STOCK TITAN
  1. Home
  2. News
  3. MOFG

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

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags
earnings
Rhea-AI Summary

MidWestOne Financial Group (MOFG) reported a net income of $16.3 million or $1.03 per diluted share for Q3 2021, compared to $17.3 million in the previous quarter. Total revenue reached $49.5 million. The efficiency ratio increased to 56.34% as noninterest expenses rose by 3.9% to $29.8 million. Nonperforming assets declined by 19.0%, and the company announced the acquisition of Iowa First Bancshares Corp. to enhance market share in Muscatine and Jefferson counties. The return on average equity was 12.00%.

Positive
  • Net income of $16.3 million, or $1.03 per diluted share.
  • Total revenue increased to $49.5 million.
  • Nonperforming assets decreased by 19.0%.
  • Acquisition of Iowa First Bancshares expected to enhance market share.
Negative
  • Net income declined from $17.3 million in the prior quarter.
  • Efficiency ratio increased to 56.34% from 54.83%.
  • Noninterest income decreased by 10.1% from the linked quarter.

Third Quarter Summary1

  • Net income for the third quarter was $16.3 million, or $1.03 per diluted common share.
    • Total revenue, net of interest expense, of $49.5 million.
    • Credit loss benefit of $1.1 million.
    • Noninterest expense of $29.8 million.
  • Excluding Paycheck Protection Program ("PPP") loans, commercial loans were $2.64 billion2, as compared to $2.61 billion2 at the end of the second quarter of 2021 (the "linked quarter"), an increase of 1.2%.
  • Efficiency ratio was 56.34%2.
  • Nonperforming assets declined 19.0% and the net charge-off ratio was a recovery of 10 basis points ("bps").
  • Cost of average total deposits decreased 2 bps to 0.26% and cost of funds decreased 3 bps to 0.37%.
  • On November 1, 2021, entered into a definitive agreement pursuant to which the Company will acquire Iowa First Bancshares Corp. and its banking subsidiaries in Muscatine and Fairfield, Iowa.

IOWA CITY, Iowa, Nov. 01, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the third quarter of 2021 of $16.3 million, or $1.03 per diluted common share, compared to net income of $17.3 million, or $1.08 per diluted common share, for the linked quarter.

CEO COMMENTARY
Charles Funk, Chief Executive Officer of the Company, commented, "We are excited to expand our footprint to Muscatine and to grow our market share in Fairfield, the seat of Jefferson County, with MidWestOne's acquisition of Iowa First Bancshares Corp. ("IOFB"). With this acquisition, we will have the number one deposit market share in both Muscatine and Jefferson counties. We believe MidWestOne's brand of banking will fit very will with IOFB's brand, and we look forward to meeting our new customers and employees over the next few months. Notably, this transaction will provide good earnings momentum for 2022 and beyond.

The third quarter of 2021 was a strong one for our Company with earnings of $1.03 per diluted common share, a 12.00% return on average equity, and a 15.06% return on average tangible equity2. In a very tough operating environment, we were able to increase our commercial loans, excluding PPP loans, by 1.2%. We are also extremely pleased with the progress being made in asset quality. The year over year decline of 15 bps in our nonperforming loans ratio to 1.03% and the 30 bps decline in the net charge-off ratio to a net recovery ratio of 10 bps are especially impressive. Our trust and investment services group continued to build its business in the third quarter of 2021 and is on track to achieve record revenues in 2021. While we saw our mortgage loan closings trail off in the third quarter of 2021, we nonetheless expect a solid fourth quarter from this business line. With respect to capital, we continue to find value in repurchasing our shares at a price just above our tangible book value per share. Finally, our bankers continue to assist our customers in working through PPP loan forgiveness. We anticipate another sizeable amount of PPP loan forgiveness in the fourth quarter."

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

     
FINANCIAL HIGHLIGHTS
 Three Months Ended Nine Months Ended
(Dollars in thousands, except per share amounts) September 30, June 30, September 30, September 30, September 30,
 2021 2021 2020 2021 2020
Net interest income $40,340   $38,505   $37,809   $117,462   $113,927  
Noninterest income 9,182   10,218   9,570   31,224   27,994  
Total revenue, net of interest expense 49,522   48,723   47,379   148,686   141,921  
Credit loss (benefit) expense (1,080)  (2,144)  4,992   (7,958)  31,410  
Noninterest expense 29,778   28,670   59,939   86,148   117,978  
Income (loss) before income tax expense 20,824   22,197   (17,552)  70,496   (7,467) 
Income tax expense 4,513   4,926   2,272   15,266   2,620  
Net income (loss) $16,311   $17,271   $(19,824)  $55,230   $(10,087) 
Diluted earnings (loss) per share $1.03   $1.08   $(1.23)  $3.46   $(0.63) 
           
Return on average assets 1.11 % 1.18 % (1.48)% 1.29 % (0.27)%
Return on average equity 12.00 % 13.24 % (14.88)% 14.03 % (2.60)%
Return on average tangible equity(1) 15.06 % 16.75 % 12.56 % 17.69 % 8.58 %
Efficiency ratio(1) 56.34 % 54.83 % 55.37 % 53.95 % 55.95 %
(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 September 30, 2021, the outstanding balance of loans modified as a result of the COVID-19 pandemic totaled $4.5 million, a decline of 78.6% from $21.0 million at June 30, 2021. The decline from the end of the second quarter of 2021 was due largely to one commercial real estate loan where the borrower resumed making payments.

PPP Loans

The following table presents PPP loan measures as of the dates indicated:

  September 30, 2021 June 30, 2021
  Round 1(3) Round 2(3) Total Round 1(3) Round 2(3) Total
(Dollars in millions) # $ # $ # $ # $ # $ # $
Total PPP Loans Funded  2,681 348.5   2,175 149.3   4,856 497.8   2,681 348.5   2,175 149.3   4,856 497.8 
PPP Loan Forgiveness(1)  2,478 323.7   1,514 72.9   3,992 396.6   2,247 285.7   441 12.3   2,688 298.0 
Outstanding PPP Loans(2)  184 16.3   661 73.1   845 89.4   416 53.9   1,734 130.5   2,150 184.4 
                         
Unearned Income $0.1 $2.8 $2.9 $0.5 $6.0 $6.5
(1) Excluded from the PPP Loan Forgiveness is $9.1 million as of September 30, 2021 and $8.9 million as of June 30, 2021 of PPP loans that were paid off by the borrower prior to forgiveness.
(2) Outstanding loans are presented net of unearned income.
(3) Round 1 refers to PPP loan applications from the first wave of funding made available through the CARES Act, which was signed into law by President Trump in March 2020. Round 2 refers to the second wave of PPP funding made available through the Consolidated Appropriations Act, 2021, which was signed into law by President Trump in December 2020 and extended by the PPP Extension Act of 2021, which was signed into law by President Biden in March 2021.
 

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased to $40.3 million in the third quarter of 2021 from $38.5 million in the second quarter of 2021 due primarily to increased PPP loan fee accretion stemming from loan forgiveness. Net PPP loan fee accretion was $3.6 million in the third quarter of 2021 compared to $2.5 million in the linked quarter.

Average interest earning assets decreased $32.5 million to $5.49 billion in the third quarter of 2021, compared to the second quarter of 2021, which includes a $90.4 million reduction in average PPP loan balances due to forgiveness. Adjusting for the $90.4 million in average PPP loan balance decline, average interest earning assets increased $57.9 million, primarily due to non-PPP loan growth.

The Company's tax equivalent net interest margin was 3.00% in the third quarter of 2021 compared to 2.88% in the linked quarter due to higher earning asset yields and lower funding costs. Total earning asset yields increased 9 bps from the linked quarter due primarily to the increased PPP net loan fee accretion described above. The cost of interest bearing liabilities decreased 3 bps to 0.46%, primarily as a result of interest bearing deposit costs of 0.32%, which declined 3 bps from the linked quarter.

Noninterest Income

Noninterest income for the third quarter of 2021 decreased $1.0 million, or 10.1%, from the linked quarter. The decrease was primarily due to a $1.2 million decrease in loan revenue. The decline in loan revenue included a $0.9 million reduction in mortgage origination fees stemming from lower gain on sale margins and decreased volumes of home mortgage loans as well as a $0.4 million decline in the fair value of our mortgage servicing rights.

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

 Three Months Ended
Noninterest IncomeSeptember 30, June 30, September 30,
(In thousands)2021 2021 2020
Investment services and trust activities$2,915  $2,809  $2,361 
Service charges and fees1,613  1,475  1,491 
Card revenue1,820  1,913  1,600 
Loan revenue1,935  3,151  3,252 
Bank-owned life insurance532  538  530 
Investment securities gains, net36  42  106 
Other331  290  230 
Total noninterest income$9,182  $10,218  $9,570 
            

Noninterest Expense

Noninterest expense for the third quarter of 2021 increased $1.1 million, or 3.9%, from the linked quarter primarily due to an increase of $0.7 million in 'other' noninterest expense and a $0.3 million increase in occupancy expense of premises, net. The increase in 'other' noninterest expense was primarily due to expenses of $0.7 million related to the settlement of litigation claims. The increase in occupancy expense of premises, net was primarily attributable to the disposal and write-down of fixed assets totaling $0.3 million. The increase in noninterest expense, as well as the decline in noninterest income noted above, were the primary drivers of the increase in the efficiency ratio, which increased 1.51 percentage points to 56.34%, as compared to the linked quarter efficiency ratio of 54.83%.

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

 Three Months Ended
Noninterest ExpenseSeptember 30, June 30, September 30,
(In thousands)2021 2021 2020
Compensation and employee benefits$17,350  $17,404  $16,460 
Occupancy expense of premises, net2,547  2,198  2,278 
Equipment1,973  1,861  1,935 
Legal and professional1,272  1,375  1,184 
Data processing1,406  1,347  1,308 
Marketing1,022  873  857 
Amortization of intangibles1,264  1,341  1,631 
FDIC insurance435  245  470 
Communications275  371  428 
Foreclosed assets, net43  136  13 
Other2,191  1,519  1,875 
Total core noninterest expense$29,778  $28,670  $28,439 
Goodwill impairment—  —  31,500 
Total noninterest expense$29,778  $28,670  $59,939 
            

Income Taxes

The effective income tax rate was 21.7% in the third quarter of 2021 compared to 22.2% in the linked quarter. The effective income tax rate in the third quarter of 2021 reflected income tax expense 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
(Dollars in millions, except per share amounts)September 30, June 30, September 30,
2021 2021 2020
Ending Balance Sheet     
Total assets$5,875.4  $5,749.2  $5,330.7 
Loans held for investment, net of unearned income3,268.6  3,330.2  3,537.4 
Total securities held for investment2,136.9  2,072.5  1,366.3 
Total deposits4,957.8  4,792.7  4,333.6 
Average Balance Sheet     
Average total assets$5,811.2  $5,851.7  $5,311.4 
Average total loans3,356.7  3,396.6  3,576.6 
Average total deposits4,882.8  4,875.3  4,317.2 
Funding and Liquidity     
Short-term borrowings$187.5  $212.3  $183.9 
Long-term debt154.9  169.8  245.5 
Loans to deposits ratio65.93% 69.48% 81.63%
Equity     
Total shareholders' equity$530.3  $530.3  $499.1 
Common equity ratio9.03% 9.22% 9.36%
Tangible common equity(1)446.7  445.4  409.8 
Tangible common equity ratio(1)7.71% 7.86% 7.82%
Per Share Data     
Book value$33.71  $33.22  $31.00 
Tangible book value(1)$28.40  $27.90  $25.45 
(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 $61.5 million, or 1.8%, to $3.27 billion from June 30, 2021, driven primarily by PPP loan forgiveness and partially offset by higher revolving line of credit utilization, which increased 2% from the linked quarter to 32% at September 30, 2021 and new loan production.

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

Loans Held for InvestmentSeptember 30, 2021 June 30, 2021 September 30, 2020 
 Balance

 % of Total

 Balance % of Total Balance % of Total 
(dollars in thousands)      
Commercial and industrial$927,258  28.4 %$982,092  29.5 %$1,103,102  31.2 %
Agricultural106,356  3.3  107,834  3.2  129,453  3.7  
Commercial real estate            
Construction and development146,417  4.5  168,070  5.0  191,423  5.4  
Farmland130,936  4.0  134,877  4.1  152,362  4.3  
Multifamily273,347  8.4  255,826  7.7  235,241  6.7  
Other1,148,658  35.0  1,147,016  34.4  1,128,009  31.8  
Total commercial real estate1,699,358  51.9  1,705,789  51.2  1,707,035  48.2  
Residential real estate            
One-to-four family first liens334,267  10.2  332,117  10.0  371,390  10.5  
One-to-four family junior liens133,869  4.1  136,464  4.1  150,180  4.2  
Total residential real estate468,136  14.3  468,581  14.1  521,570  14.7  
Consumer67,536  2.1  65,860  2.0  76,272  2.2  
Loans held for investment, net of unearned income$3,268,644  100.0 %$3,330,156  100.0 %$3,537,432  100.0 %
             
Total commitments to extend credit$950,157    $959,696    $893,147    
                   

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 Nine Months Ended
Allowance for Credit Losses Roll ForwardSeptember 30, June 30, September 30, September 30, September 30,
(In thousands)2021 2021 2020 2021 2020
Beginning balance$48,000   $50,650   $55,644   $55,500   $29,079  
Cumulative effect of change in accounting principle - CECL—   —   —   —   3,984  
Charge-offs(234)  (840)  (2,188)  (2,077)  (5,788) 
Recoveries1,114   434   347   2,235   882  
Net recoveries (charge-offs)880   (406)  (1,841)  158   (4,906) 
Credit loss (benefit) expense related to loans(980)  (2,244)  4,697   (7,758)  30,343  
Ending balance$47,900   $48,000   $58,500   $47,900   $58,500  
                         

As of September 30, 2021, the allowance for credit losses ("ACL") was $47.9 million, or 1.47% of loans held for investment, net of unearned income, compared with $48.0 million, or 1.44% of loans held for investment, net of unearned income, at June 30, 2021. After excluding net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income, decreased to 1.51%(1) as of September 30, 2021, from 1.53%(1) at June 30, 2021. The decline in the ACL during the third quarter reflected overall improvements in the economic forecast and stabilization of the 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 CompositionSeptember 30, 2021 June 30, 2021 September 30, 2020 
(dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Noninterest bearing deposits$999,887  20.2 %$952,764  19.9 %$864,504  19.9 %
Interest checking deposits1,464,389  29.5  1,414,942  29.6  1,230,146  28.5  
Money market deposits989,095  20.0  936,683  19.5  871,336  20.1  
Savings deposits616,924  12.4  596,199  12.4  486,876  11.2  
Total non-maturity deposits4,070,295  82.1  3,900,588  81.4  3,452,862  79.7  
Time deposits of $250 and under522,907  10.5  538,331  11.2  617,229  14.2  
Time deposits over $250364,579  7.4  353,747  7.4  263,550  6.1  
Total time deposits887,486  17.9  892,078  18.6  880,779  20.3  
Total deposits$4,957,781  100.0 %$4,792,666  100.0 %$4,333,641  100.0 %
                      

CREDIT RISK PROFILE

 As of or For the Three Months Ended
HighlightsSeptember 30, June 30, September 30,
(dollars in thousands)2021 2021 2020
Credit loss (benefit) expense related to loans$(980)  $(2,244)  $4,697 
Net (recoveries) charge-offs$(880)  $406   $1,841 
Net (recovery) charge-off ratio(1)(0.10)% 0.05 % 0.20%
      
At period-end     
Pass$3,069,314   $3,102,688   $3,230,611 
Special Mention / Watch82,871   115,414   176,702 
Classified116,459   112,054   130,119 
Total loans held for investment, net$3,268,644   $3,330,156   $3,537,432 
Classified loans ratio(2)3.56 % 3.36 % 3.68%
      
Nonaccrual loans held for investment$33,657   $40,764   $39,071 
Accruing loans contractually past due 90 days or more51   665   2,593 
Total nonperforming loans33,708   41,429   41,664 
Foreclosed assets, net454   755   724 
Total nonperforming assets$34,162   $42,184   $42,388 
Nonperforming loans ratio(3)1.03 % 1.24 % 1.18%
Nonperforming assets ratio(4)0.58 % 0.73 % 0.80%
Allowance for credit losses$47,900   $48,000   $58,500 
Allowance for credit losses ratio(5)1.47 % 1.44 % 1.65%
Adjusted allowance for credit losses ratio(6)1.51 % 1.53 % 1.82%
(1) Net (recovery) charge-off ratio is calculated as annualized net (recoveries) 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 June 30, 2021$40,764   $665   $41,429  
Loans placed on nonaccrual or 90+ days past due & still accruing574   105   679  
Repayments (including interest applied to principal)(5,370)  —   (5,370) 
Loans returned to accrual status or no longer past due(2,256)  (666)  (2,922) 
Charge-offs(50)  (53)  (103) 
Transfers to foreclosed assets(5)  —   (5) 
Balance at September 30, 2021$33,657   $51   $33,708  
               

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

September 30, June 30, September 30,
2021 (1) 2021 2020
MidWestOne Financial Group, Inc. Consolidated     
Tier 1 leverage ratio8.70% 8.50% 8.52%
Common equity tier 1 capital ratio10.26% 10.26% 9.72%
Tier 1 capital ratio11.20% 11.21% 10.73%
Total capital ratio13.58% 13.63% 13.56%
MidWestOne Bank     
Tier 1 leverage ratio9.41% 9.15% 9.26%
Common equity tier 1 capital ratio12.14% 12.09% 11.75%
Tier 1 capital ratio12.14% 12.09% 11.75%
Total capital ratio13.05% 13.02% 12.95%
(1) Capital ratios for September 30, 2021 are preliminary     
      

CORPORATE UPDATE

Iowa First Bancshares Corp. Pending Acquisition

On November 1, 2021, the Company and IOFB, the holding company of First National Bank of Muscatine (“FNBM”) and First National Bank in Fairfield (“FNBF”), jointly announced the signing of a definitive agreement pursuant to which the Company will acquire IOFB, FNBM, and FNBF. The acquisition will add to the Company's existing presence in Fairfield, Iowa and will expand the Company's footprint into Muscatine, Iowa.

Share Repurchase Program

Under the current repurchase program, the Company repurchased 235,277 shares of its common stock at an average price of $29.24 per share and a total cost of $6.9 million in the third quarter of 2021. At September 30, 2021, the total amount available under the Company's current share repurchase program was $7.6 million.

Banking Office Consolidation

Effective January 27, 2022, the Company plans to consolidate its 32nd Street banking office into the nearby Main Street banking office in Dubuque, Iowa. This banking office consolidation is part of the Company's strategy to improve operating efficiency. The Company estimates the banking office consolidation will reduce its annual operating expenses by approximately $309 thousand.

Wealth Management Update

Subsequent to September 30, 2021, the Company strengthened its wealth management capabilities with the addition of an experienced wealth management team in Eastern Iowa. The team collectively has more than 120 years of experience providing wealth management services to clients and is led by an experienced wealth professional with a focus on planning services who was most recently with a super-regional bank. The team is a strong cultural fit and strategically aligns with our measured pursuit of growth in noninterest income streams.

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Tuesday, November 2, 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 February 1, 2022, by calling 877-344-7529 and using the replay access code of 10159709. 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, including due to supply chain disruptions, 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; (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) 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; (5) 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; (6) the effects of interest rates, including on our net income and the value of our securities portfolio; (7) 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; (8) fluctuations in the value of our investment securities; (9) governmental monetary and fiscal policies; (10) 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; (11) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (12) the ability to attract and retain key executives and employees experienced in banking and financial services; (13) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (14) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (15) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (16) 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; (17) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (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

 September 30, June 30, March 31, December 31, September 30,
(In thousands)2021 2021 2021 2020 2020
ASSETS         
Cash and due from banks$53,562   $52,297   $57,154   $65,078   $71,901  
Interest earning deposits in banks84,952   11,124   80,924   17,409   55,421  
Federal funds sold—   13   7,691   172   7,540  
Total cash and cash equivalents138,514   63,434   145,769   82,659   134,862  
Debt securities available for sale at fair value2,136,902   2,072,452   1,896,894   1,657,381   1,366,344  
Loans held for sale58,679   6,149   58,333   59,956   13,096  
Gross loans held for investment3,278,150   3,344,156   3,374,076   3,496,790   3,555,969  
Unearned income, net(9,506)  (14,000)  (15,915)  (14,567)  (18,537) 
Loans held for investment, net of unearned income3,268,644   3,330,156   3,358,161   3,482,223   3,537,432  
Allowance for credit losses(47,900)  (48,000)  (50,650)  (55,500)  (58,500) 
Total loans held for investment, net3,220,744   3,282,156   3,307,511   3,426,723   3,478,932  
Premises and equipment, net84,130   84,667   85,581   86,401   87,955  
Goodwill62,477   62,477   62,477   62,477   62,477  
Other intangible assets, net21,130   22,394   23,735   25,242   26,811  
Foreclosed assets, net454   755   1,487   2,316   724  
Other assets152,393   154,731   155,525   153,493   159,507  
Total assets$5,875,423   $5,749,215   $5,737,312   $5,556,648   $5,330,708  
LIABILITIES          
Noninterest bearing deposits$999,887   $952,764   $958,526   $910,655   $864,504  
Interest bearing deposits3,957,894   3,839,902   3,836,037   3,636,394   3,469,137  
Total deposits4,957,781   4,792,666   4,794,563   4,547,049   4,333,641  
Short-term borrowings187,508   212,261   175,785   230,789   183,893  
Long-term debt154,860   169,839   201,696   208,691   245,481  
Other liabilities45,010   44,156   53,948   54,869   68,612  
Total liabilities5,345,159   5,218,922   5,225,992   5,041,398   4,831,627  
SHAREHOLDERS' EQUITY         
Common stock16,581   16,581   16,581   16,581   16,581  
Additional paid-in capital300,327   299,888   299,747   300,137   299,939  
Retained earnings232,639   219,884   206,230   188,191   175,017  
Treasury stock(22,735)  (15,888)  (15,278)  (14,251)  (12,272) 
Accumulated other comprehensive income3,452   9,828   4,040   24,592   19,816  
Total shareholders' equity530,264   530,293   511,320   515,250   499,081  
Total liabilities and shareholders' equity$5,875,423   $5,749,215   $5,737,312   $5,556,648   $5,330,708  
                         

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

 Three Months Ended Nine Months Ended
(In thousands, except per share data)September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2021 2021 2021 2020 2020 2021 2020
Interest income             
Loans, including fees$36,115   $34,736   $36,542   $38,239   $38,191   $107,393   $120,417  
Taxable investment securities6,655   6,483   5,093   4,673   4,574   18,231   12,937  
Tax-exempt investment securities2,428   2,549   2,555   2,529   2,360   7,532   5,730  
Other21   19   14   29   29   54   233  
Total interest income45,219   43,787   44,204   45,470   45,154   133,210   139,317  
Interest expense             
Deposits3,150   3,409   3,608   4,265   5,296   10,167   19,654  
Short-term borrowings132   161   128   142   175   421   772  
Long-term debt1,597   1,712   1,851   2,026   1,874   5,160   4,964  
Total interest expense4,879   5,282   5,587   6,433   7,345   15,748   25,390  
Net interest income40,340   38,505   38,617   39,037   37,809   117,462   113,927  
Credit loss (benefit) expense(1,080)  (2,144)  (4,734)  (3,041)  4,992   (7,958)  31,410  
Net interest income after credit loss (benefit) expense41,420   40,649   43,351   42,078   32,817   125,420   82,517  
Noninterest income             
Investment services and trust activities2,915   2,809   2,836   2,518   2,361   8,560   7,114  
Service charges and fees1,613   1,475   1,487   1,571   1,491   4,575   4,607  
Card revenue1,820   1,913   1,536   1,517   1,600   5,269   4,202  
Loan revenue1,935   3,151   4,730   3,900   3,252   9,816   6,285  
Bank-owned life insurance532   538   542   541   530   1,612   1,685  
Investment securities gains, net36   42   27   30   106   105   154  
Other331   290   666   549   230   1,287   3,947  
Total noninterest income9,182   10,218   11,824   10,626   9,570   31,224   27,994  
Noninterest expense             
Compensation and employee benefits17,350   17,404   16,917   17,638   16,460   51,671   48,759  
Occupancy expense of premises, net2,547   2,198   2,318   2,476   2,278   7,063   6,872  
Equipment1,973   1,861   1,793   2,040   1,935   5,627   5,825  
Legal and professional1,272   1,375   783   2,052   1,184   3,430   4,101  
Data processing1,406   1,347   1,252   1,460   1,308   4,005   3,902  
Marketing1,022   873   1,006   986   857   2,901   2,829  
Amortization of intangibles1,264   1,341   1,507   1,569   1,631   4,112   5,407  
FDIC insurance435   245   512   495   470   1,192   1,363  
Communications275   371   409   412   428   1,055   1,334  
Foreclosed assets, net43   136   47   (35)  13   226   185  
Goodwill impairment—   —   —   —   31,500   —   31,500  
Other2,191   1,519   1,156   2,822   1,875   4,866   5,901  
Total noninterest expense29,778   28,670   27,700   31,915   59,939   86,148   117,978  
Income (loss) before income tax expense20,824   22,197   27,475   20,789   (17,552)  70,496   (7,467) 
Income tax expense4,513   4,926   5,827   4,079   2,272   15,266   2,620  
Net income (loss)$16,311   $17,271   $21,648   $16,710   $(19,824)  $55,230   $(10,087) 
              
Earnings (loss) per common share             
Basic$1.03   $1.08   $1.35   $1.04   $(1.23)  $3.47   $(0.63) 
Diluted$1.03   $1.08   $1.35   $1.04   $(1.23)  $3.46   $(0.63) 
Weighted average basic common shares outstanding15,841   15,987   15,991   16,074   16,099   15,939   16,112  
Weighted average diluted common shares outstanding15,863   16,012   16,021   16,092   16,099   15,963   16,112  
Dividends paid per common share$0.2250   $0.2250   $0.2250   $0.2200   $0.2200   $0.6750   $0.6600  
                                   

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS

 As of or for the Three Months Ended As of or for the Nine Months Ended
(Dollars in thousands, except per share amounts)September 30, June 30, September 30, September 30, September 30,
2021 2021 2020 2021 2020
Earnings:         
Net interest income$40,340   $38,505   $37,809   $117,462   $113,927  
Noninterest income9,182   10,218   9,570   31,224   27,994  
Total revenue, net of interest expense49,522   48,723   47,379   148,686   141,921  
Credit loss (benefit) expense(1,080)  (2,144)  4,992   (7,958)  31,410  
Noninterest expense29,778   28,670   59,939   86,148   117,978  
Income (loss) before income tax expense20,824   22,197   (17,552)  70,496   (7,467) 
Income tax expense4,513   4,926   2,272   15,266   2,620  
Net income (loss)$16,311   $17,271   $(19,824)  $55,230   $(10,087) 
Per Share Data:         
Diluted earnings (loss)$1.03   $1.08   $(1.23)  $3.46   $(0.63) 
Book value33.71   33.22   31.00   33.71   31.00  
Tangible book value(1)28.40   27.90   25.45   28.40   25.45  
Ending Balance Sheet:         
Total assets$5,875,423   $5,749,215   $5,330,708   $5,875,423   $5,330,708  
Loans held for investment, net of unearned income3,268,644   3,330,156   3,537,432   3,268,644   3,537,432  
Total securities held for investment2,136,902   2,072,452   1,366,344   2,136,902   1,366,344  
Total deposits4,957,781   4,792,666   4,333,641   4,957,781   4,333,641  
Short-term borrowings187,508   212,261   183,893   187,508   183,893  
Long-term debt154,860   169,839   245,481   154,860   245,481  
Total shareholders' equity530,264   530,293   499,081   530,264   499,081  
Average Balance Sheet:         
Average total assets$5,811,228   $5,851,736   $5,311,386   $5,728,822   $5,027,692  
Average total loans3,356,680   3,396,575   3,576,642   3,394,066   3,548,968  
Average total deposits4,882,835   4,875,324   4,317,172   4,778,484   4,081,782  
Financial Ratios:         
Return on average assets1.11 % 1.18 % (1.48)% 1.29 % (0.27)%
Return on average equity12.00 % 13.24 % (14.88)% 14.03 % (2.60)%
Return on average tangible equity(1)15.06 % 16.75 % 12.56 % 17.69 % 8.58 %
Efficiency ratio(1)56.34 % 54.83 % 55.37 % 53.95 % 55.95 %
Net interest margin, tax equivalent(1)3.00 % 2.88 % 3.14 % 2.99 % 3.36 %
Loans to deposits ratio65.93 % 69.48 % 81.63 % 65.93 % 81.63 %
Common equity ratio9.03 % 9.22 % 9.36 % 9.03 % 9.36 %
Tangible common equity ratio(1)7.71 % 7.86 % 7.82 % 7.71 % 7.82 %
Credit Risk Profile:         
Total nonperforming loans$33,708   $41,429   $41,664   $33,708   $41,664  
Nonperforming loans ratio1.03 % 1.24 % 1.18 % 1.03 % 1.18 %
Total nonperforming assets$34,162   $42,184   $42,388   $34,162   $42,388  
Nonperforming assets ratio0.58 % 0.73 % 0.80 % 0.58 % 0.80 %
Net (recoveries) charge-offs$(880)  $406   $1,841   $(158)  $4,906  
Net (recovery) charge-off ratio(0.10)% 0.05 % 0.20 % (0.01)% 0.18 %
Allowance for credit losses$47,900   $48,000   $58,500   $47,900   $58,500  
Allowance for credit losses ratio1.47 % 1.44 % 1.65 % 1.47 % 1.65 %
Adjusted allowance for credit losses ratio(1)1.51 % 1.53 % 1.82 % 1.51 % 1.82 %
PPP Loans:         
Average PPP loans$143,628   $233,982   $330,969   $160,708   $146,607  
Fee Income3,593   2,469   1,312   9,735   2,374  
          
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
 

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

 Three Months Ended
 September 30, 2021 June 30, 2021 September 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)$3,356,680  $36,622  4.33% $3,396,575  $35,255  4.16% $3,576,642  $38,727  4.31%
Taxable investment securities1,628,605  6,655  1.62% 1,604,463  6,483  1.62% 864,864  4,574  2.10%
Tax-exempt investment securities (2)(4)459,717  3,043  2.63% 473,181  3,196  2.71% 405,517  2,968  2.91%
Total securities held for investment(2)2,088,322  9,698  1.84% 2,077,644  9,679  1.87% 1,270,381  7,542  2.36%
Other44,915  21  0.19% 48,208  19  0.16% 88,152  29  0.13%
Total interest earning assets(2)$5,489,917  46,341  3.35% $5,522,427  44,953  3.26% $4,935,175  46,298  3.73%
Other assets321,311      329,309      376,211     
Total assets$5,811,228      $5,851,736      $5,311,386     
LIABILITIES AND SHAREHOLDERS’ EQUITY                 
Interest checking deposits$1,434,560  $1,056  0.29% $1,469,853  $1,095  0.30% $1,174,033  $1,049  0.36%
Money market deposits955,174  506  0.21% 942,072  502  0.21% 847,059  622  0.29%
Savings deposits606,449  316  0.21% 595,150  324  0.22% 473,000  351  0.30%
Time deposits890,866  1,272  0.57% 896,169  1,488  0.67% 931,655  3,274  1.40%
Total interest bearing deposits3,887,049  3,150  0.32% 3,903,244  3,409  0.35% 3,425,747  5,296  0.62%
Short-term borrowings182,484  132  0.29% 218,491  161  0.30% 165,840  175  0.42%
Long-term debt163,817  1,597  3.87% 189,644  1,712  3.62% 231,406  1,874  3.22%
Total borrowed funds346,301  1,729  1.98% 408,135  1,873  1.84% 397,246  2,049  2.05%
Total interest bearing liabilities$4,233,350  $4,879  0.46% $4,311,379  $5,282  0.49% $3,822,993  $7,345  0.76%
Noninterest bearing deposits995,786      972,080      891,425     
Other liabilities43,040      45,035      67,111     
Shareholders’ equity539,052      523,242      529,857     
Total liabilities and shareholders’ equity$5,811,228      $5,851,736      $5,311,386     
Net interest income(2)  $41,462      $39,671      $38,953   
Net interest spread(2)    2.89%     2.77%     2.97%
Net interest margin(2)    3.00%     2.88%     3.14%
                  
Total deposits(5)$4,882,835  $3,150  0.26% $4,875,324  $3,409  0.28% $4,317,172  $5,296  0.49%
Cost of funds(6)    0.37%     0.40%     0.62%

(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 $3.5 million, $2.3 million, and $1.1 million for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively. Loan purchase discount accretion was $774 thousand, $873 thousand, and $1.9 million for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively. Tax equivalent adjustments were $507 thousand, $519 thousand, and $536 thousand for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $615 thousand, $647 thousand, and $608 thousand for the three months ended September 30, 2021, June 30, 2021, and September 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

 Nine Months Ended
 September 30, 2021 September 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)$3,394,066  $108,950  4.29% $3,548,968  $121,957  4.59%
Taxable investment securities1,501,252  18,231  1.62% 721,266  12,937  2.40%
Tax-exempt investment securities (2)(4)466,209  9,442  2.71% 305,514  7,215  3.15%
Total securities held for investment(2)1,967,461  27,673  1.88% 1,026,780  20,152  2.62%
Other43,250  54  0.17% 70,983  233  0.44%
Total interest earning assets(2)$5,404,777  136,677  3.38% $4,646,731  142,342  4.09%
Other assets324,045      380,961     
Total assets$5,728,822      $5,027,692     
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Interest checking deposits$1,418,339  $3,142  0.30% $1,052,816  $3,477  0.44%
Money market deposits936,932  1,486  0.21% 814,669  3,152  0.52%
Savings deposits585,334  926  0.21% 435,612  1,107  0.34%
Time deposits875,027  4,613  0.70% 973,044  11,918  1.64%
Total interest bearing deposits3,815,632  10,167  0.36% 3,276,141  19,654  0.80%
Short-term borrowings192,083  421  0.29% 149,041  772  0.69%
Long-term debt186,323  5,160  3.70% 219,455  4,964  3.02%
Total borrowed funds378,406  5,581  1.97% 368,496  5,736  2.08%
Total interest bearing liabilities$4,194,038  $15,748  0.50% $3,644,637  $25,390  0.93%
Noninterest bearing deposits962,852      805,641     
Other liabilities45,671      58,618     
Shareholders’ equity526,261      518,796     
Total liabilities and shareholders’ equity$5,728,822      $5,027,692     
Net interest income(2)  $120,929      $116,952   
Net interest spread(2)    2.88%     3.16%
Net interest margin(2)    2.99%     3.36%
            
Total deposits(5)$4,778,484  $10,167  0.28% $4,081,782  $19,654  0.64%
Cost of funds(6)    0.41%     0.76%

(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 $9.3 million and $1.8 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. Loan purchase discount accretion was $2.7 million and $7.6 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. Tax equivalent adjustments were $1.6 million and $1.5 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.9 million and $1.5 million for the nine months ended September 30, 2021 and September 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		          
(Dollars in thousands, except per share data) September 30, June 30, March 31, December 31, September 30,
 2021 2021 2021 2020 2020
Total shareholders’ equity $530,264   $530,293   $511,320   $515,250   $499,081  
Intangible assets, net (83,607)  (84,871)  (86,212)  (87,719)  (89,288) 
Tangible common equity $446,657   $445,422   $425,108   $427,531   $409,793  
           
Total assets $5,875,423   $5,749,215   $5,737,312   $5,556,648   $5,330,708  
Intangible assets, net (83,607)  (84,871)  (86,212)  (87,719)  (89,288) 
Tangible assets $5,791,816   $5,664,344   $5,651,100   $5,468,929   $5,241,420  
           
Book value per share $33.71   $33.22   $32.00   $32.17   $31.00  
Tangible book value per share(1) $28.40   $27.90   $26.60   $26.69   $25.45  
Shares outstanding 15,729,451   15,963,468   15,981,088   16,016,780   16,099,324  
           
Common equity ratio 9.03 % 9.22 % 8.91 % 9.27 % 9.36 %
Tangible common equity ratio(2) 7.71 % 7.86 % 7.52 % 7.82 % 7.82 %

(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.

Return on Average Tangible Equity Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net income (loss) $16,311   $17,271   $(19,824)  $55,230   $(10,087) 
Intangible amortization, net of tax(1) 948   1,006   1,223   3,084   4,055  
Goodwill impairment —   —   31,500   —   31,500  
Tangible net income $17,259   $18,277   $12,899   $58,314   $25,468  
           
Average shareholders’ equity $539,052   $523,242   $529,857   $526,261   $518,796  
Average intangible assets, net (84,288)  (85,518)  (121,306)  (85,579)  (122,518) 
Average tangible equity $454,764   $437,724   $408,551   $440,682   $396,278  
           
Return on average equity 12.00 % 13.24 % (14.88)% 14.03 % (2.60)%
Return on average tangible equity(2) 15.06 % 16.75 % 12.56 % 17.69 % 8.58 %

(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 Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net interest income $40,340   $38,505   $37,809   $117,462   $113,927  
Tax equivalent adjustments:          
Loans(1) 507   519   536   1,557   1,540  
Securities(1) 615   647   608   1,910   1,485  
Net interest income, tax equivalent $41,462   $39,671   $38,953   $120,929   $116,952  
Loan purchase discount accretion (774)  (873)  (1,923)  (2,745)  (7,556) 
Core net interest income $40,688   $38,798   $37,030   $118,184   $109,396  
           
Net interest margin 2.92 % 2.80 % 3.05 % 2.91 % 3.27 %
Net interest margin, tax equivalent(2) 3.00 % 2.88 % 3.14 % 2.99 % 3.36 %
Core net interest margin(3) 2.94 % 2.82 % 2.99 % 2.92 % 3.14 %
Average interest earning assets $5,489,917   $5,522,427   $4,935,175   $5,404,777   $4,646,731  

(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.

Loan Yield, Tax Equivalent / Core Yield on Loans Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Loan interest income, including fees $36,115   $34,736   $38,191   $107,393   $120,417  
Tax equivalent adjustment(1) 507   519   536   1,557   1,540  
Tax equivalent loan interest income $36,622   $35,255   $38,727   $108,950   $121,957  
Loan purchase discount accretion (774)  (873)  (1,923)  (2,745)  (7,556) 
Core loan interest income $35,848   $34,382   $36,804   $106,205   $114,401  
           
Yield on loans 4.27 % 4.10 % 4.25 % 4.23 % 4.53 %
Yield on loans, tax equivalent(2) 4.33 % 4.16 % 4.31 % 4.29 % 4.59 %
Core yield on loans(3) 4.24 % 4.06 % 4.09 % 4.18 % 4.31 %
Average loans $3,356,680   $3,396,575   $3,576,642   $3,394,066   $3,548,968  

(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent loan interest income divided by average loans.
(3) Annualized core loan interest income divided by average loans.

  Three Months Ended Nine Months Ended
Efficiency Ratio September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Total noninterest expense $29,778   $28,670   $59,939   $86,148   $117,978  
Amortization of intangibles (1,264)  (1,341)  (1,631)  (4,112)  (5,407) 
Merger-related expenses —   —   —   —   (61) 
Goodwill impairment —   —   (31,500)  —   (31,500) 
Noninterest expense used for efficiency ratio $28,514   $27,329   $26,808   $82,036   $81,010  
           
Net interest income, tax equivalent(1) $41,462   $39,671   $38,953   $120,929   $116,952  
Noninterest income 9,182   10,218   9,570   31,224   27,994  
Investment securities gains, net (36)  (42)  (106)  (105)  (154) 
Net revenues used for efficiency ratio $50,608   $49,847   $48,417   $152,048   $144,792  
           
Efficiency ratio (2) 56.34 % 54.83 % 55.37 % 53.95 % 55.95 %

(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles, merger-related expenses, and goodwill impairment divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.

Adjusted Allowance for Credit Losses Ratio September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2021 2021 2021 2020 2020
Loans held for investment, net of unearned income $3,268,644   $3,330,156   $3,358,161   $3,482,223   $3,537,432  
PPP loans (89,354)  (184,390)  (248,682)  (259,260)  (331,703) 
Core loans $3,179,290   $3,145,766   $3,109,479   $3,222,963   $3,205,729  
Allowance for credit losses $47,900   $48,000   $50,650   $55,500   $58,500  
           
Allowance for credit losses ratio 1.47 % 1.44 % 1.51 % 1.59 % 1.65 %
Adjusted allowance for credit losses ratio(1) 1.51 % 1.53 % 1.63 % 1.72 % 1.82 %

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

Core Loans/Core Commercial Loans September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2021 2021 2021 2020 2020
Commercial loans:          
Commercial and industrial $927,258  $982,092  $993,770  $1,055,488  $1,103,102 
Agricultural 106,356  107,834  117,099  116,392  129,453 
Commercial real estate 1,699,358  1,705,789  1,693,592  1,732,361  1,707,035 
Total commercial loans $2,732,972  $2,795,715  $2,804,461  $2,904,241  $2,939,590 
Consumer loans:          
Residential real estate $468,136  $468,581  $474,433  $499,106  $521,570 
Other consumer 67,536  65,860  79,267  78,876  76,272 
Total consumer loans $535,672  $534,441  $553,700  $577,982  $597,842 
Loans held for investment, net of unearned income $3,268,644  $3,330,156  $3,358,161  $3,482,223  $3,537,432 
           
PPP loans $89,354  $184,390  $248,682  $259,260  $331,703 
           
Core loans(1) $3,179,290  $3,145,766  $3,109,479  $3,222,963  $3,205,729 
Core commercial loans(2) $2,643,618  $2,611,325  $2,555,779  $2,644,981  $2,607,887 

(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.

Contact:  
 Charles N. Funk Barry S. Ray
 Chief Executive Officer Senior Executive Vice President and Chief Financial Officer
 319.356.5800 319.356.5800

FAQ

What were the earnings results for MidWestOne Financial Group (MOFG) in Q3 2021?

MidWestOne reported a net income of $16.3 million, or $1.03 per diluted common share for Q3 2021.

What was the total revenue for MOFG in the third quarter of 2021?

Total revenue for MidWestOne in Q3 2021 was $49.5 million.

What acquisition did MidWestOne Financial Group (MOFG) announce?

MidWestOne announced the acquisition of Iowa First Bancshares Corp. on November 1, 2021.

How did the efficiency ratio change for MOFG in Q3 2021?

The efficiency ratio increased to 56.34% in Q3 2021 from 54.83% in the previous quarter.

Stock MOFG logo
MidWestOne Financial Group

NASDAQ:MOFG

MOFG Rankings

#2916 Ranked by Market Cap
#995 Ranked by Dividends

MOFG Latest News

Oct 24, 2024
MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2024
Oct 11, 2024
MidWestOne Financial Group, Inc. Announces Third Quarter 2024 Earnings Conference Call
Jul 25, 2024
MidWestOne Financial Group, Inc. Reports Financial Results for the Second Quarter of 2024
Jul 12, 2024
MidWestOne Financial Group, Inc. Announces Second Quarter 2024 Earnings Conference Call
Jun 3, 2024
MidWestOne Financial Group Welcomes Three Key Executive Leaders to the Organization

MOFG Stock Data

620.24M
19.39M
6.62%
78.31%
0.3%
Banks - Regional
State Commercial Banks
Link
United States of America
IOWA CITY