FOR IMMEDIATE RELEASE
Charles N. Funk
James M. Cantrell
President & CEO
VP & Interim CFO
Dresner Corporate Services
MIDWESTONE FINANCIAL GROUP, INC.
REPORTS FOURTH QUARTER AND YEAR 2017 FINANCIAL RESULTS
Iowa City, Iowa, January 25, 2018 - MidWestOne Financial Group, Inc. (NASDAQ - MOFG) today reported its financial results for the three months and year ended December 31, 2017. The Company had a net loss for the fourth quarter of 2017 of $1.6 million compared with net income of $3.9 million for the same period last year, a decrease of $5.5 million, or 141.1%. Both basic and diluted earnings per share were $(0.13) for the fourth quarter of 2017 compared with $0.34 per share for both for the fourth quarter of 2016.
Earnings comparisons between the fourth quarter of 2017 and the same period in 2016 are highlighted by the following:
an increase of $5.9 million, or 125.0%, in the provision for loan losses, due primarily to a previously disclosed $7.3 million credit impairment related to a loan made to a commercial borrower; and
a $2.2 million increase in income tax expense related primarily to the $3.2 million revaluation of the Company’s deferred tax assets in accordance with the Tax Cuts and Jobs Act; partially offset by
a $1.9 million, or 7.7%, increase in net interest income, due primarily to a $2.2 million increase in interest and fees on loans, partially offset by an increase of $0.6 million in interest expense on deposits; and
a decrease of $1.0 million, or 4.8%, in noninterest expense, due primarily to decreases in all expense categories with the exception of a $0.1 million increase in salaries and employee benefits.
Net income for the year ended December 31, 2017 was $18.7 million, a decrease of $1.7 million, or 8.3%, compared to $20.4 million for 2016, with diluted earnings per share of $1.55 and $1.78 for the comparative twelve month periods, respectively. The decrease in net income was due primarily to the provision for loans losses increasing $9.4 million in 2017 compared to 2016, due primarily to the previously disclosed credit impairment related to a loan made to one commercial borrower. This was partially offset by a $7.7 million, or 8.7%, decrease in noninterest expense driven by a $4.6 million decrease in merger-related expenses, mainly in data processing ($1.9 million) and salaries and employee benefits expense ($1.9 million), attributable to the merger of Central Bank into MidWestOne Bank in 2016. Net interest income increased $4.6 million, or 4.6%, and noninterest income decreased $1.1 million, or 4.5% between 2016 and 2017. Also, as noted above, the Company realized a $3.5 million increase in income tax expense, $3.2 million of which was related to the revaluation of the Company’s deferred tax assets in accordance with the Tax Cuts and Jobs Act.
President and Chief Executive Officer Charles N. Funk stated, “We are disappointed by the large charge-off taken in the fourth quarter and its resulting effect on our quarterly and full year results. A full examination of our credit process has been undertaken to assure a higher level of quality control, and many changes have already been implemented. Unfortunately, the large provision overshadowed positive and tangible financial achievements in 2017, such as the continued increase in our net interest income, growth in loans and deposits, and continued reduction in expenses.”
Results of Operations
Net interest income of $26.4 million for the fourth quarter of 2017 increased $1.9 million, or 7.7%, from $24.5 million for the fourth quarter of 2016, primarily due to an increase of $2.6 million, or 9.4%, in interest income. An increase in the merger-related discount accretion of $0.4 million, to $1.1 million for the fourth quarter of 2017 compared to $0.7 million for the fourth quarter of 2016, assisted by a $106.7 million increase in average loan balances, resulted in loan interest income increasing $2.2 million, or 9.0%, to $26.2 million for the fourth quarter of 2017 compared to the fourth quarter of 2016. Income from investment
The following information was filed by Midwestone Financial Group, Inc. (MOFG) on Thursday, January 25, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.