The Bank Slate


MidWestOne repositions balance sheet, unveils strategic plan

MidWestOne Financial Group in Iowa City reported a sharp drop in profitability after repositioning its balance sheet.

The $6.4 billion-asset company also announced a three-year strategic plan designed to improve efficiency and returns.

MidWestOne’s net income fell by 90% from a year earlier, to $1.4 million.

The company sold $231 million of securities in late February at a pretax loss of $13.2 million. The $220 million of proceeds were used to pay off Federal Home Loan Bank borrowings and reinvest in higher-yielding, floating-rate securities.

“The transaction positions our balance sheet more favorably, improves our future earnings profile, enhances our already strong liquidity profile, and, importantly, our capital ratios still improved as compared to the linked quarter,” Chip Reeves, the company’s CEO, said in the release.

The company also a plan is to end 2025 with 12% annual EPS growth, 1.1% to 1/2% return on average assets, 10% annual TBV growth and an efficiency ratio of 55% to 57%.

MidWestOne said it hired a consulting firm to “identify areas for efficiency gains and cost reduction.” It also plans to reallocate 2.5% of its operating expense base into more-productive, profitable markets and departments.

The company also plans to reduce 2.5% of its fourth quarter operating expense run rate “to further lower our forward operating expense platform.” The plan also include a three-year technology/digital roadmap.

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