MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2022

October 27, 2022 at 16:15 PM EDT

Third Quarter Summary¹

Net income for the third quarter was $18.3 million, or $1.17 per diluted common share.
Net interest margin (tax equivalent) expanded 21 basis points (bps) to 3.08%².
Annualized core loan growth (excluding PPP) of 15.72%².
Nonperforming assets ratio improved 3 bps to 0.40%; net charge-off ratio of 0.06%.
Efficiency ratio improved to 53.67%².

IOWA CITY, Iowa, Oct. 27, 2022 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the third quarter of 2022 of $18.3 million, or $1.17 per diluted common share, compared to net income of $12.6 million, or $0.80 per diluted common share, for the linked quarter.

CEO COMMENTARY

Len Devaisher, Interim Chief Executive Officer of the Company, commented, "We are gratified by our momentum: improving earnings driven by strengthening fundamentals. The combination of accelerated loan growth, improving credit metrics, and a balanced approach to deposit costs and retention efforts has us positioned well for the future."

_{^{____________________
1} Third Quarter Summary compares to the second quarter of 2022 (the "linked quarter") unless noted.}
_{² Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.}

FINANCIAL HIGHLIGHTS	Three Months Ended									Nine Months Ended
FINANCIAL HIGHLIGHTS	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share amounts)		2022			2022			2021			2022			2021
Net interest income	$	45,733		$	39,725		$	40,340		$	122,794		$	117,462
Noninterest income		12,588			12,347			9,182			36,579			31,224
Total revenue, net of interest expense		58,321			52,072			49,522			159,373			148,686
Credit loss expense (benefit)		638			3,282			(1,080	)		3,920			(7,958	)
Noninterest expense		34,623			32,082			29,778			98,348			86,148
Income before income tax expense		23,060			16,708			20,824			57,105			70,496
Income tax expense		4,743			4,087			4,513			12,272			15,266
Net income	$	18,317		$	12,621		$	16,311		$	44,833		$	55,230
Diluted earnings per share	$	1.17		$	0.80		$	1.03		$	2.86		$	3.46

Return on average assets		1.13	%		0.83	%		1.11	%		0.97	%		1.29	%
Return on average equity		14.56	%		10.14	%		12.00	%		11.81	%		14.03	%
Return on average tangible equity⁽¹⁾		19.32	%		13.13	%		15.06	%		15.28	%		17.69	%
Efficiency ratio⁽¹⁾		53.67	%		56.57	%		56.34	%		56.70	%		53.95	%
⁽¹⁾Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

IOWA FIRST BANCSHARES CORP. ACQUISITION

On June 9, 2022, we acquired Iowa First Bancshares Corp ("IOFB"). The table below summarizes the amounts recognized at the acquisition date for each major class of assets acquired and liabilities assumed:

(In thousands)	As of June 9, 2022
Merger consideration
Cash consideration				$	46,672
Identifiable net assets acquired, at fair value
Assets acquired
Cash and due from banks	$	10,192
Interest earning deposits in banks		67,855
Debt securities		119,820
Loans held for investment		281,326
Premises and equipment		7,363
Core deposit intangible		16,500
Other assets		11,628
Total assets acquired					514,684
Liabilities assumed
Deposits		(463,638	)
Other liabilities		(3,117	)
Total liabilities assumed					(466,755	)
Identifiable net assets acquired, at fair value					47,929
Bargain purchase gain (reported in Other noninterest income)				$	1,257

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased to $45.7 million in the third quarter of 2022 from $39.7 million in the second quarter of 2022, due primarily to a higher volume of interest earning assets in addition to an expansion in the net interest margin.

Average interest earning assets increased $332.0 million to $6.05 billion in the third quarter of 2022, when compared to the second quarter of 2022. This increase reflected the full quarter benefit from earning assets acquired in the IOFB acquisition, as well as organic loan growth.

The Company's tax equivalent net interest margin was 3.08% in the third quarter of 2022 compared to 2.87% in the linked quarter. The increase in tax equivalent net interest margin reflected an increase in total interest earning asset yields, partially offset by increased funding costs. Total interest earning assets yield increased 37 bps from the linked quarter as loan yields increased 42 bps and taxable investment securities yields 18 bps. Sixteen basis points of the loan yield increase was attributable to loan purchase discount accretion. The cost of interest bearing liabilities increased 19 bps to 0.64%, due to interest bearing deposits costs of 0.46%, short-term borrowing costs of 1.34%, and long-term debt costs of 4.70%, which increased 15 bps, 87 bps and 25 bps respectively, from the linked quarter.

Noninterest Income

Noninterest income for the third quarter of 2022 increased $0.2 million, or 2.0%, from the linked quarter. The increase was primarily due to increases of $2.0 million and $0.4 million in other income and service charges and fees, respectively. The increase in other income stemmed primarily from a one-time settlement and the increase in service charges and fees reflected the full quarter benefit from the IOFB acquisition. Partially offsetting the increases above was a $1.8 million decline in loan revenue, which reflected a smaller increase in the fair value of our mortgage servicing rights.

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

	Three Months Ended
Noninterest Income	September 30,			June 30,		September 30,
(In thousands)	2022			2022		2021
Investment services and trust activities	$	2,876		$	2,670	$	2,915
Service charges and fees		2,075			1,717		1,613
Card revenue		1,898			1,878		1,820
Loan revenue		1,722			3,523		1,935
Bank-owned life insurance		579			558		532
Investment securities gains, net		(163	)		395		36
Other		3,601			1,606		331
Total noninterest income	$	12,588		$	12,347	$	9,182

Noninterest Expense

Noninterest expense for the third quarter of 2022 increased $2.5 million, or 7.9%, from the linked quarter, primarily due to increases of $1.1 million, $0.5 million, and $0.5 million in compensation and employee benefits, amortization of intangibles, and data processing, respectively. These increases primarily reflected a full three months of costs associated with IOFB as well as increased merger-related data processing expenses. Offsetting the increases identified above was a decline of $0.4 million in legal and professional expenses, primarily due to a decrease in legal and professional merger-related expenses.

The increase in net interest income and noninterest income, partially offset by the increase in noninterest expense noted above, were the primary drivers of the improvement in the efficiency ratio, which decreased 2.90 percentage points to 53.67% from 56.57% in the linked quarter.

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

	Three Months Ended
Noninterest Expense	September 30,		June 30,		September 30,
(In thousands)	2022		2022		2021
Compensation and employee benefits	$	20,046	$	18,955	$	17,350
Occupancy expense of premises, net		2,577		2,253		2,547
Equipment		2,358		2,107		1,973
Legal and professional		2,012		2,435		1,272
Data processing		1,731		1,237		1,406
Marketing		1,139		1,157		1,022
Amortization of intangibles		1,789		1,283		1,264
FDIC insurance		415		420		435
Communications		302		266		275
Foreclosed assets, net		42		4		43
Other		2,212		1,965		2,191
Total noninterest expense	$	34,623	$	32,082	$	29,778

The following table presents details of merger-related expenses for the periods indicated:

	Three Months Ended
	September 30,		June 30,		September 30,
Merger-related Expenses	2022		2022		2021
(In thousands)
Compensation and employee benefits	$	132	$	150	$	—
Occupancy expense of premises, net		—		1		—
Equipment		14		6		—
Legal and professional		193		638		—
Data processing		304		38		—
Marketing		90		65		—
Communications		—		2		—
Other		30		1		—
Total merger-related expenses	$	763	$	901	$	—

Income Taxes

The Company's effective income tax rate decreased to 20.6% in the third quarter of 2022 compared to 24.5% in the linked quarter. The lower effective income tax rate in the third quarter of 2022 was due to the one-time income tax expense of $0.8 million recognized in the second quarter of 2022 stemming from a change in the tax law in the state of Iowa. The effective income tax rate for the full year 2022 is expected to be in the range of 20-22%.

BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS	As of or for the Three Months Ended
BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTS	September 30,			June 30,			September 30,
(Dollars in millions, except per share amounts)	2022			2022			2021
Ending Balance Sheet
Total assets	$	6,491.1		$	6,442.5		$	5,875.4
Loans held for investment, net of unearned income		3,746.3			3,611.2			3,268.6
Total securities		2,299.9			2,402.8			2,136.9
Total deposits		5,476.8			5,537.4			4,957.8
Average Balance Sheet
Average total assets	$	6,457.6		$	6,079.0		$	5,811.2
Average total loans		3,673.4			3,326.3			3,356.7
Average total deposits		5,507.5			5,181.9			4,882.8
Funding and Liquidity
Short-term borrowings	$	304.5		$	193.9		$	187.5
Long-term debt		154.2			159.2			154.9
Loans to deposits ratio		68.40	%		65.21	%		65.93	%
Equity
Total shareholders' equity	$	472.2		$	488.8		$	530.3
Common equity ratio		7.28	%		7.59	%		9.03	%
Tangible common equity⁽¹⁾		377.7			392.5			446.7
Tangible common equity ratio⁽¹⁾		5.90	%		6.18	%		7.71	%
Per Share Data
Book value	$	30.23		$	31.26		$	33.71
Tangible book value⁽¹⁾	$	24.17		$	25.10		$	28.40
(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, increased $135.1 million, or 3.7%, to $3.75 billion from June 30, 2022. This increase was driven by new loan production and higher volumes of line of credit usage during the third quarter of 2022.

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

Loans Held for Investment	September 30, 2022				June 30, 2022				September 30, 2021
	Balance		% of Total		Balance		% of Total		Balance		% of Total
(dollars in thousands)	Balance		% of Total		Balance		% of Total		Balance		% of Total
Commercial and industrial	$	1,041,662	27.8	%	$	986,137	27.3	%	$	927,258	28.4	%
Agricultural		116,229	3.1			110,263	3.1			106,356	3.3
Commercial real estate
Construction and development		276,941	7.4			224,470	6.2			146,417	4.5
Farmland		183,581	4.9			181,820	5.0			130,936	4.0
Multifamily		222,592	5.9			239,676	6.6			273,347	8.4
Other		1,226,983	32.8			1,213,974	33.7			1,148,658	35.0
Total commercial real estate		1,910,097	51.0			1,859,940	51.5			1,699,358	51.9
Residential real estate
One-to-four family first liens		446,373	11.9			430,157	11.9			334,267	10.2
One-to-four family junior liens		157,276	4.2			148,647	4.1			133,869	4.1
Total residential real estate		603,649	16.1			578,804	16.0			468,136	14.3
Consumer		74,652	2.0			76,008	2.1			67,536	2.1
Loans held for investment, net of unearned income	$	3,746,289	100.0	%	$	3,611,152	100.0	%	$	3,268,644	100.0	%

Total commitments to extend credit	$	1,159,323			$	1,117,754			$	950,157

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									Nine Months Ended
Allowance for Credit Losses Roll Forward	September 30,			June 30,			September 30,			September 30,			September 30,
(In thousands)	2022			2022			2021			2022			2021
Beginning balance	$	52,350		$	46,200		$	48,000		$	48,700		$	55,500
PCD allowance established in acquisition		—			3,371			—			3,371			—
Charge-offs		(970	)		(440	)		(234	)		(4,041	)		(2,077	)
Recoveries		382			159			1,114			950			2,235
Net charge-offs		(588	)		(281	)		880			(3,091	)		158
Credit loss (benefit) expense related to loans		338			3,060			(980	)		3,120			(7,758	)
Ending balance	$	52,100		$	52,350		$	47,900		$	52,100		$	47,900

As of September 30, 2022, the allowance for credit losses ("ACL") was $52.1 million, or 1.39% of loans held for investment, net of unearned income, compared with $52.4 million, or 1.45% of loans held for investment, net of unearned income, at June 30, 2022. Credit loss expense for the third quarter of 2022 was $0.6 million, compared to $3.3 million in the second quarter of 2022, and was primarily attributable to a reserve taken to support loan growth.

Deposits

Total deposits declined $60.7 million, or 1.1%, to $5.5 billion from June 30, 2022. This decline reflected the competitive market for deposits driven by the rapid rate of increase in the federal funds target rate over the course of this year.

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

Deposit Composition	September 30, 2022				June 30, 2022				September 30, 2021
(Dollars in thousands)	Balance		% of Total		Balance		% of Total		Balance		% of Total
Noninterest bearing deposits	$	1,139,694	20.8	%	$	1,114,825	20.1	%	$	999,887	20.2	%
Interest checking deposits		1,705,289	31.2			1,749,748	31.7			1,464,389	29.5
Money market deposits		991,783	18.1			1,070,912	19.3			989,095	20.0
Savings deposits		700,843	12.8			715,829	12.9			616,924	12.4
Total non-maturity deposits		4,537,609	82.9			4,651,314	84.0			4,070,295	82.1
Time deposits of $250 and under		537,616	9.8			547,427	9.9			522,907	10.5
Time deposits over $250		401,557	7.3			338,700	6.1			364,579	7.4
Total time deposits		939,173	17.1			886,127	16.0			887,486	17.9
Total deposits	$	5,476,782	100.0	%	$	5,537,441	100.0	%	$	4,957,781	100.0	%

CREDIT RISK PROFILE

	As of or For the Three Months Ended
Highlights	September 30,			June 30,			September 30,
(Dollars in thousands)		2022			2022			2021
Credit loss expense (benefit) related to loans	$	338		$	3,060		$	(980	)
Net charge-offs (recoveries)	$	588		$	281		$	(880	)
Net charge-off (recovery) ratio⁽¹⁾		0.06	%		0.03	%		(0.10	)%

At period-end
Pass	$	3,550,695		$	3,402,508		$	3,069,314
Special Mention / Watch		101,255			111,893			82,871
Classified		94,339			96,751			116,459
Total loans held for investment, net	$	3,746,289		$	3,611,152		$	3,268,644
Classified loans ratio⁽²⁾		2.52	%		2.68	%		3.56	%

Nonaccrual loans held for investment	$	25,027		$	25,978		$	33,657
Accruing loans contractually past due 90 days or more		936			1,359			51
Total nonperforming loans		25,963			27,337			33,708
Foreclosed assets, net		103			284			454
Total nonperforming assets	$	26,066		$	27,621		$	34,162
Nonperforming loans ratio⁽³⁾		0.69	%		0.76	%		1.03	%
Nonperforming assets ratio⁽⁴⁾		0.40	%		0.43	%		0.58	%
Allowance for credit losses	$	52,100		$	52,350		$	47,900
Allowance for credit losses ratio⁽⁵⁾		1.39	%		1.45	%		1.47	%
Adjusted allowance for credit losses ratio⁽⁶⁾		1.39	%		1.45	%		1.51	%
Allowance for credit losses to nonaccrual loans ratio⁽⁷⁾		208.18	%		201.52	%		142.32	%
⁽¹⁾Net charge-off (recovery) ratio is calculated as annualized net charge-offs (recoveries) divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.
⁽²⁾ Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
⁽³⁾ Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
⁽⁴⁾ Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.
⁽⁵⁾ Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.
⁽⁶⁾ Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
⁽⁷⁾Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

During the third quarter of 2022, overall asset quality improved. The nonperforming loans ratio declined 7 bps from the linked quarter and 34 bps from the prior year to 0.69%. In addition, the classified loans ratio declined 16 bps from the linked quarter and 104 bps from the prior year to 2.52%.

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

Nonperforming Loans	Nonaccrual			90+ Days Past Due & Still Accruing			Total
(Dollars in thousands)	Nonaccrual			90+ Days Past Due & Still Accruing			Total
Balance at June 30, 2022	$	25,978		$	1,359		$	27,337
Loans placed on nonaccrual or 90+ days past due & still accruing		1,950			520			2,470
Proceeds related to repayment or sale		(2,025	)		(4	)		(2,029	)
Loans returned to accrual status or no longer past due		(139	)		(50	)		(189	)
Charge-offs		(737	)		(102	)		(839	)
Transfer to held for sale		—			(787	)		(787	)
Balance at September 30, 2022	$	25,027		$	936		$	25,963

CAPITAL

Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of the current expected credit losses (CECL) accounting standard. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. The modified CECL transitional amount of $9.4 million is then reduced from capital over the subsequent three-year period.

Regulatory Capital Ratios	September 30,		June 30,		September 30,
Regulatory Capital Ratios	2022⁽¹⁾		2022		2021
*MidWestOne* Financial Group, Inc. Consolidated**
Tier 1 leverage to average assets ratio	8.24	%	8.51	%	8.70	%
Common equity tier 1 capital to risk-weighted assets ratio	9.18	%	8.82	%	10.26	%
Tier 1 capital to risk-weighted assets ratio	9.97	%	9.61	%	11.20	%
Total capital to risk-weighted assets ratio	12.10	%	11.73	%	13.58	%
*MidWestOne* Bank**
Tier 1 leverage to average assets ratio	9.31	%	9.70	%	9.41	%
Common equity tier 1 capital to risk-weighted assets ratio	11.26	%	10.99	%	12.14	%
Tier 1 capital to risk-weighted assets ratio	11.26	%	10.99	%	12.14	%
Total capital to risk-weighted assets ratio	12.17	%	11.90	%	13.05	%
(1) Capital ratios for September 30, 2022 are preliminary

CORPORATE UPDATE

Appointment of Chief Executive Officer

As previously announced on October 19, 2022, the Company's Board of Directors appointed Charles (Chip) N. Reeves to serve as the Chief Executive Officer of the Company and MidWestOne Bank effective November 1, 2022.

IOFB Integration Update

During the third quarter of 2022, core banking system conversions were completed for the former First National Bank in Fairfield and the former First National Bank of Muscatine. Also during the third quarter of 2022, we closed and consolidated the operations of two MidWestOne banking offices located in Fairfield, IA into the former First National Bank in Fairfield banking office.

Share Repurchase Program

Under our current repurchase program, common shares repurchased by the Company during the third quarter of 2022 totaled 14,586 shares. These shares were repurchased at an average price of $29.51 per share and a total cost of $0.4 million in the third quarter of 2022. At September 30, 2022, the total amount available under the Company's current share repurchase program was $3.0 million.

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 28, 2022. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=5495738f&confId=42438. After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-927-1758, using an access code of 483853 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 26, 2023, by calling 1-866-813-9403 and using the replay access code of 684318. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

ABOUT MIDWESTONE FINANCIAL GROUP, INC.

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

Cautionary Note Regarding Forward-Looking Statements

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

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of actual and expected increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR and the adoption of a substitute; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the war in Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the effects of cyber-attacks; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; and (25) 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

	September 30,			June 30,			March 31,			December 31,			September 30,
(In thousands)		2022			2022			2022			2021			2021
ASSETS
Cash and due from banks	$	77,513		$	60,622		$	47,677		$	42,949		$	53,562
Interest earning deposits in banks		1,001			23,242			12,152			160,881			84,952
Total cash and cash equivalents		78,514			83,864			59,829			203,830			138,514
Debt securities available for sale at fair value		1,153,304			1,234,789			1,145,638			2,288,110			2,136,902
Held to maturity securities at amortized cost		1,146,583			1,168,042			1,204,212			—			—
Total securities		2,299,887			2,402,831			2,349,850			2,288,110			2,136,902
Loans held for sale		2,320			4,991			6,466			12,917			58,679
Gross loans held for investment		3,761,664			3,627,728			3,256,294			3,252,194			3,278,150
Unearned income, net		(15,375	)		(16,576	)		(6,259	)		(7,182	)		(9,506	)
Loans held for investment, net of unearned income		3,746,289			3,611,152			3,250,035			3,245,012			3,268,644
Allowance for credit losses		(52,100	)		(52,350	)		(46,200	)		(48,700	)		(47,900	)
Total loans held for investment, net		3,694,189			3,558,802			3,203,835			3,196,312			3,220,744
Premises and equipment, net		87,732			89,048			82,603			83,492			84,130
Goodwill		62,477			62,477			62,477			62,477			62,477
Other intangible assets, net		32,086			33,874			18,658			19,885			21,130
Foreclosed assets, net		103			284			273			357			454
Other assets		233,753			206,320			176,223			157,748			152,393
Total assets	$	6,491,061		$	6,442,491		$	5,960,214		$	6,025,128		$	5,875,423
LIABILITIES
Noninterest bearing deposits	$	1,139,694		$	1,114,825		$	1,002,415		$	1,005,369		$	999,887
Interest bearing deposits		4,337,088			4,422,616			4,075,310			4,109,150			3,957,894
Total deposits		5,476,782			5,537,441			5,077,725			5,114,519			4,957,781
Short-term borrowings		304,536			193,894			181,193			181,368			187,508
Long-term debt		154,190			159,168			139,898			154,879			154,860
Other liabilities		83,324			63,156			56,941			46,887			45,010
Total liabilities		6,018,832			5,953,659			5,455,757			5,497,653			5,345,159
SHAREHOLDERS' EQUITY
Common stock		16,581			16,581			16,581			16,581			16,581
Additional paid-in capital		301,418			300,859			300,505			300,940			300,327
Retained earnings		276,998			262,395			253,500			243,365			232,639
Treasury stock		(26,145	)		(25,772	)		(24,113	)		(24,546	)		(22,735	)
Accumulated other comprehensive (loss) income		(96,623	)		(65,231	)		(42,016	)		(8,865	)		3,452
Total shareholders' equity		472,229			488,832			504,457			527,475			530,264
Total liabilities and shareholders' equity	$	6,491,061		$	6,442,491		$	5,960,214		$	6,025,128		$	5,875,423

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

	Three Months Ended													Nine Months Ended
	September 30,			June 30,		March 31,			December 31,		September 30,			September 30,			September 30,
(In thousands, except per share data)		2022			2022		2022			2021		2021			2022			2021
Interest income
Loans, including fees	$	40,451		$	32,746	$	31,318		$	33,643	$	36,115		$	104,515		$	107,393
Taxable investment securities		10,635			9,576		8,123			7,461		6,655			28,334			18,231
Tax-exempt investment securities		2,326			2,367		2,383			2,415		2,428			7,076			7,532
Other		9			40		28			37		21			77			54
Total interest income		53,421			44,729		41,852			43,556		45,219			140,002			133,210
Interest expense
Deposits		5,035			3,173		2,910			3,031		3,150			11,118			10,167
Short-term borrowings		767			229		119			130		132			1,115			421
Long-term debt		1,886			1,602		1,487			1,576		1,597			4,975			5,160
Total interest expense		7,688			5,004		4,516			4,737		4,879			17,208			15,748
Net interest income		45,733			39,725		37,336			38,819		40,340			122,794			117,462
Credit loss expense (benefit)		638			3,282		—			622		(1,080	)		3,920			(7,958	)
Net interest income after credit loss expense (benefit)		45,095			36,443		37,336			38,197		41,420			118,874			125,420
Noninterest income
Investment services and trust activities		2,876			2,670		3,011			3,115		2,915			8,557			8,560
Service charges and fees		2,075			1,717		1,657			1,684		1,613			5,449			4,575
Card revenue		1,898			1,878		1,650			1,746		1,820			5,426			5,269
Loan revenue		1,722			3,523		4,293			3,132		1,935			9,538			9,816
Bank-owned life insurance		579			558		531			550		532			1,668			1,612
Investment securities gains, net		(163	)		395		40			137		36			272			105
Other		3,601			1,606		462			865		331			5,669			1,287
Total noninterest income		12,588			12,347		11,644			11,229		9,182			36,579			31,224
Noninterest expense
Compensation and employee benefits		20,046			18,955		18,664			18,266		17,350			57,665			51,671
Occupancy expense of premises, net		2,577			2,253		2,779			2,211		2,547			7,609			7,063
Equipment		2,358			2,107		1,901			2,189		1,973			6,366			5,627
Legal and professional		2,012			2,435		2,353			1,826		1,272			6,800			3,430
Data processing		1,731			1,237		1,231			1,211		1,406			4,199			4,005
Marketing		1,139			1,157		1,029			1,121		1,022			3,325			2,901
Amortization of intangibles		1,789			1,283		1,227			1,245		1,264			4,299			4,112
FDIC insurance		415			420		420			380		435			1,255			1,192
Communications		302			266		272			277		275			840			1,055
Foreclosed assets, net		42			4		(112	)		7		43			(66	)		226
Other		2,212			1,965		1,879			1,711		2,191			6,056			4,866
Total noninterest expense		34,623			32,082		31,643			30,444		29,778			98,348			86,148
Income before income tax expense		23,060			16,708		17,337			18,982		20,824			57,105			70,496
Income tax expense		4,743			4,087		3,442			4,726		4,513			12,272			15,266
Net income	$	18,317		$	12,621	$	13,895		$	14,256	$	16,311		$	44,833		$	55,230

Earnings per common share
Basic	$	1.17		$	0.81	$	0.89		$	0.91	$	1.03		$	2.86		$	3.47
Diluted	$	1.17		$	0.80	$	0.88		$	0.91	$	1.03		$	2.86		$	3.46
Weighted average basic common shares outstanding		15,623			15,668		15,683			15,692		15,841			15,658			15,939
Weighted average diluted common shares outstanding		15,654			15,688		15,718			15,734		15,863			15,686			15,963
Dividends paid per common share	$	0.2375		$	0.2375	$	0.2375		$	0.2250	$	0.2250		$	0.7125		$	0.6750

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS

	As of or for the Three Months Ended									As of or for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share amounts)		2022			2022			2021			2022			2021
Earnings:
Net interest income	$	45,733		$	39,725		$	40,340		$	122,794		$	117,462
Noninterest income		12,588			12,347			9,182			36,579			31,224
Total revenue, net of interest expense		58,321			52,072			49,522			159,373			148,686
Credit loss expense (benefit)		638			3,282			(1,080	)		3,920			(7,958	)
Noninterest expense		34,623			32,082			29,778			98,348			86,148
Income before income tax expense		23,060			16,708			20,824			57,105			70,496
Income tax expense		4,743			4,087			4,513			12,272			15,266
Net income	$	18,317		$	12,621		$	16,311		$	44,833		$	55,230
Per Share Data:
Diluted earnings	$	1.17		$	0.80		$	1.03		$	2.86		$	3.46
Book value		30.23			31.26			33.71			30.23			33.71
Tangible book value⁽¹⁾		24.17			25.10			28.40			24.17			28.40
Ending Balance Sheet:
Total assets	$	6,491,061		$	6,442,491		$	5,875,423		$	6,491,061		$	5,875,423
Loans held for investment, net of unearned income		3,746,289			3,611,152			3,268,644			3,746,289			3,268,644
Total securities		2,299,887			2,402,831			2,136,902			2,299,887			2,136,902
Total deposits		5,476,782			5,537,441			4,957,781			5,476,782			4,957,781
Short-term borrowings		304,536			193,894			187,508			304,536			187,508
Long-term debt		154,190			159,168			154,860			154,190			154,860
Total shareholders' equity		472,229			488,832			530,264			472,229			530,264
Average Balance Sheet:
Average total assets	$	6,457,647		$	6,078,950		$	5,811,228		$	6,152,390		$	5,728,822
Average total loans		3,673,379			3,326,269			3,356,680			3,416,600			3,394,066
Average total deposits		5,507,482			5,181,927			4,882,835			5,246,183			4,778,484
Financial Ratios:
Return on average assets		1.13	%		0.83	%		1.11	%		0.97	%		1.29	%
Return on average equity		14.56	%		10.14	%		12.00	%		11.81	%		14.03	%
Return on average tangible equity⁽¹⁾		19.32	%		13.13	%		15.06	%		15.28	%		17.69	%
Efficiency ratio⁽¹⁾		53.67	%		56.57	%		56.34	%		56.70	%		53.95	%
Net interest margin, tax equivalent⁽¹⁾		3.08	%		2.87	%		3.00	%		2.92	%		2.99	%
Loans to deposits ratio		68.40	%		65.21	%		65.93	%		68.40	%		65.93	%
Common equity ratio		7.28	%		7.59	%		9.03	%		7.28	%		9.03	%
Tangible common equity ratio⁽¹⁾		5.90	%		6.18	%		7.71	%		5.90	%		7.71	%
Credit Risk Profile:
Total nonperforming loans	$	25,963		$	27,337		$	33,708		$	25,963		$	33,708
Nonperforming loans ratio		0.69	%		0.76	%		1.03	%		0.69	%		1.03	%
Total nonperforming assets	$	26,066		$	27,621		$	34,162		$	26,066		$	34,162
Nonperforming assets ratio		0.40	%		0.43	%		0.58	%		0.40	%		0.58	%
Net charge-offs (recoveries)	$	588		$	281		$	(880	)	$	3,091		$	(158	)
Net charge-off (recovery) ratio		0.06	%		0.03	%		(0.10	)%		0.12	%		(0.01	)%
Allowance for credit losses	$	52,100		$	52,350		$	47,900		$	52,100		$	47,900
Allowance for credit losses ratio		1.39	%		1.45	%		1.47	%		1.39	%		1.47	%
Adjusted allowance for credit losses ratio⁽¹⁾		1.39	%		1.45	%		1.51	%		1.39	%		1.51	%
Allowance for credit losses to nonaccrual ratio		208.18	%		201.52	%		142.32	%		208.18	%		142.32	%
PPP Loans:
Average PPP loans	$	373		$	1,061		$	143,628		$	5,649		$	160,708
Fee Income		8			59			3,593			864			9,735

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

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

	Three Months Ended
	September 30, 2022						June 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost
ASSETS
Loans, including fees ^(1)(2)(3)	$	3,673,379	$	41,124	4.44	%	$	3,326,269	$	33,315	4.02	%	$	3,356,680	$	36,622	4.33	%
Taxable investment securities		1,939,517		10,635	2.18	%		1,923,155		9,576	2.00	%		1,628,605		6,655	1.62	%
Tax-exempt investment securities ⁽²⁾⁽⁴⁾		431,898		2,922	2.68	%		439,385		2,975	2.72	%		459,717		3,043	2.63	%
Total securities held for investment⁽²⁾		2,371,415		13,557	2.27	%		2,362,540		12,551	2.13	%		2,088,322		9,698	1.84	%
Other		6,070		9	0.59	%		30,016		40	0.53	%		44,915		21	0.19	%
Total interest earning assets⁽²⁾	$	6,050,864		54,690	3.59	%	$	5,718,825		45,906	3.22	%	$	5,489,917		46,341	3.35	%
Other assets		406,783						360,125						321,311
Total assets	$	6,457,647					$	6,078,950					$	5,811,228
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,725,000	$	1,463	0.34	%	$	1,641,337	$	1,189	0.29	%	$	1,434,560	$	1,056	0.29	%
Money market deposits		1,016,005		1,268	0.50	%		1,003,386		571	0.23	%		955,174		506	0.21	%
Savings deposits		710,836		297	0.17	%		662,449		287	0.17	%		606,449		316	0.21	%
Time deposits		913,307		2,007	0.87	%		836,143		1,126	0.54	%		890,866		1,272	0.57	%
Total interest bearing deposits		4,365,148		5,035	0.46	%		4,143,315		3,173	0.31	%		3,887,049		3,150	0.32	%
Securities sold under agreements to repurchase		144,628		228	0.63	%		154,107		111	0.29	%		170,384		104	0.24	%
Other short-term borrowings		83,086		539	2.57	%		41,859		118	1.13	%		12,100		28	0.92	%
Short-term borrowings		227,714		767	1.34	%		195,966		229	0.47	%		182,484		132	0.29	%
Long-term debt		159,125		1,886	4.70	%		144,440		1,602	4.45	%		163,817		1,597	3.87	%
Total borrowed funds		386,839		2,653	2.72	%		340,406		1,831	2.16	%		346,301		1,729	1.98	%
Total interest bearing liabilities	$	4,751,987	$	7,688	0.64	%	$	4,483,721	$	5,004	0.45	%	$	4,233,350	$	4,879	0.46	%
Noninterest bearing deposits		1,142,334						1,038,612						995,786
Other liabilities		64,063						57,157						43,040
Shareholders’ equity		499,263						499,460						539,052
Total liabilities and shareholders’ equity	$	6,457,647					$	6,078,950					$	5,811,228
Net interest income⁽²⁾			$	47,002					$	40,902					$	41,462
Net interest spread⁽²⁾					2.95	%					2.77	%					2.89	%
Net interest margin⁽²⁾					3.08	%					2.87	%					3.00	%

Total deposits⁽⁵⁾	$	5,507,482	$	5,035	0.36	%	$	5,181,927	$	3,173	0.25	%	$	4,882,835	$	3,150	0.26	%
Cost of funds⁽⁶⁾					0.52	%					0.36	%					0.37	%

^{(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 $35 thousand, $(31) thousand, and $3.5 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Loan purchase discount accretion was $2.0 million, $528 thousand, and $774 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Tax equivalent adjustments were $673 thousand, $569 thousand, and $507 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. The federal statutory tax rate utilized was 21%.}
^{(4) Interest income includes tax equivalent adjustments of $596 thousand, $608 thousand, and $615 thousand for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively. The federal statutory tax rate utilized was 21%.}
^{(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.}
^{(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.}

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

	Nine Months Ended
	September 30, 2022						September 30, 2021
(Dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost
ASSETS
Loans, including fees ^(1)(2)(3)	$	3,416,600	$	106,297	4.16	%	$	3,394,066	$	108,950	4.29	%
Taxable investment securities		1,899,907		28,334	1.99	%		1,501,252		18,231	1.62	%
Tax-exempt investment securities ⁽²⁾⁽⁴⁾		440,542		8,895	2.70	%		466,209		9,442	2.71	%
Total securities held for investment⁽²⁾		2,340,449		37,229	2.13	%		1,967,461		27,673	1.88	%
Other		25,972		77	0.40	%		43,250		54	0.17	%
Total interest earning assets⁽²⁾	$	5,783,021		143,603	3.32	%	$	5,404,777		136,677	3.38	%
Other assets		369,369						324,045
Total assets	$	6,152,390					$	5,728,822
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,642,849	$	3,713	0.30	%	$	1,418,339	$	3,142	0.30	%
Money market deposits		991,338		2,338	0.32	%		936,932		1,486	0.21	%
Savings deposits		671,917		863	0.17	%		585,334		926	0.21	%
Time deposits		877,923		4,204	0.64	%		875,027		4,613	0.70	%
Total interest bearing deposits		4,184,027		11,118	0.36	%		3,815,632		10,167	0.36	%
Securities sold under agreements to repurchase		152,663		435	0.38	%		171,848		321	0.25	%
Other short-term borrowings		42,952		680	2.12	%		20,235		100	0.66	%
Short-term borrowings		195,615		1,115	0.76	%		192,083		421	0.29	%
Long-term debt		148,053		4,975	4.49	%		186,323		5,160	3.70	%
Total borrowed funds		343,668		6,090	2.37	%		378,406		5,581	1.97	%
Total interest bearing liabilities	$	4,527,695	$	17,208	0.51	%	$	4,194,038	$	15,748	0.50	%
Noninterest bearing deposits		1,062,156						962,852
Other liabilities		54,775						45,671
Shareholders’ equity		507,764						526,261
Total liabilities and shareholders’ equity	$	6,152,390					$	5,728,822
Net interest income⁽²⁾			$	126,395					$	120,929
Net interest spread⁽²⁾					2.81	%					2.88	%
Net interest margin⁽²⁾					2.92	%					2.99	%

Total deposits⁽⁵⁾	$	5,246,183	$	11,118	0.28	%	$	4,778,484	$	10,167	0.28	%
Cost of funds⁽⁶⁾					0.41	%					0.41	%

^{(1) Average balance includes nonaccrual loans.}
^{(2) Tax equivalent. The federal statutory tax rate utilized was 21%.}
^{(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $0.7 million and $9.3 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. Loan purchase discount accretion was $3.3 million and $2.7 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. Tax equivalent adjustments were $1.8 million and $1.6 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. The federal statutory tax rate utilized was 21%.}
^{(4) Interest income includes tax equivalent adjustments of $1.8 million and $1.9 million for the nine months ended September 30, 2022 and September 30, 2021, 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	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands, except per share data)		2022			2022			2022			2021			2021
Total shareholders’ equity	$	472,229		$	488,832		$	504,457		$	527,475		$	530,264
Intangible assets, net		(94,563	)		(96,351	)		(81,135	)		(82,362	)		(83,607	)
Tangible common equity	$	377,666		$	392,481		$	423,322		$	445,113		$	446,657

Total assets	$	6,491,061		$	6,442,491		$	5,960,214		$	6,025,128		$	5,875,423
Intangible assets, net		(94,563	)		(96,351	)		(81,135	)		(82,362	)		(83,607	)
Tangible assets	$	6,396,498		$	6,346,140		$	5,879,079		$	5,942,766		$	5,791,816

Book value per share	$	30.23		$	31.26		$	32.15		$	33.66		$	33.71
Tangible book value per share⁽¹⁾	$	24.17		$	25.10		$	26.98		$	28.40		$	28.40
Shares outstanding		15,622,825			15,635,131			15,690,125			15,671,147			15,729,451

Common equity ratio		7.28	%		7.59	%		8.46	%		8.75	%		9.03	%
Tangible common equity ratio⁽²⁾		5.90	%		6.18	%		7.20	%		7.49	%		7.71	%

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

	Three Months Ended									Nine Months Ended
Return on Average Tangible Equity	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)		2022			2022			2021			2022			2021
Net income	$	18,317		$	12,621		$	16,311		$	44,833		$	55,230
Intangible amortization, net of tax⁽¹⁾		1,342			962			948			3,224			3,084
Tangible net income	$	19,659		$	13,583		$	17,259		$	48,057		$	58,314

Average shareholders’ equity	$	499,263		$	499,460		$	539,052		$	507,764		$	526,261
Average intangible assets, net		(95,499	)		(84,540	)		(84,288	)		(87,318	)		(85,579	)
Average tangible equity	$	403,764		$	414,920		$	454,764		$	420,446		$	440,682

Return on average equity		14.56	%		10.14	%		12.00	%		11.81	%		14.03	%
Return on average tangible equity⁽²⁾		19.32	%		13.13	%		15.06	%		15.28	%		17.69	%

^{(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									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)		2022			2022			2021			2022			2021
Net interest income	$	45,733		$	39,725		$	40,340		$	122,794		$	117,462
Tax equivalent adjustments:
Loans⁽¹⁾		673			569			507			1,782			1,557
Securities⁽¹⁾		596			608			615			1,819			1,910
Net interest income, tax equivalent	$	47,002		$	40,902		$	41,462		$	126,395		$	120,929
Loan purchase discount accretion		(2,015	)		(528	)		(774	)		(3,275	)		(2,745	)
Core net interest income	$	44,987		$	40,374		$	40,688		$	123,120		$	118,184

Net interest margin		3.00	%		2.79	%		2.92	%		2.84	%		2.91	%
Net interest margin, tax equivalent⁽²⁾		3.08	%		2.87	%		3.00	%		2.92	%		2.99	%
Core net interest margin⁽³⁾		2.95	%		2.83	%		2.94	%		2.85	%		2.92	%
Average interest earning assets	$	6,050,864		$	5,718,825		$	5,489,917		$	5,783,021		$	5,404,777

^{(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									Nine Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)		2022			2022			2021			2022			2021
Loan interest income, including fees	$	40,451		$	32,746		$	36,115		$	104,515		$	107,393
Tax equivalent adjustment⁽¹⁾		673			569			507			1,782			1,557
Tax equivalent loan interest income	$	41,124		$	33,315		$	36,622		$	106,297		$	108,950
Loan purchase discount accretion		(2,015	)		(528	)		(774	)		(3,275	)		(2,745	)
Core loan interest income	$	39,109		$	32,787		$	35,848		$	103,022		$	106,205

Yield on loans		4.37	%		3.95	%		4.27	%		4.09	%		4.23	%
Yield on loans, tax equivalent⁽²⁾		4.44	%		4.02	%		4.33	%		4.16	%		4.29	%
Core yield on loans⁽³⁾		4.22	%		3.95	%		4.24	%		4.03	%		4.18	%
Average loans	$	3,673,379		$	3,326,269		$	3,356,680		$	3,416,600		$	3,394,066

^{(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									Nine Months Ended
Efficiency Ratio	September 30,			June 30,			September 30,			September 30,			September 30,
(Dollars in thousands)		2022			2022			2021			2022			2021
Total noninterest expense	$	34,623		$	32,082		$	29,778		$	98,348		$	86,148
Amortization of intangibles		(1,789	)		(1,283	)		(1,264	)		(4,299	)		(4,112	)
Merger-related expenses		(763	)		(901	)		—			(1,792	)		—
Noninterest expense used for efficiency ratio	$	32,071		$	29,898		$	28,514		$	92,257		$	82,036

Net interest income, tax equivalent⁽¹⁾	$	47,002		$	40,902		$	41,462		$	126,395		$	120,929
Noninterest income		12,588			12,347			9,182			36,579			31,224
Investment securities gains, net		163			(395	)		(36	)		(272	)		(105	)
Net revenues used for efficiency ratio	$	59,753		$	52,854		$	50,608		$	162,702		$	152,048

Efficiency ratio⁽²⁾		53.67	%		56.57	%		56.34	%		56.70	%		53.95	%

^{(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	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)		2022			2022			2022			2021			2021
Loans held for investment, net of unearned income	$	3,746,289		$	3,611,152		$	3,250,035		$	3,245,012		$	3,268,644
PPP loans		(195	)		(402	)		(3,037	)		(30,841	)		(89,354	)
Core loans	$	3,746,094		$	3,610,750		$	3,246,998		$	3,214,171		$	3,179,290
Allowance for credit losses	$	52,100		$	52,350		$	46,200		$	48,700		$	47,900

Allowance for credit losses ratio		1.39	%		1.45	%		1.42	%		1.50	%		1.47	%
Adjusted allowance for credit losses ratio⁽¹⁾		1.39	%		1.45	%		1.42	%		1.52	%		1.51	%

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

Core Loans/Core Commercial Loans	September 30,		June 30,		March 31,		December 31,		September 30,
(Dollars in thousands)		2022		2022		2022		2021		2021
Commercial loans:
Commercial and industrial	$	1,041,662	$	986,137	$	898,942	$	902,314	$	927,258
Agricultural		116,229		110,263		94,649		103,417		106,356
Commercial real estate		1,910,097		1,859,940		1,723,891		1,704,541		1,699,358
Total commercial loans	$	3,067,988	$	2,956,340	$	2,717,482	$	2,710,272	$	2,732,972
Consumer loans:
Residential real estate	$	603,649	$	578,804	$	463,676	$	466,322	$	468,136
Other consumer		74,652		76,008		68,877		68,418		67,536
Total consumer loans	$	678,301	$	654,812	$	532,553	$	534,740	$	535,672
Loans held for investment, net of unearned income	$	3,746,289	$	3,611,152	$	3,250,035	$	3,245,012	$	3,268,644

PPP loans	$	195	$	402	$	3,037	$	30,841	$	89,354
Acquired IOFB loan portfolio	$	281,326	$	281,470	$	—	$	—	$	—

Core loans⁽¹⁾	$	3,746,094	$	3,610,750	$	3,246,998	$	3,214,171	$	3,179,290
Adjusted core loans⁽²⁾	$	3,464,768	$	3,329,280	$	3,246,998	$	3,214,171	$	3,179,290
Core commercial loans⁽³⁾	$	3,067,793	$	2,955,938	$	2,714,445	$	2,679,431	$	2,643,618

^{(1) Core loans are calculated as loans held for investment, net of unearned income less PPP loans.}
^{(2) Adjusted core loans are calculated as loans held for investment, net of unearned income, less PPP loans and the acquired IOFB loan portfolio.}
^{(3) Core commercial loans are calculated as total commercial loans less PPP loans.}

Category: Earnings

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

Source: MidWestOne Financial Group, Inc.

Industry: Banks

Contact:
	Len D. Devaisher	Barry S. Ray
	Interim Chief Executive Officer	Chief Financial Officer
	319.356.5800	319.356.5800

Penticton Herald

Penticton Herald

MidWestOne Financial Group, Inc. Reports Financial Results for the Third Quarter of 2022

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