MidWestOne Financial Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2020

Rhea-AI Summary

MidWestOne Financial Group (NASDAQ: MOFG) reported a fourth quarter net income of $16.7 million, or $1.04 per diluted share, reversing a $19.8 million loss in the previous quarter. Annual revenue rose 5% to $49.7 million, aided by a decrease in credit loss expenses by $8 million. Noninterest expenses fell by 47%, mainly due to a $31.5 million goodwill impairment recorded earlier. However, full-year net income dropped 85% to $6.6 million. Average deposits surged 17% year-over-year, indicating positive liquidity.

Positive

• Net income of $16.7 million for Q4 2020, up from a loss of $19.8 million in Q3 2020.
• Revenue increased by 5% to $49.7 million.
• Credit loss expenses decreased by $8 million, indicating improved loan credit quality.
• Noninterest expenses reduced by 47% due to prior goodwill impairment charge.
• Average deposits grew by $172.9 million, or 17% annualized.

Negative

• Full-year net income of $6.6 million down 85% from $43.6 million in 2019.
• Core earnings declined by 13% due to pandemic-related credit loss expenses.

Fourth Quarter Summary⁽¹⁾

• Net income for the fourth quarter was $16.7 million, or $1.04 per diluted common share.
  -- Revenue, net of interest expense, increased $2.3 million, or 5%, to $49.7 million.
  -- Credit loss expense decreased $8.0 million, or 161%, from improved economic forecasts.
  -- Noninterest expense decreased $28.0 million, or 47%, to $31.9 million due to the $31.5 million goodwill impairment charge recorded in the third quarter of 2020 (the “linked quarter”).
• Net charge-off ratio was 4 basis points ("bps"), a decline of 16 bps from the linked quarter.
• COVID-19 loan modifications declined to $44.1 million, which represented 1.3% of loans held for investment, net of unearned income.
• Average deposits increased $172.9 million, or 17% annualized, while cost of total deposits declined 11 bps to 38 bps.
  

Full Year 2020 Summary⁽¹⁾

• Net income for the full year was $6.6 million, or $0.41 per diluted common share.
• Core earnings⁽²⁾ were $38.1 million, a decline of $5.5 million, or 13%, due primarily to pandemic-related credit loss expenses recognized in 2020.
• Net charge-off ratio improved 8 bps to 15 bps.
• Book value and tangible book value per share⁽²⁾ grew 2% and 12%, respectively.

IOWA CITY, Iowa, Jan. 28, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the fourth quarter of 2020 of $16.7 million, or $1.04 per diluted common share, compared to net loss of $19.8 million, or a loss of $1.23 per diluted common share, for the linked quarter. Net income for the full year of 2020 was $6.6 million, or $0.41 per diluted common share, compared to net income for the full year of 2019 of $43.6 million, or $2.93 per diluted common share.

Charles Funk, Chief Executive Officer of the Company, commented, "This was an excellent quarter for MidWestOne. Earnings were strong at $1.04 per diluted common share and a 1.22% return on average assets, 13.15% return on average equity, and 17.07% return on average tangible equity⁽²⁾. Among the most positive elements of the quarter was a nice increase in noninterest income driven by our residential mortgage and wealth management operations. We also benefited from credit loss expense recapture, which was driven by stability in loan credit quality and improved economic forecasts. Finally, in a tough operating environment, we achieved core commercial loan⁽²⁾ growth in the fourth quarter of 6% annualized."

¹Fourth Quarter Summary compares to the linked quarter unless noted. Full Year 2020 Summary compares to the full year 2019 unless noted.

²Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

FINANCIAL HIGHLIGHTS		Three Months Ended															Year Ended
		December 31,					September 30,					December 31,					December 31,				December 31,
(Dollars in thousands, except per share amounts)		2020					2020					2019					2020				2019
Net interest income		$	39,037				$	37,809				$	39,584				$	152,964			$	143,650
Noninterest income		10,626					9,570					9,036					38,620				31,246
Total revenue, net of interest expense		49,663					47,379					48,620					191,584				174,896
Credit loss (benefit) expense		(3,041		)			4,992					604					28,369				7,158
Noninterest expense		31,915					59,939					36,436					149,893				117,535
Income (loss) before income tax expense (benefit)		20,789					(17,552		)			11,580					13,322				50,203
Income tax expense (benefit)		4,079					2,272					(1,791		)			6,699				6,573
Net income (loss)		$	16,710				$	(19,824	)			$	13,371				$	6,623			$	43,630
Diluted earnings (loss) per share		$	1.04				$	(1.23	)			$	0.83				$	0.41			$	2.93
Return on average assets		1.22			%		(1.48		)	%		1.14			%		0.13		%		1.04		%
Return on average equity		13.15			%		(14.88		)	%		10.55			%		1.28		%		9.65		%
Return on average tangible equity(1)		17.07			%		12.56			%		15.60			%		10.80		%		13.98		%
Efficiency ratio(1)		59.69			%		55.37			%		63.05			%		56.92		%		57.56		%
(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 December 31, 2020, loans modified as a result of the COVID-19 pandemic totaled $44.1 million, a decline of 62% from $116.0 million at September 30, 2020. Of those modified loans at December 31, 2020, $24.6 million are in their first deferral period while $19.5 million are in or being processed for an additional deferral.

Small Business Administration ("SBA") Paycheck Protection Program ("PPP") Loans

On December 27, 2020, a new COVID-19 relief bill was signed into law by President Trump, which includes as part of the bill up to $284.5 billion of a second wave of PPP funding. On January 8, 2021, the SBA issued guidance that amended the threshold for loans that qualify for the simplified forgiveness application from $50,000 or less to $150,000 or less.

During the first wave of the PPP, the Company funded 2,681 loans totaling $348.5 million. As of December 31, 2020, 2,410 loans totaling $259.3 million, including $5.3 million of unamortized net fees, were outstanding. Of those remaining loans, 2,189 loans totaling $72.9 million, including unamortized net fees of $1.7 million, qualified for the simplified forgiveness application described above.

Mr. Funk stated, "The Company remains committed to supporting our customers and communities, and we intend to participate in this next wave of the PPP. We expect the volume of second wave funding will be lower than the first round."

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased to $39.0 million in the fourth quarter of 2020 from $37.8 million in the third quarter of 2020 due mainly to accelerated PPP loan fee accretion stemming from loan forgiveness, higher volume of average interest earning assets, and a stable net interest margin. Net PPP loan fee accretion was $3.1 million in the fourth quarter of 2020 compared to $1.3 million in the linked quarter. Loan purchase discount accretion was $1.5 million in the fourth quarter of 2020, down from $1.9 million in the linked quarter. Average interest earning assets increased $182.5 million to $5.1 billion in the fourth quarter of 2020, compared to the third quarter of 2020, as net loan pay-downs and deposit inflows were re-invested into debt securities.

The Company's tax equivalent net interest margin was 3.13% in the fourth quarter of 2020 compared to 3.14% in the linked quarter as lower average funding costs were more than offset by lower average earning asset yields. The cost of interest bearing liabilities decreased 12 bps to 0.64%, primarily as a result of interest bearing deposit costs of 0.47%, which declined 15 bps from the linked quarter. Total earning asset yields decreased 10 bps from the linked quarter, reflecting the origination and re-pricing of loans at, generally, lower coupon rates compared to existing portfolio coupon rates as well as a shift in earning asset mix to a greater proportion of investment securities, which generally have lower yields than loans.

"The transitory benefit to our net interest margin from PPP loan forgiveness will continue over the next few quarters. The margin was negatively impacted in the fourth quarter by a reversal of $0.4 million of interest income from a loan relationship placed on nonaccrual. The low interest rate environment continues to challenge our margin management," stated Mr. Funk.

Noninterest Income

Noninterest income for the fourth quarter of 2020 increased $1.1 million, or 11%, from the linked quarter. The increase was due primarily to a $0.6 million increase in loan revenue, an increase in 'Other' noninterest income of $0.3 million, and an increase of $0.2 million in investment services and trust activities revenue. The increase in loan revenue reflected robust production from the Company's residential mortgage business as low interest rates continued to drive new purchase and refinance volumes.

Mr. Funk noted, "Both our home mortgage center and investment services group had record years in 2020. Our trust department also contributed despite being challenged by additional delays in the Iowa court system due to the pandemic. We are very positive about the future direction of these three areas of our Company. During the quarter, we added two wealth management professionals to our trust department serving the Twin Cities metro. We believe this will enhance wealth management revenue in 2021 and beyond."

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

	Three Months Ended
Noninterest Income	December 31,				September 30,				December 31,
(In thousands)	2020				2020				2019
Investment services and trust activities	$	2,518			$	2,361			$	2,421
Service charges and fees	1,571				1,491				2,072
Card revenue	1,517				1,600				1,142
Loan revenue	3,900				3,252				1,757
Bank-owned life insurance	541				530				501
Investment securities gains, net	30				106				18
Other	549				230				1,125
Total noninterest income	$	10,626			$	9,570			$	9,036

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 decreased $28.0 million, or 46.8%, from the linked quarter due primarily to a $31.5 million goodwill impairment charge that was recorded in the linked quarter. Excluding the goodwill impairment charge, noninterest expense increased $3.5 million, due primarily to increases in compensation and employee benefits of $1.2 million, $0.9 million in legal and professional expenses and $0.9 million in 'Other' noninterest expense. The increase in compensation and employee benefits was due mainly to an increase of $1.0 million related to incentive compensation expense and commissions. The increase in legal and professional expenses was primarily driven by $0.6 million of consulting fees incurred as part of a large contract renewal where the consultant earned a fee based on life-of-contract savings. The increase in 'Other' noninterest expense was primarily attributable to a $0.8 million loss from the termination of our cash flow hedge in the fourth quarter of 2020. The increased noninterest expenses noted above were the primary drivers in the increase in the efficiency ratio, which increased 4.32% to 59.69%, as compared to the linked quarter efficiency ratio of 55.37%.

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

	Three Months Ended
Noninterest Expense	December 31,					September 30,				December 31,
(In thousands)	2020					2020				2019
Compensation and employee benefits	$	17,638				$	16,460			$	19,246
Occupancy expense of premises, net	2,476					2,278				2,347
Equipment	2,040					1,935				2,251
Legal and professional	2,052					1,184				1,797
Data processing	1,460					1,308				1,492
Marketing	986					857				1,147
Amortization of intangibles	1,569					1,631				1,941
FDIC insurance	495					470				(72		)
Communications	412					428				493
Foreclosed assets, net	(35		)			13				173
Other	2,822					1,875				5,621
Total core noninterest expense	$	31,915				$	28,439			$	36,436
Goodwill impairment	$	—				$	31,500			$	—
Total noninterest expense	$	31,915				$	59,939			$	36,436

The Company incurred no merger-related costs in either the fourth quarter of 2020 or in the linked quarter, whereas a total amount of $3.3 million of merger-related costs were incurred in the fourth quarter of 2019.

Income Taxes

The effective income tax rate was 19.6% in the fourth quarter of 2020 compared to (12.9)% in the linked quarter. Excluding non-deductible goodwill impairment, the effective income tax rate in the linked quarter was 16.3%. The effective income tax rate in the fourth quarter of 2020 reflected an increase in income taxes based on the statutory rate and state income taxes, net of federal income tax benefits primarily due to the net income earned during the quarter, offset by benefits related to tax-exempt interest and renewable energy tax credits.The effective tax rate for the year ended December 31, 2020 was 50.3%. Excluding the impact of the non-deductible goodwill impairment, the effective income tax rate was 14.9%. The effective income tax rate for the full year 2021 is expected to be in the range of 19-21%.

BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS	As of or For the Three Months Ended
	December 31,				September 30,				December 31,
(Dollars in millions, except per share amounts)	2020				2020				2019
Ending Balance Sheet
Total assets	$	5,556.6			$	5,330.7			$	4,653.6
Loans held for investment, net of unearned income	3,482.2				3,537.4				3,451.3
Total securities held for investment	1,657.4				1,366.3				786.0
Total deposits	4,547.0				4,333.6				3,728.7
Average Balance Sheet
Average total assets	$	5,457.9			$	5,311.4			$	4,634.6
Average total loans	3,560.6				3,576.6				3,493.5
Average total deposits	4,490.0				4,317.2				3,723.9
Funding and Liquidity
Short-term borrowings	$	230.8			$	183.9			$	139.3
Long-term debt	208.7				245.5				231.7
Loans to deposits ratio	76.58		%		81.63		%		92.56		%
Equity
Total shareholders' equity	$	515.3			$	499.1			$	509.0
Equity to assets ratio	9.27		%		9.36		%		10.94		%
Tangible common equity(1)	427.5				409.8				384.8
Tangible common equity ratio(1)	7.82		%		7.82		%		8.50		%
Per Share Data
Book value	$	32.17			$	31.00			$	31.49
Tangible book value(1)	$	26.69			$	25.45			$	23.81
(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 $55.2 million, or 2%, to $3.48 billion from September 30, 2020, driven primarily by PPP loan forgiveness and pay downs totaling $79.0 million and lower line utilization.

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

Loans Held for Investment	December 31, 2020							September 30, 2020							December 31, 2019
(dollars in thousands)		Balance			% of Total				Balance			% of Total				Balance			% of Total
Commercial and industrial	$	1,055,488			30.3		%	$	1,103,102			31.2		%	$	835,236			24.2		%
Agricultural	116,392				3.3			129,453				3.7			140,446				4.1
Commercial real estate
Construction and development	181,291				5.2			191,423				5.4			298,077				8.6
Farmland	144,970				4.2			152,362				4.2			181,885				5.3
Multifamily	256,525				7.4			235,241				6.7			227,407				6.6
Other	1,149,575				33.0			1,128,009				31.9			1,107,490				32.1
Total commercial real estate	1,732,361				49.8			1,707,035				48.2			1,814,859				52.6
Residential real estate
One-to-four family first liens	355,684				10.2			371,390				10.5			407,418				11.8
One-to-four family junior liens	143,422				4.1			150,180				4.2			170,381				4.9
Total residential real estate	499,106				14.3			521,570				14.7			577,799				16.7
Consumer	78,876				2.3			76,272				2.2			82,926				2.4
Loans held for investment, net of unearned income	$	3,482,223			100.0		%	$	3,537,432			100.0		%	$	3,451,266			100.0		%

Credit Loss Expense & Allowance for Credit Losses

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

	Three Months Ended												Year Ended
Allowance for Credit Losses Roll Forward	December 31,				September 30,				December 31,				December 31,				December 31,
(In thousands)	2020				2020				2019				2020				2019
Beginning balance	$	58,500			$	55,644			$	31,532			$	29,079			$	29,307
Cumulative effect of change in accounting principle - CECL	—				—				—				3,984				—
Charge-offs	(1,005		)		(2,188		)		(3,212		)		(6,793		)		(8,390		)
Recoveries	646				347				155				1,528				1,004
Net charge-offs	(359		)		(1,841		)		(3,057		)		(5,265		)		(7,386		)
Credit loss (benefit) expense related to loans	(2,641		)		4,697				604				27,702				7,158
Ending balance	$	55,500			$	58,500			$	29,079			$	55,500			$	29,079

Effective January 1, 2020, the Company adopted the Financial Instruments - Credit Losses (CECL) accounting guidance. The adoption of this guidance established a single allowance framework for all financial assets carried at amortized cost and certain off-balance sheet credit exposures. The framework requires that management's estimate reflects credit losses over the full remaining expected life of each credit and considers expected future changes in macroeconomic conditions. The adoption resulted in the recognition on January 1, 2020 of cumulative effect adjustments of $4.0 million related to the allowance for credit losses (ACL) and $3.4 million related to the liability for off-balance sheet credit exposures.

As of December 31, 2020, the ACL was $55.5 million, or 1.59% of loans held for investment, net of unearned income, compared with $58.5 million, or 1.65%, at September 30, 2020. After excluding $259.3 million of net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income decreased to 1.72%⁽¹⁾ as of December 31, 2020, from 1.82%⁽¹⁾ at September 30, 2020. The decline in the ACL during the fourth quarter reflected overall improvements in the economic forecast when compared to the linked quarter and the overall stability in the credit quality of our loan portfolio.

Mr. Funk noted, "At 1.59%, or 1.72%⁽¹⁾ excluding the impact of PPP, we believe our allowance for credit losses ratios remain strong."

⁽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 Composition	December 31, 2020							September 30, 2020							December 31, 2019
(In thousands)	Balance				% of Total			Balance				% of Total			Balance				% of Total
Noninterest bearing deposits	$	910,655			20.0		%	$	864,504			19.9		%	$	662,209			17.8		%
Interest checking deposits	1,351,641				29.7			1,230,146				28.5			962,830				25.7
Money market deposits	918,654				20.2			871,336				20.1			763,028				20.5
Savings deposits	529,751				11.7			486,876				11.2			387,142				10.4
Total non-maturity deposits	3,710,701				81.6			3,452,862				79.7			2,775,209				74.4
Time deposits of $250,000 and under	581,471				12.8			617,229				14.2			682,232				18.3
Time deposits over $250,000	254,877				5.6			263,550				6.1			271,214				7.3
Total time deposits	836,348				18.4			880,779				20.3			953,446				25.6
Total deposits	$	4,547,049			100.0		%	$	4,333,641			100.0		%	$	3,728,655			100.0		%

CREDIT RISK PROFILE

	As of or For the Three Months Ended
Highlights	December 31,					September 30,				December 31,
(dollars in thousands)	2020					2020				2019
Credit loss (benefit) expense related to loans	$	(2,641	)			$	4,697			$	604
Net charge-offs	$	359				$	1,841			$	3,057
Net charge-off ratio(1)	0.04			%		0.20		%		0.35		%
At period-end
Pass	$	3,202,704				$	3,230,611			$	3,246,524
Special Mention / Watch	157,213					176,702				121,709
Classified	122,306					130,119				83,033
Total loans held for investment, net	$	3,482,223				$	3,537,432			$	3,451,266
Classified loans ratio(2)	3.51			%		3.68		%		2.41		%
Nonaccrual loans held for investment	$	41,950				$	39,071			$	41,483
Accruing loans contractually past due 90 days or more	739					2,593				136
Foreclosed assets, net	2,316					724				3,706
Total nonperforming assets (3)	$	45,005				$	42,388			$	45,325
Nonperforming assets ratio(4)	1.29			%		1.20		%		1.31		%
Allowance for credit losses	55,500					58,500				29,079
Allowance for credit losses ratio(5)	1.59			%		1.65		%		0.84		%
Adjusted allowance for credit losses ratio(6)	1.72			%		1.82		%		0.84		%
Performing troubled debt restructured loans held for investment	2,630					2,355				4,372
(1) Net charge-off ratio is calculated as annualized net charge-offs divided by average loans held for investment, net of unearned income during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income at the end of the period.
(3) Starting in the second quarter of 2020, performing troubled debt restructured loans held for investment are no longer included in nonperforming assets. Prior period credit quality metrics have been adjusted to exclude these loans.
(4) Nonperforming assets ratio is calculated as total nonperforming assets divided by the sum of loans held for investment, net of unearned income and foreclosed assets, net 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.

"We were pleased with the relative stability in the credit risk profile of the loan portfolio and have continued to proactively work problem credits to resolution. However, we did place one large $9.5 million hotel loan on nonaccrual at year-end. Conditions in the agricultural economy have brightened considerably with the recent rise in corn and soybean prices combined with government payments combining to make 2020 the best year in many years for our agricultural customers," stated Mr. Funk.

CAPITAL

Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) recently issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of CECL. 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.

	December 31,			September 30,			December 31,
Regulatory Capital Ratios	2020 (1)			2020			2019
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage ratio	8.50	%		8.52	%		9.48	%
Common equity tier 1 capital ratio	9.72	%		9.72	%		9.46	%
Tier 1 capital ratio	10.70	%		10.73	%		10.47	%
Total capital ratio	13.41	%		13.56	%		11.34	%
MidWestOne Bank
Tier 1 leverage ratio	9.35	%		9.26	%		10.06	%
Common equity tier 1 capital ratio	11.79	%		11.75	%		11.12	%
Tier 1 capital ratio	11.79	%		11.75	%		11.12	%
Total capital ratio	12.89	%		12.95	%		11.83	%
(1) Capital ratios for December 31, 2020 are preliminary

CORPORATE UPDATE

Share Repurchase Program

In the fourth quarter of 2020, the Company's board of directors authorized resuming repurchases under the Company's share repurchase program. The Company repurchased 84,088 shares of its common stock at an average price of $24.02 per share and a total cost of $2.0 million in the fourth quarter of 2020. At December 31, 2020, $4.4 million remained available to repurchase shares under the Company’s current share repurchase program.

Cash Dividend Announcement

On January 20, 2021, the Company’s board of directors declared a quarterly cash dividend of $0.2250 per common share. The dividend is payable March 15, 2021, to shareholders of record at the close of business on March 1, 2021.

Mr. Funk noted, "The board's confidence in our future operations was ratified with an increase in our quarterly dividend. Importantly, we were able to take advantage of market conditions to buy back our common stock during the quarter at levels we believe were very attractive."

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, January 29, 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 April 29, 2021, by calling 877-344-7529 and using the replay access code of 10150413. 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.

EARNINGS CALL PRESENTATION

The Company has prepared presentation materials that management intends to use during its fourth quarter 2020 conference call on January 29, 2021. These materials have been furnished to the U.S. Securities and Exchange Commission in a Form 8-K concurrently with this press release, and are also available on the Company's website at www.midwestonefinancial.com.

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 potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act, 2021; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (5) the effects of interest rates, including on our net income and the value of our securities portfolio; (6) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (7) fluctuations in the value of our investment securities; (8) governmental monetary and fiscal policies; (9) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR; (10) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (11) the ability to attract and retain key executives and employees experienced in banking and financial services; (12) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (13) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (14) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (15) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (16) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (17) the risks of mergers, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	December 31,				September 30,				December 31,
(In thousands)	2020				2020				2019
ASSETS
Cash and due from banks	$	65,078			$	71,901			$	67,174
Interest earning deposits in banks	17,409				55,421				6,112
Federal funds sold	172				7,540				198
Total cash and cash equivalents	82,659				134,862				73,484
Debt securities available for sale at fair value	1,657,381				1,366,344				785,977
Loans held for sale	59,956				13,096				5,400
Gross loans held for investment	3,496,790				3,555,969				3,469,236
Unearned income, net	(14,567		)		(18,537		)		(17,970		)
Loans held for investment, net of unearned income	3,482,223				3,537,432				3,451,266
Allowance for credit losses	(55,500		)		(58,500		)		(29,079		)
Total loans held for investment, net	3,426,723				3,478,932				3,422,187
Premises and equipment, net	86,401				87,955				90,723
Goodwill	62,477				62,477				91,918
Other intangible assets, net	25,242				26,811				32,218
Foreclosed assets, net	2,316				724				3,706
Other assets	153,493				159,507				147,960
Total assets	$	5,556,648			$	5,330,708			$	4,653,573
LIABILITIES
Noninterest bearing deposits	$	910,655			$	864,504			$	662,209
Interest bearing deposits	3,636,394				3,469,137				3,066,446
Total deposits	4,547,049				4,333,641				3,728,655
Short-term borrowings	230,789				183,893				139,349
Long-term debt	208,691				245,481				231,660
Other liabilities	54,869				68,612				44,927
Total liabilities	5,041,398				4,831,627				4,144,591
SHAREHOLDERS' EQUITY
Common stock	16,581				16,581				16,581
Additional paid-in capital	300,137				299,939				297,390
Retained earnings	188,191				175,017				201,105
Treasury stock	(14,251		)		(12,272		)		(10,466		)
Accumulated other comprehensive income	24,592				19,816				4,372
Total shareholders' equity	515,250				499,081				508,982
Total liabilities and shareholders' equity	$	5,556,648			$	5,330,708			$	4,653,573

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended												Year Ended
	December 31,				September 30,				December 31,				December 31,
(In thousands, except per share data)	2020				2020				2019				2020				2019
Interest income
Loans, including fees	$	38,239			$	38,191			$	44,906			$	158,656			$	163,163
Taxable investment securities	4,673				4,574				3,540				17,610				13,132
Tax-exempt investment securities	2,529				2,360				1,465				8,259				5,696
Other	29				29				115				262				450
Total interest income	45,470				45,154				50,026				184,787				182,441
Interest expense
Deposits	4,265				5,296				8,251				23,919				29,927
Short-term borrowings	142				175				368				914				1,847
Long-term debt	2,026				1,874				1,823				6,990				7,017
Total interest expense	6,433				7,345				10,442				31,823				38,791
Net interest income	39,037				37,809				39,584				152,964				143,650
Credit loss (benefit) expense	(3,041		)		4,992				604				28,369				7,158
Net interest income after credit loss (benefit) expense	42,078				32,817				38,980				124,595				136,492
Noninterest income
Investment services and trust activities	2,518				2,361				2,421				9,632				8,040
Service charges and fees	1,571				1,491				2,072				6,178				7,452
Card revenue	1,517				1,600				1,142				5,719				5,594
Loan revenue	3,900				3,252				1,757				10,185				3,789
Bank-owned life insurance	541				530				501				2,226				1,877
Insurance commissions	—				—				—				—				734
Investment securities gains, net	30				106				18				184				90
Other	549				230				1,125				4,496				3,670
Total noninterest income	10,626				9,570				9,036				38,620				31,246
Noninterest expense
Compensation and employee benefits	17,638				16,460				19,246				66,397				65,660
Occupancy expense of premises, net	2,476				2,278				2,347				9,348				8,647
Equipment	2,040				1,935				2,251				7,865				7,717
Legal and professional	2,052				1,184				1,797				6,153				8,049
Data processing	1,460				1,308				1,492				5,362				4,579
Marketing	986				857				1,147				3,815				3,789
Amortization of intangibles	1,569				1,631				1,941				6,976				5,906
FDIC insurance	495				470				(72		)		1,858				690
Communications	412				428				493				1,746				1,701
Foreclosed assets, net	(35		)		13				173				150				580
Goodwill impairment	—				31,500				—				31,500				—
Other	2,822				1,875				5,621				8,723				10,217
Total noninterest expense	31,915				59,939				36,436				149,893				117,535
Income (loss) before income tax expense	20,789				(17,552		)		11,580				13,322				50,203
Income tax expense (benefit)	4,079				2,272				(1,791		)		6,699				6,573
Net income (loss)	$	16,710			$	(19,824	)		$	13,371			$	6,623			$	43,630
Earnings (loss) per common share
Basic	$	1.04			$	(1.23	)		$	0.83			$	0.41			$	2.93
Diluted	$	1.04			$	(1.23	)		$	0.83			$	0.41			$	2.93
Weighted average basic common shares outstanding	16,074				16,099				16,162				16,102				14,870
Weighted average diluted common shares outstanding	16,092				16,099				16,193				16,110				14,885
Dividends paid per common share	$	0.2200			$	0.2200			$	0.2025			$	0.8800			$	0.8100

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

	December 31,				September 30,				June 30,				March 31,				December 31,
(In thousands)	2020				2020				2020				2020				2019
ASSETS
Cash and due from banks	$	65,078			$	71,901			$	65,863			$	60,396			$	67,174
Interest earning deposits in banks	17,409				55,421				45,018				58,319				6,112
Federal funds sold	172				7,540				6,329				6,830				198
Total cash and cash equivalents	82,659				134,862				117,210				125,545				73,484
Debt securities available for sale at fair value	1,657,381				1,366,344				1,187,455				881,859				785,977
Loans held for sale	59,956				13,096				12,048				9,483				5,400
Gross loans held for investment	3,496,790				3,555,969				3,618,675				3,440,907				3,469,236
Unearned income, net	(14,567		)		(18,537		)		(21,636		)		(15,145		)		(17,970		)
Loans held for investment, net of unearned income	3,482,223				3,537,432				3,597,039				3,425,762				3,451,266
Allowance for credit losses	(55,500		)		(58,500		)		(55,644		)		(51,187		)		(29,079		)
Total loans held for investment, net	3,426,723				3,478,932				3,541,395				3,374,575				3,422,187
Premises and equipment, net	86,401				87,955				88,929				89,860				90,723
Goodwill	62,477				62,477				93,977				93,977				91,918
Other intangible assets, net	25,242				26,811				28,443				30,190				32,218
Foreclosed assets, net	2,316				724				965				968				3,706
Other assets	153,493				159,507				160,541				157,452				147,960
Total assets	$	5,556,648			$	5,330,708			$	5,230,963			$	4,763,909			$	4,653,573
LIABILITIES
Noninterest bearing deposits	$	910,655			$	864,504			$	867,637			$	637,127			$	662,209
Interest bearing deposits	3,636,394				3,469,137				3,397,798				3,222,717				3,066,446
Total deposits	4,547,049				4,333,641				4,265,435				3,859,844				3,728,655
Short-term borrowings	230,789				183,893				162,224				129,489				139,349
Long-term debt	208,691				245,481				189,973				209,874				231,660
Other liabilities	54,869				68,612				92,550				64,138				44,927
Total liabilities	5,041,398				4,831,627				4,710,182				4,263,345				4,144,591
SHAREHOLDERS' EQUITY
Common stock	16,581				16,581				16,581				16,581				16,581
Additional paid-in capital	300,137				299,939				299,542				299,412				297,390
Retained earnings	188,191				175,017				198,382				190,212				201,105
Treasury stock	(14,251		)		(12,272		)		(12,272		)		(12,518		)		(10,466		)
Accumulated other comprehensive income	24,592				19,816				18,548				6,877				4,372
Total shareholders' equity	515,250				499,081				520,781				500,564				508,982
Total liabilities and shareholders' equity	$	5,556,648			$	5,330,708			$	5,230,963			$	4,763,909			$	4,653,573

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

	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
(In thousands, except per share data)	2020				2020				2020				2020				2019
Interest income
Loans, including fees	$	38,239			$	38,191			$	40,214			$	42,012			$	44,906
Taxable investment securities	4,673				4,574				4,646				3,717				3,540
Tax-exempt investment securities	2,529				2,360				1,858				1,512				1,465
Other	29				29				40				164				115
Total interest income	45,470				45,154				46,758				47,405				50,026
Interest expense
Deposits	4,265				5,296				6,409				7,949				8,251
Short-term borrowings	142				175				263				334				368
Long-term debt	2,026				1,874				1,374				1,716				1,823
Total interest expense	6,433				7,345				8,046				9,999				10,442
Net interest income	39,037				37,809				38,712				37,406				39,584
Credit loss (benefit) expense	(3,041		)		4,992				4,685				21,733				604
Net interest income after credit loss (benefit) expense	42,078				32,817				34,027				15,673				38,980
Noninterest income
Investment services and trust activities	2,518				2,361				2,217				2,536				2,421
Service charges and fees	1,571				1,491				1,290				1,826				2,072
Card revenue	1,517				1,600				1,237				1,365				1,142
Loan revenue	3,900				3,252				1,910				1,123				1,757
Bank-owned life insurance	541				530				635				520				501
Investment securities gains, net	30				106				6				42				18
Other	549				230				974				2,743				1,125
Total noninterest income	10,626				9,570				8,269				10,155				9,036
Noninterest expense
Compensation and employee benefits	17,638				16,460				15,682				16,617				19,246
Occupancy expense of premises, net	2,476				2,278				2,253				2,341				2,347
Equipment	2,040				1,935				2,010				1,880				2,251
Legal and professional	2,052				1,184				1,382				1,535				1,797
Data processing	1,460				1,308				1,240				1,354				1,492
Marketing	986				857				910				1,062				1,147
Amortization of intangibles	1,569				1,631				1,748				2,028				1,941
FDIC insurance	495				470				445				448				(72		)
Communications	412				428				449				457				493
Foreclosed assets, net	(35		)		13				34				138				173
Goodwill impairment	—				31,500				—				—				—
Other	2,822				1,875				1,885				2,141				5,621
Total noninterest expense	31,915				59,939				28,038				30,001				36,436
Income (loss) before income tax expense	20,789				(17,552		)		14,258				(4,173		)		11,580
Income tax expense (benefit)	4,079				2,272				2,546				(2,198		)		(1,791		)
Net income (loss)	$	16,710			$	(19,824	)		$	11,712			$	(1,975	)		$	13,371
Earnings (loss) per common share
Basic	$	1.04			$	(1.23	)		$	0.73			$	(0.12	)		$	0.83
Diluted	$	1.04			$	(1.23	)		$	0.73			$	(0.12	)		$	0.83
Weighted average basic common shares outstanding	16,074				16,099				16,094				16,142				16,162
Weighted average diluted common shares outstanding	16,092				16,099				16,100				16,142				16,193
Dividends paid per common share	$	0.2200			$	0.2200			$	0.2200			$	0.2200			$	0.2025

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

	Three Months Ended
	December 31, 2020											September 30, 2020											December 31, 2019
(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)	$	3,560,632			$	38,795			4.33	%		$	3,576,642			$	38,727			4.31	%		$	3,493,496			$	45,429			5.16	%
Taxable investment securities	1,026,359				4,673				1.81	%		864,864				4,574				2.10	%		508,911				3,540				2.76	%
Tax-exempt investment securities (2)(4)	450,659				3,180				2.81	%		405,517				2,968				2.91	%		211,695				1,846				3.46	%
Total securities held for investment(2)	1,477,018				7,853				2.12	%		1,270,381				7,542				2.36	%		720,606				5,386				2.97	%
Other	80,019				29				0.14	%		88,152				29				0.13	%		28,227				115				1.62	%
Total interest earning assets(2)	$	5,117,669			46,677				3.63	%		$	4,935,175			46,298				3.73	%		$	4,242,329			50,930				4.76	%
Other assets	340,270											376,211											392,254
Total assets	$	5,457,939										$	5,311,386										$	4,634,583
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,276,320			$	958			0.30	%		$	1,174,033			$	1,049			0.36	%		$	926,155			$	1,394			0.60	%
Money market deposits	931,900				544				0.23	%		847,059				622				0.29	%		784,752				1,820				0.92	%
Savings deposits	508,763				279				0.22	%		473,000				351				0.30	%		388,338				389				0.40	%
Time deposits	862,408				2,484				1.15	%		931,655				3,274				1.40	%		953,804				4,648				1.93	%
Total interest bearing deposits	3,579,391				4,265				0.47	%		3,425,747				5,296				0.62	%		3,053,049				8,251				1.07	%
Short-term borrowings	182,080				142				0.31	%		165,840				175				0.42	%		126,508				368				1.15	%
Long-term debt	223,407				2,026				3.61	%		231,406				1,874				3.22	%		237,788				1,823				3.04	%
Total borrowed funds	405,487				2,168				2.13	%		397,246				2,049				2.05	%		364,296				2,191				2.39	%
Total interest bearing liabilities	$	3,984,878			$	6,433			0.64	%		$	3,822,993			$	7,345			0.76	%		$	3,417,345			$	10,442			1.21	%
Noninterest bearing deposits	910,657											891,425											670,884
Other liabilities	56,898											67,111											43,343
Shareholders’ equity	505,506											529,857											503,011
Total liabilities and shareholders’ equity	$	5,457,939										$	5,311,386										$	4,634,583
Net interest income(2)					$	40,244										$	38,953										$	40,488
Net interest spread(2)									2.99	%										2.97	%										3.55	%
Net interest margin(2)									3.13	%										3.14	%										3.79	%
Total deposits(5)	$	4,490,048			$	4,265			0.38	%		$	4,317,172			$	5,296			0.49	%		$	3,723,933			$	8,251			0.88	%
Cost of funds(6)									0.52	%										0.62	%										1.01	%

(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $2.5 million, $1.1 million, and $354 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Loan purchase discount accretion was $1.5 million, $1.9 million, and $3.9 million for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Tax equivalent adjustments were $556 thousand, $536 thousand, and $523 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $651 thousand, $608 thousand, and $381 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, 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.

	Year Ended
	December 31, 2020											December 31, 2019
(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)	$	3,551,945			$	160,752			4.53	%		$	3,157,127			$	164,948			5.22	%
Taxable investment securities	797,954				17,610				2.21	%		465,484				13,132				2.82	%
Tax-exempt investment securities (2)(4)	342,000				10,395				3.04	%		204,375				7,177				3.51	%
Total securities held for investment(2)	1,139,954				28,005				2.46	%		669,859				20,309				3.03	%
Other	73,255				262				0.36	%		21,289				450				2.11	%
Total interest earning assets(2)	$	4,765,154			189,019				3.97	%		$	3,848,275			185,707				4.83	%
Other assets	370,687											352,765
Total assets	$	5,135,841										$	4,201,040
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,108,997			$	4,435			0.40	%		$	806,624			$	4,723			0.59	%
Money market deposits	844,137				3,696				0.44	%		766,812				7,549				0.98	%
Savings deposits	454,000				1,386				0.31	%		329,199				1,092				0.33	%
Time deposits	945,234				14,402				1.52	%		873,978				16,563				1.90	%
Total interest bearing deposits	3,352,368				23,919				0.71	%		2,776,613				29,927				1.08	%
Short-term borrowings	157,346				914				0.58	%		124,956				1,847				1.48	%
Long-term debt	220,448				6,990				3.17	%		224,149				7,017				3.13	%
Total borrowed funds	377,794				7,904				2.09	%		349,105				8,864				2.54	%
Total interest bearing liabilities	$	3,730,162			$	31,823			0.85	%		$	3,125,718			$	38,791			1.24	%
Noninterest bearing deposits	832,038											586,100
Other liabilities	58,186											37,204
Shareholders’ equity	515,455											452,018
Total liabilities and shareholders’ equity	$	5,135,841										$	4,201,040
Net interest income(2)					$	157,196										$	146,916
Net interest spread(2)									3.12	%										3.59	%
Net interest margin(2)									3.30	%										3.82	%
Total deposits(5)	$	4,184,406			$	23,919			0.57	%		$	3,362,713			$	29,927			0.89	%
Cost of funds(6)									0.70	%										1.05	%

(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 $4.4 million and $(316) thousand for the year ended December 31, 2020 and December 31, 2019, respectively. Loan purchase discount accretion was $9.1 million and $14.0 million for the year ended December 31, 2020 and December 31, 2019, respectively. Tax equivalent adjustments were $2.1 million and $1.8 million for the year ended December 31, 2020 and December 31, 2019, respectively. The federal statutory tax rate utilized was 21%.

(4) Interest income includes tax equivalent adjustments of $2.1 million and $1.5 million for the year ended December 31, 2020 and December 31, 2019, 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), efficiency ratio, core earnings, 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		December 31,					September 30,					June 30,					March 31,					December 31,
(Dollars in thousands, except per share data)		2020					2020					2020					2020					2019
Total shareholders’ equity		$	515,250				$	499,081				$	520,781				$	500,564				$	508,982
Intangible assets, net		(87,719		)			(89,288		)			(122,420		)			(124,167		)			(124,136		)
Tangible common equity		$	427,531				$	409,793				$	398,361				$	376,397				$	384,846
Total assets		$	5,556,648				$	5,330,708				$	5,230,963				$	4,763,909				$	4,653,573
Intangible assets, net		(87,719		)			(89,288		)			(122,420		)			(124,167		)			(124,136		)
Tangible assets		$	5,468,929				$	5,241,420				$	5,108,543				$	4,639,742				$	4,529,437
Book value per share		$	32.17				$	31.00				$	32.35				$	31.11				$	31.49
Tangible book value per share(1)		$	26.69				$	25.45				$	24.74				$	23.39				$	23.81
Shares outstanding		16,016,780					16,099,324					16,099,324					16,089,782					16,162,176
Equity to assets ratio		9.27			%		9.36			%		9.96			%		10.51			%		10.94			%
Tangible common equity ratio(2)		7.82			%		7.82			%		7.80			%		8.11			%		8.50			%

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

		Three Months Ended															Year Ended
Return on Average Tangible Equity		December 31,					September 30,					December 31,					December 31,					December 31,
(Dollars in thousands)		2020					2020					2019					2020					2019
Net income (loss)		$	16,710				$	(19,824	)			$	13,371				$	6,623				$	43,630
Intangible amortization, net of tax(1)		1,177					1,223					1,456					5,232					4,430
Goodwill impairment		—					31,500					—					31,500					—
Tangible net income		$	17,887				$	12,899				$	14,827				$	43,355				$	48,060
Average shareholders’ equity		$	505,506				$	529,857				$	503,011				$	515,455				$	452,018
Average intangible assets, net		(88,543		)			(121,306		)			(125,898		)			(113,978		)			(108,242		)
Average tangible equity		$	416,963				$	408,551				$	377,113				$	401,477				$	343,776
Return on average equity		13.15			%		(14.88		)	%		10.55			%		1.28			%		9.65			%
Return on average tangible equity(2)		17.07			%		12.56			%		15.60			%		10.80			%		13.98			%

(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															Year Ended
		December 31,					September 30,					December 31,					December 31,					December 31,
(Dollars in thousands)		2020					2020					2019					2020					2019
Net interest income		$	39,037				$	37,809				$	39,584				$	152,964				$	143,650
Tax equivalent adjustments:
Loans(1)		556					536					523					2,096					1,785
Securities(1)		651					608					381					2,136					1,481
Net interest income, tax equivalent		$	40,244				$	38,953				$	40,488				$	157,196				$	146,916
Loan purchase discount accretion		(1,542		)			(1,923		)			(3,937		)			(9,098		)			(13,977		)
Core net interest income		$	38,702				$	37,030				$	36,551				$	148,098				$	132,939
Net interest margin		3.03			%		3.05			%		3.70			%		3.21			%		3.73			%
Net interest margin, tax equivalent(2)		3.13			%		3.14			%		3.79			%		3.30			%		3.82			%
Core net interest margin(3)		3.01			%		2.99			%		3.42			%		3.11			%		3.45			%
Average interest earning assets		$	5,117,669				$	4,935,175				$	4,242,329				$	4,765,154				$	3,848,275

(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															Year Ended
Loan Yield, Tax Equivalent		December 31,					September 30,					December 31,					December 31,					December 31,
(Dollars in thousands)		2020					2020					2019					2020					2019
Loan interest income, including fees		$	38,239				$	38,191				$	44,906				$	158,656				$	163,163
Tax equivalent adjustment(1)		556					536					523					2,096					1,785
Tax equivalent loan interest income		$	38,795				$	38,727				$	45,429				$	160,752				$	164,948
Loan purchase discount accretion		(1,542		)			(1,923		)			(3,937		)			(9,098		)			(13,977		)
Core loan interest income		$	37,253				$	36,804				$	41,492				$	151,654				$	150,971
Yield on loans		4.27			%		4.25			%		5.10			%		4.47			%		5.17			%
Yield on loans, tax equivalent(2)		4.33			%		4.31			%		5.16			%		4.53			%		5.22			%
Core yield on loans(3)		4.16			%		4.09			%		4.71			%		4.27			%		4.78			%
Average loans		$	3,560,632				$	3,576,642				$	3,493,496				$	3,551,945				$	3,157,127

(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															Year Ended
Efficiency Ratio		December 31,					September 30,					December 31,					December 31,					December 31,
(Dollars in thousands)		2020					2020					2019					2020					2019
Total noninterest expense		$	31,915				$	59,939				$	36,436				$	149,893				$	117,535
Amortization of intangibles		(1,569		)			(1,631		)			(1,941		)			(6,976		)			(5,906		)
Merger-related expenses		—					—					(3,282		)			(61		)			(9,130		)
Goodwill impairment		—					(31,500		)			—					(31,500		)			—
Noninterest expense used for efficiency ratio		$	30,346				$	26,808				$	31,213				$	111,356				$	102,499
Net interest income, tax equivalent(1)		$	40,244				$	38,953				$	40,488				$	157,196				$	146,916
Noninterest income		10,626					9,570					9,036					38,620					31,246
Investment securities gains, net		(30		)			(106		)			(18		)			(184		)			(90		)
Net revenues used for efficiency ratio		$	50,840				$	48,417				$	49,506				$	195,632				$	178,072
Efficiency ratio (2)		59.69			%		55.37			%		63.05			%		56.92			%		57.56			%

(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.

		Three Months Ended													Year Ended
Core Earnings		December 31,				September 30,					December 31,				December 31,				December 31,
(Dollars in thousands, except per share data)		2020				2020					2019				2020				2019
Net income (loss)		$	16,710			$	(19,824	)			$	13,371			$	6,623			$	43,630
Goodwill impairment		—				31,500					—				31,500				—
Core earnings		$	16,710			$	11,676				$	13,371			$	38,123			$	43,630
Weighted average diluted common shares outstanding		16,092				16,099					16,193				16,110				14,885
Earnings (loss) per common share
Earnings per common share - diluted		$	1.04			$	(1.23	)			$	0.83			$	0.41			$	2.93
Core earnings per common share - diluted (1)		$	1.04			$	0.73				$	0.83			$	2.37			$	2.93

(1) Core earnings divided by weighted average diluted common shares outstanding

Adjusted Allowance for Credit Losses Ratio		December 31,					September 30,					June 30,					March 31,				December 31,
(Dollars in thousands)		2020					2020					2020					2020				2019
Loans held for investment, net of unearned income		$	3,482,223				$	3,537,432				$	3,597,039				$	3,425,762			$	3,451,266
PPP loans		(259,260		)			(331,703		)			(327,648		)			—				—
Core loans		$	3,222,963				$	3,205,729				$	3,269,391				$	3,425,762			$	3,451,266
Allowance for credit losses		$	55,500				$	58,500				$	55,644				$	51,187			$	29,079
Allowance for credit losses ratio		1.59			%		1.65			%		1.55			%		1.49		%		0.84		%
Adjusted allowance for credit losses ratio(1)		1.72			%		1.82			%		1.70			%		1.49		%		0.84		%

(1) Allowance for credit losses divided by core loans

Core Loans/Core Commercial Loans		December 31,				September 30,				June 30,				March 31,				December 31,
(Dollars in thousands)		2020				2020				2020				2020				2019
Commercial loans:
Commercial and industrial		$	1,055,488			$	1,103,102			$	1,084,527			$	864,702			$	835,236
Agricultural		116,392				129,453				140,837				145,435				140,446
Commercial real estate		1,732,361				1,707,035				1,764,739				1,780,446				1,814,859
Total commercial loans		$	2,904,241			$	2,939,590			$	2,990,103			$	2,790,583			$	2,790,541
Consumer loans:
Residential real estate		$	499,106			$	521,570			$	532,914			$	554,290			$	577,799
Other consumer		78,876				76,272				74,022				80,889				82,926
Total consumer loans		$	577,982			$	597,842			$	597,842			$	597,842			$	597,842
Loans held for investment, net of unearned income		$	3,482,223			$	3,537,432			$	3,587,945			$	3,388,425			$	3,388,383
PPP loans		$	259,260			$	331,703			$	327,648			$	—			$	—
Core loans(1)		$	3,222,963			$	3,205,729			$	3,260,297			$	3,388,425			$	3,388,383
Core commercial loans(2)		$	2,644,981			$	2,607,887			$	2,662,455			$	2,790,583			$	2,790,541

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

Category: Earnings

Source: MidWestOne Financial Group, Inc.

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 MidWestOne Financial Group's Q4 2020 earnings results?

MidWestOne Financial Group reported a Q4 2020 net income of $16.7 million, or $1.04 per diluted share.

How did annual revenue change for MidWestOne Financial Group in 2020?

Annual revenue increased by 5% to $191.6 million in 2020.

What is the current stock symbol for MidWestOne Financial Group?

The stock symbol for MidWestOne Financial Group is MOFG.

What was the credit loss expense in Q4 2020 for MidWestOne Financial Group?

Credit loss expense decreased by $8 million to a benefit of $3 million in Q4 2020.

When is the next conference call for MidWestOne Financial Group?

The next conference call is scheduled for January 29, 2021, at 11:00 a.m. CT.