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MidWestOne Financial Gp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 3, 2012 01:24PM

MidWestOne Financial Gp (MOFG) filed Quarterly Report for the period ended 2012-06-30. Midwestone Financial Group, Inc. has a market cap of $178.6 million; its shares were traded at around $21.56 with a P/E ratio of 12.6 and P/S ratio of 2.1. The dividend yield of Midwestone Financial Group, Inc. stocks is 1.6%.



Highlight of Business Operations:

For the quarter ended June 30, 2012 we earned net income of $3.5 million, all of which was available to common shareholders, compared with $3.2 million, of which $3.0 million was available to common shareholders, for the quarter ended June 30, 2011, an increase of 9.0% and 16.9%, respectively. Basic and diluted earnings per common share for the second quarter of 2012 were $0.42 and $0.41, respectively, versus $0.35 for each in the second quarter of 2011. After excluding the effects of a $4.0 million pre-tax gain on the sale of our Home Mortgage Center ("HMC") location and a $6.1 million pre-tax expense related to the termination and liquidation of our defined benefit pension plan, adjusted net income and net income available to common shareholders for the quarter ended June 30, 2012 were each $4.9 million, with basic and diluted earnings per share of $0.57 and$0.56, respectively. Our annualized return on average assets ("ROAA") for the second quarter of 2012 was 0.82% compared with a return of 0.79% for the same period in 2011. Our annualized return on average shareholders' equity ("ROAE") was 8.72% for the quarter ended June 30, 2012 versus 7.90% for the quarter ended June 30, 2011. The annualized return on average tangible common equity ("ROATCE") was 9.62% for the second quarter of 2012 compared with 9.24% for the same period in 2011. Excluding the effects of the pension termination expense and the gain on sale of the HMC, annualized ROAA was 1.12%, ROAE was 11.91%, and ROATCE was 13.02%, for the quarter ended June 30, 2012.

These increases were partially offset by decreased service charges and fees on deposit accounts of $0.1 million, or 15.1%, to $0.8 million for the second quarter of 2012, compared to $0.9 million for the same quarter of 2011. This decline was primarily attributable to lower NSF fees being collected during the second quarter of 2012 compared to the same period of 2011. For the quarter ended June 30, 2012, noninterest income comprised 21.9% of total revenues, compared with 21.7% for the same quarter in 2011. Management's strategic goal is for noninterest income to constitute 30% of total revenues (net interest income plus noninterest income) over time. For the three months ended June 30, 2012, noninterest income comprised 21.9% of total revenues, compared with 21.7% for the same period in 2011. Management continues to evaluate options for increasing noninterest income, with particular emphasis on trust, investment, and insurance fees.

For the six months ended June 30, 2012 we earned net income of $7.9 million, all of which was available to common shareholders, compared with $6.1 million, of which $5.7 million was available to common shareholders, for the six months ended June 30, 2011, an increase of 29.6% and 39.5%, respectively. Basic and diluted earnings per common share for the first half of 2012 were $0.94 and $0.93, respectively, versus $0.66 for each in the first half of 2011. After excluding the effects of a $4.0 million pre-tax gain on the sale of our HMC location and a $6.1 million pre-tax expense related to the termination and liquidation of our defined benefit pension plan, adjusted net income and net income available to common shareholders for the six months ended June 30, 2012 were each $9.5 million, with basic and diluted earnings per share of $1.09 and $1.08, respectively. Our annualized ROAA for the first six months of 2012 was 0.94% compared with a return of 0.77% for the same period in 2011. Our annualized ROAE was 9.99% for the six months ended June 30, 2012 versus 7.66% for the six months ended June 30, 2011. The annualized ROATCE was 10.99% for the first half of 2012 compared with 8.99% for the same period in 2011. Excluding the effects of the pension termination expense and the gain on sale of the HMC, annualized ROAA was 1.09%, ROAE was 11.60%, and ROATCE was 12.72%.

Our net interest income for the six months ended June 30, 2012 increased $2.7 million to $26.5 million compared with $23.8 million for the six months ended June 30, 2011. Our total interest income of $34.8 million was $0.5 million higher in the first half of 2012 compared with the same period in 2011. Most of the increase in total interest income was due to increased interest and dividends on investment securities and interest income on loans. The increased investment income was due to a higher average balances of these assets, with the improvement in loan interest also due primarily to a higher average balances. The increased income in both of these asset classes also came despite generally lower yields. The overall increase in interest income was complemented by reduced interest expense on deposits and FHLB advances. Total interest expense for the first half of 2012 decreased $2.1 million, or 20.1%, compared with the same period in 2011, due primarily to lower average interest rates in 2012. Our net interest margin on a tax-equivalent basis for the first half of 2012 increased to 3.48% compared with 3.32% in the first half of 2011. 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 4.52% for the first half of 2012 from 4.71% for the first half of 2011. This decline was due primarily to lower rates being received on newly originated loans and purchases of investment securities. The average cost of interest-bearing liabilities decreased in the first six months of 2012 to 1.23% from 1.63% for the first six months of 2011, due to the continued repricing of new time certificates and FHLB advances at lower interest rates. We expect to experience net interest margin compression during 2012, with interest rates at generational lows, despite the increased margin experienced during the first half of 2012.

These increases were partially offset by decreased service charges and fees on deposit accounts to $1.6 million for the six months ended June 30, 2012, a decline of $0.2 million, or 12.6%, from $1.8 million for the same period of 2011. This decline was attributable to lower NSF fees being received between the comparable periods. Management's strategic goal is for noninterest income to constitute 30% of total revenues (net interest income plus noninterest income) over time. For the six months ended June 30, 2012, noninterest income comprised 21.9% of total revenues, compared with 23.5% for the same period in 2011. Management continues to evaluate options for increasing noninterest income, with particular emphasis on trust, investment, and insurance fees.

Read the The complete Report



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