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


( MENAFN - GlobeNewsWire - Nasdaq <)strong> Second Quarter Summary (1)

  • Net income for the second quarter was $17.3 million, or $1.08 per diluted common share.
    • Total revenue, net of interest expense, of $48.7 million.
    • Credit loss benefit of $2.1 million.
    • Noninterest expense of $28.7 million.
  • Excluding PPP loans, commercial loans were $2.61 billion,(2) as compared to $2.56 billion(2) for the first quarter of 2021 (the "linked quarter"), an increase of 2.2%.
  • Average total deposits were $4.88 billion, as compared to $4.57 billion for the linked quarter, an increase of 6.6%, while cost of average total deposits decreased to 0.28%.
  • Efficiency ratio of 54.83%(2).
  • Nonperforming assets declined 8.0% and the net charge-off ratio was 5 bps.

IOWA CITY, Iowa, July 22, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”,“our”, or the "Company”) today reported net income for the second quarter of 2021 of $17.3 million, or $1.08 per diluted common share, compared to net income of $21.6 million, or $1.35 per diluted common share, for the linked quarter.

CEO COMMENTARY

Charles Funk, Chief Executive Officer of the Company, commented, "This was another solid quarter for our Company with good core loan growth, improved asset quality, and a nice build in our tangible book value. Despite the continuation of very low credit line usage, our commercial bankers were able to produce a quarter of respectable core loan growth although potential headwinds remain."

"The low interest rate environment continues to pressure commercial bank margins, and we are not immune. Our noninterest income results reflect a decrease in mortgage gain on sale margins; however, we continue to be running at an 'above normal' rate of mortgage originations. Our wealth management group continues to produce good results as well."

"With respect to capital, we believe our stock currently represents a compelling value, and we are selectively repurchasing our stock at opportune moments. We returned $4.7 million of capital to shareholders during the second quarter of 2021, including $1.1 million from such stock repurchases."

"Finally, we commend our fine staff for closing nearly one-half of a billion dollars of PPP loans. For some borrowers, these funds were literally the difference between survival and failure. Our bankers deserve much credit for their long hours and perseverance over the past twelve months."

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

FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share amounts) 2021 2021 2020 2021 2020
Net interest income $ 38,505 $ 38,617 $ 38,712 $ 77,122 $ 76,118
Noninterest income 10,218 11,824 8,269 22,042 18,424
Total revenue, net of interest expense 48,723 50,441 46,981 99,164 94,542
Credit loss (benefit) expense (2,144 ) (4,734 ) 4,685 (6,878 ) 26,418
Noninterest expense 28,670 27,700 28,038 56,370 58,039
Income before income tax expense 22,197 27,475 14,258 49,672 10,085
Income tax expense 4,926 5,827 2,546 10,753 348
Net income $ 17,271 $ 21,648 $ 11,712 $ 38,919 $ 9,737
Diluted earnings per share $ 1.08 $ 1.35 $ 0.73 $ 2.43 $ 0.60
Return on average assets 1.18 % 1.59 % 0.92 % 1.38 % 0.40 %
Return on average equity 13.24 % 17.01 % 9.21 % 15.10 % 3.82 %
Return on average tangible equity(1) 16.75 % 21.52 % 13.50 % 19.10 % 6.48 %
Efficiency ratio(1) 54.83 % 50.77 % 54.80 % 52.76 % 56.24 %
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.


COVID-19 UPDATE

Loan Modifications

As of June 30, 2021, the outstanding balance of loans modified as a result of the COVID-19 pandemic totaled $21.0 million, an increase of 26% from $16.7 million at March 31, 2021. The increase from the end of the first quarter of 2021 was due to an additional deferral that was granted for one large commercial real estate loan. Of those modified loans at June 30, 2021, $0.7 million were in their first deferral period while $20.3 million were in a second deferral period.

SBA Paycheck Protection Program (PPP) Loans

The PPP Extension Act of 2021 set a deadline for PPP applications of May 31, 2021. The following table presents PPP loan measures as of the dates indicated:

June 30, 2021 March 31, 2021
Round 1 Round 2 Total Round 1 Round 2 Total
(Dollars in millions) # $ # $ # $ # $ # $ # $
Total PPP Loans Funded 2,681 348.5 2,175 149.3 4,856 497.8 2,681 348.5 1,623 125.7 4,304 474.2
PPP Loan Forgiveness(1) 2,247 285.7 441 12.3 2,688 298.0 1,709 210.3 1,709 210.3
Outstanding PPP Loans(2) 416 53.9 1,734 130.5 2,150 184.4 954 128.2 1,623 120.5 2,577 248.7
Unearned Income $ 0.5 $ 6.0 $ 6.5 $1.7 $5.2 $6.9
(1) Excluded from the PPP Loan Forgiveness is $8.9 million as of June 30, 2021 and March 31, 2021 of PPP loans that were paid off by the borrower prior to forgiveness.
(2) Outstanding loans are presented net of unearned income.

Vulnerable Industries

We believe loans to certain industries are uniquely vulnerable to credit deterioration stemming from the COVID-19 pandemic. The following table presents our exposure to those industries as of the dates indicated.

June 30, 2021 March 31, 2021
(Dollars in millions) Balance % of Total
Loans
Balance % of Total
Loans
Non-essential Retail $ 78.4 2.4 % $ 88.0 2.6 %
Restaurants 51.3 1.5 56.1 1.7
Hotels 108.2 3.2 114.4 3.4
CRE-Retail 202.6 6.1 191.1 5.7
Arts, Entertainment & Gaming 23.0 0.7 23.5 0.7
Total Vulnerable Industries Loan Portfolio $ 463.5 13.9 % $ 473.1 14.1 %


INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income of $38.5 million in the second quarter of 2021 was relatively flat compared to $38.6 million in the first quarter of 2021 and reflected the income benefit from higher average earning asset balances in the second quarter of 2021 offset by lower PPP loan fee income and loan purchase discount accretion. Average interest earning assets increased $323.6 million to $5.52 billion in the second quarter of 2021, compared to the first quarter of 2021, as cash on hand and cash inflows from deposit activity was used to purchase debt securities and fund loan originations. Net PPP loan fee accretion was $2.5 million in the second quarter of 2021 compared to $3.7 million in the linked quarter. Loan purchase discount accretion was $0.9 million in the second quarter of 2021, down from $1.1 million in the linked quarter.

The Company's tax equivalent net interest margin was 2.88% in the second quarter of 2021 compared to 3.10% in the linked quarter as lower earning asset yields more than offset reduced funding costs. Total earning asset yields decreased 28 bps from the linked quarter due primarily to the decline in PPP loan fee income described above. The cost of interest bearing liabilities decreased 7 bps to 0.49%, primarily as a result of interest bearing deposit costs of 0.35%, which declined 5 bps from the linked quarter.

Noninterest Income

Noninterest income for the second quarter of 2021 decreased $1.6 million, or 14%, from the linked quarter. The decrease was primarily due to a $1.6 million decrease in loan revenue, coupled with a decrease of $0.4 million in other noninterest income. The decline in loan revenue included a $0.6 million reduction in mortgage origination fees from lower gain on sale margins as well as a $0.6 million decrease stemming from the fair value of our mortgage servicing rights. These decreases were partially offset by a $0.4 million increase in card revenue, which was primarily due to increased transaction volumes.

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

Three Months Ended
Noninterest Income June 30, March 31, June 30,
(In thousands) 2021 2021 2020
Investment services and trust activities $ 2,809 $ 2,836 $ 2,217
Service charges and fees 1,475 1,487 1,290
Card revenue 1,913 1,536 1,237
Loan revenue 3,151 4,730 1,910
Bank-owned life insurance 538 542 635
Investment securities gains, net 42 27 6
Other 290 666 974
Total noninterest income $ 10,218 $ 11,824 $ 8,269

Noninterest Expense

Noninterest expense for the second quarter of 2021 increased $1.0 million, or 3.5%, from the linked quarter primarily due to increases in legal and professional, compensation and employee benefits, and other noninterest expenses of $0.6 million, $0.5 million, and $0.4 million, respectively. The increase in legal and professional expenses was due primarily to a legal insurance recovery of $0.4 million in the first quarter of 2021 that did not recur in the second quarter of 2021. The increase in compensation and employee benefits was due primarily to a $0.6 million reduction in the benefit from SBA PPP loan origination costs which are deferred and amortized over the life of the loan to which they relate. The increased noninterest expenses, as well as the decline in noninterest income noted above, were the primary drivers of the increase in the efficiency ratio, which increased 4.06 percentage points to 54.83%, as compared to the linked quarter efficiency ratio of 50.77%.

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

Three Months Ended
Noninterest Expense June 30, March 31, June 30,
(In thousands) 2021 2021 2020
Compensation and employee benefits $ 17,404 $ 16,917 $ 15,682
Occupancy expense of premises, net 2,198 2,318 2,253
Equipment 1,861 1,793 2,010
Legal and professional 1,375 783 1,382
Data processing 1,347 1,252 1,240
Marketing 873 1,006 910
Amortization of intangibles 1,341 1,507 1,748
FDIC insurance 245 512 445
Communications 371 409 449
Foreclosed assets, net 136 47 34
Other 1,519 1,156 1,885
Total noninterest expense $ 28,670 $ 27,700 $ 28,038

Income Taxes

The effective income tax rate was 22.2% in the second quarter of 2021 compared to 21.2% in the linked quarter. The effective income tax rate in the second quarter of 2021 reflected an increase in income taxes based on the statutory rate and state income taxes, net of federal income tax benefits, primarily due to the net income earned during the quarter, offset by benefits related to tax-exempt interest and bank-owned life insurance. The effective income tax rate for the full year 2021 is expected to be in the range of 20-22%.

BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS
As of or for the Three Months Ended
June 30, March 31, June 30,
(Dollars in millions, except per share amounts) 2021 2021 2020
Ending Balance Sheet
Total assets $ 5,749.2 $ 5,737.3 $ 5,231.0
Loans held for investment, net of unearned income 3,330.2 3,358.2 3,597.0
Total securities held for investment 2,072.5 1,896.9 1,187.5
Total deposits 4,792.7 4,794.6 4,265.4
Average Balance Sheet
Average total assets $ 5,851.7 $ 5,520.3 $ 5,098.8
Average total loans 3,396.6 3,429.7 3,633.7
Average total deposits 4,875.3 4,573.9 4,165.6
Funding and Liquidity
Short-term borrowings $ 212.3 $ 175.8 $ 162.2
Long-term debt 169.8 201.7 190.0
Loans to deposits ratio 69.48 % 70.04 % 84.33 %
Equity
Total shareholders' equity $ 530.3 $ 511.3 $ 520.8
Common equity ratio 9.22 % 8.91 % 9.96 %
Tangible common equity(1) 445.4 425.1 398.4
Tangible common equity ratio(1) 7.86 % 7.52 % 7.80 %
Per Share Data
Book value $ 33.22 $ 32.00 $ 32.35
Tangible book value(1) $ 27.90 $ 26.60 $ 24.74
(1) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

Loans Held for Investment

Loans held for investment, net of unearned income, decreased $28.0 million, or 1%, to $3.33 billion from March 31, 2021, driven primarily by PPP loan forgiveness and lower line utilization.

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

Loans Held for Investment June 30, 2021 March 31, 2021 June 30, 2020
Balance
% of
Total

Balance % of
Total
Balance % of
Total
(dollars in thousands)
Commercial and industrial $ 982,092 29.5 % $ 993,770 29.6 % $ 1,084,527 30.2 %
Agricultural 107,834 3.2 117,099 3.5 140,837 3.9
Commercial real estate
Construction and development 168,070 5.0 164,927 4.9 199,950 5.6
Farmland 134,877 4.1 138,199 4.1 161,897 4.5
Multifamily 255,826 7.7 261,806 7.8 247,403 6.9
Other 1,147,016 34.4 1,128,660 33.6 1,155,489 32.0
Total commercial real estate 1,705,789 51.2 1,693,592 50.4 1,764,739 49.0
Residential real estate
One-to-four family first liens 332,117 10.0 337,408 10.0 377,100 10.5
One-to-four family junior liens 136,464 4.1 137,025 4.1 155,814 4.3
Total residential real estate 468,581 14.1 474,433 14.1 532,914 14.8
Consumer 65,860 2.0 79,267 2.4 74,022 2.1
Loans held for investment, net of unearned
income
$ 3,330,156 100.0 % $ 3,358,161 100.0 % $ 3,597,039 100.0 %

Credit Loss Expense & Allowance for Credit Losses

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

Three Months Ended Six Months Ended
Allowance for Credit Losses Roll Forward June 30, March 31, June 30, June 30, June 30,
(In thousands) 2021 2021 2020 2021 2020
Beginning balance $ 50,650 $ 55,500 $ 51,187 $ 55,500 $ 29,079
Cumulative effect of change in accounting principle - CECL 3,984
Charge-offs (840 ) (1,003 ) (2,103 ) (1,843 ) (3,600 )
Recoveries 434 687 236 1,121 535
Net charge-offs (406 ) (316 ) (1,867 ) (722 ) (3,065 )
Credit loss (benefit) expense related to loans (2,244 ) (4,534 ) 6,324 (6,778 ) 25,646
Ending balance $ 48,000 $ 50,650 $ 55,644 $ 48,000 $ 55,644

As of June 30, 2021, the allowance for credit losses ("ACL") was $48.0 million, or 1.44% of loans held for investment, net of unearned income, compared with $50.7 million, or 1.51%, at March 31, 2021. After excluding net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income, decreased to 1.53%(1) as of June 30, 2021, from 1.63%(1) at March 31, 2021. The decline in the ACL during the second quarter reflected overall improvements in the economic forecast and an improved credit profile outlook when compared to the linked quarter.

(1)Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

Deposits

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

Deposit Composition June 30, 2021 March 31, 2021 June 30, 2020
(In thousands) Balance % of
Total
Balance % of
Total
Balance % of
Total
Noninterest bearing deposits $ 952,764 19.9 % $ 958,526 20.0 % $ 867,637 20.3 %
Interest checking deposits 1,414,942 29.6 1,406,070 29.4 1,153,697 27.1
Money market deposits 936,683 19.5 950,300 19.8 811,368 19.0
Savings deposits 596,199 12.4 580,862 12.1 463,262 10.9
Total non-maturity deposits 3,900,588 81.4 3,895,758 81.3 3,295,964 77.3
Time deposits of $250 and under 538,331 11.2 558,338 11.6 656,723 15.4
Time deposits over $250 353,747 7.4 340,467 7.1 312,748 7.3
Total time deposits 892,078 18.6 898,805 18.7 969,471 22.7
Total deposits $ 4,792,666 100.0 % $ 4,794,563 100.0 % $ 4,265,435 100.0 %


CREDIT RISK PROFILE

As of or For the Three Months Ended
Highlights June 30, March 31, June 30,
(dollars in thousands) 2021 2021 2020
Credit loss (benefit) expense related to loans $ (2,244 ) $ (4,534 ) $ 6,324
Net charge-offs $ 406 $ 316 $ 1,867
Net charge-off ratio(1) 0.05 % 0.04 % 0.21 %
At period-end
Pass $ 3,102,688 $ 3,112,728 $ 3,301,353
Special Mention / Watch 115,414 130,052 204,442
Classified 112,054 115,381 91,244
Total loans held for investment, net $ 3,330,156 $ 3,358,161 $ 3,597,039
Classified loans ratio(2) 3.36 % 3.44 % 2.54 %
Nonaccrual loans held for investment $ 40,764 $ 43,874 $ 41,303
Accruing loans contractually past due 90 days or more 665 508 3,238
Total nonperforming loans 41,429 44,382 44,541
Foreclosed assets, net 755 1,487 965
Total nonperforming assets $ 42,184 $ 45,869 $ 45,506
Nonperforming loans ratio(3) 1.24 % 1.32 % 1.24 %
Nonperforming assets ratio(4) 0.73 % 0.80 % 0.87 %
Allowance for credit losses $ 48,000 $ 50,650 $ 55,644
Allowance for credit losses ratio(5) 1.44 % 1.51 % 1.55 %
Adjusted allowance for credit losses ratio(6) 1.53 % 1.63 % 1.70 %
(1) Net charge-off ratio is calculated as annualized net charge-offs divided by average loans held for investment, net of unearned income, during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(4) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.
(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.
(6) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

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

Nonperforming Loans
(dollars in thousands) Nonaccrual 90+ Days Past Due
& Still Accruing
Total
Balance at March 31, 2021 $ 43,874 $ 508 $ 44,382
Loans placed on nonaccrual or 90+ days past due & still accruing 455 688 1,143
Repayments (including interest applied to principal) (2,669 ) (2,669 )
Loans returned to accrual status or no longer past due (503 ) (503 )
Charge-offs (766 ) (28 ) (794 )
Transfers to foreclosed assets (130 ) (130 )
Balance at June 30, 2021 $ 40,764 $ 665 $ 41,429


CAPITAL

Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of the current expected credit losses (CECL) accounting standard. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. This cumulative amount will then be reduced from capital over the subsequent three-year period.

Regulatory Capital Ratios
June 30, March 31, June 30,
2021 (1) 2021 2020
MidWest One Financial Group, Inc. Consolidated
Tier 1 leverage ratio 8.50 % 8.78 % 8.72 %
Common equity tier 1 capital ratio 10.26 % 10.16 % 9.48 %
Tier 1 capital ratio 11.21 % 11.13 % 10.48 %
Total capital ratio 13.63 % 13.75 % 11.72 %
MidWest One Bank
Tier 1 leverage ratio 9.15 % 9.60 % 9.39 %
Common equity tier 1 capital ratio 12.09 % 12.19 % 11.34 %
Tier 1 capital ratio 12.09 % 12.19 % 11.34 %
Total capital ratio 13.02 % 13.19 % 12.47 %
(1) Capital ratios for June 30, 2021 are preliminary


CORPORATE UPDATE

Share Repurchase Program

For the period April 1, 2021 through June 22, 2021, under the prior repurchase program that was announced on August 20, 2019, which allowed for the repurchase of up to $10.0 million of common stock, the Company repurchased 20,985 shares of its common stock at an average price of $29.66 per share and a total cost of $0.6 million, leaving $2.1 million of shares that were available to be repurchased under that repurchase program.

On June 22, 2021, the Board of Directors of the Company approved a new share repurchase program which replaced the prior repurchase program, allowing for the repurchase of up to $15.0 million of the Company's common stock through December 31, 2023. For the period June 23, 2021 through June 30, 2021, the Company repurchased 17,790 shares of its common stock at an average price of $29.53 per share and a total cost of $0.5 million. At June 30, 2021, $14.5 million remained available to repurchase shares under the Company's new share repurchase program.

Cash Dividend Announcement

The Board of Directors of the Company declared a cash dividend of $0.2250 per common share on July 20, 2021. The dividend is payable September 15, 2021, to shareholders of record at the close of business on September 1, 2021.

Subordinated Debenture Redemption

On May 31, 2021, the Company exercised its option to redeem, in whole, $10.8 million of outstanding subordinated debentures (the "ATB Debentures") that were assumed upon the Company's acquisition of ATBancorp. The ATB Debentures had a stated maturity of May 31, 2023 and bore interest at a fixed annual rate of 6.5%. The amount of ATB Debentures qualifying as tier 2 regulatory capital would have been phased-out completely starting in the second quarter of 2022.

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, July 23, 2021. To participate, please dial 866-233-3483 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until November 4, 2021, by calling 877-344-7529 and using the replay access code of 10157115. A transcript of the call will also be available on the Company's web site ( within three business days of the call.

ABOUT MIDWEST ONE FINANCIAL GROUP, INC.

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

Cautionary Note Regarding Forward-Looking Statements

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

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act, 2021 and the American Rescue Plan; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (5) the effects of interest rates, including on our net income and the value of our securities portfolio; (6) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (7) fluctuations in the value of our investment securities; (8) governmental monetary and fiscal policies; (9) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR and the adoption of a substitute; (10) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (11) the ability to attract and retain key executives and employees experienced in banking and financial services; (12) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (13) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (14) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (15) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (16) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (17) the risks of mergers, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.



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

June 30, March 31, December 31, September 30, June 30,
(In thousands) 2021 2021 2020 2020 2020
ASSETS
Cash and due from banks $ 52,297 $ 57,154 $ 65,078 $ 71,901 $ 65,863
Interest earning deposits in banks 11,124 80,924 17,409 55,421 45,018
Federal funds sold 13 7,691 172 7,540 6,329
Total cash and cash equivalents 63,434 145,769 82,659 134,862 117,210
Debt securities available for sale at fair value 2,072,452 1,896,894 1,657,381 1,366,344 1,187,455
Loans held for sale 6,149 58,333 59,956 13,096 12,048
Gross loans held for investment 3,344,156 3,374,076 3,496,790 3,555,969 3,618,675
Unearned income, net (14,000 ) (15,915 ) (14,567 ) (18,537 ) (21,636 )
Loans held for investment, net of unearned income 3,330,156 3,358,161 3,482,223 3,537,432 3,597,039
Allowance for credit losses (48,000 ) (50,650 ) (55,500 ) (58,500 ) (55,644 )
Total loans held for investment, net 3,282,156 3,307,511 3,426,723 3,478,932 3,541,395
Premises and equipment, net 84,667 85,581 86,401 87,955 88,929
Goodwill 62,477 62,477 62,477 62,477 93,977
Other intangible assets, net 22,394 23,735 25,242 26,811 28,443
Foreclosed assets, net 755 1,487 2,316 724 965
Other assets 154,731 155,525 153,493 159,507 160,541
Total assets $ 5,749,215 $ 5,737,312 $ 5,556,648 $ 5,330,708 $ 5,230,963
LIABILITIES
Noninterest bearing deposits $ 952,764 $ 958,526 $ 910,655 $ 864,504 $ 867,637
Interest bearing deposits 3,839,902 3,836,037 3,636,394 3,469,137 3,397,798
Total deposits 4,792,666 4,794,563 4,547,049 4,333,641 4,265,435
Short-term borrowings 212,261 175,785 230,789 183,893 162,224
Long-term debt 169,839 201,696 208,691 245,481 189,973
Other liabilities 44,156 53,948 54,869 68,612 92,550
Total liabilities 5,218,922 5,225,992 5,041,398 4,831,627 4,710,182
SHAREHOLDERS' EQUITY
Common stock 16,581 16,581 16,581 16,581 16,581
Additional paid-in capital 299,888 299,747 300,137 299,939 299,542
Retained earnings 219,884 206,230 188,191 175,017 198,382
Treasury stock (15,888 ) (15,278 ) (14,251 ) (12,272 ) (12,272 )
Accumulated other comprehensive income 9,828 4,040 24,592 19,816 18,548
Total shareholders' equity 530,293 511,320 515,250 499,081 520,781
Total liabilities and shareholders' equity $ 5,749,215 $ 5,737,312 $ 5,556,648 $ 5,330,708 $ 5,230,963



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

Three Months Ended Six Months Ended
(In thousands, except per share data) June 30,
2021
March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
June 30,
2021
June 30,
2020
Interest income
Loans, including fees $ 34,736 $ 36,542 $ 38,239 $ 38,191 $ 40,214 $ 71,278 $ 82,226
Taxable investment securities 6,483 5,093 4,673 4,574 4,646 11,576 8,363
Tax-exempt investment securities 2,549 2,555 2,529 2,360 1,858 5,104 3,370
Other 19 14 29 29 40 33 204
Total interest income 43,787 44,204 45,470 45,154 46,758 87,991 94,163
Interest expense
Deposits 3,409 3,608 4,265 5,296 6,409 7,017 14,358
Short-term borrowings 161 128 142 175 263 289 597
Long-term debt 1,712 1,851 2,026 1,874 1,374 3,563 3,090
Total interest expense 5,282 5,587 6,433 7,345 8,046 10,869 18,045
Net interest income 38,505 38,617 39,037 37,809 38,712 77,122 76,118
Credit loss (benefit) expense (2,144 ) (4,734 ) (3,041 ) 4,992 4,685 (6,878 ) 26,418
Net interest income after credit loss (benefit) expense 40,649 43,351 42,078 32,817 34,027 84,000 49,700
Noninterest income
Investment services and trust activities 2,809 2,836 2,518 2,361 2,217 5,645 4,753
Service charges and fees 1,475 1,487 1,571 1,491 1,290 2,962 3,116
Card revenue 1,913 1,536 1,517 1,600 1,237 3,449 2,602
Loan revenue 3,151 4,730 3,900 3,252 1,910 7,881 3,033
Bank-owned life insurance 538 542 541 530 635 1,080 1,155
Investment securities gains, net 42 27 30 106 6 69 48
Other 290 666 549 230 974 956 3,717
Total noninterest income 10,218 11,824 10,626 9,570 8,269 22,042 18,424
Noninterest expense
Compensation and employee benefits 17,404 16,917 17,638 16,460 15,682 34,321 32,299
Occupancy expense of premises, net 2,198 2,318 2,476 2,278 2,253 4,516 4,594
Equipment 1,861 1,793 2,040 1,935 2,010 3,654 3,890
Legal and professional 1,375 783 2,052 1,184 1,382 2,158 2,917
Data processing 1,347 1,252 1,460 1,308 1,240 2,599 2,594
Marketing 873 1,006 986 857 910 1,879 1,972
Amortization of intangibles 1,341 1,507 1,569 1,631 1,748 2,848 3,776
FDIC insurance 245 512 495 470 445 757 893
Communications 371 409 412 428 449 780 906
Foreclosed assets, net 136 47 (35 ) 13 34 183 172
Goodwill impairment 31,500
Other 1,519 1,156 2,822 1,875 1,885 2,675 4,026
Total noninterest expense 28,670 27,700 31,915 59,939 28,038 56,370 58,039
Income (loss) before income tax expense 22,197 27,475 20,789 (17,552 ) 14,258 49,672 10,085
Income tax expense 4,926 5,827 4,079 2,272 2,546 10,753 348
Net income (loss) $ 17,271 $ 21,648 $ 16,710 $ (19,824 ) $ 11,712 $ 38,919 $ 9,737
Earnings (loss) per common share
Basic $ 1.08 $ 1.35 $ 1.04 $ (1.23 ) $ 0.73 $ 2.43 $ 0.60
Diluted $ 1.08 $ 1.35 $ 1.04 $ (1.23 ) $ 0.73 $ 2.43 $ 0.60
Weighted average basic common shares outstanding 15,987 15,991 16,074 16,099 16,094 15,989 16,118
Weighted average diluted common shares outstanding 16,012 16,021 16,092 16,099 16,100 16,016 16,125
Dividends paid per common share $ 0.2250 $ 0.2250 $ 0.2200 $ 0.2200 $ 0.2200 $ 0.4500 $ 0.4400



MIDWEST ONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS

As of or for the Three Months Ended As of or for the
Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share amounts) 2021 2021 2020 2021 2020
Earnings:
Net interest income $ 38,505 $ 38,617 $ 38,712 $ 77,122 $ 76,118
Noninterest income 10,218 11,824 8,269 22,042 18,424
Total revenue, net of interest expense 48,723 50,441 46,981 99,164 94,542
Credit loss (benefit) expense (2,144 ) (4,734 ) 4,685 (6,878 ) 26,418
Noninterest expense 28,670 27,700 28,038 56,370 58,039
Income before income tax expense 22,197 27,475 14,258 49,672 10,085
Income tax expense 4,926 5,827 2,546 10,753 348
Net income $ 17,271 $ 21,648 $ 11,712 $ 38,919 $ 9,737
Per Share Data:
Diluted earnings $ 1.08 $ 1.35 $ 0.73 $ 2.43 $ 0.60
Book value 33.22 32.00 32.35 33.22 32.35
Tangible book value(1) 27.90 26.60 24.74 27.90 24.74
Ending Balance Sheet:
Total assets $ 5,749,215 $ 5,737,312 $ 5,230,963 $ 5,749,215 $ 5,230,963
Loans held for investment, net of unearned income 3,330,156 3,358,161 3,597,039 3,330,156 3,597,039
Total securities held for investment 2,072,452 1,896,894 1,187,455 2,072,452 1,187,455
Total deposits 4,792,666 4,794,563 4,265,435 4,792,666 4,265,435
Short-term borrowings 212,261 175,785 162,224 212,261 162,224
Long-term debt 169,839 201,696 189,973 169,839 189,973
Total shareholders' equity 530,293 511,320 520,781 530,293 520,781
Average Balance Sheet:
Average total assets $ 5,851,736 $ 5,520,304 $ 5,098,847 $ 5,686,936 $ 4,884,285
Average total loans 3,396,575 3,429,746 3,633,695 3,413,069 3,534,979
Average total deposits 4,875,324 4,573,898 4,165,574 4,725,444 3,962,795
Financial Ratios:
Return on average assets 1.18 % 1.59 % 0.92 % 1.38 % 0.40 %
Return on average equity 13.24 % 17.01 % 9.21 % 15.10 % 3.82 %
Return on average tangible equity(1) 16.75 % 21.52 % 13.50 % 19.10 % 6.48 %
Efficiency ratio(1) 54.83 % 50.77 % 54.80 % 52.76 % 56.24 %
Net interest margin, tax equivalent(1) 2.88 % 3.10 % 3.38 % 2.99 % 3.48 %
Loans to deposits ratio 69.48 % 70.04 % 84.33 % 69.48 % 84.33 %
Common equity ratio 9.22 % 8.91 % 9.96 % 9.22 % 9.96 %
Tangible common equity ratio(1) 7.86 % 7.52 % 7.80 % 7.86 % 7.80 %
Credit Risk Profile:
Total nonperforming loans $ 41,429 $ 44,382 $ 44,541 $ 41,429 $ 44,541
Nonperforming loans ratio 1.24 % 1.32 % 1.24 % 1.24 % 1.24 %
Total nonperforming assets $ 42,184 $ 45,869 $ 45,506 $ 42,184 $ 45,506
Nonperforming assets ratio 0.73 % 0.80 % 0.87 % 0.73 % 0.87 %
Net charge-offs $ 406 $ 316 $ 1,867 $ 722 $ 3,065
Net charge-off ratio 0.05 % 0.04 % 0.21 % 0.04 % 0.17 %
Allowance for credit losses $ 48,000 $ 50,650 $ 55,644 $
48,000 $ 55,644
Allowance for credit losses ratio 1.44 % 1.51 % 1.55 % 1.44 % 1.55 %
Adjusted allowance for credit losses ratio(1) 1.53 % 1.63 % 1.70 % 1.53 % 1.70 %
PPP Loans:
Average PPP loans $ 233,982 $ 236,231 $ 257,664 $
234,515 $ 66,075
Fee Income(2) 2,469 3,674 1,054 6,143 1,054
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
(2)The amount related to the first quarter of 2021 has been revised from previous disclosure.



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

Three Months Ended
June 30, 2021 March 31, 2021 June 30, 2020
(Dollars in thousands) Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
ASSETS
Loans, including fees (1)(2)(3) $ 3,396,575 $ 35,255 4.16 % $ 3,429,746 $ 37,073 4.38 % $ 3,633,695 $ 40,721 4.51 %
Taxable investment securities 1,604,463 6,483 1.62 % 1,266,714 5,093 1.63 % 731,699 4,646 2.55 %
Tax-exempt investment securities (2)(4) 473,181 3,196 2.71 % 465,793 3,203 2.79 % 285,758 2,340 3.29 %
Total securities held for investment(2) 2,077,644 9,679 1.87 % 1,732,507 8,296 1.94 % 1,017,457 6,986 2.76 %
Other 48,208 19 0.16 % 36,536 14 0.16 % 67,429 40 0.24 %
Total interest earning assets(2) $ 5,522,427 44,953 3.26 % $ 5,198,789 45,383 3.54 % $ 4,718,581 47,747 4.07 %
Other assets 329,309 321,515 380,266
Total assets $ 5,851,736 $ 5,520,304 $ 5,098,847
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits $ 1,469,853 $ 1,095 0.30 % $ 1,349,671 $ 991 0.30 % $ 1,091,565 $ 1,113 0.41 %
Money market deposits 942,072 502 0.21 % 913,087 478 0.21 % 829,826 885 0.43 %
Savings deposits 595,150 324 0.22 % 553,824 286 0.21 % 439,592 365 0.33 %
Time deposits 896,169 1,488 0.67 % 837,460 1,853 0.90 % 990,797 4,046 1.64 %
Total interest bearing deposits 3,903,244 3,409 0.35 % 3,654,042 3,608 0.40 % 3,351,780 6,409 0.77 %
Short-term borrowings 218,491 161 0.30 % 175,193 128 0.30 % 159,157 263 0.66 %
Long-term debt 189,644 1,712 3.62 % 205,971 1,851 3.64 % 201,240 1,374 2.75 %
Total borrowed funds 408,135 1,873 1.84 % 381,164 1,979 2.11 % 360,397 1,637 1.83 %
Total interest bearing liabilities $ 4,311,379 $ 5,282 0.49 % $ 4,035,206 $ 5,587 0.56 % $ 3,712,177 $ 8,046 0.87 %
Noninterest bearing deposits 972,080 919,856 813,794
Other liabilities 45,035 49,003 61,637
Shareholders' equity 523,242 516,239 511,239
Total liabilities and shareholders' equity $ 5,851,736 $ 5,520,304 $ 5,098,847
Net interest income(2) $ 39,671 $ 39,796 $ 39,701
Net interest spread(2) 2.77 % 2.98 % 3.20 %
Net interest margin(2) 2.88 % 3.10 % 3.38 %
Total deposits(5) $ 4,875,324 $ 3,409 0.28 % $ 4,573,898 $ 3,608 0.32 % $ 4,165,574 $ 6,409 0.62 %
Cost of funds(6) 0.40 % 0.46 % 0.72 %

(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $2.3 million, $3.5 million, and $748 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Loan purchase discount accretion was $873 thousand, $1.1 million, and $2.6 million for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Tax equivalent adjustments were $519 thousand, $531 thousand, and $507 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $647 thousand, $648 thousand, and $482 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.



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

Six Months Ended
June 30, 2021 June 30, 2020
(Dollars in thousands) Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Average
Yield/
Cost
ASSETS
Loans, including fees (1)(2)(3) $ 3,413,069 $ 72,328 4.27 % $ 3,534,979 $ 83,230 4.73 %
Taxable investment securities 1,436,522 11,576 1.63 % 648,678 8,363 2.59 %
Tax-exempt investment securities (2)(4) 469,507 6,399 2.75 % 254,963 4,247 3.35 %
Total securities held for investment(2) 1,906,029 17,975 1.90 % 903,641 12,610 2.81 %
Other 42,404 33 0.16 % 62,304 204 0.66 %
Total interest earning assets(2) $ 5,361,502 90,336 3.40 % $ 4,500,924 96,044 4.29 %
Other assets 325,434 383,361
Total assets $ 5,686,936 $ 4,884,285
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits $ 1,410,094 $ 2,086 0.30 % $ 1,028,321 $ 2,428 0.47 %
Money market deposits 927,660 980 0.21 % 798,296 2,530 0.64 %
Savings deposits 574,602 610 0.21 % 416,713 756 0.36 %
Time deposits 866,976 3,341 0.78 % 993,966 8,644 1.75 %
Total interest bearing deposits 3,779,332 7,017 0.37 % 3,237,296 14,358 0.89 %
Short-term borrowings 196,962 289 0.30 % 140,550 597 0.85 %
Long-term debt 197,762 3,563 3.63 % 213,413 3,090 2.91 %
Total borrowed funds 394,724 3,852 1.97 % 353,963 3,687 2.09 %
Total interest bearing liabilities $ 4,174,056 $ 10,869 0.53 % $ 3,591,259 $ 18,045 1.01 %
Noninterest bearing deposits 946,112 725,499
Other liabilities 47,008 54,323
Shareholders' equity 519,760 513,204
Total liabilities and shareholders' equity $ 5,686,936 $ 4,884,285
Net interest income(2) $ 79,467 $ 77,999
Net interest spread(2) 2.87 % 3.28 %
Net interest margin(2) 2.99 % 3.48 %
Total deposits(5) $ 4,725,444 $ 7,017 0.30 % $ 3,962,795 $ 14,358 0.73 %
Cost of funds(6) 0.43 % 0.84 %

(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 $5.8 million and $626 thousand for the six months ended June 30, 2021 and June 30, 2020, respectively. Loan purchase discount accretion was $2.0 million and $5.6 million for the six months ended June 30, 2021 and June 30, 2020, respectively. Tax equivalent adjustments were $1.0 million and $1.0 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.3 million and $0.9 million for the six months ended June 30, 2021 and June 30, 2020, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.



Non-GAAP Measures

This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, adjusted allowance for credit losses ratio, core loans, and core commercial loans. Management believes these measures provide investors with useful information regarding the Company's profitability, financial condition and capital adequacy, consistent with how management evaluates the Company's financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure.

Tangible Common Equity/Tangible Book Value per Share/Tangible Common Equity Ratio June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2021 2021 2020 2020 2020
Total shareholders' equity $ 530,293 $ 511,320 $ 515,250 $ 499,081 $ 520,781
Intangible assets, net (84,871 ) (86,212 ) (87,719 ) (89,288 ) (122,420 )
Tangible common equity $ 445,422 $ 425,108 $ 427,531 $ 409,793 $ 398,361
Total assets $ 5,749,215 $ 5,737,312 $ 5,556,648 $ 5,330,708 $ 5,230,963
Intangible assets, net (84,871 ) (86,212 ) (87,719 ) (89,288 ) (122,420 )
Tangible assets $ 5,664,344 $ 5,651,100 $ 5,468,929 $ 5,241,420 $ 5,108,543
Book value per share $ 33.22 $ 32.00 $ 32.17 $ 31.00 $ 32.35
Tangible book value per share(1) $ 27.90 $ 26.60 $ 26.69 $ 25.45 $ 24.74
Shares outstanding 15,963,468 15,981,088 16,016,780 16,099,324 16,099,324
Common equity ratio 9.22 % 8.91 % 9.27 % 9.36 % 9.96 %
Tangible common equity ratio(2) 7.86 % 7.52 % 7.82 % 7.82 % 7.80 %

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


Three Months Ended Six Months Ended
Return on Average Tangible Equity June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net income $ 17,271 $ 21,648 $ 11,712 $ 38,919 $ 9,737
Intangible amortization, net of tax(1) 1,006 1,130 1,311 2,136 2,832
Tangible net income $ 18,277 $ 22,778 $ 13,023 $ 41,055 $ 12,569
Average shareholders' equity $ 523,242 $ 516,239 $ 511,239 $ 519,760 $ 513,204
Average intangible assets, net (85,518 ) (86,961 ) (123,313 ) (86,235 ) (123,130 )
Average tangible equity $ 437,724 $ 429,278 $ 387,926 $ 433,525 $ 390,074
Return on average equity 13.24 % 17.01 % 9.21 % 15.10 % 3.82 %
Return on average tangible equity(2) 16.75 % 21.52 % 13.50 % 19.10 % 6.48 %

(1) The combined income tax rate utilized was 25%.
(2) Annualized tangible net income divided by average tangible equity.


Net Interest Margin, Tax Equivalent/
Core Net Interest Margin
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Net interest income $ 38,505 $ 38,617 $ 38,712 $ 77,122 $ 76,118
Tax equivalent adjustments:
Loans(1) 519 531 507 1,050 1,004
Securities(1) 647 648 482 1,295 877
Net interest income, tax equivalent $ 39,671 $ 39,796 $ 39,701 $ 79,467 $ 77,999
Loan purchase discount accretion (873 ) (1,098 ) (2,610 ) (1,971 ) (5,633 )
Core net interest income $ 38,798 $ 38,698 $ 37,091 $ 77,496 $ 72,366
Net interest margin 2.80 % 3.01 % 3.30 % 2.90 % 3.40 %
Net interest margin, tax equivalent(2) 2.88 % 3.10 % 3.38 % 2.99 % 3.48 %
Core net interest margin(3) 2.82 % 3.02 % 3.16 % 2.91 % 3.23 %
Average interest earning assets $ 5,522,427 $ 5,198,789 $ 4,718,581 $ 5,361,502 $ 4,500,924

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


Three Months Ended Six Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Loan interest income, including fees $ 34,736 $ 36,542 $ 40,214 $ 71,278 $ 82,226
Tax equivalent adjustment(1) 519 531 507 1,050 1,004
Tax equivalent loan interest income $ 35,255 $ 37,073 $ 40,721 $ 72,328 $ 83,230
Loan purchase discount accretion (873 ) (1,098 ) (2,610 ) (1,971 ) (5,633 )
Core loan interest income $ 34,382 $ 35,975 $ 38,111 $ 70,357 $ 77,597
Yield on loans 4.10 % 4.32 % 4.45 % 4.21 % 4.68 %
Yield on loans, tax equivalent(2) 4.16 % 4.38 % 4.51 % 4.27 % 4.73 %
Core yield on loans(3) 4.06 % 4.25 % 4.22 % 4.16 % 4.41 %
Average loans $ 3,396,575 $ 3,429,746 $ 3,633,695 $ 3,413,069 $ 3,534,979

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


Three Months Ended Six Months Ended
Efficiency Ratio June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2021 2021 2020 2021 2020
Total noninterest expense $ 28,670 $ 27,700 $ 28,038 $ 56,370 $ 58,039
Amortization of intangibles (1,341 ) (1,507 ) (1,748 ) (2,848 ) (3,776 )
Merger-related expenses (7 ) (61 )
Noninterest expense used for efficiency ratio $ 27,329 $ 26,193 $ 26,283 $ 53,522 $ 54,202
Net interest income, tax equivalent(1) $ 39,671 $ 39,796 $ 39,701 $ 79,467 $ 77,999
Noninterest income 10,218 11,824 8,269 22,042 18,424
Investment securities gains, net (42 ) (27 ) (6 ) (69 ) (48 )
Net revenues used for efficiency ratio $ 49,847 $ 51,593 $ 47,964 $ 101,440 $ 96,375
Efficiency ratio (2) 54.83 % 50.77 % 54.80 % 52.76 % 56.24 %

(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 June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2021 2021 2020 2020 2020
Loans held for investment, net of unearned income $ 3,330,156 $ 3,358,161 $ 3,482,223 $ 3,537,432 $ 3,597,039
PPP loans (184,390 ) (248,682 ) (259,260 ) (331,703 ) (327,648 )
Core loans $ 3,145,766 $ 3,109,479 $ 3,222,963 $ 3,205,729 $ 3,269,391
Allowance for credit losses $ 48,000 $ 50,650 $ 55,500 $ 58,500 $ 55,644
Allowance for credit losses ratio 1.44 % 1.51 % 1.59 % 1.65 % 1.55 %
Adjusted allowance for credit losses ratio(1) 1.53 % 1.63 % 1.72 % 1.82 % 1.70 %

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


Core Loans/Core Commercial Loans June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2021 2021 2020 2020 2020
Commercial loans:
Commercial and industrial $ 982,092 $ 993,770 $ 1,055,488 $ 1,103,102 $ 1,084,527
Agricultural 107,834 117,099 116,392 129,453 140,837
Commercial real estate 1,705,789 1,693,592 1,732,361 1,707,035 1,764,739
Total commercial loans $ 2,795,715 $ 2,804,461 $ 2,904,241 $ 2,939,590 $ 2,990,103
Consumer loans:
Residential real estate $ 468,581 $ 474,433 $ 499,106 $ 521,570 $ 532,914
Other consumer 65,860 79,267 78,876 76,272 74,022
Total consumer loans $ 534,441 $ 553,700 $ 577,982 $ 597,842 $ 606,936
Loans held for investment, net of unearned income $ 3,330,156 $ 3,358,161 $ 3,482,223 $ 3,537,432 $ 3,597,039
PPP loans $ 184,390 $ 248,682 $ 259,260 $ 331,703 $ 327,648
Core loans(1) $ 3,145,766 $ 3,109,479 $ 3,222,963 $ 3,205,729 $ 3,269,391
Core commercial loans(2) $ 2,611,325 $ 2,555,779 $ 2,644,981 $ 2,607,887 $ 2,662,455

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


Category: Earnings

This news release may be downloaded from

Source: MidWestOne Financial Group, Inc.

Industry: Banks

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

 


Tags Financial Results Earnings MidWestOne

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