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1. Company Snapshot

1.a. Company Description

MidWestOne Financial Group, Inc.operates as the bank holding company for MidWestOne Bank that provides commercial and retail banking products and services to individuals, businesses, governmental units, and institutional customers.It offers deposit products, such as noninterest bearing and interest-bearing demand deposit accounts, interest checking accounts, savings accounts, money market accounts, certificates of deposit, and time deposits.


The company also provides commercial and industrial, commercial and residential real estate, agricultural, and credit card loans, as well as consumer loans, such as secured and unsecured personal, and automobile loans.In addition, it offers various trust and investment services, including administering estates, personal trusts, and conservatorships, as well as property management, farm management, investment advisory, retail securities brokerage, and financial planning and custodial services, as well as investment-related services, including securities trading, mutual funds sales, fixed and variable annuities, tax-exempted, and conventional unit trusts.Further, the company provides other products and services comprising treasury management, debit cards, automated teller machines, online and mobile banking, and safe deposit boxes.


It offers its products and services primarily through a network of 56 banking offices located in central and eastern Iowa, the Minneapolis/St. Paul metropolitan area of Minnesota, southwestern Wisconsin, southwestern Florida, and Denver, Colorado.MidWestOne Financial Group, Inc.was incorporated in 1983 and is headquartered in Iowa City, Iowa.

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1.b. Last Insights on MOFG

MidWestOne Financial Group, Inc.'s recent performance was positively driven by its Q3 earnings beat, with net income of $17.0 million, or $0.82 per diluted common share, and quarterly earnings of $0.87 per share, surpassing the Zacks Consensus Estimate of $0.82 per share. The company's agreement to be acquired by Nicolet Bankshares, Inc. for 0.3175 of a share of Nicolet common stock for each share of MidWestOne common stock also contributed to its performance. Additionally, its robust financial results and growth prospects have garnered attention from investors.

1.c. Company Highlights

2. Nikolay Bancshares' Strategic Acquisition and Earnings Update

Nikolay Bancshares reported an actual EPS of $0.87, surpassing estimates of $0.82, indicating a strong financial performance. The revenue growth is anticipated to be around 7.7% next year, according to analyst estimates. The company's net interest margin is expected to remain fairly flat in the fourth quarter, with some potential give-back due to rate cuts. Nikolay's CFO provided modeling guidance, suggesting a 3.30% margin is reasonable for the combined company post-acquisition.

Publication Date: Oct -27

📋 Highlights
  • Deal Valuation:: Acquisition priced at $864 million (166% of tangible book value, 11.5x 2026 EPS) with 35-40% EPS accretion and negligible tangible book dilution.
  • Combined Asset Size:: Post-merger entity reaches $10 billion in assets, ranking as one of the largest community banks in the Upper Midwest.
  • Capital Strength:: Pro forma CET1 ratio of 10.5% and TCE ratio of 8.4%, reflecting robust capital position for growth and stability.
  • Integration Timeline:: Legal closing targeted by 2026, systems conversion in summer/early fall 2026, diverging from Nikolay’s prior acquisition timelines.
  • Wealth AUM Addition:: Adds $9 million in assets under management to Nikolay’s wealth division, enhancing its total AUM to $3.4 billion.

Acquisition Impact

The acquisition of MidWestOne Financial Group, Inc. is expected to yield full-year fully phased-in EPS accretion of approximately 35-40% and negligible dilution to tangible book value. The deal, valued at around $864 million, will bring together two banks with complementary balance sheets, resulting in a combined entity with around $10 billion in assets. The integration process is expected to deviate from Nikolay's past acquisitions, with a targeted legal closing in 2026 and systems conversion in the summer or early fall.

Valuation Metrics

Considering Nikolay Bancshares is a bank, relevant valuation metrics include Price-to-Tangible Book Value (P/TBV). Although the exact P/TBV is not provided, the P/B Ratio is 1.35, indicating a reasonable valuation. The P/E Ratio stands at 13.99, suggesting that the market has priced in a certain level of growth. The Dividend Yield is 2.45%, which is attractive for income-seeking investors. As Nikolay's CEO, Mike Daniels, emphasized, the company's approach to relationship banking and mattering in the markets will continue, potentially driving long-term value.

Integration and Growth Prospects

The integration process will focus on people, delivery, and shared success, aiming for seamless retention across the deposit franchise in Iowa. The combined company will have a strong capital position, with a pro forma CET1 ratio of 10.5% and a TCE ratio of 8.4%. The acquisition is expected to result in peer-leading profitability metrics, with pro forma EPS accretion of 37% and a negligible earn-back period. The company's culture is a key aspect, with intentionality and transparency being crucial in maintaining and exporting it to new markets.

Outlook

The combined entity is expected to be a top-quartile, outperforming company delivering exceptional shareholder returns. With a strong capital position and a focus on community banking, Nikolay Bancshares is well-positioned for long-term growth. The management's commitment to achieving this goal is evident in their emphasis on cultural and systems integration work. As the deal is expected to close by the end of the year, investors can look forward to the potential benefits of the acquisition in the coming quarters.

3. NewsRoom

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Halper Sadeh LLC Encourages CDTX, MRSN, HOLX Shareholders to Contact the Firm to Discuss Their Rights

Nov -14

Source: prnewswire.com

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MOFG Stock Alert: Halper Sadeh LLC Is Investigating Whether the Sale of MidWestOne Financial Group, Inc. Is Fair to Shareholders

Oct -27

Source: businesswire.com

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MidWestOne Investor Alert By The Former Attorney General Of Louisiana: Kahn Swick & Foti, LLC Investigates Adequacy of Price and Process in Proposed Sale of MidWestOne Financial Group, Inc. - MOFG

Oct -25

Source: businesswire.com

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$HAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of MidWestOne Financial Group, Inc. (NASDAQ: MOFG)

Oct -24

Source: prnewswire.com

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Why MidWestOne Financial Rocketed Over 33% Today

Oct -24

Source: fool.com

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MidWestOne Financial Group, Inc. (MOFG) M&A Call Transcript

Oct -24

Source: seekingalpha.com

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MOFG STOCK ALERT: HALPER SADEH LLC IS INVESTIGATING WHETHER THE SALE OF MIDWESTONE FINANCIAL GROUP, INC. IS FAIR TO SHAREHOLDERS

Oct -24

Source: prnewswire.com

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Shareholder Alert: The Ademi Firm investigates whether MidWestOne Financial Group, Inc. is obtaining a Fair Price for its Public Shareholders

Oct -24

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.50%)

6. Segments

Commercial and Retail Banking and Trust and Investment Management Services

Expected Growth: 5.5%

Growing demand for digital banking, increasing adoption of online financial services, and a strong presence in the Midwest region drive MidWestOne Financial Group's growth. The company's diversified services, including commercial and retail banking, trust, and investment management, position it for continued expansion.

7. Detailed Products

Commercial Loans

MidWestOne Financial Group, Inc. offers a range of commercial loans to support businesses, including term loans, lines of credit, and construction loans.

Consumer Loans

The company provides consumer loans for personal expenses, debt consolidation, and other financial needs.

Mortgage Loans

MidWestOne Financial Group, Inc. offers a variety of mortgage loan options, including fixed-rate and adjustable-rate mortgages, for purchasing or refinancing a home.

Deposit Accounts

The company offers a range of deposit accounts, including checking, savings, and certificates of deposit (CDs), to help individuals and businesses manage their finances.

Wealth Management

MidWestOne Financial Group, Inc. offers wealth management services, including investment and trust services, to help individuals and businesses achieve their long-term financial goals.

Treasury Management

The company offers treasury management services, including cash management and fraud prevention, to help businesses optimize their cash flow and minimize risk.

8. MidWestOne Financial Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

MidWestOne Financial Group, Inc. operates in a highly competitive industry, with many substitutes available to customers. However, the company's strong brand recognition and customer loyalty help to mitigate the threat of substitutes.

Bargaining Power Of Customers

MidWestOne Financial Group, Inc. has a large customer base, which gives customers significant bargaining power. The company's customers have many options for financial services, which increases their bargaining power.

Bargaining Power Of Suppliers

MidWestOne Financial Group, Inc. has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's size and scale also give it negotiating power with suppliers.

Threat Of New Entrants

The financial services industry has significant barriers to entry, including regulatory hurdles and capital requirements. However, new fintech companies are emerging, which could potentially disrupt the industry.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. MidWestOne Financial Group, Inc. faces intense competition from larger banks and fintech companies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.68%
Debt Cost 5.26%
Equity Weight 55.32%
Equity Cost 8.76%
WACC 7.20%
Leverage 80.77%

11. Quality Control: MidWestOne Financial Group, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
First Bank

A-Score: 5.9/10

Value: 4.8

Growth: 4.9

Quality: 6.8

Yield: 4.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

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NSTS Bancorp

A-Score: 5.8/10

Value: 7.7

Growth: 5.7

Quality: 4.1

Yield: 0.0

Momentum: 7.5

Volatility: 9.7

1-Year Total Return ->

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TC Bancshares

A-Score: 5.7/10

Value: 5.5

Growth: 6.3

Quality: 5.6

Yield: 0.0

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Equity Bancshares

A-Score: 5.5/10

Value: 6.1

Growth: 6.6

Quality: 5.8

Yield: 3.0

Momentum: 4.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
MidWestOne Financial Group

A-Score: 5.1/10

Value: 6.0

Growth: 2.1

Quality: 7.0

Yield: 7.0

Momentum: 5.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Live Oak Bancshares

A-Score: 4.6/10

Value: 6.0

Growth: 8.3

Quality: 6.2

Yield: 0.0

Momentum: 2.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

40.74$

Current Price

40.74$

Potential

-0.00%

Expected Cash-Flows