Midwestone Financial Group (MOFG) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $10.0 million ($0.48 per diluted share), down 34% sequentially and 37% year-over-year, impacted by an $11.9 million credit loss expense from a single $24 million CRE office loan.

• Achieved annualized loan growth of 7.4% and sequential loan growth of 2%, with total loans at $4.39 billion, supported by new hires and market expansion in the Twin Cities and Denver.

• Net interest margin (tax equivalent) expanded 13 basis points to 3.57%, with net interest income up 5% sequentially and 38% year-over-year to $50.0 million.

• Wealth management revenues rose 6% year-over-year, with strong new client acquisition and net new asset growth of $13 million year-to-date.

• Efficiency ratio improved to 56.20% from 59.38% sequentially, reflecting expense discipline and operational investments.

Financial highlights

• Net interest income was $50.0 million, up $2.5 million sequentially and $13.6 million year-over-year, driven by higher earning asset volumes and yields, and lower funding costs.

• Noninterest income was $10.2 million, up $0.1 million sequentially but down $11.3 million year-over-year due to a prior-year gain on sale.

• Total noninterest expense was $35.8 million, down $0.5 million sequentially, aided by a $1.1 million tax credit and lower data processing costs.

• Return on average assets was 0.65%, down 35 basis points sequentially.

• Tangible book value per share increased 2.4% sequentially to $23.92.

Outlook and guidance

• Expect mid- to high-single-digit loan growth and double-digit wealth fee income growth in the second half of 2025, supported by strong pipelines and recent talent additions.

• Annual expense guidance revised to $146–$148 million due to increased hiring.

• Net interest margin expected to expand by 4–5 basis points per quarter in the second half, assuming two 25 basis point Fed rate cuts.

• Provision expense anticipated to normalize in the second half as the impact of a single large CRE credit is resolved.

• Effective tax rate for full year 2025 expected to be 22–23%.