MidWestOne Financial Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2023

Published

IOWA CITY, Iowa, Jan. 25, 2024 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the fourth quarter and full year of 2023.

Fourth Quarter 2023 Summary1

  • Net income of $2.7 million, or $0.17 per diluted common share, including, on a pre-tax basis, securities net losses of $5.7 million, merger-related costs of $245 thousand, voluntary early retirement program costs of $438 thousand, and a negative mortgage servicing right valuation adjustment of $105 thousand.
  • Sold $115.2 million of securities in a balance sheet repositioning, proceeds were utilized to purchase higher yielding debt securities and reduce short-term borrowings.
  • Annualized loan growth of 6.1%.
  • Deposits, excluding brokered deposits, increased $31.4 million, or 0.6%, the second sequential quarter of deposit growth.
  • Nonperforming assets ratio remained stable at 0.47%; net charge-off ratio was 0.20%.
  • Received all regulatory approvals for the previously announced acquisition of Denver Bankshares, Inc, which is expected to close early in the first quarter of 2024.

Full Year 2023 Summary1

  • Net income for the full year was $20.9 million, or $1.33 per diluted common share.
  • Sold $346.9 million of securities to reposition the balance sheet, proceeds were utilized to purchase higher yielding debt securities and reduce short-term borrowings.
  • Net charge-off ratio declined 10 basis points ("bps") to 0.09%.
  • Tangible book value of $27.902, an increase of $2.30 or 9%.

Subsequent Events

  • On January 23, 2024, the Board of Directors declared a cash dividend of $0.2425 per common share, payable on March 15, 2024 to shareholders of record as of the close of business on March 1, 2024.

CEO Commentary

Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “I'm pleased with our balance sheet trends, as we delivered 6.1% annualized loan growth during the fourth quarter of 2023, and continue to benefit from the expansion of our major market banking teams. We also achieved core deposit growth in the quarter, and remain cautiously optimistic that we can grow our core deposit franchise through the year ahead. That said, we remain liability sensitive, and funding cost pressure continued to impact our margins and earnings through the fourth quarter, though that pressure has been moderating.”

Mr. Reeves concluded, "More importantly, we are well ahead of plan in executing our strategic initiatives designed to improve our performance and position the Bank to deliver financial results at the median of our peer group by the end of 2025. Highlights from 2023 include outstanding expense discipline and re-allocation, our geographic repositioning with the Denver Bankshares merger expected to close on January 31st, key new hires in our Iowa Metro and Twin Cities markets, the hiring of a talented executive to lead our wealth management business, and the expansion of our specialty business lines with the recruitment of an agri-business team. We are rapidly scaling in our core markets while adding new business lines, which taken together, provide visibility to improved growth and returns."

_________________________________________1 Fourth Quarter Summary compares to the third quarter of 2023 (the "linked quarter") unless noted. Full Year 2023 Summary compares to the full year 2022 unless noted. 2 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

  As of or for the quarter ended Year Ended
(Dollars in thousands, except per share amounts and as noted) December 31, September 30, December 31, December 31, December 31,
 2023 2023 2022 2023 2022
Financial Results          
Revenue $36,421  $44,436  $54,504  $162,595  $213,877 
Credit loss expense  1,768   1,551   572   5,849   4,492 
Noninterest expense  32,131   31,544   34,440   131,913   132,788 
Net income  2,730   9,138   16,002   20,859   60,835 
Per Common Share          
Diluted earnings per share $0.17  $0.58  $1.02  $1.33  $3.87 
Book value  33.41   32.21   31.54   33.41   31.54 
Tangible book value(1)  27.90   26.60   25.60   27.90   25.60 
Balance Sheet & Credit Quality          
Loans In millions $4,126.9  $4,066.0  $3,840.5  $4,126.9  $3,840.5 
Investment securities In millions  1,870.3   1,958.5   2,283.0   1,870.3   2,283.0 
Deposits In millions  5,395.7   5,363.3   5,468.9   5,395.7   5,468.9 
Net loan charge-offs In millions  2.1   0.5   3.5   3.7   6.6 
Allowance for credit losses ratio  1.25%  1.27%  1.28%  1.25%  1.28%
Selected Ratios          
Return on average assets  0.17%  0.56%  0.97%  0.32%  0.97%
Net interest margin, tax equivalent(1)  2.22%  2.35%  2.93%  2.46%  2.92%
Return on average equity  2.12%  7.14%  13.26%  4.12%  12.16%
Return on average tangible equity(1)  3.57%  9.68%  17.85%  6.14%  15.89%
Efficiency ratio(1)  70.16%  66.06%  57.79%  67.28%  56.98%
(1)Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

REVENUE REVIEW

Revenue       Change Change
        4Q23 vs 4Q23 vs
(Dollars in thousands) 4Q23 3Q23 4Q22 3Q23 4Q22
Net interest income $32,559 $34,575 $43,564 (6)% (25)%
Noninterest income  3,862  9,861  10,940 (61)% (65)%
Total revenue, net of interest expense $36,421 $44,436 $54,504 (18)% (33)%
   

Total revenue for the fourth quarter of 2023 decreased $8.0 million from the third quarter of 2023 and decreased $18.1 million from the fourth quarter of 2022 due to lower net interest income and noninterest income.

Net interest income of $32.6 million for the fourth quarter of 2023 decreased $2.0 million from the third quarter of 2023 primarily due to higher funding costs, partially offset by lower volumes of interest bearing liabilities, higher volumes of interest earning assets, and higher interest earning asset yields. When compared to the fourth quarter of 2022, net interest income decreased $11.0 million primarily due to higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields.

The Company's tax equivalent net interest margin was 2.22% in the fourth quarter of 2023, compared to 2.35% in the third quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 32 bps, to 2.65%, due primarily to interest bearing deposit costs of 2.39% and short-term borrowing costs of 4.91%, which increased 34 bps and 62 bps, respectively from the third quarter of 2023. Total interest earning assets yield increased 12 bps from the third quarter of 2023, as a result of an increase in loan yield of 15 bps. Our cycle-to-date interest bearing deposit beta was 40%.

The tax equivalent net interest margin was 2.22% in the fourth quarter of 2023, compared to 2.93% in the fourth quarter of 2022, driven by higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 157 bps to 2.65%, due to interest bearing deposit costs of 2.39%, short-term borrowing costs of 4.91%, and long-term debt costs of 6.79%, which increased 156 bps, 237 bps and 125 bps, respectively from the fourth quarter of 2022. Total interest earning assets yield increased 59 bps from the fourth quarter of 2022, primarily as a result of an increase in loan yields of 68 bps.

Noninterest Income      Change Change
       4Q23 vs 4Q23 vs
(In thousands)4Q23 3Q23 4Q22 3Q23 4Q22
Investment services and trust activities$3,193  $3,004 $2,666  6% 20%
Service charges and fees 2,148   2,146  2,028  % 6%
Card revenue 1,802   1,817  1,784  (1)% 1%
Loan revenue 909   1,462  966  (38)% (6)%
Bank-owned life insurance 656   626  637  5% 3%
Investment securities gains (losses), net (5,696)  79  (1) n/m  n/m 
Other 850   727  2,860  17% (70)%
Total noninterest income$3,862  $9,861 $10,940  (61)% (65)%
          
Results are not meaningful (n/m)         

Noninterest income for the fourth quarter of 2023 decreased $6.0 million from the linked quarter, primarily due to investment securities losses, net, of $5.7 million in the fourth quarter of 2023, coupled with a $0.6 million unfavorable change in loan revenue. Investment securities losses stemmed from a balance sheet repositioning in the fourth quarter of 2023, in which $115.2 million of securities, yielding 2.26%, were sold and sale proceeds of $109.5 million were utilized to purchase $63.3 million of securities, yielding 5.62%, with the balance utilized to reduce short-term borrowings. Loan revenue primarily reflected an unfavorable quarter-over quarter change in the fair value of our mortgage servicing rights of $0.4 million and a decline of $0.1 million in revenue from our mortgage origination business.

Noninterest income for the fourth quarter of 2023 decreased $7.1 million from the fourth quarter of 2022 due to investment securities losses, net, of $5.7 million and a $2.0 million decline in other revenue, partially offset by an increase of $0.5 million in investment services and trust activities revenue. Investment securities losses stemmed from the balance sheet repositioning previously described. Other revenue in the fourth quarter of 2022 benefited from a nonrecurring bargain purchase gain of $2.5 million recognized in connection with the acquisition of Iowa First Bancshares Corp., which was partially offset by an increase of $0.5 million in swap origination fee income. The increase in investment services and trust activities revenue was driven by higher assets under management.

EXPENSE REVIEW

Noninterest Expense      Change Change
       4Q23 vs 2Q23 vs
(In thousands)4Q23 3Q23 4Q22 3Q23 4Q22
Compensation and employee benefits$17,859 $18,558 $20,438 (4)% (13)%
Occupancy expense of premises, net 2,309  2,405  2,663 (4)% (13)%
Equipment 2,466  2,123  2,327 16% 6%
Legal and professional 2,269  1,678  1,846 35% 23%
Data processing 1,411  1,504  1,375 (6)% 3%
Marketing 700  782  947 (10)% (26)%
Amortization of intangibles 1,441  1,460  1,770 (1)% (19)%
FDIC insurance 900  783  405 15% 122%
Communications 183  206  285 (11)% (36)%
Foreclosed assets, net 45  2  48 2150% (6)%
Other 2,548  2,043  2,336 25% 9%
Total noninterest expense$32,131 $31,544 $34,440 2% (7)%

Merger-related Expenses     
      
(In thousands)4Q23 3Q23 4Q22
Compensation and employee benefits$ $ $189
Equipment     4
Legal and professional 180  11  54
Data processing     131
Marketing 38    2
Other 27    29
Total merger-related expenses$245 $11 $409

Noninterest expense for the fourth quarter of 2023 increased $0.6 million from the linked quarter primarily as a result of increases of $0.6 million and $0.5 million in legal and professional and other, respectively. The largest offset to increases in noninterest expense was a decline of $0.7 million in compensation and employee benefits. The increase in legal and professional expenses stemmed primarily from higher executive recruitment and merger-related expenses. The increase in other noninterest expense was driven by various changes, including increases in loan expenses, travel, meals and entertainment, and operating losses. The largest driver in the decrease in compensation and employee benefits was a reduction in incentive and commission expense.

Noninterest expense for the fourth quarter of 2023 decreased $2.3 million from the fourth quarter of 2022 due primarily to a $2.6 million decline in compensation and employee benefits, which reflected a $1.6 million reduction in incentives and commissions, and a $0.6 million decline in employee benefits. The $0.3 million decrease in occupancy expense reflected a write-down of assets held for sale in the fourth quarter of 2022, which did not recur in the fourth quarter of 2023. Partially offsetting the decreases in noninterest expense was an increase of $0.5 million in FDIC insurance expense and an increase of $0.4 million in legal and professional expense, which stemmed primarily from higher recruitment and merger-related expenses.

The Company recognized a tax benefit in the fourth quarter of 2023 to reduce the full-year 2023 effective income tax rate to 16.0%, as compared to 20.6% in the prior year. The decrease in the 2023 annual effective income tax rate reflected lower taxable income and a larger benefit from tax exempt investment income. The effective income tax rate for 2024 is expected to be 20-22%.

BALANCE SHEET REVIEW

Total assets were $6.43 billion at December 31, 2023, compared to $6.47 billion at September 30, 2023 and $6.58 billion at December 31, 2022. The decrease from September 30, 2023 was primarily driven by lower securities balances as a result of the balance sheet repositioning, partially offset by higher loan balances. Compared to December 31, 2022, the decrease was primarily due to lower securities balances resulting from balance sheet repositioning in the first and fourth quarters of 2023, partially offset by higher loan balances.

Loans Held for InvestmentDecember 31, 2023 September 30, 2023 December 31, 2022 
(Dollars in thousands)Balance % ofTotal Balance % ofTotal Balance % ofTotal 
Commercial and industrial$1,075,003 26.0%$1,078,773 26.5%$1,055,162 27.5%
Agricultural 118,414 2.9  111,950 2.8  115,320 3.0 
Commercial real estate            
Construction and development 323,195 7.8  331,868 8.2  270,991 7.1 
Farmland 184,955 4.5  182,621 4.5  183,913 4.8 
Multifamily 383,178 9.3  337,509 8.3  252,129 6.6 
Other 1,333,982 32.4  1,324,019 32.5  1,272,985 33.1 
Total commercial real estate 2,225,310 54.0  2,176,017 53.5  1,980,018 51.6 
Residential real estate            
One-to-four family first liens 459,798 11.1  456,771 11.2  451,210 11.7 
One-to-four family junior liens 180,639 4.4  173,275 4.3  163,218 4.2 
Total residential real estate 640,437 15.5  630,046 15.5  614,428 15.9 
Consumer 67,783 1.6  69,183 1.7  75,596 2.0 
Loans held for investment, net of unearned income$4,126,947 100.0%$4,065,969 100.0%$3,840,524 100.0%
             
Total commitments to extend credit$1,210,796   $1,251,345   $1,190,607   

Loans held for investment, net of unearned income, increased $61.0 million, or 1.5%, to $4.13 billion from $4.07 billion at September 30, 2023 and $286.4 million, or 7.5%, from December 31, 2022. This increase from the third quarter of 2023 was driven by new loan production in the fourth quarter of 2023 and higher line of credit usage. The increase from the fourth quarter of 2022 was due to new loan production.

Investment SecuritiesDecember 31, 2023 September 30, 2023 December 31, 2022 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Available for sale$795,134 42.5%$872,770 44.6%$1,153,547 50.5%
Held to maturity 1,075,190 57.5% 1,085,751 55.4% 1,129,421 49.5%
Total investment securities$1,870,324   $1,958,521   $2,282,968   

Investment securities at December 31, 2023 were $1.87 billion, decreasing $88.2 million from September 30, 2023 and $412.6 million from December 31, 2022. The decrease from the third quarter of 2023 was primarily due to the balance sheet repositioning previously discussed, as well as principal cash flows received from scheduled payments, calls, and maturities. The decrease from the fourth quarter of 2022 was primarily due to balance sheet repositioning in the first and fourth quarters of 2023.

DepositsDecember 31, 2023 September 30, 2023 December 31, 2022 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Noninterest bearing deposits$897,053 16.6%$924,213 17.2%$1,053,450 19.3%
Interest checking deposits 1,320,435 24.5  1,334,481 24.9  1,624,278 29.8 
Money market deposits 1,105,493 20.5  1,127,287 21.0  937,340 17.1 
Savings deposits 650,655 12.1  619,805 11.6  664,169 12.1 
Time deposits of $250 and under 752,214 13.9  703,646 13.1  559,466 10.2 
Total core deposits 4,725,850 87.6  4,709,432 87.8  4,838,703 88.5 
Brokered time deposits 221,039 4.1  220,063 4.1  126,767 2.3 
Time deposits over $250 448,784 8.3  433,829 8.1  503,472 9.2 
Total deposits$5,395,673 100.0%$5,363,324 100.0%$5,468,942 100.0%

Total deposits increased $32.3 million, or 0.6%, to $5.40 billion from $5.36 billion at September 30, 2023. Core deposits increased $16.4 million from September 30, 2023. Total deposits decreased $73.3 million, or 1.3%, from $5.47 billion at December 31, 2022. Brokered deposits increased $94.3 million from $126.8 million at December 31, 2022, with core deposits declining $112.9 million from December 31, 2022.

Borrowed FundsDecember 31, 2023 September 30, 2023 December 31, 2022 
(Dollars in thousands)Balance % of Total Balance % of Total Balance % of Total 
Short-term borrowings$300,264 70.9%$373,956 75.0%$391,873 73.8%
Long-term debt 123,296 29.1% 124,526 25.0% 139,210 26.2%
Total borrowed funds$423,560   $498,482   $531,083   

Total borrowed funds were $423.6 million at December 31, 2023, a decrease of $74.9 million from September 30, 2023 and a decrease of $107.5 million from December 31, 2022. The decrease when compared to the linked quarter was due to lower Federal Home Loan Bank overnight borrowings and securities sold under agreements to repurchase, partially offset by higher Bank Term Funding Program borrowings. The decrease when compared to December 31, 2022 was primarily due to lower Federal Home Loan Bank overnight borrowings and securities sold under agreements to repurchase, partially offset by Bank Term Funding Program borrowings of $285 million, as compared to no such borrowings in the prior year.

CapitalDecember 31, September 30, December 31,
(Dollars in thousands)2023(1) 2023 2022
Total shareholders' equity$524,378  $505,411  $492,793 
Accumulated other comprehensive loss (64,899)  (84,606)  (89,047)
MidWestOne Financial Group, Inc. Consolidated     
Tier 1 leverage to average assets ratio 8.58%  8.58%  8.35%
Common equity tier 1 capital to risk-weighted assets ratio 9.59%  9.52%  9.28%
Tier 1 capital to risk-weighted assets ratio 10.38%  10.31%  10.05%
Total capital to risk-weighted assets ratio 12.53%  12.45%  12.07%
MidWestOne Bank     
Tier 1 leverage to average assets ratio 9.39%  9.51%  9.36%
Common equity tier 1 capital to risk-weighted assets ratio 11.54%  11.43%  11.29%
Tier 1 capital to risk-weighted assets ratio 11.54%  11.43%  11.29%
Total capital to risk-weighted assets ratio 12.49%  12.36%  12.10%
(1) Regulatory capital ratios for December 31, 2023 are preliminary     

Total shareholders' equity at December 31, 2023 increased $19.0 million from September 30, 2023, driven by a decrease in accumulated other comprehensive loss. Total shareholders' equity at December 31, 2023 increased $31.6 million from December 31, 2022, driven by a decrease in accumulated other comprehensive loss and an increase in retained earnings.

Accumulated other comprehensive loss at December 31, 2023 decreased $19.7 million compared to September 30, 2023, primarily due to an increase in available for sale securities valuations and the recognition of the loss from the fourth quarter sale of securities. Accumulated other comprehensive loss decreased $24.1 million from December 31, 2022.

On January 23, 2024, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable March 15, 2024, to shareholders of record at the close of business on March 1, 2024.

No common shares were repurchased by the Company during the period September 30, 2023 through December 31, 2023 or for the subsequent period through January 25, 2024. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares.

CREDIT QUALITY REVIEW

Credit QualityAs of or For the Three Months Ended
 December 31, September 30, December 31,
(Dollars in thousands)2023 2023 2022
Credit loss expense related to loans$1,968  $1,651  $572 
Net charge-offs 2,068   451   3,472 
Allowance for credit losses 51,500   51,600   49,200 
Pass$3,846,012  $3,785,908  $3,635,766 
Special Mention / Watch 113,029   163,222   108,064 
Classified 167,906   116,839   96,694 
Loans greater than 30 days past due and accruing$10,778  $6,449  $6,680 
Nonperforming loans$26,359  $28,987  $15,821 
Nonperforming assets 30,288   28,987   15,924 
Net charge-off ratio(1) 0.20%  0.04%  0.36%
Classified loans ratio(2) 4.07%  2.87%  2.52%
Nonperforming loans ratio(3) 0.64%  0.71%  0.41%
Nonperforming assets ratio(4) 0.47%  0.45%  0.24%
Allowance for credit losses ratio(5) 1.25%  1.27%  1.28%
Allowance for credit losses to nonaccrual loans ratio(6) 198.91%  178.63%  322.50%
(1) Net charge-off ratio is calculated as annualized net charge-offs divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming loans ratio is calculated as nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(4) Nonperforming assets ratio is calculated as nonperforming assets divided by total assets at the end of the period.
(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.
(6) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

Compared to the linked quarter, the nonperforming loans ratio declined 7 bps and the nonperforming assets ratio increased 2 bps. The classified loans ratio increased 120 bps from the linked quarter, primarily due to the downgrade of three larger commercial relationships. When compared to the prior year, the nonperforming loans and assets ratios both increased 23 bps, to 0.64% and 0.47%.

As of December 31, 2023, the allowance for credit losses was $51.5 million and the allowance for credit losses ratio was 1.25%, compared with $51.6 million and 1.27% at September 30, 2023. When compared to the linked quarter, credit loss expense of $1.8 million in the fourth quarter of 2023 was primarily attributable to loan growth, with the increase compared to the prior year stemming from loan growth and individually evaluated loans.

Nonperforming Loans Roll ForwardNonaccrual 90+ Days Past Due & Still Accruing Total
(Dollars in thousands)  
Balance at September 30, 2023$28,887  $100  $28,987 
Loans placed on nonaccrual or 90+ days past due & still accruing 4,377   432   4,809 
Proceeds related to repayment or sale (1,285)  (1)  (1,286)
Loans returned to accrual status or no longer past due (289)  1   (288)
Charge-offs (1,955)  (64)  (2,019)
Transfers to foreclosed assets (3,844)     (3,844)
Balance at December 31, 2023$25,891  $468  $26,359 

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, January 26, 2024. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=0492f968&confId=59127. After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-470-1428 using an access code of 827546 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 25, 2024 by calling 1-866-813-9403 and using the replay access code of 572754. 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 or branch sales (including with Iowa First Bancshares Corp. and Denver Bankshares, Inc.), 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 recent and potential additional increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our or our third-party vendors' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; (25) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

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

 December 31, September 30, June 30, March 31, December 31,
(In thousands)2023 2023 2023 2023 2022
ASSETS         
Cash and due from banks$76,237  $71,015  $75,955  $63,945  $83,990 
Interest earning deposits in banks 5,479   3,773   68,603   5,273   2,445 
Federal funds sold 11             
Total cash and cash equivalents 81,727   74,788   144,558   69,218   86,435 
Debt securities available for sale at fair value 795,134   872,770   903,520   954,074   1,153,547 
Held to maturity securities at amortized cost 1,075,190   1,085,751   1,099,569   1,117,709   1,129,421 
Total securities 1,870,324   1,958,521   2,003,089   2,071,783   2,282,968 
Loans held for sale 1,045   2,528   2,821   2,553   612 
Gross loans held for investment 4,138,352   4,078,060   4,031,377   3,932,900   3,854,791 
Unearned income, net (11,405)  (12,091)  (12,728)  (13,535)  (14,267)
Loans held for investment, net of unearned income 4,126,947   4,065,969   4,018,649   3,919,365   3,840,524 
Allowance for credit losses (51,500)  (51,600)  (50,400)  (49,800)  (49,200)
Total loans held for investment, net 4,075,447   4,014,369   3,968,249   3,869,565   3,791,324 
Premises and equipment, net 85,742   85,589   85,831   86,208   87,125 
Goodwill 62,477   62,477   62,477   62,477   62,477 
Other intangible assets, net 24,069   25,510   26,969   28,563   30,315 
Foreclosed assets, net 3,929            103 
Other assets 222,780   244,036   227,495   219,585   236,517 
Total assets$6,427,540  $6,467,818  $6,521,489  $6,409,952  $6,577,876 
LIABILITIES         
Noninterest bearing deposits$897,053  $924,213  $897,923  $989,469  $1,053,450 
Interest bearing deposits 4,498,620   4,439,111   4,547,524   4,565,684   4,415,492 
Total deposits 5,395,673   5,363,324   5,445,447   5,555,153   5,468,942 
Short-term borrowings 300,264   373,956   362,054   143,981   391,873 
Long-term debt 123,296   124,526   125,752   137,981   139,210 
Other liabilities 83,929   100,601   86,895   72,187   85,058 
Total liabilities 5,903,162   5,962,407   6,020,148   5,909,302   6,085,083 
SHAREHOLDERS' EQUITY         
Common stock 16,581   16,581   16,581   16,581   16,581 
Additional paid-in capital 302,157   301,889   301,424   300,966   302,085 
Retained earnings 294,784   295,862   290,548   286,767   289,289 
Treasury stock (24,245)  (24,315)  (24,508)  (24,779)  (26,115)
Accumulated other comprehensive loss (64,899)  (84,606)  (82,704)  (78,885)  (89,047)
Total shareholders' equity 524,378   505,411   501,341   500,650   492,793 
Total liabilities and shareholders' equity$6,427,540  $6,467,818  $6,521,489  $6,409,952  $6,577,876 
                    

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

 Three Months Ended Year Ended
 December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(In thousands, except per share data)2023 2023 2023 2023 2022 2023 2022
Interest income             
Loans, including fees$54,093  $51,870  $49,726  $46,490  $43,769  $202,179  $148,284 
Taxable investment securities 9,274   9,526   9,734   10,444   10,685   38,978   39,019 
Tax-exempt investment securities 1,789   1,802   1,822   2,127   2,303   7,540   9,379 
Other 230   374   68   244      916   77 
Total interest income 65,386   63,572   61,350   59,305   56,757   249,613   196,759 
Interest expense             
Deposits 27,200   23,128   20,117   15,319   9,127   85,764   20,245 
Short-term borrowings 3,496   3,719   2,118   1,786   1,955   11,119   3,070 
Long-term debt 2,131   2,150   2,153   2,124   2,111   8,558   7,086 
Total interest expense 32,827   28,997   24,388   19,229   13,193   105,441   30,401 
Net interest income 32,559   34,575   36,962   40,076   43,564   144,172   166,358 
Credit loss expense 1,768   1,551   1,597   933   572   5,849   4,492 
Net interest income after credit loss expense 30,791   33,024   35,365   39,143   42,992   138,323   161,866 
Noninterest income (loss)             
Investment services and trust activities 3,193   3,004   3,119   2,933   2,666   12,249   11,223 
Service charges and fees 2,148   2,146   2,047   2,008   2,028   8,349   7,477 
Card revenue 1,802   1,817   1,847   1,748   1,784   7,214   7,210 
Loan revenue 909   1,462   909   1,420   966   4,700   10,504 
Bank-owned life insurance 656   626   616   602   637   2,500   2,305 
Investment securities (losses) gains, net (5,696)  79   (2)  (13,170)  (1)  (18,789)  271 
Other 850   727   210   413   2,860   2,200   8,529 
Total noninterest income (loss) 3,862   9,861   8,746   (4,046)  10,940   18,423   47,519 
Noninterest expense             
Compensation and employee benefits 17,859   18,558   20,386   19,607   20,438   76,410   78,103 
Occupancy expense of premises, net 2,309   2,405   2,574   2,746   2,663   10,034   10,272 
Equipment 2,466   2,123   2,435   2,171   2,327   9,195   8,693 
Legal and professional 2,269   1,678   1,682   1,736   1,846   7,365   8,646 
Data processing 1,411   1,504   1,521   1,363   1,375   5,799   5,574 
Marketing 700   782   1,142   986   947   3,610   4,272 
Amortization of intangibles 1,441   1,460   1,594   1,752   1,770   6,247   6,069 
FDIC insurance 900   783   862   749   405   3,294   1,660 
Communications 183   206   260   261   285   910   1,125 
Foreclosed assets, net 45   2   (6)  (28)  48   13   (18)
Other 2,548   2,043   2,469   1,976   2,336   9,036   8,392 
Total noninterest expense 32,131   31,544   34,919   33,319   34,440   131,913   132,788 
Income before income tax expense 2,522   11,341   9,192   1,778   19,492   24,833   76,597 
Income tax (benefit) expense (208)  2,203   1,598   381   3,490   3,974   15,762 
Net income$2,730  $9,138  $7,594  $1,397  $16,002  $20,859  $60,835 
              
Earnings per common share             
Basic$0.17  $0.58  $0.48  $0.09  $1.02  $1.33  $3.89 
Diluted$0.17  $0.58  $0.48  $0.09  $1.02  $1.33  $3.87 
Weighted average basic common shares outstanding 15,693   15,689   15,680   15,650   15,624   15,678   15,649 
Weighted average diluted common shares outstanding 15,756   15,711   15,689   15,691   15,693   15,725   15,701 
Dividends paid per common share$0.2425  $0.2425  $0.2425  $0.2425  $0.2375  $0.9700  $0.9500 
                            

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL STATISTICS

 As of or for the Three Months Ended As of or for the Year Ended
 December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands, except per share amounts)2023 2023 2022 2023 2022
Earnings:         
Net interest income$32,559  $34,575  $43,564  $144,172  $166,358 
Noninterest income 3,862   9,861   10,940   18,423   47,519 
Total revenue, net of interest expense 36,421   44,436   54,504   162,595   213,877 
Credit loss expense 1,768   1,551   572   5,849   4,492 
Noninterest expense 32,131   31,544   34,440   131,913   132,788 
Income before income tax expense 2,522   11,341   19,492   24,833   76,597 
Income tax (benefit) expense (208)  2,203   3,490   3,974   15,762 
Net income$2,730  $9,138  $16,002  $20,859  $60,835 
Per Share Data:         
Diluted earnings$0.17  $0.58  $1.02  $1.33  $3.87 
Book value 33.41   32.21   31.54   33.41   31.54 
Tangible book value(1) 27.90   26.60   25.60   27.90   25.60 
Ending Balance Sheet:         
Total assets$6,427,540  $6,467,818  $6,577,876  $6,427,540  $6,577,876 
Loans held for investment, net of unearned income 4,126,947   4,065,969   3,840,524   4,126,947   3,840,524 
Total securities 1,870,324   1,958,521   2,282,968   1,870,324   2,282,968 
Total deposits 5,395,673   5,363,324   5,468,942   5,395,673   5,468,942 
Short-term borrowings 300,264   373,956   391,873   300,264   391,873 
Long-term debt 123,296   124,526   139,210   123,296   139,210 
Total shareholders' equity 524,378   505,411   492,793   524,378   492,793 
Average Balance Sheet:         
Average total assets$6,459,705  $6,452,815  $6,516,969  $6,475,360  $6,244,284 
Average total loans 4,080,243   4,019,852   3,791,880   3,993,389   3,511,192 
Average total deposits 5,443,323   5,379,871   5,495,599   5,455,609   5,309,049 
Financial Ratios:         
Return on average assets 0.17%  0.56%  0.97%  0.32%  0.97%
Return on average equity 2.12%  7.14%  13.26%  4.12%  12.16%
Return on average tangible equity(1) 3.57%  9.68%  17.85%  6.14%  15.89%
Efficiency ratio(1) 70.16%  66.06%  57.79%  67.28%  56.98%
Net interest margin, tax equivalent(1) 2.22%  2.35%  2.93%  2.46%  2.92%
Loans to deposits ratio 76.49%  75.81%  70.22%  76.49%  70.22%
Common equity ratio 8.16%  7.81%  7.49%  8.16%  7.49%
Tangible common equity ratio(1) 6.90%  6.54%  6.17%  6.90%  6.17%
Credit Risk Profile:         
Total nonperforming loans$26,359  $28,987  $15,821  $26,359  $15,821 
Nonperforming loans ratio 0.64%  0.71%  0.41%  0.64%  0.41%
Total nonperforming assets$30,288  $28,987  $15,924  $30,288  $15,924 
Nonperforming assets ratio 0.47%  0.45%  0.24%  0.47%  0.24%
Net charge-offs$2,068  $451  $3,472  $3,749  $6,563 
Net charge-off ratio 0.20%  0.04%  0.36%  0.09%  0.19%
Allowance for credit losses$51,500  $51,600  $49,200  $51,500  $49,200 
Allowance for credit losses ratio 1.25%  1.27%  1.28%  1.25%  1.28%
Allowance for credit losses to nonaccrual ratio 198.91%  178.63%  322.50%  198.91%  322.50%
          
(1)Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
 

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS

 Three Months Ended
 December 31, 2023 September 30, 2023 December 31, 2022
(Dollars in thousands)AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/Cost Average Balance InterestIncome/Expense AverageYield/Cost
ASSETS                 
Loans, including fees(1)(2)(3)$4,080,243 $54,939 5.34% $4,019,852 $52,605 5.19% $3,791,880 $44,494 4.66%
Taxable investment securities 1,593,699  9,274 2.31%  1,637,259  9,526 2.31%  1,865,494  10,685 2.27%
Tax-exempt investment securities(2)(4) 338,243  2,217 2.60%  341,330  2,234 2.60%  422,156  2,893 2.72%
Total securities held for investment(2) 1,931,942  11,491 2.36%  1,978,589  11,760 2.36%  2,287,650  13,578 2.35%
Other 22,937  230 3.98%  34,195  374 4.34%  5,562   %
Total interest earning assets(2)$6,035,122 $66,660 4.38% $6,032,636 $64,739 4.26% $6,085,092 $58,072 3.79%
Other assets 424,583      420,179      431,877    
Total assets$6,459,705     $6,452,815     $6,516,969    
LIABILITIES AND SHAREHOLDERS’ EQUITY                 
Interest checking deposits$1,305,759 $2,991 0.91% $1,354,597 $2,179 0.64% $1,632,749 $1,703 0.41%
Money market deposits 1,103,637  7,954 2.86%  1,112,149  7,402 2.64%  995,512  2,369 0.94%
Savings deposits 639,766  1,493 0.93%  603,628  749 0.49%  683,538  306 0.18%
Time deposits 1,463,498  14,762 4.00%  1,403,504  12,798 3.62%  1,067,044  4,749 1.77%
Total interest bearing deposits 4,512,660  27,200 2.39%  4,473,878  23,128 2.05%  4,378,843  9,127 0.83%
Securities sold under agreements to repurchase 8,661  17 0.78%  66,020  85 0.51%  151,880  437 1.14%
Other short-term borrowings 273,963  3,479 5.04%  277,713  3,634 5.19%  153,155  1,518 3.93%
Short-term borrowings 282,624  3,496 4.91%  343,733  3,719 4.29%  305,035  1,955 2.54%
Long-term debt 124,495  2,131 6.79%  125,737  2,150 6.78%  151,266  2,111 5.54%
Total borrowed funds 407,119  5,627 5.48%  469,470  5,869 4.96%  456,301  4,066 3.54%
Total interest bearing liabilities$4,919,779 $32,827 2.65% $4,943,348 $28,997 2.33% $4,835,144 $13,193 1.08%
Noninterest bearing deposits 930,663      905,993      1,116,756    
Other liabilities 98,027      95,408      86,242    
Shareholders’ equity 511,236      508,066      478,827    
Total liabilities and shareholders’ equity$6,459,705     $6,452,815     $6,516,969    
Net interest income(2)  $33,833     $35,742     $44,879  
Net interest spread(2)    1.73%     1.93%     2.71%
Net interest margin(2)    2.22%     2.35%     2.93%
                  
Total deposits(5)$5,443,323 $27,200 1.98% $5,379,871 $23,128 1.71% $5,495,599 $9,127 0.66%
Cost of funds(6)    2.23%     1.97%     0.88%
                     
(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 $207 thousand, $141 thousand, and $87 thousand for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. Loan purchase discount accretion was $765 thousand, $791 thousand, and $1.3 million for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. Tax equivalent adjustments were $846 thousand, $735 thousand, and $725 thousand for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $428 thousand, $432 thousand, and $590 thousand for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.
 

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS

 Year Ended
 December 31, 2023 December 31, 2022
(Dollars in thousands)AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/Cost
ASSETS           
Loans, including fees(1)(2)(3)$3,993,389 $205,189 5.14% $3,511,192 $150,791 4.29%
Taxable investment securities 1,684,360  38,978 2.31%  1,891,234  39,019 2.06%
Tax-exempt investment securities(2)(4) 355,454  9,353 2.63%  435,907  11,788 2.70%
Total securities held for investment(2) 2,039,814  48,331 2.37%  2,327,141  50,807 2.18%
Other 22,791  916 4.02%  20,827  77 0.37%
Total interest earning assets(2)$6,055,994 $254,436 4.20% $5,859,160 $201,675 3.44%
Other assets 419,366      385,124    
Total assets$6,475,360     $6,244,284    
LIABILITIES AND SHAREHOLDERS’ EQUITY           
Interest checking deposits$1,398,538 $8,990 0.64% $1,640,303 $5,416 0.33%
Money market deposits 1,037,123  23,924 2.31%  992,390  4,707 0.47%
Savings deposits 624,990  2,802 0.45%  674,846  1,169 0.17%
Time deposits 1,443,770  50,048 3.47%  925,592  8,953 0.97%
Total interest bearing deposits 4,504,421  85,764 1.90%  4,233,131  20,245 0.48%
Securities sold under agreements to repurchase 94,563  975 1.03%  152,466  872 0.57%
Other short-term borrowings 199,530  10,144 5.08%  70,729  2,198 3.11%
Short-term borrowings 294,093  11,119 3.78%  223,195  3,070 1.38%
Long-term debt 131,137  8,558 6.53%  148,863  7,086 4.76%
Total borrowed funds 425,230  19,677 4.63%  372,058  10,156 2.73%
Total interest bearing liabilities$4,929,651 $105,441 2.14% $4,605,189 $30,401 0.66%
Noninterest bearing deposits 951,188      1,075,918    
Other liabilities 88,770      62,706    
Shareholders’ equity 505,751      500,471    
Total liabilities and shareholders’ equity$6,475,360     $6,244,284    
Net interest income(2)  $148,995     $171,274  
Net interest spread(2)    2.06%     2.78%
Net interest margin(2)    2.46%     2.92%
            
Total deposits(5)$5,455,609 $85,764 1.57% $5,309,049 $20,245 0.38%
Cost of funds(6)    1.79%     0.54%
              
(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 $522 thousand and $765 thousand for the year ended December 31, 2023 and December 31, 2022, respectively. Loan purchase discount accretion was $3.7 million and $4.6 million for the year ended December 31, 2023 and December 31, 2022, respectively. Tax equivalent adjustments were $3.0 million and $2.5 million for the year ended December 31, 2023 and December 31, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.8 million and $2.4 million for the year ended December 31, 2023 and December 31, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.
 

Non-GAAP Measures

This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, and efficiency ratio. 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) 2023 2023 2023 2023 2022
Total shareholders’ equity $524,378  $505,411  $501,341  $500,650  $492,793 
Intangible assets, net  (86,546)  (87,987)  (89,446)  (91,040)  (92,792)
Tangible common equity $437,832  $417,424  $411,895  $409,610  $400,001 
           
Total assets $6,427,540  $6,467,818  $6,521,489  $6,409,952  $6,577,876 
Intangible assets, net  (86,546)  (87,987)  (89,446)  (91,040)  (92,792)
Tangible assets $6,340,994  $6,379,831  $6,432,043  $6,318,912  $6,485,084 
           
Book value per share $33.41  $32.21  $31.96  $31.94  $31.54 
Tangible book value per share(1) $27.90  $26.60  $26.26  $26.13  $25.60 
Shares outstanding  15,694,306   15,691,738   15,685,123   15,675,325   15,623,977 
           
Common equity ratio  8.16%  7.81%  7.69%  7.81%  7.49%
Tangible common equity ratio(2)  6.90%  6.54%  6.40%  6.48%  6.17%
                     
(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) 2023 2023 2022 2023 2022
Net income $2,730  $9,138  $16,002  $20,859  $60,835 
Intangible amortization, net of tax(1)  1,081   1,095   1,328   4,685   4,552 
Tangible net income $3,811  $10,233  $17,330  $25,544  $65,387 
           
Average shareholders’ equity $511,236  $508,066  $478,827  $505,751  $500,471 
Average intangible assets, net  (87,258)  (88,699)  (93,662)  (89,539)  (88,917)
Average tangible equity $423,978  $419,367  $385,165  $416,212  $411,554 
           
Return on average equity  2.12%  7.14%  13.26%  4.12%  12.16%
Return on average tangible equity(2)  3.57%  9.68%  17.85%  6.14%  15.89%
                     
(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) 2023 2023 2022 2023 2022
Net interest income $32,559  $34,575  $43,564  $144,172  $166,358 
Tax equivalent adjustments:          
Loans(1)  846   735   725   3,010   2,507 
Securities(1)  428   432   590   1,813   2,409 
Net interest income, tax equivalent $33,833  $35,742  $44,879  $148,995  $171,274 
Loan purchase discount accretion  (765)  (791)  (1,286)  (3,729)  (4,561)
Core net interest income $33,068  $34,951  $43,593  $145,266  $166,713 
           
Net interest margin  2.14%  2.27%  2.84%  2.38%  2.84%
Net interest margin, tax equivalent(2)  2.22%  2.35%  2.93%  2.46%  2.92%
Core net interest margin(3)  2.17%  2.30%  2.84%  2.40%  2.85%
Average interest earning assets $6,035,122  $6,032,636  $6,085,092  $6,055,994  $5,859,160 
                     
(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 / Core Yield on Loans December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands) 2023 2023 2022 2023 2022
Loan interest income, including fees $54,093  $51,870  $43,769  $202,179  $148,284 
Tax equivalent adjustment(1)  846   735   725   3,010   2,507 
Tax equivalent loan interest income $54,939  $52,605  $44,494  $205,189  $150,791 
Loan purchase discount accretion  (765)  (791)  (1,286)  (3,729)  (4,561)
Core loan interest income $54,174  $51,814  $43,208  $201,460  $146,230 
           
Yield on loans  5.26%  5.12%  4.58%  5.06%  4.22%
Yield on loans, tax equivalent(2)  5.34%  5.19%  4.66%  5.14%  4.29%
Core yield on loans(3)  5.27%  5.11%  4.52%  5.04%  4.16%
Average loans $4,080,243  $4,019,852  $3,791,880  $3,993,389  $3,511,192 
                     
(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) 2023 2023 2022 2023 2022
Total noninterest expense $32,131  $31,544  $34,440  $131,913  $132,788 
Amortization of intangibles  (1,441)  (1,460)  (1,770)  (6,247)  (6,069)
Merger-related expenses  (245)  (11)  (409)  (392)  (2,201)
Noninterest expense used for efficiency ratio $30,445  $30,073  $32,261  $125,274  $124,518 
           
Net interest income, tax equivalent(1) $33,833  $35,742  $44,879  $148,995  $171,274 
Plus: Noninterest income  3,862   9,861   10,940   18,423   47,519 
Less: Investment securities (losses) gains, net  (5,696)  79   (1)  (18,789)  271 
Net revenues used for efficiency ratio $43,391  $45,524  $55,820  $186,207  $218,522 
           
Efficiency ratio(2)  70.16%  66.06%  57.79%  67.28%  56.98%
                     
(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.
 

Category: Earnings

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

Source: MidWestOne Financial Group, Inc.

Industry: Banks

Contact:  
 Charles N. Reeves Barry S. Ray
 Chief Executive Officer Chief Financial Officer
 319.356.5800 319.356.5800
    

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Source: MidWestOne Bank

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