MidWestOne Financial Group | research notes

Introducing MidWestOne Financial Group: A Leading Financial Institution in the Midwest

Overview

MidWestOne Financial Group (NASDAQ: MWON) is a premier financial institution headquartered in Iowa City, Iowa. With a network of over 60 branches across Iowa, Illinois, Minnesota, and Wisconsin, MidWestOne provides a comprehensive suite of financial services to individuals, families, businesses, and communities.

History and Background

MidWestOne Financial Group has a rich history dating back to 1866. It was founded as a community-oriented bank in Oxford, Iowa, and has since expanded through acquisitions and organic growth. Today, MidWestOne is one of the largest financial institutions in the Midwest, serving over 430,000 customers.

Products and Services

MidWestOne offers a wide range of financial products and services, including:

• Personal banking: Checking, savings, money market accounts, and loans
• Business banking: Commercial loans, lines of credit, and cash management services
• Wealth management: Investment planning, retirement planning, and trust services
• Insurance: Homeowners, auto, and life insurance

Commitment to Customers

MidWestOne Financial Group is committed to providing exceptional customer service. Their team of experienced bankers and financial advisors are dedicated to helping customers achieve their financial goals. MidWestOne also places a strong emphasis on local involvement and community support.

Strong Financial Position

MidWestOne Financial Group maintains a strong financial position, with a solid capital base and a history of profitability. The company has consistently received high ratings from credit rating agencies for its financial strength and stability.

Industry Recognition

MidWestOne Financial Group has been recognized by industry organizations for its excellence in financial services. Some of the awards and accolades they have received include:

• Top 200 Community Banks in the U.S. by S&P Global Market Intelligence
• Best Banks in Iowa by Forbes
• Best-in-Class Digital Banking by J.D. Power

Conclusion

MidWestOne Financial Group is a trusted financial partner that is committed to the financial well-being of its customers and communities. With a wide range of products and services, exceptional customer service, and a strong financial position, MidWestOne is well-positioned to continue its success as a leading financial institution in the Midwest.

Business Model of MidWestOne Financial Group

MidWestOne Financial Group (MWFG) is a community-based financial institution headquartered in Iowa City, Iowa. Its business model is centered around providing a wide range of financial services to individuals, families, and businesses in its primary market area.

MWFG offers a diversified portfolio of products and services, including:

• Banking (deposits, loans, cash management)
• Wealth management (investments, retirement planning)
• Insurance (property and casualty, life insurance)
• Trust and estate services

MWFG operates through a network of branches, loan offices, and wealth management centers located throughout Iowa, Illinois, Wisconsin, and Minnesota. The company also has a strong online and mobile banking platform.

Advantages to Competitors

MWFG has several key competitive advantages that differentiate it from its competitors:

• Strong local presence: MWFG has a deep understanding of the local markets it serves and has established strong relationships with its customers. Its extensive branch network allows it to provide personalized service and build trust with clients.
• Diversified product offering: MWFG offers a comprehensive suite of financial products and services, meeting the diverse needs of its customers. This diversification helps reduce risk and provides a steady revenue stream.
• Customer-centric approach: MWFG places a high priority on customer satisfaction and building long-term relationships. Its employees are knowledgeable and focused on providing customized solutions that meet the specific needs of each client.
• Technology investments: MWFG has invested heavily in technology to enhance its service offerings and streamline operations. Its online and mobile banking platform provides customers with convenient access to their accounts and financial information.
• Community involvement: MWFG actively supports local communities through charitable donations, sponsorships, and volunteerism. This commitment to giving back strengthens its relationships with community members and fosters a positive reputation.

These advantages have enabled MWFG to establish a loyal customer base and maintain a strong competitive position in its market.

Outlook of MidWestOne Financial Group

Financial Performance

• Improved Net Income: MidWestOne Financial Group has consistently reported positive net income growth in recent years. In 2021, the company's net income reached $84.3 million, a 15.9% increase from the previous year.
• Strong Deposit Base: The company has a well-diversified deposit base with over $3.6 billion in total deposits as of March 2023. This provides a stable source of funding for growth and stability.
• Solid Loan Portfolio: Its loan portfolio is primarily comprised of residential and commercial loans. Despite the impact of COVID-19, the company has managed to maintain a low level of non-performing loans.

Market Position

• Dominant Position in Iowa: MidWestOne Financial Group is the largest financial institution in Iowa, with over 200 branches and offices statewide. This gives the company a strong competitive advantage in its core market.
• Expansion into Nebraska: In 2021, the company expanded its operations into Nebraska with the acquisition of Omaha-based First National Bank of Omaha. This move provides MidWestOne with a presence in a growing metropolitan area.
• Strong Brand Recognition: The company has built a strong brand reputation in its markets through its community involvement and customer service.

Growth Strategy

• Organic Growth: MidWestOne plans to continue growing its business organically by expanding its market share in Iowa and Nebraska. This includes opening new branches and offering new products and services.
• Acquisitions: The company has a history of making strategic acquisitions to expand its footprint and product offerings. It is possible that MidWestOne may consider further acquisitions in the future.
• Technology Investments: The company is investing heavily in technology to improve the customer experience and drive efficiency. This includes investments in mobile banking, digital lending, and data analytics platforms.

Risks and Challenges

• Competition: The financial services industry is highly competitive. MidWestOne faces competition from both national and regional banks, as well as credit unions and fintech companies.
• Economic Downturn: A significant economic downturn could adversely impact the company's loan portfolio and overall financial performance.
• Interest Rate Sensitivity: The company's net interest margin is sensitive to changes in interest rates. Rising interest rates could benefit the company, while falling interest rates could negatively impact its profitability.

Outlook Summary

MidWestOne Financial Group has a solid financial foundation, a strong market position, and a clear growth strategy. While the company faces certain risks and challenges, it is well-positioned to continue to grow and succeed in the future. The company's strong franchise in Iowa, coupled with its expansion into Nebraska, provides it with significant opportunities for long-term growth.

Companies Similar to MidWestOne Financial Group

Company Homepage

First National Bank of Omaha https://www.fnbo.com/ Why Customers Might Like It:

• Offers a wide range of banking services, including personal, business, and wealth management
• Known for its strong customer service and local presence
• Provides a variety of digital banking tools for convenience

Capital One Financial Corporation https://www.capitalone.com/ Why Customers Might Like It:

• One of the largest banks in the United States
• Offers a wide range of financial products and services, including credit cards, loans, and investments
• Known for its innovative and customer-centric approach

PNC Financial Services Group https://www.pnc.com/en/personal-banking.html Why Customers Might Like It:

• Has a large network of branches and ATMs nationwide
• Offers a comprehensive suite of financial services, including mortgages, auto loans, and checking accounts
• Provides excellent online and mobile banking services

Fifth Third Bancorp https://www.53.com/ Why Customers Might Like It:

• A large regional bank with branches in several states
• Offers a variety of personal and business banking services
• Known for its strong community involvement and commitment to customer satisfaction

UMB Financial Corporation https://www.umb.com/ Why Customers Might Like It:

• A diversified financial services company with a focus on middle-market clients
• Offers commercial banking, wealth management, and investment banking services
• Has a strong reputation for financial stability and customer loyalty

History of MidWestOne Financial Group

1864: The First National Bank of Burlington, Iowa, is chartered.

1930: The bank merges with the Union Trust & Savings Bank of Iowa City, forming the First Trust & Savings Bank of Iowa City.

1959: The bank expands into Cedar Rapids, Iowa, through the acquisition of the Iowa Trust & Savings Bank.

1960s: The bank begins a series of acquisitions and mergers, establishing a presence in several other Iowa cities.

1980: The bank establishes its holding company, First Trust Corporation.

1982: The holding company changes its name to MidWestOne Financial Group.

1994: MidWestOne acquires The Citizens National Bank of Waukesha, Wisconsin.

2000: MidWestOne acquires First Midwest Bank in Dubuque, Iowa.

2001: MidWestOne acquires the Merchants National Bank of Cedar Rapids.

2005: MidWestOne completes the acquisition of the Security National Bank in Sioux City, Iowa.

2006: MidWestOne acquires the Century National Bank in Des Moines, Iowa.

2007: MidWestOne acquires the First National Bank of Madison, Wisconsin.

2008: MidWestOne acquires the Marine Bank in Green Bay, Wisconsin.

2009: MidWestOne acquires the Bankers Trust Company in Des Moines.

2011: MidWestOne acquires the People's National Bank in Dubuque.

2016: MidWestOne acquires the Bank of Iowa in Des Moines.

2017: MidWestOne acquires the North Iowa National Bank in Mason City, Iowa.

2019: MidWestOne acquires the Community Savings Bank in Davenport, Iowa.

Present Day: MidWestOne Financial Group is a regional bank holding company with approximately $15 billion in assets. It operates more than 150 banking locations in Iowa, Wisconsin, Minnesota, and Illinois.

2022

• January: MidWestOne Financial Group announces plans to acquire Farmers Mutual Savings Bank in Decorah, Iowa.
• March: The Farmers Mutual Savings Bank acquisition is completed, expanding MidWestOne's presence in Iowa.
• November: MidWestOne reports record third-quarter earnings, driven by strong loan growth and solid credit quality.

2021

• January: MidWestOne Financial Group announces plans to acquire Security National Bank in Sioux City, Iowa.
• May: The Security National Bank acquisition is completed, further expanding MidWestOne's footprint in Iowa.
• November: MidWestOne reports record net income for the year, driven by growth in deposits and loans.

2020

• March: MidWestOne Financial Group announces a $2.5 million donation to support COVID-19 relief efforts in the communities it serves.
• June: MidWestOne launches a mobile banking app, allowing customers to conveniently manage their finances on the go.
• September: MidWestOne reports a strong third quarter despite the ongoing economic challenges caused by the pandemic.

5 Stars for MidWestOne Financial Group: A Customer-Centric Gem

As a valued member, I'm thrilled to share my exceptional experience with MidWestOne Financial Group. From the moment I joined, I've been consistently impressed with their dedication to customer satisfaction.

Unmatched Personal Attention

MidWestOne goes above and beyond to foster personal relationships with their members. Their staff is always friendly, knowledgeable, and genuinely invested in understanding my financial needs. They've taken the time to tailor solutions that are perfect for me, making me feel like more than just a number.

Competitive Products and Services

MidWestOne offers a comprehensive suite of financial products and services that meet all my banking needs. From checking and savings accounts to loans and investments, they have everything I require, all under one roof. The rates are competitive, and I appreciate the convenient online and mobile banking options.

Exceptional Technology and Innovation

MidWestOne embraces technology to enhance the member experience. Their mobile app is user-friendly and feature-rich, allowing me to manage my accounts, make payments, and access financial tools on the go. Their website is also well-designed and intuitive, providing me with valuable information and resources.

Community Involvement

MidWestOne is actively involved in the communities it serves. They support numerous local charities and non-profit organizations, demonstrating their commitment to making a positive impact. Its community involvement initiatives make me proud to be a member.

Overall, I highly recommend MidWestOne Financial Group to anyone seeking a reliable and customer-centric financial institution. Their exceptional personal attention, competitive products, innovative technology, and community involvement make them a truly outstanding choice.

Unlock Financial Empowerment with MidWestOne Financial Group: Visit Our Website for Exclusive Solutions

Are you seeking financial stability, growth, and a trusted partner to guide you on your financial journey? Look no further than MidWestOne Financial Group, a leading financial institution dedicated to empowering individuals and businesses.

Our user-friendly website, www.midwestone.com, is your gateway to a world of financial services tailored to meet your specific needs. Here's why you should visit our website today:

• Convenience at Your Fingertips: Access your accounts, manage your finances, and connect with our expert team from the comfort of your own home.

• Personalized Financial Solutions: Discover a comprehensive range of products and services designed to help you achieve your financial goals, from savings accounts and mortgages to business loans and investment options.

• Financial Education and Insights: Stay informed with our valuable educational resources, financial calculators, and expert commentary to enhance your financial literacy.

• Exceptional Customer Service: Our friendly and knowledgeable team is available to assist you with any questions or needs you may have, ensuring a seamless and personalized experience.

• Secure and Reliable: Your privacy and security are our top priorities. Our website utilizes industry-leading encryption and security measures to protect your sensitive information.

Whether you're a first-time homebuyer, a seasoned investor, or a growing business, MidWestOne Financial Group is here to support your financial aspirations. Visit our website today to:

• Open an account: Choose from a variety of savings, checking, money market, and investment accounts that meet your unique needs.
• Apply for a loan: Explore our mortgage, auto loan, and business lending options to finance your dreams.
• Manage your finances: Track your transactions, pay bills, and transfer funds with ease.
• Get personalized advice: Schedule a consultation with one of our financial advisors to discuss your financial goals and create a tailored plan.

Take control of your financial future and join the growing MidWestOne Financial Group family by visiting our website at www.midwestone.com. Experience the power of financial empowerment today!

Main Supplier (or Upstream Service Provider) of MidWestOne Financial Group

Name: Fiserv, Inc.

Website: https://www.fiserv.com/

Services Provided:

Fiserv provides a comprehensive suite of financial technology solutions and services to MidWestOne Financial Group, including:

• Core banking platform: Fiserv's core banking platform provides the underlying technology infrastructure for MidWestOne's banking operations, including account processing, transaction processing, and reporting.
• Digital banking: Fiserv's digital banking solutions enable MidWestOne customers to access their accounts and perform banking transactions online and through mobile devices.
• Payment processing: Fiserv processes debit and credit card transactions for MidWestOne customers.
• Fraud detection and prevention: Fiserv's fraud detection and prevention solutions help MidWestOne identify and mitigate fraudulent transactions.
• Data analytics: Fiserv provides data analytics tools and services to help MidWestOne understand its customers' financial behavior and make informed business decisions.

Additional Information:

• Fiserv is a global provider of financial technology solutions with a market capitalization of over $70 billion.
• Fiserv serves over 4,000 financial institutions worldwide, including many of the largest and most complex financial institutions in the United States.
• MidWestOne Financial Group has been a client of Fiserv for over 20 years.
• Fiserv's partnership with MidWestOne Financial Group enables MidWestOne to provide its customers with cutting-edge financial technology solutions and services.

MidWestOne Financial Group is a financial services company headquartered in Des Moines, Iowa. The company has over $10 billion in assets and provides a range of financial products and services to individuals and businesses.

Main Customer (or Downstream Company) of MidWestOne Financial Group

• Individuals: MidWestOne Financial Group provides a range of financial products and services to individuals, including checking and savings accounts, loans, mortgages, and investment services.
• Businesses: MidWestOne Financial Group provides a range of financial products and services to businesses, including commercial loans, lines of credit, and merchant services.

Name and Website of Main Customer (or Downstream Company)

• Individuals: The website for individuals is https://www.midwestone.com/personal.
• Businesses: The website for businesses is https://www.midwestone.com/business.

MidWestOne Financial Group's Key Revenue Streams and Estimated Annual Revenue

MidWestOne Financial Group is a financial services company headquartered in Des Moines, Iowa. The company offers a range of financial products and services to individuals and businesses, including banking, lending, wealth management, and insurance.

MidWestOne Financial Group's key revenue streams are as follows:

• Net interest income: This is the difference between the interest income earned on loans and investments and the interest expense paid on deposits and other borrowings. In 2021, MidWestOne Financial Group reported net interest income of $243.1 million.
• Non-interest income: This includes revenue from fees for services such as wealth management, insurance, and brokerage services. In 2021, MidWestOne Financial Group reported non-interest income of $101.5 million.

MidWestOne Financial Group's estimated annual revenue for 2023 is $375 million. This is based on the company's financial performance in recent years and its expectations for future growth.

Here is a breakdown of MidWestOne Financial Group's estimated annual revenue by key revenue stream:

• Net interest income: $260 million
• Non-interest income: $115 million

It is important to note that these are just estimates. MidWestOne Financial Group's actual revenue may vary depending on a number of factors, including economic conditions, interest rates, and competition.

Key Partners of MidWestOne Financial Group

Financial Institutions

• Fiserv (www.fiserv.com): Provides core banking and electronic payment solutions.
• Jack Henry & Associates (www.jackhenry.com): Offers integrated financial software solutions.
• Fiserv (www.fiserv.com): Provides digital banking, card processing, and merchant services.
• Fiserv (www.fiserv.com): Provides wealth management, insurance, and other financial services.

Technology Vendors

• IBM (www.ibm.com): Provides cloud computing, data analytics, and security solutions.
• Microsoft (www.microsoft.com): Provides software and hardware solutions, including Windows, Office, and Azure.
• Cisco (www.cisco.com): Provides networking and communication solutions.
• Dell (www.dell.com): Provides computer hardware, servers, and storage solutions.

Insurance Providers

• Principal Financial Group (www.principal.com): Provides retirement, insurance, and investment products.
• MetLife (www.metlife.com): Provides life insurance, annuities, and employee benefits.
• Aflac (www.aflac.com): Provides supplemental health insurance.
• State Farm (www.statefarm.com): Provides auto, home, and life insurance.

Other Partners

• Certegy (www.certegy.com): Provides fraud prevention and management services.
• Elan Financial Services (www.elanfinancialservices.com): Provides gift card and prepaid card solutions.
• NCR (www.ncr.com): Provides point-of-sale systems and automated banking machines.
• NCR (www.ncr.com): Provides digital imaging, document management, and payment solutions.

Key Cost Structure of MidWestOne Financial Group

MidWestOne Financial Group, Inc. (NASDAQ: MOFG) is a financial services company headquartered in Iowa City, Iowa. The company provides banking and financial services to individuals, businesses, and municipalities in the Midwest United States.

Interest Expense

Interest expense is the largest component of MidWestOne's cost structure, accounting for approximately 50% of total expenses. The company's interest expense is primarily driven by the interest it pays on deposits and other borrowings. As of December 31, 2021, MidWestOne had total deposits of $9.5 billion and total borrowings of $2.4 billion.

Salaries and Benefits

Salaries and benefits are the second largest component of MidWestOne's cost structure, accounting for approximately 25% of total expenses. The company has approximately 1,500 employees, and its salaries and benefits expense includes wages, salaries, bonuses, and health insurance premiums.

Other Operating Expenses

Other operating expenses include a variety of costs, such as occupancy costs, equipment costs, and marketing costs. These expenses account for approximately 25% of MidWestOne's total expenses.

Estimated Annual Cost

The following table provides an estimate of MidWestOne's annual cost structure, based on the company's financial statements for the year ended December 31, 2021:

| Cost Category | Estimated Annual Cost | |---|---| | Interest Expense | $500 million | | Salaries and Benefits | $250 million | | Other Operating Expenses | $250 million | | Total | $1 billion |

Note: These estimates are based on the company's financial statements for the year ended December 31, 2021, and may not be representative of future costs.

MidwestOne Financial Group, Inc.

Sales Channels

• Branch Network: MidwestOne operates a network of approximately 150 branches located in Iowa, Illinois, Minnesota, and Wisconsin. These branches provide a wide range of financial products and services to customers, including checking and savings accounts, loans, mortgages, and investments.

• Online Banking: MidwestOne offers online banking services that allow customers to manage their accounts, make payments, and access financial information from anywhere with an internet connection.

• Mobile Banking: MidwestOne offers a mobile banking app that allows customers to manage their accounts, make payments, and access financial information from their mobile devices.

• Telephone Banking: MidwestOne offers telephone banking services that allow customers to manage their accounts, make payments, and access financial information over the phone.

• Mortgage Lending: MidwestOne originates and services mortgage loans for residential properties. The company offers a variety of mortgage products, including fixed-rate and adjustable-rate mortgages, jumbo loans, and government-backed loans.

• Wealth Management: MidwestOne provides wealth management services to individuals and businesses. The company offers a range of investment products and services, including brokerage accounts, mutual funds, and financial planning.

• Other Services: MidwestOne offers a variety of other financial services, including credit cards, insurance, and cash management services.

Estimated Annual Sales

MidwestOne Financial Group does not disclose its sales figures by sales channel. However, the company's total revenue for the fiscal year ended December 31, 2021 was $536.8 million.

Customer Segments of MidWestOne Financial Group

MidWestOne Financial Group primarily targets individuals and businesses seeking financial services within its geographic footprint, which includes Iowa, Illinois, Wisconsin, Minnesota, and Florida. The company's customer segments can be broadly categorized as follows:

1. Retail Banking Customers

• Individuals: MidWestOne provides a wide range of retail banking products and services to individuals, including checking accounts, savings accounts, mortgages, personal loans, and investment services.
• Estimated Annual Sales: This segment generates a significant portion of the company's revenue, with estimated annual sales in the billions of dollars.

2. Commercial Banking Customers

• Businesses: MidWestOne offers commercial banking services to businesses of various sizes, including small businesses, mid-sized companies, and large corporations. These services include business loans, lines of credit, cash management, and treasury management.
• Estimated Annual Sales: The commercial banking segment is another major revenue contributor, with estimated annual sales also reaching into the billions of dollars.

3. Wealth Management Customers

• High-Net-Worth Individuals and Families: MidWestOne provides comprehensive wealth management services to high-net-worth individuals and families. These services include investment management, financial planning, and trust and estate services.
• Estimated Annual Sales: The wealth management segment generates a sizable portion of the company's revenue, with estimated annual sales in the hundreds of millions of dollars.

4. Insurance Customers

• Individuals and Businesses: MidWestOne offers insurance products through its subsidiary, MidWestOne Insurance Agency. These products include life insurance, health insurance, property insurance, and casualty insurance.
• Estimated Annual Sales: The insurance segment contributes to the company's overall revenue stream, with estimated annual sales in the tens of millions of dollars.

5. Non-Bank Customers

• Trust and Estate Administration: MidWestOne provides trust and estate administration services to individuals and families. These services include managing trusts, administering estates, and providing fiduciary services.
• Estimated Annual Sales: The non-bank segment, including trust and estate administration, generates a smaller portion of the company's revenue, with estimated annual sales in the tens of millions of dollars.

It's important to note that these estimates are based on publicly available information and industry data, and actual sales figures may vary.

Value Proposition of MidWestOne Financial Group

Target Audience: Businesses, individuals, and families seeking financial solutions and services.

Key Value Propositions:

1. Comprehensive Financial Solutions:

• Provides a wide range of financial products and services under one roof, including:
  • Banking (checking, savings, loans, mortgages)
  • Insurance (auto, home, life, health)
  • Investments (mutual funds, stocks, bonds)
  • Trust and estate planning
• Offers tailored solutions to meet the unique needs of businesses and individuals.

2. Local Expertise and Community Involvement:

• Has local branches and offices throughout the Midwest region.
• Employs experienced financial professionals who are deeply connected to the communities they serve.
• Actively participates in local charitable and community-building initiatives.

3. Focus on Personalization and Relationship Building:

• Prioritizes long-term relationships with clients.
• Offers dedicated customer service representatives who provide personalized financial guidance and support.
• Understands the individual circumstances and goals of each client.

4. Financial Stability and Strength:

• Is a well-established financial institution with a strong financial track record.
• Maintains a conservative approach to risk management and has consistently earned high ratings from independent credit rating agencies.
• Provides peace of mind and stability to clients.

5. Convenience and Accessibility:

• Offers convenient online and mobile banking services.
• Has numerous ATMs located throughout the region.
• Provides easy access to financial services and information for clients.

6. Competitive Pricing and Value:

• Offers competitive interest rates and loan terms.
• Provides cost-effective financial solutions tailored to meet the needs of clients.

7. Commitment to Innovation:

• Continuously invests in new technologies and products to enhance client experiences.
• Explores innovative ways to provide seamless financial services.

8. Customer-Centric Approach:

• Places client satisfaction as the top priority.
• Actively seeks feedback and adapts services based on client needs.
• Strives to provide exceptional customer service at every touchpoint.

Target Beneficiaries:

• Businesses looking for comprehensive financial management solutions.
• Individuals and families seeking tailored financial advice and planning.
• Communities and organizations seeking financial support and partnerships.

Call to Action:

MidWestOne Financial Group invites potential clients to experience the benefits of its comprehensive financial solutions, local expertise, and commitment to customer satisfaction. By partnering with MidWestOne, businesses and individuals can achieve their financial goals and secure their financial well-being.

Credit Risk

• Concentration risk: MidwestOne Financial Group has a high concentration of loans to the agricultural sector, which is subject to economic downturns and weather-related events.
• Delinquency and loss rates: MidwestOne's delinquency and loss rates have historically been higher than industry averages, indicating a higher risk of credit losses.
• Loan-to-deposit ratio: MidwestOne's loan-to-deposit ratio is above industry averages, indicating a higher reliance on borrowed funds to fund loans. This can increase credit risk if deposit levels decline.

Interest Rate Risk

• Asset-liability mismatch: MidwestOne has a significant mismatch between the interest rate sensitivity of its assets and liabilities, which can lead to interest rate volatility.
• Floating-rate loans: MidwestOne has a high proportion of floating-rate loans, which can expose it to interest rate risk if rates rise.
• Deposit repricing risk: MidwestOne's deposits are primarily short-term and rate-sensitive, which means they could be repriced quickly if interest rates rise.

Operational Risk

• Cybersecurity risks: MidwestOne is exposed to cybersecurity risks, such as data breaches and cyberattacks, which could disrupt its operations and reputation.
• Compliance risks: MidwestOne is subject to numerous laws and regulations, including those related to consumer protection and anti-money laundering, which can be complex and costly to comply with.
• Fraud risk: MidwestOne is subject to fraud risk, including employee fraud, check fraud, and counterfeiting.

Liquidity Risk

• Deposit volatility: MidwestOne's deposits are primarily short-term and rate-sensitive, which could lead to deposit outflows if interest rates rise or economic conditions deteriorate.
• Funding dependence: MidwestOne relies heavily on wholesale funding sources, such as brokered deposits and repurchase agreements, which can be volatile.
• Loan maturities: MidwestOne has a significant portion of loans maturing in the near term, which could put pressure on its liquidity if they are not refinanced or replaced.

Other Risks

• Economic downturn: An economic downturn could lead to a decline in loan demand, an increase in credit losses, and a decrease in deposit levels.
• Competition: MidwestOne faces competition from other banks, credit unions, and non-bank lenders, which could pressure its margins and market share.
• Regulatory changes: Changes in regulatory policies and requirements could increase MidwestOne's operating costs or restrict its business activities.