MidWestOne(US:MOFG)2025-07-24 20:24Executive Summary This section provides an overview of the second quarter 2025 performance, including CEO commentary and key financial highlights CEO Commentary CEO Charles Reeves highlighted strong Q2 2025 strategic execution, robust loan growth, and net interest margin expansion, despite an unfavorable $24 million CRE credit impact - Strong loan growth and back book loan re-pricing led to tax equivalent net interest margin expansion of 13 basis points, to 3.57%, and to 5% linked quarter net interest income growth4 - Wealth management, Small Business Administration ("SBA"), and residential mortgage revenues were up quarter over quarter, reflecting investments in relationship fee income businesses4 - Earnings and certain asset quality measures were unfavorably impacted by a single $24 million suburban Twin Cities CRE office credit, which moved to nonaccrual and resulted in a specific reserve, increasing the allowance for credit losses ratio to 1.50%5 Second Quarter 2025 Highlights Q2 2025 highlights include a 15% rise in pre-tax, pre-provision net revenue, 13 bps NIM expansion, and 7.4% annualized loan growth, despite higher credit loss expense Q2 2025 Key Financial Highlights (Linked Quarter Comparison) | Metric | Q2 2025 | Change from Q1 2025 | | :--------------------------------- | :------ | :------------------ | | Pre-tax, pre-provision net revenue | $24.5M | +15% | | Net interest margin (tax equivalent) | 3.57% | +13 bps | | Noninterest income | $10.2M | | | Noninterest expense | $35.8M | | | Efficiency ratio | 56.20% | Improved from 59.38% | | Net income | $10.0M | | | Diluted EPS | $0.48 | | | Credit loss expense | $11.9M | | | Criticized loans ratio | 5.15% | Improved 32 bps | | Allowance for credit losses ratio | 1.50% | | | Annualized loan growth | 7.4% | | | Tangible book value per share | $23.92 | +2.4% | | CET1 capital ratio | 11.02% | Improved 5 bps | - Provided notice of redemption for all $65.0 million aggregate principal of the Company's 5.75% fixed-to-floating rate subordinated notes due 20306 Financial Performance Review This section reviews Q2 2025 financial performance, detailing revenue, net interest income, noninterest income, and expense trends Revenue Review Total Q2 2025 revenue increased by 5% linked quarter and 4% year-over-year, driven by net interest income growth Total Revenue, Net Interest Income, and Noninterest Income (QoQ & YoY Changes in thousands) | Metric (in thousands) | 2Q25 | 1Q25 | 2Q24 | Change 2Q25 vs 1Q25 | Change 2Q25 vs 2Q24 | | :-------------------- | :--- | :--- | :--- | :------------------ | :------------------ | | Net interest income | $49,982 | $47,439 | $36,347 | 5% | 38% | | Noninterest income | $10,249 | $10,136 | $21,554 | 1% | (52)% | | Total revenue | $60,231 | $57,575 | $57,901 | 5% | 4% | Net Interest Income Net interest income grew 5% linked quarter and 38% year-over-year, with tax equivalent net interest margin expanding to 3.57% - Net interest income increased $2.5 million from Q1 2025 due to higher earning asset volumes and yields and lower funding costs9 - Net interest income increased $13.6 million from Q2 2024 due to higher earning asset yields and lower funding volumes and costs9 Tax Equivalent Net Interest Margin and Key Drivers | Metric | 2Q25 | 1Q25 | 2Q24 | Change 2Q25 vs 1Q25 | Change 2Q25 vs 2Q24 | | :-------------------------- | :----- | :----- | :----- | :------------------ | :------------------ | | Tax equivalent NIM | 3.57% | 3.44% | 2.41% | +13 bps | +116 bps | | Total earning asset yield | | | | +12 bps | +75 bps | | Loan yield | | | | +10 bps | +12 bps | | Interest bearing liability costs | 2.39% | 2.41% | 2.85% | -2 bps | -46 bps | Noninterest Income Noninterest income increased 1% linked quarter but decreased 52% year-over-year, primarily due to a prior-year branch sale gain Noninterest Income Categories (QoQ & YoY Changes in thousands) | Category (in thousands) | 2Q25 | 1Q25 | 2Q24 | Change 2Q25 vs 1Q25 | Change 2Q25 vs 2Q24 | | :---------------------- | :--- | :--- | :--- | :------------------ | :------------------ | | Investment services and trust activities | $3,705 | $3,544 | $3,504 | 5% | 6% | | Service charges and fees | $2,190 | $2,131 | $2,156 | 3% | 2% | | Card revenue | $1,934 | $1,744 | $1,907 | 11% | 1% | | Loan revenue | $1,417 | $1,194 | $1,525 | 19% | (7)% | | Bank-owned life insurance | $677 | $1,057 | $668 | (36)% | 1% | | Investment securities gains, net | $0 | $33 | $33 | (100)% | (100)% | | Other | $326 | $433 | $11,761 | (25)% | (97)% | | Total noninterest income | $10,249 | $10,136 | $21,554 | 1% | (52)% | - The significant decrease in noninterest income from Q2 2024 was primarily due to an $11.1 million gain from the sale of Florida banking operations in the prior year, recorded in 'Other' revenue12 Expense Review Noninterest expense decreased 1% linked quarter, remaining stable year-over-year, driven by lower data processing and compensation costs Noninterest Expense Categories (QoQ & YoY Changes in thousands) | Category (in thousands) | 2Q25 | 1Q25 | 2Q24 | Change 2Q25 vs 1Q25 | Change 2Q25 vs 2Q24 | | :---------------------- | :--- | :--- | :--- | :------------------ | :------------------ | | Compensation and employee benefits | $21,011 | $21,212 | $20,985 | (1)% | — % | | Occupancy expense of premises, net | $2,540 | $2,588 | $2,435 | (2)% | 4% | | Equipment | $2,550 | $2,426 | $2,530 | 5% | 1% | | Legal and professional | $2,153 | $2,226 | $2,253 | (3)% | (4)% | | Data processing | $1,486 | $1,698 | $1,645 | (12)% | (10)% | | Marketing | $762 | $552 | $636 | 38% | 20% | | Amortization of intangibles | $1,252 | $1,408 | $1,593 | (11)% | (21)% | | FDIC insurance | $851 | $917 | $1,051 | (7)% | (19)% | | Other | $2,918 | $3,033 | $2,304 | (4)% | 27% | | Total noninterest expense | $35,767 | $36,293 | $35,761 | (1)% | — % | Merger-related Expenses (in thousands) | Category | 2Q25 | 1Q25 | 2Q24 | | :------- | :--- | :--- | :--- | | Total merger-related expenses | $0 | $40 | $854 | - The decrease in compensation and employee benefits from Q1 2025 reflected the receipt of $1.1 million from Employee Retention Credit claims, partially offset by higher wage, equity compensation and employee benefits expense15 Income Tax Expense The effective tax rate for Q2 2025 was 20.6%, with a full-year 2025 expectation of 22-23% Effective Tax Rate | Period | Effective Tax Rate | | :----- | :----------------- | | 2Q25 | 20.6% | | 1Q25 | 22.7% | - The effective income tax rate for the full year 2025 is expected to be 22-23%17 Balance Sheet Review This section reviews the company's balance sheet components, including assets, loans, securities, deposits, borrowed funds, and capital, for the second quarter of 2025 Total Assets Total assets decreased to $6.16 billion at June 30, 2025, primarily due to lower cash and security volumes, partially offset by loan growth Total Assets (in billions) | Date | Total Assets | Change from Mar 31, 2025 | Change from Jun 30, 2024 | | :--- | :----------- | :----------------------- | :----------------------- | | Jun 30, 2025 | $6.16B | -$0.09B | -$0.42B | | Mar 31, 2025 | $6.25B | | | | Jun 30, 2024 | $6.58B | | | Loans Held for Investment Loans held for investment grew to $4.38 billion, increasing 1.8% linked quarter and 2.2% year-over-year, driven by organic growth Loans Held for Investment (in thousands) | Category | Jun 30, 2025 Balance | % of Total | Mar 31, 2025 Balance | % of Total | Jun 30, 2024 Balance | % of Total | | :-------------------------- | :------------------- | :--------- | :------------------- | :--------- | :------------------- | :--------- | | Commercial and industrial | $1,226,265 | 28.0% | $1,140,138 | 26.5% | $1,120,983 | 26.1% | | Agricultural | $128,717 | 2.9% | $131,409 | 3.1% | $107,983 | 2.5% | | Commercial real estate | $2,313,074 | 52.8% | $2,320,179 | 53.8% | $2,313,856 | 54.0% | | Residential real estate | $656,641 | 15.0% | $654,034 | 15.2% | $668,646 | 15.6% | | Consumer | $56,491 | 1.3% | $58,424 | 1.4% | $75,764 | 1.8% | | Total loans held for investment | $4,381,188 | 100.0% | $4,304,184 | 100.0% | $4,287,232 | 100.0% | - Total loans held for investment increased $77.0 million (1.8%) from Q1 2025 and $94.0 million (2.2%) from Q2 2024, driven by organic loan growth and higher line of credit usage19 Investment Securities Investment securities decreased to $1.24 billion, down $70.5 million linked quarter and $589.1 million year-over-year, due to principal cash flows and balance sheet repositioning Investment Securities (in thousands) | Category | Jun 30, 2025 Balance | % of Total | Mar 31, 2025 Balance | % of Total | Jun 30, 2024 Balance | % of Total | | :------------------ | :------------------- | :--------- | :------------------- | :--------- | :------------------- | :--------- | | Available for sale | $1,235,045 | 100.0% | $1,305,530 | 100.0% | $771,034 | 42.3% | | Held to maturity | $0 | — % | $0 | — % | $1,053,080 | 57.7% | | Total investment securities | $1,235,045 | | $1,305,530 | | $1,824,114 | | - The decrease from Q2 2024 stemmed primarily from the sale of debt securities in connection with a balance sheet repositioning20 Deposits Total deposits decreased to $5.39 billion, down 1.8% linked quarter, while noninterest bearing deposits increased Deposits by Type (in thousands) | Category | Jun 30, 2025 Balance | % of Total | Mar 31, 2025 Balance | % of Total | Jun 30, 2024 Balance | % of Total | | :-------------------------- | :------------------- | :--------- | :------------------- | :--------- | :------------------- | :--------- | | Noninterest bearing deposits | $910,693 | 16.9% | $903,714 | 16.5% | $882,472 | 16.3% | | Interest checking deposits | $1,206,096 | 22.5% | $1,283,328 | 23.3% | $1,284,243 | 23.7% | | Money market deposits | $971,048 | 18.0% | $1,002,066 | 18.3% | $1,043,376 | 19.3% | | Savings deposits | $851,636 | 15.8% | $877,348 | 16.0% | $745,639 | 13.8% | | Time deposits of $250 and under | $837,302 | 15.5% | $818,012 | 14.9% | $803,301 | 14.8% | | Total core deposits | $4,776,775 | 88.7% | $4,884,468 | 89.0% | $4,759,031 | 87.9% | | Brokered time deposits | $200,000 | 3.7% | $200,000 | 3.6% | $196,000 | 3.6% | | Time deposits over $250 | $411,323 | 7.6% | $404,674 | 7.4% | $457,388 | 8.5% | | Total deposits | $5,388,098 | 100.0% | $5,489,142 | 100.0% | $5,412,419 | 100.0% | Borrowed Funds Borrowed funds decreased to $112.3 million, significantly down year-over-year due to BTFP pay-offs and planned subordinated note redemption Borrowed Funds (in thousands) | Category | Jun 30, 2025 Balance | % of Total | Mar 31, 2025 Balance | % of Total | Jun 30, 2024 Balance | % of Total | | :------------------ | :------------------- | :--------- | :------------------- | :--------- | :------------------- | :--------- | | Short-term borrowings | $0 | — % | $1,482 | 1.3% | $414,684 | 78.3% | | Long-term debt | $112,320 | 100.0% | $111,398 | 98.7% | $114,839 | 21.7% | | Total borrowed funds | $112,320 | | $112,880 | | $529,523 | | - The decrease compared to June 30, 2024, was primarily due to the pay-off of $405.0 million of BTFP borrowings22 - The Company provided notice to redeem all $65.0 million aggregate principal of its 5.75% fixed-to-floating rate subordinated notes due 2030, expecting to use cash on hand and proceeds from a $50.0 million senior term note23 Capital Total shareholders' equity increased by $9.4 million, with all regulatory capital ratios showing improvement linked quarter and year-over-year Key Capital Ratios (MidWestOne Financial Group, Inc. Consolidated) | Ratio | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | | Tier 1 leverage to average assets ratio | 9.62% | 9.50% | 8.29% | | Common equity tier 1 capital to risk-weighted assets ratio | 11.02% | 10.97% | 9.56% | | Tier 1 capital to risk-weighted assets ratio | 11.88% | 11.84% | 10.35% | | Total capital to risk-weighted assets ratio | 14.44% | 14.34% | 12.62% | - Total shareholders' equity at June 30, 2025, increased $9.4 million from March 31, 2025, primarily due to a decrease in accumulated other comprehensive loss and an increase in retained earnings24 Shareholder Information This section provides details on dividends declared and the company's share repurchase program for the second quarter of 2025 Dividends A cash dividend of $0.2425 per common share was declared, payable September 16, 2025 - A cash dividend of $0.2425 per common share was declared, payable September 16, 2025, to shareholders of record on September 2, 202525 Share Repurchase Program The company repurchased 63,402 shares for $1.8 million in Q2 2025, with $13.2 million remaining under the program Share Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :------ | | Shares repurchased (Q2 2025) | 63,402 | | Total cost (Q2 2025) | $1.8M | | Average price per share (Q2 2025) | $27.65 | | Remaining under program (Jun 30, 2025) | $13.2M | Credit Quality Review This section reviews the company's credit quality metrics, including nonperforming loans, allowance for credit losses, and net charge-offs Credit Quality Metrics Nonperforming loans and assets increased significantly due to a $24.0 million CRE office credit, raising the allowance for credit losses ratio to 1.50% Key Credit Quality Metrics (in thousands, except ratios) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | | Credit loss expense related to loans | $12,089 | $1,787 | $467 | | Net charge-offs | $189 | $3,087 | $524 | | Allowance for credit losses | $65,800 | $53,900 | $53,900 | | Nonperforming loans | $37,192 | $17,470 | $25,128 | | Nonperforming assets | $40,606 | $20,889 | $31,181 | | Net charge-off ratio | 0.02% | 0.29% | 0.05% | | Classified loans ratio | 2.89% | 2.65% | 3.48% | | Criticized loans ratio | 5.15% | 5.47% | 6.89% | | Nonperforming loans ratio | 0.85% | 0.41% | 0.59% | | Nonperforming assets ratio | 0.66% | 0.33% | 0.47% | | Allowance for credit losses ratio | 1.50% | 1.25% | 1.26% | | Allowance for credit losses to nonaccrual loans ratio | 179.19% | 309.47% | 218.26% | - Nonperforming loans and nonperforming assets increased $19.7 million from the linked quarter, primarily due to a single $24.0 million CRE office credit, partially offset by the sale of a $3.9 million CRE office credit28 - The allowance for credit losses was $65.8 million and the allowance for credit losses ratio was 1.50% at June 30, 2025, reflecting the specific reserve established for the single CRE office credit29 Nonperforming Loans Roll Forward The nonperforming loans roll forward shows a $25.8 million increase in nonaccrual or 90+ days past due loans, contributing to the rise in total nonperforming loans Nonperforming Loans Roll Forward (in thousands) | Activity | Nonaccrual | 90+ Days Past Due & Still Accruing | Total | | :------------------------------------------ | :--------- | :--------------------------------- | :---- | | Balance at March 31, 2025 | $17,417 | $53 | $17,470 | | Loans placed on nonaccrual or 90+ days past due & still accruing | $25,279 | $569 | $25,848 | | Proceeds related to repayment or sale | $(4,973) | $0 | $(4,973) | | Loans returned to accrual status or no longer past due | $(632) | $0 | $(632) | | Charge-offs | $(187) | $(151) | $(338) | | Transfers to foreclosed assets | $(183) | $0 | $(183) | | Balance at June 30, 2025 | $36,721 | $471 | $37,192 | Company Information This section provides details on the upcoming conference call, company overview, and cautionary notes regarding forward-looking statements Conference Call Details The company will host an investor conference call on July 25, 2025, at 11:00 a.m. CT, with pre-registration and replay options available - A conference call for investors will be held at 11:00 a.m. CT on Friday, July 25, 2025. Pre-registration and dial-in details are available, along with a replay until October 23, 202531 About MidWestOne Financial Group, Inc. MidWestOne Financial Group, Inc. is an Iowa City-headquartered financial holding company operating MidWestOne Bank across multiple states and trading on Nasdaq - MidWestOne Financial Group, Inc. is a financial holding company headquartered in Iowa City, Iowa, operating MidWestOne Bank across Iowa, Minnesota, Wisconsin, and Colorado32 - The company provides electronic delivery of financial services through its website and trades on the Nasdaq Global Select Market under the symbol 'MOFG'32 Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks, including interest rate changes, credit quality, economic conditions, and regulatory factors, which could materially alter actual results - The release contains forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ materially from expectations33 - Key risk factors include changes in interest rates, fluctuations in investment securities value, credit quality deterioration, economic conditions, governmental policies, regulatory changes, competition, and operational risks like cybersecurity incidents3435 Consolidated Financial Statements This section presents the company's consolidated balance sheets and statements of income over five quarters, detailing financial position and performance Five Quarter Consolidated Balance Sheets The consolidated balance sheet provides a detailed breakdown of assets, liabilities, and shareholders' equity over five quarters, showing trends in cash, securities, loans, deposits, and capital Consolidated Balance Sheet Summary (in thousands) | Category | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total assets | $6,160,773 | $6,254,394 | $6,236,329 | $6,552,482 | $6,581,658 | | Total loans held for investment, net | $4,315,388 | $4,250,284 | $4,260,427 | $4,274,756 | $4,233,332 | | Total securities | $1,235,045 | $1,305,530 | $1,328,433 | $1,623,104 | $1,824,114 | | Total deposits | $5,388,098 | $5,489,142 | $5,477,982 | $5,368,727 | $5,412,419 | | Total liabilities | $5,571,733 | $5,674,769 | $5,676,633 | $5,990,244 | $6,038,372 | | Total shareholders' equity | $589,040 | $579,625 | $559,696 | $562,238 | $543,286 | Five Quarter Consolidated Statements of Income The consolidated statements of income present the company's revenues, expenses, and net income over five quarters, highlighting trends in interest income, interest expense, noninterest income, noninterest expense, and credit loss expense Consolidated Statements of Income Summary (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total interest income | $77,420 | $74,739 | $78,267 | $73,696 | $72,776 | | Total interest expense | $27,438 | $27,300 | $29,329 | $36,175 | $36,429 | | Net interest income | $49,982 | $47,439 | $48,938 | $37,521 | $36,347 | | Credit loss expense | $11,889 | $1,687 | $1,291 | $1,535 | $1,267 | | Total noninterest income (loss) | $10,249 | $10,136 | $10,837 | $(130,388) | $21,554 | | Total noninterest expense | $35,767 | $36,293 | $37,372 | $35,798 | $35,761 | | Net income (loss) | $9,980 | $15,138 | $16,330 | $(95,707) | $15,819 | | Diluted earnings per common share | $0.48 | $0.73 | $0.78 | $(6.05) | $1.00 | Financial Statistics & Ratios This section provides a comprehensive overview of key financial metrics, including earnings, per share data, balance sheet figures, and various financial and credit risk ratios Key Financial Statistics This section provides a comprehensive overview of key financial metrics, including earnings, per share data, balance sheet figures, average balance sheet figures, and various financial and credit risk ratios for the current and prior periods Key Financial Statistics (Q2 2025 vs. Q1 2025 vs. Q2 2024) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | | Net income | $9,980 | $15,138 | $15,819 | | Diluted earnings per share | $0.48 | $0.73 | $1.00 | | Total assets | $6,160,773 | $6,254,394 | $6,581,658 | | Total deposits | $5,388,098 | $5,489,142 | $5,412,419 | | Total shareholders' equity | $589,040 | $579,625 | $543,286 | | Return on average assets | 0.65% | 1.00% | 0.95% | | Return on average equity | 6.81% | 10.74% | 11.91% | | Net interest margin, tax equivalent | 3.57% | 3.44% | 2.41% | | Efficiency ratio | 56.20% | 59.38% | 56.29% | | Nonperforming loans ratio | 0.85% | 0.41% | 0.59% | | Allowance for credit losses ratio | 1.50% | 1.25% | 1.26% | Average Balance Sheet and Yield Analysis This section details average balances, interest income/expense, and yields/costs for assets and liabilities over three and six-month periods, highlighting net interest income and margin drivers Average Balance Sheet and Yield Analysis (Q2 2025) | Category | Average Balance (000s) | Interest Income/Expense (000s) | Average Yield/Cost | | :---------------------------------- | :--------------------- | :----------------------------- | :----------------- | | Assets | | | | | Loans, including fees | $4,370,196 | $63,298 | 5.81% | | Total interest earning assets | $5,745,664 | $78,602 | 5.49% | | Liabilities | | | | | Total interest bearing deposits | $4,486,819 | $25,665 | 2.29% | | Total borrowed funds | $112,931 | $1,773 | 6.30% | | Total interest bearing liabilities | $4,599,750 | $27,438 | 2.39% | | Key Ratios | | | | | Net interest spread | | | 3.10% | | Net interest margin | | | 3.57% | | Cost of funds | | | 2.00% | Average Balance Sheet and Yield Analysis (Six Months Ended Jun 30, 2025) | Category | Average Balance (000s) | Interest Income/Expense (000s) | Average Yield/Cost | | :---------------------------------- | :--------------------- | :----------------------------- | :----------------- | | Assets | | | | | Loans, including fees | $4,330,659 | $123,741 | 5.76% | | Total interest earning assets | $5,736,992 | $154,484 | 5.43% | | Liabilities | | | | | Total interest bearing deposits | $4,481,765 | $51,149 | 2.30% | | Total borrowed funds | $114,491 | $3,589 | 6.32% | | Total interest bearing liabilities | $4,596,256 | $54,738 | 2.40% | | Key Ratios | | | | | Net interest spread | | | 3.03% | | Net interest margin | | | 3.51% | | Cost of funds | | | 2.00% | Non-GAAP Measures Reconciliation This section reconciles GAAP to non-GAAP financial measures, including tangible common equity, return on average tangible equity, net interest margin, loan yield, efficiency ratio, and adjusted earnings Tangible Common Equity & Book Value This section reconciles GAAP to non-GAAP measures for tangible common equity, tangible book value per share, and tangible common equity ratio, used to evaluate financial condition and capital adequacy Tangible Common Equity Reconciliation (in thousands, except per share data) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | | :-------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Total shareholders' equity | $589,040 | $579,625 | $559,696 | $562,238 | $543,286 | | Intangible assets, net | $(92,147) | $(93,399) | $(94,807) | $(96,257) | $(97,327) | | Tangible common equity | $496,893 | $486,226 | $464,889 | $465,981 | $445,959 | | Total assets | $6,160,773 | $6,254,394 | $6,236,329 | $6,552,482 | $6,581,658 | | Tangible assets | $6,068,626 | $6,160,995 | $6,141,522 | $6,456,225 | $6,484,331 | | Book value per share | $28.36 | $27.85 | $26.94 | $27.06 | $34.44 | | Tangible book value per share | $23.92 | $23.36 | $22.37 | $22.43 | $28.27 | | Common equity ratio | 9.56% | 9.27% | 8.97% | 8.58% | 8.25% | | Tangible common equity ratio | 8.19% | 7.89% | 7.57% | 7.22% | 6.88% | Return on Average Tangible Equity This section reconciles net income to tangible net income and average shareholders' equity to average tangible equity to derive the non-GAAP measure of return on average tangible equity Return on Average Tangible Equity Reconciliation (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Six Months) | Jun 30, 2024 (Six Months) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Net income | $9,980 | $15,138 | $15,819 | $25,118 | $19,088 | | Intangible amortization, net of tax | $931 | $1,047 | $1,195 | $1,978 | $2,423 | | Tangible net income | $10,911 | $16,185 | $17,014 | $27,096 | $21,511 | | Average shareholders' equity | $587,708 | $571,378 | $533,994 | $579,588 | $530,763 | | Average intangible assets, net | $(92,733) | $(94,169) | $(99,309) | $(93,447) | $(97,302) | | Average tangible equity | $494,975 | $477,209 | $434,685 | $486,141 | $433,461 | | Return on average equity | 6.81% | 10.74% | 11.91% | 8.74% | 7.23% | | Return on average tangible equity | 8.84% | 13.75% | 15.74% | 11.24% | 9.98% | Net Interest Margin (Tax Equivalent) & Core Net Interest Margin This section reconciles net interest income to tax equivalent and core net interest income, along with corresponding net interest margins, by adjusting for tax equivalent items and loan purchase discount accretion Net Interest Margin Reconciliation (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Six Months) | Jun 30, 2024 (Six Months) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Net interest income | $49,982 | $47,439 | $36,347 | $97,421 | $71,078 | | Tax equivalent adjustments: Loans | $1,022 | $981 | $938 | $2,003 | $1,858 | | Tax equivalent adjustments: Securities | $160 | $162 | $377 | $322 | $764 | | Net interest income, tax equivalent | $51,164 | $48,582 | $37,662 | $99,746 | $73,700 | | Loan purchase discount accretion | $(1,142) | $(1,166) | $(1,261) | $(2,308) | $(2,413) | | Core net interest income | $50,022 | $47,416 | $36,401 | $97,438 | $71,287 | | Net interest margin | 3.49% | 3.36% | 2.33% | 3.42% | 2.29% | | Net interest margin, tax equivalent | 3.57% | 3.44% | 2.41% | 3.51% | 2.37% | | Core net interest margin | 3.49% | 3.36% | 2.33% | 3.42% | 2.29% | Loan Yield (Tax Equivalent) & Core Yield on Loans This section reconciles loan interest income to tax equivalent and core loan interest income, providing corresponding loan yields, by adjusting for tax equivalent items and loan purchase discount accretion Loan Yield Reconciliation (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Six Months) | Jun 30, 2024 (Six Months) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Loan interest income, including fees | $62,276 | $59,462 | $61,643 | $121,738 | $119,590 | | Tax equivalent adjustment | $1,022 | $981 | $938 | $2,003 | $1,858 | | Tax equivalent loan interest income | $63,298 | $60,443 | $62,581 | $123,741 | $121,448 | | Loan purchase discount accretion | $(1,142) | $(1,166) | $(1,261) | $(2,308) | $(2,413) | | Core loan interest income | $62,156 | $59,277 | $61,320 | $121,433 | $119,035 | | Yield on loans | 5.72% | 5.62% | 5.61% | 5.67% | 5.52% | | Yield on loans, tax equivalent | 5.81% | 5.71% | 5.69% | 5.76% | 5.60% | | Core yield on loans | 5.70% | 5.60% | 5.58% | 5.65% | 5.49% | Efficiency Ratio This section reconciles total noninterest expense and total revenue to calculate the non-GAAP efficiency ratio, adjusting for specific non-operating items Efficiency Ratio Reconciliation (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Six Months) | Jun 30, 2024 (Six Months) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Total noninterest expense | $35,767 | $36,293 | $35,761 | $72,060 | $71,326 | | Amortization of intangibles | $(1,252) | $(1,408) | $(1,593) | $(2,660) | $(3,230) | | Merger-related expenses | $0 | $(40) | $(854) | $(40) | $(2,168) | | Noninterest expense used for efficiency ratio | $34,515 | $34,845 | $33,314 | $69,360 | $65,928 | | Net interest income, tax equivalent | $51,164 | $48,582 | $37,662 | $99,746 | $73,700 | | Plus: Noninterest income | $10,249 | $10,136 | $21,554 | $20,385 | $31,304 | | Less: Investment securities gains, net | $0 | $33 | $33 | $33 | $69 | | Net revenues used for efficiency ratio | $61,413 | $58,685 | $59,183 | $120,098 | $104,935 | | Efficiency ratio | 56.20% | 59.38% | 56.29% | 57.75% | 62.83% | Adjusted Earnings & EPS This section reconciles net income to adjusted earnings and diluted EPS to adjusted EPS, by adjusting for specific non-recurring or non-operating items Adjusted Earnings Reconciliation (in thousands, except per share data) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Six Months) | Jun 30, 2024 (Six Months) | | :---------------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Net income | $9,980 | $15,138 | $15,819 | $25,118 | $19,088 | | Less: Investment securities gains, net of tax | $0 | $25 | $24 | $24 | $51 | | Less: Mortgage servicing rights (loss) gain, net of tax | $(196) | $(158) | $96 | $(355) | $(177) | | Plus: Merger-related expenses, net of tax | $0 | $30 | $634 | $30 | $1,608 | | Less: Gain on branch sale, net of tax | $0 | $0 | $8,201 | $0 | $8,201 | | Adjusted earnings | $10,176 | $15,301 | $8,132 | $25,479 | $12,621 | | Earnings per common share - diluted | $0.48 | $0.73 | $1.00 | $1.20 | $1.21 | | Adjusted earnings per common share | $0.49 | $0.73 | $0.52 | $1.22 | $0.80 | Pre-tax Pre-provision Net Revenue This section calculates pre-tax pre-provision net revenue (PTPP), a non-GAAP measure, by summing net interest income and noninterest income and subtracting noninterest expense Pre-tax Pre-provision Net Revenue (in thousands) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (Year Ended) | Jun 30, 2024 (Year Ended) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------------ | :------------------------ | | Net interest income | $49,982 | $47,439 | $36,347 | $97,421 | $71,078 | | Noninterest income | $10,249 | $10,136 | $21,554 | $20,385 | $31,304 | | Noninterest expense | $(35,767) | $(36,293) | $(35,761) | $(72,060) | $(71,326) |\ | Pre-tax Pre-provision Net Revenue | $24,464 | $21,282 | $22,140 | $45,746 | $31,056 |