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MidWestOne Financial Gp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 3, 2011 10:31AM

MidWestOne Financial Gp (MOFG) filed Quarterly Report for the period ended 2011-09-30. Midwestone Financial Gp has a market cap of $127.7 million; its shares were traded at around $14.81 with a P/E ratio of 11.9 and P/S ratio of 1.5. The dividend yield of Midwestone Financial Gp stocks is 1.6%.



Highlight of Business Operations:

For the quarter ended September 30, 2011 we earned net income of $3.8 million, of which $3.6 million was available to common shareholders, compared with $2.8 million, of which $2.6 million was available to common shareholders, for the quarter ended September 30, 2010, an increase of 37.8% and 41.2%, respectively. Basic and diluted earnings per common share for the third quarter of 2011 were $0.42 versus $0.30 for the third quarter of 2010. Our return on average assets for the third quarter of 2011 was 0.94% compared with a return of 0.71% for the same period in 2010. Our return on average shareholders' equity was 9.89% for the quarter ended September 30, 2011 versus 6.94% for the quarter ended September 30, 2010. The return on average tangible common equity was 10.11% for the third quarter of 2011 compared with 7.74% for the same period in 2010.

These increases were partially offset by decreased mortgage origination and loan servicing fees of $0.5 million for the third quarter of 2011, down from $1.0 million for the same period last year. The decrease in mortgage origination and loan servicing fees was attributable to lower refinancing activity in single-family residential loans during the third quarter of 2011 compared to the same period of 2010. Management's strategic goal is for noninterest income to constitute 30% of total revenues (net interest income plus noninterest income) over time. For the quarter ended September 30, 2011, noninterest income comprised 24.1% of total revenues, compared with 23.7% for the same quarter in 2010. Management continues to evaluate options for increasing noninterest income, with particular emphasis on trust, investment, and insurance fees.

For the nine months ended September 30, 2011 we earned net income of $10.0 million, of which $9.3 million was available to common shareholders, compared with $7.4 million, of which $6.7 million was available to common shareholders, for the nine months ended September 30, 2010, an increase of 34.8% and 38.2%, respectively. Basic and diluted earnings per common share for the first three quarters of 2011 were $1.08 versus $0.78 for the first three quarters of 2010. Our return on average assets for the first nine months of 2011 was 0.83% compared with a return of 0.64% for the same period in 2010. Our return on average shareholders' equity was 8.39% for the nine months ended September 30, 2011 versus 6.35% for the nine months ended September 30, 2010. The return on average tangible common equity was 9.09% for the first three quarters of 2011 compared with 7.04% for the same period in 2010.

Our net interest income for the nine months ended September 30, 2011 increased $0.2 million to $36.2 million compared with $36.0 million for the nine months ended September 30, 2010. Our total interest income of $51.5 million was $2.2 million lower in the first nine months of 2011 compared with the same period in 2010. Most of the decrease in interest income was due to reduced interest on loans and interest income on loan pool participations, due primarily to lower average rates. The decrease in loan income was partially offset by an increase in interest on investment securities as a result of higher volume. The overall decrease in interest income was more than offset by reduced interest expense on deposits and FHLB advances. Total interest expense for the first three quarters of 2011 decreased $2.4 million, or 13.7%, compared with the same period in 2010, due primarily to lower average interest rates in 2011. Our net interest margin on a tax-equivalent basis for the first three quarters of 2011 decreased to 3.33% compared with 3.46% in the first three quarters of 2010. Net interest margin is a measure of the net return on interest-earning assets and is computed by dividing annualized net interest income on a tax-equivalent basis by the average of total interest-earning assets for the period. Our overall yield on earning assets declined to 4.67% for the first three quarters of 2011 from 5.08% for the first three quarters of 2010. This decline was due primarily to lower rates being received on newly originated loans and purchases of investment securities, and decreased income from the loan pool participations. The average cost of interest-bearing liabilities decreased in the first nine months of 2011 to 1.57% from 1.90% for the first nine months of 2010, due to the continued repricing of new time certificates and FHLB borrowings at lower interest rates. We expect to continue battling net interest margin compression during the remainder of 2011 and into 2012, with interest rates at generational lows.

These improvements were partially offset by decreased service charges and fees on deposit accounts and decreased mortgage origination and loan servicing fees. For the first nine months of 2011, service charges and fees on deposit accounts were $2.8 million, down $0.2 million, or 7.9%, from $3.0 million for the same period of 2010. This decrease was primarily due to lower income from non-sufficient funds ("NSF") charges between the comparable periods due to lower NSF activity resulting from the general economic downturn. Mortgage origination and loan servicing fees decreased $0.2 million, or 9.7%, to $1.8 million for the first three quarters of 2011 compared to $2.0 million for the same period last year. The decrease in mortgage origination and loan servicing fees was attributable to lower refinancing activity in single-family residential loans during the first nine months of 2011, compared to the same period of 2010. Management's strategic goal is for noninterest income to constitute 30% of total revenues (net interest income plus noninterest income) over time. For the nine months ended September 30, 2011, noninterest income comprised 23.4% of total revenues, compared with 22.7% for the same period in 2010.

Read the The complete Report



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