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MidWestOne(MOFG) - 2023 Q3 - Earnings Call Transcript
2023-10-27 17:33
MidWestOne Financial Group, Inc. (NASDAQ:MOFG) Q3 2023 Earnings Call Transcript October 27, 2023 12:00 PM ET Company Participants Barry Ray - Chief Financial Officer Charles Reeves - Chief Executive Officer Len Devaisher - President and Chief Operating Officer Gary Sims - Chief Credit Officer Conference Call Participants Terence McEvoy - Stephens Inc Damon DelMonte - KBW Brian Martin - Janney Montgomery Scott Operator Good morning, ladies and gentlemen, and welcome to the MidWestOne Financial Group Third Qu ...
MidWestOne(MOFG) - 2023 Q2 - Quarterly Report
2023-08-03 23:55
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35968 MIDWESTONE FINANCIAL GROUP, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation ...
MidWestOne(MOFG) - 2023 Q2 - Earnings Call Transcript
2023-08-01 19:41
MidWestOne Financial Group, Inc. (NASDAQ:MOFG) Q2 2023 Results Conference Call August 1, 2023 12:00 PM ET Company Participants Charles Reeves - Chief Executive Officer Barry Ray - Chief Financial Officer Len Devaisher - President and Chief Operating Officer Gary Sims - Chief Credit Officer Conference Call Participants Brendan Nosal - Piper Sandler Benjamin Gerlinger - Hovde Group Terence McEvoy - Stephens Inc Damon DelMonte - Keefe, Bruyette, & Woods Brian Martin - Janney Montgomery Scott Operator Good mor ...
MidWestOne(MOFG) - 2023 Q1 - Quarterly Report
2023-05-05 19:41
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35968 MIDWESTONE FINANCIAL GROUP, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation ...
MidWestOne(MOFG) - 2022 Q4 - Annual Report
2023-03-13 21:04
PART I [Business](index=6&type=section&id=Item%201.%20Business) MidWestOne Financial Group, Inc is a bank holding company providing commercial and personal banking services across several US states Financial Snapshot as of December 31, 2022 | Metric | Value (USD) | | :--- | :--- | | Total Assets | $6.58 billion | | Total Loans, net | $3.84 billion | | Total Deposits | $5.47 billion | | Shareholders' Equity | $492.8 million | - On June 9, 2022, the Company completed the acquisition of Iowa First Bancshares Corp (IOFB) for cash consideration of **$46.7 million**, merging IOFB's subsidiary banks into MidWestOne Bank[20](index=20&type=chunk) Loan Portfolio Composition (December 31, 2022) | Loan Category | Percentage of Total Portfolio | | :--- | :--- | | Commercial Real Estate | 51.6% | | Commercial and Industrial | 27.5% | | Residential Real Estate | 15.9% | | Agricultural Loans | 3.0% | | Consumer Lending | 2.0% | - As of December 31, 2022, the company employed **811 full and part-time employees** across its geographical regions[40](index=40&type=chunk) - The company and its bank subsidiary are extensively regulated by federal and state agencies, including the Iowa Division of Banking, the Federal Reserve, the FDIC, and the CFPB, which affects business operations, capital levels, and growth[48](index=48&type=chunk)[49](index=49&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant economic, credit, operational, and regulatory risks, including interest rate fluctuations and cybersecurity threats - The company's business is heavily concentrated in the Iowa and Minneapolis/St Paul markets, making its financial condition **highly dependent on the economic health of these specific areas**[107](index=107&type=chunk) - Rising interest rates have negatively impacted the value of the company's securities portfolio, which had **$108.2 million in net unrealized losses** from available-for-sale investment securities at December 31, 2022[115](index=115&type=chunk) - A significant portion of the loan portfolio consists of commercial real estate loans, which comprised approximately **51.6% of the total loan portfolio** as of December 31, 2022, creating a concentration risk tied to real estate market values[127](index=127&type=chunk) - The company faces intense competition from a wide range of financial institutions, including large regional banks, community banks, credit unions, and emerging fintech and digital asset service providers[148](index=148&type=chunk)[149](index=149&type=chunk) - As a financial institution, the company is susceptible to fraudulent activity and cybersecurity incidents and relies on third-party vendors for critical systems, where failures could adversely affect operations[162](index=162&type=chunk)[168](index=168&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[186](index=186&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) The company operates 57 banking offices across five states, with its corporate headquarters located in Iowa City, Iowa Number of Banking Offices by State (as of Dec 31, 2022) | State | Number of Offices | | :--- | :--- | | Iowa | 35 | | Minnesota | 12 | | Wisconsin | 7 | | Florida | 2 | | Colorado | 1 | | **Total** | **57** | [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal actions that are not expected to materially impact its financial condition - The Company is party to various legal actions in the normal course of business but believes none are expected to have a material adverse effect on its consolidated financial condition[188](index=188&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[189](index=189&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq (MOFG), with an active share repurchase program in place through 2023 - The company's common stock is listed on the Nasdaq Global Select Market under the symbol "MOFG" with **15,675,325 shares outstanding** as of March 1, 2023[192](index=192&type=chunk) - A share repurchase program authorized for up to **$15.0 million** through December 31, 2023 had **$3.0 million** remaining available as of December 31, 2022[193](index=193&type=chunk) [Selected Financial Data](index=33&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company - Not applicable[197](index=197&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased in 2022 due to higher credit loss and noninterest expenses, despite growth in assets and net interest income Key Financial Results Comparison (2022 vs 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $60.8 million | $69.5 million | | Diluted EPS | $3.87 | $4.37 | | Total Assets | $6.58 billion | $6.03 billion | | Gross Loans Held for Investment | $3.85 billion | $3.25 billion | | Total Deposits | $5.47 billion | $5.11 billion | - Net interest income **increased by $10.1 million** to $166.4 million in 2022, driven by higher interest income from investments and loans[207](index=207&type=chunk)[238](index=238&type=chunk) - The company recorded a **credit loss expense of $4.5 million** in 2022, a significant shift from a credit loss benefit of $7.3 million in 2021, primarily due to loan growth[207](index=207&type=chunk)[240](index=240&type=chunk) - Noninterest income **rose by $5.1 million** to $47.5 million in 2022, largely due to a **$3.8 million bargain purchase gain** from the IOFB acquisition[207](index=207&type=chunk)[243](index=243&type=chunk) - Noninterest expense **increased by $16.2 million** to $132.8 million in 2022, driven by costs associated with the IOFB acquisition and higher operating expenses[207](index=207&type=chunk)[247](index=247&type=chunk) - Subsequent to year-end 2022, the company executed a balance sheet repositioning, selling approximately **$231 million in securities** for an estimated pre-tax loss of **$13.2 million**[257](index=257&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and liquidity risk, managed through diverse funding sources and sensitivity analysis - The company's most significant market risk is **interest rate risk**, which affects earnings and capital, alongside prevalent liquidity risk[308](index=308&type=chunk)[309](index=309&type=chunk) - Key liquidity sources include **$155.0 million** in unsecured federal funds lines and **$405.1 million** in available FHLB advances as of December 31, 2022[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) Net Interest Income Sensitivity Analysis (as of Dec 31, 2022) | Immediate Change in Rates | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 bps | $(13,921) | (8.7)% | | +100 bps | $(6,738) | (4.2)% | | -100 bps | $5,637 | 3.5% | | -200 bps | $8,398 | 5.2% | [Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements, notes, and the independent auditor's unqualified opinion - The independent registered public accounting firm, RSM US LLP, issued an **unqualified opinion** on the Company's consolidated financial statements for the period ended December 31, 2022[331](index=331&type=chunk) - The auditor identified the qualitative factors applied to the **allowance for credit losses as a critical audit matter** due to the highly subjective nature of management's inputs[337](index=337&type=chunk) Consolidated Balance Sheet Summary | (in thousands) | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$6,577,876** | **$6,025,128** | | Total Loans, net | $3,791,324 | $3,196,312 | | Total Securities | $2,282,968 | $2,288,110 | | **Total Liabilities** | **$6,085,083** | **$5,497,653** | | Total Deposits | $5,468,942 | $5,114,519 | | **Total Shareholders' Equity** | **$492,793** | **$527,475** | Consolidated Income Statement Summary | (in thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Interest Income | $166,358 | $156,281 | $152,964 | | Credit Loss Expense (Benefit) | $4,492 | $(7,336) | $28,369 | | Noninterest Income | $47,519 | $42,453 | $38,620 | | Noninterest Expense | $132,788 | $116,592 | $149,893 | | **Net Income** | **$60,835** | **$69,486** | **$6,623** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=122&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[634](index=634&type=chunk) [Controls and Procedures](index=122&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2022 - Management concluded that the Company's **disclosure controls and procedures were effective** as of December 31, 2022[636](index=636&type=chunk) - Management asserted that the Company maintained **effective internal control over financial reporting** as of December 31, 2022, based on the COSO framework (2013)[640](index=640&type=chunk) - The assessment of internal control over financial reporting **excluded Iowa First Bancshares Corporation**, which was acquired on June 9, 2022[639](index=639&type=chunk) [Other Information](index=125&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[652](index=652&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=125&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not Applicable[653](index=653&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=125&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - The information required by this item will be included in the Company's Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders and is incorporated by reference[655](index=655&type=chunk) [Executive Compensation](index=125&type=section&id=Item%2011.%20Executive%20Compensation) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - The information required by this item will be included in the Company's Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders and is incorporated by reference[656](index=656&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=125&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - The information required by this item will be included in the Company's Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders and is incorporated by reference[657](index=657&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=125&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - The information required by this item will be included in the Company's Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders and is incorporated by reference[658](index=658&type=chunk) [Principal Accountant Fees and Services](index=125&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Required information is incorporated by reference from the company's 2023 Definitive Proxy Statement - The information required by this item will be included in the Company's Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders and is incorporated by reference[659](index=659&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=125&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section lists all financial statements, schedules, and exhibits filed with the report, including certifications from the Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer[661](index=661&type=chunk)[662](index=662&type=chunk)[664](index=664&type=chunk) [Form 10-K Summary](index=130&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for this item - None[666](index=666&type=chunk)
MidWestOne(MOFG) - 2022 Q4 - Earnings Call Transcript
2023-01-27 21:26
Financial Data and Key Metrics Changes - Net interest income decreased by $2.1 million in Q4 to $43.6 million compared to the previous quarter, primarily due to higher funding costs and increased high-cost borrowings, partially offset by higher interest-earning asset levels and yields [2] - Net interest margin declined by 15 basis points to 2.93% in Q4 from 3.08% in the previous quarter [2] - Total shareholders' equity rose by $20.6 million to $492.8 million, driven by net income of $16 million and a favorable change in AOCI of $7.6 million, partially offset by cash dividends of $3.7 million [21] Business Line Data and Key Metrics Changes - Commercial loans increased by $82.5 million or 11.2% annualized from the previous quarter, with new loans at an average coupon of 6.06% [20] - Loan growth exceeded 10% annualized for the third consecutive quarter, driven by talent acquisition and relationship banking, primarily in metro markets like Twin Cities and Denver [13][24] - Nonperforming assets ratio decreased by 16 basis points to 0.24%, with the allowance coverage ratio at 1.28% [14] Market Data and Key Metrics Changes - Deposits were down slightly from the previous quarter but up 6.9% to $5.5 billion compared to year-end 2021, amid increased competition for deposits [34] - The cost of interest-bearing liabilities increased by 44 basis points to 1.08%, influenced by rising interest-bearing deposits and borrowing costs [20] Company Strategy and Development Direction - The company aims to actively manage its balance sheet and review business lines and geographies for profitable growth opportunities [17] - A strategic plan is being developed to enhance operations and growth engines, with more details expected in the first quarter 2023 earnings call [16] - The company is focused on becoming a top-performing bank, leveraging its strong foundation and diverse business lines [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to navigate uncertain economic conditions, having remedied legacy credit issues [14] - There is an expectation of continued deposit pricing pressures, with a deposit beta of 25% noted in Q4 [40] - The outlook for mortgage banking remains challenging due to low housing inventory and high rates, with no significant momentum expected in 2023 [69] Other Important Information - The wealth business has seen slower revenue growth but is expected to gain momentum, with $180 million of new AUM brought on in 2022 [100] - The company plans to open a new wealth and commercial office in Cedar Rapids within the next 90 days [100] Q&A Session Summary Question: How does the company plan to fund loan growth? - The company indicated that securities cash flows could fund mid-single-digit loan growth, with wholesale funding sources like brokered deposits considered if growth exceeds that target [39] Question: What is the current state of deposit pricing pressures? - Management noted that they are currently experiencing significant deposit pricing pressures, with a cycle-to-date deposit beta of 15% and an increase to 25% in Q4 [40][41] Question: How far along is the company in resolving legacy loan issues? - The company has made significant progress in resolving legacy credit issues, reducing the nonperforming asset ratio to 24 basis points [47] Question: What is the outlook for the margin? - Management expects downward pressure on the margin in the near term, with potential stabilization in the latter half of the year [85] Question: What is the company's exposure to the office space? - The company has 4.5% of its portfolio in office space, which is a decrease from the previous year [81]
MidWestOne(MOFG) - 2022 Q4 - Earnings Call Presentation
2023-01-27 19:21
Forward-Looking Statements & Non-GAAP Measures Cautionary Note Regarding Forward-Looking Statements This investor 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 ...
MidWestOne(MOFG) - 2022 Q3 - Quarterly Report
2022-11-03 18:43
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35968 MIDWESTONE FINANCIAL GROUP, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorpora ...
MidWestOne(MOFG) - 2022 Q3 - Earnings Call Transcript
2022-10-28 18:43
MidWestOne Financial Group, Inc. (NASDAQ:MOFG) Q3 2022 Earnings Conference Call October 28, 2022 12:00 PM ET Company Participants Len Devaisher ??? Interim Chief Executive Officer Kevin Monson ??? Chairman Barry Ray ??? Senior Executive Vice President and Chief Financial Officer Jim Cantrell ??? Senior Executive Vice President, Chief Investment Officer and Treasurer Gary Sims ??? Senior Vice President and Chief Credit Officer Conference Call Participants Brendan Nosal ??? Piper Sandler & Co. Jeff Rulis ??? ...
MidWestOne(MOFG) - 2022 Q2 - Quarterly Report
2022-08-04 17:13
[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for MidWestOne Financial Group, Inc. as of June 30, 2022, and for the three and six-month periods then ended, including balance sheets, income statements, comprehensive income, shareholders' equity, cash flows, and accompanying notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $6.44 billion by June 30, 2022, driven by loan and securities growth, while shareholders' equity decreased to $488.8 million primarily due to accumulated other comprehensive loss Consolidated Balance Sheets (dollars in thousands) | | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$6,442,491** | **$6,025,128** | | Total cash and cash equivalents | $83,864 | $203,830 | | Total securities | $2,402,831 | $2,288,110 | | Total loans held for investment, net | $3,558,802 | $3,196,312 | | Goodwill | $62,477 | $62,477 | | **Total Liabilities** | **$5,953,659** | **$5,497,653** | | Total deposits | $5,537,441 | $5,114,519 | | Short-term borrowings | $193,894 | $181,368 | | Long-term debt | $159,168 | $154,879 | | **Total Shareholders' Equity** | **$488,832** | **$527,475** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2022 was $12.6 million, a decrease from $17.3 million in Q2 2021, primarily due to a shift from a credit loss benefit to an expense and higher noninterest expenses Consolidated Statements of Income (dollars in thousands) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $39,725 | $38,505 | $77,061 | $77,122 | | Credit loss expense (benefit) | $3,282 | $(2,144) | $3,282 | $(6,878) | | Noninterest income | $12,347 | $10,218 | $23,991 | $22,042 | | Noninterest expense | $32,082 | $28,670 | $63,725 | $56,370 | | **Net income** | **$12,621** | **$17,271** | **$26,516** | **$38,919** | | **Earnings - diluted (per share)** | **$0.80** | **$1.08** | **$1.69** | **$2.43** | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive loss was $10.6 million for Q2 2022, a significant change from comprehensive income of $23.1 million in Q2 2021, primarily due to a $24.0 million net unrealized loss on available-for-sale debt securities Consolidated Statements of Comprehensive Income (dollars in thousands) | | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income | $12,621 | $17,271 | $26,516 | $38,919 | | Other comprehensive (loss) income, net of tax | $(23,215) | $5,788 | $(56,366) | $(14,764) | | **Comprehensive (loss) income** | **$(10,594)** | **$23,059** | **$(29,850)** | **$24,155** | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity decreased from $527.5 million at year-end 2021 to $488.8 million at June 30, 2022, mainly due to a $56.4 million other comprehensive loss offsetting net income Consolidated Statements of Shareholders' Equity (dollars in thousands) | | Six Months Ended June 30, 2022 | | :--- | :--- | | **Balance at December 31, 2021** | **$527,475** | | Net income | $26,516 | | Other comprehensive loss | $(56,366) | | Dividends paid on common stock | $(7,448) | | Repurchase of common stock | $(2,299) | | **Balance at June 30, 2022** | **$488,832** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by $120.0 million for the six months ended June 30, 2022, driven by net cash used in investing and financing activities, partially offset by operating activities Consolidated Statements of Cash Flows (dollars in thousands) | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $44,076 | $79,289 | | Net cash used in investing activities | $(128,178) | $(276,436) | | Net cash (used in) provided by financing activities | $(35,864) | $177,922 | | **Net decrease in cash and cash equivalents** | **$(119,966)** | **$(19,225)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the acquisition of Iowa First Bancshares Corp., reclassification of debt securities, loan portfolio analysis, derivatives, goodwill, regulatory capital, and commitments - On June 9, 2022, the Company acquired Iowa First Bancshares Corp. (IOFB) for cash consideration of **$46.7 million**, resulting in a bargain purchase gain of **$1.4 million**[27](index=27&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - On January 1, 2022, the Company transferred **$1.25 billion** of debt securities from available for sale to held to maturity, with a net unrealized after-tax loss of **$11.5 million** remaining in accumulated other comprehensive loss[43](index=43&type=chunk) - The Allowance for Credit Losses (ACL) increased to **$52.4 million** at June 30, 2022, from **$48.7 million** at year-end 2021, reflecting a **$3.4 million** initial allowance for PCD loans and **$3.1 million** for acquired non-PCD loans[76](index=76&type=chunk) - As of June 30, 2022, both the Company and MidWestOne Bank were considered well-capitalized under regulatory requirements, with a consolidated Total capital to risk-weighted assets ratio of **11.73%**[122](index=122&type=chunk)[223](index=223&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial condition and results for Q2 and H1 2022, highlighting the IOFB acquisition, net interest income trends, and the decline in net income due to credit loss expense and increased noninterest expense - Net income for Q2 2022 was **$12.6 million**, a decrease of **$4.7 million** from Q2 2021, primarily due to a **$3.3 million** credit loss expense in 2022 versus a **$2.1 million** benefit in 2021, and a **$3.4 million** increase in noninterest expense[154](index=154&type=chunk)[158](index=158&type=chunk)[172](index=172&type=chunk) - The acquisition of IOFB on June 9, 2022, for **$46.7 million** in cash, significantly impacted the balance sheet, contributing to a **$417.4 million** increase in total assets to **$6.44 billion** at June 30, 2022[150](index=150&type=chunk)[155](index=155&type=chunk) - Tax equivalent net interest margin for Q2 2022 was **2.87%**, a slight decrease from **2.88%** in Q2 2021, as lower loan yields were partially offset by higher investment security yields and lower deposit costs[169](index=169&type=chunk) - Shareholders' equity decreased by **$38.6 million** from year-end 2021 to **$488.8 million** at June 30, 2022, primarily due to a decrease in Accumulated Other Comprehensive Income (AOCI) from unrealized losses on available-for-sale debt securities[222](index=222&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk, its primary market risk, with a hypothetical 100 basis point rate increase decreasing net interest income by 2.0% over twelve months, and maintains diverse liquidity sources - The most significant market risk for the company is interest rate risk, arising from movements in interest rates affecting earnings and capital[245](index=245&type=chunk) Interest Rate Sensitivity (dollars in thousands) | | -100 bp Change | +100 bp Change | +200 bp Change | | :--- | :--- | :--- | :--- | | **June 30, 2022** | | | | | Dollar change | $321 | $(3,290) | $(7,304) | | Percent change | 0.2% | (2.0)% | (4.4)% | - The company maintains multiple sources of liquidity, including **$155.0 million** in unsecured federal funds lines, **$472.0 million** in available FHLB borrowing capacity, and a **$39.2 million** borrowing capacity at the Federal Reserve Bank Discount Window as of June 30, 2022[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The Company's management concluded that disclosure controls and procedures were effective as of June 30, 2022[264](index=264&type=chunk) - No material changes to the Company's internal controls over financial reporting occurred during the quarter ended June 30, 2022[266](index=266&type=chunk) [PART II – OTHER INFORMATION](index=70&type=section&id=Part%20II) [Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions arising in the normal course of business, with management expecting no material adverse effect on its financial condition - The Company is party to various legal actions in the normal course of business but does not expect them to have a material adverse effect on its financial condition[269](index=269&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors previously disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2021 - No material changes were reported to the risk factors disclosed in the Company's 2021 Form 10-K[270](index=270&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the Company repurchased 65,315 shares of common stock at an average price of $29.67 per share, with $3.5 million remaining for future repurchases under the program Common Stock Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | Total Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 1 - 30, 2022 | 7,662 | $31.46 | 7,662 | | May 1 - 31, 2022 | 32,116 | $29.26 | 31,897 | | June 1 - 30, 2022 | 25,908 | $29.64 | 25,756 | | **Total Q2 2022** | **65,686** | **$29.67** | **65,315** | - As of June 30, 2022, approximately **$3.5 million** remained available for repurchase under the company's share repurchase program, which extends through December 31, 2023[272](index=272&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by key officers and financial statements formatted in Inline XBRL