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MF

MidWestOne Financial Group, Inc. (MOFG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered diluted EPS of $0.73, net income of $15.1M, and tax-equivalent NIM of 3.44%; total revenue was $57.6M, down 4% q/q and up 29% y/y .
  • Versus estimates: EPS met consensus ($0.73 vs $0.73); revenue modestly missed ($57.6M actual vs $58.7M consensus, ~-$1.1M). Management reiterated FY expense guidance and signaled continued margin expansion driven by lower deposit costs and asset repricing .
  • Asset quality improved (NPA ratio 0.33%, NPL ratio 0.41%) while net charge-offs rose to 0.29% due to a partial charge-off on a previously reserved CRE loan preparing for resolution .
  • Capital strengthened: TBVPS increased 4.4% q/q to $23.36; CET1 rose to 10.97%. Buybacks are under active review given capital levels and valuation context .

What Went Well and What Went Wrong

What Went Well

  • Core margin expansion: tax-equivalent NIM rose to 3.44% (core NIM +10 bps to 3.36%); deposit cost declined 8–11 bps q/q, supporting earnings power .
  • Credit metrics improved: criticized loans ratio fell 54 bps y/y to 5.47%; NPA ratio improved to 0.33%; allowance coverage rose to 309% of nonaccruals .
  • Capital build: TBVPS up 4.4% q/q to $23.36; CET1 increased 24 bps to 10.97%. CEO: “Our return on average assets eclipsed 1%... core net interest margin expansion of 10 bps and solid expense control” .

What Went Wrong

  • Softer loan growth: loans held for investment fell 0.3% q/q (reclassification of $11M credit card receivables to HFS) and -2.5% y/y due to prior Florida divestiture; origination offset by payoffs .
  • Noninterest income decreased $0.7M q/q (loan revenue -$0.6M, investment services -$0.2M), reflecting MSR valuation (-$0.4M) and lower SBA gain on sale q/q .
  • Net charge-offs rose to 0.29% (from 0.06% in Q4) tied to a partial charge-off on a previously reserved CRE loan; management emphasized proactive resolution .

Financial Results

Core P&L and Margins

MetricQ1 2024Q4 2024Q1 2025
Total Revenue, net of interest expense ($USD Thousands)$44,481 $59,775 $57,575
Diluted EPS ($)$0.21 $0.78 $0.73
Net Interest Margin, tax equivalent (%)2.33% 3.43% 3.44%
Efficiency Ratio (%)71.28% 59.06% 59.38%
Return on Average Assets (%)0.20% 1.03% 1.00%

Changes vs prior periods:

Metricq/q Change (Q1 2025 vs Q4 2024)y/y Change (Q1 2025 vs Q1 2024)
Total Revenue-4% +29%
Diluted EPS-6% +248%
Net Interest Margin (TE)+1 bp +111 bps
Efficiency Ratio+32 bps n/m

Noninterest Income Breakdown

Category ($USD Thousands)Q1 2024Q4 2024Q1 2025
Investment services & trust$3,503 $3,779 $3,544
Service charges & fees$2,144 $2,159 $2,131
Card revenue$1,943 $1,833 $1,744
Loan revenue$856 $1,841 $1,194
BOLI$660 $719 $1,057
Investment securities gains, net$36 $161 $33
Other$608 $345 $433
Total Noninterest Income$9,750 $10,837 $10,136
MSR adjustment (included in Loan revenue)$(368) $164 $(213)

Banking KPIs

KPIQ1 2024Q4 2024Q1 2025
Cost of total deposits (%)2.03% 1.99% 1.91%
Loans / Deposits (%)79.04% 78.78% 78.41%
CET1 (%)8.98% 10.73% 10.97%
Tangible Common Equity Ratio (%)6.43% 7.57% 7.89%
TBVPS ($)$27.14 $22.37 $23.36
NPL Ratio (%)0.66% 0.51% 0.41%
NPA Ratio (%)0.49% 0.40% 0.33%
Net Charge-off Ratio (%)0.02% 0.06% 0.29%
ACL Ratio (%)1.27% 1.28% 1.25%
ACL / Nonaccrual (%)197.53% 254.32% 309.47%

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025 ActualQ1 2025 Consensus Mean# of Estimates
Diluted EPS ($)0.73 0.73*5*
Total Revenue ($USD Millions)57.6 58.7*2*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total noninterest expenseFY 2025$145–$147M (Q4 call) Reaffirmed $145–$147M (Q1 call) Maintained
Tax rate (effective)FY 202522–24% (Q4 PR) 22–23% (Q1 PR) Lowered
Loan growthNear-term 2Q 2025; FY 2025Mid-single-digit (Q4 call) Mid-single-digit; pipelines strong (Q1 call) Maintained
Deposit growthFY 2025~3% (Q4 call) Franchise stable; continued focus (Q1 call) Maintained
NIM trajectory (core)FY 2025Gradual upward (Q4 call) Upward bias into Q2; more pronounced in H2 (Q1 call) Raised trajectory
Asset repricing (fixed loans)Next 12 months~$386M at 4.57% (Q4 call) ~$349M at 4.47% (Q1 call) Updated sizing
Securities cash flowFY 2025~$200M (Q4 call) No change discussed (Q1 call) —Maintained (implicit)
Capital return (buybacks)2025Under evaluation waterfall (Q4 call) Actively reviewing buybacks in Q2 (Q1 call) Increased likelihood
DividendCurrent$0.2425 declared (Jan 2025) $0.2425 declared (Apr 2025) Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
Margin trajectoryNIM up to 2.51% via repositioning; outlook improving Core NIM 3.26%; “more gas in the tank” Core NIM 3.36%; upward bias Q2, more pronounced H2 Improving
Deposit costs/betasDeposit cost 2.58%; mix optimizing Cost down to 2.41%; continued relief Interest-bearing deposit cost 2.31%; cycle beta ~29% Improving
Loan growthAnnualized growth 3.9%; pipelines rising Mid-single-digit 2025 target; originations ~7% yield Flat in Q1 due to payoffs; guided mid-single-digit; pipelines strong Mixed near-term, positive outlook
Fee income (Wealth/SBA)Wealth momentum; SBA up y/y Treasury mgmt +12% y/y; fee growth mid-high single digits Wealth down q/q on markets; SBA +52% y/y; expecting growth Constructive but market-dependent
Credit qualityClassified down, NPA down; fraud loss impact Stable NPA/NPL; reserve up slightly NPA/NPL improved; NCO up on reserved CRE charge-off Improving with isolated charges
Capital & buybacksBuilding CET1 via repositioning CET1 ~10.73%; capital waterfall framework CET1 10.97%; buybacks under active review Positive optionality
Macro/tariffs (Ag)Monitoring; resilience noted Resilient producers; cautious outlook 2025 stable; 2026 input/pricing risks from tariffs Emerging risk in 2026

Management Commentary

  • CEO (Chip Reeves): “Our return on average assets eclipsed 1% for the second straight quarter… core net interest margin expansion of 10 bps and solid expense control… tangible book value per share increased 4.4% to $23.36 and the CET1 ratio grew to 10.97%” .
  • CFO (Barry Ray): “Core net interest margin… expanded 10 basis points to 3.36%… driven by a decline in the cost of interest-bearing liabilities and modest expansion in core earning asset yields” .
  • COO (Len Devaisher): “First quarter commercial originations were up 4% from the year ago period and 37% from the linked quarter… SBA gain on sale income is up 52% from the year ago period” .

Q&A Highlights

  • Margin outlook: Upward bias in Q2 with more pronounced expansion in H2 as deposit costs decline and assets reprice; average originations ~6.7% yield in Q1 .
  • Asset repricing: ~$349M fixed-rate loans at 4.47% to reprice over next 12 months; securities repricing tailwinds also noted .
  • Capital return: CET1 target 11–11.5%; buybacks under active review as efficient use of capital .
  • Credit & reserves: Proactive office CRE and NPA management; reserve maintained in mid‑120s basis points with stress scenario overlays under CECL .
  • Fee outlook: Wealth near-term impacted by markets; SBA and mortgage (gain-on-sale) pipelines remain strong; treasury management continues to grow .

Estimates Context

  • EPS: Q1 2025 EPS met consensus ($0.73 vs $0.73)*, reflecting disciplined funding costs and steady core margin expansion .
  • Revenue: Q1 2025 total revenue modestly missed ($57.6M vs $58.7M consensus)*, primarily on lower loan revenue (MSR valuation -$0.4M; SBA gain-on-sale down q/q) and softer investment services .
  • Forward: Management reiterated expense guidance ($145–$147M FY) and expects margin expansion through lower deposit costs and asset repricing; pipelines support mid-single-digit loan growth .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Operating leverage is improving: deposit costs declining and asset repricing should continue grinding core NIM upward through 2025, with more pronounced gains in H2 .
  • Credit normalization manageable: improved NPA/NPL metrics with isolated charge-offs; reserve discipline maintained (~1.25% ACL) amid macro uncertainty .
  • Capital optionality: CET1 10.97% and TBVPS up 4.4% q/q; buybacks under active review could be a near-term catalyst alongside steady dividend .
  • Growth vectors: Mid-single-digit loan growth guided; SBA and mortgage gain-on-sale pipelines strong; treasury management and wealth initiatives support fee momentum, subject to market volatility .
  • Expense control credible: Reaffirmed FY expense guidance ($145–$147M) provides predictability while investing in platforms (Aperture, ServiceNow) to enhance efficiency .
  • Watchlist risks: 2026 ag tariffs/input costs could pressure producers; CRE office exposures are proactively managed but remain a monitoring focus .
  • Tactical setup: Potential buybacks plus margin tailwinds create a favorable near-term risk/reward; delivery on loan/fee growth and stable credit is key to multiple expansion .
Sources: Q1 2025 press release and financial supplement **[1412665_fa99dd791cc34599b34231d7e6f27974_1]** **[1412665_fa99dd791cc34599b34231d7e6f27974_2]** **[1412665_fa99dd791cc34599b34231d7e6f27974_3]** **[1412665_fa99dd791cc34599b34231d7e6f27974_4]** **[1412665_fa99dd791cc34599b34231d7e6f27974_5]** **[1412665_fa99dd791cc34599b34231d7e6f27974_6]** **[1412665_fa99dd791cc34599b34231d7e6f27974_7]** **[1412665_fa99dd791cc34599b34231d7e6f27974_8]** **[1412665_fa99dd791cc34599b34231d7e6f27974_9]** **[1412665_fa99dd791cc34599b34231d7e6f27974_10]** **[1412665_fa99dd791cc34599b34231d7e6f27974_15]** **[1412665_fa99dd791cc34599b34231d7e6f27974_16]** **[1412665_fa99dd791cc34599b34231d7e6f27974_17]** **[1412665_fa99dd791cc34599b34231d7e6f27974_19]** **[1412665_fa99dd791cc34599b34231d7e6f27974_20]** **[1412665_fa99dd791cc34599b34231d7e6f27974_21]** **[1412665_fa99dd791cc34599b34231d7e6f27974_22]** **[1412665_fa99dd791cc34599b34231d7e6f27974_23]** **[1412665_fa99dd791cc34599b34231d7e6f27974_24]**; Form 8‑K with exhibits **[1412665_0001412665-25-000070_financialresultsq12025.htm:0]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:1]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:3]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:4]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:5]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:6]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:7]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:8]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:13]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:14]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:15]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:16]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:17]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:18]** **[1412665_0001412665-25-000070_financialresultsq12025.htm:19]**; Q1 2025 earnings call **[1412665_MOFG_3423472_0]** **[1412665_MOFG_3423472_1]** **[1412665_MOFG_3423472_2]** **[1412665_MOFG_3423472_3]** **[1412665_MOFG_3423472_4]** **[1412665_MOFG_3423472_6]** **[1412665_MOFG_3423472_7]** **[1412665_MOFG_3423472_8]** **[1412665_MOFG_3423472_9]** **[1412665_MOFG_3423472_10]** **[1412665_MOFG_3423472_11]** **[1412665_MOFG_3423472_12]** **[1412665_MOFG_3423472_14]** **[1412665_MOFG_3423472_15]** **[1412665_MOFG_3423472_16]**; Q4 2024 press release/call for trend **[1412665_de8bc00c57d2470da5cc7065f058d028_2]** **[1412665_de8bc00c57d2470da5cc7065f058d028_3]** **[1412665_de8bc00c57d2470da5cc7065f058d028_5]** **[1412665_de8bc00c57d2470da5cc7065f058d028_9]** **[1412665_de8bc00c57d2470da5cc7065f058d028_20]** **[1412665_de8bc00c57d2470da5cc7065f058d028_25]** **[1412665_MOFG_3413244_3]** **[1412665_MOFG_3413244_5]** **[1412665_MOFG_3413244_6]** **[1412665_MOFG_3413244_10]** **[1412665_MOFG_3413244_16]** **[1412665_MOFG_3413244_19]** **[1412665_MOFG_3413244_20]**; Q3 2024 press release for prior context **[1412665_0f466e5840ca4d5badab30778727ad53_2]** **[1412665_0f466e5840ca4d5badab30778727ad53_3]** **[1412665_0f466e5840ca4d5badab30778727ad53_5]** **[1412665_0f466e5840ca4d5badab30778727ad53_6]** **[1412665_0f466e5840ca4d5badab30778727ad53_8]**.