ANNUAL
REPORT
Building An Enduring Institution
1
MidWestOne Financial Group, Inc. 2023 Annual Report MidWestOne Financial Group, Inc. 2023 Annual Report MidWestOne Financial Group, Inc.
Board of Directors
Contents
Larry D. Albert—Retired CEO, Central Bank
2-6
To Our Shareholders
7
Exceptional Employee Engagement
8-9
Our Stakeholder Commitment
10
11
Creating Shareholder Value
Financial Highlights
Cover Photo: Christy Fehlberg presents a MidWestOne
Foundation donation of $5,000 to Miracles in Motion of
Swisher, IA.
Richard R. Donohue—Retired Managing Partner,
TD&T CPAs and Advisors, P.C.
Charles N. Funk—Retired CEO, MidWestOne Financial
Group, Inc., and MidWestOne Bank
Janet E. Godwin—CEO, ACT, Inc.
Douglas H. Greeff—President, Greeff Advisory LLC and
Director of TRX
Richard J. Hartig—Chairman, Hartig Drug Stores
Jennifer L. Hauschildt—Global Chief Human Resources
Officer, Georg Fischer, Uponor division
Matthew J. Hayek—Attorney and Partner, Hayek,
Moreland, Smith & Bergus, LLP
Ruth E. Heinonen—Corporate Affairs Consultant
Nathaniel J. Kaeding—Director of Real Estate
Development, Hodge Construction
Tracy S. McCormick—CFO and Director, Mill Creek
Development Company
Kevin W. Monson—Founder and Chairman Emeritus,
Neumann Monson Architects and Chairman of the Board,
MidWestOne Financial Group and MidWestOne Bank
Charles N. Reeves—CEO and Director, MidWestOne
Financial Group, Inc., and MidWestOne Bank
MidWestOne Financial Group, Inc. 2023 Annual Report
To Our Shareholders
“We will honor our legacy and principles, while embarking on our journey to build a high
performing enduring institution.”
To say 2023 was a turbulent year in banking would be an understatement. The Federal Reserve raised interest rates a
total of five hundred twenty-five basis points in 2022 and early 2023, the largest and fastest increase in our banking lives.
Warren Buffet’s famous quote of “when the tide goes out” quickly came to fruition and we saw the bank failures of Silicon
Valley, Signature and First Republic Bank in quick succession. All were highly concentrated institutions, with extreme levels
of uninsured deposits, who exhibited poor asset/liability management.
Your company, MidWestOne Financial, has an exemplary core, granular deposit franchise built over ninety years and a
diversified business model that stood the turbulence well. However, we were not immune to the interest rate cycle and our
primarily fixed rate loan portfolio and a too large, low yielding bond portfolio caused our net interest margin to decrease to
2.46 percent by year end 2023, the lowest in company history. As eighty percent of our revenue is derived from the spread
between our deposit costs and our earning asset yields, our net income was greatly reduced in 2023. We’ll discuss our
financial results in more detail later in this letter.
Amidst that backdrop, MidWestOne Financial was undergoing its own transformation. One where we honored the legacy
and culture built by Dick Summerwill and Charlie Funk, yet one where we accelerated the pace of innovation and increased
the level of performance accountability as we strive to become a high performing company for all our stakeholders.
In late April, after months long ideation and data review, Executive Management and Board of Director engagement, our
company unveiled its Strategic Plan, based on five Strategic Pillars, along with our 2023 Strategic Initiatives.
We developed the company’s first Vision Statement, for we needed to know who we are and who we aspire to be, which will
stand alongside our long-held Operating Principles. Our Vision is “To be the pre-eminent relationship-driven community
bank where our expertise and proactive approach generate meaningful impact for our stakeholders.”
To achieve our vision, we developed the following Strategic Pillars:
Exceptional
Customer
and
Employee
Engagement
Strong Core
Local
Banking
Model
Sophisticated
Commercial
Banking
and Wealth
Management
Specialty
Business
Lines
Improving our
Efficiency and
Operations
2
MidWestOne Financial Group, Inc. 2023 Annual Report Exceptional Customer and Employee Engagement
In 2023, we commenced programs eliciting the voice of our customer across many of our business lines and we performed
well. We were rated over the industry average on the Primary Financial Institution (PFI) score at 75 percent. Additionally, we
measured over the industry average at 84 percent in the Service Quality Index (SQI), and our Net Promoter Score (NPS) also
came in over the industry average at 54 percent.
Our teams are also inextricably intertwined with the communities we serve, and our philanthropic donations totaled
$1,365,470 across our footprint.
We are all about our employees and were incredibly proud to
earn Top Workplace recognition in Iowa, Minnesota and the
USA for 2023!
In 2023, we also unveiled our MidWestOne Fundamentals, the
behaviors that bring to life, each and every day, our Operating
Principles. These have served as additional connection to all
our regions, team members and communities.
Strong Core Local Banking Model
Our deposits per branch of $90 million and our average account size of $30 thousand compare well to our peers and we
have many markets where we have 30-40 percent market share. The importance of this dynamic was seen as the coastal
banking crisis erupted in March and our local model fared quite well.
We will be increasing our community advisory boards in 2024, and we continued to decentralize decision making in 2023,
getting the decision as close to the customer and the community as possible. A concrete example of such is the hiring of a
Senior Credit Officer based in our critical Dubuque, IA, market and now lending decisions up to $10 million are made in the
local market by individuals with deep local knowledge.
Sophisticated Commercial Banking and Wealth Management
We are uniquely positioned to become the bank of choice for small-to mid-sized businesses (those with revenue up to $150
million) and individuals with between $3-$25 million in investable assets.
Commercial Banking was led by Executive Vice President Chase Stafford. In 2023, we added considerable commercial
banking talent in our major metro markets of Iowa, the Twin Cities and Denver, leading to 7.50 percent loan growth. Late in
2023, we completely revamped our Treasury Management team and are now well-situated to compete for middle market
business. We have now developed the talent, products and processes to consistently achieve upper single-digit loan growth
on an annual basis.
The talent and product additions we made to our Wealth Management group in 2022 led to significant results in 2023,
with new Assets under Management of $195 million, a 60 percent yearly increase and revenue growth in that business
segment of 9 percent. In January 2024, we were pleased to welcome Steve Heimermann, Executive Vice President of Wealth
Management, as we look to his leadership to grow this business line at a double-digit pace in the years to come.
Loans Held for Investment, Net ($MM)
4,300.0
4,100.0
3,900.0
3,700.0
3,500.0
3,300.0
3,100.0
FY2019
FY2020
FY2021
FY2022
FY2023
3
MidWestOne Financial Group, Inc. 2023 Annual Report Investment Services and Trust Activity Revenue ($MM)
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
FY2019
FY2020
FY2021
FY2022
FY2023
Specialty Business Lines
Many high performing community banks have utilized a business model where specific expertise is developed in targeted
industries or products to drive customer acquisition, risk prudence and ultimately profitability. When this expertise is
combined with deep, personal, community-driven relationships, you win. This is the path your company began to develop in
2023 with the formation of specialty groups in Commercial Real Estate, Agribusiness and Government Guaranteed Lending.
We look forward to the impact these teams will make to our company and our customers in 2024 and beyond.
Improving our Efficiency and Operations
Our company grew quickly, from $1.8 billion in assets in 2014 to $6.4 billion by the end of 2023. We needed to “mature”
our company to keep pace with our asset growth. A team led by President and Chief Operating Officer Len Devaisher and
Chief Financial Officer Barry Ray identified numerous opportunities for improvement, the first of which was a geographical
realignment of our too-extensive footprint. In late September, we announced the divestiture of our Florida operations for an
attractive premium and, almost simultaneously, the execution of a definitive agreement to scale our critical Denver market.
The Denver transaction closed in the first quarter of 2024, and we expect the Florida divestiture will occur in the second
quarter of 2024.
In addition, as part of our strategic plan, we announced we would reduce expenses by 5.00 percent, while reinvesting 2.50
percent of those savings back into the business. In this difficult operating environment where revenue growth is challenged,
we were pleased to exceed our objective. While maintaining expense discipline, we also reinvested in people and significant
technology platforms, including Digital Account Opening, a Commercial end-to-end loan origination system and an
industry-leading fraud and anti-money laundering platform.
2023 Financial Results
As discussed, the rapid interest rate increases in the 2022-2023 cycle had a dramatic impact on our net interest margin,
and thus our net income. To counteract these trends, we undertook two separate balance sheet bond restructurings
totaling approximately $347 million in order to reduce our liability sensitivity and to improve future years earnings. We also
continued to be disciplined in our loan and deposit pricing, with new loans averaging greater than 7.50 percent, while our
deposit costs increased less than peer banks.
Total Return
260
240
220
200
180
160
140
120
100
80
60
4
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
MidWestOne Financial Group, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks - Midwest Region Index
MidWestOne Financial Group, Inc. 2023 Annual Report Despite these actions, our net interest margin declined 46 basis points year-over-year, primarily due to our fixed rate loan
and bond portfolios. Every basis point is equivalent to approximately $600 thousand of annual revenue, and as a result our
net interest income decreased $22 million. We expect our net interest margin to trough in the first half of 2024 and to slowly
increase thereafter, dependent on future Federal Reserve rate reductions.
Our year-to-date return on average assets was 0.32 percent, and our return on average tangible equity was 6.14 percent.
Return on Average Assets (%)
1.50
1.00
0.50
0.00
FY2019
FY2020
FY2021
FY2022
FY2023
MOFG
Peer
Midwest Banks
Despite the uncertain economic environment, asset quality metrics remained at peer group levels with net charge-offs at
only 0.09 percent of loans and non-performing asset ratio at 0.47 percent at year end 2023. These results were accomplished
through the diligent credit risk administration efforts of our frontline bankers, as well as our seasoned credit executives.
While we do expect more “normalized” asset quality metrics in 2024, we are confident in our underwriting and our credit
risk appetite.
Nonperforming Assets Ratio (%)
1.2000
1.0000
0.8000
0.6000
0.4000
0.2000
0.0000
FY2019
FY2020
FY2021
FY2022
FY2023
MOFG
Peer
Midwest Banks
Our annual employee “Rally Day” has evolved to “Rally Week” comprising three large-scale in-person recognition events
across our footprint. I had the privilege to recognize the following individuals with the CEO award for their performance and
alignment with our Fundamentals: RJ Lang, Senior Vice President, Mortgage Banking; Lisa Waldo, Vice President, Branch
Banking; Lynne Hager, Vice President, Marketing; Derek Marley, Vice President, Data Analytics; Sandy Bailey, Oskaloosa
Market President; Angie Brown, Vice President, Branch Banking; Keith Graff, Vice President, Loan Operations; and Jeannette
Hall, Vice President, Finance.
We thank our Board of Directors for their guidance and support in 2023 and for their critical role in leading the transformation
of this company to a high performing organization.
5
MidWestOne Financial Group, Inc. 2023 Annual Report While our bottom-line financial results were challenged in 2023, I could not be more proud of the MidWestOne team for
their execution of so many of our strategic initiatives and for always taking care of our customer and one another. We will
continue to honor the legacy of those before us, strive for excellence in all that we do and Build an Enduring Institution for
the next ninety years.
It is a great privilege to write this letter and to serve you, our loyal shareholders. Thank you for your faithful support.
Very sincerely yours,
Charles N. Reeves
Kevin W. Monson
6
MidWestOne Financial Group, Inc. 2023 Annual Report Employees
EXCEPTIONAL EMPLOYEE
ENGAGEMENT
Cedar Rapids, IA Wealth
Management team
receives their Rally Day
Sales Performance Award.
At MidWestOne, our people are
number one in everything we do.
Since 1934, our teams have been taking care of our
customers and those who should be. Engaged employees
help ensure excellent customer care. Our culture is based
on expertise, integrity, teamwork, talent, and results. Our
employees have been paramount to our success over the
past 90 years and we continue to prioritize initiatives that
keep our teams energized.
Newsweek
Best Bank
2018-2023
Star Tribune
Top Workplaces
2018-2023
Professional Development
Our dedicated learning and development team understands
that learning constantly leads to engaged employees.
Our employees completed approximately 1,400 hours of
professional development training during 2023.
Rally Week
Once a year our teams “Rally” regionally throughout our
footprint for an evening of celebration. Rally Week consists
of good food, comaraderie, and recognition. Individuals and
teams receive awards honoring their unique contributions
to company success. In 2023, a total of 90 awards were given
to recognize efforts in sales, community commitment, and
company loyalty.
Energage
Our employees are invited to complete the Energage
Survey on an annual basis. Energage helps us measure
and improve our workplace culture. It also serves as a
benchmark of company success for recognition as a Top
Workplace in Minnesota and Iowa. We receive constructive
feedback through this survey that is used to improve team
communication and processes. This year’s top scores
reflected employee satisfaction with manager empathy,
professional development opportunities, and exceptional
interdepartmental cooperation.
Our St. Michael team shows their support of the American Heart
Association Go Red for Women.
7
MidWestOne Financial Group, Inc. 2023 Annual Report Our Stakeholder Commitment
Being Present in our Communities
Our mission of taking care of our customers and
those who should be holds true in our community giving
philosophy as it does in other areas of our business. We
strive to deliver on our commitment to community banking
by supporting many community initiatives throughout our
footprint each year. Every one of our MidWestOne Bank
locations has a philanthropic and sponsorship budget
to use as community needs and initiatives arise. Local
decision making ensures that these dollars are given where
they are most needed.
416
Organizations Supported
$1,365,470
Total Monetary Contributions from
the Company and its Employees
Denver employees volunteered for Denver Celebrating Community.
Community Development Loans
Community Development Loans promote growth and
support of low-to moderate-income individuals, families
and communities by helping fund affordable housing or
community services, promoting economic development
and stabilizing and revitalizing areas in need of assistance.
These loans help our communities stay strong.
$134,223,580
Community Development
Loans made in 2023
MidWestOne Foundation
The MidWestOne Foundation provided substantial gifts
across our footprint during 2023 totaling over $240
thousand. These grants encompass various sectors, such
as healthcare, education, community development, and
historic preservation. Projects included the purchase of
specialized healthcare equipment, renovating school
facilities, constructing community centers, and preserving
historic districts. This diverse approach reflects their
commitment to enhancing the well-being and vitality of
communities across the Company’s footprint
Volunteer Hours
Being present in our communities is emphasized at all levels
of the company. We don’t just send a check. We personally
deliver the check and then stick around after the photo to
lend a pair of hands.
8
MidWestOne Financial Group, Inc. 2023 Annual Report
Members of our Florida team present a donation for $20,000 to
their local Habitat for Humanity group.
MidWestOne Financial Group, Inc. 2023 Annual Report Our Stakeholder Commitment
Habitat for Humanity
Our Habitat for Humanity partnerships provide a special
opportunity to contribute financially, along with sending
teams of employee volunteers to provide hands-on project
support.
Pictured: A few of our Iowa bankers gathered to help Cedar Valley Habitat for
Humanity revitalize a home through their “Women Build” program.
8,591
hours volunteered by
MidWestOne employees
328
Organizations benefitting from
MidWestOne volunteers
252
MidWestOne volunteers
active in our communities
9
MidWestOne Financial Group, Inc. 2023 Annual Report Creating Shareholder Value
Strategies for a lasting impact
MidWestOne Bank is well ahead of plan in executing the
strategic initiatives designed to improve our performance
and position the Bank to deliver financial results at the
median of our peer group by the end of 2025. Highlights
from 2023 include outstanding expense discipline and
re-allocation, our geographic repositioning with the
closing of the Denver Bankshares merger on January 31,
2024, key new hires in our Iowa Metro and Twin Cities
markets, the hiring of a talented executive to lead our
wealth management business, and the expansion of our
specialty business lines with the recruitment of an agri-
business team. We are rapidly scaling in our core markets
while adding new business lines, which taken together,
provide visibility to improved growth and returns.
“The strategic pillars are the
foundation of a commitment to
delivering financial performance
that drives shareholder value.”
-- Barry Ray, CFO at MidWestOne Bank
“Acquiring Denver
Bankshares, Inc
accelerates our growth
in this critical market
by 3-4 years and is
an important step in
our journey to build
a high performing
organization.”
-- Chip Reeves, CEO at
MidWestOne Bank
MidWestOne Financial Group, Inc. 2023 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
2023
2022
2021
2020
2019
$
6,427,540
1,870,324
4,126,947
5,395,673
524,378
$
6,577,876
2,282,968
3,840,524
5,468,942
492,793
$
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
$
6,475,360
2,039,814
3,993,389
5,455,609
505,751
$
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
$
144,172
5,849
18,423
131,913
24,833
20,859
$
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
$
1.33
1.33
0.97
33.41
26.91
$
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
CREDIT RISK PROFILE
Nonperforming Assets
Nonperforming Assets Ratio
Net Charge-Offs (Recoveries)
Net Charge-Off (Recovery) Ratio
Allowance for Credit Losses Ratio (Excluding PPP Loans)
$
30,288
0.47%
3,749
0.09%
1.25%
$
15,924
0.24%
6,563
0.19%
1.28%
$
31,897
0.53%
(436)
(0.01%)
1.52%
$
45,005
0.81%
5,265
0.15%
1.72%
$
45,323
0.97%
7,386
0.23%
0.84%
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
4.12%
6.14%
0.32%
2.46%
67.28%
8.16%
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%
(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.
11
MidWestOne Financial Group, Inc. 2023 Annual Report
Company Leadership
Len D. Devaisher—President and Chief Operating Officer
Barbara A. Finney—Senior Vice President and Chief Operations Officer
Steven J. Heimermann—Executive Vice President, Wealth Management
Timothy M. Heth—Executive Vice President and Chief Human Resources Officer
David E. Lindstrom—Executive Vice President, Consumer Banking
Susan M. Moore—Executive Vice President and Chief Risk Officer
Barry S. Ray—Senior Executive Vice President and Chief Financial Officer
Charles N. Reeves—Chief Executive Officer
Gary L. Sims— Executive Vice President and Chief Credit Officer
Chase L. Stafford—Executive Vice President, Commercial Banking
Transfer Agent/Divided Paying Agent
Equiniti Trust Company, LLC
55 Challenger Road, Floor 2
Ridgefield Park, New Jersey 07660
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. 2023 Annual Report