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MidWestOne Financial Gp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2012 03:08PM

MidWestOne Financial Gp (MOFG) filed Quarterly Report for the period ended 2012-09-30. Midwestone Financial Group has a market cap of $168.8 million; its shares were traded at around $20.55 with a P/E ratio of 11.4 and P/S ratio of 2. The dividend yield of Midwestone Financial Group stocks is 1.9%.



Highlight of Business Operations:

For the quarter ended September 30, 2012 we earned net income of $4.5 million, all of which was available to common shareholders, compared with $3.8 million, of which $3.6 million was available to common shareholders, for the quarter ended September 30, 2011, an increase of 15.9% and 22.7%, respectively. Basic and diluted earnings per common share for the third quarter of 2012 were $0.52, versus $0.42 for each in the third quarter of 2011.

These decreases were partially offset by mortgage origination and loan servicing fees increasing by $0.4 million, or 73.1%, to $0.9 million for the third quarter of 2012, compared to $0.5 million for the same quarter of 2011. The increase was due to an increased volume of loans originated and sold on the secondary market, a trend we do not expect to continue into 2013. In addition, trust, investment, and insurance fees increased $0.1 million, or 11.6%, to $1.3 million during the third quarter of 2012, compared with $1.2 million in the third quarter of 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 September 30, 2012, noninterest income comprised 20.7% of total revenues, compared with 22.2% for the same period in 2011. While our emphasis on trust, investment, and insurance fees has shown some improvement in this category of noninterest income, the effects of decreased service charges and fees on deposit accounts, and other service charges, commissions and fees, has more than offset this improvement. Management continues to evaluate options for increasing noninterest income.

For the nine months ended September 30, 2012 we earned net income of $12.4 million, all of which was available to common shareholders, compared with $10.0 million, of which $9.3 million was available to common shareholders, for the nine months ended September 30, 2011, an increase of 24.4% and 33.0%, respectively. Basic and diluted earnings per common share for the first three quarters of 2012 were $1.46 and $1.45, respectively, versus $1.08 for each in the first three quarters of 2011. After excluding the effects of a $4.0 million pre-tax gain on the sale of our Home Mortgage Center (the "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 nine months ended September 30, 2012 were each $14.1 million, with basic and diluted earnings per share of $1.61 and $1.60, respectively. Our annualized ROAA for the first nine months of 2012 was 0.97% compared with a return of 0.83% for the same period in 2011. Our annualized ROAE was 10.16% for the nine months ended September 30, 2012 versus 8.39% for the nine months ended September 30, 2011. The annualized ROATCE was 11.15% for the first three quarters of 2012 compared with 9.51% 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 1.07%, ROAE was 11.21%, and ROATCE was 12.27%.

Our net interest income for the nine months ended September 30, 2012 increased $4.0 million to $40.2 million compared with $36.2 million for the nine months ended September 30, 2011. Our total interest income of $52.4 million was $0.9 million higher in the first three quarters of 2012 compared with the same period in 2011. Most of the increase in total interest income was attributable to increased loan pool participation income resulting from the sale of several foreclosed real estate properties in the portfolio at a value greater than their net book value. In addition, we experienced an increase in interest on investment securities as a result of higher average balances and despite lower average yields. These increases were partially offset by decreased loan interest, which was due primarily to lower rates despite increases in loan balances. The overall increase in interest income was complemented by reduced interest expense on deposits and FHLB advances. Total interest expense for the first three quarters of 2012 decreased $3.1 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 three quarters of 2012 increased to 3.51% compared with 3.33% in the first three quarters 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 three quarters of 2012 from 4.67% for the first three quarters 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 nine months of 2012 to 1.20% from 1.57% for the first nine months of 2011, due to the continued repricing of new time certificates and FHLB advances at lower interest rates.

These increases were partially offset by decreased other service charges, commissions and fees of $0.4 million, or 18.4%, primarily attributable to the $0.3 million writedown of other real estate owned properties. Similarly, service charges and fees on deposit accounts decreased to $2.4 million for the nine months ended September 30, 2012, a decline of $0.4 million, or 12.8%, from $2.8 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

Read the The complete Report



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