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

Jan 24, 2020 • 12:00 pm ET

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

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Q & A
Operator
Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jeff Rulis with D.A. Davidson.

Analyst
Jeffrey Rulis

Hi guys.

Executive
Charles N. Funk

Good morning.

Analyst
Jeffrey Rulis

Just wanted to kind of check in Charlie, you mentioned the core efficiency ratio at 57.5%. Kind of as we look into '20 and if we think about I guess conversion of ATB and getting all that in, I guess, do you have a target for a core efficiency. Do you think you can improve upon that. That's a pretty skinny number, but is the balance of '20 [Phonetic] the moving pieces on expenses and if you can kind of confirm whether you think there is any more cost to squeeze out of the merger?

Executive
Charles N. Funk

Barry and I were talking about the cost saves yesterday and we are very confident that we'll achieve the cost saves that we said we would from AT. It's a good question. Our goal had been to get below 60%. It would not surprise me if it ticked up a little bit towards 60%, but we will sort of have a stake in the ground at 60% -- below 60% for our core efficiency ratio. We'll have to see how it all plays out, Jeff, but I would think somewhere in the mid to high 50s [Phonetic] would be something that we should be able to attain over the long term. I hope that answers your question.

Analyst
Jeffrey Rulis

Yeah. That's helpful. And I think in the release and also, Charlie, you mentioned in the prepared remarks just the strain on loan volumes with liquidity events and revise and some work out, but I think there was even a comment on weaker loan demand. What are the spots and you may have pegged it I guess kind of the rural Iowa if you point to Twin Cities, Florida, Colorado as being strong, is that the market, the geography that's particularly weak and maybe within the segment that is the weakest for demand?

Executive
Charles N. Funk

So, maybe with an anecdote is the best way to answer the rural footprints. You know, one of our better ag bankers who has been with our company a long time and is one of our top bankers likes to talk about that he's been calling on certain farmers for years and wanting to bring them into the bank and had the opportunity to look at their financial statements within the last year and when he saw the financial statements, thought to himself, I just can't believe that it doesn't look any better than this and we passed on the opportunities and I think that's what you see in the ag space and the better borrowers in the ag spaces are still being called on by other institutions and we have to get pretty competitive on price, but in general, we have rural markets, not only in Iowa, but also in Wisconsin and up Northeast of the Twin Cities. Those are not economically strong regions. So when we look at budgeting, basically if