MidWestOne Financial Group, Inc. - FORM 8-K - EX-99.1 - January 28, 2021

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FOR IMMEDIATE RELEASEJanuary 28, 2021

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 - 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.                1                                    

FINANCIAL HIGHLIGHTSThree Months EndedYear Ended
December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands, except per share amounts)20202020201920202019
Net interest income$39,037 $37,809 $39,584 $152,964 $143,650 
Noninterest income10,626 9,570 9,036 38,620 31,246 
Total revenue, net of interest expense49,663 47,379 48,620 191,584 174,896 
Credit loss (benefit) expense(3,041)4,992 604 28,369 7,158 
Noninterest expense31,915 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 assets1.22 %(1.48)%1.14 %0.13 %1.04 %
Return on average equity13.15 %(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


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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 Ended
Noninterest IncomeDecember 31,September 30,December 31,
(In thousands)202020202019
Investment 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%.


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The following table presents details of noninterest expense for the periods indicated:
Three Months Ended
Noninterest ExpenseDecember 31,September 30,December 31,
(In thousands)202020202019
Compensation 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%.


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BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTSAs of or For the Three Months Ended
December 31,September 30,December 31,
(Dollars in millions, except per share amounts)202020202019
Ending 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, 2020September 30, 2020December 31, 2019
Balance% of TotalBalance% of TotalBalance% of Total
(dollars in thousands)
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 development
181,291 5.2 191,423 5.4 298,077 8.6 
Farmland
144,970 4.2 152,362 4.2 181,885 5.3 
Multifamily
256,525 7.4 235,241 6.7 227,407 6.6 
Other
1,149,575 33.0 1,128,009 31.9 1,107,490 32.1 
Total commercial real estate
1,732,361 49.8 1,707,035 48.2 1,814,859 52.6 
Residential real estate
One-to-four family first liens
355,684 10.2 371,390 10.5 407,418 11.8 
One-to-four family junior liens
143,422 4.1 150,180 4.2 170,381 4.9 
Total residential real estate
499,106 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 %


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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 EndedYear Ended
Allowance for Credit Losses Roll ForwardDecember 31,September 30,December 31,December 31,December 31,
(In thousands)20202020201920202019
Beginning 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, 2020September 30, 2020December 31, 2019
(In thousands)Balance% of TotalBalance% of TotalBalance% 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 deposits
3,710,701 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 $250,000 254,877 5.6 263,550 6.1 271,214 7.3 
Total time deposits
836,348 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 %


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CREDIT RISK PROFILE
As of or For the Three Months Ended
HighlightsDecember 31,September 30,December 31,
(dollars in thousands)202020202019
Credit 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.


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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 Ratios
2020 (1)
20202019
MidWestOne 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.



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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.


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MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,September 30,December 31,
(In thousands)202020202019
ASSETS
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 income 24,592 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 




10

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months EndedYear Ended
December 31,September 30,December 31,December 31,
(In thousands, except per share data)2020202020192020 2019
Interest 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 



11

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FIVE QUARTER CONSOLIDATED BALANCE SHEETS
 December 31,September 30,June 30,March 31,December 31,
(In thousands)20202020202020202019
ASSETS
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 




12

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)20202020202020202019
Interest 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 



13

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
 Three Months Ended
 December 31, 2020September 30, 2020December 31, 2019
(Dollars in thousands)
Average
Balance
Interest
Income/
Expense
 
Average
Yield/
Cost
 
Average
Balance
Interest
Income/
Expense
 
Average
Yield/
Cost
Average BalanceInterest
Income/
Expense		 
Average
Yield/
Cost
ASSETS   
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.









14

 Year Ended
 December 31, 2020December 31, 2019
(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)
$3,551,945 $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.


15

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 RatioDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands, except per share data)20202020202020202019
Total 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 outstanding16,016,780 16,099,324 16,099,324 16,089,782 16,162,176 
Equity to assets ratio9.27 %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 EndedYear Ended
Return on Average Tangible EquityDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20202020201920202019
Net 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.



16

Net Interest Margin, Tax Equivalent/
Core Net Interest Margin		Three Months EndedYear Ended
December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20202020201920202019
Net 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 margin3.03 %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 EndedYear Ended
Loan Yield, Tax EquivalentDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20202020201920202019
Loan 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 loans4.27 %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 EndedYear Ended
Efficiency RatioDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20202020201920202019
Total 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 income10,626 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.




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Three Months EndedYear Ended
Core Earnings December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands, except per share data)20202020201920202019
Net 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 outstanding16,092 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 RatioDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands)20202020202020202019
Loans 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 ratio1.59 %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 LoansDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands)20202020202020202019
Commercial loans:
Commercial and industrial$1,055,488 $1,103,102 $1,084,527 $864,702 $835,236 
Agricultural116,392 129,453 140,837 145,435 140,446 
Commercial real estate1,732,361 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 consumer78,876 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.




Contact:
Charles N. FunkBarry S. Ray
Chief Executive OfficerSenior Executive Vice President and Chief Financial Officer
319.356.5800319.356.5800





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MidWestOne Financial Group, Inc. Reports