MidWestOne Financial Group Inc (NASDAQ:MOFG) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 12:00 pm ET


MidWestOne Financial Group Inc (NASDAQ:MOFG) Q4 2019 Earnings Conference Call - Final Transcript


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Good day and welcome to the MidWestOne Financial Group, Inc. Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] This presentation contains forward-looking statements relating to the financial condition, results of operations and business of MidWestOne Financial Group, Inc. Forward-looking statements generally include words such as believes, expects, anticipates, and other similar expressions. Actual results could differ materially from those indicated. Among the important factors that could cause actual results to differ materially are interest rates, changes in the mix of the company's business, competitive pressures, general economic conditions, and the risk factors detailed in the company's periodic reports and registration statements filed with the Securities and Exchange Commission.

MidWestOne Financial Group, Inc. undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. Please note, this event is being recorded. I would now like to turn the conference over to Charles Funk, President and CEO. Please go ahead.

Charles N. Funk

Thank you very much, Eily and good morning or good afternoon to everyone on the call and thank you for joining us. We're joined on the call this morning by Gary Sims, our Chief Credit Officer; Barry Ray, our Chief Financial Officer; and our Treasurer, Jim Cantrell. I'll just begin with a few preliminary remarks as usual and would say that the headline numbers certainly are very good and we're all very pleased because there was a lot of hard work that went into 2019 throughout our company and we are very, very pleased to see that be rewarded with a much improved financial results. To recap, $0.83 a share for the quarter, $2.93 for the year. Those include merger-related expenses and obviously the numbers are better when those merger-related expenses are taken out. I would also note that our efficiency ratio made a nice move downward during the year, roughly 57.5% for the year. The efficiency ratio was inflated a bit in the fourth quarter due to the $3.9 million expense for tax credits and we essentially gained this back in the reduced taxes we paid and of course, the expense was recognized above the line and the reduced tax expense below the line. Hence, the higher efficiency ratio.

It's been a tough six months. I'll start with the balance sheet. It's been a tough six months for loan volumes and I think there are multiple reasons. There is not any one reason in our particular footprint. First of all, we've had a lot of liquidity events and we talked about those liquidity events in our last call last quarter. Many of those liquidity events continued to come where folks are just selling their businesses and paying off their loans with us and we saw that again during the fourth quarter. We've seen some loans refinanced out of MidwestOne. In some cases, that had to do with relaxed credit terms, not in every case, but we did see several credits move that we were