MidWestOne Financial posts higher 1st-quarter profit

Higher net interest income and a decline in its provision for loan losses helped MidWestOne Financial Group in Iowa City to record a higher first-quarter profit.

The corporate parent of MidWestOne Bank posted net income of $4.8 million, or 56 cents per share in the quarter that ended on March 31, up 8.1 percent from $4.4 million, or 52 cents per share, in the first quarter of 2012.

The increase in net income was attributed to a 4.1 percent increase in net interest income and a 65.5 percent decrease in the provision for loan losses. That was partially offset by a 5.2 percent decline in non-interest income.

Charles Funk, MidWestOne Financial Group president and chief executive officer, said the first-quarter results show the company is off to a good start in 2013.

"Much of our improved performance came from the strong results of our loan pools and this was a big factor in achieving growth over last year," Funk said. "While we are exiting this line of business, we believe that the positive results attained in the first quarter is a favorable indicator of overall improvement in the general economy.

"Most of the financial indicators that we closely monitor continue to improve as well. We are especially pleased with our 11.98 percent annualized return on tangible equity and 58.56 percent efficiency ratio attained for the first quarter."

Despite increases in loan balances, loan interest income declined $1 million, or 7.4 percent , to $12.1 million for the first quarter of 2013, compared with $13.1 million for the same period of 2012, due to the general low interest rate environment.

"The pressure on net interest margins is an industry-wide phenomenon and MidWestOne is not immune," Funk said. "While we are pleased with the modest loan growth experienced in the first quarter, the new loans we are booking are at

historic low interest rates.

"Although we see some loan growth opportunities in our markets, the competition for each loan is intense and it seems clear that even with loan growth, asset yields will continue to come down."