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MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2022

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MidWestOne Financial Group, Inc. (MOFG) reported a net income of $18.3 million or $1.17 per diluted share for Q3 2022, a significant increase from $12.6 million or $0.80 per share in the prior quarter. The net interest margin improved by 21 bps to 3.08%, while core loan growth reached 15.72%. The nonperforming assets ratio further declined to 0.40%. Total revenues rose to $58.3 million, driven by increased net interest income and noninterest income.

Positive
  • Net income increased from $12.6 million to $18.3 million.
  • Net interest margin expanded by 21 bps to 3.08%.
  • Core loan growth (excluding PPP) of 15.72%.
  • Improvement in nonperforming assets ratio to 0.40%.
  • Efficiency ratio improved to 53.67%.
Negative
  • Total deposits decreased by $60.7 million (1.1%) to $5.5 billion.
  • Noninterest expense increased by $2.5 million (7.9%) compared to the linked quarter.

Third Quarter Summary1

  • Net income for the third quarter was $18.3 million, or $1.17 per diluted common share.
  • Net interest margin (tax equivalent) expanded 21 basis points (bps) to 3.08%2.
  • Annualized core loan growth (excluding PPP) of 15.72%2.
  • Nonperforming assets ratio improved 3 bps to 0.40%; net charge-off ratio of 0.06%.
  • Efficiency ratio improved to 53.67%2.

IOWA CITY, Iowa, Oct. 27, 2022 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the third quarter of 2022 of $18.3 million, or $1.17 per diluted common share, compared to net income of $12.6 million, or $0.80 per diluted common share, for the linked quarter.

CEO COMMENTARY

Len Devaisher, Interim Chief Executive Officer of the Company, commented, "We are gratified by our momentum: improving earnings driven by strengthening fundamentals. The combination of accelerated loan growth, improving credit metrics, and a balanced approach to deposit costs and retention efforts has us positioned well for the future."

____________________
1 Third Quarter Summary compares to the second quarter of 2022 (the "linked quarter") unless noted.
2 Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.


FINANCIAL HIGHLIGHTS

 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share amounts)  2022   2022   2021   2022   2021 
Net interest income $45,733  $39,725  $40,340  $122,794  $117,462 
Noninterest income  12,588   12,347   9,182   36,579   31,224 
Total revenue, net of interest expense  58,321   52,072   49,522   159,373   148,686 
Credit loss expense (benefit)  638   3,282   (1,080)  3,920   (7,958)
Noninterest expense  34,623   32,082   29,778   98,348   86,148 
Income before income tax expense  23,060   16,708   20,824   57,105   70,496 
Income tax expense  4,743   4,087   4,513   12,272   15,266 
Net income $18,317  $12,621  $16,311  $44,833  $55,230 
Diluted earnings per share $1.17  $0.80  $1.03  $2.86  $3.46 
           
Return on average assets  1.13%  0.83%  1.11%  0.97%  1.29%
Return on average equity  14.56%  10.14%  12.00%  11.81%  14.03%
Return on average tangible equity(1)  19.32%  13.13%  15.06%  15.28%  17.69%
Efficiency ratio(1)  53.67%  56.57%  56.34%  56.70%  53.95%
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

IOWA FIRST BANCSHARES CORP. ACQUISITION

On June 9, 2022, we acquired Iowa First Bancshares Corp ("IOFB"). The table below summarizes the amounts recognized at the acquisition date for each major class of assets acquired and liabilities assumed:

(In thousands) As of June 9, 2022
Merger consideration    
Cash consideration   $46,672 
Identifiable net assets acquired, at fair value    
Assets acquired    
Cash and due from banks $10,192   
Interest earning deposits in banks  67,855   
Debt securities  119,820   
Loans held for investment  281,326   
Premises and equipment  7,363   
Core deposit intangible  16,500   
Other assets  11,628   
Total assets acquired    514,684 
Liabilities assumed    
Deposits  (463,638)  
Other liabilities  (3,117)  
Total liabilities assumed    (466,755)
Identifiable net assets acquired, at fair value    47,929 
Bargain purchase gain (reported in Other noninterest income)   $1,257 

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased to $45.7 million in the third quarter of 2022 from $39.7 million in the second quarter of 2022, due primarily to a higher volume of interest earning assets in addition to an expansion in the net interest margin.

Average interest earning assets increased $332.0 million to $6.05 billion in the third quarter of 2022, when compared to the second quarter of 2022. This increase reflected the full quarter benefit from earning assets acquired in the IOFB acquisition, as well as organic loan growth.

The Company's tax equivalent net interest margin was 3.08% in the third quarter of 2022 compared to 2.87% in the linked quarter. The increase in tax equivalent net interest margin reflected an increase in total interest earning asset yields, partially offset by increased funding costs. Total interest earning assets yield increased 37 bps from the linked quarter as loan yields increased 42 bps and taxable investment securities yields 18 bps. Sixteen basis points of the loan yield increase was attributable to loan purchase discount accretion. The cost of interest bearing liabilities increased 19 bps to 0.64%, due to interest bearing deposits costs of 0.46%, short-term borrowing costs of 1.34%, and long-term debt costs of 4.70%, which increased 15 bps, 87 bps and 25 bps respectively, from the linked quarter.

Noninterest Income

Noninterest income for the third quarter of 2022 increased $0.2 million, or 2.0%, from the linked quarter. The increase was primarily due to increases of $2.0 million and $0.4 million in other income and service charges and fees, respectively. The increase in other income stemmed primarily from a one-time settlement and the increase in service charges and fees reflected the full quarter benefit from the IOFB acquisition. Partially offsetting the increases above was a $1.8 million decline in loan revenue, which reflected a smaller increase 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)2022
 2022 2021
Investment services and trust activities$2,876  $2,670  $2,915 
Service charges and fees 2,075   1,717   1,613 
Card revenue 1,898   1,878   1,820 
Loan revenue 1,722   3,523   1,935 
Bank-owned life insurance 579   558   532 
Investment securities gains, net (163)  395   36 
Other 3,601   1,606   331 
Total noninterest income$12,588  $12,347  $9,182 

Noninterest Expense

Noninterest expense for the third quarter of 2022 increased $2.5 million, or 7.9%, from the linked quarter, primarily due to increases of $1.1 million, $0.5 million, and $0.5 million in compensation and employee benefits, amortization of intangibles, and data processing, respectively. These increases primarily reflected a full three months of costs associated with IOFB as well as increased merger-related data processing expenses. Offsetting the increases identified above was a decline of $0.4 million in legal and professional expenses, primarily due to a decrease in legal and professional merger-related expenses.

The increase in net interest income and noninterest income, partially offset by the increase in noninterest expense noted above, were the primary drivers of the improvement in the efficiency ratio, which decreased 2.90 percentage points to 53.67% from 56.57% in the linked quarter.

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

 Three Months Ended
Noninterest ExpenseSeptember 30, June 30, September 30,
(In thousands)2022
 2022 2021
Compensation and employee benefits$20,046  $18,955  $17,350 
Occupancy expense of premises, net 2,577   2,253   2,547 
Equipment 2,358   2,107   1,973 
Legal and professional 2,012   2,435   1,272 
Data processing 1,731   1,237   1,406 
Marketing 1,139   1,157   1,022 
Amortization of intangibles 1,789   1,283   1,264 
FDIC insurance 415   420   435 
Communications 302   266   275 
Foreclosed assets, net 42   4   43 
Other 2,212   1,965   2,191 
Total noninterest expense$34,623  $32,082  $29,778 

The following table presents details of merger-related expenses for the periods indicated:

 Three Months Ended
 September 30, June 30, September 30,
Merger-related Expenses2022 2022 2021
(In thousands)     
Compensation and employee benefits$132  $150  $— 
Occupancy expense of premises, net —   1   — 
Equipment 14   6   — 
Legal and professional 193   638   — 
Data processing 304   38   — 
Marketing 90   65   — 
Communications —   2   — 
Other 30   1   — 
Total merger-related expenses$763  $901  $— 

Income Taxes

The Company's effective income tax rate decreased to 20.6% in the third quarter of 2022 compared to 24.5% in the linked quarter. The lower effective income tax rate in the third quarter of 2022 was due to the one-time income tax expense of $0.8 million recognized in the second quarter of 2022 stemming from a change in the tax law in the state of Iowa. The effective income tax rate for the full year 2022 is expected to be in the range of 20-22%.

BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS

As of or for the Three Months Ended
September 30, June 30, September 30,
(Dollars in millions, except per share amounts)2022 2022 2021
Ending Balance Sheet     
Total assets$6,491.1  $6,442.5  $5,875.4 
Loans held for investment, net of unearned income 3,746.3   3,611.2   3,268.6 
Total securities 2,299.9   2,402.8   2,136.9 
Total deposits 5,476.8   5,537.4   4,957.8 
Average Balance Sheet     
Average total assets$6,457.6  $6,079.0  $5,811.2 
Average total loans 3,673.4   3,326.3   3,356.7 
Average total deposits 5,507.5   5,181.9   4,882.8 
Funding and Liquidity     
Short-term borrowings$304.5  $193.9  $187.5 
Long-term debt 154.2   159.2   154.9 
Loans to deposits ratio 68.40%  65.21%  65.93%
Equity     
Total shareholders' equity$472.2  $488.8  $530.3 
Common equity ratio 7.28%  7.59%  9.03%
Tangible common equity(1) 377.7   392.5   446.7 
Tangible common equity ratio(1) 5.90%  6.18%  7.71%
Per Share Data     
Book value$30.23  $31.26  $33.71 
Tangible book value(1)$24.17  $25.10  $28.40 
(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, increased $135.1 million, or 3.7%, to $3.75 billion from June 30, 2022. This increase was driven by new loan production and higher volumes of line of credit usage during the third quarter of 2022.

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, 2022 June 30, 2022 September 30, 2021 
 Balance

 % of Total

 Balance

 % of Total

 Balance

 % of Total

 
(dollars in thousands)      
Commercial and industrial$1,041,662 27.8%$986,137 27.3%$927,258 28.4%
Agricultural 116,229 3.1  110,263 3.1  106,356 3.3 
Commercial real estate            
Construction and development 276,941 7.4  224,470 6.2  146,417 4.5 
Farmland 183,581 4.9  181,820 5.0  130,936 4.0 
Multifamily 222,592 5.9  239,676 6.6  273,347 8.4 
Other 1,226,983 32.8  1,213,974 33.7  1,148,658 35.0 
Total commercial real estate 1,910,097 51.0  1,859,940 51.5  1,699,358 51.9 
Residential real estate            
One-to-four family first liens 446,373 11.9  430,157 11.9  334,267 10.2 
One-to-four family junior liens 157,276 4.2  148,647 4.1  133,869 4.1 
Total residential real estate 603,649 16.1  578,804 16.0  468,136 14.3 
Consumer 74,652 2.0  76,008 2.1  67,536 2.1 
Loans held for investment, net of unearned income$3,746,289 100.0%$3,611,152 100.0%$3,268,644 100.0%
             
Total commitments to extend credit$1,159,323   $1,117,754   $950,157   

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)2022 2022 2021 2022 2021
Beginning balance$52,350  $46,200  $48,000  $48,700  $55,500 
PCD allowance established in acquisition —   3,371   —   3,371   — 
Charge-offs (970)  (440)  (234)  (4,041)  (2,077)
Recoveries 382   159   1,114   950   2,235 
Net charge-offs (588)  (281)  880   (3,091)  158 
Credit loss (benefit) expense related to loans 338   3,060   (980)  3,120   (7,758)
Ending balance$52,100  $52,350  $47,900  $52,100  $47,900 

As of September 30, 2022, the allowance for credit losses ("ACL") was $52.1 million, or 1.39% of loans held for investment, net of unearned income, compared with $52.4 million, or 1.45% of loans held for investment, net of unearned income, at June 30, 2022. Credit loss expense for the third quarter of 2022 was $0.6 million, compared to $3.3 million in the second quarter of 2022, and was primarily attributable to a reserve taken to support loan growth.

Deposits

Total deposits declined $60.7 million, or 1.1%, to $5.5 billion from June 30, 2022. This decline reflected the competitive market for deposits driven by the rapid rate of increase in the federal funds target rate over the course of this year.

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

Deposit CompositionSeptember 30, 2022 June 30, 2022 September 30, 2021 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Noninterest bearing deposits$1,139,694 20.8%$1,114,825 20.1%$999,887 20.2%
Interest checking deposits 1,705,289 31.2  1,749,748 31.7  1,464,389 29.5 
Money market deposits 991,783 18.1  1,070,912 19.3  989,095 20.0 
Savings deposits 700,843 12.8  715,829 12.9  616,924 12.4 
Total non-maturity deposits 4,537,609 82.9  4,651,314 84.0  4,070,295 82.1 
Time deposits of $250 and under 537,616 9.8  547,427 9.9  522,907 10.5 
Time deposits over $250 401,557 7.3  338,700 6.1  364,579 7.4 
Total time deposits 939,173 17.1  886,127 16.0  887,486 17.9 
Total deposits$5,476,782 100.0%$5,537,441 100.0%$4,957,781 100.0%

CREDIT RISK PROFILE

 As of or For the Three Months Ended
HighlightsSeptember 30, June 30, September 30,
(Dollars in thousands) 2022   2022   2021 
Credit loss expense (benefit) related to loans$338  $3,060  $(980)
Net charge-offs (recoveries)$588  $281  $(880)
Net charge-off (recovery) ratio(1) 0.06%  0.03%  (0.10)%
      
At period-end     
Pass$3,550,695  $3,402,508  $3,069,314 
Special Mention / Watch 101,255   111,893   82,871 
Classified 94,339   96,751   116,459 
Total loans held for investment, net$3,746,289  $3,611,152  $3,268,644 
Classified loans ratio(2) 2.52%  2.68%  3.56%
      
Nonaccrual loans held for investment$25,027  $25,978  $33,657 
Accruing loans contractually past due 90 days or more 936   1,359   51 
Total nonperforming loans 25,963   27,337   33,708 
Foreclosed assets, net 103   284   454 
Total nonperforming assets$26,066  $27,621  $34,162 
Nonperforming loans ratio(3) 0.69%  0.76%  1.03%
Nonperforming assets ratio(4) 0.40%  0.43%  0.58%
Allowance for credit losses$52,100  $52,350  $47,900 
Allowance for credit losses ratio(5) 1.39%  1.45%  1.47%
Adjusted allowance for credit losses ratio(6) 1.39%  1.45%  1.51%
Allowance for credit losses to nonaccrual loans ratio(7) 208.18%  201.52%  142.32%
(1) Net charge-off (recovery) ratio is calculated as annualized net charge-offs (recoveries) divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming loans ratio is calculated as 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.
(7)Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

During the third quarter of 2022, overall asset quality improved. The nonperforming loans ratio declined 7 bps from the linked quarter and 34 bps from the prior year to 0.69%. In addition, the classified loans ratio declined 16 bps from the linked quarter and 104 bps from the prior year to 2.52%.

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

Nonperforming LoansNonaccrual
 90+ Days Past Due
& Still Accruing
 Total
(Dollars in thousands)  
Balance at June 30, 2022$25,978  $1,359  $27,337 
Loans placed on nonaccrual or 90+ days past due & still accruing 1,950   520   2,470 
Proceeds related to repayment or sale (2,025)  (4)  (2,029)
Loans returned to accrual status or no longer past due (139)  (50)  (189)
Charge-offs (737)  (102)  (839)
Transfer to held for sale —   (787)  (787)
Balance at September 30, 2022$25,027  $936  $25,963 

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. The modified CECL transitional amount of $9.4 million is then reduced from capital over the subsequent three-year period.

Regulatory Capital Ratios

September 30, June 30, September 30,
2022 (1) 2022 2021
MidWestOne Financial Group, Inc. Consolidated     
Tier 1 leverage to average assets ratio8.24% 8.51% 8.70%
Common equity tier 1 capital to risk-weighted assets ratio9.18% 8.82% 10.26%
Tier 1 capital to risk-weighted assets ratio9.97% 9.61% 11.20%
Total capital to risk-weighted assets ratio12.10% 11.73% 13.58%
MidWestOne Bank     
Tier 1 leverage to average assets ratio9.31% 9.70% 9.41%
Common equity tier 1 capital to risk-weighted assets ratio11.26% 10.99% 12.14%
Tier 1 capital to risk-weighted assets ratio11.26% 10.99% 12.14%
Total capital to risk-weighted assets ratio12.17% 11.90% 13.05%
(1) Capital ratios for September 30, 2022 are preliminary     

CORPORATE UPDATE

Appointment of Chief Executive Officer

As previously announced on October 19, 2022, the Company's Board of Directors appointed Charles (Chip) N. Reeves to serve as the Chief Executive Officer of the Company and MidWestOne Bank effective November 1, 2022.

IOFB Integration Update

During the third quarter of 2022, core banking system conversions were completed for the former First National Bank in Fairfield and the former First National Bank of Muscatine. Also during the third quarter of 2022, we closed and consolidated the operations of two MidWestOne banking offices located in Fairfield, IA into the former First National Bank in Fairfield banking office.

Share Repurchase Program

Under our current repurchase program, common shares repurchased by the Company during the third quarter of 2022 totaled 14,586 shares. These shares were repurchased at an average price of $29.51 per share and a total cost of $0.4 million in the third quarter of 2022. At September 30, 2022, the total amount available under the Company's current share repurchase program was $3.0 million.

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 28, 2022. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=5495738f&confId=42438. After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-927-1758, using an access code of 483853 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 26, 2023, by calling 1-866-813-9403 and using the replay access code of 684318. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

ABOUT MIDWESTONE FINANCIAL GROUP, INC.

MidWestOne Financial Group, Inc. is a financial holding company headquartered in Iowa City, Iowa. MidWestOne is the parent company of MidWestOne Bank, which operates banking offices in Iowa, Minnesota, Wisconsin, Florida, and Colorado. MidWestOne provides electronic delivery of financial services through its website, MidWestOne.bank. MidWestOne Financial Group, Inc. trades on the Nasdaq Global Select Market under the symbol “MOFG”.

Cautionary Note Regarding Forward-Looking Statements

This release contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “goals,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of actual and expected increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR and the adoption of a substitute; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the war in Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the effects of cyber-attacks; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; and (25) 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) 2022   2022   2022   2021   2021 
ASSETS         
Cash and due from banks$77,513  $60,622  $47,677  $42,949  $53,562 
Interest earning deposits in banks 1,001   23,242   12,152   160,881   84,952 
Total cash and cash equivalents 78,514   83,864   59,829   203,830   138,514 
Debt securities available for sale at fair value 1,153,304   1,234,789   1,145,638   2,288,110   2,136,902 
Held to maturity securities at amortized cost 1,146,583   1,168,042   1,204,212   —   — 
Total securities 2,299,887   2,402,831   2,349,850   2,288,110   2,136,902 
Loans held for sale 2,320   4,991   6,466   12,917   58,679 
Gross loans held for investment 3,761,664   3,627,728   3,256,294   3,252,194   3,278,150 
Unearned income, net (15,375)  (16,576)  (6,259)  (7,182)  (9,506)
Loans held for investment, net of unearned income 3,746,289   3,611,152   3,250,035   3,245,012   3,268,644 
Allowance for credit losses (52,100)  (52,350)  (46,200)  (48,700)  (47,900)
Total loans held for investment, net 3,694,189   3,558,802   3,203,835   3,196,312   3,220,744 
Premises and equipment, net 87,732   89,048   82,603   83,492   84,130 
Goodwill 62,477   62,477   62,477   62,477   62,477 
Other intangible assets, net 32,086   33,874   18,658   19,885   21,130 
Foreclosed assets, net 103   284   273   357   454 
Other assets 233,753   206,320   176,223   157,748   152,393 
Total assets$6,491,061  $6,442,491  $5,960,214  $6,025,128  $5,875,423 
LIABILITIES          
Noninterest bearing deposits$1,139,694  $1,114,825  $1,002,415  $1,005,369  $999,887 
Interest bearing deposits 4,337,088   4,422,616   4,075,310   4,109,150   3,957,894 
Total deposits 5,476,782   5,537,441   5,077,725   5,114,519   4,957,781 
Short-term borrowings 304,536   193,894   181,193   181,368   187,508 
Long-term debt 154,190   159,168   139,898   154,879   154,860 
Other liabilities 83,324   63,156   56,941   46,887   45,010 
Total liabilities 6,018,832   5,953,659   5,455,757   5,497,653   5,345,159 
SHAREHOLDERS' EQUITY          
Common stock 16,581   16,581   16,581   16,581   16,581 
Additional paid-in capital 301,418   300,859   300,505   300,940   300,327 
Retained earnings 276,998   262,395   253,500   243,365   232,639 
Treasury stock (26,145)  (25,772)  (24,113)  (24,546)  (22,735)
Accumulated other comprehensive (loss) income (96,623)  (65,231)  (42,016)  (8,865)  3,452 
Total shareholders' equity 472,229   488,832   504,457   527,475   530,264 
Total liabilities and shareholders' equity$6,491,061  $6,442,491  $5,960,214  $6,025,128  $5,875,423 


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

 Three Months Ended Nine Months Ended
 September 30, June 30, March 31, December 31, September 30, September 30, September 30,
(In thousands, except per share data) 2022   2022   2022   2021   2021   2022   2021 
Interest income             
Loans, including fees$40,451  $32,746  $31,318  $33,643  $36,115  $104,515  $107,393 
Taxable investment securities 10,635   9,576   8,123   7,461   6,655   28,334   18,231 
Tax-exempt investment securities 2,326   2,367   2,383   2,415   2,428   7,076   7,532 
Other 9   40   28   37   21   77   54 
Total interest income 53,421   44,729   41,852   43,556   45,219   140,002   133,210 
Interest expense             
Deposits 5,035   3,173   2,910   3,031   3,150   11,118   10,167 
Short-term borrowings 767   229   119   130   132   1,115   421 
Long-term debt 1,886   1,602   1,487   1,576   1,597   4,975   5,160 
Total interest expense 7,688   5,004   4,516   4,737   4,879   17,208   15,748 
Net interest income 45,733   39,725   37,336   38,819   40,340   122,794   117,462 
Credit loss expense (benefit) 638   3,282   —   622   (1,080)  3,920   (7,958)
Net interest income after credit loss expense (benefit) 45,095   36,443   37,336   38,197   41,420   118,874   125,420 
Noninterest income             
Investment services and trust activities 2,876   2,670   3,011   3,115   2,915   8,557   8,560 
Service charges and fees 2,075   1,717   1,657   1,684   1,613   5,449   4,575 
Card revenue 1,898   1,878   1,650   1,746   1,820   5,426   5,269 
Loan revenue 1,722   3,523   4,293   3,132   1,935   9,538   9,816 
Bank-owned life insurance 579   558   531   550   532   1,668   1,612 
Investment securities gains, net (163)  395   40   137   36   272   105 
Other 3,601   1,606   462   865   331   5,669   1,287 
Total noninterest income 12,588   12,347   11,644   11,229   9,182   36,579   31,224 
Noninterest expense             
Compensation and employee benefits 20,046   18,955   18,664   18,266   17,350   57,665   51,671 
Occupancy expense of premises, net 2,577   2,253   2,779   2,211   2,547   7,609   7,063 
Equipment 2,358   2,107   1,901   2,189   1,973   6,366   5,627 
Legal and professional 2,012   2,435   2,353   1,826   1,272   6,800   3,430 
Data processing 1,731   1,237   1,231   1,211   1,406   4,199   4,005 
Marketing 1,139   1,157   1,029   1,121   1,022   3,325   2,901 
Amortization of intangibles 1,789   1,283   1,227   1,245   1,264   4,299   4,112 
FDIC insurance 415   420   420   380   435   1,255   1,192 
Communications 302   266   272   277   275   840   1,055 
Foreclosed assets, net 42   4   (112)  7   43   (66)  226 
Other 2,212   1,965   1,879   1,711   2,191   6,056   4,866 
Total noninterest expense 34,623   32,082   31,643   30,444   29,778   98,348   86,148 
Income before income tax expense 23,060   16,708   17,337   18,982   20,824   57,105   70,496 
Income tax expense 4,743   4,087   3,442   4,726   4,513   12,272   15,266 
Net income $18,317  $12,621  $13,895  $14,256  $16,311  $44,833  $55,230 
              
Earnings per common share             
Basic$1.17  $0.81  $0.89  $0.91  $1.03  $2.86  $3.47 
Diluted$1.17  $0.80  $0.88  $0.91  $1.03  $2.86  $3.46 
Weighted average basic common shares outstanding 15,623   15,668   15,683   15,692   15,841   15,658   15,939 
Weighted average diluted common shares outstanding 15,654   15,688   15,718   15,734   15,863   15,686   15,963 
Dividends paid per common share$0.2375  $0.2375  $0.2375  $0.2250  $0.2250  $0.7125  $0.6750 


MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS

 As of or for the Three Months Ended As of or for the Nine Months Ended
 September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share amounts) 2022   2022   2021   2022   2021 
Earnings:         
Net interest income$45,733  $39,725  $40,340  $122,794  $117,462 
Noninterest income 12,588   12,347   9,182   36,579   31,224 
Total revenue, net of interest expense 58,321   52,072   49,522   159,373   148,686 
Credit loss expense (benefit) 638   3,282   (1,080)  3,920   (7,958)
Noninterest expense 34,623   32,082   29,778   98,348   86,148 
Income before income tax expense 23,060   16,708   20,824   57,105   70,496 
Income tax expense 4,743   4,087   4,513   12,272   15,266 
Net income$18,317  $12,621  $16,311  $44,833  $55,230 
Per Share Data:         
Diluted earnings$1.17  $0.80  $1.03  $2.86  $3.46 
Book value 30.23   31.26   33.71   30.23   33.71 
Tangible book value(1) 24.17   25.10   28.40   24.17   28.40 
Ending Balance Sheet:         
Total assets$6,491,061  $6,442,491  $5,875,423  $6,491,061  $5,875,423 
Loans held for investment, net of unearned income 3,746,289   3,611,152   3,268,644   3,746,289   3,268,644 
Total securities 2,299,887   2,402,831   2,136,902   2,299,887   2,136,902 
Total deposits 5,476,782   5,537,441   4,957,781   5,476,782   4,957,781 
Short-term borrowings 304,536   193,894   187,508   304,536   187,508 
Long-term debt 154,190   159,168   154,860   154,190   154,860 
Total shareholders' equity 472,229   488,832   530,264   472,229   530,264 
Average Balance Sheet:         
Average total assets$6,457,647  $6,078,950  $5,811,228  $6,152,390  $5,728,822 
Average total loans 3,673,379   3,326,269   3,356,680   3,416,600   3,394,066 
Average total deposits 5,507,482   5,181,927   4,882,835   5,246,183   4,778,484 
Financial Ratios:         
Return on average assets 1.13%  0.83%  1.11%  0.97%  1.29%
Return on average equity 14.56%  10.14%  12.00%  11.81%  14.03%
Return on average tangible equity(1) 19.32%  13.13%  15.06%  15.28%  17.69%
Efficiency ratio(1) 53.67%  56.57%  56.34%  56.70%  53.95%
Net interest margin, tax equivalent(1) 3.08%  2.87%  3.00%  2.92%  2.99%
Loans to deposits ratio 68.40%  65.21%  65.93%  68.40%  65.93%
Common equity ratio 7.28%  7.59%  9.03%  7.28%  9.03%
Tangible common equity ratio(1) 5.90%  6.18%  7.71%  5.90%  7.71%
Credit Risk Profile:         
Total nonperforming loans$25,963  $27,337  $33,708  $25,963  $33,708 
Nonperforming loans ratio 0.69%  0.76%  1.03%  0.69%  1.03%
Total nonperforming assets$26,066  $27,621  $34,162  $26,066  $34,162 
Nonperforming assets ratio 0.40%  0.43%  0.58%  0.40%  0.58%
Net charge-offs (recoveries)$588  $281  $(880) $3,091  $(158)
Net charge-off (recovery) ratio 0.06%  0.03%  (0.10)%  0.12%  (0.01)%
Allowance for credit losses$52,100  $52,350  $47,900  $52,100  $47,900 
Allowance for credit losses ratio 1.39%  1.45%  1.47%  1.39%  1.47%
Adjusted allowance for credit losses ratio(1) 1.39%  1.45%  1.51%  1.39%  1.51%
Allowance for credit losses to nonaccrual ratio 208.18%  201.52%  142.32%  208.18%  142.32%
PPP Loans:         
Average PPP loans$373  $1,061  $143,628  $5,649  $160,708 
Fee Income 8   59   3,593   864   9,735 
          
(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, 2022 June 30, 2022 September 30, 2021
(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)$3,673,379 $41,124 4.44% $3,326,269 $33,315 4.02% $3,356,680 $36,622 4.33%
Taxable investment securities 1,939,517  10,635 2.18%  1,923,155  9,576 2.00%  1,628,605  6,655 1.62%
Tax-exempt investment securities (2)(4) 431,898  2,922 2.68%  439,385  2,975 2.72%  459,717  3,043 2.63%
Total securities held for investment(2) 2,371,415  13,557 2.27%  2,362,540  12,551 2.13%  2,088,322  9,698 1.84%
Other 6,070  9 0.59%  30,016  40 0.53%  44,915  21 0.19%
Total interest earning assets(2)$6,050,864  54,690 3.59% $5,718,825  45,906 3.22% $5,489,917  46,341 3.35%
Other assets 406,783      360,125      321,311    
Total assets$6,457,647     $6,078,950     $5,811,228    
LIABILITIES AND SHAREHOLDERS’ EQUITY                 
Interest checking deposits$1,725,000 $1,463 0.34% $1,641,337 $1,189 0.29% $1,434,560 $1,056 0.29%
Money market deposits 1,016,005  1,268 0.50%  1,003,386  571 0.23%  955,174  506 0.21%
Savings deposits 710,836  297 0.17%  662,449  287 0.17%  606,449  316 0.21%
Time deposits 913,307  2,007 0.87%  836,143  1,126 0.54%  890,866  1,272 0.57%
Total interest bearing deposits 4,365,148  5,035 0.46%  4,143,315  3,173 0.31%  3,887,049  3,150 0.32%
Securities sold under agreements to repurchase 144,628  228 0.63%  154,107  111 0.29%  170,384  104 0.24%
Other short-term borrowings 83,086  539 2.57%  41,859  118 1.13%  12,100  28 0.92%
Short-term borrowings 227,714  767 1.34%  195,966  229 0.47%  182,484  132 0.29%
Long-term debt 159,125  1,886 4.70%  144,440  1,602 4.45%  163,817  1,597 3.87%
Total borrowed funds 386,839  2,653 2.72%  340,406  1,831 2.16%  346,301  1,729 1.98%
Total interest bearing liabilities$4,751,987 $7,688 0.64% $4,483,721 $5,004 0.45% $4,233,350 $4,879 0.46%
Noninterest bearing deposits 1,142,334      1,038,612      995,786    
Other liabilities 64,063      57,157      43,040    
Shareholders’ equity 499,263      499,460      539,052    
Total liabilities and shareholders’ equity$6,457,647     $6,078,950     $5,811,228    
Net interest income(2)  $47,002     $40,902     $41,462  
Net interest spread(2)    2.95%     2.77%     2.89%
Net interest margin(2)    3.08%     2.87%     3.00%
                  
Total deposits(5)$5,507,482 $5,035 0.36% $5,181,927 $3,173 0.25% $4,882,835 $3,150 0.26%
Cost of funds(6)    0.52%     0.36%     0.37%

(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 $35 thousand, $(31) thousand, and $3.5 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Loan purchase discount accretion was $2.0 million, $528 thousand, and $774 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Tax equivalent adjustments were $673 thousand, $569 thousand, and $507 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $596 thousand, $608 thousand, and $615 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, 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, 2022 September 30, 2021
(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)$3,416,600 $106,297 4.16% $3,394,066 $108,950 4.29%
Taxable investment securities 1,899,907  28,334 1.99%  1,501,252  18,231 1.62%
Tax-exempt investment securities (2)(4) 440,542  8,895 2.70%  466,209  9,442 2.71%
Total securities held for investment(2) 2,340,449  37,229 2.13%  1,967,461  27,673 1.88%
Other 25,972  77 0.40%  43,250  54 0.17%
Total interest earning assets(2)$5,783,021  143,603 3.32% $5,404,777  136,677 3.38%
Other assets 369,369      324,045    
Total assets$6,152,390     $5,728,822    
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Interest checking deposits$1,642,849 $3,713 0.30% $1,418,339 $3,142 0.30%
Money market deposits 991,338  2,338 0.32%  936,932  1,486 0.21%
Savings deposits 671,917  863 0.17%  585,334  926 0.21%
Time deposits 877,923  4,204 0.64%  875,027  4,613 0.70%
Total interest bearing deposits 4,184,027  11,118 0.36%  3,815,632  10,167 0.36%
Securities sold under agreements to repurchase 152,663  435 0.38%  171,848  321 0.25%
Other short-term borrowings 42,952  680 2.12%  20,235  100 0.66%
Short-term borrowings 195,615  1,115 0.76%  192,083  421 0.29%
Long-term debt 148,053  4,975 4.49%  186,323  5,160 3.70%
Total borrowed funds 343,668  6,090 2.37%  378,406  5,581 1.97%
Total interest bearing liabilities$4,527,695 $17,208 0.51% $4,194,038 $15,748 0.50%
Noninterest bearing deposits 1,062,156      962,852    
Other liabilities 54,775      45,671    
Shareholders’ equity 507,764      526,261    
Total liabilities and shareholders’ equity$6,152,390     $5,728,822    
Net interest income(2)  $126,395     $120,929  
Net interest spread(2)    2.81%     2.88%
Net interest margin(2)    2.92%     2.99%
            
Total deposits(5)$5,246,183 $11,118 0.28% $4,778,484 $10,167 0.28%
Cost of funds(6)    0.41%     0.41%

(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $0.7 million and $9.3 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. Loan purchase discount accretion was $3.3 million and $2.7 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. Tax equivalent adjustments were $1.8 million and $1.6 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.8 million and $1.9 million for the nine months ended September 30, 2022 and September 30, 2021, 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 September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data)  2022   2022   2022   2021   2021 
Total shareholders’ equity $472,229  $488,832  $504,457  $527,475  $530,264 
Intangible assets, net  (94,563)  (96,351)  (81,135)  (82,362)  (83,607)
Tangible common equity $377,666  $392,481  $423,322  $445,113  $446,657 
           
Total assets $6,491,061  $6,442,491  $5,960,214  $6,025,128  $5,875,423 
Intangible assets, net  (94,563)  (96,351)  (81,135)  (82,362)  (83,607)
Tangible assets $6,396,498  $6,346,140  $5,879,079  $5,942,766  $5,791,816 
           
Book value per share $30.23  $31.26  $32.15  $33.66  $33.71 
Tangible book value per share(1) $24.17  $25.10  $26.98  $28.40  $28.40 
Shares outstanding  15,622,825   15,635,131   15,690,125   15,671,147   15,729,451 
           
Common equity ratio  7.28%  7.59%  8.46%  8.75%  9.03%
Tangible common equity ratio(2)  5.90%  6.18%  7.20%  7.49%  7.71%

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

  Three Months Ended Nine Months Ended
Return on Average Tangible Equity September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2022   2022   2021   2022   2021 
Net income $18,317  $12,621  $16,311  $44,833  $55,230 
Intangible amortization, net of tax(1)  1,342   962   948   3,224   3,084 
Tangible net income $19,659  $13,583  $17,259  $48,057  $58,314 
           
Average shareholders’ equity $499,263  $499,460  $539,052  $507,764  $526,261 
Average intangible assets, net  (95,499)  (84,540)  (84,288)  (87,318)  (85,579)
Average tangible equity $403,764  $414,920  $454,764  $420,446  $440,682 
           
Return on average equity  14.56%  10.14%  12.00%  11.81%  14.03%
Return on average tangible equity(2)  19.32%  13.13%  15.06%  15.28%  17.69%

(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)  2022   2022   2021   2022   2021 
Net interest income $45,733  $39,725  $40,340  $122,794  $117,462 
Tax equivalent adjustments:          
Loans(1)  673   569   507   1,782   1,557 
Securities(1)  596   608   615   1,819   1,910 
Net interest income, tax equivalent $47,002  $40,902  $41,462  $126,395  $120,929 
Loan purchase discount accretion  (2,015)  (528)  (774)  (3,275)  (2,745)
Core net interest income $44,987  $40,374  $40,688  $123,120  $118,184 
           
Net interest margin  3.00%  2.79%  2.92%  2.84%  2.91%
Net interest margin, tax equivalent(2)  3.08%  2.87%  3.00%  2.92%  2.99%
Core net interest margin(3)  2.95%  2.83%  2.94%  2.85%  2.92%
Average interest earning assets $6,050,864  $5,718,825  $5,489,917  $5,783,021  $5,404,777 

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

  Three Months Ended Nine Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands)  2022   2022   2021   2022   2021 
Loan interest income, including fees $40,451  $32,746  $36,115  $104,515  $107,393 
Tax equivalent adjustment(1)  673   569   507   1,782   1,557 
Tax equivalent loan interest income $41,124  $33,315  $36,622  $106,297  $108,950 
Loan purchase discount accretion  (2,015)  (528)  (774)  (3,275)  (2,745)
Core loan interest income $39,109  $32,787  $35,848  $103,022  $106,205 
           
Yield on loans  4.37%  3.95%  4.27%  4.09%  4.23%
Yield on loans, tax equivalent(2)  4.44%  4.02%  4.33%  4.16%  4.29%
Core yield on loans(3)  4.22%  3.95%  4.24%  4.03%  4.18%
Average loans $3,673,379  $3,326,269  $3,356,680  $3,416,600  $3,394,066 

(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)  2022   2022   2021   2022   2021 
Total noninterest expense $34,623  $32,082  $29,778  $98,348  $86,148 
Amortization of intangibles  (1,789)  (1,283)  (1,264)  (4,299)  (4,112)
Merger-related expenses  (763)  (901)  —   (1,792)  — 
Noninterest expense used for efficiency ratio $32,071  $29,898  $28,514  $92,257  $82,036 
           
Net interest income, tax equivalent(1) $47,002  $40,902  $41,462  $126,395  $120,929 
Noninterest income  12,588   12,347   9,182   36,579   31,224 
Investment securities gains, net  163   (395)  (36)  (272)  (105)
Net revenues used for efficiency ratio $59,753  $52,854  $50,608  $162,702  $152,048 
           
Efficiency ratio (2)  53.67%  56.57%  56.34%  56.70%  53.95%

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

Adjusted Allowance for Credit Losses Ratio September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands)  2022   2022   2022   2021   2021 
Loans held for investment, net of unearned income $3,746,289  $3,611,152  $3,250,035  $3,245,012  $3,268,644 
PPP loans  (195)  (402)  (3,037)  (30,841)  (89,354)
Core loans $3,746,094  $3,610,750  $3,246,998  $3,214,171  $3,179,290 
Allowance for credit losses $52,100  $52,350  $46,200  $48,700  $47,900 
           
Allowance for credit losses ratio  1.39%  1.45%  1.42%  1.50%  1.47%
Adjusted allowance for credit losses ratio(1)  1.39%  1.45%  1.42%  1.52%  1.51%

(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)  2022   2022   2022   2021   2021 
Commercial loans:          
Commercial and industrial $1,041,662  $986,137  $898,942  $902,314  $927,258 
Agricultural  116,229   110,263   94,649   103,417   106,356 
Commercial real estate  1,910,097   1,859,940   1,723,891   1,704,541   1,699,358 
Total commercial loans $3,067,988  $2,956,340  $2,717,482  $2,710,272  $2,732,972 
Consumer loans:          
Residential real estate $603,649  $578,804  $463,676  $466,322  $468,136 
Other consumer  74,652   76,008   68,877   68,418   67,536 
Total consumer loans $678,301  $654,812  $532,553  $534,740  $535,672 
Loans held for investment, net of unearned income $3,746,289  $3,611,152  $3,250,035  $3,245,012  $3,268,644 
           
PPP loans $195  $402  $3,037  $30,841  $89,354 
Acquired IOFB loan portfolio $281,326  $281,470  $—  $—  $— 
           
Core loans(1) $3,746,094  $3,610,750  $3,246,998  $3,214,171  $3,179,290 
Adjusted core loans(2) $3,464,768  $3,329,280  $3,246,998  $3,214,171  $3,179,290 
Core commercial loans(3) $3,067,793  $2,955,938  $2,714,445  $2,679,431  $2,643,618 
           

(1) Core loans are calculated as loans held for investment, net of unearned income less PPP loans.
(2) Adjusted core loans are calculated as loans held for investment, net of unearned income, less PPP loans and the acquired IOFB loan portfolio.
(3) Core commercial loans are calculated as total commercial loans less PPP loans.

Category: Earnings

This news release can be downloaded from https://www.midwestonefinancial.com/corporate-profile/default.aspx

Source: MidWestOne Financial Group, Inc.

Industry: Banks

Contact:  
 Len D. Devaisher Barry S. Ray
 Interim Chief Executive Officer Chief Financial Officer
 319.356.5800 319.356.5800



FAQ

What were MidWestOne Financial Group's earnings for Q3 2022?

MidWestOne Financial Group reported earnings of $18.3 million or $1.17 per diluted share for Q3 2022.

How did the net interest margin change in Q3 2022 for MOFG?

The net interest margin improved by 21 basis points to 3.08% in Q3 2022.

What was the increase in core loan growth for MOFG in Q3 2022?

Core loan growth, excluding PPP, was 15.72% in Q3 2022.

What was the decline in total deposits for MidWestOne Financial Group?

Total deposits decreased by $60.7 million, or 1.1%, to $5.5 billion from June 30, 2022.

What is the nonperforming assets ratio for MOFG as of Q3 2022?

The nonperforming assets ratio improved to 0.40% as of Q3 2022.

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MidWestOne Financial Group

NASDAQ:MOFG

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