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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 2023
MidWestOne Financial Group, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-35968
 
Iowa   42-1206172
(State or other jurisdiction
of incorporation)
  
(I.R.S. Employer
Identification Number)
102 South Clinton Street
Iowa City, Iowa 52240
(Address of principal executive offices, including zip code)
(319) 356-5800
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $1.00 par value MOFG The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02.     Results of Operations and Financial Condition.
On August 1, 2023, MidWestOne Financial Group, Inc. (the “Company”) issued a press release announcing its earnings for the three months and six months ended June 30, 2023. The press release is furnished herewith as Exhibit 99.1. In addition, the Company is providing a financial supplement furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this item and the attached press release and financial supplement shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.
Item 8.01.    Other Events.
The Board of Directors of the Company declared a cash dividend of $0.2425 per common share on July 25, 2023. The dividend is payable September 15, 2023, to shareholders of record at the close of business on September 1, 2023.
Item 9.01.    Financial Statements and Exhibits.
(d)    Exhibits.
MidWestOne Financial Group, Inc. press release dated August 1, 2023
MidWestOne Financial Group, Inc. financial supplement dated August 1, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MIDWESTONE FINANCIAL GROUP, INC.
Dated: August 1, 2023 By:
/s/ BARRY S. RAY
Barry S. Ray
Chief Financial Officer



EX-99.1 2 financialresultsq22023.htm EX-99.1 Document

mofglogoa01.jpg
FOR IMMEDIATE RELEASE August 1, 2023

MIDWESTONE FINANCIAL GROUP, INC. REPORTS
FINANCIAL RESULTS FOR THE
SECOND QUARTER OF 2023

Iowa City, Iowa - MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the second quarter of 2023.
Second Quarter 2023 Highlights1
•Net income of $7.6 million, or $0.48 per diluted common share, compared to net income of $1.4 million, or $0.09 per diluted common share, for the linked quarter.
•Annualized loan growth of 10.6%.
•Expenses of $34.9 million included $1.4 million of costs stemming from a voluntary early retirement program and executive relocation.
•Nonperforming assets ratio improved 1 basis point ("bps") to 0.22%; net charge-off ratio was 0.09%.
Subsequent Events
•On July 25, 2023, the Board of Directors declared a cash dividend of $0.2425 per common share.
CEO COMMENTARY
Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “On our first quarter earnings call, we introduced a comprehensive strategic plan designed to transform our operations and become a higher performing bank over the medium term. Though we are facing a challenging operating environment driven by rising interest rates, we have made solid progress across the five pillars of our plan highlighted by 10% loan growth, annualized, that we achieved in the quarter. We have been adding bankers in our major markets of the Twin Cities, Denver, and Metro Iowa, which has been a major factor in this strong loan growth. So far this year, we have added bankers in the Twin Cities and we will continue to add bankers in our major markets as we continue to build scale and take market share. Late in the second quarter, as part of our specialty commercial loan growth initiative, we recruited an established agribusiness team from a regional bank as we strive to ‘up-tier’ in this attractive segment of the market. This team has already started to bring full relationship business to MidWestOne. We are also starting to see momentum in our governmental lending group, where we have improved our focus and execution. Lastly, we are seeing a nice increase in our wealth management assets under management and revenues, as compared to the first quarter, driven by the teams recruited in 2021 and 2022.”
Mr. Reeves concluded, “I'm very pleased with the early results that we are achieving as we execute our strategic plan. We are beginning to make investments in talent and our platform to drive growth, while keeping our noninterest expense relatively steady from the first quarter. We are driving significant change across our organization, and I would like to thank our employees for their hard work and dedication to our Company, customers, and communities. Our results would not be possible without their tireless efforts. I remain confident that we are on a strong path to significantly improved financial results.”

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

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

REVENUE REVIEW

Revenue Change Change
2Q23 vs 2Q23 vs
(Dollars in thousands) 2Q23 1Q23 2Q22 1Q23 2Q22
Net interest income $ 36,962  $ 40,076  $ 39,725  (8) % (7) %
Noninterest income (loss) 8,746  (4,046) 12,347  n / m (29) %
Total revenue, net of interest expense $ 45,708  $ 36,030  $ 52,072  27  % (12) %
Results are not meaningful (n/m)
Total revenue for the second quarter of 2023 increased $9.7 million from the first quarter of 2023 as a result of increased noninterest income, partially offset by lower net interest income. Compared to the second quarter of 2022, total revenue decreased $6.4 million due to lower net interest income and noninterest income.
Net interest income of $37.0 million for the second quarter of 2023 decreased from $40.1 million in the first quarter of 2023, due primarily to higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields. Compared to the second quarter of 2022, net interest income decreased $2.8 million as a result of higher funding costs and volumes, partially offset by higher interest earning asset yields and volumes.
The Company's tax equivalent net interest margin was 2.52% in the second quarter of 2023 compared to 2.75% in the first quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 39 bps to 1.98%, due to interest bearing deposit costs of 1.79%, short-term borrowing costs of 2.91%, and long-term debt costs of 6.38%, which increased 41 bps, 9 bps and 19 bps, respectively from the first quarter of 2023. Total interest earning assets yield increased 12 bps primarily as a result of an increase in loan yield of 10 bps, partially offset by a decrease in investment security yield of 5 bps, respectively. Our cycle-to-date interest bearing deposit beta was 31%.
The tax equivalent net interest margin was 2.52% in the second quarter of 2023 compared to 2.87% in the second quarter of 2022, driven by higher funding costs and volumes, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 153 bps to 1.98%, due to interest bearing deposit costs of 1.79%, short-term borrowing costs of 2.91%, and long-term debt costs of 6.38%, which increased 148 bps, 244 bps and 193 bps, respectively from the second quarter of 2022. Total interest earning assets yield increased 92 bps primarily as a result of an increase in loan and securities yields of 103 bps and 22 bps, respectively.


2

Noninterest Income (Loss) Change Change
2Q23 vs 2Q23 vs
(In thousands) 2Q23 1Q23 2Q22 1Q23 2Q22
Investment services and trust activities $ 3,119  $ 2,933  $ 2,670  6  % 17  %
Service charges and fees 2,047  2,008  1,717  2  % 19  %
Card revenue 1,847  1,748  1,878  6  % (2) %
Loan revenue 909  1,420  3,523  (36) % (74) %
Bank-owned life insurance 616  602  558  2  % 10  %
Investment securities (losses) gains, net (2) (13,170) 395  n / m (101) %
Other 210  413  1,606  (49) % (87) %
Total noninterest income (loss) $ 8,746  $ (4,046) $ 12,347  n / m (29) %
Noninterest income for the second quarter of 2023 increased $12.8 million from the linked quarter due primarily to $13.2 million of investment security losses recognized in the linked quarter, partially offset by a $0.5 million unfavorable change in loan revenue. Loan revenue reflected an unfavorable quarter-over quarter change in the fair value of our mortgage servicing rights of $0.9 million, partially offset by a $0.5 million favorable change in loan sale gains generated by our governmental lending and mortgage origination businesses. Noninterest income decreased $3.6 million from the second quarter of 2022. The largest driver was a $0.6 million decrease in the fair value of our mortgage servicing rights in the current quarter compared to a $2.4 million increase in the second quarter of 2022.

EXPENSE REVIEW
Noninterest Expense Change Change
2Q23 vs 2Q23 vs
(In thousands) 2Q23 1Q23 2Q22 1Q23 2Q22
Compensation and employee benefits $ 20,386  $ 19,607  $ 18,955  4  % 8  %
Occupancy expense of premises, net 2,574  2,746  2,253  (6) % 14  %
Equipment 2,435  2,171  2,107  12  % 16  %
Legal and professional 1,682  1,736  2,435  (3) % (31) %
Data processing 1,521  1,363  1,237  12  % 23  %
Marketing 1,142  986  1,157  16  % (1) %
Amortization of intangibles 1,594  1,752  1,283  (9) % 24  %
FDIC insurance 862  749  420  15  % 105  %
Communications 260  261  266  —  % (2) %
Foreclosed assets, net (6) (28) 4  (79) % (250) %
Other 2,469  1,976  1,965  25  % 26  %
     Total noninterest expense $ 34,919  $ 33,319  $ 32,082  5  % 9  %
Merger-related Expenses
(In thousands) 2Q23 1Q23 2Q22
Compensation and employee benefits $ —  $ 70  $ 150 
Occupancy expense of premises, net —  —  1 
Equipment —  —  6 
Legal and professional —  —  638 
Data processing —  65  38 
Marketing —  —  65 
Communications —  —  2 
Other —  1  1 
Total merger-related expenses $ —  $ 136  $ 901 

Noninterest expense for the second quarter of 2023 increased $1.6 million, or 4.8%, from the linked quarter with overall increases in all noninterest expense categories except occupancy, legal and professional, amortization of intangibles, and communications. The increase in compensation and employee benefits reflected severance expense of $1.2 million in the current period, as compared to $0.1 million in the first quarter of 2023. The largest driver in the increase in 'other' noninterest expense was executive relocation expenses of $0.2 million.
Noninterest expense for the second quarter of 2023 increased $2.8 million, or 8.8%, from the second quarter of 2022. The increase primarily reflected costs associated with the acquired operations of Iowa First Bancshares Corp. ("IOFB"), which closed in the second quarter of 2022. Partially offsetting the increases above was a decline of $0.8 million in legal and professional expenses, primarily due to a decrease in legal and professional merger-related expenses.


3

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

BALANCE SHEET REVIEW
Total assets were $6.52 billion at June 30, 2023 compared to $6.41 billion at March 31, 2023 and $6.44 billion at June 30, 2022. The increase from March 31, 2023 was driven by higher loan balances from organic growth and an increase in cash and cash equivalents, partially offset by lower investment security balances. In comparison to June 30, 2022, the increase was primarily due to higher loan balances from organic growth and an increase in cash and cash equivalents, partially offset by lower security balances as a result of the balance sheet repositioning executed in the first quarter of 2023.
Loans Held for Investment June 30, 2023 March 31, 2023 June 30, 2022
Balance % of Total Balance % of Total Balance % of Total
(Dollars in thousands)
Commercial and industrial $ 1,089,269  27.1  % $ 1,080,514  27.6  % $ 986,137  27.3  %
Agricultural 106,148  2.6  106,641  2.7  110,263  3.1 
Commercial real estate
Construction and development 313,836  7.8  320,924  8.2  224,470  6.2 
Farmland 183,378  4.6  182,528  4.7  181,820  5.0 
Multifamily 305,519  7.6  255,065  6.5  239,676  6.6 
Other 1,331,886  33.1  1,290,454  33.0  1,213,974  33.7 
Total commercial real estate 2,134,619  53.1  2,048,971  52.4  1,859,940  51.5 
Residential real estate
One-to-four family first liens 448,096  11.2  448,459  11.4  430,157  11.9 
One-to-four family junior liens 168,755  4.2  162,403  4.1  148,647  4.1 
Total residential real estate 616,851  15.4  610,862  15.5  578,804  16.0 
Consumer 71,762  1.8  72,377  1.8  76,008  2.1 
Loans held for investment, net of unearned income $ 4,018,649  100.0  % $ 3,919,365  100.0  % $ 3,611,152  100.0  %
Total commitments to extend credit $ 1,296,719  $ 1,205,902  $ 1,117,754 
Loans held for investment, net of unearned income, increased $99.3 million, or 2.5%, to $4.02 billion from $3.92 billion at March 31, 2023. This increase was driven by new loan production in the second quarter of 2023.
Investment Securities June 30, 2023 March 31, 2023 June 30, 2022
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Available for sale $ 903,520  45.1  % $ 954,074  46.1  % $ 1,234,789  51.4  %
Held to maturity 1,099,569  54.9  % 1,117,709  53.9  % 1,168,042  48.6  %
Total investment securities $ 2,003,089  $ 2,071,783  $ 2,402,831 
Investment securities at June 30, 2023 were $2.00 billion, decreasing $68.7 million from March 31, 2023 and $399.7 million from June 30, 2022. The decrease from the first quarter of 2023 was primarily due to paydowns, calls, and maturities. The decrease from the second quarter of 2022 was primarily due to the balance sheet repositioning completed in the first quarter of 2023.


4

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

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

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

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


5

Capital June 30, March 31, June 30,
(Dollars in thousands)
2023 (1)
 2023 2022
Total shareholders' equity $ 501,341  $ 500,650  $ 488,832 
Accumulated other comprehensive loss (82,704) (78,885) (65,231)
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio 8.47  % 8.30  % 8.51  %
Common equity tier 1 capital to risk-weighted assets ratio 9.36  % 9.39  % 8.82  %
Tier 1 capital to risk-weighted assets ratio 10.15  % 10.18  % 9.61  %
Total capital to risk-weighted assets ratio 12.26  % 12.31  % 11.73  %
MidWestOne Bank
Tier 1 leverage to average assets ratio 9.42  % 9.28  % 9.70  %
Common equity tier 1 capital to risk-weighted assets ratio 11.31  % 11.40  % 10.99  %
Tier 1 capital to risk-weighted assets ratio 11.31  % 11.40  % 10.99  %
Total capital to risk-weighted assets ratio 12.22  % 12.31  % 11.90  %
(1) Regulatory capital ratios for June 30, 2023 are preliminary
Total shareholders' equity at June 30, 2023 increased $0.7 million from March 31, 2023, driven by the benefit of second quarter net income, partially offset by an increase in accumulated other comprehensive loss and dividends paid during the second quarter of 2023.
Accumulated other comprehensive loss at June 30, 2023 increased $3.8 million compared to March 31, 2023, primarily due to a decrease in available for sale securities valuations. Accumulated other comprehensive loss increased $17.5 million from June 30, 2022, driven by the impact of higher interest rates on available for sale securities valuations.
On July 25, 2023, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable September 15, 2023, to shareholders of record at the close of business on September 1, 2023.
No common shares were repurchased by the Company during the period March 31, 2023 through June 30, 2023 or for the subsequent period through August 1, 2023. The current share repurchase program allows for the repurchase of up to $15.0 million.


6

CREDIT QUALITY REVIEW

Credit Quality As of or For the Three Months Ended
June 30, March 31, June 30,
(Dollars in thousands) 2023 2023 2022
Credit loss expense related to loans $ 1,497  $ 933  $ 3,060 
Net charge-offs 897  333  281 
Allowance for credit losses 50,400  49,800  52,350 
Pass $ 3,769,309  $ 3,728,522  $ 3,402,508 
Special Mention / Watch 133,904  92,075  111,893 
Classified 115,436  98,768  96,751 
Loans greater than 30 days past due and accruing $ 6,201  $ 4,932  $ 12,349 
Nonperforming loans $ 14,448  $ 14,442  $ 27,337 
Nonperforming assets 14,448  14,442  27,621 
Net charge-off ratio(1)
 0.09  % 0.03  % 0.03  %
Classified loans ratio(2)
 2.87  % 2.52  % 2.68  %
Nonperforming loans ratio(3)
 0.36  % 0.37  % 0.76  %
Nonperforming assets ratio(4)
 0.22  % 0.23  % 0.43  %
Allowance for credit losses ratio(5)
 1.25  % 1.27  % 1.45  %
Allowance for credit losses to nonaccrual loans ratio(6)
 355.03  % 344.88  % 201.52  %
(1) Net charge-off ratio is calculated as annualized net charge-offs divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.
(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming loans ratio is calculated as nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(4) Nonperforming assets ratio is calculated as nonperforming assets divided by total assets at the end of the period.
(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.
(6)Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.
Compared to the linked quarter, nonperforming loans and nonperforming assets ratios remained stable and improved from the prior year period. The nonperforming loans ratio declined 1 bps from the linked quarter and 40 bps from the prior year to 0.36%. The classified loans ratio increased 35 bps from the linked quarter and 19 bps from the prior year. The linked quarter increase in classified loans was primarily due to the deterioration of two non-owner occupied commercial real estate loans. Further, the net charge-off ratio increased 6 bps from the linked quarter and 6 bps from the prior year.
As of June 30, 2023, the allowance for credit losses was $50.4 million, or 1.25% of loans held for investment, net of unearned income, compared with $49.8 million, or 1.27% of loans held for investment, net of unearned income, at March 31, 2023. Credit loss expense of $1.6 million in the second quarter of 2023 was primarily attributable to loan growth.
Nonperforming Loans Roll Forward Nonaccrual 90+ Days Past Due & Still Accruing Total
(Dollars in thousands)
Balance at March 31, 2023
 $ 14,440  $ 2  $ 14,442 
Loans placed on nonaccrual or 90+ days past due & still accruing 1,828  333  2,161 
Proceeds related to repayment or sale (1,054) —  (1,054)
Loans returned to accrual status or no longer past due (45) —  (45)
Charge-offs (973) (80) (1,053)
Transfer to nonaccrual —  (3) (3)
Balance at June 30, 2023
 $ 14,196  $ 252  $ 14,448 

CONFERENCE CALL DETAILS
The Company will host a conference call for investors at 11:00 a.m. CT on Tuesday, August 1, 2023. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=c7140c96&confId=51647. After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-470-1428 using an access code of 231141 at least fifteen minutes before the call start time.


7

If you are unable to participate on the call, a replay will be available until October 26, 2023, by calling 1-866-813-9403 and using the replay access code of 868948. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

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


8

Cautionary Note Regarding Forward-Looking Statements
This release contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “goals,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of actual and expected increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the war in Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; (25) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.


9

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




10

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







11

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS
As of or for the Three Months Ended As of or for the Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022
Earnings:
Net interest income $ 36,962  $ 40,076  $ 39,725  $ 77,038  $ 77,061 
Noninterest (loss) income 8,746  (4,046) 12,347  4,700  23,991 
     Total revenue, net of interest expense 45,708  36,030  52,072  81,738  101,052 
Credit loss expense 1,597  933  3,282  2,530  3,282 
Noninterest expense 34,919  33,319  32,082  68,238  63,725 
     Income before income tax expense 9,192  1,778  16,708  10,970  34,045 
Income tax expense 1,598  381  4,087  1,979  7,529 
     Net income $ 7,594  $ 1,397  $ 12,621  $ 8,991  $ 26,516 
Per Share Data:
Diluted earnings $ 0.48  $ 0.09  $ 0.80  $ 0.57  $ 1.69 
Book value 31.96  31.94  31.26  31.96  31.26 
Tangible book value(1)
 26.26  26.13  25.10  26.26  25.10 
Ending Balance Sheet:
Total assets $ 6,521,489  $ 6,409,952  $ 6,442,491  $ 6,521,489  $ 6,442,491 
Loans held for investment, net of unearned income 4,018,649  3,919,365  3,611,152  4,018,649  3,611,152 
Total securities 2,003,089  2,071,783  2,402,831  2,003,089  2,402,831 
Total deposits 5,445,447  5,555,153  5,537,441  5,445,447  5,537,441 
Short-term borrowings 362,054  143,981  193,894  362,054  193,894 
Long-term debt 125,752  137,981  159,168  125,752  159,168 
Total shareholders' equity 501,341  500,650  488,832  501,341  488,832 
Average Balance Sheet:
Average total assets $ 6,465,810  $ 6,524,065  $ 6,078,950  $ 6,494,777  $ 5,997,231 
Average total loans 4,003,717  3,867,110  3,326,269  3,935,791  3,286,083 
Average total deposits 5,454,517  5,546,694  5,181,927  5,500,350  5,113,368 
Financial Ratios:
Return on average assets 0.47  % 0.09  % 0.83  % 0.28  % 0.89  %
Return on average equity 6.03  % 1.14  % 10.14  % 3.61  % 10.44  %
Return on average tangible equity(1)
 8.50  % 2.70  % 13.13  % 5.65  % 13.35  %
Efficiency ratio(1)
 71.13  % 62.32  % 56.57  % 66.56  % 58.46  %
Net interest margin, tax equivalent(1)
 2.52  % 2.75  % 2.87  % 2.63  % 2.83  %
Loans to deposits ratio 73.80  % 70.55  % 65.21  % 73.80  % 65.21  %
Uninsured deposits excluding collateralized municipal deposits ratio 20.05  % 18.54  % 24.11  % 20.05  % 24.11  %
Common equity ratio 7.69  % 7.81  % 7.59  % 7.69  % 7.59  %
Tangible common equity ratio(1)
 6.40  % 6.48  % 6.18  % 6.40  % 6.18  %
Credit Risk Profile:
Total nonperforming loans $ 14,448  $ 14,442  $ 27,337  $ 14,448  $ 27,337 
Nonperforming loans ratio 0.36  % 0.37  % 0.76  % 0.36  % 0.76  %
Total nonperforming assets $ 14,448  $ 14,442  $ 27,621  $ 14,448  $ 27,621 
Nonperforming assets ratio 0.22  % 0.23  % 0.43  % 0.22  % 0.43  %
Net charge-offs $ 897  $ 333  $ 281  $ 1,230  $ 2,503 
Net charge-off ratio 0.09  % 0.03  % 0.03  % 0.06  % 0.15  %
Allowance for credit losses $ 50,400  $ 49,800  $ 52,350  $ 50,400  $ 52,350 
Allowance for credit losses ratio 1.25  % 1.27  % 1.45  % 1.25  % 1.45  %
Allowance for credit losses to nonaccrual ratio 355.03  % 344.88  % 201.52  % 355.03  % 201.52  %
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.




12

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
  Three Months Ended
  June 30, 2023 March 31, 2023 June 30, 2022
(Dollars in thousands) Average
Balance		 Interest
Income/
Expense		   Average
Yield/
Cost		  
Average
Balance
Interest
Income/
Expense
   Average
Yield/
Cost		 Average Balance Interest
Income/
Expense		   Average
Yield/
Cost
ASSETS      
Loans, including fees (1)(2)(3)
 $ 4,003,717  $ 50,439    5.05  %   $ 3,867,110  $ 47,206  4.95  % $ 3,326,269  $ 33,315    4.02  %
Taxable investment securities 1,698,003  9,734    2.30  %   1,811,388  10,444  2.34  % 1,923,155  9,576    2.00  %
Tax-exempt investment securities (2)(4)
 345,934  2,253    2.61  %   397,110  2,649  2.71  % 439,385  2,975    2.72  %
Total securities held for investment(2)
 2,043,937  11,987  2.35  % 2,208,498  13,093  2.40  % 2,362,540  12,551  2.13  %
Other 9,078  68    3.00  %   24,848  244  3.98  % 30,016  40    0.53  %
Total interest earning assets(2)
 $ 6,056,732  $ 62,494    4.14  %   $ 6,100,456  $ 60,543  4.02  % $ 5,718,825  $ 45,906    3.22  %
Other assets 409,078      423,609  360,125   
Total assets $ 6,465,810      $ 6,524,065  $ 6,078,950   
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Interest checking deposits $ 1,420,741  $ 1,971  0.56  % $ 1,515,845  $ 1,849  0.49  % $ 1,641,337  $ 1,189  0.29  %
Money market deposits 999,436  5,299  2.13  % 930,543  3,269  1.42  % 1,003,386  571  0.23  %
Savings deposits 603,905  288    0.19  %   653,043  272  0.17  % 662,449  287    0.17  %
Time deposits 1,490,332  12,559    3.38  %   1,417,688  9,929  2.84  % 836,143  1,126    0.54  %
Total interest bearing deposits 4,514,414  20,117    1.79  %   4,517,119  15,319  1.38  % 4,143,315  3,173    0.31  %
Securities sold under agreements to repurchase 159,583  423  1.06  % 145,809  450  1.25  % 154,107  111  0.29  %
Other short-term borrowings 132,495  1,695  5.13  % 111,306  1,336  4.87  % 41,859  118  1.13  %
Short-term borrowings 292,078  2,118    2.91  %   257,115  1,786  2.82  % 195,966  229    0.47  %
Long-term debt 135,329  2,153    6.38  %   139,208  2,124  6.19  % 144,440  1,602    4.45  %
Total borrowed funds 427,407  4,271  4.01  % 396,323  3,910  4.00  % 340,406  1,831  2.16  %
Total interest bearing liabilities $ 4,941,821  $ 24,388    1.98  %   $ 4,913,442  $ 19,229  1.59  % $ 4,483,721  $ 5,004    0.45  %
Noninterest bearing deposits 940,103      1,029,575  1,038,612   
Other liabilities 78,898      82,501  57,157   
Shareholders’ equity 504,988  498,547  499,460 
Total liabilities and shareholders’ equity $ 6,465,810      $ 6,524,065  $ 6,078,950   
Net interest income(2)
 $ 38,106  $ 41,314  $ 40,902 
Net interest spread(2)
   2.16  %     2.43  %   2.77  %
Net interest margin(2)
 2.52  % 2.75  % 2.87  %
Total deposits(5)
 $ 5,454,517  $ 20,117  1.48  % $ 5,546,694  $ 15,319  1.12  % $ 5,181,927  $ 3,173  0.25  %
Cost of funds(6)
 1.66  % 1.31  % 0.36  %
(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $79 thousand, $95 thousand, and $(31) thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Loan purchase discount accretion was $1.0 million, $1.2 million, and $528 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. Tax equivalent adjustments were $713 thousand, $716 thousand, and $569 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $431 thousand, $522 thousand, and $608 thousand for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.









13

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
  Six Months Ended
  June 30, 2023 June 30, 2022
(Dollars in thousands)
Average
Balance
Interest
Income/
Expense
  
Average
Yield/
Cost
  
Average
Balance
Interest
Income/
Expense
  
Average
Yield/
Cost
ASSETS    
Loans, including fees (1)(2)(3)
 $ 3,935,791  $ 97,645  5.00  % $ 3,286,083  $ 65,173  4.00  %
Taxable investment securities 1,754,382  20,178  2.32  % 1,879,773  17,699  1.90  %
Tax-exempt investment securities (2)(4)
 371,381  4,902  2.66  % 444,936  5,973  2.71  %
Total securities held for investment(2)
 2,125,763  25,080  2.38  % 2,324,709  23,672  2.05  %
Other 16,919  312    3.72  %   42,983  68  0.32  %
Total interest earning assets(2)
 $ 6,078,473  $ 123,037    4.08  %   $ 5,653,775  $ 88,913  3.17  %
Other assets 416,304      343,456 
Total assets $ 6,494,777      $ 5,997,231 
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
Interest checking deposits $ 1,468,030  $ 3,820  0.52  % $ 1,601,093  $ 2,250  0.28  %
Money market deposits 965,180  8,568  1.79  % 978,801  1,070  0.22  %
Savings deposits 628,338  560  0.18  % 652,134  566  0.18  %
Time deposits 1,454,210  22,488  3.12  % 859,938  2,197  0.52  %
Total interest bearing deposits 4,515,758  35,436    1.58  %   4,091,966  6,083  0.30  %
Securities sold under agreements to repurchase 152,734  873  1.15  % 156,747  207  0.27  %
Other short-term borrowings 121,959  3,031  5.01  % 22,551  141  1.26  %
Short-term borrowings 274,693  3,904    2.87  %   179,298  348  0.39  %
Long-term debt 137,258  4,277    6.28  %   142,426  3,089  4.37  %
Total borrowed funds 411,951  8,181  4.00  % 321,724  3,437  2.15  %
Total interest bearing liabilities $ 4,927,709  $ 43,617    1.78  %   $ 4,413,690  $ 9,520  0.43  %
Noninterest bearing deposits 984,592      1,021,402 
Other liabilities 80,690      50,054 
Shareholders’ equity 501,786  512,085 
Total liabilities and shareholders’ equity $ 6,494,777      $ 5,997,231 
Net interest income(2)
 $ 79,420  $ 79,393 
Net interest spread(2)
   2.30  %     2.74  %
Net interest margin(2)
 2.63  % 2.83  %
Total deposits(5)
 $ 5,500,350  $ 35,436  1.30  % $ 5,113,368  $ 6,083  0.24  %
Cost of funds(6)
 1.49  % 0.35  %
(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $0.2 million and $0.6 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Loan purchase discount accretion was $2.2 million and $1.3 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Tax equivalent adjustments were $1.4 million and $1.1 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.0 million and $1.2 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.


14

Non-GAAP Measures
This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, and adjusted earnings. Management believes these measures provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure.
Tangible Common Equity/Tangible Book Value
per Share/Tangible Common Equity Ratio June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2023 2023 2022 2022 2022
Total shareholders’ equity $ 501,341  $ 500,650  $ 492,793  $ 472,229  $ 488,832 
Intangible assets, net
 (89,446) (91,040) (92,792) (94,563) (96,351)
Tangible common equity $ 411,895  $ 409,610  $ 400,001  $ 377,666  $ 392,481 
Total assets $ 6,521,489  $ 6,409,952  $ 6,577,876  $ 6,491,061  $ 6,442,491 
Intangible assets, net
(89,446) (91,040) (92,792) (94,563) (96,351)
Tangible assets $ 6,432,043  $ 6,318,912  $ 6,485,084  $ 6,396,498  $ 6,346,140 
Book value per share $ 31.96  $ 31.94  $ 31.54  $ 30.23  $ 31.26 
Tangible book value per share(1)
 $ 26.26  $ 26.13  $ 25.60  $ 24.17  $ 25.10 
Shares outstanding 15,685,123  15,675,325  15,623,977  15,622,825  15,635,131 
Common equity ratio 7.69  % 7.81  % 7.49  % 7.28  % 7.59  %
Tangible common equity ratio(2)
 6.40  % 6.48  % 6.17  % 5.90  % 6.18  %
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.
Three Months Ended Six Months Ended
Return on Average Tangible Equity June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Net income $ 7,594  $ 1,397  $ 12,621  $ 8,991  $ 26,516 
Intangible amortization, net of tax(1)
 1,196  1,314  962  2,510  1,883 
Tangible net income $ 8,790  $ 2,711  $ 13,583  $ 11,501  $ 28,399 
Average shareholders’ equity $ 504,988  $ 498,547  $ 499,460  $ 501,786  $ 512,085 
Average intangible assets, net
(90,258) (92,002) (84,540) (91,125) (83,159)
Average tangible equity $ 414,730  $ 406,545  $ 414,920  $ 410,661  $ 428,926 
Return on average equity
 6.03  % 1.14  % 10.14  % 3.61  % 10.44  %
Return on average tangible equity(2)
 8.50  % 2.70  % 13.13  % 5.65  % 13.35  %
(1) The combined income tax rate utilized was 25%.
(2) Annualized tangible net income divided by average tangible equity.


15

Net Interest Margin, Tax Equivalent/
Core Net Interest Margin		 Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Net interest income $ 36,962  $ 40,076  $ 39,725  $ 77,038  $ 77,061 
Tax equivalent adjustments:
Loans(1)
 713  716  569  1,429  1,109 
Securities(1)
 431  522  608  953  1,223 
Net interest income, tax equivalent $ 38,106  $ 41,314  $ 40,902  $ 79,420  $ 79,393 
Loan purchase discount accretion (984) (1,189) (528) (2,173) (1,260)
Core net interest income $ 37,122  $ 40,125  $ 40,374  $ 77,247  $ 78,133 
Net interest margin 2.45  % 2.66  % 2.79  % 2.56  % 2.75  %
Net interest margin, tax equivalent(2)
 2.52  % 2.75  % 2.87  % 2.63  % 2.83  %
Core net interest margin(3)
 2.46  % 2.67  % 2.83  % 2.56  % 2.79  %
Average interest earning assets $ 6,056,732  $ 6,100,456  $ 5,718,825  $ 6,078,473  $ 5,653,775 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent net interest income divided by average interest earning assets.
(3) Annualized core net interest income divided by average interest earning assets.
Three Months Ended Six Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Loan interest income, including fees $ 49,726  $ 46,490  $ 32,746  $ 96,216  $ 64,064 
Tax equivalent adjustment(1)
 713  716  569  1,429  1,109 
Tax equivalent loan interest income $ 50,439  $ 47,206  $ 33,315  $ 97,645  $ 65,173 
Loan purchase discount accretion (984) (1,189) (528) (2,173) (1,260)
Core loan interest income $ 49,455  $ 46,017  $ 32,787  $ 95,472  $ 63,913 
Yield on loans 4.98  % 4.88  % 3.95  % 4.93  % 3.93  %
Yield on loans, tax equivalent(2)
 5.05  % 4.95  % 4.02  % 5.00  % 4.00  %
Core yield on loans(3)
 4.95  % 4.83  % 3.95  % 4.89  % 3.92  %
Average loans $ 4,003,717  $ 3,867,110  $ 3,326,269  $ 3,935,791  $ 3,286,083 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent loan interest income divided by average loans.
(3) Annualized core loan interest income divided by average loans.
Three Months Ended Six Months Ended
Efficiency Ratio June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Total noninterest expense $ 34,919  $ 33,319  $ 32,082  $ 68,238  $ 63,725 
Amortization of intangibles (1,594) (1,752) (1,283) (3,346) (2,510)
Merger-related expenses —  (136) (901) (136) (1,029)
Noninterest expense used for efficiency ratio $ 33,325  $ 31,431  $ 29,898  $ 64,756  $ 60,186 
Net interest income, tax equivalent(1)
 $ 38,106  $ 41,314  $ 40,902  $ 79,420  $ 79,393 
Plus: Noninterest income 8,746  (4,046) 12,347  4,700  23,991 
Less: Investment securities (losses) gains, net (2) (13,170) 395  (13,172) 435 
Net revenues used for efficiency ratio $ 46,854  $ 50,438  $ 52,854  $ 97,292  $ 102,949 
Efficiency ratio (2)
 71.13  % 62.32  % 56.57  % 66.56  % 58.46  %
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.









16

Three Months Ended Six Months Ended
Adjusted Earnings June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2023 2023 2022 2023 2022
Net income $ 7,594  $ 1,397  $ 12,621  $ 8,991  $ 26,516 
After tax loss on sale of debt securities(1)
 —  9,837  —  9,837  — 
Adjusted earnings $ 7,594  $ 11,234  $ 12,621  $ 18,828  $ 26,516 
Weighted average diluted common shares outstanding 15,689  15,691  15,688  15,688  15,703 
Earnings per common share
Earnings per common share - diluted $ 0.48  $ 0.09  $ 0.80  $ 0.57  $ 1.69 
Adjusted earnings per common share - diluted (2)
 $ 0.48  $ 0.72  $ 0.80  $ 1.20  $ 1.69 
(1) The income tax rate utilized was 25.3%.
(2) Adjusted earnings divided by weighted average diluted common shares outstanding.


Contact:
Charles N. Reeves Barry S. Ray
Chief Executive Officer Chief Financial Officer
319.356.5800 319.356.5800


17
EX-99.2 3 ex992q22023earningsrelea.htm EX-99.2 ex992q22023earningsrelea
Second Quarter 2023 Earnings Conference Call August 1, 2023

 
2 Forward Looking Statements & Non-GAAP Measures This presentation contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward- looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “goals,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of actual and expected increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the war in Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; (25) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company. Non-GAAP Measures This presentation contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, loan yield, tax equivalent, efficiency ratio, pre-tax, pre-provision earnings, return on average tangible equity, net interest margin, tax equivalent, and adjusted earnings / adjusted diluted earnings per common share. 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. A reconciliation of each non-GAAP measure to the most comparable GAAP measure is included, as necessary, in the Non-GAAP Financial Measures section.

 
3 Financial Highlights Total assets $ 6,521.5 1.74 % 1.23 % Total loans held for investment, net 4,018.6 2.53 11.28 Total deposits 5,445.4 (1.97) (1.66) Balance Sheet Equity to assets ratio 7.69 % (12) bps 10 bps Tangible common equity ratio (non-GAAP) 6.40 (8) 22 CET1 risk-based capital ratio 9.36 (3) 54 Total risk-based capital ratio 12.26 (5) 53 Loans to deposits ratio 73.80 % 325 859 Capital and Liquidity Net interest margin, tax equivalent (non-GAAP) 2.52 % (23) bps (35) bps Cost of total deposits 1.48 36 123 Return on average assets 0.47 38 (36) Return on average tangible equity (non-GAAP) 8.50 580 (463) Efficiency ratio (non-GAAP) 71.13 881 1,456 Profitability Nonperforming loans ratio 0.36 % (1) bps (40) bps Nonperforming assets ratio 0.22 (1) (21) Net charge-off ratio 0.09 6 6 Allowance for credit losses ratio 1.25 (2) (20) Credit Risk Profile Q2.23 Financial Highlights – See the section "Non-GAAP Financial measures." – Note: Financial metrics as of or for the quarter ended June 30, 2023. Change vs. Dollars in millions Q2.23 Q1.23 Q2.22

 
4 MOFG's Five Strategic Pillars to Deliver Improved Results Exceptional Customer and Employee Engagement 1 Enhance MOFG's award winning culture with a renewed focus on performance and financial results 2 Protect and enhance MOFG's dominant community bank franchise through product expansion 3 Continue to hire exceptional relationship bankers and wealth management professionals 4 Develop specialty commercial banking verticals by attracting experienced professionals 5 Reviewing opportunities for efficiency gains and cost reduction Strong Core Local Banking Model Sophisticated Commercial Banking and Wealth Management Specialty Business Lines Improving our Efficiency and Operations

 
5 Strategic Plan Updates Wealth management revenues continue to grow driven by teams recruited over the last two years, Cedar Rapids office opened in June 2023 Continue to invest for growth while keeping non-interest expense relatively steady from 1Q 2023 Governmental lending group gaining momentum given improved focus and execution Recruited an established agribusiness team from a regional bank to expand this attractive business segment 10%+ annualized loan growth in the second quarter largely due to an expansion of our banking team across our major markets of the Twin Cities, Denver, and Metro Iowa Added bankers in the Twin Cities in 2023 and will continue to add bankers in our major markets as we build scale and take market share

 
6 Deposits $ B ill io ns $5.55 $5.49 $5.38 $5.44 $5.19 $5.12 $5.02 $5.08 (0.37)% (1.28)% (2.01)% 1.19% Deposits, Ex Brokered Brokered Deposits MoM Change in Deposits, Ex Brokered 03/31/23 04/30/23 05/31/23 06/30/23

 
7 Commercial Loan Portfolio Commercial and Industrial, 33% Agricultural, 3% Farmland, 6% Construction & Development, 9% Multifamily, 9% CRE-Other, 40% Commercial Loan Portfolio Mix - June 30, 2023 Commercial Loan Portfolio of $3.3 billion Commercial Loan Growth in Targeted Regions $ in Millions $834.5 $944.1 $926.4 $1,043.1 Iowa Metro Twin Cities 06/30/22 09/30/22 12/31/22 03/31/23 06/30/23 $310.5 $400.7 Denver 06/30/22 09/30/22 12/31/22 03/31/23 06/30/23

 
8 Credit $ m ill io ns Nonperforming Assets 48% YoY Decline $27.62 $26.07 $15.92 $14.44 $14.45 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 $ m ill io ns Net Charge-Offs $0.3 $0.6 $3.5 $0.3 $0.9 2Q22 3Q22 4Q22 1Q23 2Q23 Credit Quality Measures $ millions 2Q22 3Q22 4Q22 1Q23 2Q23 Nonperforming assets ratio 0.43 % 0.40 % 0.24 % 0.23 % 0.22 % Net charge-off ratio 0.03 % 0.06 % 0.36 % 0.03 % 0.09 % Loans greater than 30 days past due and accruing $12.3 $6.0 $6.7 $4.9 $6.2 Allowance for credit losses ratio 1.45 % 1.39 % 1.28 % 1.27 % 1.25 % (1) (1) The fourth quarter of 2022 includes the identification and resolution of problem credits.

 
9 Commercial Real Estate 3.8% 96.2% NOO CRE Office All Other Loans Non-Owner Occupied CRE Office June 30, 2023 $ millions 2Q23 Construction & Development $ 315.8 Farmland 184.6 Multifamily 306.2 CRE Other: NOO CRE Office 154.4 OO CRE Office 85.1 Industrial and Warehouse 382.5 Retail 270.7 Hotel 132.3 Other 311.0 Total Commercial Real Estate $ 2,142.6 Commercial Real Estate Portfolio(2) June 30, 2023 Portfolio Highlights June 30, 2023 $ millions Average NOO CRE Office outstanding principal $ 1.4 Commercial Real Estate Concentration: % of Total Capital Regulatory Threshold Construction, land development and other land 48 % 100 % Total CRE loans(1) 212 % 300 % (1)Total CRE loans includes construction, land development and other land, in addition to multifamily and NOO CRE. (2) Represents the outstanding principal balance of the CRE portfolio.

 
10 Focusing on Growth in Wealth Management $2.4 $2.4 $2.7 $2.7 $2.9 2019 2020 2021 2022 2Q23 $— $1.0 $2.0 $3.0 $4.0 Investment Services and Trust Activity Revenue • Asset amounts presented are in billions of dollars • Revenue amounts presented are in millions of dollars $8.0 $9.6 $11.7 $11.2 $2.9 $3.1 2019 2020 2021 2022 1Q23 2Q23 $— $5.0 $10.0 $15.0 Wealth Management Assets Under Administration • Building momentum in the Twin Cities with a talented wealth management team focused on leveraging strong relationships with our Retail and Commercial colleagues • Strengthened wealth management capabilities in the fourth quarter of 2021 with the addition of an experienced wealth management team in Eastern Iowa that collectively has more than 120 years of experience • Invested in financial technology that will improve the customer experience and streamline internal processes

 
11 Financial Performance

 
12 Balance Sheet 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Period end balances, $ millions 2Q23 $ Change % Change $ Change % Change Loans $4,018.6 $99.2 3 % $407.4 11 % Investment securities $2,003.1 -$68.7 (3) % -$399.7 (17) % Interest earning deposits in banks $68.6 $63.3 1194 % $45.4 196 % Deposits $5,445.4 -$109.8 (2) % -$92.0 (2) % Borrowed funds $487.8 $205.8 73 % $134.7 38 % Shareholders' equity $501.3 $0.6 — % $12.5 3 % 2Q23 2Q23 Period end 2Q23 1Q23 vs. 1Q23 2Q22 vs. 2Q22 Tangible book value per share (non-GAAP) $26.26 $26.13 — % $25.10 5 % Common equity Tier 1 capital ratio 9.4 % 9.4 % 0 bps 8.8 % 60 bps AOCI $(82.7) $(78.9) (5) % $(65.2) (27) % Return on average tangible equity (non-GAAP) 8.50 % 2.70 % 580 bps 13.13 % -463 bps – See the section "Non-GAAP Financial Measures."

 
13 Balance Sheet- Average Loans and Deposits – IB Deposits represent interest bearing deposits and NIB Deposits represent noninterest bearing deposits. – Loan yield, tax equivalent is a non-GAAP measure. See the Section "Non-GAAP Financial Measures." A ve ra ge b al an ce s, $ bi lli on s Average Deposits $5.18 $5.55 $5.45 $4.14 $4.52 $4.51 $1.04 $1.03 $0.94 0.31% 1.38% 1.79% IB Deposits NIB Deposits Cost of IB Deposits 2Q22 1Q23 2Q23 A ve ra ge b al an ce s, $ bi lli on s Average Loans $3.33 $3.87 $4.00 4.02% 4.95% 5.05% Loans Loan yield, tax equivalent 2Q22 1Q23 2Q23

 
14 Balance Sheet - Debt Securities Portfolio Municipals, 19% MBS, 1% CLO, 6% CMO, 15% Corporate, 59% 2.13% 2.27% 2.35% 2.40% 2.35% Total Securities Held for Investment (FTE) Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Investment Securities Yield Available for Sale Debt Securities Portfolio Mix June 30, 2023 Municipals, 49% MBS, 7% CMO, 44% Held to Maturity Debt Securities Portfolio Mix June 30, 2023 • Investment Portfolio Mix: ◦ AFS Securities - $0.9 billion ◦ HTM Securities - $1.1 billion • Investment Portfolio Duration (Years): ◦ AFS Securities - 3.2 ◦ HTM Securities - 6.6 ◦ Total Securities - 5.0 • Allowance for credit losses for investments is $0 Portfolio Composition

 
15 Income Statement % Change 2Q23 vs. $ millions 2Q23 1Q23 2Q22 1Q23 2Q22 Net interest income $37.0 $40.1 $39.7 (8) % (7) % Noninterest income 8.7 -4.0 12.3 (318) % (29) % Total revenue 45.7 36.1 52.0 27 % (12) % Noninterest expense 34.9 33.3 32.1 5 % 9 % Pre-tax, pre-provision earnings (non-GAAP) $10.8 $2.8 $19.9 286 % (46) % Credit loss expense $1.6 $0.9 $3.3 78 % (52) % Income tax expense $1.6 $0.4 $4.1 300 % (61) % Net income $7.6 $1.4 $12.6 443 % (40) % 2Q23 2Q23 2Q23 1Q23 2Q22 vs. 1Q23 vs. 2Q22 Net interest margin (non-GAAP) 2.52 % 2.75 % 2.87 % -23 bps -35 bps Efficiency ratio (non-GAAP) 71.13 % 62.32 % 56.57 % -881 bps -1,456 bps Diluted EPS $0.48 $0.09 $0.80 433 % (40) % – See the section "Non-GAAP Financial Measures."

 
16 Non-GAAP Financial Measures

 
17 Non-GAAP Financial Measures Tangible Common Equity / Tangible Book Value per Share / Tangible Common Equity Ratio June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Total shareholders' equity $ 488,832 $ 500,650 $ 501,341 Intangible assets, net (96,351) (91,040) (89,446) Tangible common equity $ 392,481 $ 409,610 $ 411,895 Total assets $ 6,442,491 $ 6,409,952 $ 6,521,489 Intangible assets, net (96,351) (91,040) (89,446) Tangible assets $ 6,346,140 $ 6,318,912 $ 6,432,043 Book value per share $ 31.26 $ 31.94 $ 31.96 Tangible book value per share (1) $ 25.10 $ 26.13 $ 26.26 Shares outstanding 15,635,131 15,675,325 15,685,123 Tangible common equity ratio (2) 6.18 % 6.48 % 6.40 % (1) Tangible common equity divided by shares outstanding. (2) Tangible common equity divided by tangible assets. Loan Yield, Tax Equivalent For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Loan interest income, including fees $ 32,746 $ 46,490 $ 49,726 Tax equivalent adjustment (1) 569 716 713 Tax equivalent loan interest income $ 33,315 $ 47,206 $ 50,439 Yield on loans, tax equivalent (2) 4.02 % 4.95 % 5.05 % Average Loans $ 3,326,269 $ 3,867,110 $ 4,003,717 (1) The federal statutory tax rate utilized was 21%. (2) Annualized tax equivalent loan interest income divided by average loans.

 
18 Non-GAAP Financial Measures Efficiency Ratio For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Total noninterest expense $ 32,082 $ 33,319 $ 34,919 Amortization of intangibles (1,283) (1,752) (1,594) Merger-related expenses (901) (136) — Noninterest expense used for efficiency ratio $ 29,898 $ 31,431 $ 33,325 Net interest income, tax equivalent (1) $ 40,902 $ 41,314 $ 38,106 Noninterest income 12,347 (4,046) 8,746 Investment securities (losses) gains, net 395 (13,170) (2) Net revenues used for efficiency ratio $ 52,854 $ 50,438 $ 46,854 Efficiency ratio 56.57 % 62.32 % 71.13 % (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 (losses) gains. Pre-tax / Pre-provision Net Revenue For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Net interest income $ 39,725 $ 40,076 $ 36,962 Noninterest income 12,347 (4,046) 8,746 Noninterest expense (32,082) (33,319) (34,919) Pre-tax / Pre-provision Net Revenue $ 19,990 $ 2,711 $ 10,789

 
19 Non-GAAP Financial Measures Return on Average Tangible Equity For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Net income $ 12,621 $ 1,397 $ 7,594 Intangible amortization, net of tax (1) 962 1,314 1,196 Tangible net income $ 13,583 $ 2,711 $ 8,790 Average shareholders' equity $ 499,460 $ 498,547 $ 504,988 Average intangible assets, net (84,540) (92,002) (90,258) Average tangible equity $ 414,920 $ 406,545 $ 414,730 Return on average equity 10.14 % 1.14 % 6.03 % Return on average tangible equity (2) 13.13 % 2.70 % 8.50 % (1) The combined income tax rate utilized was 25%. (2) Annualized tangible net income divided by average tangible equity. Net Interest Margin, Tax Equivalent For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Net interest Income $ 39,725 $ 40,076 $ 36,962 Tax equivalent adjustments: Loans (1) 569 716 713 Securities (1) 608 522 431 Net Interest Income, tax equivalent $ 40,902 $ 41,314 $ 38,106 Average interest earning assets $ 5,718,825 $ 6,100,456 $ 6,056,732 Net interest margin, tax equivalent (2) 2.87 % 2.75 % 2.52 % (1) The federal statutory tax rate utilized was 21%. (2) Annualized tax equivalent net interest income divided by average interest earning assets.

 
20 Non-GAAP Financial Measures Adjusted Earnings / Adjusted Diluted Earnings Per Common Share For the Three Months Ended June 30, 2022 March 31, 2023 June 30, 2023 dollars in thousands Net income $ 12,621 $ 1,397 $ 7,594 After tax loss on sale of debt securities(1) — 9,837 — Adjusted earnings $ 12,621 $ 11,234 $ 7,594 Weighted average diluted common shares outstanding 15,688,460 15,691,168 15,689,314 Earnings per common share Earnings per common share - diluted $0.80 $0.09 $0.48 Adjusted earnings per common share - diluted(2) $0.80 $0.72 $0.48 (1) The income tax rate utilized was 25.3%. (2) Adjusted earnings divided by weighted average diluted common shares outstanding.