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MidWestOne Financial Gp Reports Operating Results (10-Q)

August 04, 2010 | About:

10qk

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MidWestOne Financial Gp (MOFG) filed Quarterly Report for the period ended 2010-06-30.

Midwestone Financial Gp has a market cap of $127.6 million; its shares were traded at around $14.81 with a P/E ratio of 20.8 and P/S ratio of 1.5. The dividend yield of Midwestone Financial Gp stocks is 1.3%.

Highlight of Business Operations:

For the quarter ended June 30, 2010 we earned net income of $2.6 million, of which $2.4 million was available to common shareholders, compared with $0.8 million, of which $0.6 million was available to common shareholders, for the quarter ended June 30, 2009, an increase of 232.7% and 321.2%, respectively. Basic and diluted earnings per common share for the second quarter of 2010 were $0.27 versus $0.07 for the second quarter of 2009. Our return on average assets for the second quarter of 2010 was 0.67% compared with a return of 0.20% for the same period in 2009. Our return on average shareholders' equity was 6.74% for the quarter ended June 30, 2010 versus 2.14% for the quarter ended June 30, 2009. The return on average tangible common equity was 7.52% for the second quarter of 2010 compared with 1.92% for the same period in 2009.

Our net interest income for the quarter ended June 30, 2010 increased $1.3 million to $12.2 million compared with $10.8 million for the quarter ended June 30, 2009. Our total interest income of $18.1 million was $0.5 million lower in the second quarter of 2010 compared with the same period in 2009. Most of the decrease in interest income was due to reduced interest on loans. The decrease in interest income was more than offset by reduced interest expense on deposits. Total interest expense for the second quarter of 2010 decreased $1.8 million, or 23.3%, compared with the same period in 2009 due primarily to lower interest rates in 2010. Our net interest margin on a tax-equivalent basis for the second quarter of 2010 increased to 3.48% compared with 3.11% in the second quarter of 2009. 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 5.11% for the second quarter of 2010 from 5.21% for the second quarter of 2009. 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 second quarter of 2010 to 1.91% from 2.45% for the second quarter of 2009, due to the continued repricing of new time certificates and FHLB advances at lower interest rates.

Interest and discount income on loan pool participations was $0.9 million for the second quarter of 2010 compared with $0.7 million for the second quarter of 2009, an increase of $0.2 million. Former MidWestOne had engaged in this business since 1988 and we continued the business following the merger. These loan pool participations are pools of performing, sub-performing and nonperforming loans purchased at varying discounts from the aggregate outstanding principal amount of the underlying loans. The loan pools are held and serviced by a third-party independent servicing corporation. We invest in the pools that are purchased by the servicer from nonaffiliated banking organizations and from the FDIC acting as receiver of failed banks and savings associations. We have very minimal exposure in the loan pools to consumer real estate, subprime credit or construction and real estate development loans. Currently, we hold $79.0 million in loan pool participations.

Interest income on investment securities on a tax-equivalent basis totaled $3.9 million in the second quarter of 2010 compared with $3.7 million for the second quarter of 2009, an increase of $0.2 million, or 5.4%, mainly due to a higher investment balance, and despite a lower yield on investments in 2010. The average balance of investments in the second quarter of 2010 was $407.9 million compared with $329.9 million in the second quarter of 2009. The tax-equivalent yield on our investment portfolio in the second quarter of 2010 decreased to 3.87% from 4.64% in the comparable period of 2009 reflecting reinvestment of maturing securities and purchases of new securities at lower market interest rates.

Total noninterest income increased $0.6 million for the second quarter of 2010 compared with the same period for 2009. The increase in 2010 is largely due to the the absence of any impairment losses combined with increased trust and investment fees. We did not recognize any impairment losses on the investment securities portfolio during the second quarter compared with $0.6 million for the second quarter a year ago. Trust and investment fees totaled $1.2 million for the second quarter of 2010, up from $1.0 million for the same period last year.

Mortgage origination and loan servicing fees were $0.5 million in the quarter ended June 30, 2010, a decline of $0.4 million from $0.9 million at June 30, 2009. The decrease in mortgage origination and loan servicing fees was attributable to lower refinancing volume of single family residential loans, as the most creditworthy borrowers have already taken advantage of the historically low interest rates. During the second quarter of 2010, an unused former branch bank building in Waterloo, Iowa was sold at a net loss of $0.1 million. In addition, a $0.1 million writedown was made in connection with the anticipated closure and disposal of a branch bank building located in Burlington, Iowa. 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 June 30, 2010 noninterest income comprised 22.5% of total revenues, compared with 21.2% for the same quarter in 2009.

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