MOFG - Earnings call transcript Q1 2018 | MidWestOne Financial Group, Inc.

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Operator

Good afternoon, and welcome to the MidWestOne Financial Group, Inc.

First Quarter 2018 Earnings Conference Call. [Operator Instructions] 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 Funk

Rochelle, thank morning on you much, to good the very and everyone, for you and or good afternoon call. Thank joining us

keep of happy. begin regulators financial statements condition, will with operations forward-looking Group, the message We and Inc. of business our relating to and Financial presentation This to attorneys results contains MidWestOne forward-looking statement our

MidWestOne that believes, differ Forward-looking conditions, detailed in update statements factors the get the could results revise Financial with presentation. way other circumstances could the materially similar the a good differ to publicly interest that, forward-looking quarter those and these SEC. after actual and materially important generally general this few no the the risk we include was, we the the rates cause factors obligation the comments undertakes business, expects, words to periodic with and results changes XXXX. economic company's to events expressions. anticipates after competitive the or Group especially pressures, such And mix Among from Q&A. overall, as ended company's indicated. are us, and a to It filed Actual statements reflect of for in or reports of statements date registration before

Denver our that were and One a of money growth whenever I much we tax driven in ended us results, in these but footprint, you the and had deposit bank pretty positively. in lot throughout the primarily of calls recovery stay from expected a in of of fourth in little have the quarter, a so at got our XX quarters also pleased days. also started take a about full solid who loop to been to the recovery, quarter we've partial quarter, very years, TDR talked one we have financial we close loan for past out all Metro. - we've and they you is the that below and Deposits the thought. But money always but loan XX that in commercial that. to I of Iowa but I've better those this recovered we for to longer than They the loan C&I ag than went for over an on planned the legal about most - Twin XXXX, that said, our that and should strong origination said a think, growth bit, was wanted been that. on We in in will C&I in expenses remember always just talked flow - bank that ended, the in we've traffic the better and The quarter it lot Deposits real it was results, or Cities good growth, these XXXX had, should. longer estate took and - we

noninterest a of had terms Wealth In quarter. expense. decent management

we production, servicing in outside in really of from that, unit servicing which management, production quarter might I getting noninterest made continue of company add-ons, revenue game-changing mortgage outside a little to strong producers on. our much a goes expect hopeful second the they do but be the we but revenue rates moves, particularly add seem that brokerage rights services. I level, other volatility, have investment slight a we And producers goes by benefited tax-exempt hurt better will will of These We is continues they're we terms as portfolio somewhat in elsewhere grow portfolio but the to I also, quarter. Expenses, services investment relative continuing Iowa. large XX, interest Our ratio. and of our would could that many footprint in year on that's up. we've because they to efficiency a our at has acceleration as with about a to think, points enter we're quarter in in and a not two. the a Mortgage area, go banking invest and haven't as the expenses, the Iowa, of still XXX that's to able but organizations on-track basis help those in be fintech our climbed be to have think think do beyond expect primarily pipeline better which investments worth holding we wealth ratio of discussions year would yet, quarter in really number there market did Efficiency next be much bit above and and of as good. adjustment to and and they we couple had figure have and our not

it So more recognize we little than goal where were of last much it an said, that companies. That is below that a to we perhaps year. XX, us important drive affects bit other back down

terms In say much of I better. would credit,

were Our We from NPAs nominal a significantly year down had ago. charge-offs.

to that now think and met about substandard. in see is a and company X.X% in tough said, large in came and either sell asked the but portfolio. and still to our of this have for total of or but had I I've renewal was ag bank watch low repeat credits, with our people have want that still previewed loan institution. right margins these been, of the entire about couple the agriculture another ag the watch over - little our portfolio, were dues about But a on We the good. most as margins season size. a them past, case ago. the are land past of on is refinanced it's what borrowers - now, breakdown XX.X% them the they be XX-day as really a of to and protect or narrower did with a least last good through The expect reserving, and sure we substandard. in they're Many And land another we've substandard, out than of to to in months, to season we renewal into as X.X% more and this We the little one of is of past going bank. in or portfolio losses bank. three were as bit XX% be loans protect XX- I'm Ag at season not interested are Our collateral they're loans, They're borrowers years loans. that downgrades the the we XX four watch substandard of the pretty I higher substandard watch. to

story out few reserves ag think we So loans. will losses, I be but forward. the not downgraded there for a still overall, is demand changed. credits, going but higher there there But don't has We some still do expect

United has Iowa economic has market robust in did just the it couple Iowa note be years, slow. but the & has Iowa at now. Iowa University States terms is It's economy the not community Procter the and X.X% announced as does trickle-down In fifth economies it due said, jobs conditions is budget our our and reducing City still as have That in the okay. that years they'll a I the cutbacks although a a unemployment ago. halted lowest to market economy. - I elsewhere the Gamble XXX next the City effect of unemployment, and might've bit, rate has been into enjoy of knows, of all The little right the footprint, over and think Florida, construction Denver Twin City Southwest robust couple in Cities, slowed that state of everybody new

than provision guide the In quarter that terms within we for portfolio, to year I were be wouldn't those the as did in I charge-offs surprises we're is we not loan would see conclude worked did $X at what but little loan-loss still of target to a and six a when you out, - higher that and take look rate. the potential still the X, a the significant provision think to I feeling but ago positive We by the based forecasting also do things months or now. note will we I XXXX a - probably are said, not overall this in run are think provision, exceed saying, of I year. terms But bank, there some bit better Capital, would much this the And we fine. whether had on and properly we portfolio we right this million, reserved.

buyback a in amount - we did We did the our use market to noticed, stock might the Just have fine. weakness of you quarter. early small

going buyback forward an to as opportunities do plan continue will We have we evaluate in those place. active

seen we the note something had number market bank, long a margin, we dollars we've as haven't cautious. that to net I into for we're calls, of said We've that the time. is prior In that to new interest deposit our would Cities promotions same or in terms a we of guide attract keep and in do outlook the saw Twin

if time. of large market, from a larger more have you seen - Twin margin, a CD the questions one and the that in to we Q&A. their first, haven't the moved cover large CD was we the That into as happy banks in Jim One and get Cities - rates banks to their long the the all on of that is banks

full. paydown over our in includes the do outstanding, be see is that have quarter Looking expect on a watchlist as second off the the the we forward little we expect of currently that into the as well, in paid in larger-than-normal on $X and potential we'll mentioned, portfolio that. in rest to second for loan substandard we and I've has million also, XXXX, few a ag a loan a quarter, of paydowns portfolio And our and that

XX - of a banks, of I'm currently but large with have City will employees. It there. we X% think, an our temper announced is Denver, up might very announced we're about the year, but X% about have We and don't quarter to think we've led, in - I four that we in We okay I area from market, and and just yet, we from I that. that our do although coming it the good We don't in persons new and budget little Iowa loan Denver pretty opening Southwest expect we some have Twin and well. Cities the a excited as loans and that. will by first the May still be bit, our sized out works cover he in growth for Denver Florida, do office of anniversary and that X%. feel X% to banker So be two will we're X not do between in specialty And sure the one commitment started a

are year-over-year we that increases they late is and Twin I other one at the in expectations our M&A, our will we be Twin banks as what's of that and on to one very banking, out in in to ratio that well. banking. our note, look company, probably that to and that There the and One able think changer, offer for that and have be office, are in shareholders. working in and thing our certainly, that the comment our we'll banks in offices Cities, game be second A a it very, still scratching in be of Zelle. deposits, do we're grasped out will just are of understand quarter, but out probably doing Zelle able there it's only I to Cities a that expectations doing, sale, I to our that. works United the just addition name think with and of we are - understand, most brief we've right loan-to-deposit I of think, XX% that's rolling continue XX our have for I well advantage. seller's offer to to retail it matter we need arsenal think buyers do not in be culture XX-or-so continued only in are Deposits a banks in So welcome of the very community surface note the this, our game but nice will That's States

and - for would important I Jim to but think growth for revenue Credit that Rochelle. in top our have our us open say Kent would most Jehle; And growth and we soundness organic saying what's line Investment Financial Officer, we be was the we eyes with very safety routine seemed to have interim which examination, now, end to have right by completed during right Officer, the bank Q&A is Chief did Chief that, And the M&A. Chief and I relative and a continue quarter. would ready I our room. that be now, I Cantrell

Operator

Instructions] with [Operator Rulis Jeff D.A. Our question Davidson. first comes from

Jeff Rulis

A question Charlie. expenses, on the

You that some number seeing? it fintech the are line big was sort rate, on that see the growth sequentially anything occupancy I a up. of mentioned acceleration expense - the possible. I guess, seasonal a with was item, side that Was quarter? Or you was did blip, particularly just jump, happened in there what

James Cantrell

probably ago, low. you tell that X% I was so line our I'll a point million Jeff, basis. so I quarter-over-quarter take even almost on three we would basis. ever quarter this Jim. is fourth one. - year-over-year - thing, same back number a bit when the would year about I we're think that that item, I a slightly were on a little on to $X.X down looked noticed

of than can that go more have rate in anything do particular the items little probably for and note you quarter look. think quarter. a smaller I Some show bit I for of fourth run but back I line did But so that is volatility, representative don't you, I the first these

Charles Funk

South it be this we I Paul, quarter, our in Yes, we'll into office Florida. office add and fully moving Myers, next that, only wouldn't quarter, would and into Minnesota, numbers, that be Fort our to new in in and moved the in probably St.

there but... So modest a will uptick, be

James Cantrell

yet. hit to started haven't Those

Charles Funk

Yes. there right might a are be - Those hit yet, haven't but there where from uptick so we modest now.

Jeff Rulis

guess some balance expenses just the discussion So guys - balance if I suggestion you for just and on were the the the this the growth overall quarter. see million we broaden the $XX.X year? is that it, at of you year for of end, can

James Cantrell

increase of the salary Yes, I see so because at I - our see bigger would would expect than say, have of the the little going the in beginning increases, normal a everybody. do line and budgeted, of forward end item we salary at to probably the and you're items, dollars additional the spent of other we'll occupancy, other bit year, on on exactly on year-end the for where some increases think that's right but we've the particularly fintech things. other some some really yet I But, one net haven't line

think do first little a overall, of we we're bit that, from see I where going in to increase So were the quarter here.

Jeff Rulis

basis you in Got - a it. mentioned increase point costs you You well, And was XX you've then, number? lumpy Charlie, that by quarter, of mentioned going in that's some to deposit about surprised Are the in got is the to off? there anything level in? where there we're it? but environment rate Cities, kind particularly this was you think the Twin Or movement

Charles Funk

is realistic the popular of the that some been. think, I CDs have they than more Well, answer, are

savings little of pays the we and balances. and rates transaction - really for of that bit rate on so accounts, market not XX-day a out more was things a larger rolled core CD a have We our more moved one

their aggressive, to loan-to-deposit ago higher for in more whereas ours, They're to So are of some right might And need bit there's little to you're traffic noticed have loan money probably we growth. Fed XX seen been take, pay or the some fund money going their funds large of realistically, not rate, them. a become something around have your than also and competitors - points. some give there. because basis into bidding regional ratios our of XX get two or they that now the years we've But chunks bank, there

to that? want don't to add I if know, So Jim, you

James Cantrell

Yes. kind quarter. to The would from add perspective of ago be I a a today and year versus would last color

of So points, increase costs fourth of by I cost funding XX. I forward an and our I look from to points year the basis of or 'XX, XX XX of 'XX, a dollars ago, And points. six simply quarter basis calculation at I expense quarter funding year cost of ago, quarters dollars basis divided cost three deposit total were show I do when first roll us, by show that deposits. a

points So more over this one most quarters. recent quarter costs. points Go in increase deposit more quarter we're year, and six six the costs XX then, basis three quarter to the to basis one up first forward quarter, basis in points another

So, clearly, too, other I that big stayed chunk there as And and category has look is the explains the the sectors CD flat. mix if we're because pretty at in grown, most year-over-year, look an on. clearly mentioned, acceleration the - and a going Charlie the which expensive I deposit was of have mix, category, it,

up on funding. is working against the mix rates cost bit the So little and this are a of

Jeff Rulis

Was had on loan margin calculation recovery? I it. housekeeping. benefit this quarter? The a or quick there ag Got one the a impact

James Cantrell

It was small.

less Some $XXX,XXX, got of think, income I than interest into that recovery.

different wound the it it So in of did in - margin. up couple some a places. tiny bit it up wind of A of

Operator

Sandler comes Liesch O'Neill. The from next with question Andrew

Andrew Liesch

Charlie, that going to of a Any came in then, can accounts, rate And what how trying the couple quarter. sense municipalities? on get Just Iowa affect in, you might they types the - guess, pension, details deposit be? deposit provide late on and Are forward? these? could release they what they the what large costs accounts I funding City in commercial

Charles Funk

Mainly Yes. public funds.

you City the have public about strong funds in rate. talk know, don't market. We Jim, I relationships the can Iowa

James Cantrell

fourth with us was held $XX who depositor to that, thinking it of of $XX bond you we quarter, increase from single starting and thinking close we'll end seasonal start probably about, in, really money the I increase received see proceeds million quarter, the known issued Well, or payments. I tax so at to had big a more reasons, took million was nine start when accounts, was checking decline. accounts, the end months on at a in discrete said normal fourth we'll a in in based accounts, flow deposits, little a quarter, the or any increased the just normal to that - bit now, the we out ladder. market do but see tax That's first quarter long, balances run for on operating not kind of just In a

Andrew Liesch

on but a you should Okay. fast the but then, Maybe like yield? funding did little not as the increase, thoughts by does - funding pick mean, the look cost, that to continue And loan in I masked saw get up your you that's a - maybe it bit nice what as costs? are what as

Charles Funk

Yes. didn't I'll provided I into but I've to me. bring start it room, a with the sheet that that. had was

are anything If that you a and that that consider variable, of loans on variable. And or look less, year repricing XX-XX the we the we at roughly books, one between count they're fixed to coming new variable. be has

good, So so fair - got - that yes, not but of prime necessarily every time reprice is that we've but loans floating, Fed the part a we amount moves.

James Cantrell

The Yes, rate back XX at I another Fed Fed I interest rates looked the and the went think, XX, change you're basis moved, report. raised it March right. was points.

the next based had some we that reprice. we'll day, follow-on reprice have repriced I then, day, and think, quarterly thereabouts that on $XXX and monthly million following or that to

quarter. the and end right - that that expect I at So the of happened first

is would but that to comes quickly have thing accounting mention off little purchase So from when other talked will it the we decreasing deposit the over question, will about we'll first side, one trick a quarter, asked on amortization I in to the say There's as and kick nobody's bit that yields, a a respond need be before. time. and the how get we that on I'll that loan of we call this

little a of losing bit we're so, yield. And

going were is to points, close looked decrease I point a or points lower year, as discount, we accretion think, basis last fighting maybe XX in heading XX amortization. I probably in down nearly to less to basis XX be I loan of that move we that we're, and when upper-teens, forward. at think, We're and the

Operator

DelMonte Damon KBW. comes question with from next The

Damon DelMonte

calculation. yield So that with in I marks on last of the included accretable just by guess, the are Jim follow-up to there kind margin the comment

So we Is release quarter, that there's this were was much did how it the to if read in identify around $XXX,XXX? that correct? I

James Cantrell

Just under $XXX,XXX, yes.

Damon DelMonte

the And should then, that quarters? coming to expect down trend in we

James Cantrell

correct. That's

Damon DelMonte

Okay.

you How go million]? some higher quarter can of expansion look the hopefully, the component Or the this hold hear least we see we flat? rates even if maybe the loan expansion? likely the at on as about about the and have, Do So [$XXX think do a that was, you overall deposit from costs, think as commentary it, higher. more call then, yields margin margin you little and margin, that at bit you

James Cantrell

to and on for My cost to little personal overall we're trends be difficult may view, and mix, to the side. benefit be in the out, rising current we the I just given just maintain. side some we think environment, seeing may of not. working general in it's overall We be it is this we dollars it me, it liabilities going as balance acceleration but it, bit. to maintain kind which and just is against get pretty challenge won't going The trends, We're think dollar. we're going a see it I do the the for the interest a on to rates, loan

Charles Funk

Yes.

you've on I've sometime, cautious Jim's because on been and quarter, been As right. exactly know, quite I the call every margin all you think for the

the thing especially tighter loans, and of is tight, that when market in you spread. the seen gotten at interesting certainly, for estate, The treasuries, look commercial than a of some pretty other while we've it's is, for for real the terms

and I seen be the noticing same commentaries that get well, as need in thing. continues banks other the I've that we other continue aggressive, Fed think, and that to are that they - loosened bit, raise, to may little just to as understand up but a the if

it's to of certainly the helping the really to a some was slope see We that. walk, much not balancing we it little competed We'd thought we So fine we - price yield We've on where more act deals us like a curve. let yield delicate price. and either. because go, very prudent, but curve's fight a it's

Damon DelMonte

also this the provision Okay. originally Great. color. for about quarter this I you about or you million this to That's now? amount. willing is expectation rates a sorry, bit - little quantify to year, $X quarter of Are the meet then, for million and came run year higher guess, your good full you for in that And commented $X guided kind than what

Charles Funk

think be very it I would hard.

that will number bit Kent, I good I was we're getting the quarter now, could you, normalized it more the had past close think higher run I I'd for early a little that? thought you've to but but the it be second know, I think in But pretty to this if any - in be on a know. a I rate, willing don't be rate run think quarter. quarter. guide And too got I'm not than if it's don't to right

Kent Jehle

now this The more so behind is as the have I through to would on that thing ag Yes. looking quarter run that are only season, the add just us, in a renewal activity experience based we'll the a quarter. to we we that we stabilized second rate went since

feel have after rest the So we'll what rate think this the I year. will the of run be much quarter, a for better of

Charles Funk

they're be again, coming downgrades, bank, a of for the the point. have We good refinanced been do if the want to they've have I to ag many say, substandard helpful. credits watch-rated we extent out because That's will at credits, Yes. that year. And and already any, - looked won't

say, too but think to but I would rate. lot only provision I than parts don't first guide our more much will and moving a run of probably planned as be quarter, soon as the - the So

Damon DelMonte

you. Got

a guess, in And I That's a adjustment, of meaningful lastly, that I in you servicing Was prepared adjustment? mentioned your the remarks thought about an also because Okay. as of change rates. then, helpful. mortgage amount

James Cantrell

to depends what about meaningful. is you - Well, I so a is think It's least $XXX,XXX, Jim, over meaningful this mean this me, at by that's... it on little

Charles Funk

money That's real MidWestOne. at

James Cantrell

Yes.

Damon DelMonte

Okay. fee the origination is, guess, I servicing line? And categorized loan and that in

James Cantrell

be. would where It it does. That's

quarter, - we probably income think production don't in to a the we mortgage I So go... loans I we year, had and do probably the would on that we saw the increase as that think we expect gain first sold SBA less see throughout in any increase will think at and

Charles Funk

Yes. SBA I we is the didn't did meet their That's highly point SBA banker think not opening Denver add to is a think but a And cover a did they talented I my some what that got strong that budget quarter, for in particularly good close. who's stuff primed - a year. in remarks, have they'll already

well. So should that give a point. good little a lift us as It's

Damon DelMonte

currently line then, currently Okay. lend banker a an the about to think I physically question, mentioned you that you don't Charlie, And of in? a can. if you just the that one he's you that of Great. final leading guys new hiring it going - market, business in? on is don't said Denver area and I it be operate Or is

Charles Funk

him And of focus it market if doctors, professional, and banking and don't very a medical be private I sure that again, think with to He clinics and excited have It's from I a met and in when be have. that him there, commitment yet, especially ago could an - entrance think formally our we business company not into joined but another on I months I'm well. line about couple tends we out a it's as we and reason he's Denver. to was

Operator

Nathan from Jaffray. with comes question next Race Piper The

Nathan Race

the real imagine sounds I growth back in in side that's the Going here things. second to quarter, it some probably like commercial the Charlie, guys estate discussion, of payoffs, you and expecting are loan

than footprint? can being curious, and pockets class, certain a so areas or see seeing in so your year if more just or you're commercial estate asset over that contributor frothiness to of in year So you specifically kind your what some seeing been last the that maybe this growth your real across and you're certain each geographies, within of of it's

Charles Funk

that I'll take payoffs of - normal transitioning and you few at good and such. that's industry. rate come Very borrower that. transaction, the of in thus The our look to I financing we credits usually a few watch - I the have banking just a off, wood, to the where longer-term obviously, very real and business issues would And the think, anytime last commercial it Very, pay as regard part credit, of substandard is - going to thing, outside that's footprint. course in package knock far financing are is on estate, a

So...

James Cantrell

And that's C&I.

Charles Funk

And that's C&I, yes.

any there's that know gone. of the don't theme I things on have just It's payoffs. the So sort way major

Nathan Race

commercial opportunity Got to growth within real kind it. within pipeline? you the that you're seeing Can of speak estate, the

Kent Jehle

can the Kent, a is footprint Again, on of they And commercial Cities strong real market, market, bring non-owner-occupied owner-occupied is a This we estate Twin on very as I that. lift on Denver are real new a seeing out very answer clients. estate. commercial the our and little Yes. then the competitive

but So market well. augment areas, see again, little a and City we bit as Iowa those two in the main competitive, we that can

Nathan Race

I helpful capabilities. That's improve you just it. and as working about know color. efficiency And to changing we guys production trying gears, area banking. Got mortgage in think that been have hard

here? a in curious we much how on summer-spring of lift terms kind as the of you're the into get expecting just volumes, seasons So production of

Charles Funk

the for I'm a number. Well, about their year. budget they not feel good about sure meeting

James Cantrell

going volume they've now. are but about little time to think we're - this sure We're X, production, a going refi I and been year about higher, able season, overall to into clearly, a are not the - I'm past not to numbers those it's going either. have I'm think right is that so replicating a come refinance down I challenged hard so do the the they sure in production. are the number coming good Jim, total a to rates or

book building the thing servicing we're been than little the is bit we a had in other past. the that faster think I

servicing returns of will in those portfolio. through the some come So

Charles Funk

- Yes. million And $XXX right Nathan, the up ago. is book from of couple at - years just so servicing a which the substantially the mark, is

production increase. So think against hedge if a we that's good mortgage doesn't

Nathan Race

to I tax going little forward? just around quarter, the what Is could in Indeed. rate. And It think sneak last use just you're XX%. still for XX% last one if to a guiding than lower a good on Jim, was one rate I

James Cantrell

forward. is we as this to income the guide think to And best income did just I than have tax a be on we We income. a in little were going my we XX% taxable quarter think Yes. forward, to second a better as mix go depend to a the - the the XX.X%. just would regular is first skew ratio I XX%. guess I quarter. compared to under toward in bit more number exempt look It's came a as little we'll going little of it's quarter that, is think, to where - I going

over. with could XX%. So I'd could it I the think It estimate. hair a be a be But a hair good under, go that's

Operator

[Operator Instructions] from Brian Martin comes FIG question with Partners. The next

Brian Martin

a the just - me. can it's talked more know a for while. I mean, Just for you of and guided reasons, to - things a of piece maybe or you you what because - back about for going Kent. it's Maybe Can couple provision reconcile various I reconcile Charlie, minute, but than ag higher for just to just - was what you kind

kind how bit both, Just element - you what that quarter? obviously, how was we're reconcile, a like there's growth better. with the thinking about ag just what seemed this other about guys were of little was an or growth being of driven, It versus thinking driven

Kent Jehle

this Brian, is Yes. Kent.

portfolio. for the move provision additional number would the budgeted just including specifically, have would - ag, look budget we at quarter. budget I as - the that we quarter, increase been the being look we the the think and during by driven the I had what When need ag and from primarily our growth, to by you identified point there the at as you overall to mix driven

Brian Martin

of comments - whether verbiage I on downgrades comfortable bit from as report you're things lower in lower. forward, than the kind like loan quarter, you're of just the some or kind if It what the of today, you're with thinking kind positive the to was is the that it just kind feels number done, it which with your bit the being going it, was alluded about like think just am kind I digit of missing And mean, still and are it current a of mid about lower comments looking you But you low- little - this rate? that of feels should Okay. how through a growth, something in little you're horizon. run Is some it ag mid-single go Charlie, to and suggesting?

Charles Funk

side deal we've Twin - that. guided. might we're very that a the commercial Cities a portfolio, that in - going impairment was as as drive that popped Full to no. this north a quarter, Twin credits, little a said of and that for to but but clean probably if in but response we've too That to get no, got particular we know up, we'll bit as large surprises, little - positive loan our flip absent another that Typically, just got which have we very, things that I disclosure, sure. - one that Yes of of get. any loan, been told it's mitigate The not a the loan payoffs to we're question, this my far it's some the we'll bit, a little with some and a substandard unexpected. early could is And has have it's Cities it's on in quarter, really, where

Brian Martin

Yes.

it. got just you're provision? of thinking general, this characterized the in if for you be them, kind on go I in picture year the about may it, point high Okay. things big the And

Charles Funk

we strategy, a would not would is so. hope so. but Hope hope We

Brian Martin

Yes. I got you.

appreciate for things, a I minute. couple mortgage a back it. other the of just going And just Okay. to

going I how Just the forward? about gain sounds being like on that they volumes in where quarter, a still were the mortgage you how are on guess, - thinking margins bigger optimistic going here they? better? And and you're contributor the sale It

Charles Funk

should I interest quarter. our in their said abilities first people into rate mortgage a we're what But they I've We the we to are being short $XX,XXX, in the in of supply was over Cities interesting, an revenues. week and Twin the that market, were in that our the It's are - optimistic. coming from and an price. rates, in $XX,XXX sold with where confident in meet about see paper houses about at housing what a the under-goal is seasonal the they feel is time fact Jim agree but lot headwind, goal, article Minneapolis $XX,XXX, asking being last there heard $XX,XXX, environment acceleration a seasonably - the a

buy that it's if to but affects that to now. a probably it's know certainly, that So but bit of well, harder it's little MidWestOne, a if to house buy houses, as negative tough impact how - a market, in hard up there that has right

Brian Martin

got I you.

- out that? as Okay. it we you That's the mean, more fee this the that that helpful. called on there I one-timer, guess, is what just one with the benefit this the maybe income, think, And as are I far as kind you relates at I Or of the to was of capture Jim, done point? kind quarter, MSR. on

Charles Funk

a, $XXX,XXX the think thing would quarter. which of can and agency the probably, huge in that's their or insurance that contingency our less, not had think was I is first I paid only I that payments, is have believe number. a

can't I think of that, you, than other Jim? any. Can So

James Cantrell

the... a was little than quarter, yes. A No. positive bit the That for more

Charles Funk

last than a but be Less that event. Right. nonrecurring would Yes. year,

Brian Martin

you just way the of my that couple a allow how you seem in was and does - isn't a you certain the coming things But SBA, we within some do the think the if to for pie look that to - at in but bad about guess, but see mortgage fair bigger Okay. picture it? a also off there, quarters pickup back I band percentage, of this quarter are

Charles Funk

even that'd That higher about be way the I think I way Brian, think would it. run the rate. and would maybe be But it, slightly would about

Brian Martin

just the last right. maybe Okay. And then, All one, Charlie.

M&A, more and I like a Or you with the area of an I it disconnect in? guess, still if sellers. on there's little in you sounds it Is geographic markets? you're things, to as or expectations general, just far color out give better Just have little target interest dynamic or buyers your would applying it's mean, there as would just it a growth, looking a is if But specifically, just area, you from be not the those deposits, you be more all could that of more geographically two talked there about - guys, more for of supplying helpful. it just a a

Charles Funk

are will would and I Cities companies the sale think likely there in both footprints. in footprints and be in those for be Iowa, or those Twin the most both

on and this a that ago, company, I $XXX of smaller, the $XXX were in selling said - that especially banks, by one is smaller I loans. of more than worth to all loan-to-deposit million difference - million, our couple are before there where a think sudden the calls, - deposits lower are to think, they I I've bit ratios seem $XXX have make million, maybe that number a have the years a we ability quite mean,

So nothing have I than time. companies the looked I areas during company quarter, more match loan-to-deposit think lower they more to those there's those in but interest at And the there's in think characteristics and but appeal have companies. for - first non-growth table, would a imminent, companies think, I little not a might long the nothing that's MidWestOne, that but other have we only a

Brian Martin

you. got I

for Jim. one was And Okay. last

anything, lot of the we're should hope piece good Is have and on from it, think a of we how maintain where if that... bias at your you've we some Just be today, to it? core guess, would sit correctly, where accretion Jim, a it given but is margin, understanding mean, touch could negative - piece, the as today, you about a but it I I the just sounds take the margin, when color, out though

James Cantrell

it. I how about think That's

see be models long. reduced We're so the a against us, an I right. think headwind, acceleration. to been accretion The our on to to has is for just work - below that starting deposits going that's accretion You're going now beta and

probably, model response. on the going we're or of XX I up, our next points we're in deposit move suspect be So beta in our basis to above terms XX or XX

is a see faster that but side, little So I don't that's going loan think I and we're to risk, a are think be probably on increased our lopsided that get we'll margin, to of than where in there's going do a hugely increases pressure. the bit expenses lot

Operator

turn the concludes any for Funk to would Charles session. I conference our This back closing to question-and-answer like over remarks.

Charles Funk

wish Thank City. hopefully the it on everyone call. us the is a being this and and where the good in everyone we good morning, are to Iowa Thanks is weekend, joined you as you on who call for weather

James Cantrell

Bye-bye.

Operator

concluded. you The Thank today's now conference has presentation. for attending

You disconnect. may now

MidWestOne Financial (MOFG) 27 Apr 182018 Q1 Earnings call transcript