Midwestone Financial Group (MOFG) Q3 2024 earnings summary

Executive summary

• Completed a $118.6 million common equity capital raise in Q3 2024 to support balance sheet repositioning, including a $140.4 million pre-tax securities impairment.

• Reported a net loss of $95.7 million for Q3 2024, or $(6.05) per share, driven by the securities impairment, despite adjusted earnings of $9.1 million ($0.58 per share).

• Sold $1.0 billion in low-yield debt securities, paid off $418.7 million in high-cost borrowings, and reinvested $589.8 million in higher-yielding assets, improving future profitability.

• Completed acquisition of Bank of Denver and divested Florida branches, realigning geographic focus and expanding in target markets.

• Commercial and CRE loan growth was robust, with annualized increases of 11% and 3% respectively in Q3 2024; noninterest-bearing deposits increased 4% sequentially.

Financial highlights

• Total assets at $6.55 billion at September 30, 2024, up 1.31% year-over-year.

• Net loss of $95.7 million in Q3 2024, compared to net income of $9.1 million in Q3 2023, due to a $140.4 million securities impairment.

• Adjusted EPS (non-GAAP) was $0.58, up 12% sequentially and 4% year-over-year.

• Net interest income rose to $37.5 million, up $1.2 million sequentially and $2.9 million year-over-year; net interest margin (tax equivalent) improved to 2.51%.

• Efficiency ratio increased to 70.32% for Q3 2024, up from 66.06% in Q3 2023, reflecting the impact of the securities impairment.

Outlook and guidance

• Net interest income is expected to increase due to balance sheet repositioning, with management targeting continued margin expansion.

• Loan growth targeted in the mid- to high-single digits for 2025, supported by strong pipelines and talent investments.

• 2025 expense guidance in the mid-$140 million range, reflecting ongoing investments in people and technology.

• ROA expected to exceed 1% in 2025, with potential to reach 1.10% by year-end.

• Effective tax rate for Q4 2024 and full year 2025 projected at 22–23%.