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MidWestOne Financial Group, Inc. (MOFG)

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Previous Close31.40
Open31.59
Bid31.47 x 1200
Ask31.55 x 1200
Day's Range31.29 - 31.59
52 Week Range16.59 - 33.68
Volume29,615
Avg. Volume40,896
Market Cap503.664M
Beta (5Y Monthly)1.04
PE Ratio (TTM)16.80
EPS (TTM)N/A
Earnings DateN/A
Forward Dividend & Yield0.90 (2.86%)
Ex-Dividend DateMay 28, 2021
1y Target EstN/A
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  • MidWestOne Financial Group, Inc. Reports Financial Results for the First Quarter of 2021
    GlobeNewswire

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

    First Quarter Summary(1) Net income for the first quarter was a record $21.6 million, or $1.35 per diluted common share. Total revenue, net of interest expense, increased to $50.4 million.Credit loss benefit increased to $4.7 million.Noninterest expense decreased to $27.7 million. Efficiency ratio improved to 50.8%.Average total interest earning assets grew 6.6% annualized.Average total deposits grew 7.8% annualized.Allowance for credit losses ratio declined to 1.5% given the improving economic outlook.Nonperforming assets increased 1.9% and the net charge-off ratio was 4 bps. IOWA CITY, Iowa, April 22, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the first quarter of 2021 of $21.6 million, or $1.35 per diluted common share, compared to net income of $16.7 million, or $1.04 per diluted common share, for the linked quarter. Charles Funk, Chief Executive Officer of the Company, commented, "This is the highest earnings quarter in our Company's history. We have seen our asset quality stabilize as the economy improves. Further, our credit loss estimate has declined from peak 2020 levels that stemmed from economic uncertainty driven by the COVID-19 pandemic. We also note our expenses are well-controlled, which is important given this period of soft loan demand." 1First Quarter Summary compares to the linked quarter unless noted.2Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. FINANCIAL HIGHLIGHTS Three Months Ended March 31, December 31, March 31,(Dollars in thousands, except per share amounts) 2021 2020 2020Net interest income $38,617 $39,037 $37,406 Noninterest income 11,824 10,626 10,155 Total revenue, net of interest expense 50,441 49,663 47,561 Credit loss (benefit) expense (4,734) (3,041) 21,733 Noninterest expense 27,700 31,915 30,001 Income (loss) before income tax expense (benefit) 27,475 20,789 (4,173) Income tax expense (benefit) 5,827 4,079 (2,198) Net income (loss) $21,648 $16,710 $(1,975) Diluted earnings (loss) per share $1.35 $1.04 $(0.12) Return on average assets 1.59 % 1.22 % (0.17)%Return on average equity 17.01 % 13.15 % (1.54)%Return on average tangible equity(1) 21.52 % 17.07 % (0.47)%Efficiency ratio(1) 50.77 % 59.69 % 57.67 % (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. COVID-19 UPDATE Loan Modifications As of March 31, 2021, the outstanding balance of loans modified as a result of the COVID-19 pandemic totaled $16.7 million, a decline of 62% from $44.1 million at December 31, 2020. Of those modified loans at March 31, 2021, $3.2 million were in their first deferral period while $13.5 million are in, or being processed for, an additional deferral. SBA PPP Loans On March 30, 2021, President Biden signed into law the PPP Extension Act of 2021, which provided an extension to May 31, 2021 for qualifying businesses to apply for a PPP loan and provided an additional 30 days for the SBA to process pending PPP loan applications. We expect the Company's volume of PPP loan originations will decline after March 31, 2021 compared to the level of originations during the first quarter of 2021. The following table presents PPP loan measures as of the dates indicated: Total PPP Loans Funded Outstanding PPP Loans(1)(Dollars in millions) # $ # $ UnearnedincomeMarch 31, 2021 4,304 $474.2 2,577 $248.7 $6.9 December 31, 2020 2,681 $348.5 2,410 $259.3 $5.3 (1) Outstanding loans are presented net of unearned income. Vulnerable Industries We believe loans to certain industries are uniquely vulnerable to credit deterioration stemming from the COVID-19 pandemic. The following table presents our exposure to those industries as of the dates indicated. March 31, 2021 December 31, 2020 (Dollars in millions) Balance % of TotalLoans Balance % of TotalLoans Non-essential Retail $88.0 2.6 % $95.0 2.7 %Restaurants 56.1 1.7 49.9 1.4 Hotels 114.4 3.4 117.0 3.4 CRE-Retail 191.1 5.7 203.7 5.8 Arts, Entertainment & Gaming 23.5 0.7 26.9 0.8 Total Vulnerable Industries Loan Portfolio $473.1 14.1 % $492.5 14.1 % INCOME STATEMENT HIGHLIGHTS Net Interest Income Net interest income decreased to $38.6 million in the first quarter of 2021 from $39.0 million in the fourth quarter of 2020 as higher average earning asset volumes were offset by a 3 basis point decline in the net interest margin. In addition, net PPP loan fee income added $4.4 million in the first quarter of 2021 compared to $3.1 million in the linked quarter, whereas loan purchase discount accretion was $1.1 million in the first quarter of 2021, down from $1.5 million in the linked quarter. Average interest earning assets increased $81.1 million to $5.2 billion in the first quarter of 2021, compared to the fourth quarter of 2020, as cash on hand and cash inflows from net loan pay-downs and deposit activity was used to purchase debt securities. The mix of interest earning assets shifted further to debt securities as non-PPP loan demand continued to be soft and line utilization was low. The Company's tax equivalent net interest margin was 3.10% in the first quarter of 2021 compared to 3.13% in the linked quarter, as lower earning asset yields were only partially offset by a reduction in average funding costs. Total earning asset yields decreased 9 bps from the linked quarter, reflecting the aforementioned shift in earning asset mix to debt securities that generally have lower yields than our loan portfolio. The cost of interest bearing liabilities decreased 8 bps to 0.56%, primarily as a result of interest bearing deposit costs of 0.40%, which declined 7 bps from the linked quarter. "Although our balance sheet continues to grow thanks to higher deposit balances, thus generating more net interest income, low loan demand has necessitated purchasing investment securities with these deposits. We were helped in the quarter by a slightly steeper yield curve, but this yield spread remains historically narrow," stated Mr. Funk. Noninterest Income Noninterest income for the first quarter of 2021 increased $1.2 million, or 11%, from the linked quarter. The increase was due primarily to a $0.8 million increase in loan revenue and an increase of $0.3 million in investment services and trust activities revenue. The increase in loan revenue was due primarily to a $0.9 million increase in the fair value of our mortgage servicing rights partially offset by a $0.2 million decrease in loan sale gains. Investment services and trust activities revenue reflected the earnings benefit from increased equity market valuations and fees collected in the normal course of those lines of business. The following table presents details of noninterest income for the periods indicated: Three Months EndedNoninterest IncomeMarch 31, December 31, March 31,(In thousands)2021 2020 2020Investment services and trust activities$2,836 $2,518 $2,536 Service charges and fees1,487 1,571 1,826 Card revenue1,536 1,517 1,365 Loan revenue4,730 3,900 1,123 Bank-owned life insurance542 541 520 Investment securities gains, net27 30 42 Other666 549 2,743 Total noninterest income$11,824 $10,626 $10,155 Noninterest Expense Noninterest expense for the first quarter of 2021 decreased $4.2 million, or 13.2%, from the linked quarter due primarily to decreases in other, legal and professional, and compensation and employee benefits of $1.7 million, $1.3 million, and $0.7 million, respectively. The decrease in other noninterest expense was primarily due to a $0.8 million loss on the termination of our cash flow hedge that was recorded in the fourth quarter of 2020, which did not recur in the first quarter of 2021, coupled with a reduction in tax credit partnership investment amortization of $0.6 million. The decrease in legal and professional expenses was primarily due to a $0.6 million fee incurred during the fourth quarter of 2020 related to a large contract renewal, which did not recur in the first quarter of 2021, coupled with an overall decline in legal and professional fees paid for regulatory, personnel and other services. The decrease in compensation and employee benefits reflected a $0.9 million benefit from SBA PPP loan origination costs which are deferred and amortized over the life of the loan to which they relate, coupled with a decline of $0.5 million in commission and incentive expense. Partially offsetting these decreases in compensation and employee benefits were increased salary and benefit costs of $0.7 million which stemmed from normal annual increases. Expense control was the primary driver to improvement in the Company's efficiency ratio, which decreased 8.92% to 50.77%, as compared to the linked quarter efficiency ratio of 59.69%. The following table presents details of noninterest expense for the periods indicated: Three Months EndedNoninterest ExpenseMarch 31, December 31, March 31,(In thousands)2021 2020 2020Compensation and employee benefits$16,917 $17,638 $16,617 Occupancy expense of premises, net2,318 2,476 2,341 Equipment1,793 2,040 1,880 Legal and professional783 2,052 1,535 Data processing1,252 1,460 1,354 Marketing1,006 986 1,062 Amortization of intangibles1,507 1,569 2,028 FDIC insurance512 495 448 Communications409 412 457 Foreclosed assets, net47 (35) 138 Other1,156 2,822 2,141 Total noninterest expense$27,700 $31,915 $30,001 Income Taxes The effective income tax rate was 21.2% in the first quarter of 2021 compared to 19.6% in the linked quarter. The effective income tax rate in the first quarter of 2021 reflected an increase in income taxes based on the statutory rate and state income taxes, net of federal income tax benefits primarily due to the net income earned during the quarter, offset by benefits related to tax-exempt interest and bank-owned life insurance. The effective income tax rate for the full year 2021 is expected to be in the range of 20-22%. BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTSAs of or For the Three Months Ended March 31, December 31, March 31,(Dollars in millions, except per share amounts)2021 2020 2020Ending Balance Sheet Total assets$5,737.3 $5,556.6 $4,763.9 Loans held for investment, net of unearned income3,358.2 3,482.2 3,425.8 Total securities held for investment1,896.9 1,657.4 881.9 Total deposits4,794.6 4,547.0 3,859.8 Average Balance Sheet Average total assets$5,520.3 $5,457.9 $4,669.7 Average total loans3,429.7 3,560.6 3,436.3 Average total deposits4,573.9 4,490.0 3,760.0 Funding and Liquidity Short-term borrowings$175.8 $230.8 $129.5 Long-term debt201.7 208.7 209.9 Loans to deposits ratio70.04% 76.58% 88.75%Equity Total shareholders' equity$511.3 $515.3 $500.6 Common equity ratio8.91% 9.27% 10.51%Tangible common equity(1)425.1 427.5 376.4 Tangible common equity ratio(1)7.52% 7.82% 8.11%Per Share Data Book value$32.00 $32.17 $31.11 Tangible book value(1)$26.60 $26.69 $23.39 (1) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. Loans Held for Investment Loans held for investment, net of unearned income, decreased $124.1 million, or 4%, to $3.36 billion from December 31, 2020, driven primarily by net loan pay-downs and lower line utilization. The following table presents the composition of loans held for investment, net of unearned income, as of the dates indicated: Loans Held for InvestmentMarch 31, 2021 December 31, 2020 March 31, 2020 (dollars in thousands)Balance % ofTotal Balance % ofTotal Balance % ofTotal Commercial and industrial$993,770 29.6 %$1,055,488 30.3 %$864,702 25.2 %Agricultural117,099 3.5 116,392 3.3 145,435 4.2 Commercial real estate Construction and development164,927 4.9 181,291 5.2 282,921 8.3 Farmland138,199 4.1 144,970 4.2 168,777 4.9 Multifamily261,806 7.8 256,525 7.4 217,108 6.3 Other1,128,660 33.6 1,149,575 33.0 1,111,640 32.5 Total commercial real estate1,693,592 50.4 1,732,361 49.8 1,780,446 52.0 Residential real estate One-to-four family first liens337,408 10.0 355,684 10.2 389,055 11.4 One-to-four family junior liens137,025 4.1 143,422 4.1 165,235 4.8 Total residential real estate474,433 14.1 499,106 14.3 554,290 16.2 Consumer79,267 2.4 78,876 2.3 80,889 2.4 Loans held for investment, net of unearned income$3,358,161 100.0 %$3,482,223 100.0 %$3,425,762 100.0 % Mr. Funk noted, "Loan demand remains weak in most areas of our geographic footprint. This is evidenced by credit line utilization of only 32% during the quarter compared to 46% in the first quarter of 2020. We believe loan demand will improve as the national economy opens up." Credit Loss Expense & Allowance for Credit Losses The following table shows the activity in the allowance for credit losses for the periods indicated: Three Months EndedAllowance for Credit Losses Roll ForwardMarch 31, December 31, March 31,(In thousands)2021 2020 2020Beginning balance$55,500 $58,500 $29,079 Cumulative effect of change in accounting principle - CECL— — 3,984 Charge-offs(1,003) (1,005) (1,497)Recoveries687 646 299 Net charge-offs(316) (359) (1,198)Credit loss (benefit) expense related to loans(4,534) (2,641) 19,322 Ending balance$50,650 $55,500 $51,187 As of March 31, 2021, the allowance for credit losses ("ACL") was $50.7 million, or 1.51% of loans held for investment, net of unearned income, compared with $55.5 million, or 1.59%, at December 31, 2020. After excluding net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income, decreased to 1.63%(1) as of March 31, 2021, from 1.72%(1) at December 31, 2020. The decline in the ACL during the first quarter reflected overall improvements in the economic forecast and an improved credit profile outlook when compared to the linked quarter. (1)Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. "We believe that our ACL is sufficient to weather the challenges that lie ahead," stated Mr. Funk. Deposits The following table presents the composition of our deposit portfolio as of the dates indicated: Deposit CompositionMarch 31, 2021 December 31, 2020 March 31, 2020 (In thousands)Balance % of Total Balance % of Total Balance % of Total Noninterest bearing deposits$958,526 20.0 %$910,655 20.0 %$637,127 16.5 %Interest checking deposits1,406,070 29.4 1,351,641 29.7 995,762 25.8 Money market deposits950,300 19.8 918,654 20.2 793,482 20.6 Savings deposits580,862 12.1 529,751 11.7 404,100 10.5 Total non-maturity deposits3,895,758 81.3 3,710,701 81.6 2,830,471 73.4 Time deposits of $250,000 and under558,338 11.6 581,471 12.8 688,409 17.8 Time deposits over $250,000340,467 7.1 254,877 5.6 340,964 8.8 Total time deposits898,805 18.7 836,348 18.4 1,029,373 26.6 Total deposits$4,794,563 100.0 %$4,547,049 100.0 %$3,859,844 100.0 % CREDIT RISK PROFILE As of or For the Three Months EndedHighlightsMarch 31, December 31, March 31,(dollars in thousands)2021 2020 2020Credit loss (benefit) expense related to loans$(4,534) $(2,641) $19,322 Net charge-offs$316 $359 $1,198 Net charge-off ratio(1)0.04 % 0.04 % 0.14% At period-end Pass$3,112,728 $3,202,704 $3,231,725 Special Mention / Watch130,052 157,213 117,301 Classified115,381 122,306 76,736 Total loans held for investment, net$3,358,161 $3,482,223 $3,425,762 Classified loans ratio(2)3.44 % 3.51 % 2.24% Nonaccrual loans held for investment$43,874 $41,950 $43,973 Accruing loans contractually past due 90 days or more508 739 303 Total nonperforming loans44,382 42,689 44,276 Foreclosed assets, net1,487 2,316 968 Total nonperforming assets (3)$45,869 $45,005 $45,244 Nonperforming loans ratio(4)1.32 % 1.23 % 1.29%Nonperforming assets ratio(5)0.80 % 0.81 % 0.95%Allowance for credit losses$50,650 $55,500 $51,187 Allowance for credit losses ratio(6)1.51 % 1.59 % 1.49%Adjusted allowance for credit losses ratio(7)1.63 % 1.72 % 1.49% Performing troubled debt restructured loans held for investment$2,230 $2,630 $4,359 (1) Net charge-off ratio is calculated as annualized net charge-offs divided by average loans held for investment, net of unearned income, during the period.(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.(3) Starting in the second quarter of 2020, performing troubled debt restructured loans held for investment are no longer included in nonperforming assets. Prior period credit quality metrics have been adjusted to exclude these loans.(4) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.(5) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.(6) 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.(7) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. The following table presents a roll forward of nonperforming loans for the period indicated: Nonperforming Loans (dollars in thousands)Nonaccrual 90+ Days Past Due& Still Accruing TotalBalance at December 31, 2020$41,950 $739 $42,689 Loans placed on nonaccrual or 90+ days past due & still accruing5,521 228 5,749 Repayments (including interest applied to principal)(2,514) 1 (2,513)Loans returned to accrual status or no longer past due(268) (330) (598)Charge-offs(715) (130) (845)Transfers to foreclosed assets(100) — (100)Balance at March 31, 2021$43,874 $508 $44,382 CAPITAL Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of CECL. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. This cumulative amount will then be reduced from capital over the subsequent three-year period. March 31, December 31, March 31,Regulatory Capital Ratios2021 (1) 2020 2020MidWestOne Financial Group, Inc. Consolidated Tier 1 leverage ratio8.78% 8.50% 9.39%Common equity tier 1 capital ratio10.16% 9.72% 9.25%Tier 1 capital ratio11.13% 10.70% 10.25%Total capital ratio13.75% 13.41% 11.48%MidWestOne Bank Tier 1 leverage ratio9.60% 9.35% 10.03%Common equity tier 1 capital ratio12.19% 11.79% 10.95%Tier 1 capital ratio12.19% 11.79% 10.95%Total capital ratio13.19% 12.89% 12.03%(1) Capital ratios for March 31, 2021 are preliminary CORPORATE UPDATE Share Repurchase Program During the first quarter of 2021, the Company repurchased 62,588 shares of its common stock at an average price of $27.14 per share and a total cost of $1.7 million. At March 31, 2021, $2.7 million remained available to repurchase shares under the Company’s current share repurchase program. CONFERENCE CALL DETAILS The Company will host a conference call for investors at 11:00 a.m. CT on Friday, April 23, 2021. To participate, please dial 866-233-3483 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until July 29, 2021, by calling 877-344-7529 and using the replay access code of 10153549. 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) effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act, 2021 and the American Rescue Plan; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (5) the effects of interest rates, including on our net income and the value of our securities portfolio; (6) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (7) fluctuations in the value of our investment securities; (8) governmental monetary and fiscal policies; (9) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR; (10) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (11) the ability to attract and retain key executives and employees experienced in banking and financial services; (12) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (13) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (14) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (15) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (16) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (17) the risks of mergers, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company. MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FIVE QUARTER CONSOLIDATED BALANCE SHEETS March 31, December 31, September 30, June 30, March 31,(In thousands)2021 2020 2020 2020 2020ASSETS Cash and due from banks$57,154 $65,078 $71,901 $65,863 $60,396 Interest earning deposits in banks80,924 17,409 55,421 45,018 58,319 Federal funds sold7,691 172 7,540 6,329 6,830 Total cash and cash equivalents145,769 82,659 134,862 117,210 125,545 Debt securities available for sale at fair value1,896,894 1,657,381 1,366,344 1,187,455 881,859 Loans held for sale58,333 59,956 13,096 12,048 9,483 Gross loans held for investment3,374,076 3,496,790 3,555,969 3,618,675 3,440,907 Unearned income, net(15,915) (14,567) (18,537) (21,636) (15,145)Loans held for investment, net of unearned income3,358,161 3,482,223 3,537,432 3,597,039 3,425,762 Allowance for credit losses(50,650) (55,500) (58,500) (55,644) (51,187)Total loans held for investment, net3,307,511 3,426,723 3,478,932 3,541,395 3,374,575 Premises and equipment, net85,581 86,401 87,955 88,929 89,860 Goodwill62,477 62,477 62,477 93,977 93,977 Other intangible assets, net23,735 25,242 26,811 28,443 30,190 Foreclosed assets, net1,487 2,316 724 965 968 Other assets155,525 153,493 159,507 160,541 157,452 Total assets$5,737,312 $5,556,648 $5,330,708 $5,230,963 $4,763,909 LIABILITIES Noninterest bearing deposits$958,526 $910,655 $864,504 $867,637 $637,127 Interest bearing deposits3,836,037 3,636,394 3,469,137 3,397,798 3,222,717 Total deposits4,794,563 4,547,049 4,333,641 4,265,435 3,859,844 Short-term borrowings175,785 230,789 183,893 162,224 129,489 Long-term debt201,696 208,691 245,481 189,973 209,874 Other liabilities53,948 54,869 68,612 92,550 64,138 Total liabilities5,225,992 5,041,398 4,831,627 4,710,182 4,263,345 SHAREHOLDERS' EQUITY Common stock16,581 16,581 16,581 16,581 16,581 Additional paid-in capital299,747 300,137 299,939 299,542 299,412 Retained earnings206,230 188,191 175,017 198,382 190,212 Treasury stock(15,278) (14,251) (12,272) (12,272) (12,518)Accumulated other comprehensive income4,040 24,592 19,816 18,548 6,877 Total shareholders' equity511,320 515,250 499,081 520,781 500,564 Total liabilities and shareholders' equity$5,737,312 $5,556,648 $5,330,708 $5,230,963 $4,763,909 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES 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)2021 2020 2020 2020 2020Interest income Loans, including fees$36,542 $38,239 $38,191 $40,214 $42,012 Taxable investment securities5,093 4,673 4,574 4,646 3,717 Tax-exempt investment securities2,555 2,529 2,360 1,858 1,512 Other14 29 29 40 164 Total interest income44,204 45,470 45,154 46,758 47,405 Interest expense Deposits3,608 4,265 5,296 6,409 7,949 Short-term borrowings128 142 175 263 334 Long-term debt1,851 2,026 1,874 1,374 1,716 Total interest expense5,587 6,433 7,345 8,046 9,999 Net interest income38,617 39,037 37,809 38,712 37,406 Credit loss (benefit) expense(4,734) (3,041) 4,992 4,685 21,733 Net interest income after credit loss (benefit) expense43,351 42,078 32,817 34,027 15,673 Noninterest income Investment services and trust activities2,836 2,518 2,361 2,217 2,536 Service charges and fees1,487 1,571 1,491 1,290 1,826 Card revenue1,536 1,517 1,600 1,237 1,365 Loan revenue4,730 3,900 3,252 1,910 1,123 Bank-owned life insurance542 541 530 635 520 Investment securities gains, net27 30 106 6 42 Other666 549 230 974 2,743 Total noninterest income11,824 10,626 9,570 8,269 10,155 Noninterest expense Compensation and employee benefits16,917 17,638 16,460 15,682 16,617 Occupancy expense of premises, net2,318 2,476 2,278 2,253 2,341 Equipment1,793 2,040 1,935 2,010 1,880 Legal and professional783 2,052 1,184 1,382 1,535 Data processing1,252 1,460 1,308 1,240 1,354 Marketing1,006 986 857 910 1,062 Amortization of intangibles1,507 1,569 1,631 1,748 2,028 FDIC insurance512 495 470 445 448 Communications409 412 428 449 457 Foreclosed assets, net47 (35) 13 34 138 Goodwill impairment— — 31,500 — — Other1,156 2,822 1,875 1,885 2,141 Total noninterest expense27,700 31,915 59,939 28,038 30,001 Income (loss) before income tax expense27,475 20,789 (17,552) 14,258 (4,173)Income tax expense (benefit)5,827 4,079 2,272 2,546 (2,198)Net income (loss)$21,648 $16,710 $(19,824) $11,712 $(1,975) Earnings (loss) per common share Basic$1.35 $1.04 $(1.23) $0.73 $(0.12)Diluted$1.35 $1.04 $(1.23) $0.73 $(0.12)Weighted average basic common shares outstanding15,991 16,074 16,099 16,094 16,142 Weighted average diluted common shares outstanding16,021 16,092 16,099 16,100 16,142 Dividends paid per common share$0.2250 $0.2200 $0.2200 $0.2200 $0.2200 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL STATISTICS As of or for the three months ended March 31, December 31, March 31,(Dollars in thousands, except per share amounts)2021 2020 2020Earnings: Net interest income$38,617 $39,037 $37,406 Noninterest income11,824 10,626 10,155 Total revenue, net of interest expense50,441 49,663 47,561 Credit loss (benefit) expense(4,734) (3,041) 21,733 Noninterest expense27,700 31,915 30,001 Income (loss) before income tax expense (benefit)27,475 20,789 (4,173) Income tax expense (benefit)5,827 4,079 (2,198) Net income (loss)$21,648 $16,710 $(1,975) Per Share Data: Diluted earnings (loss)$1.35 $1.04 $(0.12) Book value32.00 32.17 31.11 Tangible book value(1)26.60 26.69 23.39 Ending Balance Sheet: Total assets$5,737,312 $5,556,648 $4,763,909 Loans held for investment, net of unearned income3,358,161 3,482,223 3,425,762 Total securities held for investment1,896,894 1,657,381 881,859 Total deposits4,794,563 4,547,049 3,859,844 Short-term borrowings175,785 230,789 129,489 Long-term debt201,696 208,691 209,874 Total shareholders' equity511,320 515,250 500,564 Average Balance Sheet: Average total assets$5,520,304 $5,457,939 $4,669,724 Average total loans3,429,746 3,560,632 3,436,263 Average total deposits4,573,898 4,490,048 3,760,016 Financial Ratios: Return on average assets1.59 % 1.22 % (0.17)%Return on average equity17.01 % 13.15 % (1.54)%Return on average tangible equity(1)21.52 % 17.07 % (0.47)%Efficiency ratio(1)50.77 % 59.69 % 57.67 %Net interest margin, tax equivalent(1)3.10 % 3.13 % 3.60 %Loans to deposits ratio70.04 % 76.58 % 88.75 %Common equity ratio8.91 % 9.27 % 10.51 %Tangible common equity ratio(1)7.52 % 7.82 % 8.11 %Credit Risk Profile: Total nonperforming loans$44,382 $42,689 $44,276 Nonperforming loans ratio1.32 % 1.23 % 1.29 %Total nonperforming assets$45,869 $45,005 $45,244 Nonperforming assets ratio0.80 % 0.81 % 0.95 %Performing troubled debt restructured loans held for investment$2,230 $2,630 $4,359 Net charge-offs$316 $359 $1,198 Net charge-off ratio0.04 % 0.04 % 0.14 %Allowance for credit losses$50,650 $55,500 $51,187 Allowance for credit losses ratio1.51 % 1.59 % 1.49 %Adjusted allowance for credit losses ratio(1)1.63 % 1.72 % 1.49 %PPP Loans: Average PPP loans$236,231 $313,252 — Fee Income4,377 3,059 — (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS Three Months Ended March 31, 2021 December 31, 2020 March 31, 2020(Dollars in thousands)AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/CostASSETS Loans, including fees (1)(2)(3)$3,429,746 $37,073 4.38% $3,560,632 $38,795 4.33% $3,436,263 $42,509 4.98%Taxable investment securities1,266,714 5,093 1.63% 1,026,359 4,673 1.81% 567,001 3,717 2.64%Tax-exempt investment securities (2)(4)465,793 3,203 2.79% 450,659 3,180 2.81% 224,171 1,907 3.42%Total securities held for investment(2)1,732,507 8,296 1.94% 1,477,018 7,853 2.12% 791,172 5,624 2.86%Other36,536 14 0.16% 80,019 29 0.14% 55,833 164 1.18%Total interest earning assets(2)$5,198,789 45,383 3.54% $5,117,669 46,677 3.63% $4,283,268 48,297 4.54%Other assets321,515 340,270 386,456 Total assets$5,520,304 $5,457,939 $4,669,724 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest checking deposits$1,349,671 $991 0.30% $1,276,320 $958 0.30% $965,077 $1,316 0.55%Money market deposits913,087 478 0.21% 931,900 544 0.23% 766,766 1,645 0.86%Savings deposits553,824 286 0.21% 508,763 279 0.22% 393,833 391 0.40%Time deposits837,460 1,853 0.90% 862,408 2,484 1.15% 997,136 4,597 1.85%Total interest bearing deposits3,654,042 3,608 0.40% 3,579,391 4,265 0.47% 3,122,812 7,949 1.02%Short-term borrowings175,193 128 0.30% 182,080 142 0.31% 121,942 334 1.10%Long-term debt205,971 1,851 3.64% 223,407 2,026 3.61% 225,587 1,716 3.06%Total borrowed funds381,164 1,979 2.11% 405,487 2,168 2.13% 347,529 2,050 2.37%Total interest bearing liabilities$4,035,206 $5,587 0.56% $3,984,878 $6,433 0.64% $3,470,341 $9,999 1.16%Noninterest bearing deposits919,856 910,657 637,204 Other liabilities49,003 56,898 47,010 Shareholders’ equity516,239 505,506 515,169 Total liabilities and shareholders’ equity$5,520,304 $5,457,939 $4,669,724 Net interest income(2) $39,796 $40,244 $38,298 Net interest spread(2) 2.98% 2.99% 3.38%Net interest margin(2) 3.10% 3.13% 3.60% Total deposits(5)$4,573,898 $3,608 0.32% $4,490,048 $4,265 0.38% $3,760,016 $7,949 0.85%Cost of funds(6) 0.46% 0.52% 0.98% (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 $3.5 million, $2.5 million, and $(122) thousand for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Loan purchase discount accretion was $1.1 million, $1.5 million, and $3.0 million for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Tax equivalent adjustments were $531 thousand, $556 thousand, and $497 thousand for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. The federal statutory tax rate utilized was 21%.(4) Interest income includes tax equivalent adjustments of $648 thousand, $651 thousand, and $395 thousand for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively. The federal statutory tax rate utilized was 21%.(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds. Non-GAAP Measures This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, adjusted allowance for credit losses ratio, core loans, and core commercial loans. Management believes these measures provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure. Tangible Common Equity/Tangible Book Value per Share/Tangible Common Equity Ratio March 31, December 31, September 30, June 30, March 31,(Dollars in thousands, except per share data) 2021 2020 2020 2020 2020Total shareholders’ equity $511,320 $515,250 $499,081 $520,781 $500,564 Intangible assets, net (86,212) (87,719) (89,288) (122,420) (124,167) Tangible common equity $425,108 $427,531 $409,793 $398,361 $376,397 Total assets $5,737,312 $5,556,648 $5,330,708 $5,230,963 $4,763,909 Intangible assets, net (86,212) (87,719) (89,288) (122,420) (124,167) Tangible assets $5,651,100 $5,468,929 $5,241,420 $5,108,543 $4,639,742 Book value per share $32.00 $32.17 $31.00 $32.35 $31.11 Tangible book value per share(1) $26.60 $26.69 $25.45 $24.74 $23.39 Shares outstanding 15,981,088 16,016,780 16,099,324 16,099,324 16,089,782 Common equity ratio 8.91 % 9.27 % 9.36 % 9.96 % 10.51 %Tangible common equity ratio(2) 7.52 % 7.82 % 7.82 % 7.80 % 8.11 % (1) Tangible common equity divided by shares outstanding.(2) Tangible common equity divided by tangible assets. Three Months EndedReturn on Average Tangible Equity March 31, December 31, March 31,(Dollars in thousands) 2021 2020 2020Net income (loss) $21,648 $16,710 $(1,975) Intangible amortization, net of tax(1) 1,130 1,177 1,521 Tangible net income (loss) $22,778 $17,887 $(454) Average shareholders’ equity $516,239 $505,506 $515,169 Average intangible assets, net (86,961) (88,543) (122,948) Average tangible equity $429,278 $416,963 $392,221 Return on average equity 17.01 % 13.15 % (1.54)%Return on average tangible equity(2) 21.52 % 17.07 % (0.47)% (1) The combined income tax rate utilized was 25%.(2) Annualized tangible net income divided by average tangible equity. Net Interest Margin, Tax Equivalent/ Three Months EndedCore Net Interest Margin March 31, December 31, March 31,(Dollars in thousands) 2021 2020 2020Net interest income $38,617 $39,037 $37,406 Tax equivalent adjustments: Loans(1) 531 556 497 Securities(1) 648 651 395 Net interest income, tax equivalent $39,796 $40,244 $38,298 Loan purchase discount accretion (1,098) (1,542) (3,023) Core net interest income $38,698 $38,702 $35,275 Net interest margin 3.01 % 3.03 % 3.51 %Net interest margin, tax equivalent(2) 3.10 % 3.13 % 3.60 %Core net interest margin(3) 3.02 % 3.01 % 3.31 %Average interest earning assets $5,198,789 $5,117,669 $4,283,268 (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 EndedLoan Yield, Tax Equivalent / Core Yield on Loans March 31, December 31, March 31,(Dollars in thousands) 2021 2020 2020Loan interest income, including fees $36,542 $38,239 $42,012 Tax equivalent adjustment(1) 531 556 497 Tax equivalent loan interest income $37,073 $38,795 $42,509 Loan purchase discount accretion (1,098) (1,542) (3,023) Core loan interest income $35,975 $37,253 $39,486 Yield on loans 4.32 % 4.27 % 4.92 %Yield on loans, tax equivalent(2) 4.38 % 4.33 % 4.98 %Core yield on loans(3) 4.25 % 4.16 % 4.62 %Average loans $3,429,746 $3,560,632 $3,436,263 (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 EndedEfficiency Ratio March 31, December 31, March 31,(Dollars in thousands) 2021 2020 2020Total noninterest expense $27,700 $31,915 $30,001 Amortization of intangibles (1,507) (1,569) (2,028) Merger-related expenses — — (54) Noninterest expense used for efficiency ratio $26,193 $30,346 $27,919 Net interest income, tax equivalent(1) $39,796 $40,244 $38,298 Noninterest income 11,824 10,626 10,155 Investment securities gains, net (27) (30) (42) Net revenues used for efficiency ratio $51,593 $50,840 $48,411 Efficiency ratio (2) 50.77 % 59.69 % 57.67 % (1) The federal statutory tax rate utilized was 21%.(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains. Adjusted Allowance for Credit Losses Ratio March 31, December 31, September 30, June 30, March 31,(Dollars in thousands) 2021 2020 2020 2020 2020Loans held for investment, net of unearned income $3,358,161 $3,482,223 $3,537,432 $3,597,039 $3,425,762 PPP loans (248,682) (259,260) (331,703) (327,648) — Core loans $3,109,479 $3,222,963 $3,205,729 $3,269,391 $3,425,762 Allowance for credit losses $50,650 $55,500 $58,500 $55,644 $51,187 Allowance for credit losses ratio 1.51 % 1.59 % 1.65 % 1.55 % 1.49%Adjusted allowance for credit losses ratio(1) 1.63 % 1.72 % 1.82 % 1.70 % 1.49% (1) Allowance for credit losses divided by core loans Core Loans/Core Commercial Loans March 31, December 31, September 30, June 30, March 31,(Dollars in thousands) 2021 2020 2020 2020 2020Commercial loans: Commercial and industrial $993,770 $1,055,488 $1,103,102 $1,084,527 $864,702 Agricultural 117,099 116,392 129,453 140,837 145,435 Commercial real estate 1,693,592 1,732,361 1,707,035 1,764,739 1,780,446 Total commercial loans $2,804,461 $2,904,241 $2,939,590 $2,990,103 $2,790,583 Consumer loans: Residential real estate $474,433 $499,106 $521,570 $532,914 $554,290 Other consumer 79,267 78,876 76,272 74,022 80,889 Total consumer loans $553,700 $577,982 $597,842 $606,936 $635,179 Loans held for investment, net of unearned income $3,358,161 $3,482,223 $3,537,432 $3,597,039 $3,425,762 PPP loans $248,682 $259,260 $331,703 $327,648 $— Core loans(1) $3,109,479 $3,222,963 $3,205,729 $3,269,391 $3,425,762 Core commercial loans(2) $2,555,779 $2,644,981 $2,607,887 $2,662,455 $2,790,583 (1) Core loans are calculated as loans held for investment, net of unearned income less PPP loans.(2) Core commercial loans are calculated as total commercial loans less PPP loans. Category: Earnings This news release may be downloaded from https://www.midwestonefinancial.com/corporate-profile/default.aspx Source: MidWestOne Financial Group, Inc. Contact: Charles N. Funk Barry S. Ray Chief Executive Officer Senior Executive Vice President and Chief Financial Officer 319.356.5800 319.356.5800

  • ACCESSWIRE

    MidWestOne Financial Group, Inc. to Host Earnings Call

    NEW YORK, NY / ACCESSWIRE / January 29, 2021 / MidWestOne Financial Group, Inc. (NASDAQ:MOFG) will be discussing their earnings results in their 2020 Fourth Quarter Earnings call to be held on January 29, 2021 at 12:00 PM Eastern Time.

  • MidWestOne Financial Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2020
    GlobeNewswire

    MidWestOne Financial Group, Inc. Reports Financial Results for the Fourth Quarter and Full Year of 2020

    Fourth Quarter Summary(1) Net income for the fourth quarter was $16.7 million, or $1.04 per diluted common share.-- Revenue, net of interest expense, increased $2.3 million, or 5%, to $49.7 million.-- Credit loss expense decreased $8.0 million, or 161%, from improved economic forecasts.-- Noninterest expense decreased $28.0 million, or 47%, to $31.9 million due to the $31.5 million goodwill impairment charge recorded in the third quarter of 2020 (the “linked quarter”).Net charge-off ratio was 4 basis points ("bps"), a decline of 16 bps from the linked quarter.COVID-19 loan modifications declined to $44.1 million, which represented 1.3% of loans held for investment, net of unearned income.Average deposits increased $172.9 million, or 17% annualized, while cost of total deposits declined 11 bps to 38 bps. Full Year 2020 Summary(1) Net income for the full year was $6.6 million, or $0.41 per diluted common share.Core earnings(2) were $38.1 million, a decline of $5.5 million, or 13%, due primarily to pandemic-related credit loss expenses recognized in 2020.Net charge-off ratio improved 8 bps to 15 bps.Book value and tangible book value per share(2) grew 2% and 12%, respectively. IOWA CITY, Iowa, Jan. 28, 2021 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the fourth quarter of 2020 of $16.7 million, or $1.04 per diluted common share, compared to net loss of $19.8 million, or a loss of $1.23 per diluted common share, for the linked quarter. Net income for the full year of 2020 was $6.6 million, or $0.41 per diluted common share, compared to net income for the full year of 2019 of $43.6 million, or $2.93 per diluted common share. Charles Funk, Chief Executive Officer of the Company, commented, "This was an excellent quarter for MidWestOne. Earnings were strong at $1.04 per diluted common share and a 1.22% return on average assets, 13.15% return on average equity, and 17.07% return on average tangible equity(2). Among the most positive elements of the quarter was a nice increase in noninterest income driven by our residential mortgage and wealth management operations. We also benefited from credit loss expense recapture, which was driven by stability in loan credit quality and improved economic forecasts. Finally, in a tough operating environment, we achieved core commercial loan(2) growth in the fourth quarter of 6% annualized." 1Fourth Quarter Summary compares to the linked quarter unless noted. Full Year 2020 Summary compares to the full year 2019 unless noted. 2Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. FINANCIAL HIGHLIGHTS Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31,(Dollars in thousands, except per share amounts) 2020 2020 2019 2020 2019Net interest income $39,037 $37,809 $39,584 $152,964 $143,650 Noninterest income 10,626 9,570 9,036 38,620 31,246 Total revenue, net of interest expense 49,663 47,379 48,620 191,584 174,896 Credit loss (benefit) expense (3,041) 4,992 604 28,369 7,158 Noninterest expense 31,915 59,939 36,436 149,893 117,535 Income (loss) before income tax expense (benefit) 20,789 (17,552) 11,580 13,322 50,203 Income tax expense (benefit) 4,079 2,272 (1,791) 6,699 6,573 Net income (loss) $16,710 $(19,824) $13,371 $6,623 $43,630 Diluted earnings (loss) per share $1.04 $(1.23) $0.83 $0.41 $2.93 Return on average assets 1.22 % (1.48)% 1.14 % 0.13 % 1.04%Return on average equity 13.15 % (14.88)% 10.55 % 1.28 % 9.65%Return on average tangible equity(1) 17.07 % 12.56 % 15.60 % 10.80 % 13.98%Efficiency ratio(1) 59.69 % 55.37 % 63.05 % 56.92 % 57.56% (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. COVID-19 UPDATE Loan Modifications As of December 31, 2020, loans modified as a result of the COVID-19 pandemic totaled $44.1 million, a decline of 62% from $116.0 million at September 30, 2020. Of those modified loans at December 31, 2020, $24.6 million are in their first deferral period while $19.5 million are in or being processed for an additional deferral. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") Loans On December 27, 2020, a new COVID-19 relief bill was signed into law by President Trump, which includes as part of the bill up to $284.5 billion of a second wave of PPP funding. On January 8, 2021, the SBA issued guidance that amended the threshold for loans that qualify for the simplified forgiveness application from $50,000 or less to $150,000 or less. During the first wave of the PPP, the Company funded 2,681 loans totaling $348.5 million. As of December 31, 2020, 2,410 loans totaling $259.3 million, including $5.3 million of unamortized net fees, were outstanding. Of those remaining loans, 2,189 loans totaling $72.9 million, including unamortized net fees of $1.7 million, qualified for the simplified forgiveness application described above. Mr. Funk stated, "The Company remains committed to supporting our customers and communities, and we intend to participate in this next wave of the PPP. We expect the volume of second wave funding will be lower than the first round." INCOME STATEMENT HIGHLIGHTS Net Interest Income Net interest income increased to $39.0 million in the fourth quarter of 2020 from $37.8 million in the third quarter of 2020 due mainly to accelerated PPP loan fee accretion stemming from loan forgiveness, higher volume of average interest earning assets, and a stable net interest margin. Net PPP loan fee accretion was $3.1 million in the fourth quarter of 2020 compared to $1.3 million in the linked quarter. Loan purchase discount accretion was $1.5 million in the fourth quarter of 2020, down from $1.9 million in the linked quarter. Average interest earning assets increased $182.5 million to $5.1 billion in the fourth quarter of 2020, compared to the third quarter of 2020, as net loan pay-downs and deposit inflows were re-invested into debt securities. The Company's tax equivalent net interest margin was 3.13% in the fourth quarter of 2020 compared to 3.14% in the linked quarter as lower average funding costs were more than offset by lower average earning asset yields. The cost of interest bearing liabilities decreased 12 bps to 0.64%, primarily as a result of interest bearing deposit costs of 0.47%, which declined 15 bps from the linked quarter. Total earning asset yields decreased 10 bps from the linked quarter, reflecting the origination and re-pricing of loans at, generally, lower coupon rates compared to existing portfolio coupon rates as well as a shift in earning asset mix to a greater proportion of investment securities, which generally have lower yields than loans. "The transitory benefit to our net interest margin from PPP loan forgiveness will continue over the next few quarters. The margin was negatively impacted in the fourth quarter by a reversal of $0.4 million of interest income from a loan relationship placed on nonaccrual. The low interest rate environment continues to challenge our margin management," stated Mr. Funk. Noninterest Income Noninterest income for the fourth quarter of 2020 increased $1.1 million, or 11%, from the linked quarter. The increase was due primarily to a $0.6 million increase in loan revenue, an increase in 'Other' noninterest income of $0.3 million, and an increase of $0.2 million in investment services and trust activities revenue. The increase in loan revenue reflected robust production from the Company's residential mortgage business as low interest rates continued to drive new purchase and refinance volumes. Mr. Funk noted, "Both our home mortgage center and investment services group had record years in 2020. Our trust department also contributed despite being challenged by additional delays in the Iowa court system due to the pandemic. We are very positive about the future direction of these three areas of our Company. During the quarter, we added two wealth management professionals to our trust department serving the Twin Cities metro. We believe this will enhance wealth management revenue in 2021 and beyond." The following table presents details of noninterest income for the periods indicated: Three Months EndedNoninterest IncomeDecember 31, September 30, December 31,(In thousands)2020 2020 2019Investment services and trust activities$2,518 $2,361 $2,421 Service charges and fees1,571 1,491 2,072 Card revenue1,517 1,600 1,142 Loan revenue3,900 3,252 1,757 Bank-owned life insurance541 530 501 Investment securities gains, net30 106 18 Other549 230 1,125 Total noninterest income$10,626 $9,570 $9,036 Noninterest Expense Noninterest expense for the fourth quarter of 2020 decreased $28.0 million, or 46.8%, from the linked quarter due primarily to a $31.5 million goodwill impairment charge that was recorded in the linked quarter. Excluding the goodwill impairment charge, noninterest expense increased $3.5 million, due primarily to increases in compensation and employee benefits of $1.2 million, $0.9 million in legal and professional expenses and $0.9 million in 'Other' noninterest expense. The increase in compensation and employee benefits was due mainly to an increase of $1.0 million related to incentive compensation expense and commissions. The increase in legal and professional expenses was primarily driven by $0.6 million of consulting fees incurred as part of a large contract renewal where the consultant earned a fee based on life-of-contract savings. The increase in 'Other' noninterest expense was primarily attributable to a $0.8 million loss from the termination of our cash flow hedge in the fourth quarter of 2020. The increased noninterest expenses noted above were the primary drivers in the increase in the efficiency ratio, which increased 4.32% to 59.69%, as compared to the linked quarter efficiency ratio of 55.37%. The following table presents details of noninterest expense for the periods indicated: Three Months EndedNoninterest ExpenseDecember 31, September 30, December 31,(In thousands)2020 2020 2019Compensation and employee benefits$17,638 $16,460 $19,246 Occupancy expense of premises, net2,476 2,278 2,347 Equipment2,040 1,935 2,251 Legal and professional2,052 1,184 1,797 Data processing1,460 1,308 1,492 Marketing986 857 1,147 Amortization of intangibles1,569 1,631 1,941 FDIC insurance495 470 (72)Communications412 428 493 Foreclosed assets, net(35) 13 173 Other2,822 1,875 5,621 Total core noninterest expense$31,915 $28,439 $36,436 Goodwill impairment$— $31,500 $— Total noninterest expense$31,915 $59,939 $36,436 The Company incurred no merger-related costs in either the fourth quarter of 2020 or in the linked quarter, whereas a total amount of $3.3 million of merger-related costs were incurred in the fourth quarter of 2019. Income Taxes The effective income tax rate was 19.6% in the fourth quarter of 2020 compared to (12.9)% in the linked quarter. Excluding non-deductible goodwill impairment, the effective income tax rate in the linked quarter was 16.3%. The effective income tax rate in the fourth quarter of 2020 reflected an increase in income taxes based on the statutory rate and state income taxes, net of federal income tax benefits primarily due to the net income earned during the quarter, offset by benefits related to tax-exempt interest and renewable energy tax credits.The effective tax rate for the year ended December 31, 2020 was 50.3%. Excluding the impact of the non-deductible goodwill impairment, the effective income tax rate was 14.9%. The effective income tax rate for the full year 2021 is expected to be in the range of 19-21%. BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTSAs of or For the Three Months EndedDecember 31, September 30, December 31,(Dollars in millions, except per share amounts)2020 2020 2019Ending Balance Sheet Total assets$5,556.6 $5,330.7 $4,653.6 Loans held for investment, net of unearned income3,482.2 3,537.4 3,451.3 Total securities held for investment1,657.4 1,366.3 786.0 Total deposits4,547.0 4,333.6 3,728.7 Average Balance Sheet Average total assets$5,457.9 $5,311.4 $4,634.6 Average total loans3,560.6 3,576.6 3,493.5 Average total deposits4,490.0 4,317.2 3,723.9 Funding and Liquidity Short-term borrowings$230.8 $183.9 $139.3 Long-term debt208.7 245.5 231.7 Loans to deposits ratio76.58 % 81.63% 92.56%Equity Total shareholders' equity$515.3 $499.1 $509.0 Equity to assets ratio9.27 % 9.36% 10.94%Tangible common equity(1)427.5 409.8 384.8 Tangible common equity ratio(1)7.82 % 7.82% 8.50%Per Share Data Book value$32.17 $31.00 $31.49 Tangible book value(1)$26.69 $25.45 $23.81 (1) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. Loans Held for Investment Loans held for investment, net of unearned income, decreased $55.2 million, or 2%, to $3.48 billion from September 30, 2020, driven primarily by PPP loan forgiveness and pay downs totaling $79.0 million and lower line utilization. The following table presents the composition of loans held for investment, net of unearned income, as of the dates indicated: Loans Held for InvestmentDecember 31, 2020 September 30, 2020 December 31, 2019 (dollars in thousands) Balance % ofTotal Balance % ofTotal Balance % ofTotal Commercial and industrial$1,055,488 30.3 %$1,103,102 31.2 %$835,236 24.2 %Agricultural116,392 3.3 129,453 3.7 140,446 4.1 Commercial real estate Construction and development181,291 5.2 191,423 5.4 298,077 8.6 Farmland144,970 4.2 152,362 4.2 181,885 5.3 Multifamily256,525 7.4 235,241 6.7 227,407 6.6 Other1,149,575 33.0 1,128,009 31.9 1,107,490 32.1 Total commercial real estate1,732,361 49.8 1,707,035 48.2 1,814,859 52.6 Residential real estate One-to-four family first liens355,684 10.2 371,390 10.5 407,418 11.8 One-to-four family junior liens143,422 4.1 150,180 4.2 170,381 4.9 Total residential real estate499,106 14.3 521,570 14.7 577,799 16.7 Consumer78,876 2.3 76,272 2.2 82,926 2.4 Loans held for investment, net of unearned income$3,482,223 100.0 %$3,537,432 100.0 %$3,451,266 100.0 % Credit Loss Expense & Allowance for Credit Losses The following table shows the activity in the allowance for credit losses for the periods indicated: Three Months Ended Year EndedAllowance for Credit Losses Roll ForwardDecember 31, September 30, December 31, December 31, December 31,(In thousands)2020 2020 2019 2020 2019Beginning balance$58,500 $55,644 $31,532 $29,079 $29,307 Cumulative effect of change in accounting principle - CECL— — — 3,984 — Charge-offs(1,005) (2,188) (3,212) (6,793) (8,390)Recoveries646 347 155 1,528 1,004 Net charge-offs(359) (1,841) (3,057) (5,265) (7,386)Credit loss (benefit) expense related to loans(2,641) 4,697 604 27,702 7,158 Ending balance$55,500 $58,500 $29,079 $55,500 $29,079 Effective January 1, 2020, the Company adopted the Financial Instruments - Credit Losses (CECL) accounting guidance. The adoption of this guidance established a single allowance framework for all financial assets carried at amortized cost and certain off-balance sheet credit exposures. The framework requires that management's estimate reflects credit losses over the full remaining expected life of each credit and considers expected future changes in macroeconomic conditions. The adoption resulted in the recognition on January 1, 2020 of cumulative effect adjustments of $4.0 million related to the allowance for credit losses (ACL) and $3.4 million related to the liability for off-balance sheet credit exposures. As of December 31, 2020, the ACL was $55.5 million, or 1.59% of loans held for investment, net of unearned income, compared with $58.5 million, or 1.65%, at September 30, 2020. After excluding $259.3 million of net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income decreased to 1.72%(1) as of December 31, 2020, from 1.82%(1) at September 30, 2020. The decline in the ACL during the fourth quarter reflected overall improvements in the economic forecast when compared to the linked quarter and the overall stability in the credit quality of our loan portfolio. Mr. Funk noted, "At 1.59%, or 1.72%(1) excluding the impact of PPP, we believe our allowance for credit losses ratios remain strong." (1)Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. Deposits The following table presents the composition of our deposit portfolio as of the dates indicated: Deposit CompositionDecember 31, 2020 September 30, 2020 December 31, 2019 (In thousands)Balance % of Total Balance % of Total Balance % of Total Noninterest bearing deposits$910,655 20.0 %$864,504 19.9 %$662,209 17.8 %Interest checking deposits1,351,641 29.7 1,230,146 28.5 962,830 25.7 Money market deposits918,654 20.2 871,336 20.1 763,028 20.5 Savings deposits529,751 11.7 486,876 11.2 387,142 10.4 Total non-maturity deposits3,710,701 81.6 3,452,862 79.7 2,775,209 74.4 Time deposits of $250,000 and under581,471 12.8 617,229 14.2 682,232 18.3 Time deposits over $250,000254,877 5.6 263,550 6.1 271,214 7.3 Total time deposits836,348 18.4 880,779 20.3 953,446 25.6 Total deposits$4,547,049 100.0 %$4,333,641 100.0 %$3,728,655 100.0 % CREDIT RISK PROFILE As of or For the Three Months EndedHighlightsDecember 31, September 30, December 31,(dollars in thousands)2020 2020 2019Credit loss (benefit) expense related to loans$(2,641) $4,697 $604 Net charge-offs$359 $1,841 $3,057 Net charge-off ratio(1)0.04 % 0.20% 0.35% At period-end Pass$3,202,704 $3,230,611 $3,246,524 Special Mention / Watch157,213 176,702 121,709 Classified122,306 130,119 83,033 Total loans held for investment, net$3,482,223 $3,537,432 $3,451,266 Classified loans ratio(2)3.51 % 3.68% 2.41% Nonaccrual loans held for investment$41,950 $39,071 $41,483 Accruing loans contractually past due 90 days or more739 2,593 136 Foreclosed assets, net2,316 724 3,706 Total nonperforming assets (3)$45,005 $42,388 $45,325 Nonperforming assets ratio(4)1.29 % 1.20% 1.31%Allowance for credit losses55,500 58,500 29,079 Allowance for credit losses ratio(5)1.59 % 1.65% 0.84%Adjusted allowance for credit losses ratio(6)1.72 % 1.82% 0.84% Performing troubled debt restructured loans held for investment2,630 2,355 4,372 (1) Net charge-off ratio is calculated as annualized net charge-offs divided by average loans held for investment, net of unearned income during the period.(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income at the end of the period.(3) Starting in the second quarter of 2020, performing troubled debt restructured loans held for investment are no longer included in nonperforming assets. Prior period credit quality metrics have been adjusted to exclude these loans.(4) Nonperforming assets ratio is calculated as total nonperforming assets divided by the sum of loans held for investment, net of unearned income and foreclosed assets, net at the end of the period.(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.(6) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. "We were pleased with the relative stability in the credit risk profile of the loan portfolio and have continued to proactively work problem credits to resolution. However, we did place one large $9.5 million hotel loan on nonaccrual at year-end. Conditions in the agricultural economy have brightened considerably with the recent rise in corn and soybean prices combined with government payments combining to make 2020 the best year in many years for our agricultural customers," stated Mr. Funk. CAPITAL Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) recently issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of CECL. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. This cumulative amount will then be reduced from capital over the subsequent three-year period. December 31, September 30, December 31,Regulatory Capital Ratios2020 (1) 2020 2019MidWestOne Financial Group, Inc. Consolidated Tier 1 leverage ratio8.50 % 8.52% 9.48%Common equity tier 1 capital ratio9.72 % 9.72% 9.46%Tier 1 capital ratio10.70 % 10.73% 10.47%Total capital ratio13.41 % 13.56% 11.34%MidWestOne Bank Tier 1 leverage ratio9.35 % 9.26% 10.06%Common equity tier 1 capital ratio11.79 % 11.75% 11.12%Tier 1 capital ratio11.79 % 11.75% 11.12%Total capital ratio12.89 % 12.95% 11.83%(1) Capital ratios for December 31, 2020 are preliminary CORPORATE UPDATE Share Repurchase Program In the fourth quarter of 2020, the Company's board of directors authorized resuming repurchases under the Company's share repurchase program. The Company repurchased 84,088 shares of its common stock at an average price of $24.02 per share and a total cost of $2.0 million in the fourth quarter of 2020. At December 31, 2020, $4.4 million remained available to repurchase shares under the Company’s current share repurchase program. Cash Dividend Announcement On January 20, 2021, the Company’s board of directors declared a quarterly cash dividend of $0.2250 per common share. The dividend is payable March 15, 2021, to shareholders of record at the close of business on March 1, 2021. Mr. Funk noted, "The board's confidence in our future operations was ratified with an increase in our quarterly dividend. Importantly, we were able to take advantage of market conditions to buy back our common stock during the quarter at levels we believe were very attractive." CONFERENCE CALL DETAILS The Company will host a conference call for investors at 11:00 a.m. CT on Friday, January 29, 2021. To participate, please dial 866-233-3483 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until April 29, 2021, by calling 877-344-7529 and using the replay access code of 10150413. 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. EARNINGS CALL PRESENTATION The Company has prepared presentation materials that management intends to use during its fourth quarter 2020 conference call on January 29, 2021. These materials have been furnished to the U.S. Securities and Exchange Commission in a Form 8-K concurrently with this press release, and are also available on the Company's website at www.midwestonefinancial.com. 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) effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act and the Consolidated Appropriations Act, 2021; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (5) the effects of interest rates, including on our net income and the value of our securities portfolio; (6) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (7) fluctuations in the value of our investment securities; (8) governmental monetary and fiscal policies; (9) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR; (10) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (11) the ability to attract and retain key executives and employees experienced in banking and financial services; (12) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (13) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (14) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (15) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (16) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (17) the risks of mergers, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company. MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, September 30, December 31,(In thousands)2020 2020 2019ASSETS Cash and due from banks$65,078 $71,901 $67,174 Interest earning deposits in banks17,409 55,421 6,112 Federal funds sold172 7,540 198 Total cash and cash equivalents82,659 134,862 73,484 Debt securities available for sale at fair value1,657,381 1,366,344 785,977 Loans held for sale59,956 13,096 5,400 Gross loans held for investment3,496,790 3,555,969 3,469,236 Unearned income, net(14,567) (18,537) (17,970)Loans held for investment, net of unearned income3,482,223 3,537,432 3,451,266 Allowance for credit losses(55,500) (58,500) (29,079)Total loans held for investment, net3,426,723 3,478,932 3,422,187 Premises and equipment, net86,401 87,955 90,723 Goodwill62,477 62,477 91,918 Other intangible assets, net25,242 26,811 32,218 Foreclosed assets, net2,316 724 3,706 Other assets153,493 159,507 147,960 Total assets$5,556,648 $5,330,708 $4,653,573 LIABILITIES Noninterest bearing deposits$910,655 $864,504 $662,209 Interest bearing deposits3,636,394 3,469,137 3,066,446 Total deposits4,547,049 4,333,641 3,728,655 Short-term borrowings230,789 183,893 139,349 Long-term debt208,691 245,481 231,660 Other liabilities54,869 68,612 44,927 Total liabilities5,041,398 4,831,627 4,144,591 SHAREHOLDERS' EQUITY Common stock16,581 16,581 16,581 Additional paid-in capital300,137 299,939 297,390 Retained earnings188,191 175,017 201,105 Treasury stock(14,251) (12,272) (10,466)Accumulated other comprehensive income24,592 19,816 4,372 Total shareholders' equity515,250 499,081 508,982 Total liabilities and shareholders' equity$5,556,648 $5,330,708 $4,653,573 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Year Ended December 31, September 30, December 31, December 31,(In thousands, except per share data)2020 2020 2019 2020 2019Interest income Loans, including fees$38,239 $38,191 $44,906 $158,656 $163,163 Taxable investment securities4,673 4,574 3,540 17,610 13,132 Tax-exempt investment securities2,529 2,360 1,465 8,259 5,696 Other29 29 115 262 450 Total interest income45,470 45,154 50,026 184,787 182,441 Interest expense Deposits4,265 5,296 8,251 23,919 29,927 Short-term borrowings142 175 368 914 1,847 Long-term debt2,026 1,874 1,823 6,990 7,017 Total interest expense6,433 7,345 10,442 31,823 38,791 Net interest income39,037 37,809 39,584 152,964 143,650 Credit loss (benefit) expense(3,041) 4,992 604 28,369 7,158 Net interest income after credit loss (benefit) expense42,078 32,817 38,980 124,595 136,492 Noninterest income Investment services and trust activities2,518 2,361 2,421 9,632 8,040 Service charges and fees1,571 1,491 2,072 6,178 7,452 Card revenue1,517 1,600 1,142 5,719 5,594 Loan revenue3,900 3,252 1,757 10,185 3,789 Bank-owned life insurance541 530 501 2,226 1,877 Insurance commissions— — — — 734 Investment securities gains, net30 106 18 184 90 Other549 230 1,125 4,496 3,670 Total noninterest income10,626 9,570 9,036 38,620 31,246 Noninterest expense Compensation and employee benefits17,638 16,460 19,246 66,397 65,660 Occupancy expense of premises, net2,476 2,278 2,347 9,348 8,647 Equipment2,040 1,935 2,251 7,865 7,717 Legal and professional2,052 1,184 1,797 6,153 8,049 Data processing1,460 1,308 1,492 5,362 4,579 Marketing986 857 1,147 3,815 3,789 Amortization of intangibles1,569 1,631 1,941 6,976 5,906 FDIC insurance495 470 (72) 1,858 690 Communications412 428 493 1,746 1,701 Foreclosed assets, net(35) 13 173 150 580 Goodwill impairment— 31,500 — 31,500 — Other2,822 1,875 5,621 8,723 10,217 Total noninterest expense31,915 59,939 36,436 149,893 117,535 Income (loss) before income tax expense20,789 (17,552) 11,580 13,322 50,203 Income tax expense (benefit)4,079 2,272 (1,791) 6,699 6,573 Net income (loss)$16,710 $(19,824) $13,371 $6,623 $43,630 Earnings (loss) per common share Basic$1.04 $(1.23) $0.83 $0.41 $2.93 Diluted$1.04 $(1.23) $0.83 $0.41 $2.93 Weighted average basic common shares outstanding16,074 16,099 16,162 16,102 14,870 Weighted average diluted common shares outstanding16,092 16,099 16,193 16,110 14,885 Dividends paid per common share$0.2200 $0.2200 $0.2025 $0.8800 $0.8100 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FIVE QUARTER CONSOLIDATED BALANCE SHEETS December 31, September 30, June 30, March 31, December 31,(In thousands)2020 2020 2020 2020 2019ASSETS Cash and due from banks$65,078 $71,901 $65,863 $60,396 $67,174 Interest earning deposits in banks17,409 55,421 45,018 58,319 6,112 Federal funds sold172 7,540 6,329 6,830 198 Total cash and cash equivalents82,659 134,862 117,210 125,545 73,484 Debt securities available for sale at fair value1,657,381 1,366,344 1,187,455 881,859 785,977 Loans held for sale59,956 13,096 12,048 9,483 5,400 Gross loans held for investment3,496,790 3,555,969 3,618,675 3,440,907 3,469,236 Unearned income, net(14,567) (18,537) (21,636) (15,145) (17,970)Loans held for investment, net of unearned income3,482,223 3,537,432 3,597,039 3,425,762 3,451,266 Allowance for credit losses(55,500) (58,500) (55,644) (51,187) (29,079)Total loans held for investment, net3,426,723 3,478,932 3,541,395 3,374,575 3,422,187 Premises and equipment, net86,401 87,955 88,929 89,860 90,723 Goodwill62,477 62,477 93,977 93,977 91,918 Other intangible assets, net25,242 26,811 28,443 30,190 32,218 Foreclosed assets, net2,316 724 965 968 3,706 Other assets153,493 159,507 160,541 157,452 147,960 Total assets$5,556,648 $5,330,708 $5,230,963 $4,763,909 $4,653,573 LIABILITIES Noninterest bearing deposits$910,655 $864,504 $867,637 $637,127 $662,209 Interest bearing deposits3,636,394 3,469,137 3,397,798 3,222,717 3,066,446 Total deposits4,547,049 4,333,641 4,265,435 3,859,844 3,728,655 Short-term borrowings230,789 183,893 162,224 129,489 139,349 Long-term debt208,691 245,481 189,973 209,874 231,660 Other liabilities54,869 68,612 92,550 64,138 44,927 Total liabilities5,041,398 4,831,627 4,710,182 4,263,345 4,144,591 SHAREHOLDERS' EQUITY Common stock16,581 16,581 16,581 16,581 16,581 Additional paid-in capital300,137 299,939 299,542 299,412 297,390 Retained earnings188,191 175,017 198,382 190,212 201,105 Treasury stock(14,251) (12,272) (12,272) (12,518) (10,466)Accumulated other comprehensive income24,592 19,816 18,548 6,877 4,372 Total shareholders' equity515,250 499,081 520,781 500,564 508,982 Total liabilities and shareholders' equity$5,556,648 $5,330,708 $5,230,963 $4,763,909 $4,653,573 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME Three Months Ended December 31, September 30, June 30, March 31, December 31,(In thousands, except per share data)2020 2020 2020 2020 2019Interest income Loans, including fees$38,239 $38,191 $40,214 $42,012 $44,906 Taxable investment securities4,673 4,574 4,646 3,717 3,540 Tax-exempt investment securities2,529 2,360 1,858 1,512 1,465 Other29 29 40 164 115 Total interest income45,470 45,154 46,758 47,405 50,026 Interest expense Deposits4,265 5,296 6,409 7,949 8,251 Short-term borrowings142 175 263 334 368 Long-term debt2,026 1,874 1,374 1,716 1,823 Total interest expense6,433 7,345 8,046 9,999 10,442 Net interest income39,037 37,809 38,712 37,406 39,584 Credit loss (benefit) expense(3,041) 4,992 4,685 21,733 604 Net interest income after credit loss (benefit) expense42,078 32,817 34,027 15,673 38,980 Noninterest income Investment services and trust activities2,518 2,361 2,217 2,536 2,421 Service charges and fees1,571 1,491 1,290 1,826 2,072 Card revenue1,517 1,600 1,237 1,365 1,142 Loan revenue3,900 3,252 1,910 1,123 1,757 Bank-owned life insurance541 530 635 520 501 Investment securities gains, net30 106 6 42 18 Other549 230 974 2,743 1,125 Total noninterest income10,626 9,570 8,269 10,155 9,036 Noninterest expense Compensation and employee benefits17,638 16,460 15,682 16,617 19,246 Occupancy expense of premises, net2,476 2,278 2,253 2,341 2,347 Equipment2,040 1,935 2,010 1,880 2,251 Legal and professional2,052 1,184 1,382 1,535 1,797 Data processing1,460 1,308 1,240 1,354 1,492 Marketing986 857 910 1,062 1,147 Amortization of intangibles1,569 1,631 1,748 2,028 1,941 FDIC insurance495 470 445 448 (72)Communications412 428 449 457 493 Foreclosed assets, net(35) 13 34 138 173 Goodwill impairment— 31,500 — — — Other2,822 1,875 1,885 2,141 5,621 Total noninterest expense31,915 59,939 28,038 30,001 36,436 Income (loss) before income tax expense20,789 (17,552) 14,258 (4,173) 11,580 Income tax expense (benefit)4,079 2,272 2,546 (2,198) (1,791)Net income (loss)$16,710 $(19,824) $11,712 $(1,975) $13,371 Earnings (loss) per common share Basic$1.04 $(1.23) $0.73 $(0.12) $0.83 Diluted$1.04 $(1.23) $0.73 $(0.12) $0.83 Weighted average basic common shares outstanding16,074 16,099 16,094 16,142 16,162 Weighted average diluted common shares outstanding16,092 16,099 16,100 16,142 16,193 Dividends paid per common share$0.2200 $0.2200 $0.2200 $0.2200 $0.2025 MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS Three Months Ended December 31, 2020 September 30, 2020 December 31, 2019(Dollars in thousands)AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/Cost Average Balance InterestIncome/Expense AverageYield/CostASSETS Loans, including fees (1)(2)(3)$3,560,632 $38,795 4.33% $3,576,642 $38,727 4.31% $3,493,496 $45,429 5.16%Taxable investment securities1,026,359 4,673 1.81% 864,864 4,574 2.10% 508,911 3,540 2.76%Tax-exempt investment securities (2)(4)450,659 3,180 2.81% 405,517 2,968 2.91% 211,695 1,846 3.46%Total securities held for investment(2)1,477,018 7,853 2.12% 1,270,381 7,542 2.36% 720,606 5,386 2.97%Other80,019 29 0.14% 88,152 29 0.13% 28,227 115 1.62%Total interest earning assets(2)$5,117,669 46,677 3.63% $4,935,175 46,298 3.73% $4,242,329 50,930 4.76%Other assets340,270 376,211 392,254 Total assets$5,457,939 $5,311,386 $4,634,583 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest checking deposits$1,276,320 $958 0.30% $1,174,033 $1,049 0.36% $926,155 $1,394 0.60%Money market deposits931,900 544 0.23% 847,059 622 0.29% 784,752 1,820 0.92%Savings deposits508,763 279 0.22% 473,000 351 0.30% 388,338 389 0.40%Time deposits862,408 2,484 1.15% 931,655 3,274 1.40% 953,804 4,648 1.93%Total interest bearing deposits3,579,391 4,265 0.47% 3,425,747 5,296 0.62% 3,053,049 8,251 1.07%Short-term borrowings182,080 142 0.31% 165,840 175 0.42% 126,508 368 1.15%Long-term debt223,407 2,026 3.61% 231,406 1,874 3.22% 237,788 1,823 3.04%Total borrowed funds405,487 2,168 2.13% 397,246 2,049 2.05% 364,296 2,191 2.39%Total interest bearing liabilities$3,984,878 $6,433 0.64% $3,822,993 $7,345 0.76% $3,417,345 $10,442 1.21%Noninterest bearing deposits910,657 891,425 670,884 Other liabilities56,898 67,111 43,343 Shareholders’ equity505,506 529,857 503,011 Total liabilities and shareholders’ equity$5,457,939 $5,311,386 $4,634,583 Net interest income(2) $40,244 $38,953 $40,488 Net interest spread(2) 2.99% 2.97% 3.55%Net interest margin(2) 3.13% 3.14% 3.79% Total deposits(5)$4,490,048 $4,265 0.38% $4,317,172 $5,296 0.49% $3,723,933 $8,251 0.88%Cost of funds(6) 0.52% 0.62% 1.01% (1) Average balance includes nonaccrual loans.(2) Tax equivalent. The federal statutory tax rate utilized was 21%.(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $2.5 million, $1.1 million, and $354 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Loan purchase discount accretion was $1.5 million, $1.9 million, and $3.9 million for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. Tax equivalent adjustments were $556 thousand, $536 thousand, and $523 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. The federal statutory tax rate utilized was 21%.(4) Interest income includes tax equivalent adjustments of $651 thousand, $608 thousand, and $381 thousand for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, 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. Year Ended December 31, 2020 December 31, 2019(Dollars in thousands)AverageBalance InterestIncome/Expense AverageYield/Cost AverageBalance InterestIncome/Expense AverageYield/CostASSETS Loans, including fees (1)(2)(3)$3,551,945 $160,752 4.53% $3,157,127 $164,948 5.22%Taxable investment securities797,954 17,610 2.21% 465,484 13,132 2.82%Tax-exempt investment securities (2)(4)342,000 10,395 3.04% 204,375 7,177 3.51%Total securities held for investment(2)1,139,954 28,005 2.46% 669,859 20,309 3.03%Other73,255 262 0.36% 21,289 450 2.11%Total interest earning assets(2)$4,765,154 189,019 3.97% $3,848,275 185,707 4.83%Other assets370,687 352,765 Total assets$5,135,841 $4,201,040 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest checking deposits$1,108,997 $4,435 0.40% $806,624 $4,723 0.59%Money market deposits844,137 3,696 0.44% 766,812 7,549 0.98%Savings deposits454,000 1,386 0.31% 329,199 1,092 0.33%Time deposits945,234 14,402 1.52% 873,978 16,563 1.90%Total interest bearing deposits3,352,368 23,919 0.71% 2,776,613 29,927 1.08%Short-term borrowings157,346 914 0.58% 124,956 1,847 1.48%Long-term debt220,448 6,990 3.17% 224,149 7,017 3.13%Total borrowed funds377,794 7,904 2.09% 349,105 8,864 2.54%Total interest bearing liabilities$3,730,162 $31,823 0.85% $3,125,718 $38,791 1.24%Noninterest bearing deposits832,038 586,100 Other liabilities58,186 37,204 Shareholders’ equity515,455 452,018 Total liabilities and shareholders’ equity$5,135,841 $4,201,040 Net interest income(2) $157,196 $146,916 Net interest spread(2) 3.12% 3.59%Net interest margin(2) 3.30% 3.82% Total deposits(5)$4,184,406 $23,919 0.57% $3,362,713 $29,927 0.89%Cost of funds(6) 0.70% 1.05% (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 $4.4 million and $(316) thousand for the year ended December 31, 2020 and December 31, 2019, respectively. Loan purchase discount accretion was $9.1 million and $14.0 million for the year ended December 31, 2020 and December 31, 2019, respectively. Tax equivalent adjustments were $2.1 million and $1.8 million for the year ended December 31, 2020 and December 31, 2019, respectively. The federal statutory tax rate utilized was 21%. (4) Interest income includes tax equivalent adjustments of $2.1 million and $1.5 million for the year ended December 31, 2020 and December 31, 2019, 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), efficiency ratio, core earnings, adjusted allowance for credit losses ratio, core loans, and core commercial loans. Management believes these measures provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure. Tangible Common Equity/Tangible Book Value per Share/Tangible Common Equity Ratio December 31, September 30, June 30, March 31, December 31,(Dollars in thousands, except per share data) 2020 2020 2020 2020 2019Total shareholders’ equity $515,250 $499,081 $520,781 $500,564 $508,982 Intangible assets, net (87,719) (89,288) (122,420) (124,167) (124,136) Tangible common equity $427,531 $409,793 $398,361 $376,397 $384,846 Total assets $5,556,648 $5,330,708 $5,230,963 $4,763,909 $4,653,573 Intangible assets, net (87,719) (89,288) (122,420) (124,167) (124,136) Tangible assets $5,468,929 $5,241,420 $5,108,543 $4,639,742 $4,529,437 Book value per share $32.17 $31.00 $32.35 $31.11 $31.49 Tangible book value per share(1) $26.69 $25.45 $24.74 $23.39 $23.81 Shares outstanding 16,016,780 16,099,324 16,099,324 16,089,782 16,162,176 Equity to assets ratio 9.27 % 9.36 % 9.96 % 10.51 % 10.94 %Tangible common equity ratio(2) 7.82 % 7.82 % 7.80 % 8.11 % 8.50 % (1) Tangible common equity divided by shares outstanding.(2) Tangible common equity divided by tangible assets. Three Months Ended Year EndedReturn on Average Tangible Equity December 31, September 30, December 31, December 31, December 31,(Dollars in thousands) 2020 2020 2019 2020 2019Net income (loss) $16,710 $(19,824) $13,371 $6,623 $43,630 Intangible amortization, net of tax(1) 1,177 1,223 1,456 5,232 4,430 Goodwill impairment — 31,500 — 31,500 — Tangible net income $17,887 $12,899 $14,827 $43,355 $48,060 Average shareholders’ equity $505,506 $529,857 $503,011 $515,455 $452,018 Average intangible assets, net (88,543) (121,306) (125,898) (113,978) (108,242) Average tangible equity $416,963 $408,551 $377,113 $401,477 $343,776 Return on average equity 13.15 % (14.88)% 10.55 % 1.28 % 9.65 %Return on average tangible equity(2) 17.07 % 12.56 % 15.60 % 10.80 % 13.98 % (1) The combined income tax rate utilized was 25%.(2) Annualized tangible net income divided by average tangible equity. Net Interest Margin, Tax Equivalent/Core Net Interest Margin Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31,(Dollars in thousands) 2020 2020 2019 2020 2019Net interest income $39,037 $37,809 $39,584 $152,964 $143,650 Tax equivalent adjustments: Loans(1) 556 536 523 2,096 1,785 Securities(1) 651 608 381 2,136 1,481 Net interest income, tax equivalent $40,244 $38,953 $40,488 $157,196 $146,916 Loan purchase discount accretion (1,542) (1,923) (3,937) (9,098) (13,977) Core net interest income $38,702 $37,030 $36,551 $148,098 $132,939 Net interest margin 3.03 % 3.05 % 3.70 % 3.21 % 3.73 %Net interest margin, tax equivalent(2) 3.13 % 3.14 % 3.79 % 3.30 % 3.82 %Core net interest margin(3) 3.01 % 2.99 % 3.42 % 3.11 % 3.45 %Average interest earning assets $5,117,669 $4,935,175 $4,242,329 $4,765,154 $3,848,275 (1) The federal statutory tax rate utilized was 21%.(2) Annualized tax equivalent net interest income divided by average interest earning assets.(3) Annualized core net interest income divided by average interest earning assets. Three Months Ended Year EndedLoan Yield, Tax Equivalent December 31, September 30, December 31, December 31, December 31,(Dollars in thousands) 2020 2020 2019 2020 2019Loan interest income, including fees $38,239 $38,191 $44,906 $158,656 $163,163 Tax equivalent adjustment(1) 556 536 523 2,096 1,785 Tax equivalent loan interest income $38,795 $38,727 $45,429 $160,752 $164,948 Loan purchase discount accretion (1,542) (1,923) (3,937) (9,098) (13,977) Core loan interest income $37,253 $36,804 $41,492 $151,654 $150,971 Yield on loans 4.27 % 4.25 % 5.10 % 4.47 % 5.17 %Yield on loans, tax equivalent(2) 4.33 % 4.31 % 5.16 % 4.53 % 5.22 %Core yield on loans(3) 4.16 % 4.09 % 4.71 % 4.27 % 4.78 %Average loans $3,560,632 $3,576,642 $3,493,496 $3,551,945 $3,157,127 (1) The federal statutory tax rate utilized was 21%.(2) Annualized tax equivalent loan interest income divided by average loans.(3) Annualized core loan interest income divided by average loans. Three Months Ended Year EndedEfficiency Ratio December 31, September 30, December 31, December 31, December 31,(Dollars in thousands) 2020 2020 2019 2020 2019Total noninterest expense $31,915 $59,939 $36,436 $149,893 $117,535 Amortization of intangibles (1,569) (1,631) (1,941) (6,976) (5,906) Merger-related expenses — — (3,282) (61) (9,130) Goodwill impairment — (31,500) — (31,500) — Noninterest expense used for efficiency ratio $30,346 $26,808 $31,213 $111,356 $102,499 Net interest income, tax equivalent(1) $40,244 $38,953 $40,488 $157,196 $146,916 Noninterest income 10,626 9,570 9,036 38,620 31,246 Investment securities gains, net (30) (106) (18) (184) (90) Net revenues used for efficiency ratio $50,840 $48,417 $49,506 $195,632 $178,072 Efficiency ratio (2) 59.69 % 55.37 % 63.05 % 56.92 % 57.56 % (1) The federal statutory tax rate utilized was 21%.(2) Noninterest expense adjusted for amortization of intangibles, merger-related expenses, and goodwill impairment divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains. Three Months Ended Year EndedCore Earnings December 31, September 30, December 31, December 31, December 31,(Dollars in thousands, except per share data) 2020 2020 2019 2020 2019Net income (loss) $16,710 $(19,824) $13,371 $6,623 $43,630 Goodwill impairment — 31,500 — 31,500 — Core earnings $16,710 $11,676 $13,371 $38,123 $43,630 Weighted average diluted common shares outstanding 16,092 16,099 16,193 16,110 14,885 Earnings (loss) per common share Earnings per common share - diluted $1.04 $(1.23) $0.83 $0.41 $2.93 Core earnings per common share - diluted (1) $1.04 $0.73 $0.83 $2.37 $2.93 (1) Core earnings divided by weighted average diluted common shares outstanding Adjusted Allowance for Credit Losses Ratio December 31, September 30, June 30, March 31, December 31,(Dollars in thousands) 2020 2020 2020 2020 2019Loans held for investment, net of unearned income $3,482,223 $3,537,432 $3,597,039 $3,425,762 $3,451,266 PPP loans (259,260) (331,703) (327,648) — — Core loans $3,222,963 $3,205,729 $3,269,391 $3,425,762 $3,451,266 Allowance for credit losses $55,500 $58,500 $55,644 $51,187 $29,079 Allowance for credit losses ratio 1.59 % 1.65 % 1.55 % 1.49% 0.84%Adjusted allowance for credit losses ratio(1) 1.72 % 1.82 % 1.70 % 1.49% 0.84% (1) Allowance for credit losses divided by core loans Core Loans/Core Commercial Loans December 31, September 30, June 30, March 31, December 31,(Dollars in thousands) 2020 2020 2020 2020 2019Commercial loans: Commercial and industrial $1,055,488 $1,103,102 $1,084,527 $864,702 $835,236 Agricultural 116,392 129,453 140,837 145,435 140,446 Commercial real estate 1,732,361 1,707,035 1,764,739 1,780,446 1,814,859 Total commercial loans $2,904,241 $2,939,590 $2,990,103 $2,790,583 $2,790,541 Consumer loans: Residential real estate $499,106 $521,570 $532,914 $554,290 $577,799 Other consumer 78,876 76,272 74,022 80,889 82,926 Total consumer loans $577,982 $597,842 $597,842 $597,842 $597,842 Loans held for investment, net of unearned income $3,482,223 $3,537,432 $3,587,945 $3,388,425 $3,388,383 PPP loans $259,260 $331,703 $327,648 $— $— Core loans(1) $3,222,963 $3,205,729 $3,260,297 $3,388,425 $3,388,383 Core commercial loans(2) $2,644,981 $2,607,887 $2,662,455 $2,790,583 $2,790,541 (1) Core loans are calculated as loans held for investment, net of unearned income less PPP loans.(2) Core commercial loans are calculated as total commercial loans less PPP loans. Category: Earnings Source: MidWestOne Financial Group, Inc. Contact: Charles N. Funk Barry S. Ray Chief Executive Officer Senior Executive Vice President and Chief Financial Officer 319.356.5800 319.356.5800