MidWestOne Financial Group, Inc. Reports Financial Results for the First Quarter of 2024
/EIN News/ -- IOWA CITY, Iowa, April 25, 2024 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the first quarter of 2024.
First Quarter 2024 Summary1
- Completed acquisition of Denver Bankshares, Inc. ("DNVB"), the related core banking system conversion, and closure of the legacy MidWestOne Denver banking office.
- Net income of $3.3 million, or $0.21 per diluted common share.
- Revenue was $44.5 million, comprised of net interest income of $34.7 million and noninterest income of $9.8 million, which included a negative MSR valuation adjustment of $368 thousand.
- Credit loss expense of $4.7 million, which included day 1 credit loss expense of $3.2 million related to the DNVB acquisition.
- Noninterest Expense of $35.6 million, which included merger-related costs of $1.3 million, OREO write-down expense of $311 thousand, and non-acquisition related severance expense of $261 thousand.
- Net interest margin (tax equivalent) expanded 11 bps to 2.33%2.
- Annualized adjusted loan growth (excluding acquired DNVB loan balances) of 8%.
- Continued momentum in Wealth Management with revenue growth of 10%.
- Nonperforming assets ratio remained stable at 0.49%; net charge-off ratio was 0.02%.
CEO Commentary
Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “We are very pleased with the underlying strength of the first quarter as we continue to execute on our strategic initiatives. During the quarter we closed and integrated Denver Bankshares, the front end of our geographic realignment announced in late September 2023, and our Florida divestiture remains on track for a June 2024 closing.
Importantly, our net interest margin expanded this quarter, rising 11 bps, with net interest income increasing 7% from the fourth quarter of 2023. This outcome reflected the strategic balance sheet actions taken in 2023, the completed merger of DNVB, and continued loan growth in our targeted metro markets.
In Commercial Banking and Wealth Management, our customer and banker acquisition strategies led to robust balance sheet, assets under management, and revenue gains, and we will continue to invest in these critical business lines. Even amidst significant talent, platform, and product investments, we have been able to re-allocate resources to maintain expense discipline.
We welcome our new Bank of Denver team members, and I am proud of our entire MidWestOne team for their commitment to our customers and execution of our strategic plan."
| __________________________________ 1 First Quarter Summary compares to the fourth quarter of 2023 (the "linked quarter") unless noted. |
| 2 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. |
| As of or for the quarter ended | ||||||||||||
|
(Dollars in thousands, except per share amounts and as noted) |
March 31, | December 31, | March 31, | |||||||||
| 2024 | 2023 | 2023 | ||||||||||
| Financial Results | ||||||||||||
| Revenue | $ | 44,481 | $ | 36,421 | $ | 36,030 | ||||||
| Credit loss expense | 4,689 | 1,768 | 933 | |||||||||
| Noninterest expense | 35,565 | 32,131 | 33,319 | |||||||||
| Net income | 3,269 | 2,730 | 1,397 | |||||||||
| Per Common Share | ||||||||||||
| Diluted earnings per share | $ | 0.21 | $ | 0.17 | $ | 0.09 | ||||||
| Book value | 33.53 | 33.41 | 31.94 | |||||||||
| Tangible book value(1) | 27.14 | 27.90 | 26.13 | |||||||||
| Balance Sheet & Credit Quality | ||||||||||||
| Loans In millions | $ | 4,414.6 | $ | 4,126.9 | $ | 3,919.4 | ||||||
| Investment securities In millions | 1,862.2 | 1,870.3 | 2,071.8 | |||||||||
| Deposits In millions | 5,585.2 | 5,395.7 | 5,555.2 | |||||||||
| Net loan charge-offs In millions | 0.2 | 2.1 | 0.3 | |||||||||
| Allowance for credit losses ratio | 1.27 | % | 1.25 | % | 1.27 | % | ||||||
| Selected Ratios | ||||||||||||
| Return on average assets | 0.20 | % | 0.17 | % | 0.09 | % | ||||||
| Net interest margin, tax equivalent(1) | 2.33 | % | 2.22 | % | 2.75 | % | ||||||
| Return on average equity | 2.49 | % | 2.12 | % | 1.14 | % | ||||||
| Return on average tangible equity(1) | 4.18 | % | 3.57 | % | 2.70 | % | ||||||
| Efficiency ratio(1) | 71.28 | % | 70.16 | % | 62.32 | % | ||||||
| (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. | ||||||||||||
DENVER BANKSHARES, INC. ACQUISITION
On January 31, 2024, we completed our acquisition of Denver Bankshares, Inc, and its wholly-owned banking subsidiary, the Bank of Denver. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the January 31, 2024 acquisition date, net of any applicable tax effects. The Company considers all purchase accounting estimates provisional and fair values are subject to refinement for up to one year after the close date.
The table below summarizes the amounts recognized at the acquisition date for each major class of assets acquired and liabilities assumed:
| (In thousands) | As of January 31, 2024 | |||
| Merger consideration | ||||
| Cash consideration | $ | 32,600 | ||
| Identifiable net assets acquired, at fair value | ||||
| Assets acquired | ||||
| Cash and due from banks | 462 | |||
| Interest earning deposits in banks | 3,517 | |||
| Debt securities | 52,493 | |||
| Loans held for investment | 207,095 | |||
| Premises and equipment | 13,470 | |||
| Core deposit intangible | 7,100 | |||
| Other assets | 4,987 | |||
| Total assets acquired | 289,124 | |||
| Liabilities assumed | ||||
| Deposits | (224,248 | ) | ||
| Short-term borrowings | (37,500 | ) | ||
| Other liabilities | (3,417 | ) | ||
| Total liabilities assumed | (265,165 | ) | ||
| Identifiable net assets acquired, at fair value | 23,959 | |||
| Goodwill | $ | 8,641 | ||
REVENUE REVIEW
|
Revenue |
Change | Change | ||||||||||||||
| 1Q24 vs | 1Q24 vs | |||||||||||||||
| (Dollars in thousands) | 1Q24 | 4Q23 | 1Q23 | 4Q23 | 1Q23 | |||||||||||
| Net interest income | $ | 34,731 | $ | 32,559 | $ | 40,076 | 7 | % | (13 | )% | ||||||
| Noninterest income | 9,750 | 3,862 | (4,046 | ) | 152 | % | n/m | |||||||||
| Total revenue, net of interest expense | $ | 44,481 | $ | 36,421 | $ | 36,030 | 22 | % | 23 | % | ||||||
| Results are not meaningful (n/m) | ||||||||||||||||
Total revenue for the first quarter of 2024 increased $8.1 million from the fourth quarter of 2023 due to higher noninterest income and net interest income during the quarter. When compared to the first quarter of 2023, total revenue increased $8.5 million due to higher noninterest income, partially offset by lower net interest income.
Net interest income of $34.7 million for the first quarter of 2024 increased $2.2 million from the fourth quarter of 2023, primarily due to higher interest earning asset volumes and yields, partially offset by higher interest bearing liabilities volumes and funding costs. When compared to the first quarter of 2023, net interest income decreased $5.3 million, primarily due to higher funding costs and volumes, partially offset by higher interest earning asset volumes and yields.
The Company's tax equivalent net interest margin was 2.33%3 in the first quarter of 2024, compared to 2.22%3 in the fourth quarter of 2023, as higher earning asset yields more than offset increased funding costs. Total interest earning assets yield during the first quarter of 2024 increased 20 bps from the fourth quarter of 2023, as a result of increased loan and securities yields of 17 bps and 10 bps, respectively. The cost of interest bearing liabilities during the first quarter of 2024 increased 10 bps, to 2.75%, due primarily to interest bearing deposit costs of 2.45% and long-term debt of 6.86%, which increased 6 bps and 7 bps, respectively, from the fourth quarter of 2023, as well as a mix-shift to increased short-term borrowings. Our cycle-to-date interest bearing deposit beta was 41%.
The Company's tax equivalent net interest margin was 2.33%3 in the first quarter of 2024, compared to 2.75%3 in the first quarter of 2023, driven by higher funding costs, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 116 bps to 2.75%, due to interest bearing deposit costs of 2.45%, short-term borrowing costs of 4.82%, and long-term debt costs of 6.86%, which increased 107 bps, 200 bps and 67 bps, respectively from the first quarter of 2023. Total interest earning assets yield increased 56 bps from the first quarter of 2023, primarily as a result of an increase in loan yields of 56 bps.
|
Noninterest Income (Loss) |
Change | Change | ||||||||||||||||
| 1Q24 vs | 1Q24 vs | |||||||||||||||||
| (In thousands) | 1Q24 | 4Q23 | 1Q23 | 4Q23 | 1Q23 | |||||||||||||
| Investment services and trust activities | $ | 3,503 | $ | 3,193 | $ | 2,933 | 10 | % | 19 | % | ||||||||
| Service charges and fees | 2,144 | 2,148 | 2,008 | — | % | 7 | % | |||||||||||
| Card revenue | 1,943 | 1,802 | 1,748 | 8 | % | 11 | % | |||||||||||
| Loan revenue | 856 | 909 | 1,420 | (6 | )% | (40 | )% | |||||||||||
| Bank-owned life insurance | 660 | 656 | 602 | 1 | % | 10 | % | |||||||||||
| Investment securities gains (losses), net | 36 | (5,696 | ) | (13,170 | ) | n/m | n/m | |||||||||||
| Other | 608 | 850 | 413 | (28 | )% | 47 | % | |||||||||||
| Total noninterest income (loss) | $ | 9,750 | $ | 3,862 | $ | (4,046 | ) | 152 | % | n/m | ||||||||
| MSR Valuation Adjustment (included in loan revenue) | (368 | ) | (105 | ) | 315 | 250 | % | (217 | )% | |||||||||
| Results are not meaningful (n/m) | ||||||||||||||||||
|
______________________________________ 3 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. | ||||||||||||||||||
Noninterest income for the first quarter of 2024 increased $5.9 million from the linked quarter, primarily due to investment securities losses, net, of $5.7 million recorded in the fourth quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. Investment services and trust activities income increased $0.3 million during the first quarter of 2024, as a result of growth in assets under administration and market valuation.
Noninterest income for the first quarter of 2024 increased $13.8 million from the first quarter of 2023, primarily due to the investment securities losses, net, of $13.2 million recorded in the first quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. Investment services and trust activities income increased $0.6 million compared to the first quarter of 2023, due to growth in assets under administration. Partially offsetting these identified increases was a decline of $0.6 million in loan revenue, which primarily reflected the unfavorable year-over-year change in the fair value of our mortgage servicing rights, from a positive adjustment of $315 thousand in the first quarter of 2023 to a negative adjustment of $368 thousand in the first quarter of 2024.
EXPENSE REVIEW
|
Noninterest Expense |
Change | Change | ||||||||||||||
| 1Q24 vs | 1Q24 vs | |||||||||||||||
| (In thousands) | 1Q24 | 4Q23 | 1Q23 | 4Q23 | 1Q23 | |||||||||||
| Compensation and employee benefits | $ | 20,930 | $ | 17,859 | $ | 19,607 | 17 | % | 7 | % | ||||||
| Occupancy expense of premises, net | 2,813 | 2,309 | 2,746 | 22 | % | 2 | % | |||||||||
| Equipment | 2,600 | 2,466 | 2,171 | 5 | % | 20 | % | |||||||||
| Legal and professional | 2,059 | 2,269 | 1,736 | (9 | )% | 19 | % | |||||||||
| Data processing | 1,360 | 1,411 | 1,363 | (4 | )% | — | % | |||||||||
| Marketing | 598 | 700 | 986 | (15 | )% | (39 | )% | |||||||||
| Amortization of intangibles | 1,637 | 1,441 | 1,752 | 14 | % | (7 | )% | |||||||||
| FDIC insurance | 942 | 900 | 749 | 5 | % | 26 | % | |||||||||
| Communications | 196 | 183 | 261 | 7 | % | (25 | )% | |||||||||
| Foreclosed assets, net | 358 | 45 | (28 | ) | 696 | % | n/m | |||||||||
| Other | 2,072 | 2,548 | 1,976 | (19 | )% | 5 | % | |||||||||
| Total noninterest expense | $ | 35,565 | $ | 32,131 | $ | 33,319 | 11 | % | 7 | % | ||||||
| Results are not meaningful (n/m) | ||||||||||||||||
|
Merger-related Expenses |
|||||||||
| (In thousands) | 1Q24 | 4Q23 | 1Q23 | ||||||
| Compensation and employee benefits | $ | 241 | $ | — | $ | 70 | |||
| Occupancy expense of premises, net | 152 | — | — | ||||||
| Equipment | 149 | — | — | ||||||
| Legal and professional | 573 | 180 | — | ||||||
| Data processing | 61 | — | 65 | ||||||
| Marketing | 32 | 38 | — | ||||||
| Communications | 1 | — | — | ||||||
| Other | 105 | 27 | 1 | ||||||
| Total merger-related expenses | $ | 1,314 | $ | 245 | $ | 136 | |||
Noninterest expense for the first quarter of 2024 increased $3.4 million from the linked quarter primarily due to increases of $3.1 million, $0.5 million, and $0.3 million in compensation and employee benefits, occupancy expense of premises, net, and foreclosed assets, net, respectively. The increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in occupancy was primarily driven by additional expense as a result of the DNVB acquisition, merger-related expenses, and increased costs for snow removal. The increase in foreclosed assets expense was driven by a $0.3 million write-down of other real estate owned.
Noninterest expense for the first quarter of 2024 increased $2.2 million from the first quarter of 2023, primarily due to increases of $1.3 million, $0.4 million, and $0.4 million in compensation and employee benefits, equipment, and foreclosed assets, net, respectively. The increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in equipment reflected higher software costs and merger-related expenses. The increase in foreclosed assets, net, was due to a $0.3 million write-down of other real estate owned. Partially offsetting these increases was a decline of $0.4 million in marketing.
The Company's effective tax rate was 22.7% in the first quarter of 2024. The effective income tax rate for 2024 is expected to be 21-23%.
BALANCE SHEET REVIEW
Total assets were $6.75 billion at March 31, 2024, compared to $6.43 billion at December 31, 2023 and $6.41 billion at March 31, 2023. The increase from December 31, 2023 was primarily driven by the assets acquired from the acquisition of DNVB and organic loan growth. Compared to March 31, 2023, the increase was primarily driven by the assets acquired from the acquisition of DNVB, organic loan growth, and higher cash balances, partially offset by lower securities balances resulting from balance sheet repositioning executed in 2023.
|
Loans Held for Investment |
March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||
| (Dollars in thousands) |
Balance |
% of Total |
Balance |
% of Total |
Balance |
% of Total |
||||||||||
| Commercial and industrial | $ | 1,105,718 | 25.0 | % | $ | 1,075,003 | 26.0 | % | $ | 1,080,514 | 27.6 | % | ||||
| Agricultural | 113,029 | 2.6 | 118,414 | 2.9 | 106,641 | 2.7 | ||||||||||
| Commercial real estate | ||||||||||||||||
| Construction and development | 403,571 | 9.1 | 323,195 | 7.8 | 320,924 | 8.2 | ||||||||||
| Farmland | 184,109 | 4.2 | 184,955 | 4.5 | 182,528 | 4.7 | ||||||||||
| Multifamily | 409,504 | 9.3 | 383,178 | 9.3 | 255,065 | 6.5 | ||||||||||
| Other | 1,440,645 | 32.7 | 1,333,982 | 32.4 | 1,290,454 | 33.0 | ||||||||||
| Total commercial real estate | 2,437,829 | 55.3 | 2,225,310 | 54.0 | 2,048,971 | 52.4 | ||||||||||
| Residential real estate | ||||||||||||||||
| One-to-four family first liens | 495,408 | 11.2 | 459,798 | 11.1 | 448,459 | 11.4 | ||||||||||
| One-to-four family junior liens | 182,001 | 4.1 | 180,639 | 4.4 | 162,403 | 4.1 | ||||||||||
| Total residential real estate | 677,409 | 15.3 | 640,437 | 15.5 | 610,862 | 15.5 | ||||||||||
| Consumer | 80,661 | 1.8 | 67,783 | 1.6 | 72,377 | 1.8 | ||||||||||
| Loans held for investment, net of unearned income | $ | 4,414,646 | 100.0 | % | $ | 4,126,947 | 100.0 | % | $ | 3,919,365 | 100.0 | % | ||||
| Total commitments to extend credit | $ | 1,230,612 | $ | 1,210,796 | $ | 1,205,902 | ||||||||||
Loans held for investment, net of unearned income, increased $287.7 million, or 7.0%, to $4.41 billion from $4.13 billion at December 31, 2023 and $495.3 million, or 12.6%, from $3.92 billion at March 31, 2023. This increase from the fourth quarter of 2023 was driven by loans acquired in the DNVB acquisition, organic loan growth, and higher line of credit usage. The increase from the first quarter of 2023 was driven by loans acquired in the DNVB acquisition and organic loan growth.
| Investment Securities | March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||
| (Dollars in thousands) | Balance | % of Total | Balance | % of Total | Balance | % of Total | ||||||||||
| Available for sale | $ | 797,230 | 42.8 | % | $ | 795,134 | 42.5 | % | $ | 954,074 | 46.1 | % | ||||
| Held to maturity | 1,064,939 | 57.2 | % | 1,075,190 | 57.5 | % | 1,117,709 | 53.9 | % | |||||||
| Total investment securities | $ | 1,862,169 | $ | 1,870,324 | $ | 2,071,783 | ||||||||||
Investment securities at March 31, 2024 were $1.86 billion, decreasing $8.2 million from December 31, 2023 and $209.6 million from March 31, 2023. The decrease from the fourth quarter of 2023 was primarily due to the principal cash flows received from scheduled payments, calls, and maturities. The decrease from the first quarter of 2023 was primarily due to balance sheet repositioning executed in 2023.
| Deposits | March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||
| (Dollars in thousands) | Balance | % of Total | Balance | % of Total | Balance | % of Total | ||||||||||
| Noninterest bearing deposits | $ | 920,764 | 16.5 | % | $ | 897,053 | 16.6 | % | $ | 989,469 | 17.8 | % | ||||
| Interest checking deposits | 1,349,823 | 24.2 | 1,320,435 | 24.5 | 1,476,948 | 26.6 | ||||||||||
| Money market deposits | 1,122,717 | 20.1 | 1,105,493 | 20.5 | 969,238 | 17.4 | ||||||||||
| Savings deposits | 728,276 | 13.0 | 650,655 | 12.1 | 631,811 | 11.4 | ||||||||||
| Time deposits of $250 and under | 787,851 | 14.1 | 752,214 | 13.9 | 599,302 | 10.8 | ||||||||||
| Total core deposits | 4,909,431 | 87.9 | 4,725,850 | 87.6 | 4,666,768 | 84.0 | ||||||||||
| Brokered time deposits | 205,000 | 3.7 | 221,039 | 4.1 | 366,539 | 6.6 | ||||||||||
| Time deposits over $250 | 470,805 | 8.4 | 448,784 | 8.3 | 521,846 | 9.4 | ||||||||||
| Total deposits | $ | 5,585,236 | 100.0 | % | $ | 5,395,673 | 100.0 | % | $ | 5,555,153 | 100.0 | % | ||||
Deposits increased $189.6 million, or 3.5%, to $5.59 billion, from $5.40 billion at December 31, 2023, primarily due to the $224.2 million of deposits assumed in the DNVB acquisition. Total deposits increased $30.1 million, or 0.5%, from $5.56 billion at March 31, 2023 due to the DNVB acquisition, partially offset by a decline of $161.5 million in brokered deposits.
| Borrowed Funds | March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||
| (Dollars in thousands) | Balance | % of Total | Balance | % of Total | Balance | % of Total | ||||||||||
| Short-term borrowings | $ | 422,988 | 77.6 | % | $ | 300,264 | 70.9 | % | $ | 143,981 | 51.1 | % | ||||
| Long-term debt | 122,066 | 22.4 | % | 123,296 | 29.1 | % | 137,981 | 48.9 | % | |||||||
| Total borrowed funds | $ | 545,054 | $ | 423,560 | $ | 281,962 | ||||||||||
Borrowed funds were $545.1 million at March 31, 2024, an increase of $121.5 million from December 31, 2023 and an increase of $263.1 million from March 31, 2023. The increase compared to the linked quarter was due to higher Bank Term Funding Program borrowings and other short-term borrowings, partially offset by lower Federal Home Loan Bank overnight borrowings. The increase compared to March 31, 2023 was primarily due to higher Bank Term Funding Program borrowings and other short-term borrowings, partially offset by lower Federal Home Loan Bank overnight borrowings and securities sold under agreements to repurchase.
| Capital | March 31, | December 31, | March 31, | |||||||||
| (Dollars in thousands) | 2024(1) | 2023 | 2023 | |||||||||
| Total shareholders' equity | $ | 528,040 | $ | 524,378 | $ | 500,650 | ||||||
| Accumulated other comprehensive loss | (60,804 | ) | (64,899 | ) | (78,885 | ) | ||||||
| MidWestOne Financial Group, Inc. Consolidated | ||||||||||||
| Tier 1 leverage to average assets ratio | 8.16 | % | 8.58 | % | 8.30 | % | ||||||
| Common equity tier 1 capital to risk-weighted assets ratio | 8.98 | % | 9.59 | % | 9.39 | % | ||||||
| Tier 1 capital to risk-weighted assets ratio | 9.75 | % | 10.38 | % | 10.18 | % | ||||||
| Total capital to risk-weighted assets ratio | 11.97 | % | 12.53 | % | 12.31 | % | ||||||
| MidWestOne Bank | ||||||||||||
| Tier 1 leverage to average assets ratio | 9.36 | % | 9.39 | % | 9.28 | % | ||||||
| Common equity tier 1 capital to risk-weighted assets ratio | 11.20 | % | 11.54 | % | 11.40 | % | ||||||
| Tier 1 capital to risk-weighted assets ratio | 11.20 | % | 11.54 | % | 11.40 | % | ||||||
| Total capital to risk-weighted assets ratio | 12.25 | % | 12.49 | % | 12.31 | % | ||||||
| (1) Regulatory capital ratios for March 31, 2024 are preliminary | ||||||||||||
Total shareholders' equity at March 31, 2024 increased $3.7 million from December 31, 2023, driven by decreases in accumulated other comprehensive loss and treasury stock, partially offset by the decline in additional paid-in capital and retained earnings. Total shareholders' equity at March 31, 2024 increased $27.4 million from March 31, 2023, driven by decreases in accumulated other comprehensive loss and treasury stock, coupled with an increase in retained earnings.
Accumulated other comprehensive loss at March 31, 2024 decreased $4.1 million compared to December 31, 2023, primarily due to an increase in available for sale securities valuations. Accumulated other comprehensive loss decreased $18.1 million from March 31, 2023, primarily due to an increase in available for sale securities valuations and the recognition of the loss from the fourth quarter of 2023 sale of securities.
On April 25, 2024, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable June 17, 2024, to shareholders of record at the close of business on June 3, 2024.
No common shares were repurchased by the Company during the period December 31, 2023 through March 31, 2024 or for the subsequent period through April 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 Quality |
As of or For the Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | |||||||||
| Credit loss expense related to loans | $ | 4,589 | $ | 1,968 | $ | 933 | ||||||
| Net charge-offs | 189 | 2,068 | 333 | |||||||||
| Allowance for credit losses | 55,900 | 51,500 | 49,800 | |||||||||
| Pass | $ | 4,098,102 | $ | 3,846,012 | $ | 3,728,522 | ||||||
| Special Mention / Watch | 152,604 | 113,029 | 92,075 | |||||||||
| Classified | 163,940 | 167,906 | 98,768 | |||||||||
| Loans greater than 30 days past due and accruing | $ | 8,772 | $ | 10,778 | $ | 4,932 | ||||||
| Nonperforming loans | $ | 29,267 | $ | 26,359 | $ | 14,442 | ||||||
| Nonperforming assets | 33,164 | 30,288 | 14,442 | |||||||||
| Net charge-off ratio(1) | 0.02 | % | 0.20 | % | 0.03 | % | ||||||
| Classified loans ratio(2) | 3.71 | % | 4.07 | % | 2.52 | % | ||||||
| Nonperforming loans ratio(3) | 0.66 | % | 0.64 | % | 0.37 | % | ||||||
| Nonperforming assets ratio(4) | 0.49 | % | 0.47 | % | 0.23 | % | ||||||
| Allowance for credit losses ratio(5) | 1.27 | % | 1.25 | % | 1.27 | % | ||||||
| Allowance for credit losses to nonaccrual loans ratio(6) | 197.53 | % | 198.91 | % | 344.88 | % | ||||||
| (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 and nonperforming assets ratios remained stable, with slight increases in both ratios of 2 bps, to 0.66% and 0.49%, respectively. Special mention/watch balances increased $39.6 million from the linked quarter primarily due to two trucking industry relationships, while the classified loans ratio decreased 36 bps from the linked quarter. When compared to the prior year, the nonperforming loans and assets ratios increased 29 bps and 26 bps, respectively. Further, the net charge-off ratio declined 18 bps from the linked quarter and 1 bp from the same period in the prior year.
As of March 31, 2024, the allowance for credit losses was $55.9 million and the allowance for credit losses ratio was 1.27%, compared with $51.5 million and 1.25% at December 31, 2023. Credit loss expense of $4.7 million in the first quarter of 2024 reflected $3.2 million of day 1 credit loss expense related to the DNVB acquisition, as well as additional reserve taken to support organic loan growth.
| Nonperforming Loans Roll Forward (Dollars in thousands) |
Nonaccrual |
90+ Days Past Due & Still Accruing |
Total |
|||||||||
| Balance at December 31, 2023 | $ | 25,891 | $ | 468 | $ | 26,359 | ||||||
| Loans placed on nonaccrual or 90+ days past due & still accruing | 3,509 | 1,034 | 4,543 | |||||||||
| Acquired loan portfolio | 6 | 164 | 170 | |||||||||
| Proceeds related to repayment or sale | (306 | ) | (1 | ) | (307 | ) | ||||||
| Loans returned to accrual status or no longer past due | (352 | ) | (293 | ) | (645 | ) | ||||||
| Charge-offs | (183 | ) | (353 | ) | (536 | ) | ||||||
| Transfers to foreclosed assets | (265 | ) | (16 | ) | (281 | ) | ||||||
| Transfer to nonaccrual | — | (36 | ) | (36 | ) | |||||||
| Balance at March 31, 2024 | $ | 28,300 | $ | 967 | $ | 29,267 | ||||||
CONFERENCE CALL DETAILS
The Company will host a conference call for investors at 11:00 a.m. CT on Friday, April 26, 2024. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=0114d1d0&confId=63215. 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 891090 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until July 25, 2024 by calling 1-866-813-9403 and using the replay access code of 561214. 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 the sale of our Florida branches and the recent acquisition of DNVB), 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 significant increases in inflation and interest rates since 2020, 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 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 ongoing 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 that resulted in recent bank failures; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.
MIDWESTONE FINANCIAL GROUP, INC.
FIVE QUARTER CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| (In thousands) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 68,430 | $ | 76,237 | $ | 71,015 | $ | 75,955 | $ | 63,945 | ||||||||||
| Interest earning deposits in banks | 29,328 | 5,479 | 3,773 | 68,603 | 5,273 | |||||||||||||||
| Federal funds sold | 4 | 11 | — | — | — | |||||||||||||||
| Total cash and cash equivalents | 97,762 | 81,727 | 74,788 | 144,558 | 69,218 | |||||||||||||||
| Debt securities available for sale at fair value | 797,230 | 795,134 | 872,770 | 903,520 | 954,074 | |||||||||||||||
| Held to maturity securities at amortized cost | 1,064,939 | 1,075,190 | 1,085,751 | 1,099,569 | 1,117,709 | |||||||||||||||
| Total securities | 1,862,169 | 1,870,324 | 1,958,521 | 2,003,089 | 2,071,783 | |||||||||||||||
| Loans held for sale | 2,329 | 1,045 | 2,528 | 2,821 | 2,553 | |||||||||||||||
| Gross loans held for investment | 4,433,258 | 4,138,352 | 4,078,060 | 4,031,377 | 3,932,900 | |||||||||||||||
| Unearned income, net | (18,612 | ) | (11,405 | ) | (12,091 | ) | (12,728 | ) | (13,535 | ) | ||||||||||
| Loans held for investment, net of unearned income | 4,414,646 | 4,126,947 | 4,065,969 | 4,018,649 | 3,919,365 | |||||||||||||||
| Allowance for credit losses | (55,900 | ) | (51,500 | ) | (51,600 | ) | (50,400 | ) | (49,800 | ) | ||||||||||
| Total loans held for investment, net | 4,358,746 | 4,075,447 | 4,014,369 | 3,968,249 | 3,869,565 | |||||||||||||||
| Premises and equipment, net | 95,986 | 85,742 | 85,589 | 85,831 | 86,208 | |||||||||||||||
| Goodwill | 71,118 | 62,477 | 62,477 | 62,477 | 62,477 | |||||||||||||||
| Other intangible assets, net | 29,531 | 24,069 | 25,510 | 26,969 | 28,563 | |||||||||||||||
| Foreclosed assets, net | 3,897 | 3,929 | — | — | — | |||||||||||||||
| Other assets | 226,477 | 222,780 | 244,036 | 227,495 | 219,585 | |||||||||||||||
| Total assets | $ | 6,748,015 | $ | 6,427,540 | $ | 6,467,818 | $ | 6,521,489 | $ | 6,409,952 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Noninterest bearing deposits | $ | 920,764 | $ | 897,053 | $ | 924,213 | $ | 897,923 | $ | 989,469 | ||||||||||
| Interest bearing deposits | 4,664,472 | 4,498,620 | 4,439,111 | 4,547,524 | 4,565,684 | |||||||||||||||
| Total deposits | 5,585,236 | 5,395,673 | 5,363,324 | 5,445,447 | 5,555,153 | |||||||||||||||
| Short-term borrowings | 422,988 | 300,264 | 373,956 | 362,054 | 143,981 | |||||||||||||||
| Long-term debt | 122,066 | 123,296 | 124,526 | 125,752 | 137,981 | |||||||||||||||
| Other liabilities | 89,685 | 83,929 | 100,601 | 86,895 | 72,187 | |||||||||||||||
| Total liabilities | 6,219,975 | 5,903,162 | 5,962,407 | 6,020,148 | 5,909,302 | |||||||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Common stock | 16,581 | 16,581 | 16,581 | 16,581 | 16,581 | |||||||||||||||
| Additional paid-in capital | 300,845 | 302,157 | 301,889 | 301,424 | 300,966 | |||||||||||||||
| Retained earnings | 294,066 | 294,784 | 295,862 | 290,548 | 286,767 | |||||||||||||||
| Treasury stock | (22,648 | ) | (24,245 | ) | (24,315 | ) | (24,508 | ) | (24,779 | ) | ||||||||||
| Accumulated other comprehensive loss | (60,804 | ) | (64,899 | ) | (84,606 | ) | (82,704 | ) | (78,885 | ) | ||||||||||
| Total shareholders' equity | 528,040 | 524,378 | 505,411 | 501,341 | 500,650 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 6,748,015 | $ | 6,427,540 | $ | 6,467,818 | $ | 6,521,489 | $ | 6,409,952 | ||||||||||
MIDWESTONE FINANCIAL GROUP, INC.
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended | ||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
| (In thousands, except per share data) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||
| Interest income | ||||||||||||||||||
| Loans, including fees | $ | 57,947 | $ | 54,093 | $ | 51,870 | $ | 49,726 | $ | 46,490 | ||||||||
| Taxable investment securities | 9,460 | 9,274 | 9,526 | 9,734 | 10,444 | |||||||||||||
| Tax-exempt investment securities | 1,710 | 1,789 | 1,802 | 1,822 | 2,127 | |||||||||||||
| Other | 418 | 230 | 374 | 68 | 244 | |||||||||||||
| Total interest income | 69,535 | 65,386 | 63,572 | 61,350 | 59,305 | |||||||||||||
| Interest expense | ||||||||||||||||||
| Deposits | 27,726 | 27,200 | 23,128 | 20,117 | 15,319 | |||||||||||||
| Short-term borrowings | 4,975 | 3,496 | 3,719 | 2,118 | 1,786 | |||||||||||||
| Long-term debt | 2,103 | 2,131 | 2,150 | 2,153 | 2,124 | |||||||||||||
| Total interest expense | 34,804 | 32,827 | 28,997 | 24,388 | 19,229 | |||||||||||||
| Net interest income | 34,731 | 32,559 | 34,575 | 36,962 | 40,076 | |||||||||||||
| Credit loss expense | 4,689 | 1,768 | 1,551 | 1,597 | 933 | |||||||||||||
| Net interest income after credit loss expense | 30,042 | 30,791 | 33,024 | 35,365 | 39,143 | |||||||||||||
| Noninterest income (loss) | ||||||||||||||||||
| Investment services and trust activities | 3,503 | 3,193 | 3,004 | 3,119 | 2,933 | |||||||||||||
| Service charges and fees | 2,144 | 2,148 | 2,146 | 2,047 | 2,008 | |||||||||||||
| Card revenue | 1,943 | 1,802 | 1,817 | 1,847 | 1,748 | |||||||||||||
| Loan revenue | 856 | 909 | 1,462 | 909 | 1,420 | |||||||||||||
| Bank-owned life insurance | 660 | 656 | 626 | 616 | 602 | |||||||||||||
| Investment securities gains (losses), net | 36 | (5,696 | ) | 79 | (2 | ) | (13,170 | ) | ||||||||||
| Other | 608 | 850 | 727 | 210 | 413 | |||||||||||||
| Total noninterest income (loss) | 9,750 | 3,862 | 9,861 | 8,746 | (4,046 | ) | ||||||||||||
| Noninterest expense | ||||||||||||||||||
| Compensation and employee benefits | 20,930 | 17,859 | 18,558 | 20,386 | 19,607 | |||||||||||||
| Occupancy expense of premises, net | 2,813 | 2,309 | 2,405 | 2,574 | 2,746 | |||||||||||||
| Equipment | 2,600 | 2,466 | 2,123 | 2,435 | 2,171 | |||||||||||||
| Legal and professional | 2,059 | 2,269 | 1,678 | 1,682 | 1,736 | |||||||||||||
| Data processing | 1,360 | 1,411 | 1,504 | 1,521 | 1,363 | |||||||||||||
| Marketing | 598 | 700 | 782 | 1,142 | 986 | |||||||||||||
| Amortization of intangibles | 1,637 | 1,441 | 1,460 | 1,594 | 1,752 | |||||||||||||
| FDIC insurance | 942 | 900 | 783 | 862 | 749 | |||||||||||||
| Communications | 196 | 183 | 206 | 260 | 261 | |||||||||||||
| Foreclosed assets, net | 358 | 45 | 2 | (6 | ) | (28 | ) | |||||||||||
| Other | 2,072 | 2,548 | 2,043 | 2,469 | 1,976 | |||||||||||||
| Total noninterest expense | 35,565 | 32,131 | 31,544 | 34,919 | 33,319 | |||||||||||||
| Income before income tax expense | 4,227 | 2,522 | 11,341 | 9,192 | 1,778 | |||||||||||||
| Income tax expense (benefit) | 958 | (208 | ) | 2,203 | 1,598 | 381 | ||||||||||||
| Net income | $ | 3,269 | $ | 2,730 | $ | 9,138 | $ | 7,594 | $ | 1,397 | ||||||||
| Earnings per common share | ||||||||||||||||||
| Basic | $ | 0.21 | $ | 0.17 | $ | 0.58 | $ | 0.48 | $ | 0.09 | ||||||||
| Diluted | $ | 0.21 | $ | 0.17 | $ | 0.58 | $ | 0.48 | $ | 0.09 | ||||||||
| Weighted average basic common shares outstanding | 15,723 | 15,693 | 15,689 | 15,680 | 15,650 | |||||||||||||
| Weighted average diluted common shares outstanding | 15,774 | 15,756 | 15,711 | 15,689 | 15,691 | |||||||||||||
| Dividends paid per common share | $ | 0.2425 | $ | 0.2425 | $ | 0.2425 | $ | 0.2425 | $ | 0.2425 | ||||||||
MIDWESTONE FINANCIAL GROUP, INC.
FINANCIAL STATISTICS
| As of or for the Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| (Dollars in thousands, except per share amounts) | 2024 | 2023 | 2023 | |||||||||
| Earnings: | ||||||||||||
| Net interest income | $ | 34,731 | $ | 32,559 | $ | 40,076 | ||||||
| Noninterest income | 9,750 | 3,862 | (4,046 | ) | ||||||||
| Total revenue, net of interest expense | 44,481 | 36,421 | 36,030 | |||||||||
| Credit loss expense | 4,689 | 1,768 | 933 | |||||||||
| Noninterest expense | 35,565 | 32,131 | 33,319 | |||||||||
| Income before income tax expense | 4,227 | 2,522 | 1,778 | |||||||||
| Income tax expense (benefit) | 958 | (208 | ) | 381 | ||||||||
| Net income | $ | 3,269 | $ | 2,730 | $ | 1,397 | ||||||
| Per Share Data: | ||||||||||||
| Diluted earnings | $ | 0.21 | $ | 0.17 | $ | 0.09 | ||||||
| Book value | 33.53 | 33.41 | 31.94 | |||||||||
| Tangible book value(1) | 27.14 | 27.90 | 26.13 | |||||||||
| Ending Balance Sheet: | ||||||||||||
| Total assets | $ | 6,748,015 | $ | 6,427,540 | $ | 6,409,952 | ||||||
| Loans held for investment, net of unearned income | 4,414,646 | 4,126,947 | 3,919,365 | |||||||||
| Total securities | 1,862,169 | 1,870,324 | 2,071,783 | |||||||||
| Total deposits | 5,585,236 | 5,395,673 | 5,555,153 | |||||||||
| Short-term borrowings | 422,988 | 300,264 | 143,981 | |||||||||
| Long-term debt | 122,066 | 123,296 | 137,981 | |||||||||
| Total shareholders' equity | 528,040 | 524,378 | 500,650 | |||||||||
| Average Balance Sheet: | ||||||||||||
| Average total assets | $ | 6,635,379 | $ | 6,459,705 | $ | 6,524,065 | ||||||
| Average total loans | 4,298,216 | 4,080,243 | 3,867,110 | |||||||||
| Average total deposits | 5,481,114 | 5,443,323 | 5,546,694 | |||||||||
| Financial Ratios: | ||||||||||||
| Return on average assets | 0.20 | % | 0.17 | % | 0.09 | % | ||||||
| Return on average equity | 2.49 | % | 2.12 | % | 1.14 | % | ||||||
| Return on average tangible equity(1) | 4.18 | % | 3.57 | % | 2.70 | % | ||||||
| Efficiency ratio(1) | 71.28 | % | 70.16 | % | 62.32 | % | ||||||
| Net interest margin, tax equivalent(1) | 2.33 | % | 2.22 | % | 2.75 | % | ||||||
| Loans to deposits ratio | 79.04 | % | 76.49 | % | 70.55 | % | ||||||
| Common equity ratio | 7.83 | % | 8.16 | % | 7.81 | % | ||||||
| Tangible common equity ratio(1) | 6.43 | % | 6.90 | % | 6.48 | % | ||||||
| Credit Risk Profile: | ||||||||||||
| Total nonperforming loans | $ | 29,267 | $ | 26,359 | $ | 14,442 | ||||||
| Nonperforming loans ratio | 0.66 | % | 0.64 | % | 0.37 | % | ||||||
| Total nonperforming assets | $ | 33,164 | $ | 30,288 | $ | 14,442 | ||||||
| Nonperforming assets ratio | 0.49 | % | 0.47 | % | 0.23 | % | ||||||
| Net charge-offs | $ | 189 | $ | 2,068 | $ | 333 | ||||||
| Net charge-off ratio | 0.02 | % | 0.20 | % | 0.03 | % | ||||||
| Allowance for credit losses | $ | 55,900 | $ | 51,500 | $ | 49,800 | ||||||
| Allowance for credit losses ratio | 1.27 | % | 1.25 | % | 1.27 | % | ||||||
| Allowance for credit losses to nonaccrual ratio | 197.53 | % | 198.91 | % | 344.88 | % | ||||||
| (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. | ||||||||||||
MIDWESTONE FINANCIAL GROUP, INC.
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
| Three Months Ended | |||||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||||||||||||||
| (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) | $ | 4,298,216 | $ | 58,867 | 5.51 | % | $ | 4,080,243 | $ | 54,939 | 5.34 | % | $ | 3,867,110 | $ | 47,206 | 4.95 | % | |||||||||
| Taxable investment securities | 1,557,603 | 9,460 | 2.44 | % | 1,593,699 | 9,274 | 2.31 | % | 1,811,388 | 10,444 | 2.34 | % | |||||||||||||||
| Tax-exempt investment securities (2)(4) | 328,736 | 2,097 | 2.57 | % | 338,243 | 2,217 | 2.60 | % | 397,110 | 2,649 | 2.71 | % | |||||||||||||||
| Total securities held for investment(2) | 1,886,339 | 11,557 | 2.46 | % | 1,931,942 | 11,491 | 2.36 | % | 2,208,498 | 13,093 | 2.40 | % | |||||||||||||||
| Other | 30,605 | 418 | 5.49 | % | 22,937 | 230 | 3.98 | % | 24,848 | 244 | 3.98 | % | |||||||||||||||
| Total interest earning assets(2) | $ | 6,215,160 | $ | 70,842 | 4.58 | % | $ | 6,035,122 | $ | 66,660 | 4.38 | % | $ | 6,100,456 | $ | 60,543 | 4.02 | % | |||||||||
| Other assets | 420,219 | 424,583 | 423,609 | ||||||||||||||||||||||||
| Total assets | $ | 6,635,379 | $ | 6,459,705 | $ | 6,524,065 | |||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||
| Interest checking deposits | $ | 1,301,470 | $ | 2,890 | 0.89 | % | $ | 1,305,759 | $ | 2,991 | 0.91 | % | $ | 1,515,845 | $ | 1,849 | 0.49 | % | |||||||||
| Money market deposits | 1,102,543 | 8,065 | 2.94 | % | 1,103,637 | 7,954 | 2.86 | % | 930,543 | 3,269 | 1.42 | % | |||||||||||||||
| Savings deposits | 694,143 | 2,047 | 1.19 | % | 639,766 | 1,493 | 0.93 | % | 653,043 | 272 | 0.17 | % | |||||||||||||||
| Time deposits | 1,446,981 | 14,724 | 4.09 | % | 1,463,498 | 14,762 | 4.00 | % | 1,417,688 | 9,929 | 2.84 | % | |||||||||||||||
| Total interest bearing deposits | 4,545,137 | 27,726 | 2.45 | % | 4,512,660 | 27,200 | 2.39 | % | 4,517,119 | 15,319 | 1.38 | % | |||||||||||||||
| Securities sold under agreements to repurchase | 5,330 | 11 | 0.83 | % | 8,661 | 17 | 0.78 | % | 145,809 | 450 | 1.25 | % | |||||||||||||||
| Other short-term borrowings | 409,525 | 4,964 | 4.88 | % | 273,963 | 3,479 | 5.04 | % | 111,306 | 1,336 | 4.87 | % | |||||||||||||||
| Short-term borrowings | 414,855 | 4,975 | 4.82 | % | 282,624 | 3,496 | 4.91 | % | 257,115 | 1,786 | 2.82 | % | |||||||||||||||
| Long-term debt | 123,266 | 2,103 | 6.86 | % | 124,495 | 2,131 | 6.79 | % | 139,208 | 2,124 | 6.19 | % | |||||||||||||||
| Total borrowed funds | 538,121 | 7,078 | 5.29 | % | 407,119 | 5,627 | 5.48 | % | 396,323 | 3,910 | 4.00 | % | |||||||||||||||
| Total interest bearing liabilities | $ | 5,083,258 | $ | 34,804 | 2.75 | % | $ | 4,919,779 | $ | 32,827 | 2.65 | % | $ | 4,913,442 | $ | 19,229 | 1.59 | % | |||||||||
| Noninterest bearing deposits | 935,977 | 930,663 | 1,029,575 | ||||||||||||||||||||||||
| Other liabilities | 88,611 | 98,027 | 82,501 | ||||||||||||||||||||||||
| Shareholders’ equity | 527,533 | 511,236 | 498,547 | ||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,635,379 | $ | 6,459,705 | $ | 6,524,065 | |||||||||||||||||||||
| Net interest income(2) | $ | 36,038 | $ | 33,833 | $ | 41,314 | |||||||||||||||||||||
| Net interest spread(2) | 1.83 | % | 1.73 | % | 2.43 | % | |||||||||||||||||||||
| Net interest margin(2) | 2.33 | % | 2.22 | % | 2.75 | % | |||||||||||||||||||||
| Total deposits(5) | $ | 5,481,114 | $ | 27,726 | 2.03 | % | $ | 5,443,323 | $ | 27,200 | 1.98 | % | $ | 5,546,694 | $ | 15,319 | 1.12 | % | |||||||||
| Cost of funds(6) | 2.33 | % | 2.23 | % | 1.31 | % | |||||||||||||||||||||
| (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 $237 thousand, $207 thousand, and $95 thousand for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively. Loan purchase discount accretion was $1.2 million, $765 thousand, and $1.2 million for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively. Tax equivalent adjustments were $920 thousand, $846 thousand, and $716 thousand for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively. The federal statutory tax rate utilized was 21%. | |||||||||||||||||||||||||||
|
(4) Interest income includes tax equivalent adjustments of $387 thousand, $428 thousand, and $522 thousand for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, 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 | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| (Dollars in thousands, except per share data) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||
| Total shareholders’ equity | $ | 528,040 | $ | 524,378 | $ | 505,411 | $ | 501,341 | $ | 500,650 | ||||||||||
| Intangible assets, net | (100,649 | ) | (86,546 | ) | (87,987 | ) | (89,446 | ) | (91,040 | ) | ||||||||||
| Tangible common equity | $ | 427,391 | $ | 437,832 | $ | 417,424 | $ | 411,895 | $ | 409,610 | ||||||||||
| Total assets | $ | 6,748,015 | $ | 6,427,540 | $ | 6,467,818 | $ | 6,521,489 | $ | 6,409,952 | ||||||||||
| Intangible assets, net | (100,649 | ) | (86,546 | ) | (87,987 | ) | (89,446 | ) | (91,040 | ) | ||||||||||
| Tangible assets | $ | 6,647,366 | $ | 6,340,994 | $ | 6,379,831 | $ | 6,432,043 | $ | 6,318,912 | ||||||||||
| Book value per share | $ | 33.53 | $ | 33.41 | $ | 32.21 | $ | 31.96 | $ | 31.94 | ||||||||||
| Tangible book value per share(1) | $ | 27.14 | $ | 27.90 | $ | 26.60 | $ | 26.26 | $ | 26.13 | ||||||||||
| Shares outstanding | 15,750,471 | 15,694,306 | 15,691,738 | 15,685,123 | 15,675,325 | |||||||||||||||
| Common equity ratio | 7.83 | % | 8.16 | % | 7.81 | % | 7.69 | % | 7.81 | % | ||||||||||
| Tangible common equity ratio(2) | 6.43 | % | 6.90 | % | 6.54 | % | 6.40 | % | 6.48 | % | ||||||||||
| (1) Tangible common equity divided by shares outstanding. | ||||||||||||||||||||
| (2) Tangible common equity divided by tangible assets. | ||||||||||||||||||||
| Three Months Ended | ||||||||||||
| Return on Average Tangible Equity | March 31, | December 31, | March 31, | |||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | |||||||||
| Net income | $ | 3,269 | $ | 2,730 | $ | 1,397 | ||||||
| Intangible amortization, net of tax(1) | 1,228 | 1,081 | 1,314 | |||||||||
| Tangible net income | $ | 4,497 | $ | 3,811 | $ | 2,711 | ||||||
| Average shareholders’ equity | $ | 527,533 | $ | 511,236 | $ | 498,547 | ||||||
| Average intangible assets, net | (95,296 | ) | (87,258 | ) | (92,002 | ) | ||||||
| Average tangible equity | $ | 432,237 | $ | 423,978 | $ | 406,545 | ||||||
| Return on average equity | 2.49 | % | 2.12 | % | 1.14 | % | ||||||
| Return on average tangible equity(2) | 4.18 | % | 3.57 | % | 2.70 | % | ||||||
| (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 | |||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | |||||||||
| Net interest income | $ | 34,731 | $ | 32,559 | $ | 40,076 | ||||||
| Tax equivalent adjustments: | ||||||||||||
| Loans(1) | 920 | 846 | 716 | |||||||||
| Securities(1) | 387 | 428 | 522 | |||||||||
| Net interest income, tax equivalent | $ | 36,038 | $ | 33,833 | $ | 41,314 | ||||||
| Loan purchase discount accretion | (1,152 | ) | (765 | ) | (1,189 | ) | ||||||
| Core net interest income | $ | 34,886 | $ | 33,068 | $ | 40,125 | ||||||
| Net interest margin | 2.25 | % | 2.14 | % | 2.66 | % | ||||||
| Net interest margin, tax equivalent(2) | 2.33 | % | 2.22 | % | 2.75 | % | ||||||
| Core net interest margin(3) | 2.26 | % | 2.17 | % | 2.67 | % | ||||||
| Average interest earning assets | $ | 6,215,160 | $ | 6,035,122 | $ | 6,100,456 | ||||||
| (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 | ||||||||||||
| Loan Yield, Tax Equivalent / Core Yield on Loans | March 31, | December 31, | March 31, | |||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | |||||||||
| Loan interest income, including fees | $ | 57,947 | $ | 54,093 | $ | 46,490 | ||||||
| Tax equivalent adjustment(1) | 920 | 846 | 716 | |||||||||
| Tax equivalent loan interest income | $ | 58,867 | $ | 54,939 | $ | 47,206 | ||||||
| Loan purchase discount accretion | (1,152 | ) | (765 | ) | (1,189 | ) | ||||||
| Core loan interest income | $ | 57,715 | $ | 54,174 | $ | 46,017 | ||||||
| Yield on loans | 5.42 | % | 5.26 | % | 4.88 | % | ||||||
| Yield on loans, tax equivalent(2) | 5.51 | % | 5.34 | % | 4.95 | % | ||||||
| Core yield on loans(3) | 5.40 | % | 5.27 | % | 4.83 | % | ||||||
| Average loans | $ | 4,298,216 | $ | 4,080,243 | $ | 3,867,110 | ||||||
| (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 | ||||||||||||
| Efficiency Ratio | March 31, | December 31, | March 31, | |||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | |||||||||
| Total noninterest expense | $ | 35,565 | $ | 32,131 | $ | 33,319 | ||||||
| Amortization of intangibles | (1,637 | ) | (1,441 | ) | (1,752 | ) | ||||||
| Merger-related expenses | (1,314 | ) | (245 | ) | (136 | ) | ||||||
| Noninterest expense used for efficiency ratio | $ | 32,614 | $ | 30,445 | $ | 31,431 | ||||||
| Net interest income, tax equivalent(1) | $ | 36,038 | $ | 33,833 | $ | 41,314 | ||||||
| Plus: Noninterest income | 9,750 | 3,862 | (4,046 | ) | ||||||||
| Less: Investment securities (losses) gains, net | 36 | (5,696 | ) | (13,170 | ) | |||||||
| Net revenues used for efficiency ratio | $ | 45,752 | $ | 43,391 | $ | 50,438 | ||||||
| Efficiency ratio (2) | 71.28 | % | 70.16 | % | 62.32 | % | ||||||
| (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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