Midwestone Financial Group
Annual Report 2022

Plain-text annual report

The Journey 2022 Annual Report Business clients Jack Piper and James Adrian, owners of Jimmy Jack’s Rib Shack. 1 MidWestOne Financial Group, Inc. 2022 Annual ReportMidWestOne Financial Group, Inc. 2022 Annual ReportMidWestOne Financial Group, Inc. and MidWestOne Bank Boards of Directors Contents Larry D. Albert—Retired CEO, Central Bank 2-5 To Our Shareholders 6-7 One Exceptional Journey 8 9 10 11 Financial Highlights Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Shareholders’ Equity Share Price 12 Company Leadership Richard R. Donohue—Retired Managing Partner, TD&T CPAs and Advisors, P.C. Charles N. Funk— Retired Chief Executive Officer, MidWestOne Financial Group, Inc., and MidWestOne Bank Janet E. Godwin—CEO, ACT, Inc. Douglas H. Greeff—President, Greeff Advisory LLC and CFO and Director, TRX* Richard J. Hartig—Chairman, Hartig Drug Stores Jennifer L. Hauschildt—Vice President of Human Resources, Uponor Matthew J. Hayek—Attorney & Partner, Hayek, Moreland, Smith & Bergus, LLP Ruth E. Heinonen—Corporate Affairs Consultant Nathaniel J. Kaeding—Director, Business Development and Client Relations, Build to Suit, Inc. Tracy S. McCormick—CFO and Director, Mill Creek Development Company Kevin W. Monson—Founder and Chairman Emeritus, Neumann Monson Architects; Chairman of the Board, MidWestOne Financial Group and MidWestOne Bank Charles N. Reeves—Chief Executive Officer and Director, MidWestOne Financial Group, Inc., and MidWestOne Bank Charles J. Schrup III—Retired Vice Chairman, ATBancorp and Retired Co-Chairman of the Board, American Trust** *Serves only on MidWestOne Financial Group, Inc. board **Serves only on MidWestOne Bank board MidWestOne Financial Group, Inc. 2022 Annual Report To Our Shareholders “We will honor our legacy and principles, while embarking on our journey to build a high performing company.” I’m humbled to be writing this letter as MidWestOne Financial Group’s new chief executive officer (CEO). I thank our Board of Directors for their confidence, guidance, and support. And I honor Charlie Funk, who served as CEO of this company for twenty-two years and led our organization from an Iowa-only $400 million institution to a $6.6 billion regional community bank with operations in five states. Charlie lived our Operating Principles and had a dramatic impact on this company, the Iowa City community, and the entire state of Iowa banking landscape. 2022 was a year of rapid change in the economy and in our company. I’m incredibly proud of our bankers who navigated the environment well, as Charlie taught us and exhibited himself, through a combination of perseverance, resiliency, and innovation while maintaining a growth mindset and taking care of our customers and those that should be. To combat high and persistent inflation, the Federal Reserve tightened monetary policy dramatically in 2022. The Federal Funds rate was increased seven times, a cumulative increase of 425 basis points, the fastest rate of increases in our banking lives. As we enter 2023, inflation has begun to soften, although still high, and most economists predict a mild recession for the latter half of the year. Despite the uncertain economic environment, this company achieved significant milestones. We continued to invest in our commercial banking franchise with talent and products, and as a result, achieved record loan originations and growth. The growth was across all sectors and geographies with the Twin Cities, Denver, and Metro Iowa leading the way. 2 Asset quality–the creditworthiness of our loan portfolio– continued to improve and we were very pleased that our non-performing asset ratio declined to a seven-year low due to outstanding work by our bankers. Technology continues to transform the economy, our customers’ behavior, and the banking industry. The Pandemic accelerated migration of deposit transactions, and in many cases loan applications, to digital channels. To further propel our digital road map, we hired the company’s first chief digital innovation officer. We are laser focused on providing a seamless, high-touch-relationship customer experience, whether in-person or through our digital channels. We were pleased to welcome the customers and employees of Iowa First Bancshares Corp., in June of 2022. Our integration teams and front-line customer facing employees, worked tirelessly to ensure a smooth transition. We now enjoy leading market share in both Fairfield and Muscatine, Iowa, which are excellent geographic additions to our dominant Iowa Community regional bank deposit franchise. As Pandemic stimulus abated and persistent inflation took over, many in the communities we serve struggled to make ends meet. Consistent with our operating principles, our employees and company stepped up to the challenge by finding ways to offer support. Throughout our footprint, we support hundreds of organizations with philanthropic donations and our employees’ time and talent. We also introduced a new home loan program, First Home Now (FHN), developed to make home ownership available to low-to-moderate income (LMI) families across our MidWestOne footprint and Community Reinvestment MidWestOne Financial Group, Inc. 2022 Annual ReportAct (CRA) assessment areas. Since inception and through year-end December 31, 2022, we have booked 97 loans for $16,237,813. This is solely our FHN program and does not include the other CRA eligible loans we make to LMI borrowers. We also rolled out our innovative Overdraft Flex program to enable our customers who enrolled to avoid paying an overdraft fee. Overdraft Flex garnered national recognition and was well received by customers. We were gratified that our efforts to serve our employees, communities, and customers resulted in being named one of Iowa’s Top Workplaces for the 10th consecutive year, as well as Newsweek’s Best Small Bank in Iowa and one of America’s Best Banks for the second year in a row. Financial Performance Let’s now turn our attention to the financial numbers. Net income for 2022 was $60.8 million, or $3.87 per diluted common share. Both are the second highest in our company’s history. Return on average assets was 0.97 percent and the return on average tangible equity was 15.89 percent. As noted, asset quality metrics improved measurably with our non-performing assets ratio at 0.24 percent at December 31, 2022, now at peer group levels. Our credit loss reserve stands at 1.28 percent and 30 to 89-day delinquencies continue to be low. We are proud of the diligent work by our bankers to achieve these results that position us well for 2023’s uncertain economic conditions. We generated approximately 80 percent of our revenues from the collection of customer deposits and the investment of these deposits into assets, primarily bank loans and investment securities. The rapid rise in interest rates (an increase in deposit interest expense as we take care of our customers) combined with primarily fixed rate earning assets has resulted in significant pressure on our net interest margin. Our NIM of 2.92 percent was the lowest in our history and we expect continued pressure in 2023. Despite this macro-environment challenge, our Strategic Agenda, led by MidWestOne President Len Devaisher, yielded significant long-term results. Maturation and Expansion of our Commercial Banking Franchise MidWestOne is uniquely positioned to be the bank of choice for small to mid-sized businesses in our five-state 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 225.00 200.00 175.00 150.00 125.00 100.00 75.00 50.00 25.00 0.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Return on Average Assets (%) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks Efficiency Ratio (%) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks Dividend Payout Ratio (%) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks Return on Average Equity (%) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks 3 MidWestOne Financial Group, Inc. 2022 Annual ReportNet Interest Margin, Tax Equivalent (%) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks Price / LTM EPS (X) FY2018 FY2019 FY2020 FY2021 FY2022 MOFG Peer Midwest Banks footprint. Led by Executive Vice President Chase Stafford, we have the scale and sophisticated products of the super-regional banks, yet provide a high-touch boutique relationship approach. The combination led to organic loan growth of greater than 10 percent, a company record, and we are just beginning. A few details of the success: • Significant talent acquisition in the Twin Cities and Iowa Metro • Excellent origination volumes and customer acquisition in the Twin Cities, Denver, and Iowa Metro • Streamlined business banking platform and processes • Increase in government lending (SBA) originations • The previously discussed asset quality improvements Wealth Management Building on our long legacy of wealth management in our Iowa markets, Executive Vice President Greg Turner added wealth management teams in the Twin Cities and in Cedar Rapids, Iowa. While revenue growth was muted due to stock market valuations, we are bullish on this business line and on the new teams that produced significant new AUM in 2022. Total Return Performance Consumer Banking 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 MidWestOne Financial Group, Inc. NASDAQ Composite Index S&P U.S. BMI Banks - Midwest Region Index MidWestOne Bank enjoys dominant community bank market share in many of our legacy Iowa banking markets, as well as in rural NW Wisconsin. Led by Executive Vice President Dave Lindstrom, our branch teams have evolved from primarily service only to service and sales by providing solutions for our customers’ needs. Average deposits per branch have increased from $91.9 million at year end 2021 to $93.9 million at year end 2022. Lending volumes in our branches increased dramatically in 2022, led by home equity at $30.3 million. We have ample opportunity to increase revenue and customer loyalty as we continue to increase product penetrations across our granular deposit franchise. Mortgage originations were impacted significantly by the rise in mortgage rates and low levels of inventories in the markets we serve. We have opportunity to 3.90 3.80 3.70 3.60 3.50 3.40 3.30 3.20 3.10 3.00 2.90 2.80 62.00 54.00 46.00 38.00 30.00 22.00 14.00 6.00 260 240 220 200 180 160 140 120 100 80 60 4 MidWestOne Financial Group, Inc. 2022 Annual Reportmanage costs further in this business line even as we see opportunity to hire quality mortgage loan officers for the first time in two years. Technology Platform and Talent Investment Technology within MidWestOne enables not only a seamless digital customer experience, but automation and efficiency gains for the inner workings of our institution. As mentioned, we have hired a head of digital innovation to steer our customer facing digital roadmap and internally we have created an Enterprise Project Manager Office, as well as the role of business automation engineer to focus on internal efficiency projects. Projects completed in 2022 or “green lighted” for 2023 include: • Enterprise workflow for Audit and Legal Departments • Streamlined small business platform • New Trust Department platform • Digital account opening • Bank Secrecy Act/Anti-Money Laundering financial crime management platform • Commercial loan origination end-to-end system Our foundation and our talent level are strong. We continue to attract key employees from larger institutions due to our culture, our emphasis on team empowerment to make a difference, and the opportunity to build MidWestOne into a high performing company. These individuals are spread throughout our organization, from client facing bankers to risk management professionals to operational gurus. Our annual employee Rally Day was held in October and Charlie was able to present the CEO Award to ten individuals for their contributions to the company. They were Tasha Fowler, Second Vice President, LPL Registered Investment Services; Susan Koehn, Second Vice President, Retail Manager, North English; Brad Nevers, Vice President, Director of Enterprise Project Management Office, Information Services; Torry O’Brien, Second Vice President, Portfolio Manager Team Lead, Twin Cities Commercial and Industrial; Nikki Swancutt, Second Vice President, Senior Compliance Specialist, Compliance; Suzanne Hughes, Commercial Loan Processing Manager, Loan Operations; Karey McCrea, Systems Administrator, Information Services; Dana Priebusch, Assistant Retail Managing Officer, Platteville; Stephanie Smith, Assistant Retail Manager, North Liberty; Joe Thornburg, Treasury Management Implementation Specialist, Treasury Management Operations. We thank our Board of Directors for their guidance and support in 2022 and for navigating a chief executive officer transition with great expertise and care. We’d like to extend special recognition to Doug True, Retired Senior Vice President and Treasurer at the University of Iowa, who stepped down from the MidWestOne Board of Directors in 2022. We thank Doug for his many years of leadership and wise counsel, and we wish him well. I’m inspired by the talent and conviction of our employees and excited about the future opportunities in front of MidWestOne. We will honor our legacy and principles, while embarking on our journey to build a high performing company. It is a great privilege to write this letter for the first time and to serve you, our loyal shareholders. Thank you for your faithful support. Very sincerely yours, Charles N. “Chip” Reeves—Chief Executive Officer Kevin W. Monson—Chairman of the Board Len D. Devaisher—President & Chief Operating Officer 5 MidWestOne Financial Group, Inc. 2022 Annual ReportOne Exceptional Journey Charles N. Funk led MidWestOne Bank with distinction for over two decades as its President and Chief Executive Officer until his retirement in 2022. It was 2000 when Dick Summerwill chose his successor and hired Charlie Funk to become the new President of Iowa State Bank & Trust. Charlie and Connie moved their family from Des Moines and quickly became involved in the Iowa City community‒ and what a difference they made. Iowa State Bank was a $400 million bank that had served the Iowa City Community since 1934. Charlie would be the first president that was not a member of the Summerwill family. Following in the footsteps of his predecessors, the bank’s mission statement, “Take care of our customers and those who should be”, was emphasized as Charlie grew the bank with great success. Three historic operating principles were also retained: • Hire excellent employees • Take care of your customers, and • Conduct yourself with utmost integrity To these, with leadership from Charlie, two additional operating principles were formalized and practiced: • Work as one team, and • Learn constantly so we can continuously improve Charles N. “Charlie” Funk Charlie had the vision to use the excellent foundation of a great community bank and its staff to reach more communities and customers. With growth came advancement opportunities for employees, expanded banking products to serve customers better, and support and leadership for additional communities. In 2008, Charlie led the first major expansion of the bank when the Summerwill and Howard families merged their banks together as one. Iowa State Bank was the surviving corporation and changed its name to MidWestOne Bank using the acquired bank’s name. This was no easy task given the economic downturn to come. Yet the tenacity and leadership provided by Charlie quickly proved that it was a critical step to provide a stable base and the ability of the bank to grow in the future. That next step of growth came in 2014 when it was announced that MidWestOne Financial Group (MOFG) would acquire Central Bancshares, based in Minneapolis. That bank’s footprint included branches in Minnesota, Wisconsin, and Florida. With acquisitions come new challenges and opportunities, and it takes a steady hand and fortitude to see the process through to completion. Charlie was up to the task. He and his staff grew MOFG to $3 billion in assets and established it as a regional community bank. 6 MidWestOne Financial Group, Inc. 2022 Annual Report and continues to do so today. It is hard to estimate the true value of his tremendous volunteer efforts which have made our community a better place to live and work. Charlie has served the Iowa City Area Chamber of Commerce as a director and then as president. He has provided guidance and leadership in the work of the Iowa City Area Development (ICAD) group, serving as a director and then as president. His entrepreneurial spirit continues to be pressed into action as he is often sought for advice and counsel by the leadership of ICAD as they look to build a better future. Charlie served a key role in promoting and passing the “Yes for Kids” Iowa City School District bond. He has worked tirelessly for the kids of our community through his work on the Iowa City School District Foundation and was always the “go to” member of that board. He has served on United Way campaigns and has encouraged others to become involved in the United Way and other community-minded fundraising campaigns too numerous to mention. Not only does he support these organizations with his time, but he also supports them with financial help and sets an example for others. This community has benefited from Charlie’s high impact touches, sharing his leadership with so very many groups. He has earned the respect and admiration of many for his resilience and thoughtful vision for how we can work together to make this the best community it can be. He is a very effective leader. In 2017, Charlie was able to leverage the positive work culture he had nurtured at the bank to hire an excellent team of business bankers in Denver looking for a new home. It was another home run for the company. The new bankers were delighted with the team they joined and produced results immediately. Charlie positioned the bank for another acquisition, expanding its footprint in Iowa and Wisconsin when in 2019 it acquired ATBancorp. Now with $4.7 billion in assets, the MidWestOne franchise added new markets in Dubuque and Des Moines, Iowa, and Grant County in Southwest Wisconsin. The Trust department tripled in size and added more services to the MidWestOne portfolio. One more expansion was completed in 2022 with the acquisition of Iowa First Bancshares with locations in Muscatine and Fairfield. This was a strategic purchase that will again produce excellent results built on MidWestOne’s community banking strengths. Charlie has served the banking profession in Iowa and nationally in positions of leadership with great distinction. He has been called upon to testify in congressional hearings representing the banking industry. He taught banking skills to many at the Stonier and Colorado Graduate School(s) of Banking, and the Iowa and Nebraska School(s) of Banking. He was a favorite instructor for many years. There is not a bank president in Iowa who would not recognize Charlie and appreciate his accomplishments. In 2021, Charlie was honored with the highest award bestowed by the Iowa Bankers Association, the James A. Leach Leadership Award. He has earned the respect and admiration of many for his service, leadership, mentoring, counsel, and vision. While growing MidWestOne Bank from a $400 million bank to over $6 billion bank (the largest community bank headquartered in Iowa), Charlie always found time to make an impact for the betterment of all. When Charlie moved to Iowa City, he immediately stepped up to provide his leadership skills to a variety of community activities 7 MidWestOne Financial Group, Inc. 2022 Annual ReportFinancial Highlights (dollars in thousands, except per share amounts) YEAR-END BALANCES Total Assets Total Securities Loans Held for Investment, Net of Unearned Income Total Deposits Total Shareholders' Equity AVERAGE BALANCES Total Assets Total Securities Total Loans Total Deposits Total Shareholders' Equity EARNINGS Net Interest Income Credit Loss Expense (Benefit) Noninterest Income Noninterest Expense Income Before Income Taxes Net Income PER COMMON SHARE Earnings - Basic Earnings - Diluted Dividends Book Value Year-End Closing Price 2022 2021 2020 2019 2018 $ 6,577,876 2,282,968 3,840,524 5,468,942 492,783 $ 6,025,128 2,288,110 3,245,012 5,114,519 527,475 $ 5,556,648 1,657,381 3,482,223 4,547,049 515,250 $ 4,653,573 785,977 3,451,266 3,728,655 508,982 $ 3,291,480 609,923 2,398,779 2,612,929 357,067 $ 6,244,284 2,327,141 3,511,192 5,309,049 500,471 $ 5,780,556 2,040,672 3,362,488 4,838,227 527,036 $ 5,135,841 1,139,954 3,551,945 4,184,406 515,455 $ 4,201,040 669,859 3,157,127 3,362,713 452,018 $ 3,249,718 636,362 2,354,354 2,608,725 345,734 $ 166,358 4,492 47,519 132,788 76,597 60,835 $ 156,281 (7,336) 42,453 116,592 89,478 69,486 $ 152,964 28,369 38,620 149,893 13,322 6,623 $ 143,650 7,158 31,246 117,535 50,203 43,630 $ 105,268 7,300 23,215 83,215 37,968 30,351 $ 3.89 3.87 0.95 31.54 31.75 $ 4.38 4.37 0.90 33.66 32.37 $ 0.41 0.41 0.88 32.17 24.50 $ 2.93 2.93 0.81 31.49 36.23 $ 2.48 2.48 0.78 29.32 24.83 CREDIT RISK PROFILE Non-Performing Loans Net Charge-Offs (Recoveries) Allowance for Credit Losses Ratio (Excluding PPP Loans) Net Charge-Off (Recovery) Ratio Nonperforming Loans Ratio $ 15,821 6,563 1.28% 0.19% 0.41% $ 31,540 (436) 1.52% -0.01% 0.97% $ 42,689 5,265 1.72% 0.15% 1.23% $ 41,617 7,386 0.84% 0.23% 1.21% $ 20,289 6,052 1.22% 0.26% 0.85% FINANCIAL RATIOS Return on Average Equity Return on Average Tangible Equity(1) Return on Average Assets Net Interest Margin, Tax Equivalent(1) Efficiency Ratio(1) Common Equity Ratio 12.16% 15.89% 0.97% 2.92% 56.98% 7.49% 13.18% 16.63% 1.20% 2.95% 54.65% 8.75% 1.28% 10.80% 0.13% 3.30% 56.92% 9.27% 9.65% 13.98% 1.04% 3.82% 57.56% 10.94% 8.78% 11.87% 0.93% 3.60% 61.23% 10.85% (1) Non-GAAP Financial Measure. Refer to the "Non-GAAP Presentations" section of the applicable Form 10-K for a reconciliation to the most directly comparable GAAP measure. 8 MidWestOne Financial Group, Inc. 2022 Annual Report Consolidated Balance Sheets (dollars in thousands, except per share amounts) ASSETS Cash and due from banks Interest earning deposits in banks Total cash and cash equivalents Debt securities available for sale at fair value Held to maturity securities at amortized cost Loans held for sale Gross loans held for investment Unearned income, net Loans held for investment, net of unearned income Allowance for credit losses Total loans held for investment, net Premises and equipment, net Goodwill Other intangible assets, net Foreclosed assets, net Other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest bearing deposits Interest bearing deposits Total deposits Short-term borrowings Long-term debt Other liabilities Total liabilities Shareholders' Equity December 31, 2022 2021 $ 83,990 2,445 86,435 1,153,547 1,129,421 612 3,854,791 (14,267) 3,840,524 (49,200) 3,791,324 87,125 62,477 30,315 103 236,517 6,577,876 1,053,450 4,415,492 5,468,942 391,873 139,210 85,058 6,085,083 $ 42,949 160,881 203,830 2,288,110 - 12,917 3,252,194 (7,182) 3,245,012 (48,700) 3,196,312 83,492 62,477 19,885 357 157,748 6,025,128 $ 1,005,369 4,109,150 5,114,519 181,368 154,879 46,887 5,497,653 $ $ $ $ $ Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding Common stock, $1.00 par value; authorized 30,000,000 shares; issued shares of 16,581,017 and 16,581,017; outstanding shares of 15,623,977 and 15,671,147 Additional paid-in capital Retained earnings Treasury stock at cost; 957,040 and 909,870 Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity - - 16,581 302,085 289,289 (26,115) (89,047) 492,793 6,577,876 $ 16,581 300,940 243,365 (24,546) (8,865) 527,475 6,025,128 $ Should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of the Company's Form 10-K for the fiscal year ended December 31, 2022. 9 MidWestOne Financial Group, Inc. 2022 Annual Report Consolidated Statements of Income (dollars in thousands, except per share amounts) Interest income: Loans, including fees Taxable investment securities Tax-exempt investment securities Other Total interest income Interest expense: Deposits Short-term borrowings Long-term debt Total interest expense Net interest income Credit loss expense (benefit) Net interest income after credit loss expense (benefit) Noninterest income: Investment services and trust activities Service charges and fees Card revenue Loan revenue Bank-owned life insurance Investment securities gains, net Other Total noninterest income Noninterest expense: Compensation and employee benefits Occupancy expense of premises, net Equipment Legal and professional Data processing Marketing Amortization of intangibles FDIC insurance Communications Foreclosed assets, net Goodwill impairment Other Total noninterest expense Income before income tax expense Income tax expense Net income Earnings per Common Share: Basic Diluted Years Ended December 31, 2021 2020 2022 $ 148,284 39,019 9,379 77 196,759 $ 141,036 25,692 9,947 91 176,766 $ 158,656 17,610 8,259 262 184,787 20,245 3,070 7,086 30,401 166,358 4,492 161,866 11,223 7,477 7,210 10,504 2,305 271 8,529 47,519 78,103 10,272 8,693 8,646 5,574 4,272 6,069 1,660 1,125 (18) - 8,392 132,788 76,597 13,198 551 6,736 20,485 156,281 (7,336) 163,617 11,675 6,259 7,015 12,948 2,162 242 2,152 42,453 69,937 9,274 7,816 5,256 5,216 4,022 5,357 1,572 1,332 233 - 6,577 116,592 89,478 23,919 914 6,990 31,823 152,964 28,369 124,595 9,632 6,178 5,719 10,185 2,226 184 4,496 38,620 66,397 9,348 7,865 6,153 5,362 3,815 6,976 1,858 1,746 150 31,500 8,723 149,893 13,322 15,762 60,835 $ 19,992 69,486 $ 6,699 6,623 $ $ $ 3.89 3.87 $ $ 4.38 4.37 $ $ 0.41 0.41 Should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of the Company's Form 10-K for the fiscal year ended December 31, 2022. 10 MidWestOne Financial Group, Inc. 2022 Annual Report Consolidated Statements of Shareholders' Equity (dollars in thousands, except per share amounts) Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Balance at December 31, 2019 $ 16,581 $ 297,390 $ 201,105 $ (10,466) $ 4,372 $ 508,982 Cumulative effect of change in accounting principle Net income Other comprehensive income Acquisition fair value finalization Release/lapse of restriction on RSUs (34,032 shares, net) Repurchase of common stock (179,428 shares) Share-based compensation Dividends paid on common stock ($0.8800 per share) Balance at December 31, 2020 Net income Other comprehensive loss Release/lapse of restriction on RSUs (49,907 shares, net) Repurchase of common stock (395,540 shares) Share-based compensation Dividends paid on common stock ($0.9000 per share) Balance at December 31, 2021 Net income Other comprehensive loss Release/lapse of restriction on RSUs (44,231 shares, net) Repurchase of common stock (91,401 shares) Share-based compensation Dividends paid on common stock ($0.9500 per share) Balance at December 31, 2022 - - - - - - - - 16,581 $ - - - - - - 16,581 $ - - - - - - 16,581 $ - - - 2,355 (988) - 1,380 - 300,137 $ - - (1,350) - 2,153 - 300,940 $ - - (1,396) - 2,541 - 302,085 $ (5,362) 6,623 - - - - - (14,175) 188,191 $ 69,486 - (30) - - (14,282) 243,365 $ 60,835 - (41) - - (14,870) 289,289 $ - - - - 839 (4,624) - - (14,251) $ - - 1,259 (11,554) - - (24,546) $ - - 1,156 (2,725) - - (26,115) $ - - 20,220 - - - - - 24,592 $ - (33,457) - - - - (8,865) $ - (80,182) - - - - (89,047) $ (5,362) 6,623 20,220 2,355 (149) (4,624) 1,380 (14,175) 515,250 $ 69,486 (33,457) (121) (11,554) 2,153 (14,282) 527,475 $ 60,835 (80,182) (281) (2,725) 2,541 (14,870) 492,793 $ Should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of the Company's Form 10-K for the fiscal year ended December 31, 2022. Share Price 2021 First Quarter Second Quarter Third Quarter Fourth Quarter 2022 First Quarter Second Quarter Third Quarter Fourth Quarter High Low $32.93 $32.14 $30.80 $34.33 $33.74 $33.32 $33.29 $35.20 $24.50 $28.52 $27.52 $30.07 $29.52 $28.21 $27.29 $27.30 Cash Dividend Declared $ $ $ $ 0.2250 0.2250 0.2250 0.2250 $ $ $ $ 0.2375 0.2375 0.2375 0.2375 2020 First Quarter Second Quarter Third Quarter Fourth Quarter High Low Cash Dividend Declared $35.88 $22.71 $21.24 $25.47 $16.57 $16.20 $16.80 $17.78 $ $ $ $ 0.2200 0.2200 0.2200 0.2200 11 MidWestOne Financial Group, Inc. 2022 Annual Report Company Leadership Jim M. Cantrell—Senior Executive Vice President & Chief Investment Officer, Treasurer Heather M. DeStefano—Senior Vice President, Director of Digital Innovation Len D. Devaisher—President & Chief Operating Officer Barb A. Finney—Senior Vice President & Chief Operations Officer John J. Henk—Senior Vice President & Chief Information Officer Timothy M. Heth—Senior Vice President & Chief Human Resources Officer Peggy L. Hudson—Senior Vice President & Chief Marketing Officer David E. Lindstrom—Executive Vice President, Consumer Banking Susan M. Moore—Executive Vice President & Chief Risk Officer Barry S. Ray—Senior Executive Vice President & Chief Financial Officer Charles N. Reeves—Chief Executive Officer Gary L. Sims— Executive Vice President & Chief Credit Officer Chase L. Stafford—Executive Vice President, Commercial Banking Greg W. Turner—Executive Vice President, Wealth Management 12 MidWestOne Financial Group, Inc. 2022 Annual ReportTake care of our customers... and those who should be. Kimberlin, Ben, and family enjoy a treat at business customer Almost Famous Popcorn Company 13 MidWestOne Financial Group, Inc. 2022 Annual Report Business client, Life Line Emergency Vehicles Transfer Agent/Divided Paying Agent American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, New York 11219 General Counsel Barack Ferrazzano Kirschbaum & Nagleberg LLP 200 West Madison Street, Suite 3900 Chicago, Illinois 60606-3465 Independent Registered Public Accounting Firm RSM US, LLP 400 Locust Street, Suite 640 Des Moines, Iowa 50309 MidWestOne Financial Group, Inc. Corporate Headquarters 102 S. Clinton Street Iowa City, IA 52240 800.247.4418 MidWestOne.bank NASDAQ Symbol: MOFG ©2023 MidWestOne Financial Group, Inc. MidWestOne Financial Group, Inc. 2022 Annual Report

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