EX-99.1 3 financialresultsq42021.htm EX-99.1 Document

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FOR IMMEDIATE RELEASEJanuary 27, 2022

MIDWESTONE FINANCIAL GROUP, INC.
REPORTS FINANCIAL RESULTS FOR THE
FOURTH QUARTER AND FULL YEAR OF 2021
Fourth Quarter Summary1
•Net income for the fourth quarter was $14.3 million, or $0.91 per diluted common share.
◦Total revenue, net of interest expense, of $50.0 million.
◦Credit loss expense of $0.6 million.
◦Noninterest expense of $30.4 million.
•Excluding Paycheck Protection Program ("PPP") loans, commercial loans were $2.68 billion2, as compared to $2.64 billion2, an increase of 5.5% annualized.
•Efficiency ratio was 56.74%2, an increase of 40 basis points ("bps").
•Nonperforming assets ratio declined 5 bps to 0.53% and the net charge-off ratio was a recovery of 3 bps.
•Average total deposits were $5.0 billion, as compared to $4.9 billion, an increase of 2.7%, while cost of average total deposits decreased 2 bps to 0.24% and cost of funds decreased 2 bps to 0.35%.
Full Year 2021 Summary1
•Record net income of $69.5 million, or $4.37 per diluted common share.
•Book value and tangible book value per share grew 4.6% and 6.4%2, respectively.
•Return on average equity and return on average tangible equity of 13.18% and 16.63%2, respectively.
•Net charge-off ratio was a recovery of 1 basis point.
•Efficiency ratio was 54.65%2, a decline of 227 bps from the prior year.
Iowa City, Iowa - MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported net income for the fourth quarter of 2021 of $14.3 million, or $0.91 per diluted common share, compared to net income of $16.3 million, or $1.03 per diluted common share, for the linked quarter. For the full year of 2021, the Company reported record earnings, with net income of $69.5 million, or $4.37 per diluted common share, compared to net income for the full year of 2020 of $6.6 million, or $0.41 per diluted common share.
CEO COMMENTARY

Charles Funk, Chief Executive Officer of the Company, commented, "The fourth quarter of 2021 was a solid ending to a record earnings year for MidWestOne. During the quarter, we saw good ex-PPP commercial loan growth, continued progress in wealth management, and improvements in our nonperforming loans and nonperforming assets ratios. We are pleased with the return on average tangible equity of 13.50%.

Key to continued progress in our Company is quality loan growth. We saw ex-PPP linked quarter commercial loan growth of 5.5% annualized in the fourth quarter. This is even more impressive when considering that we saw a high level of pay-offs during the fourth quarter and continued low credit line usage. We begin 2022 with a solid pipeline of new loans and optimism that this growth will continue.

1 Fourth Quarter Summary compares to the third quarter of 2021 (the "linked quarter") unless noted. Full Year 2021 Summary compares to the full year 2020 unless noted.
2 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
                                    





The consistent improvement in overall asset quality was one of the big stories for the Company in 2021. At year-end, nonperforming loans fell below 1.0%, at 0.97% of total loans. For the quarter and for the entire year, we had a net recovery of charged-off loans. Importantly, we expect to see continued progress in nonperforming assets in 2022.

With respect to fee income, there is no doubt that our mortgage team contributed mightily to the record 2021 results. In line with the rise in long-term interest rates, we see that slowing in 2022. Our wealth management team also continued to shine as their revenue in 2021 was up $2.0 million, or 21.2%, from the prior year and we expect continued good progress.

We have continued to make headway in our previously announced acquisition of Iowa First Bancshares Corp. ("IOFB"), which is expected to close late in the first quarter or early in the second quarter of 2022. We look forward to welcoming our new customers and employees to MidWestOne.

Finally, between share repurchases and the cash dividend, we returned $25.8 million to our common shareholders in 2021. Looking ahead, our common stock dividend increase of 5.6% for 2022 reflects our confidence in continued sound financial performance."
FINANCIAL HIGHLIGHTSThree Months EndedYear Ended
December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands, except per share amounts)20212021202020212020
Net interest income$38,819 $40,340 $39,037 $156,281 $152,964 
Noninterest income11,229 9,182 10,626 42,453 38,620 
Total revenue, net of interest expense50,048 49,522 49,663 198,734 191,584 
Credit loss expense (benefit)622 (1,080)(3,041)(7,336)28,369 
Noninterest expense30,444 29,778 31,915 116,592 149,893 
   Income before income tax expense18,982 20,824 20,789 89,478 13,322 
Income tax expense 4,726 4,513 4,079 19,992 6,699 
   Net income $14,256 $16,311 $16,710 $69,486 $6,623 
Diluted earnings per share$0.91 $1.03 $1.04 $4.37 $0.41 
Return on average assets0.95 %1.11 %1.22 %1.20 %0.13 %
Return on average equity10.68 %12.00 %13.15 %13.18 %1.28 %
Return on average tangible equity(1)
13.50 %15.06 %17.07 %16.63 %10.80 %
Efficiency ratio(1)
56.74 %56.34 %59.69 %54.65 %56.92 %
(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.




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INCOME STATEMENT HIGHLIGHTS

Net Interest Income
Net interest income decreased to $38.8 million in the fourth quarter of 2021 from $40.3 million in the third quarter of 2021 due primarily to decreased PPP loan fee accretion stemming from loan forgiveness that continued to be robust in the fourth quarter of 2021. Net PPP loan fee accretion was $2.0 million in the fourth quarter of 2021 compared to $3.6 million in the linked quarter.
Average interest earning assets increased $117.2 million to $5.61 billion in the fourth quarter of 2021, compared to the third quarter of 2021. When adjusting for the $91.0 million reduction in average PPP loan balances due to forgiveness, average interest earning assets increased $206.9 million, primarily due to cash inflows from deposit activity that resulted in an increase in interest earning deposits in banks on the balance sheet and that were used to purchase debt securities, coupled with non-PPP loan growth.
The Company's tax equivalent net interest margin was 2.83% in the fourth quarter of 2021 compared to 3.00% in the linked quarter due to a decrease in total interest earning assets yield, partially offset by reduced funding costs. Total interest earning assets yield decreased 19 bps from the linked quarter due to the reduced benefit from PPP net loan fee accretion described above, coupled with lower loan coupon rates at origination and re-pricing, and an asset mix shift to cash and debt securities. The cost of interest bearing liabilities decreased 3 bps to 0.43%, primarily as a result of interest bearing deposits costs of 0.30%, which declined 2 bps from the linked quarter.
Noninterest Income
Noninterest income for the fourth quarter of 2021 increased $2.0 million, or 22.3%, from the linked quarter. The increase was primarily due to an increase of $1.2 million in loan revenue and an increase of $0.5 million in 'Other' noninterest income. The increase in loan revenue was primarily driven by a $0.9 million increase in the fair value of our mortgage servicing rights. The increase in 'Other' noninterest income partially stemmed from a $0.2 million increase in income received from our commercial loan back-to-back swap program.
The following table presents details of noninterest income for the periods indicated:
Three Months Ended
Noninterest IncomeDecember 31,September 30,December 31,
(In thousands)202120212020
Investment services and trust activities$3,115 $2,915 $2,518 
Service charges and fees1,684 1,613 1,571 
Card revenue1,746 1,820 1,517 
Loan revenue3,132 1,935 3,900 
Bank-owned life insurance550 532 541 
Investment securities gains, net137 36 30 
Other865 331 549 
Total noninterest income$11,229 $9,182 $10,626 
Noninterest Expense
Noninterest expense for the fourth quarter of 2021 increased $0.7 million, or 2.2%, from the linked quarter primarily due to an increase of $0.9 million in compensation and employee benefits and a $0.6 million increase in legal and professional expenses. The increase in compensation and employee benefits was primarily due to an increase of $0.5 million related to incentive and commission expense. The increase in legal and professional expenses was partially due to $0.2 million merger-related legal expenses. Partially offsetting these increases was a decrease of $0.5 million in 'other' noninterest expense. The decline in 'other' noninterest expense was primarily driven by the settlement of litigation claims totaling $0.7 million during the third quarter of 2021, which did not recur in the fourth quarter of 2021.
The increase in noninterest expense and the decline in net interest income, partially offset by the increase in noninterest income noted above, were the primary drivers of the increase in the efficiency ratio, which increased 0.40 percentage points to 56.74% from 56.34% in the linked quarter.


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The following table presents details of noninterest expense for the periods indicated:
Three Months Ended
Noninterest ExpenseDecember 31,September 30,December 31,
(In thousands)202120212020
Compensation and employee benefits$18,266 $17,350 $17,638 
Occupancy expense of premises, net2,211 2,547 2,476 
Equipment2,189 1,973 2,040 
Legal and professional1,826 1,272 2,052 
Data processing1,211 1,406 1,460 
Marketing1,121 1,022 986 
Amortization of intangibles1,245 1,264 1,569 
FDIC insurance380 435 495 
Communications277 275 412 
Foreclosed assets, net7 43 (35)
Other1,711 2,191 2,822 
     Total noninterest expense $30,444 $29,778 $31,915 
The following table presents details of merger-related expenses for the periods indicated:
Three Months Ended
December 31,September 30,December 31,
Merger-related Expenses202120212020
(In thousands)
Equipment$18 $— $— 
Legal and professional202 — — 
Marketing2 — — 
Other2 — — 
Total merger-related expenses$224 $— $— 

Income Taxes
The effective income tax rate increased to 24.9% in the fourth quarter of 2021 compared to 21.7% in the linked quarter. This increase was primarily due to the year-end adjustment to federal tax expense based upon 2021 taxable income. The Company's effective tax rate is lower than its combined statutory tax rate due to benefits related to tax-exempt interest and bank-owned life insurance. The effective income tax rate for the full year 2022 is expected to be in the range of 19.5-21.5%.




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BALANCE SHEET, LIQUIDITY AND CAPITAL HIGHLIGHTSAs of or for the Three Months Ended
December 31,September 30,December 31,
(Dollars in millions, except per share amounts)202120212020
Ending Balance Sheet
Total assets$6,025.1 $5,875.4 $5,556.6 
Loans held for investment, net of unearned income3,245.0 3,268.6 3,482.2 
Total securities held for investment2,288.1 2,136.9 1,657.4 
Total deposits5,114.5 4,957.8 4,547.0 
Average Balance Sheet
Average total assets$5,934.1 $5,811.2 $5,457.9 
Average total loans3,268.8 3,356.7 3,560.6 
Average total deposits5,015.5 4,882.8 4,490.0 
Funding and Liquidity
Short-term borrowings$181.4 $187.5 $230.8 
Long-term debt154.9 154.9 208.7 
Loans to deposits ratio63.45 %65.93 %76.58 %
Equity
Total shareholders' equity$527.5 $530.3 $515.3 
Common equity ratio8.75 %9.03 %9.27 %
Tangible common equity(1)
445.1 446.7 427.5 
Tangible common equity ratio(1)
7.49 %7.71 %7.82 %
Per Share Data
Book value$33.66 $33.71 $32.17 
Tangible book value(1)
$28.40 $28.40 $26.69 
(1) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

Loans Held for Investment
Loans held for investment, net of unearned income, decreased $23.6 million, or 0.7%, to $3.25 billion from September 30, 2021, driven primarily by PPP loan forgiveness and partially offset by new loan production during the fourth quarter of 2021. The revolving line of credit utilization was consistent with the linked quarter at 32%.
The following table presents the composition of loans held for investment, net of unearned income, as of the dates indicated:
Loans Held for InvestmentDecember 31, 2021September 30, 2021December 31, 2020
Balance% of TotalBalance% of TotalBalance% of Total
(dollars in thousands)
Commercial and industrial$902,314 27.8 %$927,258 28.4 %$1,055,488 30.3 %
Agricultural103,417 3.2 106,356 3.3 116,392 3.3 
Commercial real estate
Construction and development172,160 5.3 146,417 4.5 181,291 5.2 
Farmland144,673 4.5 130,936 4.0 144,970 4.2 
Multifamily244,503 7.5 273,347 8.4 256,525 7.4 
Other1,143,205 35.2 1,148,658 35.0 1,149,575 33.0 
Total commercial real estate1,704,541 52.5 1,699,358 51.9 1,732,361 49.8 
Residential real estate
One-to-four family first liens333,308 10.3 334,267 10.2 355,684 10.2 
One-to-four family junior liens133,014 4.1 133,869 4.1 143,422 4.1 
Total residential real estate466,322 14.4 468,136 14.3 499,106 14.3 
Consumer68,418 2.1 67,536 2.1 78,876 2.3 
Loans held for investment, net of unearned income$3,245,012 100.0 %$3,268,644 100.0 %$3,482,223 100.0 %
Total commitments to extend credit$1,014,397 $950,157 $897,274 






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PPP Loans
The following table presents PPP loan measures as of the dates indicated:
December 31, 2021September 30, 2021
Round 1(3)
Round 2(3)
Total
Round 1(3)
Round 2(3)
Total
(Dollars in millions)#$#$#$#$#$#$
Total PPP Loans Funded2,681348.5 2,175149.3 4,856497.8 2,681348.5 2,175149.3 4,856497.8 
PPP Loan Forgiveness(1)
2,609334.2 2,009122.4 4,618456.6 2,478323.7 1,51472.9 3,992396.6 
Outstanding PPP Loans(2)
535.6 16425.2 21730.8 18416.3 66173.1 84589.4 
Unearned Income$—$0.9$0.9$0.1$2.8$2.9
(1) Excluded from the PPP Loan Forgiveness is $9.3 million as of December 31, 2021 and $9.1 million as of September 30, 2021 of PPP loans that were paid off by the borrower prior to forgiveness or through the SBA PPP loan guarantee.
(2) Outstanding loans are presented net of unearned income.
(3) Round 1 refers to PPP loan applications from the first wave of funding made available through the CARES Act, which was signed into law by President Trump in March 2020. Round 2 refers to the second wave of PPP funding made available through the Consolidated Appropriations Act, 2021, which was signed into law by President Trump in December 2020 and extended by the PPP Extension Act of 2021, which was signed into law by President Biden in March 2021.

Credit Loss Expense & Allowance for Credit Losses

The following table shows the activity in the allowance for credit losses for the periods indicated:
Three Months EndedYear Ended
Allowance for Credit Losses Roll ForwardDecember 31,September 30,December 31,December 31,December 31,
(In thousands)20212021202020212020
Beginning balance$47,900 $48,000 $58,500 $55,500 $29,079 
Cumulative effect of change in accounting principle - CECL— — — — 3,984 
Charge-offs(255)(234)(1,005)(2,332)(6,793)
Recoveries533 1,114 646 2,768 1,528 
Net recoveries (charge-offs)278 880 (359)436 (5,265)
Credit loss (benefit) expense related to loans522 (980)(2,641)(7,236)27,702 
Ending balance$48,700 $47,900 $55,500 $48,700 $55,500 

As of December 31, 2021, the allowance for credit losses ("ACL") was $48.7 million, or 1.50% of loans held for investment, net of unearned income, compared with $47.9 million, or 1.47% of loans held for investment, net of unearned income, at September 30, 2021. The ACL declined 12.3% from the prior year-end. After excluding net PPP loans, the ACL as a percentage of loans held for investment, net of unearned income, increased to 1.52%(1) as of December 31, 2021, from 1.51%(1) at September 30, 2021. The increase in the ACL during the fourth quarter was primarily attributable to reserve taken to support loan growth.
(1)Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
Deposit CompositionDecember 31, 2021September 30, 2021December 31, 2020
(Dollars in thousands)Balance% of TotalBalance% of TotalBalance% of Total
Noninterest bearing deposits$1,005,369 19.6 %$999,887 20.2 %$910,655 20.0 %
Interest checking deposits1,619,136 31.6 1,464,389 29.5 1,351,641 29.7 
Money market deposits939,523 18.4 989,095 20.0 918,654 20.2 
Savings deposits628,242 12.3 616,924 12.4 529,751 11.7 
Total non-maturity deposits
4,192,270 81.9 4,070,295 82.1 3,710,701 81.6 
Time deposits of $250 and under505,392 9.9 522,907 10.5 581,471 12.8 
Time deposits over $250 416,857 8.2 364,579 7.4 254,877 5.6 
Total time deposits
922,249 18.1 887,486 17.9 836,348 18.4 
Total deposits
$5,114,519 100.0 %$4,957,781 100.0 %$4,547,049 100.0 %


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CREDIT RISK PROFILE
As of or For the Three Months Ended
HighlightsDecember 31,September 30,December 31,
(Dollars in thousands)202120212020
Credit loss (benefit) expense related to loans$522 $(980)$(2,641)
Net (recoveries) charge-offs$(278)$(880)$359 
Net (recovery) charge-off ratio(1)
(0.03)%(0.10)%0.04 %
At period-end
Pass$3,013,917 $3,069,314 $3,202,704 
Special Mention / Watch117,401 82,871 157,213 
Classified113,694 116,459 122,306 
Total loans held for investment, net$3,245,012 $3,268,644 $3,482,223 
Classified loans ratio(2)
3.50 %3.56 %3.51 %
Nonaccrual loans held for investment$31,540 $33,657 $41,950 
Accruing loans contractually past due 90 days or more— 51 739 
Total nonperforming loans31,540 33,708 42,689 
Foreclosed assets, net357 454 2,316 
Total nonperforming assets
$31,897 $34,162 $45,005 
Nonperforming loans ratio(3)
0.97 %1.03 %1.23 %
Nonperforming assets ratio(4)
0.53 %0.58 %0.81 %
Allowance for credit losses$48,700 $47,900 $55,500 
Allowance for credit losses ratio(5)
1.50 %1.47 %1.59 %
Adjusted allowance for credit losses ratio(6)
1.52 %1.51 %1.72 %
Allowance for credit losses to nonaccrual loans ratio(7)
154.41 %142.32 %132.30 %
(1) Net (recovery) charge-off ratio is calculated as annualized net (recoveries) charge-offs divided by average loans held for investment, net of unearned income, 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 total 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 total 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) Non-GAAP Measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.
(7)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.
During the fourth quarter of 2021, we saw improvements in overall asset quality when compared to the linked quarter and the corresponding period in the prior year. We continued to experience net recoveries in the fourth quarter of 2021 and recorded net recoveries of $0.4 million for the year-ended December 31, 2021. Our nonperforming loans ratio of 0.97% was an improvement of 6 bps from the linked quarter and 23 bps from the prior year-end. Special mention / watch credits did increase $34.5 million from the linked quarter based upon our proactive credit monitoring processes. However, year-over-year, special mention / watch credits were down $39.8 million, or 25.3%.
The following table presents a roll forward of nonperforming loans for the period:
Nonperforming LoansNonaccrual90+ Days Past Due & Still AccruingTotal
(Dollars in thousands)
Balance at September 30, 2021
$33,657 $51 $33,708 
Loans placed on nonaccrual or 90+ days past due & still accruing512 10 522 
Repayments (including interest applied to principal)(2,153)— (2,153)
Loans returned to accrual status or no longer past due(312)(49)(361)
Charge-offs(164)(10)(174)
Transfers to nonaccrual— (2)(2)
Balance at December 31, 2021
$31,540 $— $31,540 



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CAPITAL
Effective March 31, 2020, we elected the 5-year phase-in option allowed under the interim final rule (IFR) issued by the federal banking regulatory agencies that delays the estimated impact on regulatory capital stemming from the implementation of the current expected credit losses (CECL) accounting standard. The IFR allows the add back of 100% of the capital effect from the day one CECL transition adjustment and 25% of the capital effect from subsequent increases in the allowance for credit losses through the two-year period ending December 31, 2021. The modified CECL transitional amount of $9.4 million will then be reduced from capital over the subsequent three-year period.
Regulatory Capital RatiosDecember 31,September 30,December 31,
2021 (1)
20212020
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio8.67 %8.70 %8.50 %
Common equity tier 1 capital to risk-weighted assets ratio9.94 %10.26 %9.72 %
Tier 1 capital to risk-weighted assets ratio10.83 %11.20 %10.70 %
Total capital to risk-weighted assets ratio13.09 %13.58 %13.41 %
MidWestOne Bank
Tier 1 leverage to average assets ratio9.25 %9.41 %9.35 %
Common equity tier 1 capital to risk-weighted assets ratio11.58 %12.14 %11.79 %
Tier 1 capital to risk-weighted assets ratio11.58 %12.14 %11.79 %
Total capital to risk-weighted assets ratio12.46 %13.05 %12.89 %
(1) Capital ratios for December 31, 2021 are preliminary

CORPORATE UPDATE
Share Repurchase Program
Under the current repurchase program, the Company repurchased 58,900 shares of its common stock at an average price of $31.02 per share and a total cost of $1.8 million in the fourth quarter of 2021. At December 31, 2021, the total amount available under the Company's current share repurchase program was $5.8 million.
Cash Dividend Announcement
On January 25, 2022, the Company’s board of directors declared a quarterly cash dividend of $0.2375 per common share. The dividend is payable March 15, 2022, to shareholders of record at the close of business on March 1, 2022.
CONFERENCE CALL DETAILS
The Company will host a conference call for investors at 11:00 a.m. CT on Friday, January 28, 2022. To participate, you may pre-register for this call utilizing the following link: https://www.incommglobalevents.com/registration/q4inc/9571/midwestone-financial-group-inc-4th-quarter-2021-earnings-call/. After pre-registering for this event you will receive your access details via email. You are also able to on the day of the call dial 1-844-200-6205, using an access code of 306531 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until April 28, 2022, by calling 1-866-813-9403 and using the replay access code of 602023. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

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


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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) effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and our operations, including due to supply chain disruptions, as well as any changes to federal, state, or local government laws, regulations, or orders in connection with the pandemic; (2) government intervention in the U.S. financial system in response to the COVID-19 pandemic, including the effects of recent legislative, tax, accounting and regulatory actions and reforms; (3) the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges; (4) the risks of mergers (including with IOFB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (5) credit quality deterioration or pronounced and sustained reduction in real estate market values causing an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (6) the effects of interest rates, including on our net income and the value of our securities portfolio; (7) 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; (8) fluctuations in the value of our investment securities; (9) governmental monetary and fiscal policies; (10) changes in and uncertainty related to benchmark interest rates used to price loans and deposits, including the expected elimination of LIBOR and the adoption of a substitute; (11) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators; (12) the ability to attract and retain key executives and employees experienced in banking and financial services; (13) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (14) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (15) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (16) 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; (17) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (18) volatility of rate-sensitive deposits; (19) operational risks, including data processing system failures or fraud; (20) asset/liability matching risks and liquidity risks; (21) the costs, effects and outcomes of existing or future litigation; (22) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business; (23) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (24) war or terrorist activities, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (25) the effects of cyber-attacks; (26) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; 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
 December 31,September 30,June 30,March 31,December 31,
(In thousands)20212021202120212020
ASSETS
Cash and due from banks$42,949 $53,562 $52,297 $57,154 $65,078 
Interest earning deposits in banks160,881 84,952 11,124 80,924 17,409 
Federal funds sold— — 13 7,691 172 
Total cash and cash equivalents203,830 138,514 63,434 145,769 82,659 
Debt securities available for sale at fair value2,288,110 2,136,902 2,072,452 1,896,894 1,657,381 
Loans held for sale12,917 58,679 6,149 58,333 59,956 
Gross loans held for investment3,252,194 3,278,150 3,344,156 3,374,076 3,496,790 
Unearned income, net(7,182)(9,506)(14,000)(15,915)(14,567)
Loans held for investment, net of unearned income3,245,012 3,268,644 3,330,156 3,358,161 3,482,223 
Allowance for credit losses(48,700)(47,900)(48,000)(50,650)(55,500)
Total loans held for investment, net3,196,312 3,220,744 3,282,156 3,307,511 3,426,723 
Premises and equipment, net83,492 84,130 84,667 85,581 86,401 
Goodwill62,477 62,477 62,477 62,477 62,477 
Other intangible assets, net19,885 21,130 22,394 23,735 25,242 
Foreclosed assets, net357 454 755 1,487 2,316 
Other assets157,748 152,393 154,731 155,525 153,493 
Total assets$6,025,128 $5,875,423 $5,749,215 $5,737,312 $5,556,648 
LIABILITIES          
Noninterest bearing deposits$1,005,369 $999,887 $952,764 $958,526 $910,655 
Interest bearing deposits4,109,150 3,957,894 3,839,902 3,836,037 3,636,394 
Total deposits5,114,519 4,957,781 4,792,666 4,794,563 4,547,049 
Short-term borrowings181,368 187,508 212,261 175,785 230,789 
Long-term debt154,879 154,860 169,839 201,696 208,691 
Other liabilities46,887 45,010 44,156 53,948 54,869 
Total liabilities5,497,653 5,345,159 5,218,922 5,225,992 5,041,398 
SHAREHOLDERS' EQUITY          
Common stock16,581 16,581 16,581 16,581 16,581 
Additional paid-in capital300,940 300,327 299,888 299,747 300,137 
Retained earnings243,365 232,639 219,884 206,230 188,191 
Treasury stock(24,546)(22,735)(15,888)(15,278)(14,251)
Accumulated other comprehensive (loss) income(8,865)3,452 9,828 4,040 24,592 
Total shareholders' equity527,475 530,264 530,293 511,320 515,250 
Total liabilities and shareholders' equity$6,025,128 $5,875,423 $5,749,215 $5,737,312 $5,556,648 




10





MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FIVE QUARTER AND YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME
 Three Months EndedYear Ended
December 31,September 30,June 30,March 31,December 31,December 31,December 31,
(In thousands, except per share data)202120212021202120202021 2020
Interest income
Loans, including fees$33,643 $36,115 $34,736 $36,542 $38,239 $141,036 $158,656 
Taxable investment securities7,461 6,655 6,483 5,093 4,673 25,692 17,610 
Tax-exempt investment securities2,415 2,428 2,549 2,555 2,529 9,947 8,259 
Other37 21 19 14 29 91 262 
Total interest income43,556 45,219 43,787 44,204 45,470 176,766 184,787 
Interest expense
Deposits3,031 3,150 3,409 3,608 4,265 13,198 23,919 
Short-term borrowings130 132 161 128 142 551 914 
Long-term debt1,576 1,597 1,712 1,851 2,026 6,736 6,990 
Total interest expense4,737 4,879 5,282 5,587 6,433 20,485 31,823 
Net interest income38,819 40,340 38,505 38,617 39,037 156,281 152,964 
Credit loss expense (benefit)622 (1,080)(2,144)(4,734)(3,041)(7,336)28,369 
Net interest income after credit loss expense (benefit)38,197 41,420 40,649 43,351 42,078 163,617 124,595 
Noninterest income
Investment services and trust activities3,115 2,915 2,809 2,836 2,518 11,675 9,632 
Service charges and fees1,684 1,613 1,475 1,487 1,571 6,259 6,178 
Card revenue1,746 1,820 1,913 1,536 1,517 7,015 5,719 
Loan revenue3,132 1,935 3,151 4,730 3,900 12,948 10,185 
Bank-owned life insurance550 532 538 542 541 2,162 2,226 
Investment securities gains, net137 36 42 27 30 242 184 
Other865 331 290 666 549 2,152 4,496 
Total noninterest income11,229 9,182 10,218 11,824 10,626 42,453 38,620 
Noninterest expense
Compensation and employee benefits18,266 17,350 17,404 16,917 17,638 69,937 66,397 
Occupancy expense of premises, net2,211 2,547 2,198 2,318 2,476 9,274 9,348 
Equipment2,189 1,973 1,861 1,793 2,040 7,816 7,865 
Legal and professional1,826 1,272 1,375 783 2,052 5,256 6,153 
Data processing1,211 1,406 1,347 1,252 1,460 5,216 5,362 
Marketing1,121 1,022 873 1,006 986 4,022 3,815 
Amortization of intangibles1,245 1,264 1,341 1,507 1,569 5,357 6,976 
FDIC insurance380 435 245 512 495 1,572 1,858 
Communications277 275 371 409 412 1,332 1,746 
Foreclosed assets, net7 43 136 47 (35)233 150 
Goodwill impairment— — — — — — 31,500 
Other1,711 2,191 1,519 1,156 2,822 6,577 8,723 
Total noninterest expense30,444 29,778 28,670 27,700 31,915 116,592 149,893 
Income before income tax expense18,982 20,824 22,197 27,475 20,789 89,478 13,322 
Income tax expense 4,726 4,513 4,926 5,827 4,079 19,992 6,699 
Net income $14,256 $16,311 $17,271 $21,648 $16,710 $69,486 $6,623 
Earnings per common share
Basic$0.91 $1.03 $1.08 $1.35 $1.04 $4.38 $0.41 
Diluted$0.91 $1.03 $1.08 $1.35 $1.04 $4.37 $0.41 
Weighted average basic common shares outstanding15,692 15,841 15,987 15,991 16,074 15,877 16,102 
Weighted average diluted common shares outstanding15,734 15,863 16,012 16,021 16,092 15,905 16,110 
Dividends paid per common share$0.2250 $0.2250 $0.2250 $0.2250 $0.2200 $0.9000 $0.8800 







11





MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL STATISTICS
As of or for the Three Months EndedAs of or for the Year Ended
December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands, except per share amounts)20212021202020212020
Earnings:
Net interest income$38,819 $40,340 $39,037 $156,281 $152,964 
Noninterest income11,229 9,182 10,626 42,453 38,620 
     Total revenue, net of interest expense50,048 49,522 49,663 198,734 191,584 
Credit loss expense (benefit)622 (1,080)(3,041)(7,336)28,369 
Noninterest expense30,444 29,778 31,915 116,592 149,893 
     Income before income tax expense 18,982 20,824 20,789 89,478 13,322 
Income tax expense 4,726 4,513 4,079 19,992 6,699 
     Net income $14,256 $16,311 $16,710 $69,486 $6,623 
Per Share Data:
Diluted earnings $0.91 $1.03 $1.04 $4.37 $0.41 
Book value33.66 33.71 32.17 33.66 32.17 
Tangible book value(1)
28.40 28.40 26.69 28.40 26.69 
Ending Balance Sheet:
Total assets$6,025,128 $5,875,423 $5,556,648 $6,025,128 $5,556,648 
Loans held for investment, net of unearned income3,245,012 3,268,644 3,482,223 3,245,012 3,482,223 
Total securities held for investment2,288,110 2,136,902 1,657,381 2,288,110 1,657,381 
Total deposits5,114,519 4,957,781 4,547,049 5,114,519 4,547,049 
Short-term borrowings181,368 187,508 230,789 181,368 230,789 
Long-term debt154,879 154,860 208,691 154,879 208,691 
Total shareholders' equity527,475 530,264 515,250 527,475 515,250 
Average Balance Sheet:
Average total assets$5,934,076 $5,811,228 $5,457,939 $5,780,556 $5,135,841 
Average total loans3,268,783 3,356,680 3,560,632 3,362,488 3,551,945 
Average total deposits5,015,506 4,882,835 4,490,048 4,838,227 4,184,406 
Financial Ratios:
Return on average assets0.95 %1.11 %1.22 %1.20 %0.13 %
Return on average equity10.68 %12.00 %13.15 %13.18 %1.28 %
Return on average tangible equity(1)
13.50 %15.06 %17.07 %16.63 %10.80 %
Efficiency ratio(1)
56.74 %56.34 %59.69 %54.65 %56.92 %
Net interest margin, tax equivalent(1)
2.83 %3.00 %3.13 %2.95 %3.30 %
Loans to deposits ratio63.45 %65.93 %76.58 %63.45 %76.58 %
Common equity ratio8.75 %9.03 %9.27 %8.75 %9.27 %
Tangible common equity ratio(1)
7.49 %7.71 %7.82 %7.49 %7.82 %
Credit Risk Profile:
Total nonperforming loans$31,540 $33,708 $42,689 $31,540 $42,689 
Nonperforming loans ratio0.97 %1.03 %1.23 %0.97 %1.23 %
Total nonperforming assets$31,897 $34,162 $45,005 $31,897 $45,005 
Nonperforming assets ratio0.53 %0.58 %0.81 %0.53 %0.81 %
Net (recoveries) charge-offs$(278)$(880)$359 $(436)$5,265 
Net (recovery) charge-off ratio(0.03)%(0.10)%0.04 %(0.01)%0.15 %
Allowance for credit losses$48,700 $47,900 $55,500 $48,700 $55,500 
Allowance for credit losses ratio1.50 %1.47 %1.59 %1.50 %1.59 %
Adjusted allowance for credit losses ratio(1)
1.52 %1.51 %1.72 %1.52 %1.72 %
Allowance for credit losses to nonaccrual ratio154.41 %142.32 %132.30 %154.41 %132.30 %
PPP Loans:
Average PPP loans$52,564 $143,628 $313,252 $186,333 $223,137 
Fee Income1,996 3,593 2,853 11,731 5,228 
(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
 December 31, 2021September 30, 2021December 31, 2020
(Dollars in thousands)Average
Balance		Interest
Income/
Expense		 Average
Yield/
Cost		 
Average
Balance
Interest
Income/
Expense
 Average
Yield/
Cost		Average BalanceInterest
Income/
Expense		 Average
Yield/
Cost
ASSETS   
Loans, including fees (1)(2)(3)
$3,268,783 $34,191  4.15 % $3,356,680 $36,622 4.33 %$3,560,632 $38,795  4.33 %
Taxable investment securities1,802,349 7,461  1.64 % 1,628,605 6,655 1.62 %1,026,359 4,673  1.81 %
Tax-exempt investment securities (2)(4)
455,570 3,026  2.64 % 459,717 3,043 2.63 %450,659 3,180  2.81 %
Total securities held for investment(2)
2,257,919 10,487 1.84 %2,088,322 9,698 1.84 %1,477,018 7,853 2.12 %
Other80,415 37  0.18 % 44,915 21 0.19 %80,019 29  0.14 %
Total interest earning assets(2)
$5,607,117 44,715  3.16 % $5,489,917 46,341 3.35 %$5,117,669 46,677  3.63 %
Other assets326,959   321,311 340,270  
Total assets$5,934,076   $5,811,228 $5,457,939  
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Interest checking deposits$1,506,600 $1,065 0.28 %$1,434,560 $1,056 0.29 %$1,276,320 $958 0.30 %
Money market deposits976,018 520 0.21 %955,174 506 0.21 %931,900 544 0.23 %
Savings deposits621,871 285  0.18 % 606,449 316 0.21 %508,763 279  0.22 %
Time deposits903,765 1,161  0.51 % 890,866 1,272 0.57 %862,408 2,484  1.15 %
Total interest bearing deposits4,008,254 3,031  0.30 % 3,887,049 3,150 0.32 %3,579,391 4,265  0.47 %
Short-term borrowings190,788 130  0.27 % 182,484 132 0.29 %182,080 142  0.31 %
Long-term debt154,870 1,576  4.04 % 163,817 1,597 3.87 %223,407 2,026  3.61 %
Total borrowed funds345,658 1,706 1.96 %346,301 1,729 1.98 %405,487 2,168 2.13 %
Total interest bearing liabilities$4,353,912 $4,737  0.43 % $4,233,350 $4,879 0.46 %$3,984,878 $6,433  0.64 %
Noninterest bearing deposits1,007,252   995,786 910,657  
Other liabilities43,576   43,040 56,898  
Shareholders’ equity529,336 539,052 505,506 
Total liabilities and shareholders’ equity$5,934,076   $5,811,228 $5,457,939  
Net interest income(2)
$39,978 $41,462 $40,244 
Net interest spread(2)
 2.73 %  2.89 % 2.99 %
Net interest margin(2)
2.83 %3.00 %3.13 %
Total deposits(5)
$5,015,506 $3,031 0.24 %$4,882,835 $3,150 0.26 %$4,490,048 $4,265 0.38 %
Cost of funds(6)
0.35 %0.37 %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 $1.9 million, $3.5 million, and $2.5 million for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. Loan purchase discount accretion was $599 thousand, $774 thousand, and $1.5 million for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. Tax equivalent adjustments were $548 thousand, $507 thousand, and $556 thousand for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $611 thousand, $615 thousand, and $651 thousand for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, 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
 Year Ended
 December 31, 2021December 31, 2020
(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)
$3,362,488 $143,141 4.26 %$3,551,945 $160,752 4.53 %
Taxable investment securities1,577,146 25,692 1.63 %797,954 17,610 2.21 %
Tax-exempt investment securities (2)(4)
463,526 12,468 2.69 %342,000 10,395 3.04 %
Total securities held for investment(2)
2,040,672 38,160 1.87 %1,139,954 28,005 2.46 %
Other52,617 91  0.17 % 73,255 262 0.36 %
Total interest earning assets(2)
$5,455,777 181,392  3.32 % $4,765,154 189,019 3.97 %
Other assets324,779   370,687 
Total assets$5,780,556   $5,135,841 
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Interest checking deposits$1,440,585 $4,208 0.29 %$1,108,997 $4,435 0.40 %
Money market deposits946,784 2,006 0.21 %844,137 3,696 0.44 %
Savings deposits594,543 1,210 0.20 %454,000 1,386 0.31 %
Time deposits882,271 5,774 0.65 %945,234 14,402 1.52 %
Total interest bearing deposits3,864,183 13,198  0.34 % 3,352,368 23,919 0.71 %
Short-term borrowings191,757 551  0.29 % 157,346 914 0.58 %
Long-term debt178,395 6,736  3.78 % 220,448 6,990 3.17 %
Total borrowed funds370,152 7,287 1.97 %377,794 7,904 2.09 %
Total interest bearing liabilities$4,234,335 $20,485  0.48 % $3,730,162 $31,823 0.85 %
Noninterest bearing deposits974,044   832,038 
Other liabilities45,141   58,186 
Shareholders’ equity527,036 515,455 
Total liabilities and shareholders’ equity$5,780,556   $5,135,841 
Net interest income(2)
$160,907 $157,196 
Net interest spread(2)
 2.84 %  3.12 %
Net interest margin(2)
2.95 %3.30 %
Total deposits(5)
$4,838,227 $13,198 0.27 %$4,184,406 $23,919 0.57 %
Cost of funds(6)
0.39 %0.70 %
(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 $11.2 million and $4.4 million for the years ended December 31, 2021 and December 31, 2020, respectively. Loan purchase discount accretion was $3.3 million and $9.1 million for the years ended December 31, 2021 and December 31, 2020, respectively. Tax equivalent adjustments were $2.1 million and $2.1 million for the years ended December 31, 2021 and December 31, 2020, respectively. The federal statutory tax rate utilized was 21%.
(4) Interest income includes tax equivalent adjustments of $2.5 million and $2.1 million for the years ended December 31, 2021 and December 31, 2020, 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, adjusted allowance for credit losses ratio, core loans, and core commercial loans. 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 RatioDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands, except per share data)20212021202120212020
Total shareholders’ equity$527,475 $530,264 $530,293 $511,320 $515,250 
Intangible assets, net
(82,362)(83,607)(84,871)(86,212)(87,719)
Tangible common equity$445,113 $446,657 $445,422 $425,108 $427,531 
Total assets$6,025,128 $5,875,423 $5,749,215 $5,737,312 $5,556,648 
Intangible assets, net
(82,362)(83,607)(84,871)(86,212)(87,719)
Tangible assets$5,942,766 $5,791,816 $5,664,344 $5,651,100 $5,468,929 
Book value per share$33.66 $33.71 $33.22 $32.00 $32.17 
Tangible book value per share(1)
$28.40 $28.40 $27.90 $26.60 $26.69 
Shares outstanding15,671,147 15,729,451 15,963,468 15,981,088 16,016,780 
Common equity ratio8.75 %9.03 %9.22 %8.91 %9.27 %
Tangible common equity ratio(2)
7.49 %7.71 %7.86 %7.52 %7.82 %
(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.
Three Months EndedYear Ended
Return on Average Tangible EquityDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20212021202020212020
Net income$14,256 $16,311 $16,710 $69,486 $6,623 
Intangible amortization, net of tax(1)
934 948 1,177 4,018 5,232 
Goodwill impairment— — — — 31,500 
Tangible net income $15,190 $17,259 $17,887 $73,504 $43,355 
Average shareholders’ equity$529,336 $539,052 $505,506 $527,036 $515,455 
Average intangible assets, net
(82,990)(84,288)(88,543)(84,927)(113,978)
Average tangible equity$446,346 $454,764 $416,963 $442,109 $401,477 
Return on average equity
10.68 %12.00 %13.15 %13.18 %1.28 %
Return on average tangible equity(2)
13.50 %15.06 %17.07 %16.63 %10.80 %
(1) The combined income tax rate utilized was 25%.
(2) Annualized tangible net income divided by average tangible equity.


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Net Interest Margin, Tax Equivalent/
Core Net Interest Margin		Three Months EndedYear Ended
December 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20212021202020212020
Net interest income$38,819 $40,340 $39,037 $156,281 $152,964 
Tax equivalent adjustments:
Loans(1)
548 507 556 2,105 2,096 
Securities(1)
611 615 651 2,521 2,136 
Net interest income, tax equivalent$39,978 $41,462 $40,244 $160,907 $157,196 
Loan purchase discount accretion(599)(774)(1,542)(3,344)(9,098)
Core net interest income$39,379 $40,688 $38,702 $157,563 $148,098 
Net interest margin2.75 %2.92 %3.03 %2.86 %3.21 %
Net interest margin, tax equivalent(2)
2.83 %3.00 %3.13 %2.95 %3.30 %
Core net interest margin(3)
2.79 %2.94 %3.01 %2.89 %3.11 %
Average interest earning assets$5,607,117 $5,489,917 $5,117,669 $5,455,777 $4,765,154 
(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 EndedYear Ended
Loan Yield, Tax Equivalent / Core Yield on LoansDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20212021202020212020
Loan interest income, including fees$33,643 $36,115 $38,239 $141,036 $158,656 
Tax equivalent adjustment(1)
548 507 556 2,105 2,096 
Tax equivalent loan interest income$34,191 $36,622 $38,795 $143,141 $160,752 
Loan purchase discount accretion(599)(774)(1,542)(3,344)(9,098)
Core loan interest income$33,592 $35,848 $37,253 $139,797 $151,654 
Yield on loans4.08 %4.27 %4.27 %4.19 %4.47 %
Yield on loans, tax equivalent(2)
4.15 %4.33 %4.33 %4.26 %4.53 %
Core yield on loans(3)
4.08 %4.24 %4.16 %4.16 %4.27 %
Average loans$3,268,783 $3,356,680 $3,560,632 $3,362,488 $3,551,945 
(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 EndedYear Ended
Efficiency RatioDecember 31,September 30,December 31,December 31,December 31,
(Dollars in thousands)20212021202020212020
Total noninterest expense$30,444 $29,778 $31,915 $116,592 $149,893 
Amortization of intangibles(1,245)(1,264)(1,569)(5,357)(6,976)
Merger-related expenses(224)— — (224)(61)
Goodwill impairment— — — — (31,500)
Noninterest expense used for efficiency ratio$28,975 $28,514 $30,346 $111,011 $111,356 
Net interest income, tax equivalent(1)
$39,978 $41,462 $40,244 $160,907 $157,196 
Noninterest income11,229 9,182 10,626 42,453 38,620 
Investment securities gains, net
(137)(36)(30)(242)(184)
Net revenues used for efficiency ratio$51,070 $50,608 $50,840 $203,118 $195,632 
Efficiency ratio (2)
56.74 %56.34 %59.69 %54.65 %56.92 %
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles, merger-related expenses, and goodwill impairment divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.





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Adjusted Allowance for Credit Losses RatioDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands)20212021202120212020
Loans held for investment, net of unearned income$3,245,012 $3,268,644 $3,330,156 $3,358,161 $3,482,223 
PPP loans(30,841)(89,354)(184,390)(248,682)(259,260)
Core loans$3,214,171 $3,179,290 $3,145,766 $3,109,479 $3,222,963 
Allowance for credit losses$48,700 $47,900 $48,000 $50,650 $55,500 
Allowance for credit losses ratio1.50 %1.47 %1.44 %1.51 %1.59 %
Adjusted allowance for credit losses ratio(1)
1.52 %1.51 %1.53 %1.63 %1.72 %
(1) Allowance for credit losses divided by core loans.

Core Loans/Core Commercial LoansDecember 31,September 30,June 30,March 31,December 31,
(Dollars in thousands)20212021202120212020
Commercial loans:
Commercial and industrial$902,314 $927,258 $982,092 $993,770 $1,055,488 
Agricultural103,417 106,356 107,834 117,099 116,392 
Commercial real estate1,704,541 1,699,358 1,705,789 1,693,592 1,732,361 
Total commercial loans$2,710,272 $2,732,972 $2,795,715 $2,804,461 $2,904,241 
Consumer loans:
Residential real estate$466,322 $468,136 $468,581 $474,433 $499,106 
Other consumer68,418 67,536 65,860 79,267 78,876 
Total consumer loans$534,740 $535,672 $534,441 $553,700 $577,982 
Loans held for investment, net of unearned income$3,245,012 $3,268,644 $3,330,156 $3,358,161 $3,482,223 
PPP loans$30,841 $89,354 $184,390 $248,682 $259,260 
Core loans(1)
$3,214,171 $3,179,290 $3,145,766 $3,109,479 $3,222,963 
Core commercial loans(2)
$2,679,431 $2,643,618 $2,611,325 $2,555,779 $2,644,981 
(1) Core loans are calculated as loans held for investment, net of unearned income less PPP loans.
(2) Core commercial loans are calculated as total commercial loans less PPP loans.



Contact:
Charles N. FunkBarry S. Ray
Chief Executive OfficerSenior Executive Vice President and Chief Financial Officer
319.356.5800319.356.5800





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