Midwestone Financial reports 3Q earnings
IOWA CITY, IOWA
MidWestOne Financial today reported results for its three and nine months ended September 30, 2012. Net income for the third quarter of 2012 rose to $4.5 million, compared with $3.8 million for the same period last year.
Net income available to common shareholders for the third quarter of 2012 rose to $4.5 million, or $0.52 per diluted share, compared with net income available to common shareholders of $3.6 million, or $0.42 per diluted share, for the third quarter of 2011.
Net income for the third quarter of 2012 was higher than the same period in 2011 primarily due to a 10.6% increase in net interest income; and a 23.3% decrease in the provision for loan losses; partially offset by a decrease of 8.5% in noninterest income. Net income for the first nine months of 2012 was $12.4 million, a $2.4 million, or 24.4%, increase compared to $10.0 million of net income for the same period of 2011. Earnings per diluted share of $1.45 and $1.08 for the comparative year-to-date periods are based on net income available to common shareholders of $12.4 million and $9.3 million, respectively. The increase in net income was primarily the result of higher net interest income after provision for loan loss expense and increased noninterest income, mainly due to the gain on the sale of the Company's Home Mortgage Center location realized in the second quarter of 2012. These increases were partially offset by a $6.1 million loss on the termination of the Company's pension plan, which was also recognized in the second quarter of 2012. After excluding the $4.0 million gain on the sale of the Home Mortgage Center and the $6.1 million loss on the termination of the pension, adjusted diluted earnings per share for the first nine months of 2012 were $1.60.
"This was another strong quarter of earnings at MidWestOne," stated President and Chief Executive Officer Charles N. Funk. "We continue to benefit from moderate loan growth, improved loan pool performance and adequate expense control. We are also benefiting from improved performance in our noninterest income areas year-to-date, primarily at the Home Mortgage Center, our Trust Department and Investment Services Department. We believe we are on track to set another company record in terms of annual earnings per share for 2012."
Net interest income for the third quarter of 2012 improved $1.3 million, or 10.6%, from $12.4 million for the third quarter of 2011, to $13.7 million. Income from loan pool participations was $0.9 million for the third quarter of 2012, an increase of $0.6 million compared to the same period a year ago, on a much lower level of investment in 2012, as the Company continues to exit this line of business as balances pay down. Despite increases in loan balances, loan interest income decreased $0.4 million, or 2.8%, to $12.8 million for the third quarter of 2012, compared to $13.1 million for the same period of 2011, due to lower rates. Income from investment securities increased $0.1 million, or 3.6%, to $3.9 million for the third quarter of 2012 compared to the third quarter of 2011. Interest expense decreased $0.9 million, or 20.1%, to $3.9 million for the third quarter of 2012, compared to $4.8 million for the same period of 2011, primarily due to lower expense on deposit accounts resulting from lower interest rates.
Net interest income for the first nine months of 2012 increased $4.0 million to $40.2 million compared with the nine months ended September 30, 2011.
The net interest margin for the third quarter of 2012, calculated on a fully tax-equivalent basis, was 3.57% or 22 basis points higher than the 3.35% net interest margin for the third quarter of 2011. The increase was due primarily to the average rate paid on interest-bearing liabilities decreasing more significantly than the average yield earned on interestearning assets.
The Company posted a net interest margin of 3.51% for the first nine months of 2012, up 18 basis points from 3.33% for the same period of 2011, for predominantly the same reason.
The provision for loan losses for the third quarter of 2012 was $0.6 million, a decrease of $0.2 million, or 23.3%, from $0.8 million in the third quarter of 2011. The year-to-date 2012 provision for loan losses was $1.7 million, compared with $2.6 million for the same period last year. The decreased provision reflects the continued improvement in the Company's loan portfolio credit quality indicators and management's belief that the regional economy has generally stablized.
Noninterest income for the third quarter of 2012 decreased to $3.6 million, down $0.3 million, or 8.5%, from $3.9 million in the third quarter of 2011.