MidWestOne Financial Group, Inc. Reports Financial Results for the Second Quarter of 2023

MidWestOne Bank

IOWA CITY, Iowa, Aug. 01, 2023 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the second quarter of 2023.

Second Quarter 2023 Highlights¹

• Net income of $7.6 million, or $0.48 per diluted common share, compared to net income of $1.4 million, or $0.09 per diluted common share, for the linked quarter.

• Annualized loan growth of 10.6%.

• Expenses of $34.9 million included $1.4 million of costs stemming from a voluntary early retirement program and executive relocation.

• Nonperforming assets ratio improved 1 basis point (“bps”) to 0.22%; net charge-off ratio was 0.09%.

Subsequent Events

• On July 25, 2023, the Board of Directors declared a cash dividend of $0.2425 per common share.
  

CEO COMMENTARY

Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “On our first quarter earnings call, we introduced a comprehensive strategic plan designed to transform our operations and become a higher performing bank over the medium term. Though we are facing a challenging operating environment driven by rising interest rates, we have made solid progress across the five pillars of our plan highlighted by 10% loan growth, annualized, that we achieved in the quarter. We have been adding bankers in our major markets of the Twin Cities, Denver, and Metro Iowa, which has been a major factor in this strong loan growth. So far this year, we have added bankers in the Twin Cities and we will continue to add bankers in our major markets as we continue to build scale and take market share. Late in the second quarter, as part of our specialty commercial loan growth initiative, we recruited an established agribusiness team from a regional bank as we strive to ‘up-tier’ in this attractive segment of the market. This team has already started to bring full relationship business to MidWestOne. We are also starting to see momentum in our governmental lending group, where we have improved our focus and execution. Lastly, we are seeing a nice increase in our wealth management assets under management and revenues, as compared to the first quarter, driven by the teams recruited in 2021 and 2022.”

Mr. Reeves concluded, “I’m very pleased with the early results that we are achieving as we execute our strategic plan. We are beginning to make investments in talent and our platform to drive growth, while keeping our noninterest expense relatively steady from the first quarter. We are driving significant change across our organization, and I would like to thank our employees for their hard work and dedication to our Company, customers, and communities. Our results would not be possible without their tireless efforts. I remain confident that we are on a strong path to significantly improved financial results.”

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1} Second Quarter Summary compares to the first quarter of 2023 (the “linked quarter”) unless noted.

	As of or for the quarter ended												Six Months Ended
(Dollars in thousands, except per share amounts and as noted)	June 30,				March 31,				June 30,				June 30,				June 30,
		2023				2023				2022				2023				2022
Financial Results
Revenue	$	45,708			$	36,030			$	52,072			$	81,738			$	101,052
Credit loss expense		1,597				933				3,282				2,530				3,282
Noninterest expense		34,919				33,319				32,082				68,238				63,725
Net income		7,594				1,397				12,621				8,991				26,516
Per Common Share
Diluted earnings per share	$	0.48			$	0.09			$	0.80			$	0.57			$	1.69
Book value		31.96				31.94				31.26				31.96				31.26
Tangible book value(1)		26.26				26.13				25.10				26.26				25.10
Balance Sheet & Credit Quality
Loans In millions	$	4,018.6			$	3,919.4			$	3,611.2			$	4,018.6			$	3,611.2
Investment securities In millions		2,003.1				2,071.8				2,402.8				2,003.1				2,402.8
Deposits In millions		5,445.4				5,555.2				5,537.4				5,445.4				5,537.4
Net loan charge-offs In millions		0.9				0.3				0.3				1.2				2.5
Allowance for credit losses ratio		1.25	%			1.27	%			1.45	%			1.25	%			1.45	%
Selected Ratios
Return on average assets		0.47	%			0.09	%			0.83	%			0.28	%			0.89	%
Net interest margin, tax equivalent(1)		2.52	%			2.75	%			2.87	%			2.63	%			2.83	%
Return on average equity		6.03	%			1.14	%			10.14	%			3.61	%			10.44	%
Return on average tangible equity(1)		8.50	%			2.70	%			13.13	%			5.65	%			13.35	%
Efficiency ratio(1)		71.13	%			62.32	%			56.57	%			66.56	%			58.46	%
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

REVENUE REVIEW

Revenue										Change		Change
										2Q23 vs		2Q23 vs
(Dollars in thousands)	2Q23			1Q23			2Q22			1Q23		2Q22
Net interest income	$	36,962		$	40,076		$	39,725		(8	)%	(7	)%
Noninterest income (loss)		8,746			(4,046	)		12,347		n / m		(29	)%
Total revenue, net of interest expense	$	45,708		$	36,030		$	52,072		27	%	(12	)%
Results are not meaningful (n/m)

Total revenue for the second quarter of 2023 increased $9.7 million from the first quarter of 2023 as a result of increased noninterest income, partially offset by lower net interest income. Compared to the second quarter of 2022, total revenue decreased $6.4 million due to lower net interest income and noninterest income.

Net interest income of $37.0 million for the second quarter of 2023 decreased from $40.1 million in the first quarter of 2023, due primarily to higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields. Compared to the second quarter of 2022, net interest income decreased $2.8 million as a result of higher funding costs and volumes, partially offset by higher interest earning asset yields and volumes.

The Company’s tax equivalent net interest margin was 2.52% in the second quarter of 2023 compared to 2.75% in the first quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 39 bps to 1.98%, due to interest bearing deposit costs of 1.79%, short-term borrowing costs of 2.91%, and long-term debt costs of 6.38%, which increased 41 bps, 9 bps and 19 bps, respectively from the first quarter of 2023. Total interest earning assets yield increased 12 bps primarily as a result of an increase in loan yield of 10 bps, partially offset by a decrease in investment security yield of 5 bps, respectively. Our cycle-to-date interest bearing deposit beta was 31%.

The tax equivalent net interest margin was 2.52% in the second quarter of 2023 compared to 2.87% in the second quarter of 2022, driven by higher funding costs and volumes, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 153 bps to 1.98%, due to interest bearing deposit costs of 1.79%, short-term borrowing costs of 2.91%, and long-term debt costs of 6.38%, which increased 148 bps, 244 bps and 193 bps, respectively from the second quarter of 2022. Total interest earning assets yield increased 92 bps primarily as a result of an increase in loan and securities yields of 103 bps and 22 bps, respectively.

Noninterest Income (Loss)												Change			Change
												2Q23 vs			2Q23 vs
(In thousands)	2Q23				1Q23				2Q22			1Q23			2Q22
Investment services and trust activities	$	3,119			$	2,933			$	2,670		6	%		17	%
Service charges and fees		2,047				2,008				1,717		2	%		19	%
Card revenue		1,847				1,748				1,878		6	%		(2	)%
Loan revenue		909				1,420				3,523		(36	)%		(74	)%
Bank-owned life insurance		616				602				558		2	%		10	%
Investment securities (losses) gains, net		(2	)			(13,170	)			395		n / m			(101	)%
Other		210				413				1,606		(49	)%		(87	)%
Total noninterest income (loss)	$	8,746			$	(4,046	)		$	12,347		n / m			(29	)%

Noninterest income for the second quarter of 2023 increased $12.8 million from the linked quarter due primarily to $13.2 million of investment security losses recognized in the linked quarter, partially offset by a $0.5 million unfavorable change in loan revenue. Loan revenue reflected an unfavorable quarter-over-quarter change in the fair value of our mortgage servicing rights of $0.9 million, partially offset by a $0.5 million favorable change in loan sale gains generated by our governmental lending and mortgage origination businesses. Noninterest income decreased $3.6 million from the second quarter of 2022. The largest driver was a $0.6 million decrease in the fair value of our mortgage servicing rights in the current quarter compared to a $2.4 million increase in the second quarter of 2022.

EXPENSE REVIEW

Noninterest Expense									Change		Change
									2Q23 vs		2Q23 vs
(In thousands)	2Q23			1Q23			2Q22		1Q23		2Q22
Compensation and employee benefits	$	20,386		$	19,607		$	18,955	4	%	8	%
Occupancy expense of premises, net		2,574			2,746			2,253	(6	)%	14	%
Equipment		2,435			2,171			2,107	12	%	16	%
Legal and professional		1,682			1,736			2,435	(3	)%	(31	)%
Data processing		1,521			1,363			1,237	12	%	23	%
Marketing		1,142			986			1,157	16	%	(1	)%
Amortization of intangibles		1,594			1,752			1,283	(9	)%	24	%
FDIC insurance		862			749			420	15	%	105	%
Communications		260			261			266	—	%	(2	)%
Foreclosed assets, net		(6	)		(28	)		4	(79	)%	(250	)%
Other		2,469			1,976			1,965	25	%	26	%
Total noninterest expense	$	34,919		$	33,319		$	32,082	5	%	9	%

Merger-related Expenses
(In thousands)	2Q23			1Q23			2Q22
Compensation and employee benefits	$	—		$	70		$	150
Occupancy expense of premises, net		—			—			1
Equipment		—			—			6
Legal and professional		—			—			638
Data processing		—			65			38
Marketing		—			—			65
Communications		—			—			2
Other		—			1			1
Total merger-related expenses	$	—		$	136		$	901

Noninterest expense for the second quarter of 2023 increased $1.6 million, or 4.8%, from the linked quarter with overall increases in all noninterest expense categories except occupancy, legal and professional, amortization of intangibles, and communications. The increase in compensation and employee benefits reflected severance expense of $1.2 million in the current period, as compared to $0.1 million in the first quarter of 2023. The largest driver in the increase in ’other’ noninterest expense was executive relocation expenses of $0.2 million.

Noninterest expense for the second quarter of 2023 increased $2.8 million, or 8.8%, from the second quarter of 2022. The increase primarily reflected costs associated with the acquired operations of Iowa First Bancshares Corp. ("IOFB"), which closed in the second quarter of 2022. Partially offsetting the increases above was a decline of $0.8 million in legal and professional expenses, primarily due to a decrease in legal and professional merger-related expenses.

The Company’s effective income tax rate decreased to 17.4% in the second quarter of 2023 compared to 21.4% in the linked quarter. The decrease reflected an adjustment to full-year 2023 estimated taxable income in the Company’s annual effective tax rate calculation. The effective income tax rate for the full year 2023 is expected to be in the range of 18% - 20%.

BALANCE SHEET REVIEW

Total assets were $6.52 billion at June 30, 2023 compared to $6.41 billion at March 31, 2023 and $6.44 billion at June 30, 2022. The increase from March 31, 2023 was driven by higher loan balances from organic growth and an increase in cash and cash equivalents, partially offset by lower investment security balances. In comparison to June 30, 2022, the increase was primarily due to higher loan balances from organic growth and an increase in cash and cash equivalents, partially offset by lower security balances as a result of the balance sheet repositioning executed in the first quarter of 2023.

Loans Held for Investment	June 30, 2023					March 31, 2023					June 30, 2022
(Dollars in thousands)	Balance			% of Total		Balance			% of Total		Balance			% of Total
Commercial and industrial	$	1,089,269		27.1	%	$	1,080,514		27.6	%	$	986,137		27.3	%
Agricultural		106,148		2.6			106,641		2.7			110,263		3.1
Commercial real estate
Construction and development		313,836		7.8			320,924		8.2			224,470		6.2
Farmland		183,378		4.6			182,528		4.7			181,820		5.0
Multifamily		305,519		7.6			255,065		6.5			239,676		6.6
Other		1,331,886		33.1			1,290,454		33.0			1,213,974		33.7
Total commercial real estate		2,134,619		53.1			2,048,971		52.4			1,859,940		51.5
Residential real estate
One-to-four family first liens		448,096		11.2			448,459		11.4			430,157		11.9
One-to-four family junior liens		168,755		4.2			162,403		4.1			148,647		4.1
Total residential real estate		616,851		15.4			610,862		15.5			578,804		16.0
Consumer		71,762		1.8			72,377		1.8			76,008		2.1
Loans held for investment, net of unearned income	$	4,018,649		100.0	%	$	3,919,365		100.0	%	$	3,611,152		100.0	%
Total commitments to extend credit	$	1,296,719				$	1,205,902				$	1,117,754

Loans held for investment, net of unearned income, increased $99.3 million, or 2.5%, to $4.02 billion from $3.92 billion at March 31, 2023. This increase was driven by new loan production in the second quarter of 2023.

Investment Securities	June 30, 2023					March 31, 2023					June 30, 2022
(Dollars in thousands)	Balance			% of Total		Balance			% of Total		Balance			% of Total
Available for sale	$	903,520		45.1	%	$	954,074		46.1	%	$	1,234,789		51.4	%
Held to maturity		1,099,569		54.9	%		1,117,709		53.9	%		1,168,042		48.6	%
Total investment securities	$	2,003,089				$	2,071,783				$	2,402,831

Investment securities at June 30, 2023 were $2.00 billion, decreasing $68.7 million from March 31, 2023 and $399.7 million from June 30, 2022. The decrease from the first quarter of 2023 was primarily due to paydowns, calls, and maturities. The decrease from the second quarter of 2022 was primarily due to the balance sheet repositioning completed in the first quarter of 2023.

Deposits	June 30, 2023					March 31, 2023					June 30, 2022
(Dollars in thousands)	Balance			% of Total		Balance			% of Total		Balance			% of Total
Noninterest bearing deposits	$	897,923		16.5	%	$	989,469		17.8	%	$	1,114,825		20.1	%
Interest checking deposits		1,397,276		25.7			1,476,948		26.6			1,749,748		31.7
Money market deposits		1,096,432		20.1			969,238		17.4			1,070,912		19.3
Savings deposits		585,967		10.8			631,811		11.4			715,829		12.9
Time deposits of $250 and under		648,586		11.9			599,302		10.8			547,427		9.9
Total core deposits		4,626,184		85.0			4,666,768		84.0			5,198,741		93.9
Brokered time deposits		365,623		6.7			366,539		6.6			—		—
Time deposits over $250		453,640		8.3			521,846		9.4			338,700		6.1
Total deposits	$	5,445,447		100.0	%	$	5,555,153		100.0	%	$	5,537,441		100.0	%

Total deposits declined $109.7 million, or 2.0%, to $5.45 billion from $5.56 billion at March 31, 2023. Brokered deposits decreased $0.9 million from $366.5 million at March 31, 2023. Total uninsured deposits were estimated to be $1.68 billion, which included $591.8 million of collateralized municipal deposits at June 30, 2023. Total uninsured deposits, excluding collateralized municipal deposits, represented approximately 20.0% of total deposits.

Borrowed Funds	June 30, 2023					March 31, 2023					June 30, 2022
(Dollars in thousands)	Balance			% of Total		Balance			% of Total		Balance			% of Total
Short-term borrowings	$	362,054		74.2	%	$	143,981		51.1	%	$	193,894		54.9	%
Long-term debt		125,752		25.8	%		137,981		48.9	%		159,168		45.1	%
Total borrowed funds	$	487,806				$	281,962				$	353,062

Total borrowed funds were $487.8 million at June 30, 2023 an increase of $205.8 million from March 31, 2023 and $134.7 million from June 30, 2022. The increase was primarily due to Bank Term Funding Program borrowings of $225 million, as compared to no borrowings in the prior periods, and increased Federal Home Loan Bank overnight borrowings.

Capital	June 30,				March 31,				June 30,
(Dollars in thousands)	2023 (1)					2023				2022
Total shareholders’ equity	$	501,341			$	500,650			$	488,832
Accumulated other comprehensive loss		(82,704	)			(78,885	)			(65,231	)
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio		8.47	%			8.30	%			8.51	%
Common equity tier 1 capital to risk-weighted assets ratio		9.36	%			9.39	%			8.82	%
Tier 1 capital to risk-weighted assets ratio		10.15	%			10.18	%			9.61	%
Total capital to risk-weighted assets ratio		12.26	%			12.31	%			11.73	%
MidWestOne Bank
Tier 1 leverage to average assets ratio		9.42	%			9.28	%			9.70	%
Common equity tier 1 capital to risk-weighted assets ratio		11.31	%			11.40	%			10.99	%
Tier 1 capital to risk-weighted assets ratio		11.31	%			11.40	%			10.99	%
Total capital to risk-weighted assets ratio		12.22	%			12.31	%			11.90	%
(1) Regulatory capital ratios for June 30, 2023 are preliminary

Total shareholders’ equity at June 30, 2023 increased $0.7 million from March 31, 2023, driven by the benefit of second quarter net income, partially offset by an increase in accumulated other comprehensive loss and dividends paid during the second quarter of 2023.

Accumulated other comprehensive loss at June 30, 2023 increased $3.8 million compared to March 31, 2023, primarily due to a decrease in available for sale securities valuations. Accumulated other comprehensive loss increased $17.5 million from June 30, 2022, driven by the impact of higher interest rates on available for sale securities valuations.

On July 25, 2023, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable September 15, 2023, to shareholders of record at the close of business on September 1, 2023.

No common shares were repurchased by the Company during the period March 31, 2023 through June 30, 2023 or for the subsequent period through August 1, 2023. The current share repurchase program allows for the repurchase of up to $15.0 million.

CREDIT QUALITY REVIEW

Credit Quality	As of or For the Three Months Ended
	June 30,				March 31,				June 30,
(Dollars in thousands)		2023				2023				2022
Credit loss expense related to loans	$	1,497			$	933			$	3,060
Net charge-offs		897				333				281
Allowance for credit losses		50,400				49,800				52,350
Pass	$	3,769,309			$	3,728,522			$	3,402,508
Special Mention / Watch		133,904				92,075				111,893
Classified		115,436				98,768				96,751
Loans greater than 30 days past due and accruing	$	6,201			$	4,932			$	12,349
Nonperforming loans	$	14,448			$	14,442			$	27,337
Nonperforming assets		14,448				14,442				27,621
Net charge-off ratio(1)		0.09	%			0.03	%			0.03	%
Classified loans ratio(2)		2.87	%			2.52	%			2.68	%
Nonperforming loans ratio(3)		0.36	%			0.37	%			0.76	%
Nonperforming assets ratio(4)		0.22	%			0.23	%			0.43	%
Allowance for credit losses ratio(5)		1.25	%			1.27	%			1.45	%
Allowance for credit losses to nonaccrual loans ratio(6)	...	355.03	%			344.88	%			201.52	%
(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, nonperforming loans and nonperforming assets ratios remained stable and improved from the prior year period. The nonperforming loans ratio declined 1 bps from the linked quarter and 40 bps from the prior year to 0.36%. The classified loans ratio increased 35 bps from the linked quarter and 19 bps from the prior year. The linked quarter increase in classified loans was primarily due to the deterioration of two non-owner occupied commercial real estate loans. Further, the net charge-off ratio increased 6 bps from the linked quarter and 6 bps from the prior year.

As of June 30, 2023, the allowance for credit losses was $50.4 million, or 1.25% of loans held for investment, net of unearned income, compared with $49.8 million, or 1.27% of loans held for investment, net of unearned income, at March 31, 2023. Credit loss expense of $1.6 million in the second quarter of 2023 was primarily attributable to loan growth.

Nonperforming Loans Roll Forward
(Dollars in thousands)		Nonaccrual				90+ Days Past Due & Still Accruing				Total
Balance at March 31, 2023	$	14,440			$	2			$	14,442
Loans placed on nonaccrual or 90+ days past due & still accruing		1,828				333				2,161
Proceeds related to repayment or sale		(1,054	)			—				(1,054	)
Loans returned to accrual status or no longer past due		(45	)			—				(45	)
Charge-offs		(973	)			(80	)			(1,053	)
Transfer to nonaccrual		—				(3	)			(3	)
Balance at June 30, 2023	$	14,196			$	252			$	14,448

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Tuesday, August 1, 2023. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=c7140c96&confId=51647. 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 231141 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until October 26, 2023, by calling 1-866-813-9403 and using the replay access code of 868948. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

ABOUT MIDWESTONE FINANCIAL GROUP, INC.

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

Cautionary Note Regarding Forward-Looking Statements

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

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of actual and expected increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the war in Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our 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) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; (25) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

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

	June 30,				March 31,				December 31,				September 30,				June 30,
(In thousands)		2023				2023				2022				2022				2022
ASSETS
Cash and due from banks	$	75,955			$	63,945			$	83,990			$	77,513			$	60,622
Interest earning deposits in banks		68,603				5,273				2,445				1,001				23,242
Total cash and cash equivalents		144,558				69,218				86,435				78,514				83,864
Debt securities available for sale at fair value		903,520				954,074				1,153,547				1,153,304				1,234,789
Held to maturity securities at amortized cost		1,099,569				1,117,709				1,129,421				1,146,583				1,168,042
Total securities		2,003,089				2,071,783				2,282,968				2,299,887				2,402,831
Loans held for sale		2,821				2,553				612				2,320				4,991
Gross loans held for investment		4,031,377				3,932,900				3,854,791				3,761,664				3,627,728
Unearned income, net		(12,728	)			(13,535	)			(14,267	)			(15,375	)			(16,576	)
Loans held for investment, net of unearned income		4,018,649				3,919,365				3,840,524				3,746,289				3,611,152
Allowance for credit losses		(50,400	)			(49,800	)			(49,200	)			(52,100	)			(52,350	)
Total loans held for investment, net		3,968,249				3,869,565				3,791,324				3,694,189				3,558,802
Premises and equipment, net		85,831				86,208				87,125				87,732				89,048
Goodwill		62,477				62,477				62,477				62,477				62,477
Other intangible assets, net		26,969				28,563				30,315				32,086				33,874
Foreclosed assets, net		—				—				103				103				284
Other assets		227,495				219,585				236,517				233,753				206,320
Total assets	$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061			$	6,442,491
LIABILITIES
Noninterest bearing deposits	$	897,923			$	989,469			$	1,053,450			$	1,139,694			$	1,114,825
Interest bearing deposits		4,547,524				4,565,684				4,415,492				4,337,088				4,422,616
Total deposits		5,445,447				5,555,153				5,468,942				5,476,782				5,537,441
Short-term borrowings		362,054				143,981				391,873				304,536				193,894
Long-term debt		125,752				137,981				139,210				154,190				159,168
Other liabilities		86,895				72,187				85,058				83,324				63,156
Total liabilities		6,020,148				5,909,302				6,085,083				6,018,832				5,953,659
SHAREHOLDERS’ EQUITY
Common stock		16,581				16,581				16,581				16,581				16,581
Additional paid-in capital		301,424				300,966				302,085				301,418				300,859
Retained earnings		290,548				286,767				289,289				276,998				262,395
Treasury stock		(24,508	)			(24,779	)			(26,115	)			(26,145	)			(25,772	)
Accumulated other comprehensive loss		(82,704	)			(78,885	)			(89,047	)			(96,623	)			(65,231	)
Total shareholders’ equity		501,341				500,650				492,793				472,229				488,832
Total liabilities and shareholders’ equity	$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061			$	6,442,491

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

	Three Months Ended																			Six Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,			June 30,				June 30,
(In thousands, except per share data)		2023				2023				2022				2022				2022			2023				2022
Interest income
Loans, including fees	$	49,726			$	46,490			$	43,769			$	40,451			$	32,746		$	96,216			$	64,064
Taxable investment securities		9,734				10,444				10,685				10,635				9,576			20,178				17,699
Tax-exempt investment securities		1,822				2,127				2,303				2,326				2,367			3,949				4,750
Other		68				244				—				9				40			312				68
Total interest income		61,350				59,305				56,757				53,421				44,729			120,655				86,581
Interest expense
Deposits		20,117				15,319				9,127				5,035				3,173			35,436				6,083
Short-term borrowings		2,118				1,786				1,955				767				229			3,904				348
Long-term debt		2,153				2,124				2,111				1,886				1,602			4,277				3,089
Total interest expense		24,388				19,229				13,193				7,688				5,004			43,617				9,520
Net interest income		36,962				40,076				43,564				45,733				39,725			77,038				77,061
Credit loss expense		1,597				933				572				638				3,282			2,530				3,282
Net interest income after credit loss expense		35,365				39,143				42,992				45,095				36,443			74,508				73,779
Noninterest income (loss)
Investment services and trust activities		3,119				2,933				2,666				2,876				2,670			6,052				5,681
Service charges and fees		2,047				2,008				2,028				2,075				1,717			4,055				3,374
Card revenue		1,847				1,748				1,784				1,898				1,878			3,595				3,528
Loan revenue		909				1,420				966				1,722				3,523			2,329				7,816
Bank-owned life insurance		616				602				637				579				558			1,218				1,089
Investment securities (losses) gains, net		(2	)			(13,170	)			(1	)			(163	)			395			(13,172	)			435
Other		210				413				2,860				3,601				1,606			623				2,068
Total noninterest income (loss)		8,746				(4,046	)			10,940				12,588				12,347			4,700				23,991
Noninterest expense
Compensation and employee benefits		20,386				19,607				20,438				20,046				18,955			39,993				37,619
Occupancy expense of premises, net		2,574				2,746				2,663				2,577				2,253			5,320				5,032
Equipment		2,435				2,171				2,327				2,358				2,107			4,606				4,008
Legal and professional		1,682				1,736				1,846				2,012				2,435			3,418				4,788
Data processing		1,521				1,363				1,375				1,731				1,237			2,884				2,468
Marketing		1,142				986				947				1,139				1,157			2,128				2,186
Amortization of intangibles		1,594				1,752				1,770				1,789				1,283			3,346				2,510
FDIC insurance		862				749				405				415				420			1,611				840
Communications		260				261				285				302				266			521				538
Foreclosed assets, net		(6	)			(28	)			48				42				4			(34	)			(108	)
Other		2,469				1,976				2,336				2,212				1,965			4,445				3,844
Total noninterest expense		34,919				33,319				34,440				34,623				32,082			68,238				63,725
Income before income tax expense		9,192				1,778				19,492				23,060				16,708			10,970				34,045
Income tax expense		1,598				381				3,490				4,743				4,087			1,979				7,529
Net income	$	7,594			$	1,397			$	16,002			$	18,317			$	12,621		$	8,991			$	26,516
Earnings per common share
Basic	$	0.48			$	0.09			$	1.02			$	1.17			$	0.81		$	0.57			$	1.69
Diluted	$	0.48			$	0.09			$	1.02			$	1.17			$	0.80		$	0.57			$	1.69
Weighted average basic common shares outstanding		15,680				15,650				15,624				15,623				15,668			15,665				15,675
Weighted average diluted common shares outstanding		15,689				15,691				15,693				15,654				15,688			15,688				15,703
Dividends paid per common share	$	0.2425			$	0.2425			$	0.2375			$	0.2375			$	0.2375		$	0.4850			$	0.4750

MIDWESTONE 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)		2023				2023				2022				2023				2022
Earnings:
Net interest income	$	36,962			$	40,076			$	39,725			$	77,038			$	77,061
Noninterest (loss) income		8,746				(4,046	)			12,347				4,700				23,991
Total revenue, net of interest expense		45,708				36,030				52,072				81,738				101,052
Credit loss expense		1,597				933				3,282				2,530				3,282
Noninterest expense		34,919				33,319				32,082				68,238				63,725
Income before income tax expense		9,192				1,778				16,708				10,970				34,045
Income tax expense		1,598				381				4,087				1,979				7,529
Net income	$	7,594			$	1,397			$	12,621			$	8,991			$	26,516
Per Share Data:
Diluted earnings	$	0.48			$	0.09			$	0.80			$	0.57			$	1.69
Book value		31.96				31.94				31.26				31.96				31.26
Tangible book value(1)		26.26				26.13				25.10				26.26				25.10
Ending Balance Sheet:
Total assets	$	6,521,489			$	6,409,952			$	6,442,491			$	6,521,489			$	6,442,491
Loans held for investment, net of unearned income		4,018,649				3,919,365				3,611,152				4,018,649				3,611,152
Total securities		2,003,089				2,071,783				2,402,831				2,003,089				2,402,831
Total deposits		5,445,447				5,555,153				5,537,441				5,445,447				5,537,441
Short-term borrowings		362,054				143,981				193,894				362,054				193,894
Long-term debt		125,752				137,981				159,168				125,752				159,168
Total shareholders’ equity		501,341				500,650				488,832				501,341				488,832
Average Balance Sheet:
Average total assets	$	6,465,810			$	6,524,065			$	6,078,950			$	6,494,777			$	5,997,231
Average total loans		4,003,717				3,867,110				3,326,269				3,935,791				3,286,083
Average total deposits		5,454,517				5,546,694				5,181,927				5,500,350				5,113,368
Financial Ratios:
Return on average assets		0.47	%			0.09	%			0.83	%			0.28	%			0.89	%
Return on average equity		6.03	%			1.14	%			10.14	%			3.61	%			10.44	%
Return on average tangible equity(1)		8.50	%			2.70	%			13.13	%			5.65	%			13.35	%
Efficiency ratio(1)		71.13	%			62.32	%			56.57	%			66.56	%			58.46	%
Net interest margin, tax equivalent(1)		2.52	%			2.75	%			2.87	%			2.63	%			2.83	%
Loans to deposits ratio		73.80	%			70.55	%			65.21	%			73.80	%			65.21	%
Uninsured deposits excluding collateralized municipal deposits ratio		20.05	%			18.54	%			24.11	%			20.05	%			24.11	%
Common equity ratio		7.69	%			7.81	%			7.59	%			7.69	%			7.59	%
Tangible common equity ratio(1)		6.40	%			6.48	%			6.18	%			6.40	%			6.18	%
Credit Risk Profile:
Total nonperforming loans	$	14,448			$	14,442			$	27,337			$	14,448			$	27,337
Nonperforming loans ratio		0.36	%			0.37	%			0.76	%			0.36	%			0.76	%
Total nonperforming assets	$	14,448			$	14,442			$	27,621			$	14,448			$	27,621
Nonperforming assets ratio		0.22	%			0.23	%			0.43	%			0.22	%			0.43	%
Net charge-offs	$	897			$	333			$	281			$	1,230			$	2,503
Net charge-off ratio		0.09	%			0.03	%			0.03	%			0.06	%			0.15	%
Allowance for credit losses	$	50,400			$	49,800			$	52,350			$	50,400			$	52,350
Allowance for credit losses ratio		1.25	%			1.27	%			1.45	%			1.25	%			1.45	%
Allowance for credit losses to nonaccrual ratio		355.03	%			344.88	%			201.52	%			355.03	%			201.52	%
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

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

	Three Months Ended
	June 30, 2023									March 31, 2023									June 30, 2022
(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)	$	4,003,717		$	50,439		5.05	%		$	3,867,110		$	47,206		4.95	%		$	3,326,269		$	33,315		4.02	%
Taxable investment securities		1,698,003			9,734		2.30	%			1,811,388			10,444		2.34	%			1,923,155			9,576		2.00	%
Tax-exempt investment securities (2)(4)		345,934			2,253		2.61	%			397,110			2,649		2.71	%			439,385			2,975		2.72	%
Total securities held for investment(2)		2,043,937			11,987		2.35	%			2,208,498			13,093		2.40	%			2,362,540			12,551		2.13	%
Other		9,078			68		3.00	%			24,848			244		3.98	%			30,016			40		0.53	%
Total interest earning assets(2)	$	6,056,732		$	62,494		4.14	%		$	6,100,456		$	60,543		4.02	%		$	5,718,825		$	45,906		3.22	%
Other assets		409,078									423,609									360,125
Total assets	$	6,465,810								$	6,524,065								$	6,078,950
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,420,741		$	1,971		0.56	%		$	1,515,845		$	1,849		0.49	%		$	1,641,337		$	1,189		0.29	%
Money market deposits		999,436			5,299		2.13	%			930,543			3,269		1.42	%			1,003,386			571		0.23	%
Savings deposits		603,905			288		0.19	%			653,043			272		0.17	%			662,449			287		0.17	%
Time deposits		1,490,332			12,559		3.38	%			1,417,688			9,929		2.84	%			836,143			1,126		0.54	%
Total interest bearing deposits		4,514,414			20,117		1.79	%			4,517,119			15,319		1.38	%			4,143,315			3,173		0.31	%
Securities sold under agreements to repurchase		159,583			423		1.06	%			145,809			450		1.25	%			154,107			111		0.29	%
Other short-term borrowings		132,495			1,695		5.13	%			111,306			1,336		4.87	%			41,859			118		1.13	%
Short-term borrowings		292,078			2,118		2.91	%			257,115			1,786		2.82	%			195,966			229		0.47	%
Long-term debt		135,329			2,153		6.38	%			139,208			2,124		6.19	%			144,440			1,602		4.45	%
Total borrowed funds		427,407			4,271		4.01	%			396,323			3,910		4.00	%			340,406			1,831		2.16	%
Total interest bearing liabilities	$	4,941,821		$	24,388		1.98	%		$	4,913,442		$	19,229		1.59	%		$	4,483,721		$	5,004		0.45	%
Noninterest bearing deposits		940,103									1,029,575									1,038,612
Other liabilities		78,898									82,501									57,157
Shareholders’ equity		504,988									498,547									499,460
Total liabilities and shareholders’ equity	$	6,465,810								$	6,524,065								$	6,078,950
Net interest income(2)				$	38,106								$	41,314								$	40,902
Net interest spread(2)							2.16	%								2.43	%								2.77	%
Net interest margin(2)							2.52	%								2.75	%								2.87	%
Total deposits(5)	$	5,454,517		$	20,117		1.48	%		$	5,546,694		$	15,319		1.12	%		$	5,181,927		$	3,173		0.25	%
Cost of funds(6)							1.66	%								1.31	%								0.36	%

(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 $79 thousand, $95 thousand, and $(31) thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Loan purchase discount accretion was $1.0 million, $1.2 million, and $528 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Tax equivalent adjustments were $713 thousand, $716 thousand, and $569 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $431 thousand, $522 thousand, and $608 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

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

	Six Months Ended
	June 30, 2023									June 30, 2022
(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)	$	3,935,791		$	97,645		5.00	%		$	3,286,083		$	65,173		4.00	%
Taxable investment securities		1,754,382			20,178		2.32	%			1,879,773			17,699		1.90	%
Tax-exempt investment securities (2)(4)		371,381			4,902		2.66	%			444,936			5,973		2.71	%
Total securities held for investment(2)		2,125,763			25,080		2.38	%			2,324,709			23,672		2.05	%
Other		16,919			312		3.72	%			42,983			68		0.32	%
Total interest earning assets(2)	$	6,078,473		$	123,037		4.08	%		$	5,653,775		$	88,913		3.17	%
Other assets		416,304									343,456
Total assets	$	6,494,777								$	5,997,231
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,468,030		$	3,820		0.52	%		$	1,601,093		$	2,250		0.28	%
Money market deposits		965,180			8,568		1.79	%			978,801			1,070		0.22	%
Savings deposits		628,338			560		0.18	%			652,134			566		0.18	%
Time deposits		1,454,210			22,488		3.12	%			859,938			2,197		0.52	%
Total interest bearing deposits		4,515,758			35,436		1.58	%			4,091,966			6,083		0.30	%
Securities sold under agreements to repurchase		152,734			873		1.15	%			156,747			207		0.27	%
Other short-term borrowings		121,959			3,031		5.01	%			22,551			141		1.26	%
Short-term borrowings		274,693			3,904		2.87	%			179,298			348		0.39	%
Long-term debt		137,258			4,277		6.28	%			142,426			3,089		4.37	%
Total borrowed funds		411,951			8,181		4.00	%			321,724			3,437		2.15	%
Total interest bearing liabilities	$	4,927,709		$	43,617		1.78	%		$	4,413,690		$	9,520		0.43	%
Noninterest bearing deposits		984,592									1,021,402
Other liabilities		80,690									50,054
Shareholders’ equity		501,786									512,085
Total liabilities and shareholders’ equity	$	6,494,777								$	5,997,231
Net interest income(2)				$	79,420								$	79,393
Net interest spread(2)							2.30	%								2.74	%
Net interest margin(2)							2.63	%								2.83	%
Total deposits(5)	$	5,500,350		$	35,436		1.30	%		$	5,113,368		$	6,083		0.24	%
Cost of funds(6)							1.49	%								0.35	%

(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $0.2 million and $0.6 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Loan purchase discount accretion was $2.2 million and $1.3 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Tax equivalent adjustments were $1.4 million and $1.1 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.0 million and $1.2 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

Non-GAAP Measures

This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, and adjusted earnings. 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)			2023				2023				2022				2022				2022
Total shareholders’ equity		$	501,341			$	500,650			$	492,793			$	472,229			$	488,832
Intangible assets, net			(89,446	)			(91,040	)			(92,792	)			(94,563	)			(96,351	)
Tangible common equity		$	411,895			$	409,610			$	400,001			$	377,666			$	392,481
Total assets		$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061			$	6,442,491
Intangible assets, net			(89,446	)			(91,040	)			(92,792	)			(94,563	)			(96,351	)
Tangible assets		$	6,432,043			$	6,318,912			$	6,485,084			$	6,396,498			$	6,346,140
Book value per share		$	31.96			$	31.94			$	31.54			$	30.23			$	31.26
Tangible book value per share(1)		$	26.26			$	26.13			$	25.60			$	24.17			$	25.10
Shares outstanding			15,685,123				15,675,325				15,623,977				15,622,825				15,635,131
Common equity ratio			7.69	%			7.81	%			7.49	%			7.28	%			7.59	%
Tangible common equity ratio(2)			6.40	%			6.48	%			6.17	%			5.90	%			6.18	%

(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)			2023				2023				2022				2023				2022
Net income		$	7,594			$	1,397			$	12,621			$	8,991			$	26,516
Intangible amortization, net of tax(1)			1,196				1,314				962				2,510				1,883
Tangible net income		$	8,790			$	2,711			$	13,583			$	11,501			$	28,399
Average shareholders’ equity		$	504,988			$	498,547			$	499,460			$	501,786			$	512,085
Average intangible assets, net			(90,258	)			(92,002	)			(84,540	)			(91,125	)			(83,159	)
Average tangible equity		$	414,730			$	406,545			$	414,920			$	410,661			$	428,926
Return on average equity			6.03	%			1.14	%			10.14	%			3.61	%			10.44	%
Return on average tangible equity(2)			8.50	%			2.70	%			13.13	%			5.65	%			13.35	%

(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)			2023				2023				2022				2023				2022
Net interest income		$	36,962			$	40,076			$	39,725			$	77,038			$	77,061
Tax equivalent adjustments:
Loans(1)			713				716				569				1,429				1,109
Securities(1)			431				522				608				953				1,223
Net interest income, tax equivalent		$	38,106			$	41,314			$	40,902			$	79,420			$	79,393
Loan purchase discount accretion			(984	)			(1,189	)			(528	)			(2,173	)			(1,260	)
Core net interest income		$	37,122			$	40,125			$	40,374			$	77,247			$	78,133
Net interest margin			2.45	%			2.66	%			2.79	%			2.56	%			2.75	%
Net interest margin, tax equivalent(2)			2.52	%			2.75	%			2.87	%			2.63	%			2.83	%
Core net interest margin(3)			2.46	%			2.67	%			2.83	%			2.56	%			2.79	%
Average interest earning assets		$	6,056,732			$	6,100,456			$	5,718,825			$	6,078,473			$	5,653,775

(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)			2023				2023				2022				2023				2022
Loan interest income, including fees		$	49,726			$	46,490			$	32,746			$	96,216			$	64,064
Tax equivalent adjustment(1)			713				716				569				1,429				1,109
Tax equivalent loan interest income		$	50,439			$	47,206			$	33,315			$	97,645			$	65,173
Loan purchase discount accretion			(984	)			(1,189	)			(528	)			(2,173	)			(1,260	)
Core loan interest income		$	49,455			$	46,017			$	32,787			$	95,472			$	63,913
Yield on loans			4.98	%			4.88	%			3.95	%			4.93	%			3.93	%
Yield on loans, tax equivalent(2)			5.05	%			4.95	%			4.02	%			5.00	%			4.00	%
Core yield on loans(3)			4.95	%			4.83	%			3.95	%			4.89	%			3.92	%
Average loans		$	4,003,717			$	3,867,110			$	3,326,269			$	3,935,791			$	3,286,083

(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)			2023				2023				2022				2023				2022
Total noninterest expense		$	34,919			$	33,319			$	32,082			$	68,238			$	63,725
Amortization of intangibles			(1,594	)			(1,752	)			(1,283	)			(3,346	)			(2,510	)
Merger-related expenses			—				(136	)			(901	)			(136	)			(1,029	)
Noninterest expense used for efficiency ratio		$	33,325			$	31,431			$	29,898			$	64,756			$	60,186
Net interest income, tax equivalent(1)		$	38,106			$	41,314			$	40,902			$	79,420			$	79,393
Plus: Noninterest income			8,746				(4,046	)			12,347				4,700				23,991
Less: Investment securities (losses) gains, net			(2	)			(13,170	)			395				(13,172	)			435
Net revenues used for efficiency ratio		$	46,854			$	50,438			$	52,854			$	97,292			$	102,949
Efficiency ratio (2)			71.13	%			62.32	%			56.57	%			66.56	%			58.46	%

(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.

		Three Months Ended									Six Months Ended
Adjusted Earnings		June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands, except per share data)			2023			2023			2022			2023			2022
Net income		$	7,594		$	1,397		$	12,621		$	8,991		$	26,516
After tax loss on sale of debt securities(1)			—			9,837			—			9,837			—
Adjusted earnings		$	7,594		$	11,234		$	12,621		$	18,828		$	26,516
Weighted average diluted common shares outstanding			15,689			15,691			15,688			15,688			15,703
Earnings per common share
Earnings per common share - diluted		$	0.48		$	0.09		$	0.80		$	0.57		$	1.69
Adjusted earnings per common share - diluted (2)		$	0.48		$	0.72		$	0.80		$	1.20		$	1.69

(1) The income tax rate utilized was 25.3%.
(2) Adjusted earnings divided by weighted average diluted common shares outstanding.

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