IOWA CITY, Iowa, April 25, 2024 (GLOBE NEWSWIRE) -- MidWestOne Financial Group, Inc. (NASDAQ:MOFG) ("we", "our", or the "Company") today reported results for the first quarter of 2024. First Quarter 2024 Summary1 Completed acquisition of Denver Bankshares, Inc. ("DNVB"), the related core banking system conversion, and closure of the legacy MidWestOne Denver banking office. Net income of $3.3 million, or $0.21 per diluted common share. Revenue was $44.5 million, comprised of net interest income of $34.7 million and noninterest income of $9.8 million, which included a negative MSR valuation adjustment of $368 thousand. Credit loss expense of $4.7 million, which included day 1 credit loss expense of $3.2 million related to the DNVB acquisition. Noninterest Expense of $35.6 million, which included merger-related costs of $1.3 million, OREO write-down expense of $311 thousand, and non-acquisition related severance expense of $261 thousand. Net interest margin (tax equivalent) expanded 11 bps to 2.33%2. Annualized adjusted loan growth (excluding acquired DNVB loan balances) of 8%. Continued momentum in Wealth Management with revenue growth of 10%. Nonperforming assets ratio remained stable at 0.49%; net charge-off ratio was 0.02%. CEO Commentary Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, "We are very pleased with the underlying strength of the first quarter as we continue to execute on our strategic initiatives. During the quarter we closed and integrated Denver Bankshares, the front end of our geographic realignment announced in late September 2023, and our Florida divestiture remains on track for a June 2024 closing. Importantly, our net interest margin expanded this quarter, rising 11 bps, with net interest income increasing 7% from the fourth quarter of 2023. This outcome reflected the strategic balance sheet actions taken in 2023, the completed merger of DNVB, and continued loan growth in our targeted metro markets. In Commercial Banking and Wealth Management, our customer and banker acquisition strategies led to robust balance sheet, assets under management, and revenue gains, and we will continue to invest in these critical business lines. Even amidst significant talent, platform, and product investments, we have been able to re-allocate resources to maintain expense discipline. We welcome our new Bank of Denver team members, and I am proud of our entire MidWestOne team for their commitment to our customers and execution of our strategic plan." __________________________________1 First Quarter Summary compares to the fourth quarter of 2023 (the "linked quarter") unless noted. 2 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.     As of or for the quarter ended (Dollars in thousands, except per share amounts and as noted)   March 31,   December 31,   March 31,     2024       2023       2023   Financial Results             Revenue   $ 44,481     $ 36,421     $ 36,030   Credit loss expense     4,689       1,768       933   Noninterest expense     35,565       32,131       33,319   Net income     3,269       2,730       1,397   Per Common Share             Diluted earnings per share   $ 0.21     $ 0.17     $ 0.09   Book value     33.53       33.41       31.94   Tangible book value(1)     27.14       27.90       26.13   Balance Sheet & Credit Quality             Loans In millions   $ 4,414.6     $ 4,126.9     $ 3,919.4   Investment securities In millions     1,862.2       1,870.3       2,071.8   Deposits In millions     5,585.2       5,395.7       5,555.2   Net loan charge-offs In millions     0.2       2.1       0.3   Allowance for credit losses ratio     1.27 %     1.25 %     1.27 % Selected Ratios             Return on average assets     0.20 %     0.17 %     0.09 % Net interest margin, tax equivalent(1)     2.33 %     2.22 %     2.75 % Return on average equity     2.49 %     2.12 %     1.14 % Return on average tangible equity(1)     4.18 %     3.57 %     2.70 % Efficiency ratio(1)     71.28 %     70.16 %     62.32 % (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. DENVER BANKSHARES, INC. ACQUISITION On January 31, 2024, we completed our acquisition of Denver Bankshares, Inc, and its wholly-owned banking subsidiary, the Bank of Denver. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the January 31, 2024 acquisition date, net of any applicable tax effects. The Company considers all purchase accounting estimates provisional and fair values are subject to refinement for up to one year after the close date. The table below summarizes the amounts recognized at the acquisition date for each major class of assets acquired and liabilities assumed: (In thousands)   As of January 31, 2024 Merger consideration     Cash consideration   $ 32,600   Identifiable net assets acquired, at fair value     Assets acquired     Cash and due from banks     462   Interest earning deposits in banks     3,517   Debt securities     52,493   Loans held for investment     207,095   Premises and equipment     13,470   Core deposit intangible     7,100   Other assets     4,987   Total assets acquired     289,124   Liabilities assumed     Deposits     (224,248 ) Short-term borrowings     (37,500 ) Other liabilities     (3,417 ) Total liabilities assumed     (265,165 ) Identifiable net assets acquired, at fair value     23,959   Goodwill   $ 8,641   REVENUE REVIEW Revenue               Change   Change               1Q24 vs   1Q24 vs (Dollars in thousands)   1Q24   4Q23   1Q23   4Q23   1Q23 Net interest income   $ 34,731   $ 32,559   $ 40,076     7 %   (13 )% Noninterest income     9,750     3,862     (4,046 )   152 %   n/m   Total revenue, net of interest expense   $ 44,481   $ 36,421   $ 36,030     22 %   23 %                       Results are not meaningful (n/m) Total revenue for the first quarter of 2024 increased $8.1 million from the fourth quarter of 2023 due to higher noninterest income and net interest income during the quarter. When compared to the first quarter of 2023, total revenue increased $8.5 million due to higher noninterest income, partially offset by lower net interest income. Net interest income of $34.7 million for the first quarter of 2024 increased $2.2 million from the fourth quarter of 2023, primarily due to higher interest earning asset volumes and yields, partially offset by higher interest bearing liabilities volumes and funding costs. When compared to the first quarter of 2023, net interest income decreased $5.3 million, primarily due to higher funding costs and volumes, partially offset by higher interest earning asset volumes and yields. The Company's tax equivalent net interest margin was 2.33%3 in the first quarter of 2024, compared to 2.22%3 in the fourth quarter of 2023, as higher earning asset yields more than offset increased funding costs. Total interest earning assets yield during the first quarter of 2024 increased 20 bps from the fourth quarter of 2023, as a result of increased loan and securities yields of 17 bps and 10 bps, respectively. The cost of interest bearing liabilities during the first quarter of 2024 increased 10 bps, to 2.75%, due primarily to interest bearing deposit costs of 2.45% and long-term debt of 6.86%, which increased 6 bps and 7 bps, respectively, from the fourth quarter of 2023, as well as a mix-shift to increased short-term borrowings. Our cycle-to-date interest bearing deposit beta was 41%. The Company's tax equivalent net interest margin was 2.33%3 in the first quarter of 2024, compared to 2.75%3 in the first quarter of 2023, driven by higher funding costs, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 116 bps to 2.75%, due to interest bearing deposit costs of 2.45%, short-term borrowing costs of 4.82%, and long-term debt costs of 6.86%, which increased 107 bps, 200 bps and 67 bps, respectively from the first quarter of 2023. Total interest earning assets yield increased 56 bps from the first quarter of 2023, primarily as a result of an increase in loan yields of 56 bps. Noninterest Income (Loss)               Change   Change                 1Q24 vs   1Q24 vs (In thousands)   1Q24   4Q23   1Q23   4Q23   1Q23 Investment services and trust activities   $ 3,503     $ 3,193     $ 2,933     10 %   19 % Service charges and fees     2,144       2,148       2,008     — %   7 % Card revenue     1,943       1,802       1,748     8 %   11 % Loan revenue     856       909       1,420     (6 )%   (40 )% Bank-owned life insurance     660       656       602     1 %   10 % Investment securities gains (losses), net     36       (5,696 )     (13,170 )   n/m     n/m   Other     608       850       413     (28 )%   47 % Total noninterest income (loss)   $ 9,750     $ 3,862     $ (4,046 )   152 %   n/m                             MSR Valuation Adjustment (included in loan revenue)     (368 )     (105 )     315     250 %   (217 )%                           Results are not meaningful (n/m)                                                   ______________________________________3 Non-GAAP measure. See the separate Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure. Noninterest income for the first quarter of 2024 increased $5.9 million from the linked quarter, primarily due to investment securities losses, net, of $5.7 million recorded in the fourth quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. Investment services and trust activities income increased $0.3 million during the first quarter of 2024, as a result of growth in assets under administration and market valuation. Noninterest income for the first quarter of 2024 increased $13.8 million from the first quarter of 2023, primarily due to the investment securities losses, net, of $13.2 million recorded in the first quarter of 2023 as part of a balance sheet repositioning, which did not recur in the first quarter of 2024. Investment services and trust activities income increased $0.6 million compared to the first quarter of 2023, due to growth in assets under administration. Partially offsetting these identified increases was a decline of $0.6 million in loan revenue, which primarily reflected the unfavorable year-over-year change in the fair value of our mortgage servicing rights, from a positive adjustment of $315 thousand in the first quarter of 2023 to a negative adjustment of $368 thousand in the first quarter of 2024. EXPENSE REVIEW Noninterest Expense               Change   Change               1Q24 vs   1Q24 vs (In thousands)   1Q24   4Q23   1Q23   4Q23   1Q23 Compensation and employee benefits   $ 20,930   $ 17,859   $ 19,607     17 %   7 % Occupancy expense of premises, net     2,813     2,309     2,746     22 %   2 % Equipment     2,600     2,466     2,171     5 %   20 % Legal and professional     2,059     2,269     1,736     (9 )%   19 % Data processing     1,360     1,411     1,363     (4 )%   — % Marketing     598     700     986     (15 )%   (39 )% Amortization of intangibles     1,637     1,441     1,752     14 %   (7 )% FDIC insurance     942     900     749     5 %   26 % Communications     196     183     261     7 %   (25 )% Foreclosed assets, net     358     45     (28 )   696 %   n/m   Other     2,072     2,548     1,976     (19 )%   5 % Total noninterest expense   $ 35,565   $ 32,131   $ 33,319     11 %   7 %                       Results are not meaningful (n/m)                     Merger-related Expenses             (In thousands)   1Q24   4Q23   1Q23 Compensation and employee benefits   $ 241   $ —   $ 70 Occupancy expense of premises, net     152     —     — Equipment     149     —     — Legal and professional     573     180     — Data processing     61     —     65 Marketing     32     38     — Communications     1     —     — Other     105     27     1 Total merger-related expenses   $ 1,314   $ 245   $ 136 Noninterest expense for the first quarter of 2024 increased $3.4 million from the linked quarter primarily due to increases of $3.1 million, $0.5 million, and $0.3 million in compensation and employee benefits, occupancy expense of premises, net, and foreclosed assets, net, respectively. The increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in occupancy was primarily driven by additional expense as a result of the DNVB acquisition, merger-related expenses, and increased costs for snow removal. The increase in foreclosed assets expense was driven by a $0.3 million write-down of other real estate owned. Noninterest expense for the first quarter of 2024 increased $2.2 million from the first quarter of 2023, primarily due to increases of $1.3 million, $0.4 million, and $0.4 million in compensation and employee benefits, equipment, and foreclosed assets, net, respectively. The increase in compensation and employee benefits was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in equipment reflected higher software costs and merger-related expenses. The increase in foreclosed assets, net, was due to a $0.3 million write-down of other real estate owned. Partially offsetting these increases was a decline of $0.4 million in marketing. The Company's effective tax rate was 22.7% in the first quarter of 2024. The effective income tax rate for 2024 is expected to be 21-23%. BALANCE SHEET REVIEW Total assets were $6.75 billion at March 31, 2024, compared to $6.43 billion at December 31, 2023 and $6.41 billion at March 31, 2023. The increase from December 31, 2023 was primarily driven by the assets acquired from the acquisition of DNVB and organic loan growth. Compared to March 31, 2023, the increase was primarily driven by the assets acquired from the acquisition of DNVB, organic loan growth, and higher cash balances, partially offset by lower securities balances resulting from balance sheet repositioning executed in 2023. Loans Held for Investment   March 31, 2024   December 31, 2023   March 31, 2023   (Dollars in thousands)   Balance   % ofTotal   Balance   % ofTotal   Balance   % ofTotal   Commercial and industrial   $ 1,105,718   25.0 % $ 1,075,003   26.0 % $ 1,080,514   27.6 % Agricultural     113,029   2.6     118,414   2.9     106,641   2.7   Commercial real estate                           Construction and development     403,571   9.1     323,195   7.8     320,924   8.2   Farmland     184,109   4.2     184,955   4.5     182,528   4.7   Multifamily     409,504   9.3     383,178   9.3     255,065   6.5   Other     1,440,645   32.7     1,333,982   32.4     1,290,454   33.0        Total commercial real estate     2,437,829   55.3     2,225,310   54.0     2,048,971   52.4   Residential real estate                           One-to-four family first liens     495,408   11.2     459,798   11.1     448,459   11.4   One-to-four family junior liens     182,001   4.1     180,639   4.4     162,403   4.1        Total residential real estate     677,409   15.3     640,437   15.5     610,862   15.5   Consumer     80,661   1.8     67,783   1.6     72,377   1.8   Loans held for investment, net of unearned income   $ 4,414,646   100.0 % $ 4,126,947   100.0 % $ 3,919,365   100.0 %                             Total commitments to extend credit   $ 1,230,612       $ 1,210,796       $ 1,205,902       Loans held for investment, net of unearned income, increased $287.7 million, or 7.0%, to $4.41 billion from $4.13 billion at December 31, 2023 and $495.3 million, or 12.6%, from $3.92 billion at March 31, 2023. This increase from the fourth quarter of 2023 was driven by loans acquired in the DNVB acquisition, organic loan growth, and higher line of credit usage. The increase from the first quarter of 2023 was driven by loans acquired in the DNVB acquisition and organic loan growth. Investment Securities   March 31, 2024   December 31, 2023   March 31, 2023   (Dollars in thousands)   Balance   % of Total   Balance   % of Total   Balance   % of Total   Available for sale   $ 797,230   42.8 % $ 795,134   42.5 % $ 954,074   46.1 % Held to maturity     1,064,939   57.2 %   1,075,190   57.5 %   1,117,709   53.9 % Total investment securities   $ 1,862,169       $ 1,870,324       $ 2,071,783       Investment securities at March 31, 2024 were $1.86 billion, decreasing $8.2 million from December 31, 2023 and $209.6 million from March 31, 2023. The decrease from the fourth quarter of 2023 was primarily due to the principal cash flows received from scheduled payments, calls, and maturities. The decrease from the first quarter of 2023 was primarily due to balance sheet repositioning executed in 2023. Deposits   March 31, 2024   December 31, 2023   March 31, 2023   (Dollars in thousands)   Balance   % of Total   Balance   % of Total   Balance   % of Total   Noninterest bearing deposits   $ 920,764   16.5 % $ 897,053   16.6 % $ 989,469   17.8 % Interest checking deposits     1,349,823   24.2     1,320,435   24.5     1,476,948   26.6   Money market deposits     1,122,717   20.1     1,105,493   20.5     969,238   17.4   Savings deposits     728,276   13.0     650,655   12.1     631,811   11.4   Time deposits of $250 and under     787,851   14.1     752,214   13.9     599,302   10.8   Total core deposits     4,909,431   87.9     4,725,850   87.6     4,666,768   84.0   Brokered time deposits     205,000   3.7     221,039   4.1     366,539   6.6   Time deposits over $250     470,805   8.4     448,784   8.3     521,846   9.4   Total deposits   $ 5,585,236   100.0 % $ 5,395,673   100.0 % $ 5,555,153   100.0 % Deposits increased $189.6 million, or 3.5%, to $5.59 billion, from $5.40 billion at December 31, 2023, primarily due to the $224.2 million of deposits assumed in the DNVB acquisition. Total deposits increased $30.1 million, or 0.5%, from $5.56 billion at March 31, 2023 due to the DNVB acquisition, partially offset by a decline of $161.5 million in brokered deposits. Borrowed Funds   March 31, 2024   December 31, 2023   March 31, 2023   (Dollars in thousands)   Balance   % of Total   Balance   % of Total   Balance   % of Total   Short-term borrowings   $ 422,988   77.6 % $ 300,264   70.9 % $ 143,981   51.1 % Long-term debt     122,066   22.4 %   123,296   29.1 %   137,981   48.9 % Total borrowed funds   $ 545,054       $ 423,560       $ 281,962       Borrowed funds were $545.1 million at March 31, 2024, an increase of $121.5 million from December 31, 2023 and an increase of $263.1 million from March 31, 2023. The increase compared to the linked quarter was due to higher Bank Term Funding Program borrowings and other short-term borrowings, partially offset by lower Federal Home Loan Bank overnight borrowings. The increase compared to March 31, 2023 was primarily due to higher Bank Term Funding Program borrowings and other short-term borrowings, partially offset by lower Federal Home Loan Bank overnight borrowings and securities sold under agreements to repurchase. Capital   March 31,   December 31,   March 31, (Dollars in thousands)   2024(1)     2023       2023   Total shareholders' equity   $ 528,040     $ 524,378     $ 500,650   Accumulated other comprehensive loss     (60,804 )     (64,899 )     (78,885 ) MidWestOne Financial Group, Inc. Consolidated             Tier 1 leverage to average assets ratio     8.16 %     8.58 %     8.30 % Common equity tier 1 capital to risk-weighted assets ratio     8.98 %     9.59 %     9.39 % Tier 1 capital to risk-weighted assets ratio     9.75 %     10.38 %     10.18 % Total capital to risk-weighted assets ratio     11.97 %     12.53 %     12.31 % MidWestOne Bank             Tier 1 leverage to average assets ratio     9.36 %     9.39 %     9.28 % Common equity tier 1 capital to risk-weighted assets ratio     11.20 %     11.54 %     11.40 % Tier 1 capital to risk-weighted assets ratio     11.20 %     11.54 %     11.40 % Total capital to risk-weighted assets ratio     12.25 %     12.49 %     12.31 % (1) Regulatory capital ratios for March 31, 2024 are preliminary             Total shareholders' equity at March 31, 2024 increased $3.7 million from December 31, 2023, driven by decreases in accumulated other comprehensive loss and treasury stock, partially offset by the decline in additional paid-in capital and retained earnings. Total shareholders' equity at March 31, 2024 increased $27.4 million from March 31, 2023, driven by decreases in accumulated other comprehensive loss and treasury stock, coupled with an increase in retained earnings. Accumulated other comprehensive loss at March 31, 2024 decreased $4.1 million compared to December 31, 2023, primarily due to an increase in available for sale securities valuations. Accumulated other comprehensive loss decreased $18.1 million from March 31, 2023, primarily due to an increase in available for sale securities valuations and the recognition of the loss from the fourth quarter of 2023 sale of securities. On April 25, 2024, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable June 17, 2024, to shareholders of record at the close of business on June 3, 2024. No common shares were repurchased by the Company during the period December 31, 2023 through March 31, 2024 or for the subsequent period through April 25, 2024. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares. CREDIT QUALITY REVIEW Credit Quality   As of or For the Three Months Ended     March 31,   December 31,   March 31, (Dollars in thousands)     2024       2023       2023   Credit loss expense related to loans