IOWA CITY — MidWestOne Financial Group on Thursday reported a higher third-quarter net profit on an increase in net interest income and a decline in the provision for loan losses.
The Iowa City-based corporate parent of MidWestOne Bank posted net income of $4.5 million, or 52 cents per share, for the quarter that ended on Sept. 30, up from $3.8 million, or 42 cents per share, in the same quarter of 2011. The higher net interest income and decrease in loan loss reserves was partially offset by an 8.5 percent decrease in noninterest income
Net income for the first nine months of 2012 was $12.4 million, or $1.45 per share, an increase from $2.4 million, or $1.08 per share, in the same period of 2011.
The increase in net income for the first nine months of this year was primarily due to higher net interest income after the provision for loan loss expense and increased non-interest income, mainly due to a gain on the sale of MidWestOne’s Home Mortgage Center location in the second quarter.
The increases were partially offset by a $6.1 million loss on the termination of the company’s pension plan, which was also recognized in the second quarter. Excluding the $4 million gain on the sale of the Home Mortgage Center location and the $6.1 million loss on the termination of the pension, adjusted earnings per share for the first nine months of 2012 were $1.60.
Income from loan pool participation was $900,000 for the third quarter of 2012, an increase of $600,000 compared with the same period a year ago, on a much lower level of investment in 2012. MidWestOne has made a decision to phase out of loan pool participation (investments in performing, sub-performing and nonperforming loans that have been purchased from various non-affiliated banking organizations).
Charles Funk, MidWestOne president and CEO, said the most recent period produced another strong quarter of earnings for the company.
“We continue to benefit from moderate loan growth, improved loan pool performance and adequate expense control,” Funk said. ”We also are benefiting from improved performance in our non-interest income areas year-to-date, primarily at the Home Mortgage Center, our trust department and investment services department.
“We believe we are on track to set another company record in terms of annual earnings per share for 2012.”