MidWestOne Financial posted record earnings per share in 2012, primarily due to higher interest and non-interest income as well as a lower provision for loan losses.
The Iowa City-based corporate parent of MidWestOne Bank reported net income of $16.8 million, or $1.96 cents per share, for 2012 compared with $13.3 million, or $1.47 per share, for 2011. The $1.96 per share topped the previous record set in 2011.
Net income for the fourth quarter of 2012 was $4.4 million, or 51 cents per share, compared with $3.4 million, or 39 cents per dshare, for the same period of 2011.
An increase of 13.2 percent in non-interest income was mainly due to a $4 million gain on the sale of MidWestOne's Home Mortgage Center location in the second quarter of 2012.
Net interest income for the fourth quarter of 2012 improved $600,000, or 4.7 percent, to $13.2 million from $12.6 million for the fourth quarter of 2011. Net interest income for 2012 increased $4.6 million to $53.4 million compared with the year ended on Dec. 31, 2011.
The net interest margin for the fourth quarter of 2012, calculated on a fully tax-equivalent basis, was 3.31 percent or 3 basis points lower than the 3.34 percent net-interest margin for the fourth quarter of 2011. The decrease was due primarily to the average yield earned on interest-earning assets declining more significantly than the average rate paid on interest-bearing liabilities.
"There is no doubt that the low interest rate policy enacted by the Federal Reserve is continuing to challenge our ability to maintain a solid net interest margin," said Charles Funk, president and CEO of MidWestOne. "This is a problem that is generally being faced by banking organizations of all sizes.
"We believe that the longer this policy is kept in place, the more challenges it will present to our industry."MidWestOne's provision for loan losses for the fourth quarter of 2012 was $700,000, a decrease of $100,000, or 18.8 percent, from $800,000 in the fourth quarter of 2011. The provision for loan losses for 2012 was $2.4 million, compared with $3.4 million for 2011.