B anking in the heartland
An Emerging Force
2009 Annu Al rEport
Charles N. Funk, President and CEO,
and W. Richard Summerwill, Chairman.
to our ShArEholdErS
This is the third annual report presented to you since the
March, 2008 merger of ISB Financial Corp. and the “former”
MidWestOne Financial Group. Much has taken place since
that combination of two well established and respected Iowa
community banking organizations.
We endured a tornado and a major flood in 2008,
the worst economy in a generation, and all of the
normal day-to-day challenges inherent in any merger
transaction. If we have learned anything during these
two years, it is the art of perseverance. This necessary
mind set prompts us to be very optimistic about the
long term future of MidWestOne.
Our financial performance in 2009 exceeded 2008
results. Nevertheless, it was well below our long-term
goals. MidWestOne Financial earned $4,409,000 before
the dividend on the Company’s preferred stock leaving
$3,630,000 net income available to common shareholders,
equal to $0.42 per diluted common share, in 2009. Among
the factors that contributed to this financial performance,
three are most noteworthy, all directly related to the poor
economy:
• Our FDIC insurance premiums increased significantly
to $3,244,000 from $595,000 in 2008 as the banking
industry assumed the cost of the 145 bank failures as of
year-end 2009.
• Given current conditions, we aggressively built our loan
loss reserve in our bank loan portfolio. Our provision
for loan losses increased to $7,725,000 in 2009 from
$4,366,000 in 2008. It is important to note that our
2009 provision significantly exceeded net charge-offs of
$4,745,000 during the year.
• The results of our loan pool participations were well
below our historical averages. Shareholders will recall
this is a line of business the former MidWestOne had
been involved with since 1988. The “all-in” yield on this
loan portfolio declined to 3.21% in 2009 from 8.41% in
2008. In terms of income, the decline was to $1,809,000
in 2009 from $4,459,000 in 2008. This was the worst
performance in the 21 year history of the loan pools.
MidWestOne Financial group, inc. 2009 annual report 1
To summarize, these three items represented a pre-tax
reduction in 2009 earnings of $8,658,000. Looking ahead, we
expect that FDIC insurance premiums will remain at higher
than historical levels. With the stabilization that we have seen
in the economy during 2009 and so far in 2010, the loan
loss provision for the bank loan portfolio may be less in 2010
than in 2009 but this, of course, ultimately depends on the
experience of the bank loan portfolio as the year progresses.
With regard to loan pools, we believe returns will continue to
be lower than historical norms in 2010.
Prominent in most discussions concerning banking
companies during the past few years is an examination of
credit quality in the loan portfolio. MidWestOne ended 2009
with a 1.44% ratio of non-performing loans to total loans in
the bank loan portfolio. This is an improvement from year
end 2008 when the comparable ratio was 1.50%. Loans 30-89
days past due also declined to $10.1 million at 2009 year-end
from $10.8 million at the end of 2008. Other real estate
owned increased to $3.6 million at year-end 2009 from $1.0
million at year-end 2008 as we moved non-performing loans
toward resolution. We had net charge-offs in 2009 of 0.49%
of average total loans. While all the above numbers are higher
than we have normally experienced, we believe they represent
solid performance in difficult times and we commend our
lending and loan review personnel for this achievement in an
extremely challenging economic environment.
In the past two annual letters, we discussed three major
corporate goals.
• We have reduced our loan to deposit ratio to 89.2%
at year-end 2009 from 98.4% at the end of the prior
year. This is consistent with our “in the 80s” goal. We
believe we can provide shareholders with solid returns
with loan to deposit ratios in this range. Higher loan
to deposit levels generally present higher levels of credit
and liquidity risk; thus, we believe that our “in the 80s”
goal achieves the appropriate balance between generating
attractive returns and managing risk.
• Progress toward our goal of non-interest income
accounting for 30% of total revenues was obscured by
several one-time, non-core items. For example, on the
positive side there were one-time gains from the sale
of investment securities and on the negative side there
were other than temporary impairment charges with
respect to certain investment securities in our portfolio.
Also, there were a number of smaller adjustments, both
positive and negative, which resulted from integration
and compliance issues attributable to the 2008 merger.
On an ongoing basis, the primary drivers toward our goal
will be real estate loan fees and wealth management fees.
We progressed in both areas last year and believe we can
reach our 30% goal over the next few years.
•
Implementation of a disciplined expense management
culture is continuing. While professional fees continued
to be high ($3,635,000 in 2009) due to the early stages
of Sarbanes-Oxley compliance costs and loan collection
expenses, we expect this number to decline in 2010. We
have also undertaken a review of all banking operations
with the goal of increased efficiency.
2 MidWestOne Financial group, inc. 2009 annual report
On the senior management front, we have continued
to strengthen our team by putting the right people in the
right jobs throughout the company. We promoted Susan
R. Evans to Chief Operating Officer and Gary J. Ortale to
Chief Financial Officer. During 2009 we welcomed James
M. Cantrell as Senior Vice President of Risk Management at
MidWestOne Bank and Gregory W. Turner as Senior Vice
President of Wealth Management. Jim and Greg, together
with others hired during 2009, will be counted upon heavily
in the years ahead.
All MidWestOne employees have regular educational
discussions relative to our 75-year mission statement of
“taking care of our customers and those who should be.” We
devote substantial resources to train our employees to execute
our mission with each customer encounter. During the final
quarter of 2009, we saw more frequent examples of our
employees working together to increase our wallet share and
allow MidWestOne to play an even greater role in the lives of
our customers.
Unfortunately, the banking industry experienced
significantly increased costs of compliance in 2009. More
proposed regulations are being debated in Congress in
response to the financial crisis of 2008–2009 that, if enacted,
would raise our cost of doing business and potentially restrict
consumers’ access to credit. Community banks have not been
at the center of the economic crisis. It is our hope that when
the final laws are written, they do not unfairly penalize the
community banks who have not engaged in many of the risky
practices engaged in by the large Wall Street institutions.
We believe that community banks will play an integral role
in rebuilding local economies through financing small
businesses and consumers in their local communities, and
hope that any new regulation will help facilitate lending by
community banks rather than imposing additional costs and
regulatory burdens.
While we do not see completely smooth sailing ahead,
we do nevertheless believe that the worst has passed for
MidWestOne. We must continue to closely monitor our loan
portfolio as it will be the biggest determinant of near term
profit improvement. In that vein, we do take comfort that
Iowa remains in much better shape than the nation with
an unemployment rate of just 6.6% and a relatively stable
agricultural economy.
We thank our employees for a year of hard work and
progress in continuing to build a strong foundation. We also
thank our shareholders for your patience and support. We
look forward to the future with some optimism. We are — and
we remain — a force in Iowa banking!
Charles N. Funk
President and CEO
W. Richard Summerwill
Chairman
MidWESTONE FiNANCiAL GROUP, iNC. BoArd oF dirEctorS
richard r. donohue
Managing Principal,
Td&T Financial Group, P.C.
charles n. Funk
President & CEO, MidWestOne Financial
Group, inc. and President & CEO,
MidWestOne Bank
charles S. howard
Vice Chairman, MidWestOne Financial
Group, inc. and Vice Chairman,
MidWestOne Bank
John S. Koza
Retired Bank Executive,
MidWestOne Bank
Sally K. Mason
President, The University of iowa
Kevin W. Monson
Managing Partner,
Neumann Monson Architects, PC
John p. pothoven
Retired Bank Executive,
MidWestOne Bank
James G. Wake
General Manager,
Smith-Wake Ag Services
W. richard Summerwill
Chairman, MidWestOne Financial Group,
inc. and Chairman, MidWestOne Bank
robert d. Wersen
President, interpower Corporation
Stephen l. West
President, West Music Company, inc.
r. Scott Zaiser
Owner, Zaiser’s Landscaping, inc.
MidWESTONE BANK BoArd oF dirEctorS
richard r. donohue, Managing Principal, Td&T Financial Group, P.C.
charles n. Funk, President & CEO, MidWestOne Financial Group, inc. and President & CEO,
MidWestOne Bank
oFFicErS
W. richard Summerwill, Chairman
charles S. howard, Vice Chairman
charles n. Funk, President & Chief
charles S. howard, Vice Chairman, MidWestOne Financial Group, inc. and Vice Chairman,
Executive Officer
MidWestOne Bank
dorothy l. King, Retired Bank Executive, MidWestOne Bank
Barbara Kniff-Mcculla, CEO, Corporate Treasurer, Secretary, KLK Construction
John p. pothoven, Retired Bank Executive, MidWestOne Bank
richard J. Schwab, investor, Entrepreneur & Builder
Suzanne Summerwill, Retired Bank Executive, MidWestOne Bank
W. richard Summerwill, Chairman, MidWestOne Financial Group, inc. and Chairman,
MidWestOne Bank
Stephen l. West, President, West Music Company, inc.
Susan r. Evans, Chief Operating Officer
Gary J. ortale, Executive Vice President,
Chief Financial Officer & Treasurer
Kent l. Jehle, Executive Vice President &
Chief Lending Officer
James M. cantrell, Vice President & Chief
Risk Officer
Gregory W. turner, Vice President & Head
of Wealth Management
Kenneth r. urmie, Secretary
MidWestOne Financial group, inc. 2009 annual report 3
4 MidWestOne Financial group, inc. 2009 annual report
Todd Means, Vice President and
Central Region Retail Manager,
and Barb Finney, Market
President and West Region
Retail Manager.
Bu i lding on o ur legacy
todd Means and Barb Finney
mirror MidWestOne’s
commitment to community
Among MidWestOne’s greatest assets are the talented employees it has fostered from early
in their careers. Joining the bank in entry-level positions, such as service associates and loan
processors, many employees choose to stay with the organization, growing into more senior
positions. Two such employees have recently been recognized for their excellence — Todd
Means and Barb Finney.
Means previously worked at another bank as a teller, while getting his degree in Economics
from The University of Iowa. He joined the bank in 2002 as manager of the Coralville branch,
eventually bringing another branch under his leadership three years later.
Last August, Means was promoted to Vice President and Central Region Retail Manager.
Based in Iowa City, he oversees the retail programs at six branches, helping them to expand
their consumer lending, checking, savings and CDs, as well as tending to service quality and
the bank’s mission statement. He is currently working toward his graduate degree from the
Graduate School of Banking in Colorado.
In 2009, he was recognized by the Corridor Business Journal in its “40 Under 40” issue as a
young leader in the community. Means was surprised by his inclusion in the roundup of local
talent but definitely pleased. He especially enjoys and values the way in which his job allows
him to give back to the community.
“MidWestOne is a big bank, but we really have a community-centered, small-town feel,
which is very important to me,” says Means, who was born and raised in Iowa City, and now
has two school-aged children of his own. “I really want to work for a place that has the same
passion for the community that I do.”
Mean’s colleague, Finney, is Market President and West Region Retail Manager. Based
in Oskaloosa, she has been with the bank for 13 years, starting at age 26 as the Operations
Officer for the then-Mahaska Investment Company. When Mahaska merged the four
institutions under its control in 2006, Finney oversaw the consolidation process. She was
especially focused on product standardizaton.
“We wanted to be sure that while we became more efficient and offered more products,”
explains Finney, “we didn’t lose anything by way of customer service or the community
involvements that made each bank unique.”
Finney graduated with a bachelor’s degree in Finance at The University of Iowa, before
pursuing a degree from the Graduate School of Banking in Colorado. A strong commercial
banking instructor piqued her interested in a career in banking, and her first job was as
an examiner for the Sioux City branch of the Office of the Comptroller of the Currency.
The position allowed her to travel widely and see a multitude of examples of how banks are
managed, an experience she says was invaluable. When she started a family, however, she
decided that she wanted to stay closer to home in central Iowa.
Last summer, Charlie Funk, president and CEO of MidWestOne Bank, nominated Finney
for NorthWestern Financial Review’s annual “Rising Stars in Banking” competition. He noted
that Finney, who won the award, “has become one of our key officers.”
The mother of two children, Finney, much like Means, values MidWestOne’s commitment
to community. “We care deeply about our communities,” she notes. “We appreciate each
individual town and its differences, while also providing the products and services of a large
institution.” Having experienced many different banking institutions, she believes this to be a
unique combination.
No doubt, both Finney and Means have a special loyalty toward MidWestOne because of
the years that they have spent with the institution, beginning at early ages. Now in a position
to hire current students and recent college graduates, Means is especially proud of the bank’s
dedication to its youngest employees: “No matter someone’s age, they have to prove themselves,
of course. But we provide a lot of opportunities for younger people to grow with us.”
“no Matter
soMeone’s age,
they have to
prove theMselves,
oF course. But We
provide a lot oF
opportunities For
younger people to
groW With us.”
todd Means
central region
retail Manager
MidWestOne Financial group, inc. 2009 annual report 5
Marketing o ut s i de th e Box
telling our story
Lose the pig! That was the message that greeted MidWestOne customers for much of
the summer of 2009 on signs, t-shirts, and piggy banks. Promoting the Bank’s unique Bank
Your Change service, the campaign reminded people that they no longer needed a piggy bank
because MidWestOne would round up to the next whole dollar any purchase they made on
their Check Card and automatically deposit the difference into a savings account.
Featuring a cute but forlorn pig holding a sign, “Need Work,” the campaign garnered
several awards from the Iowa Bankers Association, including Best of Show and People’s Choice
for best campaign.
Marketing Officer, Nick Pfeiffer, says that MidWestOne prides itself on its out-of-the-box
approach to marketing. “The overall goal of our marketing tactics is to establish relationships
and create a buzz,” he says. “We want our customers, and those who should be, to know that
MidWestOne isn’t your typical bank.”
Other recent marketing campaigns have focused on community outreach, including a
program between MidWestOne and the animal shelters in two of its communities, Iowa City
and Burlington, which provided reduced-price microchipping for dogs. Pet owners could
bring their dog to a MidWestOne branch on a certain day and animal shelter employees would
chip the dog. Microchips about the size of a grain of rice are implanted in a painless and
quick process, after which dogs can be scanned and their owner’s information quickly located
should the animals become lost or stolen. In two years, more than six hundred dogs have been
microchipped through this program.
Two other programs send MidWestOne employees into the community to do unsuspecting
good. “A Plug for You. A Plug for Us,” was started at the downtown branch of the Iowa City
location in 2008. At random times each week, a bank employee walks around downtown—an
area with many hotly contested short-term meters — and puts ten or fifteen cents into meters
that are about to expire or have already expired. Drivers learn about this act of goodwill
through a card bearing the MidWestOne logo that is left on the windshield and reads, “We
noticed your meter was running a little low, so we dropped a few coins your way to give you
some extra time. Thank you for spending time in, and supporting, downtown Iowa City. Be
sure to stop by and see us!”
“This program has generated a lot of goodwill for the bank,” says Pfeiffer, noting several
thank you letters the bank has received from grateful drivers. “It leaves a good impression on
both members of the community and people visiting from outside of the area.”
In order to raise awareness about environmental issues, while also getting the MidWestOne
brand into the community, the bank has given away more than 50,000 reusable tote bags since
June of 2008. The bags were distributed not only at branches but also at community events,
parades, and farmers markets. Recipients were told that they could “Get caught holding the
bag” and win cash. More than $10,000 in cash prizes have since been given away in the form of
coupons worth $25, $50, and $100 that bank employees disburse randomly at public events or
just on the street during a lunch break.
Marketing campaigns such as these are relatively easy and low-cost ways for MidWestOne
to capture the public’s attention and instill trust and a sense of neighborly generosity. The fact
that the campaigns are often fun and practical is an added bonus. As Pfeiffer notes, “You can
go to any financial institution and get a checking account or a loan, but when you come to
MidWestOne Bank you are getting outstanding service, a community leader, and a friend that
knows how and when to have fun. It really does make a difference.”
“the overall goal oF our Marketing tactics is to estaBlish relationships and
create a Buzz. We Want our custoMers, and those Who should Be, to knoW
that MidWestOne isn’t your typical Bank..”
nick pFeiFFer, Marketing oFFicer
6 MidWestOne Financial group, inc. 2009 annual report
MidWestOne Financial group, inc. 2009 annual report 7
“We recognize that ‘taking care oF our custoMers’ could have a diFFerent
Meaning For each eMployee, and We Want to help our eMployees have a More
uniForM approach to helping our custoMers.”
susan Weinschenk, vice president oF huMan resource developMent
ed ge service
Extraordinary deeds through
Genuine Efforts
“Take care of our customers and those who should be,” is the MidWestOne Bank
mission statement. The belief that developing strong relationships is a key to success led bank
executives to a decision four years ago to provide employees with additional tools to enhance
their communication skills. The Bank created a service skill development program called
EDGE—Extraordinary Deeds through Genuine Efforts.
MidWestOne employees of all levels have participated in the program, from the custodians
to the president. “We recognize the fact that ‘taking care of our customers’ could have a
different meaning for each employee, and we want to help our employees have a more uniform
approach to helping our customers,” says Susan Weinschenk, Vice President of Human
Resource Development.
The goal, according to Weinschenk, is to provide MidWestOne’s staff with tools for
dealing comfortably with a wide range of customers and situations. “We want to give people
skills that they can rely on,” she says. “It’s not about giving them a script, but allowing them to
personalize a message and make it genuine.”
The skills learned in the initial course help employees focus on using a positive attitude to
take ownership of interactions by satisfying the TRU needs of customers. Customers are defined
as both internal and external and all have TRU needs. The TRU needs are: Task, Respect, and
Uniqueness. Employees take ownership of their interactions by going beyond respectful service to
meet the unique needs and situations of the person with whom they are interacting.
The program is divided into two six-hour classes, and is held over two weeks. Small groups
work together, learning about the skills, writing scripts, and discussing various customer service
scenarios that can be improved utilizing the skills.
The initial program focuses on the following ABCDE skills:
• Aligning with people by greeting them warmly and professionally, or empathizing with
them when they are upset or have a complaint or problem;
• Bridging by keeping the person informed of what you are doing or will do;
• Clarifying and Checking to better understand the person’s needs and wishes before
offering solutions or options;
• Delighting people by going the extra mile to meet their uniqueness needs;
• Explaining solutions and options in simple, easy to understand terms that include a
benefit to the person.
Cedar Valley Market President Sue Armbrecht, says that EDGE helps employees to “focus on
the importance of aligning with your customer from the Welcome through the Close, ensuring
they receive the proper services needed specifically for them.” Weinschenk says, “Our people come
out of these classes with a new level of confidence. Most importantly, they bring away pride.”
In addition to the introductory EDGE classes for new employees, Weinschenk’s staff
reinforces the EDGE Skills by providing follow-up events and activities and by including the
skills in other classes they conduct. She says that a range of bank employees, including service
associates, personal bankers, and supervisors, benefit from EDGE in their ongoing and daily
interactions with internal and external customers. “These truly are communication skills, so
they can be used in a multitude of situations,” says Weinschenk. “They are not just specific to
customer service.”
8 MidWestOne Financial group, inc. 2009 annual report
FiNANCiAL hiGhliGhtS
(dollars in thousands, except per share amounts)
YEAr-End BAlAncES
Assets
investment Securities
Loans
Loan Pool Participation
Non-Performing Bank Loans
deposits
Shareholder Equity
AVErAGE BAlAncES
Assets
investment Securities
Loans
Loan Pools
deposits
Shareholder Equity
rESultS oF opErAtionS
Net interest income
Provision for Loan Losses
Noninterest income
Noninterest Expense
income (Loss) Before income Taxes
Net income (Loss)
Net income (Loss) Available to Common Shareholders
$
pEr coMMon ShArE
Net income — Basic
Net income — diluted
dividends
Tangible Book Value
Closing Price
rAtioS
Return on Average Equity
Return on Average Assets
Net interest Margin
Average Equity as a % of Average Assets
Allowance for Bank Loan Losses as a % of Bank Loans
Net Bank Loan Charge-offs as a % of Average Bank Loans
Non-Performing Bank Loans as a % of Bank Loans
2009
$ 1,534,783
370,912
966,998
85,186
13,879
1,179,868
152,208
2009
2008
$ 1,508,962
280,505
1,014,814
95,066
15,233
1,128,189
130,342
2008
$ 1,543,307
$ 1,359,667
347,965
990,540
92,456
1,035,938
147,544
2009
282,822
893,451
72,558
894,823
138,603
2008
2007
$ 701,983
232,220
401,554
-
1,299
526,615
77,392
2007
$ 681,109
235,360
390,862
-
441,421
66,873
2007
$
45,115
$
39,811
$ 19,267
7,725
12,519
45,579
4,330
4,409
3,630
2009
0.42
0.42
0.30
14.42
8.74
2009
2.99%
0.29%
3.27%
9.56%
1.44%
0.48%
1.44%
$
4,366
5,542
65,999
(25,012)
(24,562)
(24,562)
2008
(3.09)
(3.09)
0.46
13.58
9.90
2008
-15.96%
-1.61%
3.29%
10.19%
1.08%
0.48%
1.50%
500
8,806
18,620
8,953
6,648
6,648
2007
$
1.29
1.29
0.65
14.14
18.55
2007
8.83%
0.98%
3.27%
9.82%
1.36%
0.09%
0.32%
MidWestOne Financial group, inc. 2009 annual report 9
condEnSEd conSolidAtEd BAlAncE ShEEtS
(dollars in thousands, except per share amounts)
ASSEtS
Cash and due from banks
Federal funds sold and other short-term investments
cash and cash equivalents
dEcEMBEr 31, 2009
25,452
2,136
27,588
$
dEcEMBEr 31, 2008
32,383
$
543
32,926
investment securities available for sale
investment securities held to maturity
Loans held for sale
Loans
Allowance for loan losses
Loans, net
Loan pool participations, net
Premises and equipment, net
Accrued interest receivable
Other intangible assets, net
Bank owned life insurance
Other real estate owned
Other assets
total Assets
liABilitiES And ShArEholdErS’ EQuitY
liabilities
deposits:
Non-interest bearing demand
interest-bearing checking
Savings
Certificates of deposit under $100,000
Certificates of deposit $100,000 and over
Total deposits
Federal funds purchased and securities sold under agreements to repurchase
Federal Home Loan Bank borrowings
Long-term debt
Accrued expenses and other liabilities
total liabilities
Shareholders’ Equity
Preferred stock, no par value, with a liquidation preference of $1,000
per share; authorized 500,000 shares; issued and outstanding 16,000
shares as of december 31, 2009; no shares authorized or issued at
december 31, 2008
Capital stock, common, $1 par value; authorized 15,000,000 shares at
december 31, 2009 and 10,000,000 shares at december 31, 2008;
8,690,398 shares issued at december 31, 2009 and 2008;
8,605,333 shares outstanding at december 31, 2009 and
8,603,055 at december 31, 2008
Additional paid-in capital
Treasury stock, at cost; 85,065 shares and 87,343 shares at december 31, 2009
and 2008, respectively
Retained earnings
Accumulated other comprehensive (loss)
total Shareholders’ Equity
total liabilities and Shareholders’ Equity
10 MidWestOne Financial group, inc. 2009 annual report
362,903
8,009
1,208
966,998
(13,957)
953,041
83,052
28,969
11,534
12,172
18,118
3,635
24,554
$ 1,534,783
272,380
8,125
5,279
1,014,814
(10,977)
1,003,837
92,932
28,748
11,736
13,424
17,340
996
21,239
$ 1,508,962
dEcEMBEr 31, 2009
dEcEMBEr 31, 2008
$
133,990
401,264
62,989
394,369
187,256
1,179,868
44,973
130,200
15,588
11,946
$ 1,382,575
$
123,558
389,227
59,133
402,950
153,321
1,128,189
57,299
158,782
15,640
18,710
$ 1,378,620
15,699
-
8,690
81,179
(1,183)
48,079
(256)
8,690
80,757
(1,215)
43,683
(1,573)
152,208
$ 1,534,783
130,342
$ 1,508,962
condEnSEd conSolidAtEd StAtEMEntS oF opErAtionS
(dollars in thousands, except per share amounts)
intErESt incoME
Loans
Loan pool participations
investment securities:
Taxable securities
Tax-exempt securities
Federal funds sold and other short-term investments
Total interest income
intErESt ExpEnSE
interest-bearing checking
Savings
Certificates of deposit
Federal funds purchased and securities sold under agreements to repurchase
Federal Home Loan Bank advances
Long-term debt
Other borrowings
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
nonintErESt incoME
Trust and investment fees
Service charges on deposit accounts
Mortgage origination and servicing fees
Bank-owned life insurance income
Securities gains (losses), net
investment securities impairment losses
Other income
Total Noninterest income
nonintErESt ExpEnSE
Salaries and employee benefits
Net occupancy and equipment
data processing
FdiC insurance
Goodwill impairment
Other expenses
Total noninterest expense
income (loss) before income taxes
income tax expense (benefit)
Net income (loss)
Less: Preferred stock dividends and discount accretion
Net income (loss) available to common shareholders
EArninGS (loSS) pEr coMMon ShArE
Basic
diluted
$
$
$
$
YEArS EndEd dEcEMBEr 31,
$
2009
58,697
1,809
2008
$ 53,104
4,459
2007
$ 27,564
-
8,797
3,997
58
73,358
2009
4,501
213
16,897
464
5,450
658
60
28,243
45,115
7,725
37,390
2009
4,180
3,988
2,770
778
813
(2,404)
2,394
12,519
2009
23,152
6,961
1,844
3,244
-
10,378
45,579
4,330
(79)
4,409
779
3,630
8,222
4,080
341
70,206
2008
4,149
1,362
17,646
1,122
5,348
631
137
30,395
39,811
4,366
35,445
2008
4,011
5,611
907
542
(346)
(6,194)
1,011
5,542
2008
20,903
4,759
1,860
595
27,295
10,587
65,999
(25,012)
(450)
$ (24,562)
-
$ (24,562)
7,552
2,641
548
38,305
2007
2,950
159
11,689
2,114
2,126
-
-
19,038
19,267
500
18,767
2007
3,688
2,082
1,208
338
(256)
-
1,746
8,806
2007
10,926
2,978
1,145
60
-
3,511
18,620
8,953
2,305
$ 6,648
-
$ 6,648
2009
0.42
0.42
2008
$ (3.09)
$ (3.09)
2007
$
$
1.29
1.29
MidWestOne Financial group, inc. 2009 annual report 11
condEnSEd conSolidAtEd StAtEMEntS oF
ShArEholdErS’ EQuitY And othEr coMprEhEnSiVE incoME (loSS)
(dollars in thousands, except per share amounts)
YEArS EndEd dEcEMBEr 31, 2009, 2008, And 2007
StocK
StocK pAid-in cApitAl StocK
EArninGS
incoME
totAl
prEFErrEd coMMon AdditionAl trEASurY rEtAinEd coMprEhEnSiVE
AccuMulAtEd
othEr
Balance, december 31, 2006
$
-
$ 5,176
$ 14
$
-
$ 69,539
$ (1,520) $ 73,209
comprehensive income:
Net income
Net change in unrealized losses on securities,
net of reclassification adjustment and tax
Total Comprehensive income
Cash dividends paid, $0.65 per share
Stock options exercised for 8,425 shares
Stock compensation
Repurchase of 19,605 shares of common stock
-
-
-
-
-
-
-
-
-
8
-
(19)
-
-
-
99
2
(15)
-
-
-
-
-
-
6,648
- 6,648
-
1,314 1,314
(3,359)
-
-
(495)
7,962
-
-
-
-
(3,359)
107
2
(529)
Balance, december 31, 2007
$
-
$ 5,165
$ 100
$
-
$ 72,333
$
(206) $ 77,392
comprehensive income (loss):
Net loss
Net change in unrealized losses on securities,
net of reclassification adjustment and tax
Net change in unrealized pension liability,
net of tax
Total Comprehensive income (Loss)
Cash dividends paid, $0.46 per share
Stock options exercised for 7,959 shares
Treasury stock purchased
Fractional shares purchased in merger
Shares issued in merger
Stock compensation
Stock option value allocated to transaction
purchase price
Cumulative effect of adjustment for postretirement
split dollar life insurance benefits
Balance, december 31, 2008
$
Cumulative effect of FASB ASC 320, net of tax
comprehensive income:
Net income
Net change in unrealized gains on securities,
net of reclassification adjustment and tax
Net change in unrealized pension liability,
net of tax
Total Comprehensive income
Cash dividends paid, $0.30 per share
Cash dividends paid on preferred stock
Release/lapse of restrictions on RSUs
issuance of preferred shares (16,000 shares)
Common warrants issued
Preferred stock discount accretion
Stock compensation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
3,520
-
-
-
-
-
-
-
29
-
(3)
78,245
21
2,365
-
-
-
-
-
38
(1,253)
-
-
-
-
-
(24,562)
-
(24,562)
-
-
(2,425)
(2,425)
1,058 1,058
(3,955)
-
-
-
-
-
(25,929)
(3,955)
-
72
-
(1,253)
-
-
(3)
- 81,765
21
-
-
-
2,365
(133)
-
(133)
$ 8,690
$ 80,757
$ (1,215) $ 43,683
$ (1,573) $ 130,342
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32)
-
358
-
96
-
-
-
-
-
-
32
-
-
-
-
3,266
(3,266)
-
4,409
-
4,409
-
-
663
663
3,920 3,920
(2,602)
(620)
-
-
-
(57)
-
8,992
(2,602)
(620)
-
-
-
-
- 15,642
358
-
-
-
96
-
-
-
-
15,642
-
57
-
Balance, december 31, 2009
$15,699 $ 8,690
$81,179
$ (1,183) $ 48,079
$
(256) $ 152,208
12 MidWestOne Financial group, inc. 2009 annual report
StocK
2008
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2009
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
hiGh
loW
cASh diVidEnd dEclArEd
$ 19.24
$ 16.00
$ 17.25
$ 11.94
$ 14.95
$ 12.00
$ 14.47
$ 8.35
$
-
$ 0.1525
$ 0.1525
$ 0.1525
hiGh
loW
cASh diVidEnd dEclArEd
$ 10.35 $
$ 10.52 $
$
$
9.50 $
9.00 $
5.90
6.51
7.00
7.57
$ 0.1525
$ 0.0500
$ 0.0500
$ 0.0500
rEport oF indEpEndEnt rEGiStErEd puBlic AccountinG FirM
The Board of Directors, MidWestOne Financial Group, Inc.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of MidWestOne Financial Group, Inc. and subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of operations, shareholders’ equity and other comprehensive income (loss), and cash flows (not presented herein) for the years then
ended; and in our report dated March 8, 2010, we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material
respects, in relation to the consolidated financial statements from which it has been derived.
KPMG LLP
Des Moines, Iowa
March 8, 2010
rEport oF indEpEndEnt rEGiStErEd puBlic AccountinG FirM
The Board of Directors, MidWestOne Financial Group, Inc. and Subsidiaries:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
statements of operations, shareholders’ equity and other comprehensive income (loss), and cash flows of ISB Financial Corp. and Subsidiaries
(n/k/a MidWestOne Financial Group, Inc.) for the year ended December 31, 2007 (not presented herein); and in our report dated March 13,
2008, we expressed an unqualified opinion on those financial statements.
In our opinion, the information set forth in the accompanying condensed financial statements is fairly stated, in all material respects, in
relation to the financial statements from which it has been derived.
McGladrey & Pullen
Cedar Rapids, Iowa
March 13, 2008
trAnSFEr AGEnt/
diVidEnd pAYinG AGEnt
Illinois Stock Transfer Company
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606-6905
GEnErAl council
indEpEndEnt
AccountinG FirM
Barack Ferrazzano Kirschbaum &
Nagelberg LLP
200 West Madison Street, Suite 3900
Chicago, Illinois 60606-3465
KPMG LLP
666 Grand Avenue
2500 Ruan Center
Des Moines, Iowa 50309
MidWestOne Financial group, inc. 2009 annual report 13
822 12th Street
802 13th Street
3225 division Street
323 Jefferson Street
4510 Prairie Parkway
120 West Center Street
110 First Avenue
101 W. Second St., Suite 100
58 East Burlington Avenue
2408 West Burlington Avenue
926 Avenue G
100 Eddystone drive
102 South Clinton Street
325 South Clinton Street
1906 Keokuk Street
2233 Rochester Avenue
202 Main Street
MidWEStOne BAnK oFFicES
Belle plaine
Belle plaine
Burlington
Burlington
cedar Falls
conrad
coralville
davenport
Fairfield
Fairfield
Fort Madison
hudson
iowa city
iowa city
iowa city
iowa city
Melbourne
north English 10030 Highway 149
north liberty 465 Hwy 965 NE, Suite A
oskaloosa
oskaloosa
oskaloosa
ottumwa
parkersburg
pella
pella
Sigourney
Waterloo
West liberty
124 South First Street
222 First Avenue East
301 A Avenue West
116 West Main Street
1001 Hwy 57
700 Main Street
500 Oskaloosa Street
112 North Main Street
3110 Kimball Avenue
305 West Rainbow drive
319-444-2842
(drive Up)
319-754-6526
319-754-7553
319-277-2500
641-366-2165
319-356-5800
563-322-9900
641-472-6511
641-472-2424
319-372-3991
319-988-4090
319-356-5800
319-356-5960
319-356-5800
319-356-5800
641-482-3105
319-664-3311
319-356-5800
641-673-8303
(drive Up)
(drive Up)
641-682-8355
319-346-1645
641-628-4356
(drive Up)
641-622-2381
319-232-5513
319-627-2100
toll Free
En Español
1-800-247-4418
319-688-3938
MidWEStOne inSurAncE SErVicES, inc.
MidWestOne insurance Agency
Melbourne
202 Main St.
Butler-Brown insurance Agency
309 High Ave. East
oskaloosa
cook & Son Agency
pella
729 Franklin St.
641-482-3105
641-673-8603
641-628-4904
MidWEStOne FinAnciAl Group, inc.
corporate headquarters
102 South Clinton Street
iowa City, iowa 52240-4065
1-800-247-4418
www.midwestone.com
nASdAQ Symbol: MoFG