Exhibit 99.1

mofglogoa01.jpg

FOR IMMEDIATE RELEASE                            October 25, 2018

MIDWESTONE FINANCIAL GROUP, INC.
REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS
Iowa City, Iowa - MidWestOne Financial Group, Inc. (Nasdaq - MOFG) today reported its financial results for the third quarter of 2018. Net income for the third quarter of 2018 was $6.8 million, or $0.55 per diluted common share, compared to net income of $8.2 million, or $0.67 per diluted common share, for the second quarter of 2018 (the “linked quarter”) and net income of $6.3 million, or $0.52 per diluted common share for the prior year period. The decrease in net income from the linked quarter was primarily due to higher noninterest expense partially offset by higher noninterest income and a lower provision for loan losses. The increase from the prior year period was primarily due to a lower provision for loan losses partially offset by lower net interest income and higher noninterest expense. Noninterest expense during the quarter was negatively impacted by the following:
$605 thousand of professional fees related to our planned merger with ATBancorp;
$585 thousand of occupancy expenses related to the write-down of a former branch facility; and
$274 thousand in compensation costs stemming from the retirement of the Company’s Chief Credit Officer, which was effective August 31, 2018.
The combination of those charges reduced diluted earnings per share by approximately $0.10.
“Third quarter results were impacted by several items - some were related to the recently announced ATBancorp transaction and others were non-recurring expenses,” Charles Funk, President and CEO, commented. “Our underlying business fundamentals remain solid. Although we experienced lower than expected loan growth in the third quarter, we expect a rebound in the fourth quarter.”
FINANCIAL HIGHLIGHTS
 
As of or For the Three Months Ended
 
As of or For the Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
2018
 
2018
 
2017
 
2018
 
2017
 
(Dollars in thousands, except per share amounts)
Net income
$
6,778

 
$
8,156

 
$
6,342

 
$
22,727

 
$
20,289

Diluted earnings per share
0.55

 
0.67

 
0.52

 
1.86

 
1.69

Return on average assets-annualized
0.83
%
 
1.01
%
 
0.81
%
 
0.94
%
 
0.88
%
Return on average equity-annualized
7.72
%
 
9.55
%
 
7.29
%
 
8.84
%
 
8.20
%
Return on average tangible equity-annualized(1)
10.45
%
 
12.91
%
 
10.06
%
 
12.00
%
 
11.47
%
 
 
 
 
 
 
 
 
 
 
Net interest margin (tax equivalent)(1)
3.56
%
 
3.65
%
 
3.85
%
 
3.64
%
 
3.85
%
Yield on average loans (tax equivalent)(1)
4.74
%
 
4.76
%
 
4.76
%
 
4.74
%
 
4.74
%
Cost of average total deposits
0.70
%
 
0.62
%
 
0.46
%
 
0.63
%
 
0.45
%
Efficiency ratio(1)
68.58
%
 
60.76
%
 
56.69
%
 
63.30
%
 
58.78
%
 
 
 
 
 
 
 
 
 
 
Total assets
$
3,267,965

 
$
3,276,277

 
$
3,144,199

 
$
3,267,965

 
$
3,144,199

Loans held for investment
2,377,649

 
2,364,035

 
2,263,811

 
2,377,649

 
2,263,811

Total deposits
2,632,259

 
2,604,201

 
2,490,415

 
2,632,259

 
2,490,415

 
 
 
 
 
 
 
 
 
 
Equity to assets ratio
10.69
%
 
10.57
%
 
11.02
%
 
10.69
%
 
11.02
%
Tangible equity/tangible assets(1)
8.61
%
 
8.48
%
 
8.84
%
 
8.61
%
 
8.84
%
Book value per share
$
28.57

 
$
28.33

 
$
28.36

 
$
28.57

 
$
28.36

Tangible book value per share(1)
22.50

 
22.22

 
22.20

 
22.50

 
22.20

Loan to deposit ratio
90.33
%
 
90.78
%
 
90.90
%
 
90.33
%
 
90.90
%
 
 
 
 
 
 
 
 
 
 
(1) Non-GAAP measure. See pages 12-14 for a detailed explanation.

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INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income decreased slightly in the third quarter of 2018 to $26.4 million from $26.6 million in the linked quarter and $26.5 million in the prior year period. Loan interest income increased primarily due to the effect of higher loan volumes but was negatively impacted by the reversal of $313 thousand from nonaccrual loans, which resulted in a 4 basis point drop in the quarter’s net interest margin. In addition, discount accretion from acquired loans decreased to $605 thousand from $783 thousand in the linked quarter and $1.3 million in the prior year period.
The cost of average total deposits in the third quarter of 2018, was 0.70% compared to 0.62% and 0.46% in the linked and prior year periods, respectively. The increase reflects the higher rates paid to attract and retain deposits in light of recent market rate increases and the competitive market for deposits.
The tax equivalent net interest margin decreased to 3.56% from 3.65% in the linked period and 3.85% in the prior year period as increases in the cost of interest-bearing liabilities outpaced the benefit from higher average loan rates. In addition, the current year margins reflect the impact from the reduction in the federal income tax rate from 35% to 21%.
Mr. Funk commented, “Deposit competition remains intense. That said, our new business development activity in deposit generation has increased over the past thirty days. The net interest margin was negatively impacted by a reversal of interest, primarily from two loans placed on nonaccrual during the period.”
Provision for Loan Losses
For the third quarter of 2018, the provision for loan losses was $950 thousand, a decrease of $300 thousand and $3.4 million from the linked and prior year periods, respectively. The decreased provision from the prior year period was primarily due to the recognition of individual impairments against certain large credits last year with no similarly large impairments in the third quarter of 2018.
Noninterest Income
Noninterest income for the third quarter of 2018 increased $497 thousand, or 9.1%, from the linked quarter and was flat from the prior year period. The increase from the linked quarter was primarily due to gains recognized in connection with the sales of certain tax-exempt municipal securities and certain foreclosed assets. The investment security sales were completed to take advantage of favorable market pricing for those securities. From the prior year period, trust, investment and insurance fees increased $72 thousand, or 5.0%, to $1.5 million for the third quarter of 2018 primarily from increased trust services activity. Service charges and fees on deposit accounts decreased $147 thousand, or 11.4%, to $1.1 million primarily from lower overdraft charges on deposit accounts. Loan origination and servicing fees reflected the lower level of mortgage loans originated and sold on the secondary market which was a result of the general decrease in mortgage activity in the Company’s markets.
The following table presents details of noninterest income for the periods indicated:
 
Three Months Ended
 
September 30,
 
June 30,
 
September 30,
Noninterest Income
2018
 
2018
 
2017
 
(In thousands)
Trust, investment, and insurance fees
$
1,526

 
$
1,537

 
$
1,454

Service charges and fees on deposit accounts
1,148

 
1,158

 
1,295

Loan origination and servicing fees
891

 
906

 
1,012

Other service charges and fees
1,502

 
1,582

 
1,625

Bank-owned life insurance
399

 
397

 
344

Investment securities gains (losses), net
192

 
(4
)
 
176

Other
326

 
(89
)
 
10

Total noninterest income
$
5,984

 
$
5,487

 
$
5,916

Noninterest Expense
Noninterest expense for the third quarter of 2018 increased $2.3 million, or 11%, from the linked quarter. Linked quarter increases were driven by salaries and employee benefits, occupancy charges and professional fees. Salaries and employee benefits increased $826 thousand primarily from increased incentives and commissions of $272

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thousand, approximately $274 thousand related to the retirement of the Company’s Chief Credit Officer, and employee relocation costs of $100 thousand. Occupancy and equipment, net reflected the $585 thousand write-down of a former Minnesota branch facility. Finally, professional fees were impacted by $605 thousand of costs related to our planned merger with ATBancorp and increased credit-related legal fees.
Noninterest expense increased $3.1 million from the prior year period. Salaries and employee benefits increased $1.0 million, or 8.4%, due to annual salary adjustments and the compensation-related items described above. Professional fees increased $928 thousand, or 99.5%, from the prior year period mainly due to the $605 thousand of ATBancorp merger-related charges, and credit-related legal fees. Occupancy and equipment expense, net, increased $965 thousand, or 32.3%, to $4.0 million from the third quarter of 2017, due primarily to increased building rental and depreciation expenses as well as the aforementioned branch facility write-down. Partially offsetting these increases, amortization of intangible asset expense decreased $212 thousand between the two periods as those intangibles are amortized on an accelerated basis.
The following table presents details of noninterest expense for the periods indicated:
 
Three Months Ended
 
September 30,
 
June 30,
 
September 30,
Noninterest Expense
2018
 
2018
 
2017
 
(In thousands)
Salaries and employee benefits
$
13,051

 
$
12,225

 
$
12,039

Occupancy and equipment, net
3,951

 
3,238

 
2,986

Professional fees
1,861

 
959

 
933

Data processing
697

 
691

 
723

FDIC insurance
393

 
392

 
238

Amortization of intangibles
547

 
589

 
759

Other
2,311

 
2,437

 
2,066

Total noninterest expense
$
22,811

 
$
20,531

 
$
19,744

Income Taxes
Income tax expense was $1.8 million for the third quarter of 2018 compared to $1.9 million for the same period in 2017. The decrease in income tax expense was primarily due to the reduction in the maximum corporate federal income tax rate to 21% for 2018 compared to 35% for 2017 as a result of the Tax Cuts and Jobs Act enacted by the U.S. government on December 22, 2017.
BALANCE SHEET HIGHLIGHTS
Loans Held for Investment
Loans held for investment, net of unearned income, increased $91.0 million, or 4.0%, from $2.29 billion at December 31, 2017, to $2.38 billion at September 30, 2018. Loan portfolio segments experiencing the largest increases were commercial real estate and commercial and industrial. As of September 30, 2018, commercial real estate loans comprised approximately 53% of the loan portfolio. Commercial and industrial loans was the next largest category at 22% of total loans, followed by residential real estate loans at 19%, agricultural loans at 4%, and consumer loans at 2%.

3



The following table presents the composition of loans held for investment, net of unearned income, as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
Loans Held for Investment
2018
 
2018
 
2017
 
(In thousands)
Commercial and industrial
$
523,333

 
$
512,357

 
$
503,624

Agricultural
103,207

 
103,429

 
105,512

Commercial real estate
 
 
 
 
 
Construction and development
223,324

 
206,269

 
165,276

Farmland
85,735

 
88,761

 
87,868

Multifamily
126,663

 
129,659

 
134,506

Other
818,068

 
819,205

 
784,321

Total commercial real estate
1,253,790

 
1,243,894

 
1,171,971

Residential real estate
 
 
 
 
 
One-to-four family first liens
342,755

 
350,281

 
352,226

One-to-four family junior liens
115,768

 
117,138

 
117,204

Total residential real estate
458,523

 
467,419

 
469,430

Consumer
38,796

 
36,936

 
36,158

Total loans held for investment, net of unearned income
$
2,377,649

 
$
2,364,035

 
$
2,286,695

Allowance for Loan Losses
The following table shows the changes to the allowance for loan losses for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
Allowance for Loan Losses Roll Forward
2018
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Beginning balance
$
30,800

 
$
29,671

 
$
22,510

 
$
28,059

 
$
21,850

Charge-offs
(817
)
 
(291
)
 
(978
)
 
(1,584
)
 
(2,737
)
Recoveries
345

 
170

 
594

 
753

 
732

Net charge-offs
(472
)
 
(121
)
 
(384
)
 
(831
)
 
(2,005
)
Provision for credit losses
950

 
1,250

 
4,384

 
4,050

 
6,665

Ending balance
$
31,278

 
$
30,800

 
$
26,510

 
$
31,278

 
$
26,510

Deposits and Borrowings
Total deposits at September 30, 2018, were $2.63 billion, an increase of $26.9 million from December 31, 2017. The mix of deposits saw increases between December 31, 2017 and September 30, 2018 of $23.4 million, or 3.3%, in certificates of deposit, and $8.8 million, or 0.7%, in interest-bearing checking deposits. These increases were partially offset by a decrease of $3.4 million, or 0.7%, in non-interest-bearing demand deposits, and $1.8 million, or 0.9%, in savings deposits between the two dates.
The following table presents the composition of our deposit portfolio as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
Deposit Composition
2018
 
2018
 
2017
 
(In thousands)
Noninterest-bearing demand
$
458,576

 
$
469,862

 
$
461,969

Interest checking
691,743

 
654,094

 
687,434

Money market
545,179

 
529,290

 
540,678

Savings
211,591

 
216,866

 
213,430

Total non-maturity deposits
1,907,089

 
1,870,112

 
1,903,511

Time deposits less than $100,000
348,099

 
341,584

 
324,681

Time deposits of $100,000 to $250,000
174,459

 
172,579

 
158,259

Time deposits of $250,000 and over
202,612

 
219,926

 
218,868

Total time deposits
725,170

 
734,089

 
701,808

Total deposits
$
2,632,259

 
$
2,604,201

 
$
2,605,319


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Between December 31, 2017 and September 30, 2018, federal funds purchased rose $18.1 million, to $19.1 million compared to $1.0 million, while securities sold under agreements to repurchase declined $27.3 million, due to normal cash need fluctuations by customers. FHLB borrowings rose $28.0 million or 24.3%, between the two dates. The overall increase in borrowings was the result of growth in the loan portfolio exceeding deposit growth. At September 30, 2018, long-term debt had an outstanding balance of $8.8 million, a decrease of $3.8 million, or 30.0%, from December 31, 2017, due to normal scheduled repayments.
CREDIT QUALITY
Nonaccrual loans increased $6.1 million between December 31, 2017 and September 30, 2018, primarily due to $8.7 million being added to nonaccrual status, partially offset by $1.8 million of payments and net charge-offs of $0.8 million. The balance of loans modified in a troubled debt restructuring (“TDRs”) decreased $1.5 million from year-end 2017, primarily due to payments of $1.2 million, and $265 thousand of performing TDRs transferred to non-disclosed status. Loans 90 days or more past due and still accruing interest were largely unchanged between December 31, 2017, and September 30, 2018. At September 30, 2018, net foreclosed assets totaled $549 thousand, down from $2.0 million at December 31, 2017. During the first nine months of 2018, the Company had a net decrease of 17 properties from foreclosed assets. As of September 30, 2018, the allowance for loan losses was $31.3 million, or 1.32% of total loans, compared with $28.1 million, or 1.23% of total loans at December 31, 2017.
Mr. Funk commented, “While our nonaccrual loans increased, the necessary reserve set aside for these loans had been identified in prior periods. The allowance for loan losses to nonaccrual loans remains strong at 149%.”
The following table presents selected loan credit quality metrics as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
 
September 30,
Credit Quality Metrics
2018
 
2018
 
2017
 
2017
 
(dollars in thousands)
Nonaccrual loans held for investment
$
20,929

 
$
13,067

 
$
14,784

 
$
19,871

Performing troubled debt restructured loans held for investment
7,354

 
8,362

 
8,870

 
5,531

Accruing loans contractually past due 90 days or more
171

 
151

 
207

 
486

Foreclosed assets, net
549

 
676

 
2,010

 
1,343

Total nonperforming assets
$
29,003

 
$
22,256

 
$
25,871

 
$
27,231

Allowance for loan losses
31,278

 
30,800

 
28,059

 
26,510

Provision for loan losses (for the quarter)
950

 
1,250

 
10,669

 
4,384

Net charge-offs (for the quarter)
472

 
121

 
9,120

 
384

Net charge-offs to average loans held for investment (for the quarter)
0.08
%
 
0.02
%
 
1.60
%
 
0.07
%
Allowance for loan losses to loans held for investment
1.32
%
 
1.30
%
 
1.23
%
 
1.17
%
Allowance for loan losses to nonaccrual loans held for investment
149.45
%
 
235.71
%
 
189.79
%
 
133.41
%
Nonaccrual loans held for investment to loans held for investment
0.88
%
 
0.55
%
 
0.65
%
 
0.88
%
CORPORATE UPDATE
Proposed Merger with ATBancorp
On August 21, 2018, the Company entered into a merger agreement with ATBancorp, an Iowa corporation, pursuant to which ATBancorp will merge with and into the Company. In connection with the merger, American Trust & Savings Bank, an Iowa-chartered bank, and American Bank & Trust of Wisconsin, a Wisconsin-chartered bank, both of which are wholly-owned subsidiaries of ATBancorp, will become wholly-owned subsidiaries of the Company. After the merger is completed, these banks will be merged into MidWestOne Bank, which will continue as the surviving bank. The corporate headquarters of the combined company will be in Iowa City, Iowa.
Subject to the terms and conditions of the merger agreement, each share of common stock of ATBancorp will automatically be converted into the right to receive (i) 117.55 shares of common stock of the Company, and (ii) $992.51 in cash, subject to certain adjustments as described in the merger agreement. The merger is anticipated to be completed in the first quarter of 2019.
For further information, please refer to the Current Report on Form 8-K filed by the Company with the SEC on August 22, 2018.

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Mr. Funk commented, “Our pending acquisition of ATBancorp is progressing on schedule. We look forward to combining these two companies together for the benefit of our customers, the communities we serve, and our shareholders by expanding our platform of financial services.”
Quarterly Cash Dividend Declared
On October 16, 2018, the Company’s board of directors declared a quarterly cash dividend of $0.195 per common share, the same as the dividend paid in the previous two quarters. The dividend is payable December 17, 2018, to shareholders of record at the close of business on December 1, 2018. At this quarterly rate, the indicated annual cash dividend is equal to $0.78 per common share.
New Share Repurchase Plan Approved
On October 16, 2018, the Company’s board of directors approved a new share repurchase program, allowing for the repurchase of up to $5.0 million of stock through December 31, 2020. The new repurchase program replaces the Company’s prior repurchase program, pursuant to which the Company had bought 33,998 shares for approximately $1.1 million since the plan was announced in July 2016. The prior program had authorized the repurchase of $5.0 million of stock and was due to expire December 31, 2018. There were no shares repurchased in the third quarter of 2018.
CONFERENCE CALL DETAILS
The Company will host a conference call for investors at 11:00 a.m., CDT, on Friday, October 26, 2018. To participate, please dial 866-233-3483 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 26, 2019, by calling 877-344-7529 and using the replay access code of 10114836. A transcript of the call will also be available on the company’s web site (www.midwestone.com) within three business days of the event.
ABOUT MIDWESTONE FINANCIAL GROUP, INC.
MidWestOne Financial Group, Inc. is a financial holding company headquartered in Iowa City, Iowa. MidWestOne Financial 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.com. MidWestOne Financial trades on the Nasdaq Global Select Market under the symbol “MOFG”.
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) 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 provision for loan losses, and a reduction in net earnings; (2) the risk of mergers, including with ATBancorp, 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; (3) our management’s ability to reduce and effectively manage interest rate risk and the impact of interest rates in general on the volatility of our net interest income; (4) 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; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators and changes in the scope and cost of Federal Deposit Insurance Corporation insurance and other coverages; (8) the ability to attract and retain key executives and employees experienced in banking and financial services; (9) the sufficiency of the allowance for loan losses to absorb the amount of actual losses inherent in our existing loan portfolio; (10) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (11) credit risks and risks from

6



concentrations (by geographic area and by industry) within our loan portfolio; (12) 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, and other financial institutions operating in our markets or elsewhere or providing similar services; (13) the failure of assumptions underlying the establishment of allowances for loan losses and estimation of values of collateral and various financial assets and liabilities; (14) volatility of rate-sensitive deposits; (15) operational risks, including data processing system failures or fraud; (16) asset/liability matching risks and liquidity risks; (17) the costs, effects and outcomes of existing or future litigation; (18) changes in general economic or industry conditions, nationally, internationally or in the communities in which we conduct business; (19) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (20) war or terrorist activities which may cause further deterioration in the economy or cause instability in credit markets; (21) cyber-attacks; (22) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; and (23) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.
Additional Information and Where You Can Find It
The Company filed a preliminary proxy statement with the SEC in connection with the proposed transaction with ATBancorp on October 19, 2018, and will mail a definitive proxy statement and other relevant materials to the Company’s shareholders. Shareholders are advised to read the preliminary proxy statement, and, when available, any amendments thereto, and the definitive proxy statement because these documents contain and will contain important information about the Company, ATBancorp and the proposed transaction. When filed, these documents and other documents relating to the proposed transaction filed by the Company can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing the Company’s website at www.midwestone.com under the tab “About MidWestOne Financial Group” and then under “SEC Filings - Documents.” Alternatively, these documents, when available, can be obtained free of charge from MidWestOne upon written request to MidWestOne Financial Group, Inc., Attention: Barry Ray, P.O. Box 1700, Iowa City, IA 52244 or by calling (319) 356-5800.
Participants in Solicitation
The Company, certain of its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed transaction with ATBancorp under the rules of the SEC. Information about these participants may be found in the definitive proxy statement of the Company relating to its 2018 Annual Meeting of Shareholders filed with the SEC by the Company on March 9, 2018. This definitive proxy statement can be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive proxy statement and other relevant materials to be filed by the Company with the SEC in conjunction with the proposed transaction (when they become available).


7



MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
September 30,
 
June 30,
 
December 31,
 
2018
 
2018
 
2017
 
(In thousands)
ASSETS
 
 
 
 
 
Cash and due from banks
$
49,229

 
$
41,547

 
$
44,818

Interest-earning deposits in banks
4,150

 
1,717

 
5,474

Federal funds sold

 

 
680

Total cash and cash equivalents
53,379

 
43,264

 
50,972

Equity securities at fair value
2,797

 
2,809

 
2,336

Debt securities available for sale at fair value
407,766

 
438,312

 
445,324

Held to maturity securities at amortized cost
191,733

 
192,896

 
195,619

Loans held for sale
1,124

 
1,528

 
856

Loans held for investment, net of unearned income
2,377,649

 
2,364,035

 
2,286,695

Allowance for loan losses
(31,278
)
 
(30,800
)
 
(28,059
)
Loans held for investment, net
2,346,371

 
2,333,235

 
2,258,636

Premises and equipment, net
76,497

 
78,106

 
75,969

Goodwill
64,654

 
64,654

 
64,654

Other intangible assets, net
10,378

 
10,925

 
12,046

Foreclosed assets, net
549

 
676

 
2,010

Other
112,717

 
109,872

 
103,849

Total assets
$
3,267,965

 
$
3,276,277

 
$
3,212,271

LIABILITIES
  

 
  

 
  

Non-interest-bearing deposits
$
458,576

 
$
469,862

 
$
461,969

Interest-bearing deposits
2,173,683

 
2,134,339

 
2,143,350

Total deposits
2,632,259

 
2,604,201

 
2,605,319

Federal funds purchased
19,056

 
52,421

 
1,000

Securities sold under agreements to repurchase
68,922

 
75,046

 
96,229

Federal Home Loan Bank borrowings
143,000

 
143,000

 
115,000

Junior subordinated notes issued to capital trusts
23,865

 
23,841

 
23,793

Long-term debt
8,750

 
10,000

 
12,500

Other
22,924

 
21,567

 
18,126

Total liabilities
2,918,776

 
2,930,076

 
2,871,967

SHAREHOLDERS' EQUITY
  

 
  

 
  

Common stock
12,463

 
12,463

 
12,463

Additional paid-in capital
187,581

 
187,304

 
187,486

Treasury stock
(5,474
)
 
(5,474
)
 
(5,121
)
Retained earnings
163,709

 
159,315

 
148,078

Accumulated other comprehensive loss
(9,090
)
 
(7,407
)
 
(2,602
)
Total shareholders' equity
349,189

 
346,201

 
340,304

Total liabilities and shareholders' equity
$
3,267,965

 
$
3,276,277

 
$
3,212,271



8



MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 
  
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
  
2018
 
2018
 
2017
 
2018
 
2017
 
 
(In thousands, except per share data)
Interest income
  
 
 
 
 
 
 
 
 
 
Loans
  
$
28,088

 
$
27,486

 
$
26,206

 
$
82,141

 
$
76,135

Taxable securities
  
2,965

 
2,940

 
2,589

 
8,793

 
7,897

Tax-exempt securities
  
1,395

 
1,528

 
1,547

 
4,452

 
4,699

Deposits in banks and federal funds sold
  
12

 
19

 
19

 
39

 
51

Total interest income
  
32,460

 
31,973

 
30,361

 
95,425

 
88,782

Interest expense
  
 
 
 
 
 
 
 
 
 
Deposits
  
4,625

 
4,009

 
2,900

 
12,170

 
8,369

Federal funds purchased
  
144

 
211

 
81

 
480

 
152

Securities sold under agreements to repurchase
  
173

 
144

 
53

 
451

 
125

Federal Home Loan Bank borrowings
  
741

 
615

 
474

 
1,873

 
1,321

Other borrowings
  
3

 
4

 
3

 
9

 
9

Junior subordinated notes issued to capital trusts
  
313

 
307

 
243

 
878

 
704

Long-term debt
  
100

 
102

 
115

 
309

 
338

Total interest expense
  
6,099

 
5,392

 
3,869

 
16,170

 
11,018

Net interest income
  
26,361

 
26,581

 
26,492

 
79,255

 
77,764

Provision for loan losses
  
950

 
1,250

 
4,384

 
4,050

 
6,665

Net interest income after provision for loan losses
  
25,411

 
25,331

 
22,108

 
75,205

 
71,099

Noninterest income
 
 
 
 
 
 
 
 
 
 
Trust, investment, and insurance fees
  
1,526

 
1,537

 
1,454

 
4,703

 
4,594

Service charges and fees on deposit accounts
  
1,148

 
1,158

 
1,295

 
3,474

 
3,835

Loan origination and servicing fees
  
891

 
906

 
1,012

 
2,738

 
2,532

Other service charges and fees
  
1,502

 
1,582

 
1,625

 
4,464

 
4,580

Bank-owned life insurance
  
399

 
397

 
344

 
1,229

 
990

Investment securities gains (losses), net
  
192

 
(4
)
 
176

 
197

 
239

Other
  
326

 
(89
)
 
10

 
338

 
66

Total noninterest income
  
5,984

 
5,487

 
5,916

 
17,143

 
16,836

Noninterest expense
  
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
  
13,051

 
12,225

 
12,039

 
37,647

 
35,712

Occupancy and equipment, net
  
3,951

 
3,238

 
2,986

 
10,440

 
9,323

Professional fees
  
1,861

 
959

 
933

 
3,614

 
2,991

Data processing
  
697

 
691

 
723

 
2,076

 
1,982

FDIC insurance
 
393

 
392

 
238

 
1,104

 
957

Amortization of intangibles
  
547

 
589

 
759

 
1,793

 
2,412

Other
 
2,311

 
2,437

 
2,066

 
7,026

 
6,666

Total noninterest expense
  
22,811

 
20,531

 
19,744

 
63,700

 
60,043

Income before income tax expense
  
8,584

 
10,287

 
8,280

 
28,648

 
27,892

Income tax expense
  
1,806

 
2,131

 
1,938

 
5,921

 
7,603

Net income
  
$
6,778

 
$
8,156

 
$
6,342

 
$
22,727

 
$
20,289

Earnings per common share
 
 
 
 
 
 
 
 
 
 
Basic
 
0.55

 
0.67

 
0.52

 
1.86

 
1.69

Diluted
 
0.55

 
0.67

 
0.52

 
1.86

 
1.69

Weighted average basic common shares outstanding
 
12,221

 
12,218

 
12,219

 
12,221

 
11,978

Weighted average diluted common shares outstanding
 
12,240

 
12,230

 
12,239

 
12,238

 
12,000

Dividends paid per common share
 
0.195

 
0.195

 
0.17

 
0.585

 
0.50


9



MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FIVE QUARTER CONSOLIDATED BALANCE SHEETS
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
49,229

 
$
41,547

 
$
39,929

 
$
44,818

 
$
39,113

Interest-earning deposits in banks
4,150

 
1,717

 
2,467

 
5,474

 
2,988

Federal funds sold

 

 

 
680

 

Total cash and cash equivalents
53,379

 
43,264

 
42,396

 
50,972

 
42,101

Equity securities at fair value
2,797

 
2,809

 
2,815

 
2,336

 
 
Debt securities available for sale at fair value
407,766

 
438,312

 
446,087

 
445,324

 
427,241

Held to maturity securities at amortized cost
191,733

 
192,896

 
194,617

 
195,619

 
183,304

Loans held for sale
1,124

 
1,528

 
870

 
856

 
612

Loans held for investment, net of unearned income
2,377,649

 
2,364,035

 
2,326,158

 
2,286,695

 
2,263,811

Allowance for loan losses
(31,278
)
 
(30,800
)
 
(29,671
)
 
(28,059
)
 
(26,510
)
Loans held for investment, net
2,346,371

 
2,333,235

 
2,296,487

 
2,258,636

 
2,237,301

Premises and equipment, net
76,497

 
78,106

 
77,552

 
75,969

 
75,036

Goodwill
64,654

 
64,654

 
64,654

 
64,654

 
64,654

Other intangible assets, net
10,378

 
10,925

 
11,389

 
12,046

 
12,759

Foreclosed assets, net
549

 
676

 
1,001

 
2,010

 
1,343

Other
112,717

 
109,872

 
103,774

 
103,849

 
99,848

Total assets
$
3,267,965

 
$
3,276,277

 
$
3,241,642

 
$
3,212,271

 
$
3,144,199

LIABILITIES
  

 
  

 
  

 
  

 
  

Non-interest-bearing deposits
$
458,576

 
$
469,862

 
$
450,168

 
$
461,969

 
$
477,376

Interest-bearing deposits
2,173,683

 
2,134,339

 
2,181,753

 
2,143,350

 
2,013,039

Total deposits
2,632,259

 
2,604,201

 
2,631,921

 
2,605,319

 
2,490,415

Federal funds purchased
19,056

 
52,421

 
25,573

 
1,000

 
16,708

Securities sold under agreements to repurchase
68,922

 
75,046

 
67,738

 
96,229

 
87,964

Federal Home Loan Bank borrowings
143,000

 
143,000

 
123,000

 
115,000

 
145,000

Junior subordinated notes issued to capital trusts
23,865

 
23,841

 
23,817

 
23,793

 
23,768

Long-term debt
8,750

 
10,000

 
11,250

 
12,500

 
13,750

Other
22,924

 
21,567

 
16,966

 
18,126

 
20,031

Total liabilities
2,918,776

 
2,930,076

 
2,900,265

 
2,871,967

 
2,797,636

SHAREHOLDERS' EQUITY
  

 
  

 
  

 
  

 
  

Common stock
12,463

 
12,463

 
12,463

 
12,463

 
12,463

Additional paid-in capital
187,581

 
187,304

 
187,188

 
187,486

 
187,296

Treasury stock
(5,474
)
 
(5,474
)
 
(5,612
)
 
(5,121
)
 
(5,141
)
Retained earnings
163,709

 
159,315

 
153,542

 
148,078

 
151,280

Accumulated other comprehensive income (loss)
(9,090
)
 
(7,407
)
 
(6,204
)
 
(2,602
)
 
665

Total shareholders' equity
349,189

 
346,201

 
341,377

 
340,304

 
346,563

Total liabilities and shareholders' equity
$
3,267,965

 
$
3,276,277

 
$
3,241,642

 
$
3,212,271

 
$
3,144,199



10



MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
 
(In thousands, except per share data)
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
28,088

 
$
27,486

 
$
26,567

 
$
26,231

 
$
26,206

Taxable securities
2,965

 
2,940

 
2,888

 
2,676

 
2,589

Tax-exempt securities
1,395

 
1,528

 
1,529

 
1,540

 
1,547

Deposits in banks and federal funds sold
12

 
19

 
8

 
91

 
19

Total interest income
32,460

 
31,973

 
30,992

 
30,538

 
30,361

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
4,625

 
4,009

 
3,536

 
3,120

 
2,900

Federal funds purchased
144

 
211

 
125

 
19

 
81

Securities sold under agreements to repurchase
173

 
144

 
134

 
116

 
53

Federal Home Loan Bank borrowings
741

 
615

 
517

 
517

 
474

Other borrowings
3

 
4

 
2

 
3

 
3

Junior subordinated notes issued to capital trusts
313

 
307

 
258

 
245

 
243

Long-term debt
100

 
102

 
107

 
107

 
115

Total interest expense
6,099

 
5,392

 
4,679

 
4,127

 
3,869

Net interest income
26,361

 
26,581

 
26,313

 
26,411

 
26,492

Provision for loan losses
950

 
1,250

 
1,850

 
10,669

 
4,384

Net interest income after provision for loan losses
25,411

 
25,331

 
24,463

 
15,742

 
22,108

Noninterest income
 
 
 
 
 
 
 
 
 
Trust, investment, and insurance fees
1,526

 
1,537

 
1,640

 
1,595

 
1,454

Service charges and fees on deposit accounts
1,148

 
1,158

 
1,168

 
1,291

 
1,295

Loan origination and servicing fees
891

 
906

 
941

 
889

 
1,012

Other service charges and fees
1,502

 
1,582

 
1,380

 
1,412

 
1,625

Bank-owned life insurance
399

 
397

 
433

 
398

 
344

Investment securities gains (losses), net
192

 
(4
)
 
9

 
2

 
176

Other
326

 
(89
)
 
101

 
(53
)
 
10

Total noninterest income
5,984

 
5,487

 
5,672

 
5,534

 
5,916

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
13,051

 
12,225

 
12,371

 
12,152

 
12,039

Occupancy and equipment, net
3,951

 
3,238

 
3,251

 
2,982

 
2,986

Professional fees
1,861

 
959

 
794

 
971

 
933

Data processing
697

 
691

 
688

 
692

 
723

FDIC insurance
393

 
392

 
319

 
308

 
238

Amortization of intangibles
547

 
589

 
657

 
713

 
759

Other
2,311

 
2,437

 
2,278

 
2,275

 
2,066

Total noninterest expense
22,811

 
20,531

 
20,358

 
20,093

 
19,744

Income before income tax expense
8,584

 
10,287

 
9,777

 
1,183

 
8,280

Income tax expense
1,806

 
2,131

 
1,984

 
2,773

 
1,938

Net income (Loss)
$
6,778

 
$
8,156

 
$
7,793

 
$
(1,590
)
 
$
6,342

Earnings per common share
 
 
 
 
 
 
 
 
 
Basic
0.55

 
0.67

 
0.64

 
(0.13
)
 
0.52

Diluted
0.55

 
0.67

 
0.64

 
(0.13
)
 
0.52

Weighted average basic common shares outstanding
12,221

 
12,218

 
12,223

 
12,219

 
12,219

Weighted average diluted common shares outstanding
12,240

 
12,230

 
12,242

 
12,247

 
12,239

Dividends paid per common share
0.195

 
0.195

 
0.195

 
0.17

 
0.17


11



MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
 
Three Months Ended
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Average
Yield/
Cost
 
(Dollars in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)(2)
$
2,375,100

 
$
28,358

 
4.74
%
 
$
2,337,216

 
$
27,744

 
4.76
%
 
$
2,219,355

 
$
26,652

 
4.76
%
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable securities
426,674

 
2,965

 
2.76
%
 
438,569

 
2,940

 
2.69

 
417,896

 
2,589

 
2.46
%
Tax exempt securities (3)
200,577

 
1,760

 
3.48
%
 
215,461

 
1,929

 
3.59

 
217,535

 
2,367

 
4.32
%
Total investment securities
627,251

 
4,725

 
2.99
%
 
654,030

 
4,869

 
2.99

 
635,431

 
4,956

 
3.09
%
Federal funds sold and interest-earning deposits in banks
2,541

 
12

 
1.87
%
 
4,271

 
19

 
1.78

 
3,929

 
19

 
1.92
%
Total interest-earning assets
$
3,004,892

 
33,095

 
4.37
%
 
$
2,995,517

 
32,632

 
4.37
%
 
$
2,858,715

 
31,627

 
4.39
%
Cash and due from banks
36,759

 
 
 
 
 
35,761

 
 
 
 
 
35,774

 
 
 
 
Premises and equipment
77,476

 
 
 
 
 
78,013

 
 
 
 
 
74,962

 
 
 
 
Allowance for loan losses
(31,441
)
 
 
 
 
 
(30,193
)
 
 
 
 
 
(23,054
)
 
 
 
 
Other assets
170,597

 
 
 
 
 
167,204

 
 
 
 
 
155,951

 
 
 
 
Total assets
$
3,258,283

 
 
 
 
 
$
3,246,302

 
 
 
 
 
$
3,102,348

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings and interest-bearing demand deposits
$
1,425,768

 
1,685

 
0.47
%
 
$
1,431,642

 
1,354

 
0.38
%
 
$
1,345,525

 
966

 
0.28
%
Certificates of deposit
729,795

 
2,940

 
1.60
%
 
721,293

 
2,655

 
1.48
%
 
676,143

 
1,934

 
1.13
%
Total deposits
2,155,563

 
4,625

 
0.85
%
 
2,152,935

 
4,009

 
0.75
%
 
2,021,668

 
2,900

 
0.57
%
Federal funds purchased and securities sold under agreements to repurchase
99,254

 
317

 
1.27
%
 
109,752

 
355

 
1.30
%
 
95,387

 
134

 
0.56
%
Federal Home Loan Bank borrowings
143,326

 
741

 
2.05
%
 
130,967

 
615

 
1.88
%
 
111,576

 
474

 
1.69
%
Long-term debt and junior subordinated notes issued to capital trusts
35,109

 
416

 
4.70
%
 
36,321

 
413

 
4.56
%
 
40,057

 
361

 
3.58
%
Total borrowed funds
277,689

 
1,474

 
2.11
%
 
277,040

 
1,383

 
2.00
%
 
247,020

 
969

 
1.56
%
Total interest-bearing liabilities
$
2,433,252

 
6,099

 
0.99
%
 
$
2,429,975

 
5,392

 
0.89
%
 
$
2,268,688

 
3,869

 
0.68
%
Demand deposits
453,124

 
 
 
 
 
454,659

 
 
 
 
 
466,485

 
 
 
 
Other liabilities
23,776

 
 
 
 
 
18,956

 
 
 
 
 
22,214

 
 
 
 
Shareholders’ equity
348,131

 
 
 
 
 
342,712

 
 
 
 
 
344,961

 
 
 
 
Total liabilities and shareholders’ equity
$
3,258,283

 
 
 
 
 
$
3,246,302

 
 
 
 
 
$
3,102,348

 
 
 
 
Net interest income(4)
 
 
$
26,996

 
 
 
 
 
$
27,240

 
 
 
 
 
$
27,758

 
 
Net interest spread(4)
 
 
 
 
3.38
%
 
 
 
 
 
3.48
%
 
 
 
 
 
3.71
%
Net interest margin(4)
 
 
 
 
3.56
%
 
 
 
 
 
3.65
%
 
 
 
 
 
3.85
%
Total deposits(5)
$
2,608,687

 
$
4,625

 
0.70
%
 
$
2,607,594

 
$
4,009

 
0.62
%
 
$
2,488,153

 
$
2,900

 
0.46
%
Funding sources(6)
$
2,886,376

 
$
6,099

 
0.84
%
 
$
2,884,634

 
$
5,392

 
0.74
%
 
$
2,735,173

 
$
3,869