MOFG 10-Q Quarterly Report Sept. 30, 2024

MIDWESTONE FINANCIAL GROUP, INC.

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-Q	Quarter ended March 31, 2012
10-K	Fiscal year ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-Q	Quarter ended March 31, 2011
10-K	Fiscal year ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-Q	Quarter ended March 31, 2010
10-K	Fiscal year ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on March 11, 2025
DEF 14A	Filed on Dec. 31, 2024
DEF 14A	Filed on March 8, 2024
DEF 14A	Filed on Dec. 31, 2023
DEF 14A	Filed on March 15, 2023
DEF 14A	Filed on March 15, 2022
DEF 14A	Filed on Dec. 31, 2021
DEF 14A	Filed on March 16, 2021
DEF 14A	Filed on March 6, 2020
DEF 14A	Filed on March 8, 2019
DEF 14A	Filed on March 9, 2018
DEF 14A	Filed on March 10, 2017
DEF 14A	Filed on March 11, 2016
DEF 14A	Filed on May 15, 2015
DEF 14A	Filed on March 14, 2014
DEF 14A	Filed on March 15, 2013
DEF 14A	Filed on March 16, 2012
DEF 14A	Filed on March 18, 2011
DEF 14A	Filed on March 15, 2010

mofg-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


			Commission file number			001-35968

MIDWESTONE FINANCIAL GROUP, INC.

(Exact name of Registrant as specified in its charter)


Iowa						42-1206172
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

102 South Clinton Street , Iowa City , IA 52240						( 319 ) 356-5800
(Address of principal executive offices, including zip code)						(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1.00 par value

MOFG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

As of November 5, 2024, there were 20,774,919 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

MIDWEST ONE FINANCIAL GROUP, INC.

Form 10-Q Quarterly Report

Table of Contents

Page No.

PART I

Item 1.

Financial Statements (unaudited)

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Shareholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Part II

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

Table of Contents

PART I – FINANCIAL INFORMATION

Glossary of Acronyms, Abbreviations, and Terms

As used in this report, references to "MidWest One ", "we", "our", "us", the "Company", and similar terms refer to the consolidated entity consisting of MidWest One Financial Group, Inc. and its wholly-owned subsidiaries. MidWest One Bank or the "Bank" refers to MidWest One 's bank subsidiary, MidWest One Bank.

The acronyms, abbreviations, and terms listed below are used in various sections of this Quarterly Report on Form 10-Q ("Form 10-Q"), including "Item 1. Financial Statements" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."


ACL	Allowance for Credit Losses	FHLB	Federal Home Loan Bank
AFS	Available for Sale	FHLBC	Federal Home Loan Bank of Chicago
AOCI	Accumulated Other Comprehensive Income	FHLBDM	Federal Home Loan Bank of Des Moines
ASC	Accounting Standards Codification	FHLMC	Federal Home Loan Mortgage Corporation
ASU	Accounting Standards Update	FNBF	First National Bank in Fairfield
ATM	Automated Teller Machine	FNBM	First National Bank of Muscatine
Basel III Rules	A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013	FNMA	Federal National Mortgage Association
BHCA	Bank Holding Company Act of 1956, as amended	FRB	Board of Governors of the Federal Reserve System
BOD	Bank of Denver	GAAP	U.S. Generally Accepted Accounting Principles
BOLI	Bank Owned Life Insurance	GLBA	Gramm-Leach-Bliley Act of 1999
CAA	Consolidated Appropriations Act, 2021	GNMA	Government National Mortgage Association
CARES Act	Coronavirus Aid, Relief and Economic Security Act	HTM	Held to Maturity
CDARS	Certificate of Deposit Account Registry Service	ICS	Insured Cash Sweep
CECL	Current Expected Credit Loss	IOFB	Iowa First Bancshares Corp.
CMO	Collateralized Mortgage Obligations	LIBOR	The London Inter-bank Offered Rate
COVID-19	Coronavirus Disease 2019	MBEFD	Loan Modification for Borrowers Experiencing Financial Difficulty
CRA	Community Reinvestment Act	MBS	Mortgage-Backed Securities
CRE	Commercial Real Estate	PCD	Purchase Credit Deteriorated
DCF	Discounted Cash Flows	PPP	Paycheck Protection Program
DNVB	Denver Bankshares, Inc.	ROU	Right-of-Use
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	RPA	Credit Risk Participation Agreement
ECL	Expected Credit Losses	RRE	Residential Real Estate
EVE	Economic Value of Equity	SBA	U.S. Small Business Administration
FASB	Financial Accounting Standards Board	SEC	U.S. Securities and Exchange Commission
FDIC	Federal Deposit Insurance Corporation	SOFR	Secured Overnight Financing Rate

Table of Contents

Item 1. Financial Statements (unaudited).

MIDWEST ONE FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS


	September 30, 2024		December 31, 2023
(unaudited) (dollars in thousands, except per share amounts)
ASSETS
Cash and due from banks	$	72,173	$	76,237
Interest earning deposits in banks	129,695		5,479
Federal funds sold	—		11
Total cash and cash equivalents	201,868		81,727
Debt securities available for sale at fair value	1,623,104		795,134
Held to maturity securities at amortized cost	—		1,075,190
Total securities	1,623,104		1,870,324
Loans held for sale	3,283		1,045
Gross loans held for investment	4,344,559		4,138,352
Unearned income, net	( 15,803 )		( 11,405 )
Loans held for investment, net of unearned income	4,328,756		4,126,947
Allowance for credit losses	( 54,000 )		( 51,500 )
Total loans held for investment, net	4,274,756		4,075,447
Premises and equipment, net	90,750		85,742
Goodwill	69,788		62,477
Other intangible assets, net	26,469		24,069
Foreclosed assets, net	3,583		3,929
Other assets	258,881		222,780
Total assets	$	6,552,482	$	6,427,540

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing deposits	$	917,715	$	897,053
Interest bearing deposits	4,451,012		4,498,620
Total deposits	5,368,727		5,395,673
Short-term borrowings	410,630		300,264
Long-term debt	115,051		123,296
Other liabilities	95,836		83,929
Total liabilities	5,990,244		5,903,162

Shareholders' equity
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding	—		—
Common stock, $ 1.00 par value; authorized 30,000,000 shares; issued shares of 21,580,067 and 16,581,017 ; outstanding shares of 20,774,919 and 15,694,306	21,580		16,581
Additional paid-in capital	414,965		302,157
Retained earnings	206,490		294,784
Treasury stock at cost, 805,148 and 886,711 shares	( 21,955 )		( 24,245 )
Accumulated other comprehensive loss	( 58,842 )		( 64,899 )
Total shareholders' equity	562,238		524,378
Total liabilities and shareholders' equity	$	6,552,482	$	6,427,540

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWEST ONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(unaudited) (dollars in thousands, except per share amounts)	2024		2023		2024		2023
Interest income
Loans, including fees	$	62,521	$	51,870	$	182,111	$	148,086
Taxable investment securities	8,779		9,526		27,467		29,704
Tax-exempt investment securities	1,611		1,802		4,984		5,751
Other	785		374		1,445		686
Total interest income	73,696		63,572		216,007		184,227
Interest expense
Deposits	29,117		23,128		85,785		58,564
Short-term borrowings	5,043		3,719		15,427		7,623
Long-term debt	2,015		2,150		6,196		6,427
Total interest expense	36,175		28,997		107,408		72,614
Net interest income	37,521		34,575		108,599		111,613
Credit loss expense	1,535		1,551		7,491		4,081
Net interest income after credit loss expense	35,986		33,024		101,108		107,532
Noninterest income
Investment services and trust activities	3,410		3,004		10,417		9,056
Service charges and fees	2,170		2,146		6,470		6,201
Card revenue	1,935		1,817		5,785		5,412
Loan revenue	760		1,462		3,141		3,791
Bank-owned life insurance	879		626		2,207		1,844


Investment securities (losses) gains, net	( 140,182 )		79		( 140,113 )		( 13,093 )
Other	640		727		13,009		1,350
Total noninterest (loss) income	( 130,388 )		9,861		( 99,084 )		14,561
Noninterest expense
Compensation and employee benefits	19,943		18,558		61,858		58,551
Occupancy expense of premises, net	2,443		2,405		7,691		7,725
Equipment	2,486		2,123		7,616		6,729
Legal and professional	2,261		1,678		6,573		5,096
Data processing	1,580		1,504		4,585		4,388
Marketing	619		782		1,853		2,910
Amortization of intangibles	1,470		1,460		4,700		4,806
FDIC insurance	923		783		2,916		2,394
Communications	159		206		546		727
Foreclosed assets, net	330		2		826		( 32 )

Other	3,584		2,043		7,960		6,488
Total noninterest expense	35,798		31,544		107,124		99,782
(Loss) income before income tax (benefit) expense	( 130,200 )		11,341		( 105,100 )		22,311
Income tax (benefit) expense	( 34,493 )		2,203		( 28,481 )		4,182
Net (loss) income	$	( 95,707 )	$	9,138	$	( 76,619 )	$	18,129

Per common share information
Earnings (loss) - basic	$	( 6.05 )	$	0.58	$	( 4.86 )	$	1.16
Earnings (loss) - diluted	$	( 6.05 )	$	0.58	$	( 4.86 )	$	1.15
Dividends paid	$	0.2425	$	0.2425	$	0.7275	$	0.7275

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWEST ONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(unaudited) (dollars in thousands)	2024		2023		2024		2023
Net (loss) income	$	( 95,707 )	$	9,138	$	( 76,619 )	$	18,129

Other comprehensive income (loss), net of tax:
Unrealized (loss) gain from AFS debt securities:
Unrealized net loss on debt securities AFS	( 137,647 )		( 4,578 )		( 132,473 )		( 13,658 )
Reclassification adjustment for losses (gains) included in net income	140,182		( 79 )		140,113		13,093
Reclassification of the change in fair value of AFS debt securities attributable to change in hedged risk	( 687 )		454		299		454
Income tax (expense) benefit	( 467 )		1,065		( 2,009 )		27
Unrealized net gain (loss) on AFS debt securities, net of reclassification adjustments	1,381		( 3,138 )		5,930		( 84 )
Reclassification of AFS debt securities to HTM on January 1, 2022:
Amortization of the net unrealized loss from the reclassification of AFS debt securities to HTM	356		586		1,346		1,768
Income tax expense	( 91 )		( 148 )		( 341 )		( 447 )
Amortization of net unrealized loss from the reclassification of AFS debt securities to HTM, net	265		438		1,005		1,321
Unrealized (loss) gain from cash flow hedging instruments:
Unrealized net (loss) gain in cash flow hedging instruments	( 2,388 )		1,829		1,162		5,288
Reclassification adjustment for net gain in cash flow hedging instruments included in income	( 763 )		( 761 )		( 2,338 )		( 999 )
Income tax benefit (expense)	798		( 270 )		298		( 1,085 )
Unrealized net (losses) gains on cash flow hedging instruments, net of reclassification adjustment	( 2,353 )		798		( 878 )		3,204
Other comprehensive (loss) income, net of tax	( 707 )		( 1,902 )		6,057		4,441
Comprehensive (loss) income	$	( 96,414 )	$	7,236	$	( 70,562 )	$	22,570

See accompanying notes to consolidated financial statements.

Table of Contents

MIDWEST ONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


Three Months Ended September 30,
	Common Stock
(unaudited) (dollars in thousands, except per share amounts)	Par Value		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total














Balance at June 30, 2023	$	16,581	$	301,424	$	290,548	$	( 24,508 )	$	( 82,704 )	$	501,341
Net income	—		—		9,138		—		—		9,138
Other comprehensive loss	—		—		—		—		( 1,902 )		( 1,902 )
Release/lapse of restriction on RSUs ( 6,615 shares, net)	—		( 227 )		( 19 )		193		—		( 53 )

Share-based compensation	—		692		—		—		—		692
Dividends paid on common stock ($ 0.2425 per share)	—		—		( 3,805 )		—		—		( 3,805 )
Balance at September 30, 2023	$	16,581	$	301,889	$	295,862	$	( 24,315 )	$	( 84,606 )	$	505,411















Balance at June 30, 2024	$	16,581	$	300,831	$	306,030	$	( 22,021 )	$	( 58,135 )	$	543,286
Net loss	—		—		( 95,707 )		—		—		( 95,707 )
Other comprehensive loss	—		—		—		—		( 707 )		( 707 )
Issuance of common stock ( 4,999,050 shares), net of expenses $ 257	4,999		113,634		—		—		—		118,633
Release/lapse of restriction on RSUs ( 2,401 shares, net)	—		( 87 )		( 8 )		66		—		( 29 )

Share-based compensation	—		587		—		—		—		587
Dividends paid on common stock ($ 0.2425 per share)	—		—		( 3,825 )		—		—		( 3,825 )
Balance at September 30, 2024	$	21,580	$	414,965	$	206,490	$	( 21,955 )	$	( 58,842 )	$	562,238

Nine Months Ended September 30,
	Common Stock
(unaudited) (dollars in thousands, except per share amounts)	Par Value		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2022	$	16,581	$	302,085	$	289,289	$	( 26,115 )	$	( 89,047 )	$	492,793
Net income	—		—		18,129		—		—		18,129
Other comprehensive income	—		—		—		—		4,441		4,441
Release/lapse of restriction on RSUs ( 67,761 shares, net)	—		( 2,261 )		( 146 )		1,800		—		( 607 )

Share-based compensation	—		2,065		—		—		—		2,065
Dividends paid on common stock ($ 0.7275 per share)	—		—		( 11,410 )		—		—		( 11,410 )
Balance at September 30, 2023	$	16,581	$	301,889	$	295,862	$	( 24,315 )	$	( 84,606 )	$	505,411

Balance at December 31, 2023	$	16,581	$	302,157	$	294,784	$	( 24,245 )	$	( 64,899 )	$	524,378
Net loss	—		—		( 76,619 )		—		—		( 76,619 )
Other comprehensive income	—		—		—		—		6,057		6,057
Issuance of common stock ( 4,999,050 shares), net of expenses $ 257	4,999		113,634		—		—		—		118,633
Release/lapse of restriction on RSUs ( 81,563 shares, net)	—		( 2,638 )		( 205 )		2,290		—		( 553 )

Share-based compensation	—		1,812		—		—		—		1,812
Dividends paid on common stock ($ 0.7275 per share)	—		—		( 11,470 )		—		—		( 11,470 )
Balance at September 30, 2024	$	21,580	$	414,965	$	206,490	$	( 21,955 )	$	( 58,842 )	$	562,238

Table of Contents

MIDWEST ONE FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
(unaudited) (dollars in thousands)	2024		2023
Operating Activities:
Net (loss) income	$	( 76,619 )	$	18,129
Adjustments to reconcile net income to net cash provided by operating activities:
Credit loss expense	7,491		4,081

Depreciation, amortization, and accretion	8,269		9,420


Net change in premises and equipment due to writedown or sale	78		68
Share-based compensation	1,812		2,065
Net (gain) loss on call or sale of debt securities available for sale	( 247 )		13,093

Impairment of debt securities	140,360		—


Net change in foreclosed assets due to writedown or sale	268		( 29 )
Net gain on sale of loans held for sale	( 989 )		( 912 )
Origination of loans held for sale	( 48,313 )		( 41,650 )
Proceeds from sales of loans held for sale	47,064		40,646
Increase in cash surrender value of bank-owned life insurance	( 2,000 )		( 1,844 )
Increase in deferred income taxes, net	( 36,176 )		( 75 )
Gain on branch sale	( 10,949 )		—
Change in:
Other assets	5,916		( 2,701 )
Other liabilities	( 3,903 )		15,543
Net cash provided by operating activities	$	32,062	$	55,834
Investing Activities:

Purchases of equity securities	$	( 500 )	$	( 750 )
Proceeds from sales of debt securities available for sale	52,323		218,667
Proceeds from maturities, calls and payments of debt securities available for sale	116,506		101,194
Purchases of debt securities available for sale	( 28,376 )		( 54,690 )

Proceeds from maturities, calls, and payments of debt securities held to maturity	36,881		43,963
Net increase in loans held for investment	( 158,941 )		( 224,068 )
Purchases of premises and equipment	( 1,367 )		( 2,280 )
Proceeds from sale of foreclosed assets	3,088		135
Proceeds from sale of premises and equipment	7		880
Net cash paid in business acquisition	( 28,621 )		—
Net cash received in divestiture of branches	43,625		—

Proceeds of principal and earnings from bank-owned life insurance	645		—
Net cash provided by investing activities	$	35,270	$	83,051
Financing Activities:
Net (decrease) increase in:
Deposits	$	( 118,202 )	$	( 105,713 )
Short-term borrowings	72,866		( 17,917 )


Payments on finance lease liability	( 152 )		( 135 )
Proceeds from Federal Home Loan Bank borrowings	3,187		—
Payments of Federal Home Loan Bank borrowings	( 6,250 )		( 11,000 )

Payments of other long-term debt	( 5,250 )		( 3,750 )

Taxes paid relating to the release/lapse of restriction on RSUs	( 553 )		( 607 )
Dividends paid	( 11,470 )		( 11,410 )
Proceeds from issuance of common stock	118,890		—
Payment of stock issuance costs	( 257 )		—

Net cash provided by (used in) financing activities	$	52,809	$	( 150,532 )
Net change in cash and cash equivalents	$	120,141	$	( 11,647 )
Cash and cash equivalents at beginning of period	81,727		86,435
Cash and cash equivalents at end of period	$	201,868	$	74,788

Table of Contents


	Nine Months Ended September 30,
(unaudited) (dollars in thousands)	2024		2023
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	97,302	$	65,992
Cash paid during the period for income taxes, net of refunds	7,610		1,456
Supplemental schedule of non-cash investing and financing activities:
Transfer of loans to foreclosed assets, net	$	3,010	$	3

Investment securities purchased but not settled	12,049		—

Transfer of debt securities held to maturity to available for sale	1,046,489		—
Supplemental schedule of non-cash investing activities from acquisition:
Non-cash assets acquired:
Investment securities	$	52,493	$	—
Total loans held for investment, net	207,095		—
Premises and equipment	11,091		—
Assets held for sale	1,979		—
Goodwill	9,041		—
Core deposit intangible	7,100		—

Other assets	4,987		—
Total non-cash assets acquired	$	293,786	$	—
Liabilities assumed:
Deposits	$	224,248	$	—
Short-term borrowings	37,500		—

Other liabilities	3,417		—
Total liabilities assumed	$	265,165	$	—
Supplemental schedule of non-cash investing activities from divestiture:
Non-cash assets divested:
Total loans held for investment, net	$	161,359	$	—
Premises and equipment	3,511		—
Goodwill	1,730		—
Other assets	375		—
Total non-cash assets divested	$	166,975	$	—
Liabilities divested:
Deposits	$	133,403	$	—
Other liabilities	231		—
Total liabilities divested	$	133,634	$	—

See accompanying notes to consolidated financial statements.

Table of Contents

MidWest One Financial Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Significant Accounting Policies

Nature of Business

The Company, an Iowa corporation formed in 1983, is a bank holding company under the BHCA and a financial holding company under the GLBA. Our principal executive offices are located at 102 South Clinton Street, Iowa City, Iowa 52240.

The Company owns all of the outstanding common stock of MidWest One Bank, an Iowa state non-member bank chartered in 1934 with its main office in Iowa City, Iowa. We operate primarily through MidWest One Bank, our bank subsidiary.

On January 31, 2024, the Company completed the acquisition of DNVB, a bank holding company whose wholly-owned banking subsidiary was BOD. Immediately following completion of the acquisition, BOD was merged with and into the Bank. As consideration for the merger, the Company paid cash in the amount of $ 32.6 million.

On June 7, 2024, MidWest One Bank completed the sale of its Florida banking operations for a 7.5 % deposit premium, which consisted of one MidWest One Bank branch in each of Naples and Ft. Myers, Florida.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, certain disclosures accompanying annual consolidated financial statements are omitted. In the opinion of management, all significant intercompany accounts and transactions have been eliminated and adjustments, consisting solely of normal recurring accruals and considered necessary for the fair presentation of financial statements for the interim periods, have been included. The current period's results of operations are not necessarily indicative of the results that ultimately may be achieved for the year. The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) the disclosure of contingent assets and liabilities at the date of the financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made. Actual results could differ from those estimates. The results for the three and nine months ended September 30, 2024 may not be indicative of results for the year ending December 31, 2024, or for any other period.

All significant accounting policies followed in the preparation of the quarterly financial statements are disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024.

Segment Reporting

The Company’s activities are considered to be one reportable segment for financial reporting purposes. The Company is engaged in the business of commercial and retail banking and trust and investment management services with operations throughout central and eastern Iowa, the Minneapolis/St. Paul metropolitan area, southwestern Wisconsin, and Denver, Colorado. Substantially all income is derived from a diverse base of commercial, mortgage and retail lending activities, and investments.

Effect of New Financial Accounting Standards

Accounting Guidance Pending Adoption at September 30, 2024

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . ASC 848 contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. Certain optional expedients and exceptions for contract modifications and hedging relationships were amended in ASU 2021-01, Reference Rate Reform (Topic 848): Scope Refinement , issued on January 7, 2021. In addition, ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset

Table of Contents

Date of Topic 848 , deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which time entities will no longer be permitted to apply the relief in Topic 848. The adoption of ASU 2020-04 is not expected to have a material impact on the Company’s consolidated financial statements.

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. Enhanced disclosures about significant segment expenses are included within this ASU. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with an option to early adopt. The amendments should be applied retrospectively to all prior periods presented in the financial statements, with the segment expense categories and amounts disclosed in prior periods being based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact of ASU 2023-07.

On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures . Additional transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information, will be required. The amendments are effective for annual periods beginning after December 15, 2024, with an option to early adopt. The amendments should be applied on a prospective basis, with retrospective application being permitted. The Company is currently evaluating the impact of ASU 2023-09.

Accounting Guidance Adopted in 2024

On March 29, 2023, the FASB issued ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method . Under this ASU, if certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with an option to early adopt. The amendments must be applied on either a modified retrospective or a retrospective basis, with certain exceptions for low-income-housing tax credit structures that are not accounted for using the proportional amortization method. The adoption of ASU 2023-02 was applied on a modified retrospective basis and did not have a material impact on the Company's consolidated financial statements.

2. Business Combinations and Divestitures

Business Combinations:

On January 31, 2024, the Company acquired 100 % of the equity of DNVB through a merger and acquired its wholly-owned banking subsidiary, Bank of Denver, for cash consideration of $ 32.6 million. The primary reason for the acquisition was to increase our presence in Denver, Colorado. Immediately following the completion of the acquisition, BOD was merged with and into the Bank.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the January 31, 2024 acquisition date, net of any applicable tax effects using a methodology similar to the Company's legacy assets and liabilities (refer to Note 14. Fair Value of Financial Instruments and Fair Value Measurements for additional information regarding the fair value methodology). Initial accounting for the assets acquired and liabilities assumed was incomplete at September 30, 2024. Thus, such amounts recognized in the financial statements have been determined to be provisional. The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill. This goodwill is not deductible for tax purposes. The revenue and earnings amount specific to DNVB since the acquisition date that are included in the consolidated results for the three and nine months ended September 30, 2024 are not readily determinable. The disclosures of these amounts are impracticable due to the merging of certain processes and systems at the acquisition date.

Table of Contents

The table below summarizes the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed:


(in thousands)	January 31, 2024

Merger consideration
Cash consideration	$	32,600
Identifiable net assets acquired, at fair value
Assets acquired
Cash and due from banks	$	462
Interest earning deposits in banks	3,517
Debt securities	52,493
Loans held for investment	207,095
Premises and equipment	13,070
Core deposit intangible	7,100
Other assets	4,987
Total assets acquired	288,724
Liabilities assumed
Deposits	$	( 224,248 )
Short-term borrowings	( 37,500 )
Other liabilities	( 3,417 )
Total liabilities assumed	( 265,165 )
Identifiable net assets acquired, at fair value	23,559
Goodwill	$	9,041

For illustrative purposes only, the following table presents certain unaudited pro forma information for the three and nine months ended September 30, 2024 and September 30, 2023. This unaudited, estimated pro forma information was calculated as if DNVB had been acquired as of the beginning of the year prior to the date of acquisition. This unaudited pro forma information combines the historical results of DNVB and the Company and includes adjustments for the estimated impact of certain fair value purchase accounting, interest expense, acquisition-related expenses, and income tax expense for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. Additionally, the Company expects to achieve further operating cost savings and other business synergies, including revenue growth as a result of the acquisition, which are not reflected in the pro forma amounts that follow. As a result, actual amounts would have differed from the unaudited pro forma information presented.


	Unaudited
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share amounts)	2024		2023		2024		2023
Total revenues	$	( 93,277 )	$	47,606	$	9,799	$	135,179
Net (loss) income	$	( 95,887 )	$	9,685	$	( 73,226 )	$	15,268
EPS - basic	$	( 6.06 )	$	0.62	$	( 4.64 )	$	0.97
EPS - diluted	$	( 6.06 )	$	0.62	$	( 4.64 )	$	0.97

Table of Contents

The following table summarizes acquisition and divestiture-related expenses incurred during the three and nine months ended September 30, 2024 and September 30, 2023, which are included in the respective income statement line items, for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2024		2023		2024		2023
Noninterest Expense
Compensation and employee benefits	$	—	$	—	$	314	$	70
Occupancy expense of premises, net	—		—		152		—
Equipment	—		—		177		—
Legal and professional	127		11		1,162		11
Data processing	—		—		312		65
Marketing	—		—		32		—
Communications	—		—		9		—
Other	6		—		143		1
Total acquisition and divestiture-related expenses	$	133	$	11	$	2,301	$	147

Divestitures:

On June 7, 2024, the Bank completed the sale of its Florida banking operations for a 7.5 % deposit premium, which consisted of one bank branch in each of Naples and Ft. Myers, Florida. The sale of our Florida banking operations resulted in a gain on sale of $ 10.9 million that was recorded in other revenue.

The following is a summary of the assets and liabilities related to the branch sale:


(in thousands)	June 7, 2024

Assets
Cash and due from banks		$	353
Loans held for investment, net of unearned income		163,302
Allowance for credit losses		( 1,943 )
Total loans held for investment, net		161,359
Premises and equipment		3,511
Goodwill		1,730
Other assets		375
Total assets		$	167,328
Liabilities
Deposits		$	133,403
Other liabilities		231
Total liabilities		$	133,634

3. Debt Securities

Subsequent to quarter end, as part of a balance sheet repositioning, the Company sold $ 1.0 billion of debt securities, including securities previously classified as HTM. The decision to sell HTM securities necessitated the reclassification, on September 30, 2024, of all HTM securities to AFS. On September 30, 2024, the HTM securities reclassified had an amortized cost basis of $ 1.04 billion and a fair value of $ 870.2 million. The Company recognized an unrealized loss of $ 45.7 million in accumulated other comprehensive income associated with the HTM securities reclassified, and an impairment loss of $ 140.4 million in pre-tax earnings associated with the securities sold during the fourth quarter of 2024.

Table of Contents

The following tables summarize the amortized cost, gross unrealized gains and losses and the resulting fair value of debt securities as of the dates indicated:


	As of September 30, 2024
(in thousands)	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss related to Debt Securities		Fair Value
Available for Sale


State and political subdivisions	$	603,069	$	3	$	20,027	$	—	$	583,045
Mortgage-backed securities	68,024		9		2,757		—		65,276
Collateralized loan obligations	50,470		108		56		—		50,522
Collateralized mortgage obligations	573,621		127		42,980		—		530,768
Corporate debt securities	406,267		127		12,901		—		393,493
Total available for sale debt securities	$	1,701,451	$	374	$	78,721	$	—	$	1,623,104
(1) Amortized cost reflects impairment recognized in earnings as follows: $ 45.9 million of state and political subdivisions, $ 7.4 million of mortgage-backed securities, $ 70.0 million of collateralized mortgage obligations, and $ 17.1 million of corporate debt securities.


	As of December 31, 2023
(in thousands)	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss related to Debt Securities		Fair Value
Available for Sale


State and political subdivisions	$	139,482	$	2	$	9,345	$	—	$	130,139
Mortgage-backed securities	5,448		5		142		—		5,311
Collateralized loan obligations	50,541		135		239		—		50,437
Collateralized mortgage obligations	190,304		—		21,108		—		169,196
Corporate debt securities	487,361		57		47,367		—		440,051
Total available for sale debt securities	$	873,136	$	199	$	78,201	$	—	$	795,134

Held to Maturity

State and political subdivisions	$	532,422	$	—	$	65,932	$	—	$	466,490
Mortgage-backed securities	74,904		—		11,635		—		63,269

Collateralized mortgage obligations	467,864		—		102,360		—		365,504

Total held to maturity debt securities	$	1,075,190	$	—	$	179,927	$	—	$	895,263
(1) Amortized cost for the held to maturity securities includes $ 0.2 million of unamortized gain in state and political subdivisions, $ 58 thousand of unamortized gains in mortgage-backed securities and $ 9.7 million of unamortized losses in collateralized mortgage obligations related to the re-classification of securities from available for sale to held to maturity on January 1, 2022.

Investment securities with a fair value of $ 885.2 million and $ 1.16 billion at September 30, 2024 and December 31, 2023, respectively, were pledged on public deposits, securities sold under agreements to repurchase and for other purposes, as required or permitted by law.

Accrued interest receivable on available for sale debt securities and held to maturity debt securities is recorded within 'Other Assets,' and is excluded from the estimate of credit losses. At September 30, 2024, the accrued interest receivable on available for sale debt securities was $ 8.6 million. There was no accrued interest on held to maturity debt securities at September 30, 2024, as the entire portfolio was reclassified as available for sale. At December 31, 2023 the accrued interest receivable on available for sale debt securities and held to maturity debt securities totaled $ 5.5 million and $ 3.7 million, respectively.

Table of Contents

The following table presents debt securities AFS in an unrealized loss position for which an allowance for credit losses had not been recorded as of September 30, 2024, aggregated by investment category and length of time in a continuous loss position:


		As of September 30, 2024
	Number of Securities	Less than 12 Months				12 Months or More				Total
Available for Sale		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(in thousands, except number of securities)

State and political subdivisions	364	$	592	$	4	$	580,218	$	20,023	$	580,810	$	20,027
Mortgage-backed securities	36	—		—		64,810		2,757		64,810		2,757
Collateralized loan obligations	4	28,026		38		2,594		18		30,620		56
Collateralized mortgage obligations	90	—		—		471,848		42,980		471,848		42,980
Corporate debt securities	121	—		—		380,003		12,901		380,003		12,901
Total	615	$	28,618	$	42	$	1,499,473	$	78,679	$	1,528,091	$	78,721

As of September 30, 2024, 364 state and political subdivisions securities with total unrealized losses of $ 20.0 million were held by the Company. Management evaluated these securities through a process that included consideration of credit agency ratings and payment history. In addition, management evaluated securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of September 30, 2024, 36 mortgage-backed securities and 90 collateralized mortgage obligations with unrealized losses totaling $ 45.7 million were held by the Company. Management evaluated the payment history of these securities, and considered the implied U.S. government guarantee of these agency securities and the level of credit enhancement for non-agency securities. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of September 30, 2024, 4 collateralized loan obligations with unrealized losses of $ 56 thousand were held by the Company. Management evaluated these securities through a process that included consideration of credit agency ratings, priority of cash flows and the amount of over-collateralization. In addition, management may evaluate securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

As of September 30, 2024, 121 corporate debt securities with total unrealized losses of $ 12.9 million were held by the Company. Management evaluated these securities by considering credit agency ratings and payment history. In addition, management evaluated securities by considering the yield spread to treasury securities and the most recent financial information available. Based on this evaluation, management concluded that the decline in fair value was not attributable to credit losses.

The following table presents debt securities AFS in an unrealized loss position for which an allowance for credit losses has not been recorded as of December 31, 2023, aggregated by investment category and length of time in a continuous loss position:


		As of December 31, 2023
Available for Sale	Number of Securities	Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(in thousands, except number of securities)

State and political subdivisions	149	$	8,417	$	492	$	114,713	$	8,853	$	123,130	$	9,345
Mortgage-backed securities	19	—		—		4,906		142		4,906		142
Collateralized loan obligations	2	17,696		239		—		—		17,696		239
Collateralized mortgage obligations	20	6,278		90		127,792		21,018		134,070		21,108
Corporate debt securities	133	2,377		80		429,222		47,287		431,599		47,367
Total	323	$	34,768	$	901	$	676,633	$	77,300	$	711,401	$	78,201

Table of Contents

Proceeds and gross realized gains and losses on debt securities available for sale for the three and nine months ended September 30, 2024 and 2023, were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2024		2023		2024		2023
Proceeds from sales of debt securities available for sale	$	—	$	—	$	52,323	$	218,667


Gross realized losses from sales of debt securities available for sale (1)	—		—		—		( 13,170 )
Net realized loss from sales of debt securities available for sale (1)	$	—	$	—	$	—	$	( 13,170 )

(1) The difference in investment securities (losses) gains, net reported herein as compared to the Consolidated Statements of Income for the three and nine months ended September 30, 2024 is associated with the net realized gain from the call of debt securities of $ 178 thousand and $ 247 thousand, respectively, coupled with the securities impairment of $ 140.4 million recognized in the three and nine months ended September 30, 2024. The difference in investment securities (losses), gains, net reported herein as compared to the Consolidated Statements of Income for the three and nine months ended September 30, 2023 is associated with the net realized gain from the call of debt securities of $ 79 thousand and $ 77 thousand, respectively.

The contractual maturity distribution of investment debt securities at September 30, 2024 is shown below. Expected maturities of MBS, CLO and CMO may differ from contractual maturities because the mortgages underlying the securities may be called or prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following summary.


	Available for Sale
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	71,084	$	70,904
Due after one year through five years	465,017		463,392
Due after five years through ten years	360,340		343,899
Due after ten years	112,895		98,343
	$	1,009,336	$	976,538
Mortgage-backed securities	68,024		65,276
Collateralized loan obligations	50,470		50,522
Collateralized mortgage obligations	573,621		530,768
Total	$	1,701,451	$	1,623,104

Table of Contents

4. Loans Receivable and the Allowance for Credit Losses

The composition of loans by class of receivable was as follows:



(in thousands)	As of September 30, 2024		As of December 31, 2023
Agricultural	$	112,696	$	118,414
Commercial and industrial	1,149,758		1,075,003
Commercial real estate:
Construction & development	386,920		323,195
Farmland	182,164		184,955
Multifamily	409,544		383,178
Commercial real estate-other	1,353,513		1,333,982
Total commercial real estate	2,332,141		2,225,310
Residential real estate:
One- to four- family first liens	485,210		459,798
One- to four- family junior liens	176,827		180,639
Total residential real estate	662,037		640,437
Consumer	72,124		67,783
Loans held for investment, net of unearned income	4,328,756		4,126,947
Allowance for credit losses	( 54,000 )		( 51,500 )
Total loans held for investment, net	$	4,274,756	$	4,075,447

Loans with unpaid principal in the amount of $ 1.20 billion and $ 1.13 billion at September 30, 2024 and December 31, 2023, respectively, were pledged to the FHLB as collateral for borrowings.

Non-accrual and Delinquent Status

Loans are placed on non-accrual status when (1) payment in full of principal and interest is no longer expected or (2) principal or interest has been in default for 90 days or more for all loan types, except owner occupied residential real estate, which are moved to non-accrual at 120 days or more past due, unless the loan is both well secured with marketable collateral and in the process of collection. All loans rated doubtful or worse, and certain loans rated substandard, are placed on non-accrual.

A non-accrual loan may be restored to accrual status when (1) all past due principal and interest has been paid (excluding renewals and modifications that involve the capitalizing of interest) or (2) the loan becomes well secured with marketable collateral and is in the process of collection. An established track record of performance is also considered when determining accrual status.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

Table of Contents

The following tables present the amortized cost basis of loans based on delinquency status at the dates indicated:


			Age Analysis of Past-Due Financial Assets								90 Days or More Past Due And Accruing
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
September 30, 2024
Agricultural	$	112,018	$	279	$	—	$	399	$	112,696	$	—
Commercial and industrial	1,139,357		618		52		9,731		1,149,758		—
Commercial real estate:
Construction and development	386,667		—		253		—		386,920		—
Farmland	179,097		2,714		—		353		182,164		—
Multifamily	409,544		—		—		—		409,544		—
Commercial real estate-other	1,345,302		1,984		61		6,166		1,353,513		—
Total commercial real estate	2,320,610		4,698		314		6,519		2,332,141		—
Residential real estate:
One- to four- family first liens	478,489		3,388		937		2,396		485,210		1,198
One- to four- family junior liens	175,831		215		243		538		176,827		6
Total residential real estate	654,320		3,603		1,180		2,934		662,037		1,204
Consumer	71,728		263		85		48		72,124		48
Total	$	4,298,033	$	9,461	$	1,631	$	19,631	$	4,328,756	$	1,252























			Age Analysis of Past-Due Financial Assets								90 Days or More Past Due And Accruing
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
December 31, 2023
Agricultural	$	117,852	$	338	$	—	$	224	$	118,414	$	—
Commercial and industrial	1,058,301		440		401		15,861		1,075,003		—
Commercial real estate:
Construction and development	323,165		30		—		—		323,195		—
Farmland	182,759		677		352		1,167		184,955		—
Multifamily	383,178		—		—		—		383,178		—
Commercial real estate-other	1,327,727		2,129		1,290		2,836		1,333,982		—
Total commercial real estate	2,216,829		2,836		1,642		4,003		2,225,310		—
Residential real estate:
One- to four- family first liens	453,212		3,572		1,741		1,273		459,798		468
One- to four- family junior liens	179,339		356		690		254		180,639		—
Total residential real estate	632,551		3,928		2,431		1,527		640,437		468
Consumer	67,622		118		28		15		67,783		—
Total	$	4,093,155	$	7,660	$	4,502	$	21,630	$	4,126,947	$	468

Table of Contents

The following table presents the amortized cost basis of loans on non-accrual status, amortized cost basis of loans on non-accrual status with no allowance for credit losses recorded, and loans past due 90 days or more and still accruing by class of loan at the dates presented:


	Nonaccrual				Nonaccrual with no Allowance for Credit Losses				90 Days or More Past Due And Accruing
(in thousands)	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023

Agricultural	$	456	$	235	$	208	$	12	$	—	$	—
Commercial and industrial	9,807		17,770		9,062		12,549		—		—
Commercial real estate:
Construction and development	—		—		—		—		—		—
Farmland	481		1,654		341		1,490		—		—
Multifamily	—		—		—		—		—		—
Commercial real estate-other	6,318		3,441		830		853		—		—
Total commercial real estate	6,799		5,095		1,171		2,343		—		—
Residential real estate:
One- to four- family first liens	2,519		1,888		828		455		1,198		468
One- to four- family junior liens	1,023		876		392		—		6		—
Total residential real estate	3,542		2,764		1,220		455		1,204		468
Consumer	98		27		—		—		48		—
Total	$	20,702	$	25,891	$	11,661	$	15,359	$	1,252	$	468

The interest income recognized on loans that were on nonaccrual status for the three months ended September 30, 2024 and September 30, 2023 was $ 708 thousand and $ 93 thousand, respectively. The interest income recognized on loans that were on nonaccrual status for the nine months ended September 30, 2024 and September 30, 2023 was $ 960 thousand and $ 186 thousand, respectively.

Credit Quality Information

The Company aggregates loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, and other factors. The Company analyzes loans individually to classify the loans as to credit risk. This analysis includes non-homogenous loans, such as agricultural, commercial and industrial, commercial real estate and non-owner occupied residential real estate loans. Loans not meeting the criteria described below that are analyzed individually are considered to be pass-rated. The Company uses the following definitions for risk ratings:

Special Mention/Watch - A special mention/watch asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention/watch assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard - Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

Homogenous loans, including owner occupied residential real estate and consumer loans, are not individually risk rated. Instead, these loans are categorized based on performance: performing and nonperforming. Nonperforming loans include those loans on nonaccrual and loans greater than 90 days past due and on accrual.

Table of Contents

The following tables set forth the amortized cost basis of loans by class of receivable by credit quality indicator, and vintage, in addition to the current period gross write-offs by class of receivable and vintage, based on the most recent analysis performed, as of September 30, 2024. As of September 30, 2024, there were no 'loss' rated credits.


	Term Loans by Origination Year												Revolving Loans
September 30, 2024 (in thousands)	2024		2023		2022		2021		2020		Prior				Total
Agricultural
Pass	$	9,286	$	7,847	$	10,160	$	5,898	$	2,038	$	1,173	$	71,817		$	108,219
Special mention / watch	266		201		429		240		100		476		850			2,562
Substandard	30		—		211		153		212		192		1,117			1,915
Doubtful	—		—		—		—		—		—		—			—
Total	$	9,582	$	8,048	$	10,800	$	6,291	$	2,350	$	1,841	$	73,784		$	112,696



Commercial and industrial
Pass	$	107,574	$	154,949	$	176,128	$	170,713	$	99,111	$	121,711	$	212,075		$	1,042,261
Special mention / watch	6,478		2,396		27,232		3,602		5,417		6,634		22,293			74,052
Substandard	553		477		1,675		2,887		48		26,660		1,145			33,445
Doubtful	—		—		—		—		—		—		—			—
Total	$	114,605	$	157,822	$	205,035	$	177,202	$	104,576	$	155,005	$	235,513		$	1,149,758



CRE - Construction and development
Pass	$	70,201	$	173,943	$	120,172	$	12,910	$	3,036	$	1,986	$	3,531		$	385,779
Special mention / watch	592		—		29		—		—		—		—			621
Substandard	224		296		—		—		—		—		—			520
Doubtful	—		—		—		—		—		—		—			—
Total	$	71,017	$	174,239	$	120,201	$	12,910	$	3,036	$	1,986	$	3,531		$	386,920



CRE - Farmland
Pass	$	21,743	$	24,553	$	40,048	$	41,344	$	21,014	$	14,673	$	3,012		$	166,387
Special mention / watch	1,654		142		5,502		963		723		1,018		988			10,990
Substandard	563		384		382		583		1,188		1,687		—			4,787
Doubtful	—		—		—		—		—		—		—			—
Total	$	23,960	$	25,079	$	45,932	$	42,890	$	22,925	$	17,378	$	4,000		$	182,164



CRE - Multifamily
Pass	$	18,776	$	42,170	$	109,531	$	105,221	$	69,979	$	19,931	$	3,256		$	368,864
Special mention / watch	11,094		—		449		260		16,525		12,352		—			40,680
Substandard	—		—		—		—		—		—		—			—
Doubtful	—		—		—		—		—		—		—			—
Total	$	29,870	$	42,170	$	109,980	$	105,481	$	86,504	$	32,283	$	3,256		$	409,544



CRE - Other
Pass	$	104,098	$	147,414	$	292,565	$	237,854	$	213,143	$	165,703	$	64,580		$	1,225,357
Special mention / watch	1,506		7,904		18,962		1,501		4,262		5,988		1,928			42,051
Substandard	1,593		294		25,749		18,188		16,357		22,348		1,576			86,105
Doubtful	—		—		—		—		—		—		—			—
Total	$	107,197	$	155,612	$	337,276	$	257,543	$	233,762	$	194,039	$	68,084		$	1,353,513




RRE - One- to four- family first liens
Pass / Performing	$	49,065	$	56,588	$	125,885	$	90,424	$	48,340	$	86,114	$	15,624		$	472,040
Special mention / watch	307		669		1,915		547		608		2,239		—			6,285
Substandard / Nonperforming	—		1,330		1,029		548		103		3,875		—			6,885
Doubtful	—		—		—		—		—		—		—			—
Total	$	49,372	$	58,587	$	128,829	$	91,519	$	49,051	$	92,228	$	15,624		$	485,210







RRE - One- to four- family junior liens
Performing	$	9,738	$	17,905	$	23,890	$	15,555	$	6,606	$	8,097	$	94,007		$	175,798
Nonperforming	—		—		662		69		21		277		—			1,029
Total	$	9,738	$	17,905	$	24,552	$	15,624	$	6,627	$	8,374	$	94,007		$	176,827



Consumer
Performing	$	14,483	$	22,917	$	11,600	$	6,789	$	2,613	$	7,427	$	6,149		$	71,978
Nonperforming	—		66		56		—		24		—		—			146
Total	$	14,483	$	22,983	$	11,656	$	6,789	$	2,637	$	7,427	$	6,149		$	72,124

Table of Contents


	Term Loans by Origination Year												Revolving Loans
September 30, 2024 (in thousands)	2024		2023		2022		2021		2020		Prior				Total
Total by Credit Quality Indicator Category
Pass	$	380,743	$	607,464	$	874,489	$	664,364	$	456,661	$	411,291	$	373,895		$	3,768,907
Special mention / watch	21,897		11,312		54,518		7,113		27,635		28,707		26,059			177,241
Substandard	2,963		2,781		29,046		22,359		17,908		54,762		3,838			133,657

Performing	24,221		40,822		35,490		22,344		9,219		15,524		100,156			247,776
Nonperforming	—		66		718		69		45		277		—			1,175
Total	$	429,824	$	662,445	$	994,261	$	716,249	$	511,468	$	510,561	$	503,948		$	4,328,756

	Term Loans by Origination Year												Revolving Loans
September 30, 2024 (in thousands)	2024		2023		2022		2021		2020		Prior				Total
Year-to-date Current Period Gross Write-offs
Agricultural	$	—	$	—	$	—	$	4	$	—	$	—	$	—		$	4
Commercial and industrial	—		43		330		145		29		1,796		—			2,343



CRE - Other	—		—		—		—		—		35		—			35
RRE - One-to-four-family first liens	—		—		53		22		—		—		—			75

Consumer	8		851		28		10		2		14		—			913
Total Current Period Gross Write-offs	$	8	$	894	$	411	$	181	$	31	$	1,845	$	—		$	3,370

Table of Contents

The following tables set forth the amortized cost basis of loans by class of receivable by credit quality indicator and vintage based on the most recent analysis performed, as of December 31, 2023. As of December 31, 2023, there were no 'loss' rated credits.


	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Agricultural
Pass	$	11,859	$	12,149	$	8,352	$	2,752	$	689	$	1,139	$	71,680		$	108,620
Special mention / watch	266		550		670		91		5		522		3,705			5,809
Substandard	709		193		302		208		—		224		2,349			3,985
Doubtful	—		—		—		—		—		—		—			—
Total	$	12,834	$	12,892	$	9,324	$	3,051	$	694	$	1,885	$	77,734		$	118,414
Commercial and industrial
Pass	$	176,021	$	224,924	$	193,011	$	117,326	$	25,555	$	116,661	$	147,690		$	1,001,188
Special mention / watch	2,541		416		3,209		3,385		193		272		14,692			24,708
Substandard	897		2,921		2,010		561		8,507		29,432		4,779			49,107
Doubtful	—		—		—		—		—		—		—			—
Total	$	179,459	$	228,261	$	198,230	$	121,272	$	34,255	$	146,365	$	167,161		$	1,075,003
CRE - Construction and development
Pass	$	99,803	$	163,126	$	43,189	$	3,393	$	821	$	700	$	9,552		$	320,584
Special mention / watch	1,097		—		464		—		—		—		467			2,028
Substandard	343		240		—		—		—		—		—			583
Doubtful	—		—		—		—		—		—		—			—
Total	$	101,243	$	163,366	$	43,653	$	3,393	$	821	$	700	$	10,019		$	323,195
CRE - Farmland
Pass	$	25,666	$	44,907	$	47,068	$	18,863	$	6,587	$	14,845	$	1,642		$	159,578
Special mention / watch	1,229		6,898		2,409		5,982		—		965		276			17,759
Substandard	1,830		210		1,542		1,052		926		2,029		29			7,618
Doubtful	—		—		—		—		—		—		—			—
Total	$	28,725	$	52,015	$	51,019	$	25,897	$	7,513	$	17,839	$	1,947		$	184,955
CRE - Multifamily
Pass	$	32,077	$	96,969	$	111,032	$	77,532	$	8,701	$	6,508	$	4,208		$	337,027
Special mention / watch	5,318		1,237		277		18,984		7,850		4,586		—			38,252
Substandard	—		—		7,572		327		—		—		—			7,899
Doubtful	—		—		—		—		—		—		—			—
Total	$	37,395	$	98,206	$	118,881	$	96,843	$	16,551	$	11,094	$	4,208		$	383,178
CRE - Other
Pass	$	199,698	$	295,066	$	256,718	$	250,676	$	77,509	$	90,170	$	51,827		$	1,221,664
Special mention / watch	364		1,306		3,300		4,823		4,282		2,395		3,856			20,326
Substandard	325		26,555		19,253		19,103		8,242		17,876		638			91,992
Doubtful	—		—		—		—		—		—		—			—
Total	$	200,387	$	322,927	$	279,271	$	274,602	$	90,033	$	110,441	$	56,321		$	1,333,982
RRE - One- to four- family first liens
Pass / Performing	$	62,644	$	125,777	$	92,767	$	54,028	$	19,674	$	81,660	$	13,283		$	449,833
Special mention / watch	629		716		36		620		1,827		319		—			4,147
Substandard / Nonperforming	1,156		191		738		165		164		3,404		—			5,818
Doubtful	—		—		—		—		—		—		—			—
Total	$	64,429	$	126,684	$	93,541	$	54,813	$	21,665	$	85,383	$	13,283		$	459,798
RRE - One- to four- family junior liens
Performing	$	23,551	$	29,919	$	18,733	$	7,292	$	2,590	$	7,867	$	89,810		$	179,762
Nonperforming	—		192		—		25		23		637		—			877
Total	$	23,551	$	30,111	$	18,733	$	7,317	$	2,613	$	8,504	$	89,810		$	180,639
Consumer
Performing	$	26,028	$	14,319	$	10,042	$	4,421	$	1,451	$	7,350	$	4,145		$	67,756
Nonperforming	—		22		—		—		3		2		—			27
Total	$	26,028	$	14,341	$	10,042	$	4,421	$	1,454	$	7,352	$	4,145		$	67,783

Table of Contents


	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Total by Credit Quality Indicator Category
Pass	$	607,768	$	962,918	$	752,137	$	524,570	$	139,536	$	311,683	$	299,882		$	3,598,494
Special mention / watch	11,444		11,123		10,365		33,885		14,157		9,059		22,996			113,029
Substandard	5,260		30,310		31,417		21,416		17,839		52,965		7,795			167,002
Doubtful	—		—		—		—		—		—		—			—
Performing	49,579		44,238		28,775		11,713		4,041		15,217		93,955			247,518
Nonperforming	—		214		—		25		26		639		—			904
Total	$	674,051	$	1,048,803	$	822,694	$	591,609	$	175,599	$	389,563	$	424,628		$	4,126,947

	Term Loans by Origination Year												Revolving Loans
December 31, 2023 (in thousands)	2023		2022		2021		2020		2019		Prior				Total
Year-to-date Current Period Gross Write-offs
Agricultural	$	—	$	8	$	1	$	17	$	2	$	—	$	—		$	28
Commercial and industrial	239		343		223		133		464		45		—			1,447



CRE - Other	—		—		—		—		—		2,337		—			2,337
RRE - One-to-four-family first liens	—		—		—		—		—		36		—			36
RRE - One-to-four-family junior liens	—		19		—		—		—		—		—			19
Consumer	—		621		30		12		12		10		—			685
Total Current Period Gross Write-offs	$	239	$	991	$	254	$	162	$	478	$	2,428	$	—		$	4,552

Allowance for Credit Losses

The following are the economic factors utilized by the Company for its loan credit loss estimation process at September 30, 2024, and the forecast for each factor at that date: (1) Midwest unemployment – increase in the first forecasted quarter, with little change in the second through fourth forecasted quarters; (2) national unemployment - decreases over the next four forecasted quarters; (3) year-to-year change in national retail sales - increases over the next four forecasted quarters; (4) year-to-year change in CRE Index - decreases over the next two forecasted quarters, with increases in the third and fourth forecasted quarters; and (5) year-to-year change in U.S. GDP - increases over the next four forecasted quarters. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

The increase in the ACL between September 30, 2024 and December 31, 2023 reflects $ 3.1 million of day 1 credit loss expense related to acquired DNVB loans, as well as additional reserve taken to support loan growth. Partially offsetting these identified increases was a $ 1.9 million reduction to the ACL for allowance allocated to the loans sold with our Florida banking operations. Net loan charge-offs were $ 1.7 million for the three months ended September 30, 2024 as compared to net loan charge-offs of $ 0.5 million for the three months ended September 30, 2023. Net loan charge-offs were $ 2.4 million for the nine months ended September 30, 2024 as compared to net loan charge-offs of $ 1.7 million for the nine months ended September 30, 2023.

We have made a policy election to report interest receivable as a separate line on the balance sheet. Accrued interest receivable, which is recorded within 'Other Assets', totaled $ 22.0 million at September 30, 2024.

Table of Contents

The changes in the allowance for credit losses by portfolio segment were as follows for the periods indicated:



	Three Months Ended September 30, 2024 and 2023
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
For the Three Months Ended September 30, 2024
Beginning balance	$	402	$	23,008	$	24,324	$	4,659	$	1,507	$	53,900

Charge-offs	—		( 1,575 )		—		—		( 363 )		( 1,938 )
Recoveries	1		168		4		4		26		203
Credit loss expense (benefit) (1)	( 45 )		( 746 )		1,787		463		376		1,835
Ending balance	$	358	$	20,855	$	26,115	$	5,126	$	1,546	$	54,000

For the Three Months Ended September 30, 2023
Beginning balance	$	617	$	22,921	$	21,911	$	4,393	$	558	$	50,400

Charge-offs	( 25 )		( 511 )		—		( 21 )		( 178 )		( 735 )
Recoveries	126		79		4		3		72		284
Credit loss expense (benefit) (1)	( 181 )		( 426 )		1,872		268		118		1,651
Ending balance	$	537	$	22,063	$	23,787	$	4,643	$	570	$	51,600
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss benefit of $ 0.3 million and $ 0.1 million related to off-balance sheet credit exposures for the three months ended September 30, 2024 and September 30, 2023, respectively.


	Nine Months Ended September 30, 2024 and 2023
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
For the Nine Months Ended September 30, 2024
Beginning balance	$	613	$	21,743	$	23,759	$	4,762	$	623	$	51,500
Allocated in banking office sale	—		( 51 )		( 1,795 )		( 94 )		( 3 )		( 1,943 )
Charge-offs	( 4 )		( 2,343 )		( 35 )		( 75 )		( 913 )		( 3,370 )
Recoveries	356		437		18		17		94		922
Credit loss expense (benefit) (1)	( 607 )		1,069		4,168		516		1,745		6,891
Ending balance	$	358	$	20,855	$	26,115	$	5,126	$	1,546	$	54,000

For the Nine Months Ended September 30, 2023
Beginning balance	$	923	$	22,855	$	20,123	$	4,678	$	621	$	49,200

Charge-offs	( 26 )		( 1,020 )		( 830 )		( 54 )		( 451 )		( 2,381 )
Recoveries	153		349		15		23		160		700
Credit loss (benefit) expense (1)	( 513 )		( 121 )		4,479		( 4 )		240		4,081
Ending balance	$	537	$	22,063	$	23,787	$	4,643	$	570	$	51,600
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss expense of $ 0.6 million related to off-balance sheet credit exposure for the nine months ended September 30, 2024. There was no difference for the nine months ended September 30, 2023.

The composition of the allowance for credit losses by portfolio segment based on evaluation method was as follows:


	As of September 30, 2024
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
Loans held for investment, net of unearned income
Individually evaluated for impairment	$	207	$	9,263	$	8,836	$	2,259	$	—	$	20,565
Collectively evaluated for impairment	112,489		1,140,495		2,323,305		659,778		72,124		4,308,191
Total	$	112,696	$	1,149,758	$	2,332,141	$	662,037	$	72,124	$	4,328,756
Allowance for credit losses:
Individually evaluated for impairment	$	—	$	204	$	2,334	$	169	$	—	$	2,707
Collectively evaluated for impairment	358		20,651		23,781		4,957		1,546		51,293
Total	$	358	$	20,855	$	26,115	$	5,126	$	1,546	$	54,000

Table of Contents


	As of December 31, 2023
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
Loans held for investment, net of unearned income
Individually evaluated for impairment	$	11	$	17,231	$	10,932	$	983	$	—	$	29,157
Collectively evaluated for impairment	118,403		1,057,772		2,214,378		639,454		67,783		4,097,790

Total	$	118,414	$	1,075,003	$	2,225,310	$	640,437	$	67,783	$	4,126,947
Allowance for credit losses:
Individually evaluated for impairment	$	—	$	2,616	$	705	$	16	$	—	$	3,337
Collectively evaluated for impairment	613		19,127		23,054		4,746		623		48,163

Total	$	613	$	21,743	$	23,759	$	4,762	$	623	$	51,500

The following tables present the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:


	As of September 30, 2024
	Primary Type of Collateral
(in thousands)	Real Estate		Equipment		Other		Total		ACL Allocation
Agricultural	$	207	$	—	$	—	$	207	$	—
Commercial and industrial	9,060		203		—		9,263		204
Commercial real estate:

Farmland	2,680		—		—		2,680		—

Commercial real estate-other	6,156		—		—		6,156		2,334
Residential real estate:
One- to four- family first liens	1,715		—		—		1,715		69
One- to four- family junior liens	544		—		—		544		100

Total	$	20,362	$	203	$	—	$	20,565	$	2,707


	As of December 31, 2023
	Primary Type of Collateral
(in thousands)	Real Estate		Equipment		Other		Total		ACL Allocation
Agricultural	$	11	$	—	$	—	$	11	$	—
Commercial and industrial	15,991		—		1,240		17,231		2,616
Commercial real estate:

Farmland	5,403		—		—		5,403		—

Commercial real estate-other	5,350		—		179		5,529		705
Residential real estate:
One- to four- family first liens	481		—		—		481		—
One- to four- family junior liens	—		—		502		502		16

Total	$	27,236	$	—	$	1,921	$	29,157	$	3,337

Loan Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company may modify loans to borrowers who are experiencing financial difficulty. Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, term extension, other-than-insignificant payment delays, interest rate reduction, or a combination thereof.

Table of Contents

The following tables present the amortized cost basis of loans as of September 30, 2024 and September 30, 2023 that were modified during the three and nine months ended September 30, 2024 and September 30, 2023 and experiencing financial difficulty at the time of the modification by class and by type of modification:


	For the Three Months and Nine Months Ended September 30, 2024
									Combination:
(dollars in thousands)	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Term Extension & Interest Rate Reduction		Principal Forgiveness & Term Extension		Payment Delay & Term Extension		Term Extension, Interest Rate Reduction, & Payment Delay		Total Class of Financing Receivable
Three Months Ended September 30, 2024
Agricultural	$	—	$	—	$	56	$	—	$	—	$	—	$	—	$	—	0.05	%
Commercial and industrial	—		—		552		—		—		—		—		—		0.05	%



CRE - Other	—		—		1,892		—		—		—		—		—		0.14	%
RRE - One- to four- family first liens	—		—		—		—		—		—		—		86		0.02	%

Consumer	—		—		14		—		—		—		—		—		0.02	%
Total	$	—	$	—	$	2,514	$	—	$	—	$	—	$	—	$	86

Nine Months Ended September 30, 2024
Agricultural	$	—	$	—	$	56	$	—	$	—	$	—	$	—	$	—	0.05	%
Commercial and industrial	—		—		621		—		—		—		—		—		0.05	%
CRE - Construction and development	—		—		224		—		—		—		—		—		0.06	%
CRE - Farmland	—		—		378		—		—		—		—		—		0.21	%

CRE - Other	—		—		6,786		—		—		—		—		—		0.50	%
RRE - One- to four- family first liens	—		251		—		—		—		—		386		86		0.15	%
RRE - One- to four- family junior liens	—		—		—		—		—		—		134		—		0.08	%
Consumer	—		—		14		—		—		—		—		—		0.02	%
Total	$	—	$	251	$	8,079	$	—	$	—	$	—	$	520	$	86


	For the Three Months and Nine Months Ended September 30, 2023
									Combination:
(dollars in thousands)	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Term Extension & Interest Rate Reduction		Principal Forgiveness & Term Extension		Principal Forgiveness, Term Extension, & Interest Rate Reduction		Payment Delay & Term Extension		Total Class of Financing Receivable
Three Months Ended September 30, 2023

Commercial and industrial	$	—	$	—	$	2,062	$	—	$	—	$	—	$	—	$	—	0.19	%



CRE - Other	—		—		1,368		—		—		—		—		—		0.10	%



Total	$	—	$	—	$	3,430	$	—	$	—	$	—	$	—	$	—

Nine Months Ended September 30, 2023
Agricultural	$	—	$	13	$	—	$	—	$	—	$	—	$	—	$	—	0.01	%
Commercial and industrial	—		264		2,820		—		103		302		—		188		0.34	%

CRE - Farmland	—		—		1,823		—		—		—		—		—		1.00	%

CRE - Other	—		158		1,368		—		—		—		—		—		0.12	%
RRE - One- to four- family first liens	—		—		49		—		—		—		—		—		0.01	%


Total	$	—	$	435	$	6,060	$	—	$	103	$	302	$	—	$	188

The Company had no additional commitments to lend amounts to the borrowers included in the previous tables as of September 30, 2024 and as of September 30, 2023. For the three and nine months ended September 30, 2024, the Company had 4 modified loans totaling $ 5.4 million and 16 modified loans totaling $ 6.6 million, respectively, to borrowers experiencing financial difficulty that redefaulted within 12 months subsequent to the modification. For the three and nine months ended September 30, 2023, the Company had 8 modified loans totaling $ 0.3 million and 12 modified loans totaling $ 1.1 million, respectively to borrowers experiencing financial difficulty that redefaulted within 12 months subsequent to the modification.

Table of Contents

The following tables present the performance, as of September 30, 2024 and September 30, 2023, of loans that were modified while the borrower was experiencing financial difficulty at the time of modification in the last 12 months:


	As of September 30, 2024
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
Agricultural	$	56	$	—	$	—	$	—	$	56
Commercial and industrial	621		—		—		—		621
CRE - Construction and development	296		—		224		—		520
CRE - Farmland	378		—		—		352		730

CRE - Other	6,989		—		—		5,310		12,299
RRE - One- to four- family first liens	723		—		—		—		723
RRE - One- to four- family junior liens	148		—		—		—		148
Consumer	14		—		—		—		14
Total	$	9,225	$	—	$	224	$	5,662	$	15,111

	As of September 30, 2023
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
Agricultural	$	—	$	—	$	13	$	—	$	13
Commercial and industrial	3,490		188		—		—		3,678

CRE - Farmland	1,823		—		—		—		1,823

CRE - Other	1,525		—		—		—		1,525
RRE - One- to four- family first liens	—		49		—		—		49


Total	$	6,838	$	237	$	13	$	—	$	7,088

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and nine months ended September 30, 2024 and September 30, 2023:


(dollars in thousands)	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension (Months)
Three Months Ended September 30, 2024
Agricultural	$	—	—	%	2.87
Commercial and industrial	—		—		12.0



CRE - Other	—		—		10.8
RRE - One- to four- family first liens	—		1.25		244.5

Consumer	—		—		18.3
Total	$	—	1.25	%	18.7

Nine Months Ended September 30, 2024
Agricultural	$	—	—	%	2.9
Commercial and industrial	—		—		10.0
CRE - Construction and development	—		—		0.8
CRE - Farmland	—		—		5.4

CRE - Other	—		—		8.1
RRE - One- to four- family first liens	—		1.25		216.3
RRE - One- to four- family junior liens	—		—		122.0
Consumer	—		—		20.2
Total	$	—	1.25	%	20.2

Table of Contents


(dollars in thousands)	Principal Forgiveness		Weighted Average Interest Rate Reduction		Weighted Average Term Extension (Months)
Three Months Ended September 30, 2023

Commercial and industrial	$	—	—	%	9.9



CRE - Other	18		—		5.3



Total	$	18	—	%	8.1

Nine Months Ended September 30, 2023

Commercial and industrial	$	63	1.25	%	9.2

CRE - Farmland	—		—		0.9

CRE - Other	18		—		5.3
RRE - One- to four- family first liens	—		—		3.9


Total	$	81	1.25	%	6.1

5. Derivatives, Hedging Activities and Balance Sheet Offsetting

The following table presents the total notional amounts and gross fair values of the Company’s derivatives as of the dates indicated. The derivative asset and liability balances are presented on a gross basis, prior to the application of master netting agreements, as included in other assets and other liabilities, respectively, on the consolidated balance sheets. The fair values of the Company's derivative instrument assets and liabilities are summarized as follows:


	As of September 30, 2024						As of December 31, 2023
	Notional Amount		Fair Value				Notional Amount		Fair Value
(in thousands)			Assets		Liabilities				Assets		Liabilities
Designated as hedging instruments:
Fair value hedges:
Interest rate swaps - loans	$	49,804	$	1,573	$	1,540	$	41,101	$	2,071	$	902
Interest rate swaps - securities	150,000		—		532		150,000		—		821
Cash flow hedges
Interest rate swaps	200,000		74		574		200,000		940		264
Total	$	399,804	$	1,647	$	2,646	$	391,101	$	3,011	$	1,987

Not designated as hedging instruments:
Interest rate swaps	$	652,740	$	23,102	$	23,118	$	432,648	$	22,028	$	22,038
RPAs - protection sold	54,266		8		—		18,778		4		—
RPAs - protection purchased	30,175		—		1		31,145		—		9
Interest rate lock commitments	2,704		40		—		1,461		50		—
Interest rate forward loan sales contracts	2,750		—		1		2,075		—		23
Total	$	742,635	$	23,150	$	23,120	$	486,107	$	22,082	$	22,070

Derivatives Designated as Hedging Instruments

The Company uses derivative instruments to hedge its exposure to economic risks. Certain hedging relationships are formally designated and qualify for hedge accounting under GAAP as fair value or cash flow hedges.

Fair Value Hedges - Derivatives are designated as fair value hedges to limit the Company's exposure to changes in the fair value of assets or liabilities due to movements in interest rates. The Company entered into pay-fixed receive-floating interest rate swaps to manage its exposure to changes in fair value in certain fixed-rate assets, including AFS debt securities and loans. The gain or loss on the loan fair value hedge derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income. The change in the fair value of the available for sale securities attributable to changes in the hedged risk is recorded in accumulated other comprehensive income and subsequently reclassified into interest income, as applicable, in the same period(s) to offset the changes in the fair value of the swap, which is also recognized in interest income.

Cash Flow Hedges - Derivatives are designated as cash flow hedges in order to minimize the variability in cash flows of earning assets or forecasted transactions caused by movement in interest rates. The Company has previously entered into pay-fixed receive-variable interest rate swaps to hedge against adverse fluctuations in interest rates by reducing exposure to variability in cash flows relating to interest payments on the Company's variable rate debt, including brokered deposits. The

Table of Contents

gain or loss on the derivatives is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense, as applicable, in the same period(s) during which the hedged transaction affects earnings. During the 12 months following September 30, 2024, the Company estimates that an additional $ 48.0 thousand of income will be reclassified into interest expense.

The table below presents the effect of cash flow hedge accounting on AOCI for the three and nine months ended September 30, 2024 and 2023:


	Amount of Gain (Loss) Recognized in AOCI on Derivative				Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain Reclassified from AOCI into Income
	Three Months Ended September 30,					Three Months Ended September 30,
(in thousands)	2024		2023			2024		2023
Interest rate swaps	$	( 2,388 )	$	1,829	Interest Expense	$	763	$	761

	Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2024		2023			2024		2023
Interest rate swaps	$	1,162	$	5,288	Interest Expense	$	2,338	$	999

The table below presents the effect of the Company’s derivative financial instruments designated as hedging instruments on the consolidated statements of income for the periods indicated:


	Location and Amount of Gain or Loss Recognized in Income on Hedging Relationships
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2024				2023				2024				2023
(in thousands)	Interest Income		Other Income		Interest Income		Other Income		Interest Income		Other Income		Interest Income		Other Income
Income and expense included in the consolidated statements of income related to the effects of fair value or cash flow hedges are recorded	$	446	$	—	$	317	$	—	$	1,336	$	—	$	666	$	—

The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships in subtopic 815-20:
Interest contracts - loans:
Hedged items	2,135		—		( 747 )		—		1,139		—		( 212 )		—
Derivative designated as hedging instruments	( 1,852 )		—		964		—		( 322 )		—		1,219		—

Interest contracts - securities:
Hedged items	687		—		( 454 )		—		( 299 )		—		( 454 )		—
Derivative designated as hedging instruments	( 524 )		—		560		—		819		—		560		—

As of September 30, 2024, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:


Line Item in the Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset
(in thousands)
Loans	$	49,824	$	( 24 )
Securities	$	150,520	$	520

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps - The Company periodically enters into commercial loan interest rate swap agreements in order to provide commercial loan customers with the ability to convert from variable to fixed interest rates. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer, while simultaneously entering into an offsetting interest rate swap with an institutional counterparty.

Table of Contents

Credit Risk Participation Agreements -The Company enters into RPAs to manage the credit exposure on interest rate contracts associated with a syndicated loan or participation agreement. The Company may enter into protection purchased RPAs with institutional counterparties to decrease or increase its exposure to a borrower. Under the RPA, the Company will receive or make payment if a borrower defaults on the related interest rate contract. The notional amount of the RPAs reflects the Company’s pro-rata share of the derivative instrument.

Interest Rate Forward Loan Sales Contracts & Interest Rate Lock Commitments - The Company enters into forward delivery contracts to sell residential mortgage loans at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage interest rate lock commitments.

The following table presents the net gains (losses) recognized on the consolidated statements of income related to the derivatives not designated as hedging instruments for the periods indicated:


	Location in the Consolidated Statements of Income	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)		2024		2023		2024		2023
Interest rate swaps	Other income	$	( 6 )	$	( 27 )	$	( 5 )	$	( 27 )
RPAs	Other income	5		1		12		70
Interest rate lock commitments	Loan revenue	( 10 )		( 51 )		( 10 )		11
Interest rate forward loan sales contracts	Loan revenue	( 14 )		( 5 )		21		14
Total		$	( 25 )	$	( 82 )	$	18	$	68

Offsetting of Derivatives

The Company has entered into agreements with certain counterparty financial institutions, which include master netting agreements. However, the Company has elected to account for all derivatives with counterparty financial institutions on a gross basis. The Company manages the risk of default by its borrower counterparties through its normal loan underwriting and credit monitoring policies and procedures.

The table below presents gross derivatives and the respective collateral received or pledged in the form of other financial instruments as of September 30, 2024 and December 31, 2023, which are generally marketable securities and/or cash. The collateral amounts in the table below are limited to the outstanding balances of the related asset or liability (after netting is applied); thus instances of over-collateralization are not shown. Further, the net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.


							Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts presented in the Balance Sheet		Financial Instruments		Cash Collateral Received / Paid		Net Assets /Liabilities
As of September 30, 2024
Asset Derivatives	$	24,797	$	—	$	24,797	$	—	$	11,424	$	13,373
Liability Derivatives	25,766		—		25,766		—		10,090		15,676

As of December 31, 2023
Asset Derivatives	$	25,093	$	—	$	25,093	$	—	$	15,549	$	9,544
Liability Derivatives	24,057		—		24,057		—		2,420		21,637

Credit-risk-related Contingent Features

The Company has an unsecured federal funds line with its institutional derivative counterparties. The Company has an agreement with its institutional derivative counterparties that contains a provision under which, if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has an agreement with its derivative counterparties that contains a provision under which the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of September 30, 2024, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 13.3 million.

Table of Contents

6. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill as of the dates indicated:


(in thousands)	September 30, 2024		December 31, 2023

Goodwill, beginning of period	$	62,477	$	62,477
Established in acquisition	9,041		—
Allocated to divestiture	( 1,730 )		—

Total goodwill, end of period	$	69,788	$	62,477

As indicated in Note 2. Business Combinations , the Company acquired a core deposit intangible in connection with its acquisition of DNVB on January 31, 2024 with an estimated fair value of $ 7.1 million, which will be amortized over its estimated useful life of 10 years.

The following table presents the gross carrying amount, accumulated amortization, and net carrying amount of other intangible assets as of the dates indicated:


	As of September 30, 2024						As of December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Core deposit intangible	$	65,345	$	( 45,975 )	$	19,370	$	58,245	$	( 41,499 )	$	16,746
Customer relationship intangible	5,265		( 5,211 )		54		5,265		( 5,008 )		257
Other	2,700		( 2,695 )		5		2,700		( 2,674 )		26
	$	73,310	$	( 53,881 )	$	19,429	$	66,210	$	( 49,181 )	$	17,029
Indefinite-lived trade name intangible					7,040						7,040
Total other intangible assets, net					$	26,469					$	24,069

The following table provides the estimated future amortization expense for the remaining three months of the year ending December 31, 2024 and the succeeding annual periods:


(in thousands)	Core Deposit Intangible		Customer Relationship Intangible		Other		Total

2024	$	1,413	$	36	$	5	$	1,454
2025	4,924		18		—		4,942
2026	3,840		—		—		3,840
2027	2,757		—		—		2,757
2028	2,110		—		—		2,110
Thereafter	4,326		—		—		4,326
Total	$	19,370	$	54	$	5	$	19,429

7. Other Assets

The components of the Company's other assets as of September 30, 2024 and December 31, 2023 were as follows:


(in thousands)	September 30, 2024		December 31, 2023
Bank-owned life insurance	$	99,394	$	98,039
Interest receivable	31,124		29,768
FHLB stock	5,128		5,806
Mortgage servicing rights	12,068		13,333
Operating lease right-of-use assets, net	1,709		2,337
Federal and state income taxes, current	1,702		1,556
Federal and state income taxes, deferred	64,747		31,218
Derivative assets	24,797		25,093
Other receivables/assets	18,212		15,630
	$	258,881	$	222,780

Table of Contents

8. Deposits

The following table presents the composition of our deposits as of the dates indicated:


(in thousands)	September 30, 2024		December 31, 2023
Noninterest bearing deposits	$	917,715	$	897,053
Interest checking deposits	1,230,605		1,320,435
Money market deposits	1,038,575		1,105,493
Savings deposits	768,298		650,655
Time deposits of $250 and under	1,044,298		973,253
Time deposits over $250	369,236		448,784
Total deposits	$	5,368,727	$	5,395,673

The Company had $ 23.7 million and $ 15.2 million in reciprocal time deposits as of September 30, 2024 and December 31, 2023, respectively. Included in money market deposits at September 30, 2024 and December 31, 2023 were $ 130.9 million and $ 128.0 million, respectively, of interest-bearing reciprocal deposits. Included in noninterest bearing deposits at September 30, 2024 and December 31, 2023 were $ 97.8 million and $ 58.0 million, respectively, of noninterest-bearing reciprocal deposits. These reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to distribute deposits that exceed the FDIC insurance coverage limits to numerous institutions in order to provide insurance coverage for all participating deposits.

In addition, included within the time deposits of “$250 thousand and under ” was $ 200.0 million of brokered deposits as of September 30, 2024 and $ 221.0 million as of December 31, 2023.

As of September 30, 2024 and December 31, 2023, the Company had public entity deposits, which were collateralized by investment securities balances of $ 22.0 million and $ 183.4 million, respectively. As of September 30, 2024, the public entity deposits were also collateralized by FHLB letters of credit totaling $ 112.3 million and no FHLB letters of credit related to public entity deposits at December 31, 2023.

9. Short-Term Borrowings

The following table summarizes the Company's short-term borrowings as of the dates indicated:


	September 30, 2024				December 31, 2023
(in thousands)	Weighted Average Rate		Balance		Weighted Average Rate		Balance
Securities sold under agreements to repurchase	0.75	%	$	5,630	0.72	%	$	5,064
Federal Home Loan Bank advances	—		—		5.64		10,200

Federal Reserve Bank borrowings	4.77		405,000		4.82		285,000

Total	4.71	%	$	410,630	4.78	%	$	300,264

Securities Sold Under an Agreement to Repurchase - Securities sold under agreements to repurchase are agreements in which the Company acquires funds by selling assets to another party under a simultaneous agreement to repurchase the same assets at a specified price and date. The Company enters into repurchase agreements and also offers a demand deposit account product to customers that sweeps their balances in excess of an agreed upon target amount into overnight repurchase agreements. All securities sold under agreements to repurchase are recorded on the face of the balance sheet.

Federal Home Loan Bank Advances - The Bank has a secured line of credit with the FHLBDM. Advances from the FHLBDM are collateralized primarily by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. See Note 4. Loans Receivable and the Allowance for Credit Losses of the notes to the consolidated financial statements.

Federal Funds Purchased - The Bank has unsecured federal funds lines totaling $ 135.0 million from multiple correspondent banking relationships. There were no borrowings from such lines at either September 30, 2024 or December 31, 2023.

Federal Reserve Bank Borrowing - At both September 30, 2024 and December 31, 2023, the Company had no Federal Reserve Discount Window borrowings, while its borrowing capacity was $ 396.5 million as of September 30, 2024 and $ 428.8 million as of December 31, 2023. At September 30, 2024 and December 31, 2023, the Company had $ 405.0 million and $ 285.0 million, respectively, of Bank Term Funding Program borrowings. The FRB announced that effective March 11, 2024, no additional loans would be made under the Bank Term Funding Program. As of September 30, 2024 and December 31, 2023, investment securities consisting primarily of corporate debt, state and political subdivisions, mortgage backed, and collateralized mortgage

Table of Contents

obligations were pledged to the Federal Reserve Bank of Chicago, with a market value of $ 744.3 million and $ 797.6 million, respectively.

Unsecured Line of Credit - The Company has a credit agreement with a correspondent bank with a revolving commitment of $ 25.0 million. The credit agreement was amended on September 30, 2024 such that the revolving commitment matures on September 30, 2025, with no other alterations made to the fee structure or interest rate. Fees are paid on the average daily unused revolving commitment in the amount of 0.30 % per annum. Interest is payable at a rate equal to the monthly reset term SOFR rate plus 1.55 %. The Company had no borrowings outstanding under this revolving credit facility as of both September 30, 2024 and December 31, 2023.

10. Long-Term Debt

Junior Subordinated Notes Issued to Capital Trusts

The table below summarizes the terms of each issuance of junior subordinated notes outstanding as of the dates indicated:


			September 30,		December 31,			September 30,		December 31,
			2024		2023			2024		2023
(in thousands)	Face Value		Book Value				Interest Rate (1)	Rate				Maturity Date	Callable Date
ATBancorp Statutory Trust I	$	7,732	$	7,003	$	6,970	1.68 % Margin	6.89	%	7.33	%	06/15/2036	06/15/2011
ATBancorp Statutory Trust II	12,372		11,085		11,034		1.65 % Margin	6.86	%	7.30	%	09/15/2037	06/15/2012
Barron Investment Capital Trust I	2,062		1,881		1,861		2.15 % Margin	7.16	%	7.77	%	09/23/2036	09/23/2011
Central Bancshares Capital Trust II	7,217		6,993		6,964		3.50 % Margin	8.71	%	9.15	%	03/15/2038	03/15/2013
MidWestOne Statutory Trust II	15,464		15,464		15,464		1.59 % Margin	6.80	%	7.24	%	12/15/2037	12/15/2012
Total	$	44,847	$	42,426	$	42,293









(1) Interest rate is equal to the Three-month CME Term SOFR + 0.26 % Spread + Applicable Margin

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at the stated maturity date or upon redemption of the junior subordinated notes. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes. The Company’s obligation under the junior subordinated notes and other relevant trust agreements, in aggregate, constitutes a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust. The Company has the right to defer payment of interest on the junior subordinated notes and, therefore, distributions on the trust preferred securities, for up to five years , but not beyond the stated maturity date in the table above. During any such deferral period the Company may not pay cash dividends on its stock and generally may not repurchase its stock.

Subordinated Debentures

On July 28, 2020, the Company completed the private placement offering of $ 65.0 million of its subordinated notes, of which $ 63.75 million have been exchanged for subordinated notes registered under the Securities Act of 1933. The 5.75 % fixed-to-floating rate subordinated notes are due July 30, 2030. On July 30, 2025, the interest rate on the subordinated notes will reset quarterly to a floating rate of three-month term SOFR plus 5.68 %. At September 30, 2024, 100 % of the subordinated notes qualified as Tier 2 capital. Per applicable Federal Reserve rules and regulations, the amount of the subordinated notes qualifying as Tier 2 regulatory capital will be phased-out by 20 % of the amount of the subordinated notes in each of the five years beginning on the fifth anniversary preceding the maturity date of the subordinated notes. At September 30, 2024 and December 31, 2023, the Company had outstanding subordinated debentures of $ 64.2 million and $ 64.1 million, respectively.

Table of Contents

Other Long-Term Debt

Other long-term borrowings were as follows as of September 30, 2024 and December 31, 2023:


	September 30, 2024				December 31, 2023
(in thousands)	Weighted Average Rate		Balance		Weighted Average Rate		Balance
Finance lease payable	8.89	%	$	452	8.89	%	$	604
FHLB borrowings	—		3,187		3.11		6,262
Note payable to unaffiliated bank	6.75		4,750		6.89		10,000
Total	4.30	%	$	8,389	5.56	%	$	16,866

On June 7, 2022, pursuant to a credit agreement with a correspondent bank, the Company entered into a $ 35.0 million term note payable maturing on June 30, 2027. Principal and interest are payable quarterly, and began on September 30, 2022. Interest accrues at the monthly reset term SOFR plus 1.55 %. The credit agreement includes customary covenants requiring the Company to, among other things, maintain minimum levels of both regulatory capital and certain financial ratios; the Company certifies compliance with the covenants on a quarterly basis. On February 12, 2024, the credit agreement, including certain of its covenants, was amended. On September 30, 2024, the credit agreement was again amended to include certain terms and to extend the maturity date of the line of credit to September 30, 2025.

As a member of the FHLBDM, the Bank may borrow funds from the FHLB, provided the Bank is able to pledge an adequate amount of qualified assets to secure the borrowings. In addition, the FHLB has established a credit capacity limit to the Bank that is equal to 45 % of the Bank’s total assets. This credit capacity limit includes short-term and long-term borrowings, federal funds, letters of credit and other sources of credit exposure to the FHLB. Advances from the FHLB are collateralized primarily by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. See Note 4. Loans Receivable and the Allowance for Credit Losses of the notes to the unaudited consolidated financial statements. As of September 30, 2024, there were no FHLB borrowings due in 2024.

11. Earnings per Share

The following table presents the computation of basic and diluted (loss) earnings per common share for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except per share amounts)	2024		2023		2024		2023
Basic (Loss) Earnings Per Share:
Net (loss) income	$	( 95,707 )	$	9,138	$	( 76,619 )	$	18,129
Weighted average shares outstanding	15,829,032		15,688,502		15,771,924		15,672,989
Basic (loss) earnings per common share	$	( 6.05 )	$	0.58	$	( 4.86 )	$	1.16

Diluted (Loss) Earnings Per Share:
Net (loss) income	$	( 95,707 )	$	9,138	$	( 76,619 )	$	18,129
Weighted average shares outstanding, including all dilutive potential shares	15,829,032		15,711,137		15,771,924		15,696,071
Diluted (loss) earnings per common share	$	( 6.05 )	$	0.58	$	( 4.86 )	$	1.15

The weighted average shares that have an antidilutive effect in the calculation of diluted (loss) earnings per common share and have been excluded from the computation above were as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Dilutive shares (1)	42,195	—	33,643	—
(1) Dilutive potential shares that were excluded from the computation of diluted (loss) earnings per common share for the three and nine months ended September 30, 2024 as a result of the reported net loss available to common shareholders.

12. Regulatory Capital Requirements and Restrictions on Subsidiary Cash

Regulatory Capital and Reserve Requirement - The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Table of Contents

As of both September 30, 2024 and December 31, 2023, the Bank was not required to maintain reserve balances in cash on hand or on deposit with Federal Reserve Banks, and therefore no amounts were held in reserve for each of these periods.

A comparison of the Company's and the Bank's capital, with the corresponding minimum regulatory requirements in effect at September 30, 2024 and December 31, 2023, is presented below:


	Actual		For Capital Adequacy Purposes With Capital Conservation Buffer (1)		To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount	Ratio	Amount	Ratio	Amount	Ratio
At September 30, 2024
Consolidated:
Total capital/risk weighted assets	$ 696,014	12.96 %	$ 564,115	10.50 %	N/A	N/A
Tier 1 capital/risk weighted assets	574,673	10.70	456,664	8.50	N/A	N/A
Common equity tier 1 capital/risk weighted assets	532,247	9.91	376,077	7.00	N/A	N/A
Tier 1 leverage capital/average assets	574,673	8.78	261,824	4.00	N/A	N/A
MidWest One Bank:
Total capital/risk weighted assets	$ 690,462	12.88 %	$ 562,721	10.50 %	$ 535,925	10.00 %
Tier 1 capital/risk weighted assets	634,121	11.83	455,536	8.50	428,740	8.00
Common equity tier 1 capital/risk weighted assets	634,121	11.83	375,147	7.00	348,351	6.50
Tier 1 leverage capital/average assets	634,121	9.69	261,644	4.00	327,055	5.00

At December 31, 2023
Consolidated:
Total capital/risk weighted assets	$ 668,748	12.53 %	$ 560,596	10.50 %	N/A	N/A
Tier 1 capital/risk weighted assets	554,177	10.38	453,816	8.50	N/A	N/A
Common equity tier 1 capital/risk weighted assets	511,884	9.59	373,731	7.00	N/A	N/A
Tier 1 leverage capital/average assets	554,177	8.58	258,487	4.00	N/A	N/A
MidWest One Bank:
Total capital/risk weighted assets	$ 656,027	12.49 %	$ 551,658	10.50 %	$ 525,388	10.00 %
Tier 1 capital/risk weighted assets	606,456	11.54	446,580	8.50	420,310	8.00
Common equity tier 1 capital/risk weighted assets	606,456	11.54	367,772	7.00	341,502	6.50
Tier 1 leverage capital/average assets	606,456	9.39	258,339	4.00	322,924	5.00

(1) Includes a capital conservation buffer of 2.50 %.

13. Commitments and Contingencies

Credit-related financial instruments - The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, commitments to sell loans, and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets.

The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The following table summarizes the Bank’s commitments as of the dates indicated:


	September 30, 2024		December 31, 2023
(in thousands)
Commitments to extend credit	$	1,142,569	$	1,203,001
Commitments to sell loans	3,283		1,045
Standby letters of credit	7,246		7,795
Total	$	1,153,098	$	1,211,841

The Bank’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, crops, livestock, inventory, property and equipment, residential real estate and income-producing commercial properties.

Commitments to sell loans are agreements to sell loans held for sale to third parties at an agreed upon price.

Table of Contents

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have terms of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds collateral, which may include accounts receivable, inventory, property, equipment and income-producing properties, that support those commitments, if deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank could be required to make is represented by the contractual amount shown in the summary above. If the commitment is funded, the Bank would be entitled to seek recovery from the customer.

Liability for Off-Balance Sheet Credit Losses - The Company records a liability for off-balance sheet credit losses through a charge to credit loss expense (or a reversal of credit loss expense) on the Company's consolidated statements of income and other liabilities on the Company's consolidated balance sheets. At September 30, 2024 and December 31, 2023, the liability for off-balance-sheet credit losses totaled $ 5.2 million and $ 4.6 million, respectively. For the nine months ended September 30, 2024, $ 0.6 million credit loss expense was recorded, with no credit loss expense recorded for the nine months ended September 30, 2023.

Litigation - In the normal course of business, the Company and its subsidiaries have been named, from time to time, as defendants in various legal actions. Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Management, after consulting with legal counsel, is of the opinion that the ultimate liability, if any, resulting from these pending or threatened actions and proceedings will not have a material effect on the financial statements of the Company.

Concentrations of credit risk - Substantially all of the Bank’s loans, commitments to extend credit and standby letters of credit have been granted to customers in the Bank’s market areas. Although the loan portfolio of the Bank is diversified, approximately 65 % of the loans are real estate loans, excluding farmland, and approximately 7 % are agriculturally related. The concentrations of credit by type of loan are set forth in Note 4. Loans Receivable and the Allowance for Credit Losses . Commitments to extend credit are primarily related to commercial loans and home equity loans. Standby letters of credit were granted primarily to commercial borrowers. Investments in securities issued by state and political subdivisions involve certain governmental entities within Iowa, California, and Minnesota. The carrying value of investment securities of Iowa, California and Minnesota political subdivisions totaled 12 %, 12 %, and 10 %, respectively, as of September 30, 2024.

14. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

• Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

• Level 2 – Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For additional information regarding the valuation methodologies used to measure the Company's assets recorded at fair value, and for estimating fair value for financial instruments not recorded at fair value, see Note 1. Nature of Business and Significant Accounting Policies and Note 20. Estimated Fair Value of Financial Instruments and Fair Value Measurements to the consolidated financial statements in the Company's 2023 Annual Report on Form 10-K, filed with the SEC on March 8, 2024.

The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily available for sale debt securities, derivatives and mortgage servicing rights. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period, and such measurements are therefore considered “nonrecurring ” for purposes of disclosing the Company's fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for collateral dependent individually analyzed loans and foreclosed assets.

Table of Contents

Recurring Basis

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, by level within the fair value hierarchy:


	Fair Value Measurement at September 30, 2024 Using
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available for sale debt securities:


State and political subdivisions	$	583,045	$	—	$	583,045	$	—
Mortgage-backed securities	65,276		—		65,276		—
Collateralized loan obligations	50,522		—		50,522		—
Collateralized mortgage obligations	530,768		—		530,768		—
Corporate debt securities	393,493		—		393,493		—
Derivative assets	24,797		—		24,757		40
Mortgage servicing rights	12,068		—		12,068		—

Liabilities:
Derivative liabilities	$	25,766	$	—	$	25,766	$	—


	Fair Value Measurement at December 31, 2023 Using
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Debt securities available for sale:

State and political subdivisions	$	130,139	$	—	$	130,139	$	—
Mortgage-backed securities	5,311		—		5,311		—
Collateralized loan obligations	50,437		—		50,437		—
Collateralized mortgage obligations	169,196		—		169,196		—
Corporate debt securities	440,051		—		440,051		—
Derivative assets	25,093		—		25,043		50
Mortgage servicing rights	13,333		—		13,333		—

Liabilities:
Derivative liabilities	$	24,057	$	—	$	24,057	$	—

There were no transfers of assets between Level 3 and other levels of the fair value hierarchy during the nine months ended September 30, 2024 or the year ended December 31, 2023. Changes in the fair value of available for sale debt securities, including the changes attributable to the hedged risk, are included in other comprehensive income.

The following table presents the valuation technique, significant unobservable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company and categorized within Level 3 of the fair value hierarchy at the dates indicated:


	Fair Value at
(dollars in thousands)	September 30, 2024		December 31, 2023		Valuation Techniques(s)	Unobservable Input	Range of Inputs			Weighted Average
Interest rate lock commitments	$	40	$	50	Quoted or published market prices of similar instruments, adjusted for factors such as pull-through rate assumptions	Pull-through rate	80 %	-	100 %	91 %

Nonrecurring Basis

The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:


	Fair Value Measurement at September 30, 2024 Using
(in thousands)	Total		Level 1		Level 2		Level 3
Collateral dependent individually analyzed loans	$	3,401	$	—	$	—	$	3,401
Foreclosed assets, net	3,583		—		—		3,583


	Fair Value Measurement at December 31, 2023 Using
(in thousands)	Total		Level 1		Level 2		Level 3
Collateral dependent individually analyzed loans	$	6,524	$	—	$	—	$	6,524
Foreclosed assets, net	3,929		—		—		3,929

Table of Contents

The following table presents the valuation technique(s), unobservable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company and categorized within Level 3 of the fair value hierarchy at the dates indicated:


	Fair Value at
(dollars in thousands)	September 30, 2024		December 31, 2023		Valuation Techniques(s)	Unobservable Input	Range of Inputs			Weighted Average
Collateral dependent individually analyzed loans	$	3,401	$	6,524	Fair value of collateral	Valuation adjustments	— %	-	8 %	7 %
Foreclosed assets, net	$	3,583	$	3,929	Fair value of collateral	Valuation adjustments	7 %	-	19 %	19 %

Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair value of financial instruments at September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024
(in thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	201,868	$	201,868	$	201,868	$	—	$	—
Debt securities available for sale	1,623,104		1,623,104		—		1,623,104		—

Loans held for sale	3,283		3,320		—		3,320		—
Loans held for investment, net	4,274,756		4,207,271		—		—		4,207,271
Interest receivable	31,124		31,124		—		31,124		—
FHLB stock	5,128		5,128		—		5,128		—
Derivative assets	24,797		24,797		—		24,757		40
Financial liabilities:
Noninterest bearing deposits	917,715		917,715		917,715		—		—
Interest bearing deposits	4,451,012		4,413,900		3,037,478		1,376,422		—
Short-term borrowings	410,630		410,630		410,630		—		—
Finance leases payable	452		452		—		452		—
FHLB borrowings	3,187		3,066		—		3,066		—
Junior subordinated notes issued to capital trusts	42,426		37,870		—		37,870		—
Subordinated debentures	64,236		62,699		—		62,699		—
Other long-term debt	4,750		4,750		—		4,750		—
Derivative liabilities	25,766		25,766		—		25,766		—


	December 31, 2023
(in thousands)	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	81,727	$	81,727	$	81,727	$	—	$	—
Debt securities available for sale	795,134		795,134		—		795,134		—
Debt securities held to maturity	1,075,190		895,263		—		895,263		—
Loans held for sale	1,045		1,083		—		1,083		—
Loans held for investment, net	4,075,447		3,953,368		—		—		3,953,368
Interest receivable	29,768		29,768		—		29,768		—
FHLB stock	5,806		5,806		—		5,806		—
Derivative assets	25,093		25,093		—		25,043		50
Financial liabilities:
Noninterest bearing deposits	897,053		897,053		897,053		—		—
Interest bearing deposits	4,498,620		4,489,322		3,076,582		1,412,740		—
Short-term borrowings	300,264		300,264		300,264		—		—
Finance leases payable	604		604		—		604		—
FHLB borrowings	6,262		6,199		—		6,199		—
Junior subordinated notes issued to capital trusts	42,293		37,938		—		37,938		—
Subordinated debentures	64,137		61,940		—		61,940		—
Other long-term debt	10,000		10,000		—		10,000		—
Derivative liabilities	24,057		24,057		—		24,057		—

15. Leases

The Company's lease commitments consist primarily of real estate property for banking offices and office space with terms extending through 2045. Substantially all of the Company's leases are classified as operating leases, with the Company holding only one existing finance lease for a banking office location with a lease term through 2025.

Table of Contents


(in thousands)	Classification	September 30, 2024			December 31, 2023
Operating lease right-of-use assets	Other assets	$	1,709		$	2,337
Finance lease right-of-use asset	Premises and equipment, net	183			255
Total right-of-use assets		$	1,892		$	2,592

Operating lease liability	Other liabilities	$	2,333		$	3,078
Finance lease liability	Long-term debt	452			604
Total lease liabilities		$	2,785		$	3,682


Weighted-average remaining lease term:	Operating leases	11.91 years			10.20 years
	Finance lease	1.92 years			2.67 years
Weighted-average discount rate:	Operating leases	4.83		%	4.43		%
	Finance lease	8.89		%	8.89		%

The following table represents lease costs and other lease information for the periods indicated. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2024		2023		2024		2023
Lease Costs
Operating lease cost	$	192	$	297	$	813	$	885
Variable lease cost	16		4		29		15
Interest on lease liabilities (1)	10		15		35		47
Amortization of right-of-use assets	24		24		72		72
Net lease cost	$	242	$	340	$	949	$	1,019

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	379	$	602	$	1,895	$	1,799
Operating cash flows from finance lease	10		15		35		47
Finance cash flows from finance lease	52		46		152		135

Supplemental non-cash information on lease liabilities:
Right-of-use assets obtained in exchange for new operating lease liabilities	58		526		253		857

(1) Included in long-term debt interest expense in the Company’s consolidated statements of income. All other lease costs in this table are included in occupancy expense of premises, net.

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more for the remaining three months ending December 31, 2024 and the succeeding annual periods were as follows:


(in thousands)	Finance Leases		Operating Leases
December 31, 2024	$	64	$	180
December 31, 2025	254		593
December 31, 2026	172		447
December 31, 2027	—		302
December 31, 2028	—		138
Thereafter	—		1,600
Total undiscounted lease payment	$	490	$	3,260
Amounts representing interest	( 38 )		( 927 )
Lease liability	$	452	$	2,333

Table of Contents

16. Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in accumulated other comprehensive income (loss) by component, net of tax for the periods indicated:


Three Months Ended September 30,
(in thousands)	Unrealized Gain (Loss) from AFS Debt Securities		Reclassification of AFS Debt Securities to HTM		Unrealized Gain (Loss) from Cash Flow Hedging Instruments		Total
Balance, June 30, 2023	$	( 88,798 )	$	3,688	$	2,406	$	( 82,704 )
Other comprehensive (loss) income before reclassifications	( 3,420 )		438		1,366		( 1,616 )
Amounts reclassified from AOCI	282		—		( 568 )		( 286 )
Net current-period other comprehensive (loss) income	( 3,138 )		438		798		( 1,902 )
Balance, September 30, 2023	$	( 91,936 )	$	4,126	$	3,204	$	( 84,606 )

Balance, June 30, 2024	$	( 65,366 )	$	5,251	$	1,980	$	( 58,135 )
Other comprehensive (loss) income before reclassifications	( 102,822 )		265		( 1,783 )		( 104,340 )
Amounts reclassified from AOCI	104,203		—		( 570 )		103,633
Net current-period other comprehensive (loss) income	1,381		265		( 2,353 )		( 707 )
Reclassification of HTM securities to AFS	5,516		( 5,516 )		—		—
Balance, September 30, 2024	$	( 58,469 )	$	—	$	( 373 )	$	( 58,842 )

Nine Months Ended September 30,
(in thousands)	Unrealized Gain (Loss) from AFS Debt Securities		Reclassification of AFS Debt Securities to HTM		Unrealized Gain (Loss) from Cash Flow Hedging Instruments		Total
Balance, December 31, 2022	$	( 91,852 )	$	2,805	$	—	$	( 89,047 )
Other comprehensive (loss) income before reclassifications	( 10,203 )		1,321		3,950		( 4,932 )
Amounts reclassified from AOCI	10,119		—		( 746 )		9,373
Net current-period other comprehensive income (loss)	( 84 )		1,321		3,204		4,441
Balance, September 30, 2023	$	( 91,936 )	$	4,126	$	3,204	$	( 84,606 )

Balance, December 31, 2023	$	( 69,915 )	$	4,511	$	505	$	( 64,899 )
Other comprehensive (loss) income before reclassifications	( 98,958 )		1,005		868		( 97,085 )
Amounts reclassified from AOCI	104,888		—		( 1,746 )		103,142
Net current-period other comprehensive income (loss)	5,930		1,005		( 878 )		6,057
Reclassification of HTM securities to AFS	5,516		( 5,516 )		—		—
Balance, September 30, 2024	$	( 58,469 )	$	—	$	( 373 )	$	( 58,842 )

The following table presents reclassifications out of AOCI:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Investment securities (gains) losses, net	$	140,182	$	( 79 )	$	140,113	$	13,093
Interest income (expense)	( 687 )		454		299		454
Interest expense	( 763 )		( 761 )		( 2,338 )		( 999 )
Income tax (expense) benefit	( 35,099 )		100		( 34,932 )		( 3,175 )
Net of tax	$	103,633	$	( 286 )	$	103,142	$	9,373

17. Subsequent Events

On October 23, 2024, the board of directors of the Company declared a cash dividend of $ 0.2425 per share, payable on December 16, 2024 to shareholders of record as of the close of business on December 2, 2024.

Table of Contents

In October 2024, as part of a balance sheet repositioning, the Company sold $ 1.0 billion of debt securities. The net proceeds from the sale were used to purchase $ 589.8 million of higher yielding debt securities and to pay off $ 418.7 million of Bank Term Funding Program borrowings, including accrued interest. In connection with the securities sales, the Company recognized a pre-tax loss of $ 140.4 million in the third quarter of 2024, and a pre-tax gain of $ 0.2 million in the fourth quarter of 2024.

The Company has evaluated events that have occurred subsequent to September 30, 2024, and has concluded there are no other subsequent events that would require recognition in the accompanying consolidated financial statements.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following:

• the risks of mergers or branch sales (including the recent sale of our Florida banking operations and the acquisition of DNVB), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;

• credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings;

• the effects of changes in interest rates, including on our net income and the value of our securities portfolio;

• changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing;

• fluctuations in the value of our investment securities;

• governmental monetary and fiscal policies;

• changes in and uncertainty related to benchmark interest rates used to price loans and deposits;

• legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators and any changes in response to the failures of other banks;

• the ability to attract and retain key executives and employees experienced in banking and financial services;

• the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio;

• our ability to adapt successfully to technological changes to compete effectively in the marketplace;

• credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio;

• the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services;

• the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities;

• volatility of rate-sensitive deposits;

• operational risks, including data processing system failures or fraud;

• asset/liability matching risks and liquidity risks;

• the costs, effects and outcomes of existing or future litigation;

• changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession;

• changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the FASB;

• war or terrorist activities, including the ongoing conflict in the Middle East and the Russian invasion of Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets;

• the occurrence of fraudulent activity, breaches, or failures of our or our third-party vendors' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools;

• the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers;

• potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election;

• the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits;

• the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; and

• factors and risks described under “Risk Factors” in our Annual Report on Form 10-K and in other reports we file with the SEC.

We qualify all of our forward-looking statements by the foregoing cautionary statements. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations are not necessarily indicative of our future results.

Table of Contents

OVERVIEW

The Company provides financial services to individuals, businesses, governmental units and institutional customers located primarily in the upper Midwest through its bank subsidiary, MidWest One Bank. The Bank has locations throughout central and eastern Iowa, the Minneapolis/St. Paul metropolitan area, southwestern Wisconsin, and Denver, Colorado.

On January 31, 2024, the Company completed the acquisition of DNVB, a bank holding company headquartered in Denver, Colorado, and the parent company of BOD. Immediately following completion of the acquisition, BOD was merged with and into the Bank. As consideration for the merger, we paid cash of $32.6 million.

On June 7, 2024, the Bank completed the sale of its Florida banking operations for a 7.5% deposit premium, which consisted of one bank branch in each of Naples and Ft. Myers, Florida.

The Bank is focused on delivering relationship-based business and personal banking products and services. The Bank provides commercial loans, real estate loans, agricultural loans, credit card loans, and consumer loans. The Bank also provides deposit products including demand and interest checking accounts, savings accounts, money market accounts, and time deposits. Complementary to our loan and deposit products, the Bank also provides products and services including treasury management, Zelle, online and mobile banking, credit and debit cards, ATMs, and safe deposit boxes. The Bank also has wealth management services through which it offers the administration of estates, trusts, and conservatorships, as well as financial planning, investment advisory, and brokerage services (the latter of which is provided through an arrangement with a third-party registered broker-dealer).

Our results of operations are significantly affected by our net interest income. Results of operations are also affected by noninterest income and expense, credit loss expense and income tax expense. Significant external factors that impact our results of operations include general economic and competitive conditions, as well as changes in market interest rates, government policies, and actions of regulatory authorities.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and the statistical information and financial data appearing in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024. Results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be attained for any other period.

FINANCIAL SUMMARY

On September 30, 2024, the Company completed a common equity capital raise, which resulted in net proceeds to the Company of $118.6 million to facilitate a balance sheet repositioning. Subsequent to quarter end, as part of the balance sheet repositioning, the Company sold $1.0 billion of debt securities, including securities previously classified as HTM. The decision to sell HTM securities necessitated the reclassification on September 30, 2024, of all HTM securities to AFS. On September 30, 2024, the HTM securities reclassified had an amortized cost basis of $1.04 billion and a fair value of $870.2 million. For the quarter ended September 30, 2024, the Company recognized an impairment loss of $140.4 million in pre-tax earnings associated with the securities sold in the fourth quarter of 2024.

The Company reported net loss for the three months ended September 30, 2024 of $95.7 million, a decrease of $104.8 million, compared to net income of $9.1 million for the three months ended September 30, 2023, with diluted (loss) earnings per share of $(6.05) and $0.58 for the three months ended September 30, 2024 and 2023, respectively. Adjusted earnings (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) for the three months ended September 30, 2024 were $9.1 million, compared to $8.9 million for the three months ended September 30, 2023, with adjusted earnings per share (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) of $0.58 and $0.56 for the three months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, the Company reported net loss of $76.6 million, a decrease of $94.7 million, compared to net income of $18.1 million for the nine months ended September 30, 2023, with diluted (loss) earnings per share of $(4.86) and $1.15 for the respective annual nine month periods. Adjusted earnings (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) for the nine months ended September 30, 2024 were $21.8 million, compared to $28.0 million for the nine months ended September 30, 2023, with adjusted earnings per share (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) of $1.38 and $1.79 for the nine months ended September 30, 2024 and 2023, respectively.

Table of Contents

The periods as of and for the three and nine months ended September 30, 2024 were also highlighted by the following results:

Balance Sheet:

• Total assets increased to $6.55 billion at September 30, 2024 from $6.43 billion at December 31, 2023, driven primarily by acquired DNVB assets, organic loan growth and higher line of credit usage, partially offset by loans divested in the sale of our Florida banking operations and lower investment securities balances stemming primarily from the third quarter of 2024 balance sheet repositioning.

• Total debt securities available for sale at September 30, 2024, were $1.62 billion. There were no held to maturity debt securities on September 30, 2024 as all securities previously classified as held to maturity were classified as available for sale during the third quarter of 2024 in connection with the balance sheet repositioning. There were $1.08 billion of held to maturity debt securities at December 31, 2023, while the total amount of debt securities available for sale was $795.1 million at that date.

• Gross loans held for investment increased $206.2 million, from $4.14 billion at December 31, 2023 to $4.34 billion at September 30, 2024, due primarily to acquired DNVB loans, organic loan growth, and higher line of credit usage, partially offset by the sale of loans associated with our Florida banking operations.

• The allowance for credit losses was $54.0 million, or 1.25% of total loans at September 30, 2024, compared with $51.5 million, or 1.25% of total loans, at December 31, 2023. The increase in the ACL primarily reflected $3.1 million of day 1 credit loss expense related to acquired DNVB loans, as well as an additional reserve taken to support organic loan growth, partially offset by $1.9 million of allowance divested in the sale of our Florida banking operations.

• Nonperforming assets declined $4.8 million, from $30.3 million at December 31, 2023, to $25.5 million at September 30, 2024.

• Total deposits decreased $26.9 million, from $5.40 billion at December 31, 2023, to $5.37 billion at September 30, 2024.

• Short-term borrowings increased to $410.6 million at September 30, 2024, from $300.3 million at December 31, 2023, and long-term debt decreased to $115.1 million at September 30, 2024, from $123.3 million at December 31, 2023.

• The Company was well-capitalized with a total risk-based capital ratio of 12.96% at September 30, 2024.

Income Statement:

Three Months Ended September 30, 2024 and 2023:

• Tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) was $38.8 million for the third quarter of 2024, an increase of $3.1 million, from $35.7 million in the third quarter of 2023. The increase in tax equivalent net interest income was due primarily to an increase of $10.9 million in loan interest income, partially offset by a $1.0 million decrease in investment securities interest income, coupled with an increase in interest expense on interest-bearing deposits and borrowed funds of $6.0 million and $1.2 million, respectively.

• Credit loss expense of $1.5 million was recorded during the third quarter of 2024, compared to credit loss expense of $1.6 million recorded in the third quarter of 2023. Credit loss expense in the third quarter of 2024 reflected an additional reserve taken to support organic loan growth, offset by a reduction of $0.3 million in the reserve for unfunded loan commitments.

• Noninterest income decreased $140.2 million, from $9.9 million in the third quarter of 2023, to noninterest loss of $130.4 million in the third quarter of 2024, primarily due to the balance sheet repositioning-related securities impairment of $140.4 million.

• Noninterest expense increased $4.3 million, from $31.5 million in the third quarter of 2023, to $35.8 million in the third quarter of 2024, primarily due to increases in all noninterest expense categories, except marketing and communications.

Nine Months Ended September 30, 2024 and 2023:

• Tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) was $112.5 million for the nine months ended September 30, 2024, a decrease of $2.6 million from the nine months ended September 30, 2023. The decrease in tax equivalent net interest income was due primarily to an increase in interest expense on interest-bearing deposits and borrowed funds of $27.2 million and $7.6 million, respectively, in addition to a decrease of $3.3 million in interest income earned from investment securities. Partially offsetting these identified decreases in tax equivalent net interest income was an increase of $34.7 million in loan interest income.

Table of Contents

• Credit loss expense of $7.5 million was recorded in the first nine months of 2024, as compared to credit loss expense of $4.1 million for the first nine months of 2023. Credit loss expense in the first nine months of 2024 reflected $3.2 million of expense for acquired DNVB loans, an additional liability of $0.6 million for unfunded loan commitments, coupled with an additional reserve taken to support organic loan growth.

• Noninterest income decreased $113.6 million, from $14.6 million for the nine months ended September 30, 2023, to noninterest loss of $99.1 million in the first nine months of 2024, primarily due to the balance sheet repositioning-related securities impairment of $140.4 million recorded in the third quarter of 2024. Partially offsetting this decrease was a $10.9 million gain on sale recognized in connection with the sale of our Florida banking operations, which was recorded in other noninterest income in the second quarter of 2024.

• Noninterest expense increased $7.3 million, from $99.8 million for the nine months ended September 30, 2023, to $107.1 million in the first nine months of 2024, primarily due to increases of $3.3 million, $1.5 million, and $1.5 million in compensation and employee benefits, legal and professional, and other expense, respectively. Partially offsetting these increases was a decline of $1.1 million in marketing expense.

Critical Accounting Estimates

Management has identified the accounting policies related to the ACL, fair value of assets acquired and liabilities assumed in a business combination, and the annual impairment testing of goodwill and other intangible assets to be critical accounting policies. Information about our critical accounting estimates is included under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024, and there have been no material changes in these critical accounting policies since December 31, 2023.

RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended September 30, 2024 and September 30, 2023

Summary


	As of or for the Three Months Ended September 30,
(dollars in thousands, except per share amounts)	2024			2023
Net Interest Income	$	37,521		$	34,575
Noninterest (Loss) Income	(130,388)			9,861
Total Revenue, Net of Interest Expense	(92,867)			44,436
Credit Loss Expense	1,535			1,551
Noninterest Expense	35,798			31,544
(Loss) Income Before Income Tax Expense	(130,200)			11,341
Income Tax (Benefit) Expense	(34,493)			2,203
Net (Loss) Income	(95,707)			9,138
Adjusted Earnings (1)	$	9,141		$	8,875
Diluted Earnings (Loss) Per Share	$	(6.05)		$	0.58
Adjusted Earnings Per Share (1)	0.58			0.56




Return on Average Assets	(5.78)		%	0.56		%
Return on Average Equity	(69.05)			7.14
Return on Average Tangible Equity (1)	(82.78)			9.68
Efficiency Ratio (1)	70.32			66.06
Dividend Payout Ratio	n/m			41.81

Common Equity Ratio	8.58			7.81
Tangible Common Equity Ratio (1)	7.22			6.54
Book Value per Share	$	27.06		$	32.21
Tangible Book Value per Share (1)	22.43			26.60
(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.
(n/m) - Not meaningful

Table of Contents

Net Interest Income

The following table shows consolidated average balance sheets, detailing the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related yields and costs for the periods indicated:


	Three Months Ended September 30,
	2024						2023
	Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost
(dollars in thousands)
ASSETS
Loans, including fees (1)(2)(3)	$	4,311,693	$	63,472	5.86	%	$	4,019,852	$	52,605	5.19	%
Taxable investment securities	1,489,843		8,779		2.34		1,637,259		9,526		2.31
Tax-exempt investment securities (2)(4)	313,935		1,976		2.50		341,330		2,234		2.60
Total securities held for investment (2)	1,803,778		10,755		2.37		1,978,589		11,760		2.36
Other	52,054		785		6.00		34,195		374		4.34
Total interest earning assets (2)	$	6,167,525	$	75,012	4.84	%	$	6,032,636	$	64,739	4.26	%
Other assets	415,879						420,179
Total assets	$	6,583,404					$	6,452,815

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits	$	1,243,327	$	3,041	0.97	%	$	1,354,597	$	2,179	0.64	%
Money market deposits	1,047,081		7,758		2.95		1,112,149		7,402		2.64
Savings deposits	761,922		3,128		1.63		603,628		749		0.49
Time deposits	1,430,723		15,190		4.22		1,403,504		12,798		3.62
Total interest bearing deposits	4,483,053		29,117		2.58		4,473,878		23,128		2.05
Securities sold under agreements to repurchase	5,812		12		0.82		66,020		85		0.51

Other short-term borrowings	415,961		5,031		4.81		277,713		3,634		5.19
Total short-term borrowings	421,773		5,043		4.76		343,733		3,719		4.29
Long-term debt	116,032		2,015		6.91		125,737		2,150		6.78
Total borrowed funds	537,805		7,058		5.22		469,470		5,869		4.96
Total interest bearing liabilities	$	5,020,858	$	36,175	2.87	%	$	4,943,348	$	28,997	2.33	%

Noninterest bearing deposits	919,581						905,993
Other liabilities	91,551						95,408
Shareholders’ equity	551,414						508,066
Total liabilities and shareholders’ equity	$	6,583,404					$	6,452,815
Net interest income (2)			$	38,837					$	35,742
Net interest spread (2)					1.97	%					1.93	%
Net interest margin (2)					2.51	%					2.35	%

Total deposits (5)	$	5,402,634	$	29,117	2.14	%	$	5,379,871	$	23,128	1.71	%
Cost of funds (6)					2.42	%					1.97	%


(1)			Average balance includes nonaccrual loans.
(2)			Tax equivalent (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent). The federal statutory tax rate utilized was 21%.
(3)			Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $378 thousand and $141 thousand for the three months ended September 30, 2024 and September 30, 2023, respectively. Loan purchase discount accretion was $1.4 million and $0.8 million for the three months ended September 30, 2024 and September 30, 2023, respectively. Tax equivalent adjustments were $951 thousand and $735 thousand for the three months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4)			Interest income includes tax equivalent adjustments of $365 thousand and $432 thousand for the three months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(5)			Total deposits is the sum of total interest bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6)			Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

Table of Contents

The following table shows changes to tax equivalent net interest income (a non-GAAP financial measure - see the "Non-GAAP Presentations" section for a reconciliation to the most comparable GAAP equivalent) attributable to (i) changes in volume and (ii) changes in rate. Changes attributable to both rate and volume have been allocated proportionately to the change due to volume and the change due to rate.


	Three Months Ended September 30,
	2024 Compared to 2023
	Change due to
(in thousands)	Volume		Yield/Cost		Net
Increase (decrease) in interest income:
Loans, including fees (1)	$	3,911	$	6,956	$	10,867
Taxable investment securities	(868)		121		(747)
Tax-exempt investment securities (1)	(174)		(84)		(258)
Total securities held for investment (1)	(1,042)		37		(1,005)
Other	237		174		411
Change in interest income (1)	3,106		7,167		10,273
Increase (decrease) in interest expense:
Interest checking deposits	(190)		1,052		862
Money market deposits	(458)		814		356
Savings deposits	241		2,138		2,379
Time deposits	251		2,141		2,392
Total interest-bearing deposits	(156)		6,145		5,989
Securities sold under agreements to repurchase	(105)		32		(73)

Other short-term borrowings	1,680		(283)		1,397
Total short-term borrowings	1,575		(251)		1,324
Long-term debt	(174)		39		(135)
Total borrowed funds	1,401		(212)		1,189
Change in interest expense	1,245		5,933		7,178
Change in net interest income	$	1,861	$	1,234	$	3,095
Percentage increase in net interest income over prior period					8.7		%
(1) Tax equivalent, using a federal statutory tax rate of 21%.

Our tax equivalent net interest income for the third quarter of 2024 was $38.8 million, an increase of $3.1 million, or 8.7%, compared to $35.7 million for the third quarter of 2023. The increase in tax equivalent net interest income in the third quarter of 2024 compared to the third quarter of 2023 was due primarily to an increase of $10.9 million, or 20.7%, in loan interest income stemming from higher yields coupled with increased volumes from acquired DNVB loans, organic loan growth, and additional line of credit usage. The increased loan volumes were partially offset by the sale of loans associated with our Florida banking operations. Partially offsetting this increase in loan interest income was a decrease of $1.0 million, or 8.5%, in interest income earned from investment securities, which stemmed from lower volumes of securities, and increases in interest expense on interest bearing deposits and borrowed funds of $6.0 million and $1.2 million, respectively, stemming from higher costs on interest bearing deposits and increased volumes of borrowed funds.

The tax equivalent net interest margin for the third quarter of 2024 improved to 2.51% from 2.35% for the third quarter of 2023, driven by higher earning asset yields, partially offset by higher funding costs. Total earning asset yield increased 58 basis points ("bps") from the third quarter of 2023, primarily due to a 67 bps increase in loan yields. Funding costs increased 54 bps to 2.87%, due to interest bearing deposit costs of 2.58%, short-term borrowing costs of 4.76%, and long-term debt costs of 6.91%, which increased 53 bps, 47 bps and 13 bps, respectively, from the third quarter of 2023.

Credit Loss Expense

Credit loss expense of $1.5 million was recorded during the third quarter of 2024, compared to $1.6 million of credit loss expense recorded in the third quarter of 2023. Credit loss expense in the third quarter of 2024 reflected an additional reserve taken to support organic loan growth, offset by a reduction of $0.3 million in the liability for unfunded loan commitments. Net charge-offs were $1.7 million in the third quarter of 2024, compared to net charge-offs of $0.5 million in the third quarter of 2023. The estimation model utilized by the Company is sensitive to changes in the following forecast inputs: (1) Midwest and national unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, and (4) year-to-year change in U.S. GDP. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

Table of Contents

Noninterest (Loss) Income

The following table presents significant components of noninterest (loss) income and the related dollar and percentage change from period to period:


	Three Months Ended September 30,
(dollars in thousands)	2024		2023		$ Change		% Change
Investment services and trust activities	$	3,410	$	3,004	$	406	13.5	%
Service charges and fees	2,170		2,146		24		1.1
Card revenue	1,935		1,817		118		6.5
Loan revenue	760		1,462		(702)		(48.0)
Bank-owned life insurance	879		626		253		40.4

Investment securities (losses) gains, net	(140,182)		79		(140,261)		n/m
Other	640		727		(87)		(12.0)
Total noninterest (loss) income	$	(130,388)	$	9,861	$	(140,249)	n/m

(n/m) - Not meaningful

Total noninterest income for the third quarter of 2024 decreased $140.2 million to a noninterest loss of $130.4 million, from noninterest income of $9.9 million in the third quarter of 2023, primarily due to the balance sheet repositioning-related securities impairment of $140.4 million. Also contributing to the decline in noninterest income was a decrease of $0.7 million in loan revenue, primarily due to an unfavorable year-over-year change of $1.3 million in the fair value of our mortgage servicing rights, which was partially offset by an increase of $0.5 million in SBA gain on sale. Partially offsetting these decreases in total noninterest income was an increase of $0.4 million in investment securities and trust activities revenue, driven by growth in assets under administration and transaction fees, and an increase of $0.3 million in bank-owned life insurance due primarily to $0.2 million of death benefits recognized in the third quarter of 2024.

Noninterest Expense

The following table presents significant components of noninterest expense and the related dollar and percentage change from period to period:


	Three Months Ended September 30,
(dollars in thousands)	2024		2023		$ Change		% Change
Compensation and employee benefits	$	19,943	$	18,558	$	1,385	7.5	%
Occupancy expense of premises, net	2,443		2,405		38		1.6
Equipment	2,486		2,123		363		17.1
Legal and professional	2,261		1,678		583		34.7
Data processing	1,580		1,504		76		5.1
Marketing	619		782		(163)		(20.8)
Amortization of intangibles	1,470		1,460		10		0.7
FDIC insurance	923		783		140		17.9
Communications	159		206		(47)		(22.8)
Foreclosed assets, net	330		2		328		n/m
Other	3,584		2,043		1,541		75.4


Total noninterest expense	$	35,798	$	31,544	$	4,254	13.5	%

(n/m) - Not meaningful

The following table summarizes the acquisition and divestiture-related expenses incurred during the three months ended September 30, 2024 and September 30, 2023, which are included in the respective income statement line items, for the periods indicated:


	Three Months Ended September 30,
Merger-related expenses:	2024		2023
(dollars in thousands)



Legal and professional	$	127	$	11



Other	6		—
Total merger-related expenses	$	133	$	11

Noninterest expense for the third quarter of 2024 increased $4.3 million, or 13.5%, to $35.8 million from $31.5 million for the third quarter of 2023, due to increases in all noninterest expense categories, except marketing and communications. The largest

Table of Contents

contributors to the increase in noninterest expense were increases of $1.5 million, $1.4 million, and $0.6 million in other, compensation and employee benefits, and legal and professional expenses, respectively. The increase in other expense was primarily driven by a $1.2 million fraud loss recorded in the third quarter of 2024. The increase in compensation and employee benefits expense was driven by annual compensation adjustments and increased incentive and commission expense. The increase in legal and professional expense stemmed from increased costs for legal fees, consulting, personnel procurement, merger-related expenses, and accounting and tax fees. Partially offsetting these increases was a decline of $0.2 million in marketing expense.

Income Tax Expense

Our effective income tax rate, or income tax expense divided by income before income tax expense, was 26.5% for the three months ended September 30, 2024, as compared to an effective tax rate of 19.4% for the three months ended September 30, 2023. The increase primarily reflected the impact of the investment security impairments recorded in the third quarter of 2024. The effective tax rate for the full year 2024 is expected to be in the range of 27% to 29%.

Comparison of Operating Results for the Nine Months Ended September 30, 2024 and September 30, 2023

Summary


	As of and for the Nine Months Ended September 30,
(dollars in thousands, except per share amounts)	2024			2023
Net Interest Income	$	108,599		$	111,613
Noninterest (Loss) Income	(99,084)			14,561
Total Revenue, Net of Interest Expense	9,515			126,174
Credit Loss Expense	7,491			4,081
Noninterest Expense	107,124			99,782
(Loss) Income Before Income Tax Expense	(105,100)			22,311
Income Tax (Benefit) Expense	(28,481)			4,182
Net (Loss) Income	(76,619)			18,129
Adjusted Earnings (1)	$	21,762		$	28,046
Diluted (Loss) Earnings Per Share	$	(4.86)		$	1.15
Adjusted Earnings Per Share (1)	1.38			1.79




Return on Average Assets	(1.54)		%	0.37		%
Return on Average Equity	(19.03)			4.81
Return on Average Tangible Equity (1)	(22.17)			7.03
Efficiency Ratio (1)	65.20			66.40
Dividend Payout Ratio	n/m			62.72

Common Equity Ratio	8.58			7.81
Tangible Common Equity Ratio (1)	7.22			6.54
Book Value per Share	$	27.06		$	32.21
Tangible Book Value per Share (1)	22.43			26.60

(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for a reconciliation to the most comparable GAAP equivalents.
(n/m) - Not meaningful

Table of Contents

Net Interest Income


	Nine Months Ended September 30,
	2024						2023
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Cost		Average Balance		Interest Income/ Expense		Average Yield/ Cost
ASSETS
Loans, including fees (1)(2)(3)	$	4,343,087	$	184,920	5.69	%	$	3,964,119	$	150,250	5.07	%
Taxable investment securities	1,522,447		27,467		2.41		1,714,912		29,704		2.32
Tax-exempt investment securities (2)(4)	321,560		6,113		2.54		361,254		7,136		2.64
Total securities held for investment (2)	1,844,007		33,580		2.43		2,076,166		36,840		2.37
Other	34,435		1,445		5.61		22,741		686		4.03
Total interest-earning assets (2)	$	6,221,529	$	219,945	4.72	%	$	6,063,026	$	187,776	4.14	%

Other assets	422,368						417,610
Total assets	$	6,643,897					$	6,480,636

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking deposits	$	1,280,581	$	9,076	0.95	%	$	1,429,804	$	5,999	0.56	%
Money market deposits	1,074,006		23,644		2.94		1,014,708		15,970		2.10
Savings deposits	731,724		7,848		1.43		620,011		1,309		0.28
Time deposits	1,449,485		45,217		4.17		1,437,122		35,286		3.28
Total interest-bearing deposits	4,535,796		85,785		2.53		4,501,645		58,564		1.74
Securities sold under agreements to repurchase	5,482		33		0.80		123,512		958		1.04

Other short-term borrowings	422,653		15,394		4.87		174,448		6,665		5.11
Total short-term borrowings	428,135		15,427		4.81		297,960		7,623		3.42
Long-term debt	119,837		6,196		6.91		133,375		6,427		6.44
Total borrowed funds	547,972		21,623		5.27		431,335		14,050		4.36
Total interest-bearing liabilities	$	5,083,768	$	107,408	2.82	%	$	4,932,980	$	72,614	1.97	%

Noninterest bearing deposits	930,197						958,104
Other liabilities	92,235						85,650
Shareholders' equity	537,697						503,902
Total liabilities and shareholders' equity	$	6,643,897					$	6,480,636
Net interest income (2)			$	112,537					$	115,162
Net interest spread (2)					1.90	%					2.17	%









Net interest margin (2)					2.42	%					2.54	%

Total deposits (5)	$	5,465,993	$	85,785	2.10	%	$	5,459,749	$	58,564	1.43	%
Cost of funds (6)					2.39	%					1.65	%


(1)			Average balance includes nonaccrual loans.
(2)			Tax equivalent. The federal statutory tax rate utilized was 21%.
(3)			Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $952 million and $315 thousand for the nine months ended September 30, 2024 and September 30, 2023, respectively. Loan purchase discount accretion was $3.8 million and $3.0 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Tax equivalent adjustments were $2.8 million and $2.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(4)			Interest income includes tax equivalent adjustments of $1.1 million and $1.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The federal statutory tax rate utilized was 21%.
(5)			Total deposits is the sum of total interest bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(6)			Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

Table of Contents

The following table shows changes to tax equivalent net interest income attributable to (i) changes in volume and (ii) changes in rate. Changes attributable to both rate and volume have been allocated proportionately to the change due to volume and the change due to rate.


	Nine Months Ended September 30,
	2024 Compared to 2023
	Change due to
(in thousands)	Volume		Yield/Cost		Net
Increase (decrease) in interest income:
Loans, including fees (1)	$	15,211	$	19,459	$	34,670
Taxable investment securities	(3,379)		1,142		(2,237)
Tax-exempt investment securities (1)	(761)		(262)		(1,023)
Total securities held for investment (1)	(4,140)		880		(3,260)
Other	431		328		759
Change in interest income (1)	11,502		20,667		32,169
Increase (decrease) in interest expense:
Interest checking deposits	(688)		3,765		3,077
Money market deposits	978		6,696		7,674
Savings deposits	275		6,264		6,539
Time deposits	306		9,625		9,931
Total interest-bearing deposits	871		26,350		27,221
Securities sold under agreements to repurchase	(745)		(180)		(925)

Other short-term borrowings	9,056		(327)		8,729
Total short-term borrowings	8,311		(507)		7,804
Long-term debt	(680)		449		(231)
Total borrowed funds	7,631		(58)		7,573
Change in interest expense	8,502		26,292		34,794
Change in net interest income	$	3,000	$	(5,625)	$	(2,625)
Percentage decrease in net interest income over prior period					(2.3)		%
(1) Tax equivalent, using a federal statutory tax rate of 21%.

Our tax equivalent net interest income for the nine months ended September 30, 2024 was $112.5 million, a decrease of $2.6 million, or 2.3%, compared to $115.2 million for the nine months ended September 30, 2023. This decrease in tax equivalent net interest income was due to an increase in interest expense on interest bearing deposits and borrowed funds of $27.2 million and $7.6 million, respectively, due to higher costs and volumes of interest bearing deposits, coupled with higher volumes of borrowed funds, partially offset by lower costs of borrowed funds. The decrease in tax equivalent net interest income was also due to a decrease of $3.3 million, or 8.8%, in interest income earned from investment securities, which stemmed from lower volumes. Partially offsetting these decreases was an increase of $34.7 million, or 23.1%, in loan interest income due to higher yields coupled with increased volumes from acquired DNVB loans, organic loan growth, and additional line of credit usage. The increased loan volumes were partially offset by the sale of loans associated with our Florida banking operations.

The tax equivalent net interest margin for the nine months ended September 30, 2024 was 2.42%, or 12 bps lower than the tax equivalent net interest margin of 2.54% for the nine months ended September 30, 2023. The cost of interest-bearing deposits increased 79 bps for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, while the cost of borrowed funds increased 91 bps for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Partially offsetting these identified decreases to tax equivalent net interest margin from the nine months ended September 30, 2023, was the increase in loan yields of 62 bps, which primarily reflected new loan production originated at higher yields.

Credit Loss Expense

Credit loss expense of $7.5 million was recorded in the first nine months of 2024, as compared to credit loss expense of $4.1 million for the first nine months of 2023. Credit loss expense in the first nine months of 2024 reflected $3.2 million of day 1 credit loss expense related to the DNVB acquisition, an additional liability of $0.6 million on unfunded loan commitments, and additional reserve taken to support organic loan growth. Net charge-offs in the first nine months of 2024 were $2.4 million, as compared to net charge-offs of $1.7 million in the first nine months of 2023. The estimation model utilized by the Company is sensitive to changes in the following forecast inputs: (1) Midwest and national unemployment, (2) year-to-year change in national retail sales, (3) year-to-year change in the CRE Index, and (4) year-to-year change in U.S. GDP. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of

Table of Contents

specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

Noninterest Income

The following table presents the significant components of noninterest income and the related dollar and percentage change from period to period:



	Nine Months Ended September 30,
(dollars in thousands)	2024		2023		$ Change		% Change
Investment services and trust activities	$	10,417	$	9,056	$	1,361	15.0	%
Service charges and fees	6,470		6,201		269		4.3
Card revenue	5,785		5,412		373		6.9
Loan revenue	3,141		3,791		(650)		(17.1)
Bank-owned life insurance	2,207		1,844		363		19.7

Investment securities (losses) gains, net	(140,113)		(13,093)		(127,020)		n/m
Other	13,009		1,350		11,659		n/m
Total noninterest income	$	(99,084)	$	14,561	$	(113,645)	n/m

(n/m) - Not meaningful

Total noninterest income for the first nine months of 2024 decreased $113.6 million to a noninterest loss of $99.1 million, from noninterest income of $14.6 million during the same period of 2023, primarily due to the balance sheet repositioning-related securities impairment of $140.4 million recorded in the third quarter of 2024, a larger loss than the $13.2 million of investment securities losses, net, recorded in the first quarter of 2023 related to a smaller volume balance sheet repositioning. The largest offset to this decrease in total noninterest income was an $11.7 million increase in other noninterest income due primarily to the $10.9 million gain on sale of assets associated with our Florida banking operations. Further offsetting the decline in total noninterest income was a $1.4 million increase in investment services and trust activities revenue, driven by growth in assets under administration and transaction fees.

Noninterest Expense

The following table presents the significant components of noninterest expense and the related dollar and percentage change from period to period:



	Nine Months Ended September 30,
(dollars in thousands)	2024		2023		$ Change		% Change
Compensation and employee benefits	$	61,858	$	58,551	$	3,307	5.6	%
Occupancy expense of premises, net	7,691		7,725		(34)		(0.4)
Equipment	7,616		6,729		887		13.2
Legal and professional	6,573		5,096		1,477		29.0
Data processing	4,585		4,388		197		4.5
Marketing	1,853		2,910		(1,057)		(36.3)
Amortization of intangibles	4,700		4,806		(106)		(2.2)
FDIC insurance	2,916		2,394		522		21.8
Communications	546		727		(181)		(24.9)
Foreclosed assets, net	826		(32)		858		n/m
Other	7,960		6,488		1,472		22.7


Total noninterest expense	$	107,124	$	99,782	$	7,342	7.4	%

(n/m) - Not meaningful

Table of Contents

The following table summarizes the acquisition and divestiture-related expenses incurred during the nine months ended September 30, 2024 and September 30, 2023, which are included in the respective income statement line items, for the periods indicated:


Merger-related expenses:	Nine Months Ended September 30,
(dollars in thousands)	2024		2023
Compensation and employee benefits	$	314	$	70
Occupancy expense of premises, net	152		—
Equipment	177		—
Legal and professional	1,162		11
Data processing	312		65
Marketing	32		—
Communications	9		—
Other	143		1
Total merger-related expenses	$	2,301	$	147

Noninterest expense for the nine months ended September 30, 2024 was $107.1 million, an increase of $7.3 million, or 7.4%, from $99.8 million for the nine months ended September 30, 2023, primarily due to increases of $3.3 million, $1.5 million, and $1.5 million in compensation and employee benefits, legal and professional, and other expenses, respectively. The increase in compensation and employee benefits expense was primarily driven by annual compensation adjustments, increased headcount as a result of the DNVB acquisition, increased incentive and commission expense, and merger-related expenses. The increase in legal and professional expense stemmed primarily from higher merger-related expenses. The increase in other expense stemmed primarily from a $1.2 million fraud loss recorded in the third quarter of 2024. Partially offsetting these increases was a decline of $1.1 million in marketing expense.

Income Tax Expense

Our effective income tax rate, or income tax expense divided by income before tax expense, was 27.1% for the first nine months of 2024, compared to an effective tax rate of 18.7% for the first nine months of 2023. The increase reflected the impact of the investment security impairments recorded in the third quarter of 2024 related to the balance sheet repositioning, taxable income attributed to the Florida banking operations sale exceeding book income due to the non-deductible goodwill allocated to the Florida banking operations, and a decreased benefit from tax exempt income. The effective tax rate for the full year 2024 is expected to be in the range of 27 to 29%.

FINANCIAL CONDITION

The table below presents the major categories of the Company's balance sheet as of the dates indicated:


(dollars in thousands)	September 30, 2024		December 31, 2023		$ Change		% Change
ASSETS
Cash and cash equivalents	$	201,868	$	81,727	$	120,141	147.0	%
Loans held for sale	3,283		1,045		2,238		214.2
Debt securities available for sale at fair value	1,623,104		795,134		827,970		104.1
Held to maturity securities at amortized cost	—		1,075,190		(1,075,190)		(100.0)
Loans held for investment, net of unearned income	4,328,756		4,126,947		201,809		4.9
Allowance for credit losses	(54,000)		(51,500)		(2,500)		4.9
Total loans held for investment, net	4,274,756		4,075,447		199,309		4.9
Other assets	449,471		398,997		50,474		12.7
Total assets	$	6,552,482	$	6,427,540	$	124,942	1.9	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits	$	5,368,727	$	5,395,673	$	(26,946)	(0.5)	%
Total borrowings	525,681		423,560		102,121		24.1
Other liabilities	95,836		83,929		11,907		14.2
Total shareholders' equity	562,238		524,378		37,860		7.2
Total liabilities and shareholders' equity	$	6,552,482	$	6,427,540	$	124,942	1.9	%

Table of Contents

Debt Securities

The composition of debt securities available for sale and held to maturity as of the dates indicated was as follows:


	September 30, 2024				December 31, 2023
(dollars in thousands)	Balance		% of Total		Balance		% of Total
Available for Sale


States and political subdivisions	$	583,045	36.0	%	$	130,139	16.4	%
Mortgage-backed securities	65,276		4.0		5,311		0.7
Collateralized loan obligations	50,522		3.1		50,437		6.3
Collateralized mortgage obligations	530,768		32.7		169,196		21.3
Corporate debt securities	393,493		24.2		440,051		55.3
Fair value of debt securities available for sale	$	1,623,104	100.0	%	$	795,134	100.0	%

Held to Maturity

States and political subdivisions	$	—	—	%	$	532,422	49.5	%
Mortgage-backed securities	—		—		74,904		7.0
Collateralized mortgage obligations	—		—		467,864		43.5

Amortized cost of debt securities held to maturity	$	—	—	%	$	1,075,190	100.0	%

Total investment securities at September 30, 2024 decreased $247.2 million, or 13.22%, from December 31, 2023 to $1.62 billion. This decrease stemmed from impairment recognized in the third quarter of 2024 related to the balance sheet repositioning, fair value adjustments recognized in the third quarter of 2024 in connection with the reclassification of held to maturity securities to available for sale, and principal cash flows received from scheduled payments, calls, and maturities.

As of September 30, 2024, there was $374 thousand of gross unrealized gains and $78.7 million of gross unrealized losses in our debt securities available for sale portfolio for a net unrealized loss of $78.3 million.

See Note 3. Debt Securities to our consolidated financial statements for additional information related to debt securities.

Loans

The composition of our loan portfolio by type of loan was as follows, as of the dates indicated:


	September 30, 2024				December 31, 2023
(dollars in thousands)	Balance		% of Total		Balance		% of Total
Agricultural	$	112,696	2.6	%	$	118,414	2.9	%
Commercial and industrial	1,149,758		26.6		1,075,003		26.0





Commercial real estate	2,332,141		53.8		2,225,310		54.0



Residential real estate	662,037		15.3		640,437		15.5
Consumer	72,124		1.7		67,783		1.6
Loans held for investment, net of unearned income	$	4,328,756	100.0	%	$	4,126,947	100.0	%
Loans held for sale	$	3,283			$	1,045

Loans held for investment, net of unearned income, at September 30, 2024, increased $201.8 million, or 4.9%, from December 31, 2023 to $4.33 billion, driven primarily by loans acquired in the DNVB acquisition, organic loan growth, and higher line of credit usage, partially offset by sale of gross loans of $163.6 million associated with our Florida banking operations. See Note 4. Loans Receivable and the Allowance for Credit Losses to our consolidated financial statements for additional information related to our loan portfolio. Our loan to deposit ratio increased to 80.63% as of September 30, 2024, as compared to 76.49% as of December 31, 2023.

Commitments under standby letters of credit, unused lines of credit and other conditionally approved credit lines totaled approximately $1.15 billion and $1.21 billion as of September 30, 2024 and December 31, 2023, respectively.

Table of Contents

The composition of our commercial real estate loan portfolio as of September 30, 2024 was as follows:



(dollars in thousands)	Amount		% of Total Loans
Construction & Development	$	386,920	8.9	%
Farmland	182,164		4.2
Multifamily	409,544		9.5
CRE Other:
NOO CRE Office	154,734		3.6
OO CRE Office	84,591		2.0
Industrial and Warehouse	403,525		9.2
Retail	282,414		6.5
Hotel	111,686		2.6
Other	316,563		7.3
Total CRE	$	2,332,141	53.8	%

Nonperforming Assets

The following table sets forth information concerning nonperforming loans by class of receivable and our nonperforming assets at September 30, 2024 and December 31, 2023:


(in thousands)	September 30, 2024			December 31, 2023

Nonaccrual loans held for investment	$	20,702		$	25,891
Accruing loans contractually past due 90 days or more	1,252			468
Total nonperforming loans	21,954			26,359
Foreclosed assets, net	3,583			3,929
Total nonperforming assets	25,537			30,288

Nonaccrual loans ratio (1)	0.48		%	0.63		%
Nonperforming loans ratio (2)	0.51		%	0.64		%
Nonperforming assets ratio (3)	0.39		%	0.47		%

(1) Nonaccrual loans ratio is calculated as nonaccrual loans divided by loans held for investment, net of unearned income, at the end of the period.
(2) Nonperforming loans ratio is calculated as total nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.
(3) Nonperforming assets ratio is calculated as total nonperforming assets divided by total assets at the end of the period.

Compared to December 31, 2023, nonperforming loans and asset ratios improved, with declines in both ratios of 13 and 8 bps, respectively.

Loan Review and Classification Process for Agricultural, Commercial and Industrial, and Commercial Real Estate Loans:

The Bank maintains a loan review and classification process which involves multiple officers of the Bank and is designed to assess the general quality of credit underwriting and to promote early identification of potential problem loans. All commercial and agricultural loan officers are charged with the responsibility of risk rating all loans in their portfolios and updating the ratings, positively or negatively, on an ongoing basis as conditions warrant. Risk ratings are selected from an 8-point scale with ratings as follows: ratings 1- 4 Satisfactory (pass), rating 5 Special Mention/Watch (potential weakness), rating 6 Substandard (well-defined weakness), rating 7 Doubtful, and rating 8 Loss.

When a loan officer originates a new loan, based upon proper loan authorization, they document the credit file with an offering sheet summary, supplemental underwriting analysis, relevant financial information and collateral evaluations. This information is used in the determination of the initial loan risk rating. Segregation of owner-occupied and non-owner occupied residential real estate loans is made at the time of origination. The Bank’s loan review department undertakes independent credit reviews of relationships based on either criteria established by loan policy, risk-focused sampling, or random sampling. Credit relationships with larger exposure may pose incrementally higher risks. As a result, the Bank's loan review department is required to review all credit relationships with total exposure of $7.5 million or more at least annually. In addition, the individual loan reviews consider such items as: loan type; nature, type and estimated value of collateral; borrower and/or guarantor estimated financial strength; most recently available financial information; related loans and total borrower exposure; and current and anticipated performance of the loan. The results of such reviews are presented to both executive management and the audit committee of the Company's board of directors.

Through the review of delinquency reports, updated financial statements or other relevant information, the lending officer and/or loan review personnel may determine that a loan relationship has weakened to the point that a Special Mention/Watch (risk

Table of Contents

rating 5) or Classified (risk ratings 6 through 8) status is warranted. At least quarterly, the loan strategy committee will meet to discuss loan relationships with total exposure of $1.0 million or above that are Special Mention/Watch rated credits, loan relationships with total exposure of $500 thousand and above that are Substandard or worse rated credits, as well as loan relationships with total exposure of $250 thousand and above that are on non-accrual. Loan relationships outside these designated thresholds are reviewed upon request. The lending officer is charged with preparing a loan strategy summary worksheet that outlines the background of the credit problem, current repayment status of the loans, current collateral evaluation and a workout plan of action. This plan may include goals to improve the credit rating, assist the borrower in moving the loans to another institution and/or collateral liquidation. All such reports are presented to the loan strategy committee. The minutes of the loan strategy committee meetings are provided to the board of directors of the Bank.

Depending upon the individual facts and circumstances and the result of the classified/watch review process, loan officers and/or loan review personnel may categorize a loan relationship as requiring an individual analysis. Once that determination has occurred, the credit analyst will complete an individually analyzed worksheet that contains an evaluation of the collateral (for collateral-dependent loans) based upon the estimated collateral value, adjusting for current market conditions and other local factors that may affect collateral value. Loan review personnel may also complete an independent individual analysis when deemed necessary. These judgmental evaluations may produce an initial specific allowance for recognition in the Company’s allowance for credit losses calculation. An analysis for the underlying collateral value of each individually analyzed loan relationship is completed in the last month of the quarter. The individually analyzed worksheets are reviewed by the Credit Administration department prior to quarter-end. The board of directors of the Bank on a quarterly basis reviews the classified/watch reports including changes in credit grades of 5 or higher as well as all individually analyzed loans, the related allowances and foreclosed assets, net.

The review process also provides for the upgrade of loans that show improvement since the last review. All requests for an upgrade of a credit are approved by the proper authority based upon the aggregate credit exposure before the rating can be changed.

Loan Modifications for Borrowers Experiencing Financial Difficulty

Infrequently, the Company makes modification to certain loans in order to alleviate temporary difficulties in the borrower's financial condition and/or constraints on the borrower's ability to repay a loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, including:

• Principal forgiveness.

• Interest rate reduction.

• An other than-insignificant payment delay.

• Term extension.

During the three months ended September 30, 2024, the amortized cost of the loans that were modified to borrowers in financial distress was $2.6 million, which represented 0.06% of total loans held for investment, net of unearned income. For the nine months ended September 30, 2024, the amortized cost of the loans that were modified to borrowers in financial distress was $8.9 million, which represented 0.21% of total loans held for investment, net of unearned income.

Table of Contents

Allowance for Credit Losses

The following table sets forth the allowance for credit losses by loan portfolio segments compared to the percentage of loans to total loans by loan portfolio segment for the periods indicated:


	September 30, 2024					December 31, 2023
(dollars in thousands)	Allowance for Credit Losses			% of Loans in Each Segment to Total Loans		Allowance for Credit Losses			% of Loans in Each Segment to Total Loans
Agricultural	$	358		2.6	%	$	613		2.9	%
Commercial and industrial	20,855			26.6		21,743			26.0
Commercial real estate	26,115			53.8		23,759			54.0
Residential real estate	5,126			15.3		4,762			15.5
Consumer	1,546			1.7		623			1.6
Total	$	54,000		100.0	%	$	51,500		100.0	%

Allowance for credit losses ratio (1)	1.25		%			1.25		%

Allowance for credit losses to nonaccrual loans ratio (2)	260.84		%			198.91		%

(1) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income at the end of the period.

(2) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

The following tables set forth the net (charge-offs) recoveries by loan portfolio segments for the periods indicated:



	Three Months Ended September 30, 2024 and 2023
(in thousands)	Agricultural			Commercial and Industrial			Commercial Real Estate			Residential Real Estate			Consumer			Total
For the Three Months Ended September 30, 2024
Charge-offs	$	—		$	(1,575)		$	—		$	—		$	(363)		$	(1,938)
Recoveries	1			168			4			4			26			203
Net (charge-offs) recoveries	$	1		$	(1,407)		$	4		$	4		$	(337)		$	(1,735)

Net (charge-off) recovery ratio (1)	—		%	(0.13)		%	—		%	—		%	(0.03)		%	(0.16)		%

For the Three Months Ended September 30, 2023
Charge-offs	$	(25)		$	(511)		$	—		$	(21)		$	(178)		$	(735)
Recoveries	126			79			4			3			72			284
Net (charge-offs) recoveries	$	101		$	(432)		$	4		$	(18)		$	(106)		$	(451)

Net (charge-off) recovery ratio (1)	0.01		%	(0.04)		%	—		%	—		%	(0.01)		%	(0.04)		%

	Nine Months Ended September 30, 2024 and 2023
(in thousands)	Agricultural			Commercial and Industrial			Commercial Real Estate			Residential Real Estate			Consumer			Total
For the Nine Months Ended September 30, 2024
Charge-offs	$	(4)		$	(2,343)		$	(35)		$	(75)		$	(913)		$	(3,370)
Recoveries	356			437			18			17			94			922
Net (charge-offs) recoveries	$	352		$	(1,906)		$	(17)		$	(58)		$	(819)		$	(2,448)

Net (charge-off) recovery ratio (1)	0.01		%	(0.06)		%	—		%	—		%	(0.03)		%	(0.08)		%

For the Nine Months Ended September 30, 2023
Charge-offs	$	(26)		$	(1,020)		$	(830)		$	(54)		$	(451)		$	(2,381)
Recoveries	153			349			15			23			160			700
Net (charge-offs) recoveries	$	127		$	(671)		$	(815)		$	(31)		$	(291)		$	(1,681)

Net (charge-off) recovery ratio (1)	—		%	(0.02)		%	(0.03)		%	—		%	(0.01)		%	(0.06)		%

(1) Net (charge-off) recovery ratio is calculated as the annualized net (charge-offs) recoveries divided by average loans held for investment, net of unearned income and average loans held for sale, during the period.

Actual Results: Our ACL as of September 30, 2024 was $54.0 million, which was 1.25% of loans held for investment, net of unearned income as of that date. This compares with an ACL of $51.5 million as of December 31, 2023, which was 1.25% of loans held for investment, net of unearned income. The increase in the ACL primarily reflected the $3.1 million of day 1 credit

Table of Contents

loss expense related to the acquired DNVB loans, as well as an additional reserve taken to support organic loan growth, partially offset by the $1.9 million of allowance divested in the sale of our Florida banking operations. The liability for off-balance sheet credit exposures totaled $5.2 million as of September 30, 2024 and $4.6 million as of December 31, 2023, and is included in 'Other liabilities' on the balance sheet.

The Company recorded a credit loss expense related to loans of $6.9 million for the nine months ended September 30, 2024, compared to credit loss expense related to loans of $4.1 million for the nine months ended September 30, 2023. Gross charge-offs for the first nine months of 2024 totaled $3.4 million, while there were $0.9 million in gross recoveries of previously charged-off loans. The ratio of annualized net charge-offs to average loans for the first nine months of 2024 was 0.08% compared to 0.06% for the nine months ended September 30, 2023.

Economic Forecast: At September 30, 2024, the economic forecast used by the Company showed the following: (1) Midwest unemployment – increase in the first forecasted quarter, with little change in the second through fourth forecasted quarters; (2) national unemployment - decreases over the next four forecasted quarters; (3) year-to-year change in national retail sales - increases over the next four forecasted quarters; (4) year-to-year change in CRE Index - decreases over the next two forecasted quarters, with increases in the third and fourth forecasted quarters; and (5) year-to-year change in U.S. GDP - increases over the next four forecasted quarters. In addition, management utilized qualitative factors to adjust the calculated ACL as appropriate. Qualitative factors are based on management’s judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

Loan Policy: We review all nonaccrual relationships greater than $250 thousand individually on a quarterly basis to measure any amount to be recognized in the Company's allowance for credit losses by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, and other relevant factors. We review loans 90 days or more past due that are still accruing interest no less than quarterly to determine if the asset is both well secured and in the process of collection. If not, such loans are placed on non-accrual status. Upon the Company's determination that a loan balance has been deemed uncollectible, the uncollectible balance is charged-off.

Based on the inherent risk in the loan portfolio, management believed that, as of September 30, 2024, the ACL was adequate; however, there is no assurance losses will not exceed the ACL. In addition, growth in the loan portfolio or general economic deterioration may require the recognition of additional credit loss expense in future periods. See Note 4. Loans Receivable and the Allowance for Credit Losses to our unaudited consolidated financial statements for additional information related to the allowance for credit losses.

Deposits

The composition of deposits was as follows:


	As of September 30, 2024				As of December 31, 2023
(in thousands)	Balance		% of Total		Balance		% of Total
Noninterest bearing deposits	$	917,715	17.1	%	$	897,053	16.6	%
Interest checking deposits	1,230,605		23.0		1,320,435		24.5
Money market deposits	1,038,575		19.3		1,105,493		20.5
Savings deposits	768,298		14.3		650,655		12.1
Total non-maturity deposits	3,955,193		73.6		3,973,636		73.7
Time deposits of $250 and under	1,044,298		19.5		973,253		18.0
Time deposits over $250	369,236		6.9		448,784		8.3
Total time deposits	$	1,413,534	26.4	%	$	1,422,037	26.3	%
Total deposits	$	5,368,727	100.0	%	$	5,395,673	100.0	%

Deposits as of September 30, 2024 decreased $26.9 million from December 31, 2023, or 0.5%, to $5.37 billion. Brokered time deposits were $200.0 million and $221.0 million at September 30, 2024 and December 31, 2023, respectively, and are included in the table above within "Time deposits of $250 and under ” . Core deposits, which include the total of all deposits other than time deposits over $250 thousand and non-reciprocal brokered deposits, were approximately 89.4% of our total deposits as of September 30, 2024, compared to 87.6% as of December 31, 2023. See Note 8. Deposits to our consolidated financial statements for additional information related to our deposits.

Table of Contents

Short-Term Borrowings and Long-Term Debt

The following table sets forth the composition of short-term borrowings and long-term debt as of the dates presented:


(dollars in thousands)	September 30, 2024		December 31, 2023
Securities sold under agreements to repurchase	$	5,630	$	5,064
Federal Home Loan Bank advances	—		10,200

Federal Reserve Bank borrowings	405,000		285,000

Total short-term borrowings	$	410,630	$	300,264

Junior subordinated notes issued to capital trusts	$	42,426	$	42,293
Subordinated debentures	64,236		64,137
Finance lease payable	452		604
Federal Home Loan Bank borrowings	3,187		6,262
Other long-term debt	4,750		10,000
Total long-term debt	$	115,051	$	123,296

See Note 9. Short-Term Borrowings and Note 10. Long-Term Debt to our unaudited consolidated financial statements for additional information related to short-term borrowings and long-term debt.

Capital Resources

Shareholders' Equity and Capital Adequacy

The following table summarizes certain equity capital ratios and book value per share amounts of the Company at the dates presented:


	September 30, 2024			December 31, 2023
Common equity ratio	8.58		%	8.16		%
Tangible common equity ratio (1)	7.22		%	6.90		%
Total risk-based capital ratio	12.96		%	12.53		%
Tier 1 risk-based capital ratio	10.70		%	10.38		%
Common equity tier 1 risk-based capital ratio	9.91		%	9.59		%
Tier 1 leverage ratio	8.78		%	8.58		%
Book value per share	$	27.06		$	33.41
Tangible book value per share (1)	$	22.43		$	27.90
(1) A non-GAAP financial measure - see the “Non-GAAP Presentations” section for a reconciliation to the most comparable GAAP equivalent.

Shareholders' Equity: Total shareholders’ equity was $562.2 million as of September 30, 2024, compared to $524.4 million as of December 31, 2023, an increase of $37.9 million, or 7.2%, due primarily to an increase in the balance of common stock and additional paid-in-capital stemming from the common stock capital raise executed in the third quarter of 2024, partially offset by a decline in retained earnings.

Capital Adequacy: Risk-based capital guidelines require the classification of assets and some off-balance-sheet items in terms of credit-risk exposure and the measuring of capital as a percentage of the risk-adjusted asset totals. Management believed that, as of September 30, 2024, the Company and the Bank met all capital adequacy requirements to which we were subject. As of that date, the Bank was “well capitalized” under regulatory prompt corrective action provisions. See Note 12. Regulatory Capital Requirements and Restrictions on Subsidiary Cash to our unaudited consolidated financial statements for additional information related to our capital.

Stock Compensation

Restricted stock units were granted to certain officers of the Company on February 15, 2024, in the aggregate amount of 104,326. In the second quarter, restricted stock units were also granted to directors of the Company and the Bank on May 15, 2024, in the aggregate amount of 17,264. During the third quarter, restricted stock units were granted to certain officers of the Company on August 15, 2024, in the aggregate amount of 5,968. Additionally, during the first nine months of 2024, 103,961 shares of common stock were issued in connection with the vesting of previously awarded grants of restricted stock units, of which 22,398 shares were surrendered by grantees to satisfy tax requirements, and 7,030 unvested restricted stock units were forfeited.

Table of Contents

Liquidity

Liquidity risk management involves meeting the cash flow requirements of depositors and borrowers. We conduct liquidity risk management on both a daily and long-term basis, and adjust our investments in liquid assets based on expected loan demand, projected loan maturities and payments, expected deposit flows, yields available on interest-bearing deposits, and the objectives of our asset/liability management program. Generally, excess liquidity is invested in short-term U.S. government and agency securities, short- and medium-term state and political subdivision securities, and other investment securities. Our most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold. The balances of these assets are dependent on our operating, investing, and financing activities during any given period.

Cash and cash equivalents are summarized in the table below:


(dollars in thousands)	As of September 30, 2024		As of December 31, 2023
Cash and due from banks	$	72,173	$	76,237
Interest-bearing deposits	129,695		5,479
Federal funds sold	—		11
Total	$	201,868	$	81,727

Generally, our principal sources of funds are deposits, advances from the FHLB, principal repayments on loans, proceeds from the sale of loans, proceeds from the maturity and sale of investment securities, our federal funds lines, and funds provided by operations. While scheduled loan amortization and maturing interest-bearing deposits are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by economic conditions, the general level of interest rates, and competition. We utilized particular sources of funds based on comparative costs and availability. The Bank maintains unsecured lines of credit with several correspondent banks and secured lines with the Federal Reserve Bank of Chicago and the FHLB that would allow us to borrow funds on a short-term basis, if necessary. We also hold debt securities classified as available for sale that could be sold to meet liquidity needs if necessary.

Net cash provided by operations was another major source of liquidity. The net cash provided by operating activities was $32.1 million for the nine months ended September 30, 2024 and $55.8 million for the nine months ended September 30, 2023.

Inflation

The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the growth of total assets, it is difficult to assess its overall impact on the Company. The price of one or more of the components of the Consumer Price Index may fluctuate considerably and thereby influence the overall Consumer Price Index without having a corresponding effect on interest rates or upon the cost of those goods and services normally purchased by us. Inflation and related increases in market rates by the Federal Reserve generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders' equity. Ongoing higher inflation levels and higher interest rates could have a negative impact on both our consumer and commercial borrowers. We anticipate our noninterest income may be adversely affected in future periods as a result of sustained high interest rates and inflationary pressure, which negatively impact mortgage originations and mortgage banking revenue. Additionally, the economic impact of the sustained higher levels of inflation and higher interest rates could place increased demand on our liquidity if we experience significant credit deterioration and as we meet borrowers' needs. There is also a risk that additional interest rate increases to fight inflation could lead to a recession.

Off-Balance-Sheet Arrangements

During the normal course of business, we are a party to financial instruments with off-balance-sheet risk in order to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commitments to sell loans, and standby letters of credit. We follow the same credit policy (including requiring collateral, if deemed appropriate) to make such commitments as is followed for those loans that are recorded in our financial statements.

Our exposure to credit losses in the event of nonperformance is represented by the contractual amount of the commitments. Management does not expect any significant losses as a result of these commitments, and also expects to have sufficient liquidity available to cover these off-balance-sheet instruments. Off-balance-sheet transactions are more fully discussed in Note 13. Commitments and Contingencies to our unaudited consolidated financial statements.

Contractual Obligations

There have been no material changes to the Company's contractual obligations existing at December 31, 2023, as disclosed in the Annual Report on Form 10-K, filed with the SEC on March 8, 2024.

Table of Contents

Non-GAAP Financial Measures

Certain ratios and amounts not in conformity with GAAP are provided to evaluate and measure the Company’s operating performance and financial condition, including return on average tangible equity, tangible common equity, tangible book value per share, tangible common equity ratio, efficiency ratio, net interest margin (tax equivalent), core net interest margin, adjusted earnings, and adjusted earnings per share. Management believes these ratios and amounts provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance.

Table of Contents

The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent:


	Three Months Ended						Nine Months Ended
(dollars in thousands)	September 30,						September 30,
Return on Average Tangible Equity	2024			2023			2024			2023

Net (loss) income	$	(95,707)		$	9,138		$	(76,619)		$	18,129
Intangible amortization, net of tax (1)	1,090			1,095			3,487			3,605

Tangible net (loss) income	$	(94,617)		$	10,233		$	(73,132)		$	21,734

Average shareholders' equity	$	551,414		$	508,066		$	537,697		$	503,902
Average intangible assets, net	(96,706)			(88,699)			(97,102)			(90,308)
Average tangible equity	$	454,708		$	419,367		$	440,595		$	413,594

Return on average equity	(69.05)		%	7.14		%	(19.03)		%	4.81		%
Return on average tangible equity (2)	(82.78)		%	9.68		%	(22.17)		%	7.03		%

(1) The income tax rate utilized was the blended marginal rate.
(2) Annualized tangible net income divided by average tangible equity.


Tangible Common Equity/Tangible Book Value per Share / Tangible Common Equity Ratio	September 30, 2024			December 31, 2023
(Dollars in thousands, except per share data)
Total shareholders’ equity	$	562,238		$	524,378
Intangible assets, net	(96,257)			(86,546)
Tangible common equity	$	465,981		$	437,832

Total assets	$	6,552,482		$	6,427,540
Intangible assets, net	(96,257)			(86,546)
Tangible assets	$	6,456,225		$	6,340,994

Book value per share	$	27.06		$	33.41
Tangible book value per share (1)	$	22.43		$	27.90
Shares outstanding	20,774,919			15,694,306

Equity to assets ratio	8.58		%	8.16		%
Tangible common equity ratio (2)	7.22		%	6.90		%

(1) Tangible common equity divided by shares outstanding.
(2) Tangible common equity divided by tangible assets.


	Three Months Ended						Nine Months Ended
(dollars in thousands)	September 30,						September 30,
Efficiency Ratio	2024			2023			2024			2023

Total noninterest expense	$	35,798		$	31,544		$	107,124		$	99,782
Amortization of intangibles	(1,470)			(1,460)			(4,700)			(4,806)
Merger-related expenses	(133)			(11)			(2,301)			(147)

Noninterest expense used for efficiency ratio	$	34,195		$	30,073		$	100,123		$	94,829

Net interest income, tax equivalent (1)	$	38,837		$	35,742		$	112,537		$	115,162
Noninterest (loss) income	(130,388)			9,861			(99,084)			14,561
Investment security losses (gains), net	140,182			(79)			140,113			13,093
Net revenues used for efficiency ratio	$	48,631		$	45,524		$	153,566		$	142,816

Efficiency ratio (2)	70.32		%	66.06		%	65.20		%	66.40		%
(1) The federal statutory tax rate utilized was 21%.
(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.

Table of Contents


	Three Months Ended						Nine Months Ended
(dollars in thousands)	September 30,						September 30,
Net Interest Margin, Tax Equivalent/Core Net Interest Margin	2024			2023			2024			2023
Net interest income	$	37,521		$	34,575		$	108,599		$	111,613
Tax equivalent adjustments:
Loans (1)	951			735			2,809			2,164
Securities (1)	365			432			1,129			1,385
Net interest income, tax equivalent	$	38,837		$	35,742		$	112,537		$	115,162
Loan purchase discount accretion	(1,426)			(791)			(3,839)			(2,964)
Core net interest income	$	37,411		$	34,951		$	108,698		$	112,198

Net interest margin	2.42		%	2.27		%	2.33		%	2.46		%
Net interest margin, tax equivalent (2)	2.51		%	2.35		%	2.42		%	2.54		%
Core net interest margin (3)	2.41		%	2.30		%	2.33		%	2.47		%
Average interest earning assets	$	6,167,525		$	6,032,636		$	6,221,529		$	6,063,026

(1) The federal statutory tax rate utilized was 21%.
(2) Annualized tax equivalent net interest income divided by average interest earning assets.
(3) Annualized core net interest income divided by average interest earning assets.


	Three Months Ended				Nine Months Ended
(dollars in thousands, except per share data)	September 30,				September 30,
Adjusted Earnings	2024		2023		2024		2023
Net (loss) income	$	(95,707)	$	9,138	$	(76,619)	$	18,129


Less: Investment securities (losses) gains, net of tax (1)	(103,988)		59		(103,937)		(9,820)

Less: Mortgage servicing rights (loss) gain, net of tax (1)	(761)		212		(938)		13

Plus: Merger-related expenses, net of tax (1)	99		8		1,707		110
Less: Gain on branch sale, net of tax (1)	—		—		8,201		—

Adjusted earnings	$	9,141	$	8,875	$	21,762	$	28,046

Weighted average diluted common shares outstanding	15,829,032		15,711,137		15,771,924		15,696,071

Earnings (loss) per common share
Earnings (loss) per common share - diluted	$	(6.05)	$	0.58	$	(4.86)	$	1.15
Adjusted earnings per common share (2)	$	0.58	$	0.56	$	1.38	$	1.79
(1) The income tax rate utilized was the blended marginal tax rate.
(2) Adjusted earnings divided by weighted average diluted common shares outstanding.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

In general, market risk is the risk of change in asset values due to movements in underlying market rates and prices. Interest rate risk is the risk to earnings and capital arising from movements in interest rates. Interest rate risk is the most significant market risk affecting us as other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of our business activities.

In addition to interest rate risk, economic conditions in recent years have made liquidity risk (namely, funding liquidity risk) a more prevalent concern among financial institutions. In general, liquidity risk is the risk of being unable to fund an entity’s obligations to creditors (including, in the case of banks, obligations to depositors) as such obligations become due and/or fund its acquisition of assets.

Liquidity Risk

Liquidity refers to our ability to fund operations, to meet depositor withdrawals, to provide for our customers’ credit needs, and to meet maturing obligations and existing commitments. Our liquidity principally depends on cash flows from operating activities, investment in and maturity of assets, changes in balances of deposits and borrowings, and our ability to borrow funds.

Net cash inflows from operating activities were $32.1 million in the first nine months of 2024, compared with $55.8 million in the first nine months of 2023. Net cash inflows from investing activities were $35.3 million in the first nine months of 2024, compared to net cash inflows of $83.1 million in the comparable nine month period of 2023. Net cash inflows from financing

Table of Contents

activities in the first nine months of 2024 were $52.8 million, compared with net cash outflows of $150.5 million for the same period of 2023.

To manage liquidity risk, the Bank has several sources of liquidity in place to maximize funding availability and increase the diversification of funding sources. The criteria for evaluating the use of these sources include volume concentration (percentage of liabilities), cost, volatility, and the fit with the current asset/liability management plan. These acceptable sources of liquidity include:

• Federal Funds Lines

• Federal Reserve Bank Discount Window/Bank Term Funding Program

• Federal Home Loan Bank Advances

• Brokered Deposits

• Brokered Repurchase Agreements

Federal Funds Lines - Federal funds positions provide a source of short-term liquidity funding for the Bank. Unsecured federal funds purchased lines are viewed as a volatile liability and are not used as a long-term funding solution, especially when used to fund long-term assets. The current federal funds purchased limit is 10% of total assets, or the amount of established federal funds lines, whichever is smaller. As of September 30, 2024, the Bank maintains several unsecured federal funds lines totaling $135.0 million, which lines are tested annually to ensure availability.

Federal Reserve Bank Discount Window and Bank Term Funding Program - The Federal Reserve Bank Discount Window and the BTFP are additional sources of liquidity, particularly during periods of economic uncertainty or stress. Effective March 11, 2024, no new loans will be made under the BTFP. As of September 30, 2024, the Bank had investment securities consisting primarily of corporate debt, state and political subdivisions, mortgage backed, and collateralized mortgage obligations, with an approximate market value of $744.3 million, pledged to the Federal Reserve Bank of Chicago for liquidity purposes and had additional borrowing capacity of $396.5 million. There were no outstanding borrowings through the FRB Discount Window at September 30, 2024. There were $405.0 million of Bank Term Funding Program borrowings outstanding at September 30, 2024. In the fourth quarter of 2024, the Company used the net proceeds from the sale of the debt securities to pay-off the Bank Term Funding Program borrowings outstanding, including accrued interest.

Federal Home Loan Bank Advances - FHLB advances provide both a source of liquidity and long-term funding for the Bank. All credit exposure, including advances and federal funds borrowings from the FHLBDM are collateralized primarily by one- to four-family residential, commercial and agricultural real estate first mortgages equal to various percentages of the total outstanding notes. The current credit limit established by the FHLBDM is equal to 45% of the Bank's total assets. This credit capacity limit includes short-term and long-term borrowings, federal funds, letters of credit, and other sources of credit exposure to the FHLB. As of September 30, 2024, the Bank had no short-term FHLB advances and $3.2 million in long-term FHLB borrowings and additional borrowing capacity of $684.3 million.

Brokered Deposits and Reciprocal Deposits - The Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering which does not cannibalize the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 20% of total assets. Board approval is required to exceed this limit. The Bank must maintain a “well capitalized” rating to access brokered deposits without FDIC waiver. An “adequately capitalized” rating requires an FDIC waiver to access brokered deposits and an “undercapitalized” rating prohibits the Bank from using brokered deposits. The Company had brokered deposits of $200.0 million as of September 30, 2024 and $221.0 million as of December 31, 2023.

Under a final rule that was issued by the FDIC in December 2018, financial institutions that are considered "well capitalized" qualify for the exemption of certain reciprocal deposits from being considered brokered deposits. Such exemption is limited to the lesser of 20 percent of total liabilities or $5.0 billion, with some exceptions for financial institutions that do not meet such criteria. At September 30, 2024, the Company had $23.7 million of reciprocal time deposits, $130.9 million of reciprocal interest bearing non-maturity deposits, and $97.8 million non-interest bearing non-maturity deposits that qualified for the brokered deposit exemption. These reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to spread deposits that exceed the FDIC insurance coverage limits out to numerous institutions in order to provide insurance coverage for all participating deposits.

Table of Contents

Brokered Repurchase Agreements - Brokered repurchase agreements may be established with approved brokerage firms and banks. Repurchase agreements create rollover risk (the risk that a broker will discontinue the relationship due to market factors) and are not used as a long-term funding solution, especially when used to fund long-term assets. Collateral requirements and availability are evaluated and monitored. The current policy limit for brokered repurchase agreements is 15% of total assets. There were no outstanding brokered repurchase agreements at September 30, 2024.

Interest Rate Risk

Interest rate risk is defined as the exposure of net interest income and fair value of financial instruments (interest-earning assets, deposits and borrowings) to movements in interest rates. The Company’s results of operations depend to a large degree on its net interest income and its ability to manage interest rate risk. The Company considers interest rate risk to be a significant market risk. The major sources of the Company’s interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, changes in customer behavior and changes in relationships between rate indices (basis risk). Management measures these risks and their impact in various ways, including through the use of income simulation and valuation analyses. Multiple interest rate scenarios are used in this analysis which include changes in interest rates, spread narrowing and widening, yield curve twists and changes in assumptions about customer behavior in various interest rate scenarios. A mismatch between maturities, interest rate sensitivities and prepayment characteristics of assets and liabilities results in interest-rate risk. Like most financial institutions, we have material interest-rate risk exposure to changes in both short-term and long-term interest rates, as well as variable interest rate indices (e.g., the prime rate or SOFR).

The Bank’s asset and liability committee meets regularly and is responsible for reviewing its interest rate sensitivity position and establishing policies to monitor and limit exposure to interest rate risk. Our asset and liability committee seeks to manage interest rate risk under a variety of rate environments by structuring our balance sheet and off-balance-sheet positions in such a way that changes in interest rates do not have a large negative impact. The risk is monitored and managed within approved policy limits.

We use a third-party service to model and measure our exposure to potential interest rate changes. For various assumed hypothetical changes in market interest rates, numerous other assumptions are made, such as prepayment speeds on loans and securities backed by mortgages, the slope of the Treasury yield-curve, the rates and volumes of our deposits, and the rates and volumes of our loans. There are two primary tools used to evaluate interest rate risk: net interest income simulation and economic value of equity ("EVE"). In addition, interest rate gap is reviewed to monitor asset and liability repricing over various time periods.

Net Interest Income Simulation - Management utilizes net interest income simulation models to estimate the near-term effects of changing interest rates on its net interest income. Net interest income simulation involves projecting net interest income under a variety of scenarios, which include varying the level of interest rates and shifts in the shape of the yield curve. Management exercises its best judgment in making assumptions regarding events that management can influence, such as non-contractual deposit re-pricings, and events outside management’s control, such as customer behavior on loan and deposit activity and the effect that competition has on both loan and deposit pricing. These assumptions are subjective and, as a result, net interest income simulation results will differ from actual results due to the timing, magnitude and frequency of interest rate changes, changes in market conditions, customer behavior and management strategies, among other factors. We perform various sensitivity analyses on assumptions of deposit attrition and deposit re-pricing.

The following table presents the anticipated effect on net interest income over a twelve month period if short- and long-term interest rates were to sustain an immediate decrease of 100 bps or 200 bps, or an immediate increase of 100 bps or 200 bps:


	Immediate Change in Rates
(dollars in thousands)	-200			-100			+100			+200
September 30, 2024
Dollar change	$	(5,989)		$	(2,588)		$	2,936		$	5,563
Percent change	(3.5)		%	(1.5)		%	1.7		%	3.3		%
December 31, 2023
Dollar change	$	1,280		$	(347)		$	229		$	111
Percent change	0.9		%	(0.2)		%	0.2		%	0.1		%

As of September 30, 2024, 39.9% of the Company’s earning asset balances will reprice or are expected to pay down in the next twelve months, and 40.0% of the Company’s deposit balances are low cost or no cost deposits.

Table of Contents

Economic Value of Equity - Management also uses EVE to measure risk in the balance sheet that might not be taken into account in the net interest income simulation analysis. Net interest income simulation highlights exposure over a relatively short time period, while EVE analysis incorporates all cash flows over the estimated remaining life of all balance sheet positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows minus the discounted present value of liability cash flows. EVE analysis addresses only the current balance sheet and does not incorporate the run-off replacement assumptions that are used in the net interest income simulation model. As with the net interest income simulation model, EVE analysis is based on key assumptions about the timing and variability of balance sheet cash flows and does not take into account any potential responses by management to anticipated changes in interest rates.

Interest Rate Gap - The interest rate gap is the difference between interest-earning assets and interest-bearing liabilities re-pricing within a given period and represents the net asset or liability sensitivity at a point in time. An interest rate gap measure could be significantly affected by external factors such as loan prepayments, early withdrawals of deposits, changes in the correlation of various interest-bearing instruments, competition, or a rise or decline in interest rates.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer, have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2024.

The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing, and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will prevent all errors or fraud or ensure that all material information will be made known to appropriate management in a timely fashion. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management’s control objectives.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

Table of Contents

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We and our subsidiaries are from time to time parties to various legal actions arising in the normal course of business. We believe that there is no threatened or pending proceeding, other than ordinary routine litigation incidental to the Company’s business, against us or our subsidiaries or of which our property is the subject, which, if determined adversely, would have a material adverse effect on our consolidated business or financial condition.

Item 1A. Risk Factors.

There have been no material changes to the risk factors set forth under Part I, Item 1A "Risk Factors" in the Company's Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 8, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Repurchase of Equity Securities

The following table sets forth information about the Company’s purchases of its common stock during the third quarter of 2024:


	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1 - 31, 2024	—	$	—	—	$	15,000,000
August 1 - 31, 2024	1,090	26.82		—	15,000,000
September 1 - 30, 2024	—	—		—	15,000,000
Total	1,090	$	26.82	—	$	15,000,000

(1) During the three months ended September 30, 2024, no shares were repurchased by the Company under the current share repurchase program, while 1,090 shares were surrendered by employees of the Company to pay withholding taxes on vesting of restricted stock unit awards.

(2) On April 27, 2023, the Board of Directors of the Company approved the current share repurchase program, allowing for the repurchase of up to $15.0 million of the Company's common stock through December 31, 2025. Since April 28, 2023 and through September 30, 2024, the Company repurchased no shares of common stock, leaving $15.0 million available to be repurchased.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

During the fiscal quarter ended September 30, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

Table of Contents

Item 6. Exhibits.

Exhibit

Number

Description

Incorporated by Reference to:

3.1

Amended and Restated Articles of Incorporation of MidWest One Financial Group, Inc. filed with the Secretary of State of the State of Iowa on March 14, 2008

Exhibit 3.3 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-147628) filed with the SEC on January 14, 2008

3.2

Articles of Amendment (First Amendment) to the Amended and Restated Articles of Incorporation of MidWest One Financial Group, Inc. filed with the Secretary of State of the State of Iowa on January 23, 2009

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2009

3.3

Articles of Amendment (Second Amendment) to the Amended and Restated Articles of Incorporation of MidWest One Financial Group, Inc. filed with the Secretary of State of the State of Iowa on February 4, 2009 (containing the Certificate of Designations for the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A)

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2009

3.4

Articles of Amendment (Third Amendment) to the Amended and Restated Articles of Incorporation of MidWest One Financial Group, Inc., filed with the Secretary of State of the State of Iowa on April 21, 2017

Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 4, 2017

3.5

Third Amended and Restated Bylaws, as Amended of MidWest One Financial Group, Inc. as of October 18, 2022

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2022

4.1

Form of MidWest One Financial Group, Inc. 2023 Equity Incentive Plan Restricted Stock Unit Award Agreement

Exhibit 4.7 to the Company’s Form S-8 filed with the SEC on May 5, 2023

4.2

Form of MidWest One Financial Group, Inc. 2023 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement

Exhibit 4.8 to the Company’s Form S-8 filed with the SEC on May 5, 2023

10.1

Third Amendment to the Credit Agreement by and between MidWest One Financial Group, Inc. and U.S. Bank National Association dated February 12, 2024

Exhibit 10.11 to the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2024

10.2

Underwriting Agreement, dated September 26, 2024, by and between MidWest One Financial Group, Inc. and Keefe, Bruyette & Woods, Inc.

Exhibit 1.1 to the Company's Current Report on Form 8-K filed with the SEC on September 30, 2024.

31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

31.3

Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Filed herewith

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.3

Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

M ID W EST O NE F INANCIAL G ROUP , I NC .

Dated:

November 7, 2024

By:

/s/ CHARLES N. REEVES

Charles N. Reeves

Chief Executive Officer

(Principal Executive Officer)

By:

/s/ BARRY S. RAY

Barry S. Ray

Chief Financial Officer

(Principal Financial Officer)

By:

/s/ JOHN J. RUPPEL

John J. Ruppel

Chief Accounting Officer

(Principal Accounting Officer)

TABLE OF CONTENTS

Part I Financial Information Item 1. Financial Statements (unaudited)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

MOFG 10-Q Quarter ended Sept. 30, 2024

Exhibits