MidWestOne Financial Group Reports Q2 2025 Net Income of $10.0 Million, Loan Growth at 7.4%

MidWestOne Financial Group reported Q2 2025 net income of $10.0 million, or $0.48 per diluted share, down from the previous quarter. The company experienced strong annualized loan growth of 7.4% and a net interest margin expansion to 3.57%. The bank announced the redemption of $65 million of its 5.75% subordinated notes to reduce funding costs.

MidWestOne Financial Group Inc. (NASDAQ: MOFG) reported its second-quarter 2025 earnings on July 25, 2025. The company posted a net income of $10.0 million, or $0.48 per diluted common share, which was down from the previous quarter. Despite this, the bank showcased strong financial performance with an annualized loan growth of 7.4% and a net interest margin expansion to 3.57%.

Key highlights from the quarter include a 15% increase in pre-tax, pre-provision net revenue to $24.5 million, and a 13 basis points (bps) expansion in the core net interest margin to 3.49%. Noninterest income reached $10.2 million, while noninterest expense decreased to $35.8 million, resulting in an efficiency ratio improvement to 56.20%. The bank's criticized loans ratio improved by 32 bps to 5.15%, and the allowance for credit losses ratio increased to 1.50% due to a single commercial real estate (CRE) office credit issue.

MidWestOne Financial Group also announced the redemption of $65 million of its 5.75% fixed-to-floating rate subordinated notes due in 2030, set to reprice on July 30th. This move aims to reduce funding costs and strengthen the bank's balance sheet.

The company's CEO, Charles (Chip) Reeves, commented on the results, stating that the bank's team executed well on its 2025 strategic initiatives. Strong loan growth and back book loan repricing led to the net interest margin expansion, while investments in relationship fee income businesses, such as wealth management and SBA, contributed to revenue growth. The bank maintained expense discipline despite adding significant customer-facing talent in Denver and the Twin Cities, and investing in platforms to improve internal efficiencies and customer experience.

However, earnings were negatively impacted by a single $24 million CRE office credit that moved to non-accrual status. A receiver was placed, and resolution efforts have begun. The bank established a specific reserve, which led to an increase in the allowance for credit losses ratio.

MidWestOne Financial Group's balance sheet, capital, and underlying earnings strength position the bank well for the future. The company's CET1 capital ratio improved by 5 bps to 11.02%, indicating a strong capital base.

References:
[1] https://finance.yahoo.com/news/midwestone-financial-group-inc-mofg-070941844.html
[2] https://finance.yahoo.com/news/expect-midwestone-financial-group-inc-132956340.html
[3] https://midwestonefinancial.com/news/news-details/2025/MidWestOne-Financial-Group-Inc--Reports-Financial-Results-for-the-Second-Quarter-of-2025/default.aspx