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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) October 24, 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 October 26, 2023, MidWestOne Financial Group, Inc. (the “Company”) issued a press release announcing its earnings for the three months and nine months ended September 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 October 24, 2023. The dividend is payable December 15, 2023, to shareholders of record at the close of business on December 1, 2023.
Item 9.01.    Financial Statements and Exhibits.
(d)    Exhibits.
MidWestOne Financial Group, Inc. press release dated October 26, 2023
MidWestOne Financial Group, Inc. financial supplement dated October 26, 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: October 26, 2023 By:
/s/ BARRY S. RAY
Barry S. Ray
Chief Financial Officer



EX-99.1 2 financialresultsq32023.htm EX-99.1 Document

mofglogoa01a.jpg
FOR IMMEDIATE RELEASE October 26, 2023

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

Iowa City, Iowa - MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the third quarter of 2023.
Third Quarter 2023 Highlights1
•Net income of $9.1 million, or $0.58 per diluted common share, compared to net income of $7.6 million, or $0.48 per diluted common share, for the linked quarter.
•Annualized loan growth of 4.8%.
•Core deposits increased $83.2 million or 2%.
•Nonperforming assets ratio of 0.45%; net charge-off ratio was 0.04%.
•Efficiency ratio improved to 66.06%.
•Announced sale of Florida operations and acquisition of Denver Bankshares, Inc. ("Denver Bankshares") in strategic geographic repositioning.
Subsequent Events
•On October 24, 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, “Despite the difficult interest rate environment, which continues to compress our net interest margin, we had another strong quarter of strategic plan execution, highlighted by the September announcement of the sale of our Florida operations, with the proceeds reinvested into the acquisition of Denver Bankshares. These two transactions align our geographic footprint with our Strategic Plan, while accelerating our Denver market growth by three to four years. We are confident in our ability to integrate this low-risk merger, while continuing our growth trajectory in the attractive Denver MSA. Also, in the third quarter of 2023, our Treasury Management initiatives and client acquisition strategies resulted in balanced loan and deposit growth, providing ample flexibility for future, selective loan growth. Asset quality metrics were affected by one senior living credit moving to non-accrual, however, charge-offs and 30-89 day past dues remain at historically low levels. We remain diligent as uncertain economic conditions begin to normalize asset quality migration.”

Mr. Reeves continued, “While we continue to invest for growth, we are also laser focused on improving our operational effectiveness. Expenses in the quarter were well-controlled and our cost savings initiative to reduce noninterest expense by 2.5% is well underway. To conclude, we've made substantial progress executing our strategic initiatives over the last two quarters, and while we have more to do, I could not be more pleased with our team and the execution of our strategic initiatives.”

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

As of or for the quarter ended Nine Months Ended
(Dollars in thousands, except per share amounts and as noted) September 30, June 30, September 30, September 30, September 30,
2023 2023 2022 2023 2022
Financial Results
Revenue $ 44,436  $ 45,708  $ 58,321  $ 126,174  $ 159,373 
Credit loss expense 1,551  1,597  638  4,081  3,920 
Noninterest expense 31,544  34,919  34,623  99,782  98,348 
Net income 9,138  7,594  18,317  18,129  44,833 
Per Common Share
Diluted earnings per share $ 0.58  $ 0.48  $ 1.17  $ 1.15  $ 2.86 
Book value 32.21  31.96  30.23  32.21  30.23 
Tangible book value(1)
 26.60  26.26  24.17  26.60  24.17 
Balance Sheet & Credit Quality
Loans In millions
 $ 4,066.0  $ 4,018.6  $ 3,746.3  $ 4,066.0  $ 3,746.3 
Investment securities In millions
 1,958.5  2,003.1  2,299.9  1,958.5  2,299.9 
Deposits In millions
 5,363.3  5,445.4  5,476.8  5,363.3  5,476.8 
Net loan charge-offs In millions
 0.5  0.9  0.6  1.7  3.1 
Allowance for credit losses ratio 1.27  % 1.25  % 1.39  % 1.27  % 1.39  %
Selected Ratios
Return on average assets 0.56  % 0.47  % 1.13  % 0.37  % 0.97  %
Net interest margin, tax equivalent(1)
 2.35  % 2.52  % 3.08  % 2.54  % 2.92  %
Return on average equity 7.14  % 6.03  % 14.56  % 4.81  % 11.81  %
Return on average tangible equity(1)
 9.68  % 8.50  % 19.32  % 7.03  % 15.28  %
Efficiency ratio(1)
 66.06  % 71.13  % 53.67  % 66.40  % 56.70  %
(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
3Q23 vs 3Q23 vs
(Dollars in thousands) 3Q23 2Q23 3Q22 2Q23 3Q22
Net interest income $ 34,575  $ 36,962  $ 45,733  (6) % (24) %
Noninterest income 9,861  8,746  12,588  13  % (22) %
Total revenue, net of interest expense $ 44,436  $ 45,708  $ 58,321  (3) % (24) %
Total revenue for the third quarter of 2023 decreased $1.3 million from the second quarter of 2023 as a result of lower net interest income, partially offset by higher noninterest income. Compared to the third quarter of 2022, total revenue decreased $13.9 million due to lower net interest income and noninterest income.
Net interest income of $34.6 million for the third quarter of 2023 decreased $2.4 million from the second quarter of 2023 and $11.2 million from the third quarter of 2022 as a result of higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields.
The Company's tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 2.52% in the second quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 35 basis points ("bps") to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 26 bps, 138 bps and 40 bps, respectively from the second quarter of 2023. Total interest earning assets yield increased 12 bps from the second quarter of 2023, as a result of an increase in loan and securities yields of 14 bps and 1 bp, respectively. Our cycle-to-date interest bearing deposit beta was 34%.
The tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 3.08% in the third 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 169 bps to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 159 bps, 295 bps and 208 bps, respectively from the third quarter of 2022. Total interest earning assets yield increased 67 bps from the third quarter of 2022, primarily as a result of an increase in loan and securities yields of 75 bps and 9 bps, respectively.


2

Noninterest Income Change Change
3Q23 vs 3Q23 vs
(In thousands) 3Q23 2Q23 3Q22 2Q23 3Q22
Investment services and trust activities $ 3,004  $ 3,119  $ 2,876  (4) % 4  %
Service charges and fees 2,146  2,047  2,075  5  % 3  %
Card revenue 1,817  1,847  1,898  (2) % (4) %
Loan revenue 1,462  909  1,722  61  % (15) %
Bank-owned life insurance 626  616  579  2  % 8  %
Investment securities gains (losses), net 79  (2) (163) n / m (148) %
Other 727  210  3,601  246  % (80) %
Total noninterest income $ 9,861  $ 8,746  $ 12,588  13  % (22) %
Results are not meaningful (n/m)
Noninterest income for the third quarter of 2023 increased $1.1 million from the linked quarter due primarily to a $0.6 million favorable change in loan revenue, coupled with a $0.5 million increase in other revenue. Loan revenue reflected a favorable quarter-over quarter change in the fair value of our mortgage servicing rights of $0.9 million, partially offset by a decrease in loan sale gains generated by our governmental lending business and a decrease in revenue in our mortgage origination business. Other revenue reflected an increase of $0.6 million in swap origination fee income. Noninterest income decreased $2.7 million from the third quarter of 2022, primarily due to the decline of $2.9 million in other revenue stemming from a one-time settlement recognized in the third quarter of 2022.

EXPENSE REVIEW
Noninterest Expense Change Change
3Q23 vs 2Q23 vs
(In thousands) 3Q23 2Q23 3Q22 2Q23 3Q22
Compensation and employee benefits $ 18,558  $ 20,386  $ 20,046  (9) % (7) %
Occupancy expense of premises, net 2,405  2,574  2,577  (7) % (7) %
Equipment 2,123  2,435  2,358  (13) % (10) %
Legal and professional 1,678  1,682  2,012  —  % (17) %
Data processing 1,504  1,521  1,731  (1) % (13) %
Marketing 782  1,142  1,139  (32) % (31) %
Amortization of intangibles 1,460  1,594  1,789  (8) % (18) %
FDIC insurance 783  862  415  (9) % 89  %
Communications 206  260  302  (21) % (32) %
Foreclosed assets, net 2  (6) 42  (133) % (95) %
Other 2,043  2,469  2,212  (17) % (8) %
     Total noninterest expense $ 31,544  $ 34,919  $ 34,623  (10) % (9) %
Merger-related Expenses
(In thousands) 3Q23 2Q23 3Q22
Compensation and employee benefits $ —  $ —  $ 132 
Equipment —  —  14 
Legal and professional 11  —  193 
Data processing —  —  304 
Marketing —  —  90 
Other —  —  30 
Total merger-related expenses $ 11  $ —  $ 763 

Noninterest expense for the third quarter of 2023 decreased $3.4 million, or 9.7%, from the linked quarter with overall decreases in all noninterest expense categories except foreclosed assets, net. The decrease in compensation and employee benefits reflected a reduction of $1.1 million in severance expense, as well as a reduction of $1.1 million in medical insurance benefit expense, driven primarily by accrual adjustments. The $0.4 million decline in other noninterest expense was driven by various changes, including $0.2 million of executive relocation expense recognized in the linked quarter that did not recur and reduced loan expenses by $0.2 million. The $0.4 million decrease in marketing reflected a decline in advertising and sponsorships.


3

Noninterest expense for the third quarter of 2023 decreased $3.1 million, or 8.9%, from the third quarter of 2022, with overall decreases in all noninterest expense categories except FDIC insurance. These decreases primarily reflected a $1.8 million decline in employee benefits and incentives and commission expense, coupled with a $0.8 million decrease in merger-related expenses.
The Company's effective income tax rate increased to 19.4% in the third quarter of 2023 compared to 17.4% in the linked quarter. The higher effective income tax rate reflected an adjustment to the 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 $6.47 billion at September 30, 2023, compared to $6.52 billion at June 30, 2023 and $6.49 billion at September 30, 2022. The decrease from June 30, 2023 was driven by lower cash and securities balances, partially offset by higher loan balances. Compared to September 30, 2022, the decrease was due primarily to lower securities balances resulting from the balance sheet repositioning executed in the first quarter of 2023 as well as lower cash balances, partially offset by higher loan balances.
Loans Held for Investment September 30, 2023 June 30, 2023 September 30, 2022
Balance % of Total Balance % of Total Balance % of Total
(Dollars in thousands)
Commercial and industrial $ 1,078,773  26.5  % $ 1,089,269  27.1  % $ 1,041,662  27.8  %
Agricultural 111,950  2.8  106,148  2.6  116,229  3.1 
Commercial real estate
Construction and development 331,868  8.2  313,836  7.8  276,941  7.4 
Farmland 182,621  4.5  183,378  4.6  183,581  4.9 
Multifamily 337,509  8.3  305,519  7.6  222,592  5.9 
Other 1,324,019  32.5  1,331,886  33.1  1,226,983  32.8 
Total commercial real estate 2,176,017  53.5  2,134,619  53.1  1,910,097  51.0 
Residential real estate
One-to-four family first liens 456,771  11.2  448,096  11.2  446,373  11.9 
One-to-four family junior liens 173,275  4.3  168,755  4.2  157,276  4.2 
Total residential real estate 630,046  15.5  616,851  15.4  603,649  16.1 
Consumer 69,183  1.7  71,762  1.8  74,652  2.0 
Loans held for investment, net of unearned income $ 4,065,969  100.0  % $ 4,018,649  100.0  % $ 3,746,289  100.0  %
Total commitments to extend credit $ 1,251,345  $ 1,296,719  $ 1,159,323 
Loans held for investment, net of unearned income, increased $47.3 million, or 1.2%, to $4.07 billion from $4.02 billion at June 30, 2023. This increase was driven by new loan production in the third quarter of 2023.
Investment Securities September 30, 2023 June 30, 2023 September 30, 2022
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Available for sale $ 872,770  44.6  % $ 903,520  45.1  % $ 1,153,304  50.1  %
Held to maturity 1,085,751  55.4  % 1,099,569  54.9  % 1,146,583  49.9  %
Total investment securities $ 1,958,521  $ 2,003,089  $ 2,299,887 
Investment securities at September 30, 2023 were $1.96 billion, decreasing $44.6 million from June 30, 2023 and $341.4 million from September 30, 2022. The decrease from the second quarter of 2023 was due primarily to paydowns, calls, and maturities. The decrease from the third quarter of 2022 was due primarily to the balance sheet repositioning executed in the first quarter of 2023.


4

Deposits September 30, 2023 June 30, 2023 September 30, 2022
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Noninterest bearing deposits $ 924,213  17.2  % $ 897,923  16.5  % $ 1,139,694  20.8  %
Interest checking deposits 1,334,481  24.9  1,397,276  25.7  1,705,289  31.2 
Money market deposits 1,127,287  21.0  1,096,432  20.1  991,783  18.1 
Savings deposits 619,805  11.6  585,967  10.8  700,843  12.8 
Time deposits of $250 and under 703,646  13.1  648,586  11.9  537,616  9.8 
Total core deposits 4,709,432  87.8  4,626,184  85.0  5,075,225  92.7 
Brokered time deposits 220,063  4.1  365,623  6.7  —  — 
Time deposits over $250 433,829  8.1  453,640  8.3  401,557  7.3 
Total deposits
 $ 5,363,324  100.0  % $ 5,445,447  100.0  % $ 5,476,782  100.0  %

Total deposits declined $82.1 million, or 1.5%, to $5.36 billion from $5.45 billion at June 30, 2023. Brokered deposits decreased $145.6 million from $365.6 million at June 30, 2023. Core deposits increased $83.2 million from June 30, 2023.

Borrowed Funds September 30, 2023 June 30, 2023 September 30, 2022
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
Short-term borrowings $ 373,956  75.0  % $ 362,054  74.2  % $ 304,536  66.4  %
Long-term debt 124,526  25.0  % 125,752  25.8  % 154,190  33.6  %
Total borrowed funds $ 498,482  $ 487,806  $ 458,726 

Total borrowed funds were $498.5 million at September 30, 2023 an increase of $10.7 million from June 30, 2023 and an increase of $39.8 million from September 30, 2022. The increase when compared to the linked quarter was due to increased Federal Home Loan Bank overnight borrowings, partially offset by a reduction in securities sold under agreements to repurchase. The increase when compared to September 30, 2022 was primarily due to Bank Term Funding Program borrowings of $225 million, as compared to no such borrowings in the prior year, partially offset by a reduction in securities sold under agreements to repurchase and Federal Home Loan Bank overnight borrowings.


5

Capital September 30, June 30, September 30,
(Dollars in thousands)
2023 (1)
 2023 2022
Total shareholders' equity $ 505,411  $ 501,341  $ 472,229 
Accumulated other comprehensive loss (84,606) (82,704) (96,623)
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio 8.58  % 8.47  % 8.24  %
Common equity tier 1 capital to risk-weighted assets ratio 9.52  % 9.36  % 9.18  %
Tier 1 capital to risk-weighted assets ratio 10.31  % 10.15  % 9.97  %
Total capital to risk-weighted assets ratio 12.45  % 12.26  % 12.10  %
MidWestOne Bank
Tier 1 leverage to average assets ratio 9.51  % 9.42  % 9.31  %
Common equity tier 1 capital to risk-weighted assets ratio 11.43  % 11.31  % 11.26  %
Tier 1 capital to risk-weighted assets ratio 11.43  % 11.31  % 11.26  %
Total capital to risk-weighted assets ratio 12.36  % 12.22  % 12.17  %
(1) Regulatory capital ratios for September 30, 2023 are preliminary
Total shareholders' equity at September 30, 2023 increased $4.1 million from June 30, 2023, driven by the benefit of third quarter net income, partially offset by an increase in accumulated other comprehensive loss and dividends paid during the third quarter of 2023.
Accumulated other comprehensive loss at September 30, 2023 increased $1.9 million compared to June 30, 2023, primarily due to a decrease in available for sale securities valuations. Accumulated other comprehensive loss decreased $12.0 million from September 30, 2022.
On October 24, 2023, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable December 15, 2023, to shareholders of record at the close of business on December 1, 2023.
No common shares were repurchased by the Company during the period June 30, 2023 through September 30, 2023 or for the subsequent period through October 26, 2023. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares.


6

CREDIT QUALITY REVIEW

Credit Quality As of or For the Three Months Ended
September 30, June 30, September 30,
(Dollars in thousands) 2023 2023 2022
Credit loss expense related to loans $ 1,651  $ 1,497  $ 338 
Net charge-offs 451  897  588 
Allowance for credit losses 51,600  50,400  52,100 
Pass $ 3,785,908  $ 3,769,309  $ 3,550,695 
Special Mention / Watch 163,222  133,904  101,255 
Classified 116,839  115,436  94,339 
Loans greater than 30 days past due and accruing $ 6,449  $ 6,201  $ 5,960 
Nonperforming loans $ 28,987  $ 14,448  $ 25,963 
Nonperforming assets 28,987  14,448  26,066 
Net charge-off ratio(1)
 0.04  % 0.09  % 0.06  %
Classified loans ratio(2)
 2.87  % 2.87  % 2.52  %
Nonperforming loans ratio(3)
 0.71  % 0.36  % 0.69  %
Nonperforming assets ratio(4)
 0.45  % 0.22  % 0.40  %
Allowance for credit losses ratio(5)
 1.27  % 1.25  % 1.39  %
Allowance for credit losses to nonaccrual loans ratio(6)
 178.63  % 355.03  % 208.18  %
(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 assets ratios increased 35 bps and 23 bps, respectively, and when compared to the prior year increased 2 bps and 5 bps, respectively, to 0.71% and 0.45%, primarily due to the downgrade of a single commercial relationship.
As of September 30, 2023, the allowance for credit losses was $51.6 million, or 1.27% of loans held for investment, net of unearned income, compared with $50.4 million, or 1.25% of loans held for investment, net of unearned income, at June 30, 2023. Credit loss expense of $1.6 million in the third 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 June 30, 2023
 $ 14,196  $ 252  $ 14,448 
Loans placed on nonaccrual or 90+ days past due & still accruing 16,394  140  16,534 
Proceeds related to repayment or sale (799) (1) (800)
Loans returned to accrual status or no longer past due (298) (252) (550)
Charge-offs (603) (39) (642)
Transfers to foreclosed assets (3) —  (3)
Balance at September 30, 2023
 $ 28,887  $ 100  $ 28,987 

CONFERENCE CALL DETAILS
The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 27, 2023. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=03182047&confId=56188. 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 146099 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 25, 2024 by calling 1-866-813-9403 and using the replay access code of 205972. 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.


7


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 or branch sales (including with Iowa First Bancshares Corp. and Denver Bankshares, Inc.), 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 recent and potential additional 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 Israeli-Palestinian conflict and the Russian invasion of 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
  September 30, June 30, March 31, December 31, September 30,
(In thousands) 2023 2023 2023 2022 2022
ASSETS
Cash and due from banks $ 71,015  $ 75,955  $ 63,945  $ 83,990  $ 77,513 
Interest earning deposits in banks 3,773  68,603  5,273  2,445  1,001 
Total cash and cash equivalents 74,788  144,558  69,218  86,435  78,514 
Debt securities available for sale at fair value 872,770  903,520  954,074  1,153,547  1,153,304 
Held to maturity securities at amortized cost 1,085,751  1,099,569  1,117,709  1,129,421  1,146,583 
Total securities 1,958,521  2,003,089  2,071,783  2,282,968  2,299,887 
Loans held for sale 2,528  2,821  2,553  612  2,320 
Gross loans held for investment 4,078,060  4,031,377  3,932,900  3,854,791  3,761,664 
Unearned income, net (12,091) (12,728) (13,535) (14,267) (15,375)
Loans held for investment, net of unearned income 4,065,969  4,018,649  3,919,365  3,840,524  3,746,289 
Allowance for credit losses (51,600) (50,400) (49,800) (49,200) (52,100)
Total loans held for investment, net 4,014,369  3,968,249  3,869,565  3,791,324  3,694,189 
Premises and equipment, net 85,589  85,831  86,208  87,125  87,732 
Goodwill 62,477  62,477  62,477  62,477  62,477 
Other intangible assets, net 25,510  26,969  28,563  30,315  32,086 
Foreclosed assets, net —  —  —  103  103 
Other assets 244,036  227,495  219,585  236,517  233,753 
Total assets $ 6,467,818  $ 6,521,489  $ 6,409,952  $ 6,577,876  $ 6,491,061 
LIABILITIES               
Noninterest bearing deposits $ 924,213  $ 897,923  $ 989,469  $ 1,053,450  $ 1,139,694 
Interest bearing deposits 4,439,111  4,547,524  4,565,684  4,415,492  4,337,088 
Total deposits 5,363,324  5,445,447  5,555,153  5,468,942  5,476,782 
Short-term borrowings 373,956  362,054  143,981  391,873  304,536 
Long-term debt 124,526  125,752  137,981  139,210  154,190 
Other liabilities 100,601  86,895  72,187  85,058  83,324 
Total liabilities 5,962,407  6,020,148  5,909,302  6,085,083  6,018,832 
SHAREHOLDERS' EQUITY               
Common stock 16,581  16,581  16,581  16,581  16,581 
Additional paid-in capital 301,889  301,424  300,966  302,085  301,418 
Retained earnings 295,862  290,548  286,767  289,289  276,998 
Treasury stock (24,315) (24,508) (24,779) (26,115) (26,145)
Accumulated other comprehensive loss (84,606) (82,704) (78,885) (89,047) (96,623)
Total shareholders' equity 505,411  501,341  500,650  492,793  472,229 
Total liabilities and shareholders' equity $ 6,467,818  $ 6,521,489  $ 6,409,952  $ 6,577,876  $ 6,491,061 




10

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FIVE QUARTER AND YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME
  Three Months Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
(In thousands, except per share data) 2023 2023 2023 2022 2022 2023   2022
Interest income
Loans, including fees $ 51,870  $ 49,726  $ 46,490  $ 43,769  $ 40,451  $ 148,086  $ 104,515 
Taxable investment securities 9,526  9,734  10,444  10,685  10,635  29,704  28,334 
Tax-exempt investment securities 1,802  1,822  2,127  2,303  2,326  5,751  7,076 
Other 374  68  244  —  9  686  77 
Total interest income 63,572  61,350  59,305  56,757  53,421  184,227  140,002 
Interest expense
Deposits 23,128  20,117  15,319  9,127  5,035  58,564  11,118 
Short-term borrowings 3,719  2,118  1,786  1,955  767  7,623  1,115 
Long-term debt 2,150  2,153  2,124  2,111  1,886  6,427  4,975 
Total interest expense 28,997  24,388  19,229  13,193  7,688  72,614  17,208 
Net interest income 34,575  36,962  40,076  43,564  45,733  111,613  122,794 
Credit loss expense 1,551  1,597  933  572  638  4,081  3,920 
Net interest income after credit loss expense 33,024  35,365  39,143  42,992  45,095  107,532  118,874 
Noninterest income (loss)
Investment services and trust activities 3,004  3,119  2,933  2,666  2,876  9,056  8,557 
Service charges and fees 2,146  2,047  2,008  2,028  2,075  6,201  5,449 
Card revenue 1,817  1,847  1,748  1,784  1,898  5,412  5,426 
Loan revenue 1,462  909  1,420  966  1,722  3,791  9,538 
Bank-owned life insurance 626  616  602  637  579  1,844  1,668 
Investment securities (losses) gains, net 79  (2) (13,170) (1) (163) (13,093) 272 
Other 727  210  413  2,860  3,601  1,350  5,669 
Total noninterest income (loss) 9,861  8,746  (4,046) 10,940  12,588  14,561  36,579 
Noninterest expense
Compensation and employee benefits 18,558  20,386  19,607  20,438  20,046  58,551  57,665 
Occupancy expense of premises, net 2,405  2,574  2,746  2,663  2,577  7,725  7,609 
Equipment 2,123  2,435  2,171  2,327  2,358  6,729  6,366 
Legal and professional 1,678  1,682  1,736  1,846  2,012  5,096  6,800 
Data processing 1,504  1,521  1,363  1,375  1,731  4,388  4,199 
Marketing 782  1,142  986  947  1,139  2,910  3,325 
Amortization of intangibles 1,460  1,594  1,752  1,770  1,789  4,806  4,299 
FDIC insurance 783  862  749  405  415  2,394  1,255 
Communications 206  260  261  285  302  727  840 
Foreclosed assets, net 2  (6) (28) 48  42  (32) (66)
Other 2,043  2,469  1,976  2,336  2,212  6,488  6,056 
Total noninterest expense 31,544  34,919  33,319  34,440  34,623  99,782  98,348 
Income before income tax expense 11,341  9,192  1,778  19,492  23,060  22,311  57,105 
Income tax expense 2,203  1,598  381  3,490  4,743  4,182  12,272 
Net income $ 9,138  $ 7,594  $ 1,397  $ 16,002  $ 18,317  $ 18,129  $ 44,833 
Earnings per common share
Basic $ 0.58  $ 0.48  $ 0.09  $ 1.02  $ 1.17  $ 1.16  $ 2.86 
Diluted $ 0.58  $ 0.48  $ 0.09  $ 1.02  $ 1.17  $ 1.15  $ 2.86 
Weighted average basic common shares outstanding 15,689  15,680  15,650  15,624  15,623  15,673  15,658 
Weighted average diluted common shares outstanding 15,711  15,689  15,691  15,693  15,654  15,696  15,686 
Dividends paid per common share $ 0.2425  $ 0.2425  $ 0.2425  $ 0.2375  $ 0.2375  $ 0.7275  $ 0.7125 







11

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS
As of or for the Three Months Ended As of or for the Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share amounts) 2023 2023 2022 2023 2022
Earnings:
Net interest income $ 34,575  $ 36,962  $ 45,733  $ 111,613  $ 122,794 
Noninterest income 9,861  8,746  12,588  14,561  36,579 
     Total revenue, net of interest expense 44,436  45,708  58,321  126,174  159,373 
Credit loss expense 1,551  1,597  638  4,081  3,920 
Noninterest expense 31,544  34,919  34,623  99,782  98,348 
     Income before income tax expense 11,341  9,192  23,060  22,311  57,105 
Income tax expense 2,203  1,598  4,743  4,182  12,272 
     Net income $ 9,138  $ 7,594  $ 18,317  $ 18,129  $ 44,833 
Per Share Data:
Diluted earnings $ 0.58  $ 0.48  $ 1.17  $ 1.15  $ 2.86 
Book value 32.21  31.96  30.23  32.21  30.23 
Tangible book value(1)
 26.60  26.26  24.17  26.60  24.17 
Ending Balance Sheet:
Total assets $ 6,467,818  $ 6,521,489  $ 6,491,061  $ 6,467,818  $ 6,491,061 
Loans held for investment, net of unearned income 4,065,969  4,018,649  3,746,289  4,065,969  3,746,289 
Total securities 1,958,521  2,003,089  2,299,887  1,958,521  2,299,887 
Total deposits 5,363,324  5,445,447  5,476,782  5,363,324  5,476,782 
Short-term borrowings 373,956  362,054  304,536  373,956  304,536 
Long-term debt 124,526  125,752  154,190  124,526  154,190 
Total shareholders' equity 505,411  501,341  472,229  505,411  472,229 
Average Balance Sheet:
Average total assets $ 6,452,815  $ 6,465,810  $ 6,457,647  $ 6,480,636  $ 6,152,390 
Average total loans 4,019,852  4,003,717  3,673,379  3,964,119  3,416,600 
Average total deposits 5,379,871  5,454,517  5,507,482  5,459,749  5,246,183 
Financial Ratios:
Return on average assets 0.56  % 0.47  % 1.13  % 0.37  % 0.97  %
Return on average equity 7.14  % 6.03  % 14.56  % 4.81  % 11.81  %
Return on average tangible equity(1)
 9.68  % 8.50  % 19.32  % 7.03  % 15.28  %
Efficiency ratio(1)
 66.06  % 71.13  % 53.67  % 66.40  % 56.70  %
Net interest margin, tax equivalent(1)
 2.35  % 2.52  % 3.08  % 2.54  % 2.92  %
Loans to deposits ratio 75.81  % 73.80  % 68.40  % 75.81  % 68.40  %
Common equity ratio 7.81  % 7.69  % 7.28  % 7.81  % 7.28  %
Tangible common equity ratio(1)
 6.54  % 6.40  % 5.90  % 6.54  % 5.90  %
Credit Risk Profile:
Total nonperforming loans $ 28,987  $ 14,448  $ 25,963  $ 28,987  $ 25,963 
Nonperforming loans ratio 0.71  % 0.36  % 0.69  % 0.71  % 0.69  %
Total nonperforming assets $ 28,987  $ 14,448  $ 26,066  $ 28,987  $ 26,066 
Nonperforming assets ratio 0.45  % 0.22  % 0.40  % 0.45  % 0.40  %
Net charge-offs $ 451  $ 897  $ 588  $ 1,681  $ 3,091 
Net charge-off ratio 0.04  % 0.09  % 0.06  % 0.06  % 0.12  %
Allowance for credit losses $ 51,600  $ 50,400  $ 52,100  $ 51,600  $ 52,100 
Allowance for credit losses ratio 1.27  % 1.25  % 1.39  % 1.27  % 1.39  %
Allowance for credit losses to nonaccrual ratio 178.63  % 355.03  % 208.18  % 178.63  % 208.18  %
(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
  September 30, 2023 June 30, 2023 September 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)
 $ 4,019,852  $ 52,605    5.19  %   $ 4,003,717  $ 50,439  5.05  % $ 3,673,379  $ 41,124    4.44  %
Taxable investment securities 1,637,259  9,526    2.31  %   1,698,003  9,734  2.30  % 1,939,517  10,635    2.18  %
Tax-exempt investment securities (2)(4)
 341,330  2,234    2.60  %   345,934  2,253  2.61  % 431,898  2,922    2.68  %
Total securities held for investment(2)
 1,978,589  11,760  2.36  % 2,043,937  11,987  2.35  % 2,371,415  13,557  2.27  %
Other 34,195  374    4.34  %   9,078  68  3.00  % 6,070  9    0.59  %
Total interest earning assets(2)
 $ 6,032,636  $ 64,739    4.26  %   $ 6,056,732  $ 62,494  4.14  % $ 6,050,864  $ 54,690    3.59  %
Other assets 420,179      409,078  406,783   
Total assets $ 6,452,815      $ 6,465,810  $ 6,457,647   
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Interest checking deposits $ 1,354,597  $ 2,179  0.64  % $ 1,420,741  $ 1,971  0.56  % $ 1,725,000  $ 1,463  0.34  %
Money market deposits 1,112,149  7,402  2.64  % 999,436  5,299  2.13  % 1,016,005  1,268  0.50  %
Savings deposits 603,628  749    0.49  %   603,905  288  0.19  % 710,836  297    0.17  %
Time deposits 1,403,504  12,798    3.62  %   1,490,332  12,559  3.38  % 913,307  2,007    0.87  %
Total interest bearing deposits 4,473,878  23,128    2.05  %   4,514,414  20,117  1.79  % 4,365,148  5,035    0.46  %
Securities sold under agreements to repurchase 66,020  85  0.51  % 159,583  423  1.06  % 144,628  228  0.63  %
Other short-term borrowings 277,713  3,634  5.19  % 132,495  1,695  5.13  % 83,086  539  2.57  %
Short-term borrowings 343,733  3,719    4.29  %   292,078  2,118  2.91  % 227,714  767    1.34  %
Long-term debt 125,737  2,150    6.78  %   135,329  2,153  6.38  % 159,125  1,886    4.70  %
Total borrowed funds 469,470  5,869  4.96  % 427,407  4,271  4.01  % 386,839  2,653  2.72  %
Total interest bearing liabilities $ 4,943,348  $ 28,997    2.33  %   $ 4,941,821  $ 24,388  1.98  % $ 4,751,987  $ 7,688    0.64  %
Noninterest bearing deposits 905,993      940,103  1,142,334   
Other liabilities 95,408      78,898  64,063   
Shareholders’ equity 508,066  504,988  499,263 
Total liabilities and shareholders’ equity $ 6,452,815      $ 6,465,810  $ 6,457,647   
Net interest income(2)
 $ 35,742  $ 38,106  $ 47,002 
Net interest spread(2)
   1.93  %     2.16  %   2.95  %
Net interest margin(2)
 2.35  % 2.52  % 3.08  %
Total deposits(5)
 $ 5,379,871  $ 23,128  1.71  % $ 5,454,517  $ 20,117  1.48  % $ 5,507,482  $ 5,035  0.36  %
Cost of funds(6)
 1.97  % 1.66  % 0.52  %
(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 $141 thousand, $79 thousand, and $35 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Loan purchase discount accretion was $791 thousand, $1.0 million, and $2.0 million for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Tax equivalent adjustments were $735 thousand, $713 thousand, and $673 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $432 thousand, $431 thousand, and $596 thousand for the three months ended September 30, 2023, June 30, 2023, and September 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
  Nine Months Ended
  September 30, 2023 September 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)
 $ 3,964,119  $ 150,250  5.07  % $ 3,416,600  $ 106,297  4.16  %
Taxable investment securities 1,714,912  29,704  2.32  % 1,899,907  28,334  1.99  %
Tax-exempt investment securities (2)(4)
 361,254  7,136  2.64  % 440,542  8,895  2.70  %
Total securities held for investment(2)
 2,076,166  36,840  2.37  % 2,340,449  37,229  2.13  %
Other 22,741  686    4.03  %   25,972  77  0.40  %
Total interest earning assets(2)
 $ 6,063,026  $ 187,776    4.14  %   $ 5,783,021  $ 143,603  3.32  %
Other assets 417,610      369,369 
Total assets $ 6,480,636      $ 6,152,390 
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
Interest checking deposits $ 1,429,804  $ 5,999  0.56  % $ 1,642,849  $ 3,713  0.30  %
Money market deposits 1,014,708  15,970  2.10  % 991,338  2,338  0.32  %
Savings deposits 620,011  1,309  0.28  % 671,917  863  0.17  %
Time deposits 1,437,122  35,286  3.28  % 877,923  4,204  0.64  %
Total interest bearing deposits 4,501,645  58,564    1.74  %   4,184,027  11,118  0.36  %
Securities sold under agreements to repurchase 123,512  958  1.04  % 152,663  435  0.38  %
Other short-term borrowings 174,448  6,665  5.11  % 42,952  680  2.12  %
Short-term borrowings 297,960  7,623    3.42  %   195,615  1,115  0.76  %
Long-term debt 133,375  6,427    6.44  %   148,053  4,975  4.49  %
Total borrowed funds 431,335  14,050  4.36  % 343,668  6,090  2.37  %
Total interest bearing liabilities $ 4,932,980  $ 72,614    1.97  %   $ 4,527,695  $ 17,208  0.51  %
Noninterest bearing deposits 958,104      1,062,156 
Other liabilities 85,650      54,775 
Shareholders’ equity 503,902  507,764 
Total liabilities and shareholders’ equity $ 6,480,636      $ 6,152,390 
Net interest income(2)
 $ 115,162  $ 126,395 
Net interest spread(2)
   2.17  %     2.81  %
Net interest margin(2)
 2.54  % 2.92  %
Total deposits(5)
 $ 5,459,749  $ 58,564  1.43  % $ 5,246,183  $ 11,118  0.28  %
Cost of funds(6)
 1.65  % 0.41  %
(1) Average balance includes nonaccrual loans.
(2) Tax equivalent. The federal statutory tax rate utilized was 21%.
(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $315 thousand and $678 thousand for the nine months ended September 30, 2023 and September 30, 2022, respectively. Loan purchase discount accretion was $3.0 million and $3.3 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. Tax equivalent adjustments were $2.2 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $1.4 million and $1.8 million for the nine months ended September 30, 2023 and September 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 September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data) 2023 2023 2023 2022 2022
Total shareholders’ equity $ 505,411  $ 501,341  $ 500,650  $ 492,793  $ 472,229 
Intangible assets, net
 (87,987) (89,446) (91,040) (92,792) (94,563)
Tangible common equity $ 417,424  $ 411,895  $ 409,610  $ 400,001  $ 377,666 
Total assets $ 6,467,818  $ 6,521,489  $ 6,409,952  $ 6,577,876  $ 6,491,061 
Intangible assets, net
(87,987) (89,446) (91,040) (92,792) (94,563)
Tangible assets $ 6,379,831  $ 6,432,043  $ 6,318,912  $ 6,485,084  $ 6,396,498 
Book value per share $ 32.21  $ 31.96  $ 31.94  $ 31.54  $ 30.23 
Tangible book value per share(1)
 $ 26.60  $ 26.26  $ 26.13  $ 25.60  $ 24.17 
Shares outstanding 15,691,738  15,685,123  15,675,325  15,623,977  15,622,825 
Common equity ratio 7.81  % 7.69  % 7.81  % 7.49  % 7.28  %
Tangible common equity ratio(2)
 6.54  % 6.40  % 6.48  % 6.17  % 5.90  %
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.
Three Months Ended Nine Months Ended
Return on Average Tangible Equity September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Net income $ 9,138  $ 7,594  $ 18,317  $ 18,129  $ 44,833 
Intangible amortization, net of tax(1)
 1,095  1,196  1,342  3,605  3,224 
Tangible net income $ 10,233  $ 8,790  $ 19,659  $ 21,734  $ 48,057 
Average shareholders’ equity $ 508,066  $ 504,988  $ 499,263  $ 503,902  $ 507,764 
Average intangible assets, net
(88,699) (90,258) (95,499) (90,308) (87,318)
Average tangible equity $ 419,367  $ 414,730  $ 403,764  $ 413,594  $ 420,446 
Return on average equity
 7.14  % 6.03  % 14.56  % 4.81  % 11.81  %
Return on average tangible equity(2)
 9.68  % 8.50  % 19.32  % 7.03  % 15.28  %
(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 Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Net interest income $ 34,575  $ 36,962  $ 45,733  $ 111,613  $ 122,794 
Tax equivalent adjustments:
Loans(1)
 735  713  673  2,164  1,782 
Securities(1)
 432  431  596  1,385  1,819 
Net interest income, tax equivalent $ 35,742  $ 38,106  $ 47,002  $ 115,162  $ 126,395 
Loan purchase discount accretion (791) (984) (2,015) (2,964) (3,275)
Core net interest income $ 34,951  $ 37,122  $ 44,987  $ 112,198  $ 123,120 
Net interest margin 2.27  % 2.45  % 3.00  % 2.46  % 2.84  %
Net interest margin, tax equivalent(2)
 2.35  % 2.52  % 3.08  % 2.54  % 2.92  %
Core net interest margin(3)
 2.30  % 2.46  % 2.95  % 2.47  % 2.85  %
Average interest earning assets $ 6,032,636  $ 6,056,732  $ 6,050,864  $ 6,063,026  $ 5,783,021 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent net interest income divided by average interest earning assets.
(3) Annualized core net interest income divided by average interest earning assets.
Three Months Ended Nine Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Loan interest income, including fees $ 51,870  $ 49,726  $ 40,451  $ 148,086  $ 104,515 
Tax equivalent adjustment(1)
 735  713  673  2,164  1,782 
Tax equivalent loan interest income $ 52,605  $ 50,439  $ 41,124  $ 150,250  $ 106,297 
Loan purchase discount accretion (791) (984) (2,015) (2,964) (3,275)
Core loan interest income $ 51,814  $ 49,455  $ 39,109  $ 147,286  $ 103,022 
Yield on loans 5.12  % 4.98  % 4.37  % 4.99  % 4.09  %
Yield on loans, tax equivalent(2)
 5.19  % 5.05  % 4.44  % 5.07  % 4.16  %
Core yield on loans(3)
 5.11  % 4.95  % 4.22  % 4.97  % 4.03  %
Average loans $ 4,019,852  $ 4,003,717  $ 3,673,379  $ 3,964,119  $ 3,416,600 
(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent loan interest income divided by average loans.
(3) Annualized core loan interest income divided by average loans.
Three Months Ended Nine Months Ended
Efficiency Ratio September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands) 2023 2023 2022 2023 2022
Total noninterest expense $ 31,544  $ 34,919  $ 34,623  $ 99,782  $ 98,348 
Amortization of intangibles (1,460) (1,594) (1,789) (4,806) (4,299)
Merger-related expenses (11) —  (763) (147) (1,792)
Noninterest expense used for efficiency ratio $ 30,073  $ 33,325  $ 32,071  $ 94,829  $ 92,257 
Net interest income, tax equivalent(1)
 $ 35,742  $ 38,106  $ 47,002  $ 115,162  $ 126,395 
Plus: Noninterest income 9,861  8,746  12,588  14,561  36,579 
Less: Investment securities (losses) gains, net 79  (2) (163) (13,093) 272 
Net revenues used for efficiency ratio $ 45,524  $ 46,854  $ 59,753  $ 142,816  $ 162,702 
Efficiency ratio (2)
 66.06  % 71.13  % 53.67  % 66.40  % 56.70  %
(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 Nine Months Ended
Adjusted Earnings September 30, June 30, September 30, September 30, September 30,
(Dollars in thousands, except per share data) 2023 2023 2022 2023 2022
Net income $ 9,138  $ 7,594  $ 18,317  $ 18,129  $ 44,833 
After tax loss on sale of debt securities(1)
 —  —  125  9,837  — 
Adjusted earnings $ 9,138  $ 7,594  $ 18,442  $ 27,966  $ 44,833 
Weighted average diluted common shares outstanding 15,711  15,689  15,654  15,696  15,686 
Earnings per common share
Earnings per common share - diluted $ 0.58  $ 0.48  $ 1.17  $ 1.15  $ 2.86 
Adjusted earnings per common share - diluted (2)
 $ 0.58  $ 0.48  $ 1.18  $ 1.78  $ 2.86 
(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 ex992q32023earningsrelea.htm EX-99.2 ex992q32023earningsrelea
Third Quarter 2023 Earnings Conference Call October 27, 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 or branch sales (including with Iowa First Bancshares Corp. and Denver Bankshares, Inc.), 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 recent and potential additional 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 Israeli-Palestinian conflict and the Russian Invasion of 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, and net interest margin, tax equivalent. 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 $ 6,467.8 (0.82) % (0.36) % Total loans held for investment, net 4,066.0 1.18 8.53 Total deposits 5,363.3 (1.51) (2.07) Balance Sheet Equity to assets ratio 7.81 % 12 bps 53 bps Tangible common equity ratio (non-GAAP) 6.54 14 64 CET1 risk-based capital ratio 9.52 16 34 Total risk-based capital ratio 12.45 19 35 Loans to deposits ratio 75.81 % 201 741 Capital and Liquidity Net interest margin, tax equivalent (non-GAAP) 2.35 % (17) bps (73) bps Cost of total deposits 1.71 23 135 Return on average assets 0.56 9 (57) Return on average tangible equity (non-GAAP) 9.68 118 (964) Efficiency ratio (non-GAAP) 66.06 (507) 1,239 Profitability Nonperforming loans ratio 0.71 % 35 bps 2 bps Nonperforming assets ratio 0.45 23 5 Net charge-off ratio 0.04 (5) (2) Allowance for credit losses ratio 1.27 2 (12) Credit Risk Profile 3Q23 Financial Highlights – See the section "Non-GAAP Financial measures." – Note: Financial metrics as of or for the quarter ended September 30, 2023. Change vs. Dollars in millions 3Q23 2Q23 3Q22

 
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 Identify and execute on 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 Managed expenses closely, resulting in an improved efficiency ratio as compared to 2Q23. Improved our Treasury Management business by naming a new leader, combining our sales and service organizations, and recruiting two experienced treasury management salespeople in our metro markets. Announced the sale of MOFG's Florida operations, with the proceeds to be reinvested in the acquisition of Denver Bankshares, Inc. The combined transaction is expected to deliver double digit accretion. Recruited a seasoned banker to lead our Twin Cities middle market C&I lending team as we drive further scale and growth in the Twin Cities.

 
6 Deposits $ B ill io ns $5.45 $5.40 $5.36 $5.36 $5.08 $5.11 $5.10 $5.14 1.28% 0.52% (0.20)% 0.93% Deposits, Ex Brokered Brokered Deposits MoM Change in Deposits, Ex Brokered 06/30/23 07/31/23 08/31/23 09/30/23

 
7 Commercial Loan Portfolio Commercial and Industrial, 32% Agricultural, 3% Farmland, 6% Construction & Development, 10% Multifamily, 10% CRE-Other, 39% Commercial Loan Portfolio Mix - September 30, 2023 Commercial Loan Portfolio of $3.4 billion Commercial Loan Growth in Targeted Regions $ in Millions $856.0 $937.7 $958.3 $1,052.5 Iowa Metro Twin Cities 09/30/22 12/31/22 03/31/23 06/30/23 09/30/23 $347.8 $422.8 Denver 09/30/22 12/31/22 03/31/23 06/30/23 09/30/23

 
8 Credit $ m illi on s Nonperforming Assets $26.07 $15.92 $14.44 $14.45 $28.99 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 $ m illi on s Net Charge-Offs $0.6 $3.5 $0.3 $0.9 $0.5 3Q22 4Q22 1Q23 2Q23 3Q23 Credit Quality Measures $ millions 3Q22 4Q22 1Q23 2Q23 3Q23 Nonperforming assets ratio 0.40 % 0.24 % 0.23 % 0.22 % 0.45 % Net charge-off ratio 0.06 % 0.36 % 0.03 % 0.09 % 0.04 % Loans greater than 30 days past due and accruing $6.0 $6.7 $4.9 $6.2 $6.4 Allowance for credit losses ratio 1.39 % 1.28 % 1.27 % 1.25 % 1.27 % (1) (1) The fourth quarter of 2022 includes the identification and resolution of problem credits. (2) The third quarter of 2023 nonperforming assets increased primarily due to a single commercial relationship. (2)

 
9 Commercial Real Estate 3.7% 96.3% NOO CRE Office All Other Loans Non-Owner Occupied CRE Office September 30, 2023 $ millions 3Q23 Construction & Development $ 333.9 Farmland 183.5 Multifamily 338.2 CRE Other: NOO CRE Office 151.8 OO CRE Office 84.7 Industrial and Warehouse 373.3 Retail 270.8 Hotel 131.1 Other 317.4 Total Commercial Real Estate $ 2,184.7 Commercial Real Estate Portfolio(2) September 30, 2023 Portfolio Highlights September 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 50 % 100 % Total CRE loans(1) 218 % 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 $2.43 $2.44 $2.74 $2.73 $2.84 2019 2020 2021 2022 3Q23 $— $1.00 $2.00 $3.00 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 $3.1 $3.0 $2.8 $3.2 $4.2 $3.9 $1.1 $0.9 $5.2 $6.4 $7.5 $7.3 $2.1 $2.1 Investment Services Trust 2019 2020 2021 2022 2Q23 3Q23 $— $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 with the addition of an experienced wealth management team in Eastern Iowa that collectively has more than 120 years of experience • Strategic opening of a new office in Cedar Rapids, Iowa, a targeted metropolitan market • Invested in financial technology that will improve the customer experience and streamline internal processes

 
11 Financial Performance

 
12 Balance Sheet 3Q23 vs. 2Q23 3Q23 vs. 3Q22 Period end balances, $ millions 3Q23 $ Change % Change $ Change % Change Loans $4,066.0 $47.4 1 % $319.7 9 % Investment securities $1,958.5 -$44.6 (2) % -$341.4 (15) % Interest earning deposits in banks $3.8 -$64.8 (94) % $2.8 280 % Deposits $5,363.3 -$82.1 (2) % -$113.5 (2) % Borrowed funds $498.5 $10.7 2 % $39.8 9 % Shareholders' equity $505.4 $4.1 1 % $33.2 7 % 3Q23 3Q23 Period end 3Q23 2Q23 vs. 2Q23 3Q22 vs. 3Q22 Tangible book value per share (non-GAAP) $26.60 $26.26 1 % $24.17 10 % Common equity Tier 1 capital ratio 9.5 % 9.4 % 10 bps 9.2 % 30 bps AOCI $(84.6) $(82.7) (2) % $(96.6) 12 % Return on average tangible equity (non-GAAP) 9.68 % 8.50 % 118 bps 19.32 % -964 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." Av er ag e ba la nc es , $ bi lli on s Average Deposits $5.51 $5.45 $5.38 $4.37 $4.51 $4.47 $1.14 $0.94 $0.91 0.46% 1.79% 2.05% IB Deposits NIB Deposits Cost of IB Deposits 3Q22 2Q23 3Q23 Av er ag e ba la nc es , $ bi lli on s Average Loans $3.67 $4.00 $4.02 4.44% 5.05% 5.19% Loans Loan yield, tax equivalent 3Q22 2Q23 3Q23

 
14 Balance Sheet - Debt Securities Portfolio Municipals, 19% MBS, 1% CLO, 6% CMO, 15% Corporate, 60% 2.27% 2.35% 2.40% 2.35% 2.36% Total Securities Held for Investment (FTE) 3Q22 4Q22 1Q23 2Q23 3Q23 Investment Securities Yield Available for Sale Debt Securities Portfolio Mix September 30, 2023(1) Municipals, 49% MBS, 7% CMO, 44% Held to Maturity Debt Securities Portfolio Mix September 30, 2023(1) • Investment Portfolio Mix: ◦ AFS Securities - $0.9 billion ◦ HTM Securities - $1.1 billion • Investment Portfolio Duration (Years): ◦ AFS Securities - 3.1 ◦ HTM Securities - 6.6 ◦ Total Securities - 5.0 • Allowance for credit losses for investments is $0 Portfolio Composition (1) Percentages may not total 100% due to rounding.

 
15 Income Statement % Change 3Q23 vs. $ millions 3Q23 2Q23 3Q22 2Q23 3Q22 Net interest income $34.6 $37.0 $45.7 (6) % (24) % Noninterest income 9.9 8.7 12.6 14 % (21) % Total revenue 44.5 45.7 58.3 (3) % (24) % Noninterest expense 31.5 34.9 34.6 (10) % (9) % Pre-tax, pre-provision earnings (non-GAAP) $13.0 $10.8 $23.7 20 % (45) % Credit loss expense $1.6 $1.6 $0.6 — % 167 % Income tax expense $2.2 $1.6 $4.7 38 % (53) % Net income $9.1 $7.6 $18.3 20 % (50) % 3Q23 3Q23 3Q23 2Q23 3Q22 vs. 2Q23 vs. 3Q22 Net interest margin (non-GAAP) 2.35 % 2.52 % 3.08 % -17 bps -73 bps Efficiency ratio (non-GAAP) 66.06 % 71.13 % 53.67 % 507 bps -1,239 bps Diluted EPS $0.58 $0.48 $1.17 21 % (50) % – 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 September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Total shareholders' equity $ 472,229 $ 501,341 $ 505,411 Intangible assets, net (94,563) (89,446) (87,987) Tangible common equity $ 377,666 $ 411,895 $ 417,424 Total assets $ 6,491,061 $ 6,521,489 $ 6,467,818 Intangible assets, net (94,563) (89,446) (87,987) Tangible assets $ 6,396,498 $ 6,432,043 $ 6,379,831 Book value per share $ 30.23 $ 31.96 $ 32.21 Tangible book value per share (1) $ 24.17 $ 26.26 $ 26.60 Shares outstanding 15,622,825 15,685,123 15,691,738 Tangible common equity ratio (2) 5.90 % 6.40 % 6.54 % (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 September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Loan interest income, including fees $ 40,451 $ 49,726 $ 51,870 Tax equivalent adjustment (1) 673 713 735 Tax equivalent loan interest income $ 41,124 $ 50,439 $ 52,605 Yield on loans, tax equivalent (2) 4.44 % 5.05 % 5.19 % Average Loans $ 3,673,379 $ 4,003,717 $ 4,019,852 (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 September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Total noninterest expense $ 34,623 $ 34,919 $ 31,544 Amortization of intangibles (1,789) (1,594) (1,460) Merger-related expenses (763) — (11) Noninterest expense used for efficiency ratio $ 32,071 $ 33,325 $ 30,073 Net interest income, tax equivalent (1) $ 47,002 $ 38,106 $ 35,742 Noninterest income 12,588 8,746 9,861 Investment securities (losses) gains, net (163) (2) 79 Net revenues used for efficiency ratio $ 59,753 $ 46,854 $ 45,524 Efficiency ratio 53.67 % 71.13 % 66.06 % (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 September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Net interest income $ 45,733 $ 36,962 $ 34,575 Noninterest income 12,588 8,746 9,861 Noninterest expense (34,623) (34,919) (31,544) Pre-tax / Pre-provision Net Revenue $ 23,698 $ 10,789 $ 12,892

 
19 Non-GAAP Financial Measures Return on Average Tangible Equity For the Three Months Ended September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Net income $ 18,317 $ 7,594 $ 9,138 Intangible amortization, net of tax (1) 1,342 1,196 1,095 Tangible net income $ 19,659 $ 8,790 $ 10,233 Average shareholders' equity $ 499,263 $ 504,988 $ 508,066 Average intangible assets, net (95,499) (90,258) (88,699) Average tangible equity $ 403,764 $ 414,730 $ 419,367 Return on average equity 14.56 % 6.03 % 7.14 % Return on average tangible equity (2) 19.32 % 8.50 % 9.68 % (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 September 30, 2022 June 30, 2023 September 30, 2023 dollars in thousands Net interest Income $ 45,733 $ 36,962 $ 34,575 Tax equivalent adjustments: Loans (1) 673 713 735 Securities (1) 596 431 432 Net Interest Income, tax equivalent $ 47,002 $ 38,106 $ 35,742 Average interest earning assets $ 6,050,864 $ 6,056,732 $ 6,032,636 Net interest margin, tax equivalent (2) 3.08 % 2.52 % 2.35 % (1) The federal statutory tax rate utilized was 21%. (2) Annualized tax equivalent net interest income divided by average interest earning assets.