.77 |
% |
Net interest margin(2) |
|
|
|
|
2.52 |
% |
|
|
|
|
|
2.75 |
% |
|
|
|
|
|
2.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits(5) |
$ |
5,454,517 |
|
$ |
20,117 |
|
1.48 |
% |
|
$ |
5,546,694 |
|
$ |
15,319 |
|
1.12 |
% |
|
$ |
5,181,927 |
|
$ |
3,173 |
|
0.25 |
% |
Cost of funds(6) |
|
|
|
|
1.66 |
% |
|
|
|
|
|
1.31 |
% |
|
|
|
|
|
0.36 |
% |
(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 $79
thousand, $95 thousand, and $(31) thousand for the three months
ended June 30, 2023, March 31, 2023, and June 30,
2022, respectively. Loan purchase discount accretion was $1.0
million, $1.2 million, and $528 thousand for the three months ended
June 30, 2023, March 31, 2023, and June 30, 2022,
respectively. Tax equivalent adjustments were $713 thousand, $716
thousand, and $569 thousand for the three months ended
June 30, 2023, March 31, 2023, and June 30, 2022,
respectively. The federal statutory tax rate utilized was 21%.(4)
Interest income includes tax equivalent adjustments of $431
thousand, $522 thousand, and $608 thousand for the three months
ended June 30, 2023, March 31, 2023, and June 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 SUBSIDIARIESAVERAGE BALANCE SHEET
AND YIELD ANALYSIS
|
Six Months Ended |
|
June 30, 2023 |
|
June 30, 2022 |
(Dollars in
thousands) |
AverageBalance |
|
InterestIncome/Expense |
|
AverageYield/Cost |
|
AverageBalance |
|
InterestIncome/Expense |
|
AverageYield/Cost |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees (1)(2)(3) |
$ |
3,935,791 |
|
$ |
97,645 |
|
5.00 |
% |
|
$ |
3,286,083 |
|
$ |
65,173 |
|
4.00 |
% |
Taxable investment
securities |
|
1,754,382 |
|
|
20,178 |
|
2.32 |
% |
|
|
1,879,773 |
|
|
17,699 |
|
1.90 |
% |
Tax-exempt investment
securities (2)(4) |
|
371,381 |
|
|
4,902 |
|
2.66 |
% |
|
|
444,936 |
|
|
5,973 |
|
2.71 |
% |
Total securities held for investment(2) |
|
2,125,763 |
|
|
25,080 |
|
2.38 |
% |
|
|
2,324,709 |
|
|
23,672 |
|
2.05 |
% |
Other |
|
16,919 |
|
|
312 |
|
3.72 |
% |
|
|
42,983 |
|
|
68 |
|
0.32 |
% |
Total interest earning assets(2) |
$ |
6,078,473 |
|
$ |
123,037 |
|
4.08 |
% |
|
$ |
5,653,775 |
|
$ |
88,913 |
|
3.17 |
% |
Other assets |
|
416,304 |
|
|
|
|
|
|
343,456 |
|
|
|
|
Total assets |
$ |
6,494,777 |
|
|
|
|
|
$ |
5,997,231 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Interest checking
deposits |
$ |
1,468,030 |
|
$ |
3,820 |
|
0.52 |
% |
|
$ |
1,601,093 |
|
$ |
2,250 |
|
0.28 |
% |
Money market deposits |
|
965,180 |
|
|
8,568 |
|
1.79 |
% |
|
|
978,801 |
|
|
1,070 |
|
0.22 |
% |
Savings deposits |
|
628,338 |
|
|
560 |
|
0.18 |
% |
|
|
652,134 |
|
|
566 |
|
0.18 |
% |
Time deposits |
|
1,454,210 |
|
|
22,488 |
|
3.12 |
% |
|
|
859,938 |
|
|
2,197 |
|
0.52 |
% |
Total interest bearing deposits |
|
4,515,758 |
|
|
35,436 |
|
1.58 |
% |
|
|
4,091,966 |
|
|
6,083 |
|
0.30 |
% |
Securities sold under
agreements to repurchase |
|
152,734 |
|
|
873 |
|
1.15 |
% |
|
|
156,747 |
|
|
207 |
|
0.27 |
% |
Other short-term
borrowings |
|
121,959 |
|
|
3,031 |
|
5.01 |
% |
|
|
22,551 |
|
|
141 |
|
1.26 |
% |
Short-term borrowings |
|
274,693 |
|
|
3,904 |
|
2.87 |
% |
|
|
179,298 |
|
|
348 |
|
0.39 |
% |
Long-term debt |
|
137,258 |
|
|
4,277 |
|
6.28 |
% |
|
|
142,426 |
|
|
3,089 |
|
4.37 |
% |
Total borrowed funds |
|
411,951 |
|
|
8,181 |
|
4.00 |
% |
|
|
321,724 |
|
|
3,437 |
|
2.15 |
% |
Total interest bearing liabilities |
$ |
4,927,709 |
|
$ |
43,617 |
|
1.78 |
% |
|
$ |
4,413,690 |
|
$ |
9,520 |
|
0.43 |
% |
Noninterest bearing
deposits |
|
984,592 |
|
|
|
|
|
|
1,021,402 |
|
|
|
|
Other liabilities |
|
80,690 |
|
|
|
|
|
|
50,054 |
|
|
|
|
Shareholders’ equity |
|
501,786 |
|
|
|
|
|
|
512,085 |
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
6,494,777 |
|
|
|
|
|
$ |
5,997,231 |
|
|
|
|
Net interest income(2) |
|
|
$ |
79,420 |
|
|
|
|
|
$ |
79,393 |
|
|
Net interest spread(2) |
|
|
|
|
2.30 |
% |
|
|
|
|
|
2.74 |
% |
Net interest margin(2) |
|
|
|
|
2.63 |
% |
|
|
|
|
|
2.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits(5) |
$ |
5,500,350 |
|
$ |
35,436 |
|
1.30 |
% |
|
$ |
5,113,368 |
|
$ |
6,083 |
|
0.24 |
% |
Cost of funds(6) |
|
|
|
|
1.49 |
% |
|
|
|
|
|
0.35 |
% |
(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 $0.2
million and $0.6 million for the six months ended June 30,
2023 and June 30, 2022, respectively. Loan purchase discount
accretion was $2.2 million and $1.3 million for the six months
ended June 30, 2023 and June 30, 2022, respectively. Tax
equivalent adjustments were $1.4 million and $1.1 million
for the six months ended June 30, 2023 and June 30, 2022,
respectively. The federal statutory tax rate utilized was 21%.(4)
Interest income includes tax equivalent adjustments of
$1.0 million and $1.2 million for the six months ended
June 30, 2023 and June 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 |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
(Dollars in thousands, except per share data) |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
Total shareholders’
equity |
|
$ |
501,341 |
|
|
$ |
500,650 |
|
|
$ |
492,793 |
|
|
$ |
472,229 |
|
|
$ |
488,832 |
|
Intangible assets, net |
|
|
(89,446 |
) |
|
|
(91,040 |
) |
|
|
(92,792 |
) |
|
|
(94,563 |
) |
|
|
(96,351 |
) |
Tangible common equity |
|
$ |
411,895 |
|
|
$ |
409,610 |
|
|
$ |
400,001 |
|
|
$ |
377,666 |
|
|
$ |
392,481 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
6,521,489 |
|
|
$ |
6,409,952 |
|
|
$ |
6,577,876 |
|
|
$ |
6,491,061 |
|
|
$ |
6,442,491 |
|
Intangible assets, net |
|
|
(89,446 |
) |
|
|
(91,040 |
) |
|
|
(92,792 |
) |
|
|
(94,563 |
) |
|
|
(96,351 |
) |
Tangible assets |
|
$ |
6,432,043 |
|
|
$ |
6,318,912 |
|
|
$ |
6,485,084 |
|
|
$ |
6,396,498 |
|
|
$ |
6,346,140 |
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share |
|
$ |
31.96 |
|
|
$ |
31.94 |
|
|
$ |
31.54 |
|
|
$ |
30.23 |
|
|
$ |
31.26 |
|
Tangible book value per
share(1) |
|
$ |
26.26 |
|
|
$ |
26.13 |
|
|
$ |
25.60 |
|
|
$ |
24.17 |
|
|
$ |
25.10 |
|
Shares outstanding |
|
|
15,685,123 |
|
|
|
15,675,325 |
|
|
|
15,623,977 |
|
|
|
15,622,825 |
|
|
|
15,635,131 |
|
|
|
|
|
|
|
|
|
|
|
|
Common equity ratio |
|
|
7.69 |
% |
|
|
7.81 |
% |
|
|
7.49 |
% |
|
|
7.28 |
% |
|
|
7.59 |
% |
Tangible common equity
ratio(2) |
|
|
6.40 |
% |
|
|
6.48 |
% |
|
|
6.17 |
% |
|
|
5.90 |
% |
|
|
6.18 |
% |
(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) |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
|
$ |
7,594 |
|
|
$ |
1,397 |
|
|
$ |
12,621 |
|
|
$ |
8,991 |
|
|
$ |
26,516 |
|
Intangible amortization, net
of tax(1) |
|
|
1,196 |
|
|
|
1,314 |
|
|
|
962 |
|
|
|
2,510 |
|
|
|
1,883 |
|
Tangible net income |
|
$ |
8,790 |
|
|
$ |
2,711 |
|
|
$ |
13,583 |
|
|
$ |
11,501 |
|
|
$ |
28,399 |
|
|
|
|
|
|
|
|
|
|
|
|
Average shareholders’
equity |
|
$ |
504,988 |
|
|
$ |
498,547 |
|
|
$ |
499,460 |
|
|
$ |
501,786 |
|
|
$ |
512,085 |
|
Average intangible assets, net |
|
|
(90,258 |
) |
|
|
(92,002 |
) |
|
|
(84,540 |
) |
|
|
(91,125 |
) |
|
|
(83,159 |
) |
Average tangible equity |
|
$ |
414,730 |
|
|
$ |
406,545 |
|
|
$ |
414,920 |
|
|
$ |
410,661 |
|
|
$ |
428,926 |
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity |
|
|
6.03 |
% |
|
|
1.14 |
% |
|
|
10.14 |
% |
|
|
3.61 |
% |
|
|
10.44 |
% |
Return on average tangible equity(2) |
|
|
8.50 |
% |
|
|
2.70 |
% |
|
|
13.13 |
% |
|
|
5.65 |
% |
|
|
13.35 |
% |
(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) |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net interest income |
|
$ |
36,962 |
|
|
$ |
40,076 |
|
|
$ |
39,725 |
|
|
$ |
77,038 |
|
|
$ |
77,061 |
|
Tax equivalent
adjustments: |
|
|
|
|
|
|
|
|
|
|
Loans(1) |
|
|
713 |
|
|
|
716 |
|
|
|
569 |
|
|
|
1,429 |
|
|
|
1,109 |
|
Securities(1) |
|
|
431 |
|
|
|
522 |
|
|
|
608 |
|
|
|
953 |
|
|
|
1,223 |
|
Net interest income, tax equivalent |
|
$ |
38,106 |
|
|
$ |
41,314 |
|
|
$ |
40,902 |
|
|
$ |
79,420 |
|
|
$ |
79,393 |
|
Loan purchase discount
accretion |
|
|
(984 |
) |
|
|
(1,189 |
) |
|
|
(528 |
) |
|
|
(2,173 |
) |
|
|
(1,260 |
) |
Core net interest income |
|
$ |
37,122 |
|
|
$ |
40,125 |
|
|
$ |
40,374 |
|
|
$ |
77,247 |
|
|
$ |
78,133 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
|
2.45 |
% |
|
|
2.66 |
% |
|
|
2.79 |
% |
|
|
2.56 |
% |
|
|
2.75 |
% |
Net interest margin, tax
equivalent(2) |
|
|
2.52 |
% |
|
|
2.75 |
% |
|
|
2.87 |
% |
|
|
2.63 |
% |
|
|
2.83 |
% |
Core net interest
margin(3) |
|
|
2.46 |
% |
|
|
2.67 |
% |
|
|
2.83 |
% |
|
|
2.56 |
% |
|
|
2.79 |
% |
Average interest earning
assets |
|
$ |
6,056,732 |
|
|
$ |
6,100,456 |
|
|
$ |
5,718,825 |
|
|
$ |
6,078,473 |
|
|
$ |
5,653,775 |
|
(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) |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Loan interest income, including fees |
|
$ |
49,726 |
|
|
$ |
46,490 |
|
|
$ |
32,746 |
|
|
$ |
96,216 |
|
|
$ |
64,064 |
|
Tax equivalent
adjustment(1) |
|
|
713 |
|
|
|
716 |
|
|
|
569 |
|
|
|
1,429 |
|
|
|
1,109 |
|
Tax equivalent loan interest income |
|
$ |
50,439 |
|
|
$ |
47,206 |
|
|
$ |
33,315 |
|
|
$ |
97,645 |
|
|
$ |
65,173 |
|
Loan purchase discount
accretion |
|
|
(984 |
) |
|
|
(1,189 |
) |
|
|
(528 |
) |
|
|
(2,173 |
) |
|
|
(1,260 |
) |
Core loan interest income |
|
$ |
49,455 |
|
|
$ |
46,017 |
|
|
$ |
32,787 |
|
|
$ |
95,472 |
|
|
$ |
63,913 |
|
|
|
|
|
|
|
|
|
|
|
|
Yield on loans |
|
|
4.98 |
% |
|
|
4.88 |
% |
|
|
3.95 |
% |
|
|
4.93 |
% |
|
|
3.93 |
% |
Yield on loans, tax
equivalent(2) |
|
|
5.05 |
% |
|
|
4.95 |
% |
|
|
4.02 |
% |
|
|
5.00 |
% |
|
|
4.00 |
% |
Core yield on loans(3) |
|
|
4.95 |
% |
|
|
4.83 |
% |
|
|
3.95 |
% |
|
|
4.89 |
% |
|
|
3.92 |
% |
Average loans |
|
$ |
4,003,717 |
|
|
$ |
3,867,110 |
|
|
$ |
3,326,269 |
|
|
$ |
3,935,791 |
|
|
$ |
3,286,083 |
|
(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) |
|
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total noninterest expense |
|
$ |
34,919 |
|
|
$ |
33,319 |
|
|
$ |
32,082 |
|
|
$ |
68,238 |
|
|
$ |
63,725 |
|
Amortization of
intangibles |
|
|
(1,594 |
) |
|
|
(1,752 |
) |
|
|
(1,283 |
) |
|
|
(3,346 |
) |
|
|
(2,510 |
) |
Merger-related expenses |
|
|
— |
|
|
|
(136 |
) |
|
|
(901 |
) |
|
|
(136 |
) |
|
|
(1,029 |
) |
Noninterest expense used for efficiency ratio |
|
$ |
33,325 |
|
|
$ |
31,431 |
|
|
$ |
29,898 |
|
|
$ |
64,756 |
|
|
$ |
60,186 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, tax
equivalent(1) |
|
$ |
38,106 |
|
|
$ |
41,314 |
|
|
$ |
40,902 |
|
|
$ |
79,420 |
|
|
$ |
79,393 |
|
Plus: Noninterest income |
|
|
8,746 |
|
|
|
(4,046 |
) |
|
|
12,347 |
|
|
|
4,700 |
|
|
|
23,991 |
|
Less: Investment securities (losses) gains, net |
|
|
(2 |
) |
|
|
(13,170 |
) |
|
|
395 |
|
|
|
(13,172 |
) |
|
|
435 |
|
Net revenues used for efficiency ratio |
|
$ |
46,854 |
|
|
$ |
50,438 |
|
|
$ |
52,854 |
|
|
$ |
97,292 |
|
|
$ |
102,949 |
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (2) |
|
|
71.13 |
% |
|
|
62.32 |
% |
|
|
56.57 |
% |
|
|
66.56 |
% |
|
|
58.46 |
% |
(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 |
|
Six Months Ended |
Adjusted
Earnings |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
(Dollars in thousands, except per share data) |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Net income |
|
$ |
7,594 |
|
$ |
1,397 |
|
$ |
12,621 |
|
$ |
8,991 |
|
$ |
26,516 |
After tax loss on sale of debt
securities(1) |
|
|
— |
|
|
9,837 |
|
|
— |
|
|
9,837 |
|
|
— |
Adjusted earnings |
|
$ |
7,594 |
|
$ |
11,234 |
|
$ |
12,621 |
|
$ |
18,828 |
|
$ |
26,516 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
common shares outstanding |
|
|
15,689 |
|
|
15,691 |
|
|
15,688 |
|
|
15,688 |
|
|
15,703 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
Earnings per common share - diluted |
|
$ |
0.48 |
|
$ |
0.09 |
|
$ |
0.80 |
|
$ |
0.57 |
|
$ |
1.69 |
Adjusted earnings per common share - diluted (2) |
|
$ |
0.48 |
|
$ |
0.72 |
|
$ |
0.80 |
|
$ |
1.20 |
|
$ |
1.69 |
(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 |
MidWestOne Financial (NASDAQ:MOFG)
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