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Fourth Quarter 2024 Earnings Conference Call January 24, 2025 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 ...

Core Insights - MidWestOne (MOFG) reported a revenue of $59.78 million for the quarter ended December 2024, marking a year-over-year increase of 64.1% and exceeding the Zacks Consensus Estimate by 6.61% [1] - The earnings per share (EPS) for the same period was $0.77, compared to $0.51 a year ago, resulting in an EPS surprise of 6.94% over the consensus estimate of $0.72 [1] Financial Performance Metrics - Net Interest Margin was reported at 3.4%, slightly above the two-analyst average estimate of 3.3% [4] - The Efficiency Ratio stood at 59.1%, compared to the estimated 59.2% by two analysts [4] - Total Noninterest Income was $10.84 million, exceeding the average estimate of $10.39 million [4] - Net Interest Income reached $48.94 million, surpassing the average estimate of $45.68 million [4] Stock Performance - Over the past month, shares of MidWestOne have returned +1.4%, while the Zacks S&P 500 composite increased by +2.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - MidWestOne reported quarterly earnings of $0.77 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and up from $0.51 per share a year ago, representing an earnings surprise of 6.94% [1] - The company posted revenues of $59.78 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.61%, compared to year-ago revenues of $36.42 million [2] Group 2: Stock Performance and Outlook - MidWestOne shares have increased approximately 3.4% since the beginning of the year, slightly underperforming the S&P 500's gain of 3.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.70 on revenues of $56.25 million, and for the current fiscal year, it is $3.11 on revenues of $237.4 million [7] Group 3: Industry Context - The Banks - Midwest industry, to which MidWestOne belongs, is currently ranked in the top 12% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Net Income and Profitability - Net income for Q4 2024 was $16.3 million, with a return on average assets of 1.03% and a net interest margin (tax equivalent) of 3.43%[6] - Net income for Q4 2024 was $16.330 million, compared to a loss of $95.707 million in Q3 2024 and a 498.2% increase from $2.730 million in Q4 2023[39] - Return on average assets for Q4 2024 improved to 1.03%, compared to -5.78% in Q3 2024 and 0.17% in Q4 2023[39] - Return on average tangible equity was 14.80% for Q4 2024, a significant improvement from (82.78)% in Q3 2024 and 3.57% in Q4 2023[55] - Adjusted earnings per common share were $0.77 in Q4 2024, up from $0.58 in Q3 2024 and $0.46 in Q4 2023[64] Net Interest Income and Margin - Net interest income for Q4 2024 increased by $11.4 million from Q3 2024, reaching $48.9 million[9] - Core net interest margin expanded by 85 bps to 3.26% in Q4 2024[6] - Net interest income for Q4 2024 increased to $48.938 million, up 30.4% from $37.521 million in Q3 2024 and 50.3% from $32.559 million in Q4 2023[39] - Net interest margin (tax equivalent) increased to 3.43% in Q4 2024, up from 2.51% in Q3 2024 and 2.22% in Q4 2023[58] - Core net interest margin improved to 3.26% in Q4 2024, compared to 2.41% in Q3 2024 and 2.17% in Q4 2023[58] - Net interest income (tax equivalent) grew to $50.1 million in Q4 2024, up from $38.8 million in Q3 2024 and $33.8 million in Q4 2023[58] - Net interest income for the three months ended December 31, 2024, was $50.091 million, with a net interest margin of 3.43%[40] - Net interest income for the year ended December 31, 2024, was $157,537 thousand, compared to $144,172 thousand in 2023[38] - Net interest income for the year ended December 31, 2024, was $162.693 million, with a net interest margin of 2.66%[46] Deposits and Loans - Noninterest bearing deposits increased by 3.7% and core deposits increased by 2.3% in Q4 2024[6] - Loans held for investment increased by $188.7 million (4.6%) to $4.32 billion in December 2024 compared to December 2023, driven by the DNVB acquisition and organic loan growth[21] - Total deposits increased by $109.3 million (2.0%) to $5.48 billion in December 2024 from September 2024, with core deposits increasing by $111.5 million[23] - Loans held for investment, net of unearned income, increased from $4,126,947 thousand in December 2023 to $4,315,627 thousand in December 2024[37] - Total deposits increased from $5,395,673 thousand in December 2023 to $5,477,982 thousand in December 2024[37] - Loans held for investment remained stable at $4.316 billion as of December 31, 2024, compared to $4.329 billion in September 2024 and $4.127 billion in December 2023[39] - Total deposits increased to $5.478 billion as of December 31, 2024, from $5.369 billion in September 2024 and $5.396 billion in December 2023[39] - Total deposits for the year ended December 31, 2024, were $5.466 billion, with a cost of funds at 2.31%[46] - Loans, including fees, generated $63.443 million in interest income with an average yield of 5.86% for the three months ended December 31, 2024[40] - Loans, including fees, for the year ended December 31, 2024, generated $248.409 million in interest income with an average yield of 5.73%[46] - Average loans increased to $4.31 billion in Q4 2024, compared to $4.08 billion in Q4 2023[60] Credit Quality and Loan Performance - Classified loan ratio improved by 54 bps to 2.57% in Q4 2024, with a net charge-off ratio of 0.06%[6] - Nonperforming loans ratio remained stable at 0.51% as of December 31, 2024, compared to the linked quarter, while the classified loans ratio improved by 54 bps to 2.57%[28] - Special mention loan balances decreased by $28.8 million, or 16%, from September 30, 2024, to December 31, 2024[28] - Allowance for credit losses increased to $55.2 million as of December 31, 2024, with an allowance ratio of 1.28%, up from $54.0 million and 1.25% as of September 30, 2024[29] - Credit loss expense related to loans was $1.891 million for Q4 2024, compared to $1.835 million in Q3 2024 and $1.968 million in Q4 2023[28] - Nonperforming loans ratio decreased to 0.51% as of December 31, 2024, from 0.64% in December 2023[39] - Net charge-off ratio for Q4 2024 was 0.06%, down from 0.16% in Q3 2024 and 0.20% in Q4 2023[39] Capital and Equity - Common equity tier 1 (CET1) ratio improved by 82 bps to 10.73% in Q4 2024[6] - Total shareholders' equity decreased by $2.5 million from September 30, 2024, to December 31, 2024, primarily due to an increase in accumulated other comprehensive loss, partially offset by an increase in retained earnings[25] - Total shareholders' equity increased by $35.3 million from December 31, 2023, to December 31, 2024, driven by increases in common stock and additional paid-in-capital from a common equity capital raise in Q3 2024[25] - Tier 1 leverage to average assets ratio increased to 9.15% as of December 31, 2024, compared to 8.78% as of September 30, 2024[25] - Common equity tier 1 capital to risk-weighted assets ratio rose to 10.73% as of December 31, 2024, from 9.91% as of September 30, 2024[25] - CET1 ratio improved to 10.73% as of December 31, 2024, from 9.91% in September 2024 and 9.59% in December 2023[39] - Tangible common equity ratio decreased to 7.57% as of December 31, 2024, compared to 7.22% in September 2024 and 6.90% in December 2023[53] - Total shareholders' equity increased to $559.7 million as of December 31, 2024, compared to $524.4 million in December 2023[53] Noninterest Income and Expense - Investment services and trust activities revenue increased by 15.9% to $14.2 million in 2024[6] - Noninterest income for Q4 2024 increased by $141.2 million from Q3 2024, primarily due to a securities impairment of $140.4 million recognized in Q3 2024[12] - Noninterest expense increased by $1.6 million in 4Q24 compared to 3Q24, driven by a $0.7 million increase in compensation and employee benefits and a $0.3 million increase in occupancy expense[15] - Noninterest expense increased by $5.2 million in 4Q24 compared to 4Q23, with compensation and employee benefits, other expense, and occupancy expense contributing $2.8 million, $1.0 million, and $0.5 million respectively[16] - Total noninterest income (loss) for the year ended December 31, 2024, was $(88,247) thousand, compared to $18,423 thousand in 2023[38] - Total noninterest expense for the year ended December 31, 2024, was $144,496 thousand, compared to $131,913 thousand in 2023[38] Asset and Liability Management - Total earning assets yield increased by 60 bps in Q4 2024 compared to Q3 2024, primarily due to a 171 bps increase in total investment securities yields[10] - Total assets decreased to $6.24 billion in December 2024 from $6.55 billion in September 2024, primarily due to lower securities balances from balance sheet repositioning[18] - Investment securities decreased by $294.7 million to $1.33 billion in December 2024 from September 2024, and by $541.9 million from December 2023, due to the sale of debt securities[22] - Borrowed funds decreased by $409.1 million to $116.6 million in December 2024 from September 2024, primarily due to the payoff of BTFP borrowings[24] - Total assets decreased from $6,748,015 thousand in March 2024 to $6,236,329 thousand in December 2024[37] - Total assets as of December 31, 2024, decreased to $6.236 billion from $6.552 billion in September 2024 and $6.428 billion in December 2023[39] - Total interest-earning assets amounted to $5.807 billion, yielding $79.420 million in interest income at an average yield of 5.44% for the three months ended December 31, 2024[40] - Total interest-earning assets for the year ended December 31, 2024, were $6.117 billion, yielding $299.430 million in interest income at an average yield of 4.89%[46] Tax and Dividend - The effective tax rate for 4Q24 was 22.7%, down from 26.5% in 3Q24, with the full-year 2025 expected tax rate projected to be 22-24%[17] - The company declared a cash dividend of $0.2425 per common share, payable on March 17, 2025, to shareholders of record as of March 3, 2025[26] Share Repurchase - No common shares were repurchased during the period from September 30, 2024, through January 23, 2025, with $15.0 million remaining available under the share repurchase program[27] Efficiency and Yield Metrics - Efficiency ratio improved to 59.06% in Q4 2024, down from 70.32% in Q3 2024 and 70.16% in Q4 2023[62] - Yield on loans (tax equivalent) remained stable at 5.86% in Q4 2024, consistent with Q3 2024 but higher than 5.34% in Q4 2023[60] - Taxable investment securities yielded $38.787 million in interest income with an average yield of 2.75% for the year ended December 31, 2024[46] - Total interest-bearing deposits for the year ended December 31, 2024, were $4.529 billion, with an interest expense of $113.109 million and an average cost of 2.50%[46] - Long-term debt for the year ended December 31, 2024, had an interest expense of $8.086 million with an average cost of 6.80%[46] Revenue and Interest Income - Total revenue for Q4 2024 increased by $152.6 million from Q3 2024, driven by higher net interest income and noninterest income[8] - Total revenue for Q4 2024 was $59.775 million, a significant recovery from a loss of $92.867 million in Q3 2024 and a 64.1% increase from $36.421 million in Q4 2023[39] - Total interest income for the year ended December 31, 2024, was $294,274 thousand, compared to $249,613 thousand in 2023[38]

Core Insights - MidWestOne Financial Group, Inc. reported strong fourth quarter results for 2024, highlighting successful balance sheet repositioning and strategic initiatives, with a return on average assets exceeding 1.0% driven by net interest margin expansion [4][7] - The company achieved a net income of $16.3 million, or $0.78 per diluted share, with significant improvements in asset quality metrics [7][22] - Total revenue for the fourth quarter increased significantly compared to both the previous quarter and the same quarter last year, primarily due to higher net interest income and noninterest income [9][10] Financial Performance - Fourth quarter net interest income was $48.9 million, a 30% increase from the previous quarter and a 50% increase year-over-year [9][10] - Noninterest income for the fourth quarter was $10.8 million, a substantial recovery from a loss in the previous quarter, reflecting a year-over-year increase of 181% [9][15] - Total revenue for the fourth quarter reached $59.8 million, up from a loss of $92.9 million in the previous quarter and an increase of 64% compared to the same quarter last year [9][10] Balance Sheet and Credit Quality - Total assets decreased to $6.24 billion as of December 31, 2024, primarily due to lower securities balances from sales and repositioning efforts [22][26] - Loans held for investment remained stable at $4.32 billion, reflecting a slight decrease from the previous quarter but a 4.6% increase year-over-year [23][24] - The classified loans ratio improved to 2.57%, a 54 basis point improvement from the previous quarter, while the nonperforming assets ratio remained stable at 0.40% [7][36] Capital and Deposits - Total deposits increased by $109.3 million, or 2.0%, to $5.48 billion from the previous quarter, with core deposits also showing growth [27] - The common equity tier 1 (CET1) ratio improved to 10.73%, reflecting a strong capital position [7][29] - The company declared a cash dividend of $0.2425 per common share, payable on March 17, 2025 [31]

Group 1 - MidWestOne (MOFG) is expected to report quarterly earnings of $0.72 per share, a 41.2% increase year-over-year, with revenues projected at $56.07 million, reflecting a 54% year-over-year growth [1] - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating analysts' reassessment of their initial projections [1] - Analysts predict an 'Efficiency Ratio' of 59.2%, significantly improved from 70.2% in the same quarter last year [3] Group 2 - Total Noninterest Income is projected to reach $10.39 million, up from $3.86 million reported in the same quarter last year [4] - Net Interest Income is expected to be $45.68 million, compared to $32.56 million in the same quarter of the previous year [4] - MidWestOne shares have shown a return of +0.4% over the past month, while the Zacks S&P 500 composite has decreased by -0.4% [4]

Core Viewpoint - MidWestOne Financial Group, Inc. will release its fourth quarter 2024 financial results on January 23, 2025, and will host a conference call on January 24, 2025, to discuss these results [1]. Financial Results Announcement - The financial results for the fourth quarter of 2024 will be announced after market closes on January 23, 2025 [1]. - A conference call to discuss the financial results is scheduled for 11:00 a.m. Central Time on January 24, 2025 [1]. Participation Details - Investors and analysts can pre-register for the conference call via a provided link [2]. - Access details will be sent via email after pre-registration [2]. - Callers can dial in approximately 15 minutes before the call starts using specific numbers for the U.S. and Canada [2]. Replay Information - A replay of the conference call will be available within four hours after the call concludes [3]. - The replay can be accessed online and via telephone, with specific numbers provided for U.S., Canada, and international callers [3]. - The replay will be available until April 24, 2025 [3]. Company Overview - MidWestOne Financial Group, Inc. is a financial holding company based in Iowa City, Iowa [4]. - The company is the parent of MidWestOne Bank, which operates in Iowa, Minnesota, Wisconsin, and Colorado [4]. - MidWestOne provides electronic financial services through its website [4].

Core Viewpoint - The Zacks rating system, which focuses on earnings estimate revisions, has a strong track record in predicting stock price movements, with Zacks Rank 1 stocks averaging a +25% annual return since 1988 [3]. Group 1: Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with only the top 5% receiving a 'Strong Buy' rating [4]. - The system maintains an equal proportion of 'buy' and 'sell' ratings across over 4000 stocks, contrasting with Wall Street analysts who tend to favor optimistic recommendations [4]. Group 2: MidWestOne's Upgrade - MidWestOne (MOFG) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [6][10]. - The Zacks Consensus Estimate for MidWestOne has increased by 6.5% over the past three months, indicating a positive outlook for the company's earnings [14]. Group 3: Earnings Estimates and Stock Prices - There is a strong correlation between changes in earnings estimates and near-term stock price movements, largely driven by institutional investors who adjust their valuations based on these estimates [9][13]. - Rising earnings estimates for MidWestOne suggest an improvement in the company's underlying business, which could lead to higher stock prices as investors respond positively [10][12].

Cash Flow - Net cash inflows from operating activities were $32.1 million in the first nine months of 2024, down from $55.8 million in the same period of 2023, representing a decrease of 42.5%[254] - Net cash inflows from investing activities were $35.3 million in the first nine months of 2024, compared to $83.1 million in the comparable period of 2023, indicating a decline of 57.5%[254] - Net cash inflows from financing activities were $52.8 million in the first nine months of 2024, contrasting with net cash outflows of $150.5 million for the same period in 2023[255] Liquidity - As of September 30, 2024, the Bank had brokered deposits of $200.0 million, a decrease from $221.0 million as of December 31, 2023[259] - The Bank's liquidity sources include Federal Funds Lines totaling $135.0 million as of September 30, 2024, which are tested annually for availability[256] - The Bank had investment securities with a market value of approximately $744.3 million pledged to the Federal Reserve Bank of Chicago for liquidity purposes[257] - As of September 30, 2024, the Company had $23.7 million of reciprocal time deposits that qualified for the brokered deposit exemption[260] Interest Rate Sensitivity - As of September 30, 2024, 39.9% of the Company's earning asset balances are expected to reprice or pay down in the next twelve months[267] - The anticipated effect on net interest income over a twelve-month period shows a potential decrease of $5.989 million (3.5%) if short- and long-term interest rates decrease by 200 basis points[268] - The interest rate gap measures the difference between interest-earning assets and interest-bearing liabilities re-pricing within a given period[270] - This gap represents the net asset or liability sensitivity at a specific point in time[270] - External factors significantly affect the interest rate gap, including loan prepayments and early withdrawals of deposits[270] - Changes in the correlation of various interest-bearing instruments can impact the interest rate gap[270] - Competition in the market influences the interest rate gap dynamics[270] - A rise or decline in interest rates can significantly alter the interest rate gap[270] Credit Limit - The current credit limit established by the Federal Home Loan Bank of Des Moines is equal to 45% of the Bank's total assets[258]