Ladies and gentlemen, welcome to the MidWestOne Financial Group Inc. fourth quarter 2022 earnings call. My name is Glenn and I'll be the moderator of today's call. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I will now hand you over to your host, Barry Ray, CFO of MidWestOne to begin. Barry, please go ahead. Thank you everyone for joining us today. We appreciate your participation in our fourth quarter 2022 earnings conference call. With me here on the call this morning is Chip Reeves, our Chief Executive Officer, and Len Devaisher, our President and Chief Operating Officer. Following the conclusion of today's conference, a replay of this call will be available on our website. Before we begin, let me remind everyone on the call that this presentation contains forward-looking statements relating to the financial condition, results of operations, and business of MidWestOne Financial Group, Inc. Forward-looking statements generally include words such as beliefs, expect, anticipate, and other similar expressions. Actual results could differ materially from those indicated. Among the important factors that could cause actual results to differ materially are interest rates, change in the mix of the company's business, competitive pressures, general economic conditions, and the risk factors detailed in the company's periodic reports and registration statements filed with the Securities and Exchange Commission. MidWestOne Financial Group, Inc. undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. I would now like to turn the call over to Chip. Thank you, Barry. Good morning, everyone. I'm excited to be here today and thankful for the opportunity to succeed Charlie as MidWestOne's next CEO. Through Charlie's 22 years of leadership and vision, MidWestOne's grown to $6.6 billion in assets while expanding our geographic footprint to five states. Charlie's also developed an enduring culture focused on our employees, communities, and customers that's firmly positioned this company for future success. I'm honored to succeed Charlie and grateful for his wisdom and counsel through my first 90 days. I'd also like to acknowledge Len Devaisher, our President and COO, who did, quite simply, an outstanding job as interim CEO. For those who don't know me, I've spent my banking career at both super regional and community banks in both rural and metro markets, building organic growth engines while developing new lines of business through a combination of a disciplined strategic process and talent acquisition. I've been fortunate to work with outstanding bankers and teams that executed on strategic priorities, ultimately delivering improved financial results and shareholder value. Here at MidWestOne, I see a bank with a strong foundation, compelling markets, and diverse business lines. Our commercial banking franchise has benefited from initiatives implemented 18-24 months ago, which can be seen in our fourth quarter and full year results. We also have a significant wealth business that during 2022 has strategically added talent and AUM in our growth markets. While year-over-year revenue in the business is muted due to equity valuations, this business line is prepared for substantial growth. In addition, MidWestOne enjoys dominant community bank market share in many of our core Iowa banking markets. We now need to translate these foundational strengths into our operating performance. Looking at our fourth quarter results in more detail, they reflected many of these initiatives, with loan growth exceeding 10% annualized for the third consecutive quarter. This growth, driven by talent acquisition and our relationship banking model, occurred primarily in our select metro target markets of the Twin Cities, Denver, and Metro Iowa. Turning to credit quality, through expertise and fourth quarter strategic actions, our asset quality metrics improved measurably with the non-performing assets ratio decreasing 16 basis points to 0.24%. Our allowance coverage ratio is at 1.28%, and our 30-89-day delinquencies remained at historically low levels. We've now remedied our organization's legacy credit issues and are positioned well for 2023's uncertain economic conditions. Our fourth quarter results, however, were impacted by higher funding costs and a primarily fixed rate earning asset composition, leading to net interest margin compression. In addition, non-interest income was impacted due primarily to lower mortgage origination volumes. Both pressured our profitability and earnings. Looking forward, I believe there's an opportunity to improve our operations while enhancing and further developing our growth engines with the ultimate goal of becoming a top-performing bank. To accomplish this, we've commenced the development of a strategic plan that will position MidWestOne to achieve this goal. While we outline more details of the plan in our late April first quarter 2023 earnings call, let me share some high-level thoughts on our review. First, a clear area of focus is to more actively manage the bank's balance sheet, given that we are liability sensitive. We're reviewing a broad range of initiatives to address this challenge. Second, we'll review our business lines and the geographies in which we operate. We must ensure that we are in businesses and markets that provide opportunities for scale and profitable, responsible growth. Third, as we review our business lines, a commensurate review of our operating expense base will occur. This will likely lead to a reallocation of resources to drive growth as well as efficiency. You'll hear me say this often. We want to be a high-performing bank with an organic growth engine to power our results. Once again, I'm honored to be a part of MidWestOne Bank. This is a special place with a strong foundation, compelling markets, and talented bankers, and we look forward to creating a high-performing organization. With that, I'll turn the call over to Len, who will provide line of business comments. Thank you, Chip, and good morning, everyone. With Chip's arrival, the leadership team is aligned, and we are committed to the acceleration of our journey to build MidWestOne into a high-performing bank. While that journey has begun, we're just getting started. Looking back over the past year, I am proud of our accomplishments as we executed on our strategic priorities, including, number one, driving loan growth while improving the risk profile of our portfolio. Number two, scaling up our wealth business. Number three, integrating the Iowa First acquisition. I'll offer some high-level perspective on each of these focus areas. Looking at our commercial loan growth, Denver and Twin Cities led the way, each growing more than $120 million in 2022. We are very pleased that Twin Cities' commercial portfolio now exceeds $1 billion. Iowa Metro has also been a strong contributor to growth, Des Moines growing more than $25 million. These are different markets, but with one common thread, recruiting new talent. These talent investments have driven increased volume, but just as importantly, an improving risk profile. Non-performing assets are down by more than half, a nearly $60 million reduction, while 30-day past dues have followed the same trend. Finally, I should point out that while commercial is the needle mover in our loan growth engine, our retail team continues to deliver high-quality consumer growth across our footprint, with balances up $33 million in consumer and $38 million in mortgage. Looking forward, our commercial pipeline remains solid. In the current environment, we feel mid-single digits is an appropriate growth range to target. At the same time, given the new talent we've onboarded and our low loan-to-deposit ratio, we will continue to add new customer relationships opportunistically when the risk and return profile is a shareholder win. Our belief is that some of the uncertainty of 2023 could present opportunities for our credit discipline relationship approach to take advantage and gain share, especially in our growth markets. The wealth business is the same talent story. While the revenue growth has been slower to materialize than we planned, the momentum over the back half of 2022 bodes well for the future. We are pleased that we saw AUM grow materially faster than the S&P 500, with our wealth teams bringing on $180 million of new AUM. As we look forward, we are encouraged with a pipeline of similar magnitude, and we will be opening our new Cedar Rapids wealth and commercial office in the next 90 days. Finally, Iowa First has performed according to plan, with expense takeouts realized and earnings contribution evident. With Iowa First now fully integrated, we are positioned to focus our technology and operations capacity on strategic initiatives in the year ahead to drive growth and efficiency. Let me now turn the call to Barry to discuss our financial results. Thank you, Len. I'll walk through our financial statements, beginning with the balance sheet. Starting with assets. Loans increased $94.2 million or 10.4% annualized from the linked quarter to $3.8 billion. Strength in the fourth quarter was led by commercial loans, which increased $82.5 million or 11.2% annualized from the linked quarter. In the quarter, new loans were brought on at an average coupon of 6.06% and at a premium for 4.94% in the third quarter of 2022. The overall portfolio yield was 4.66%, resulting in a 20 basis point improvement in interest earning asset yields as compared to the linked quarter. As Chip discussed, we took strategic actions through the fourth quarter to improve the credit profile of our loan portfolio, which positions the bank for an uncertain economic outlook. During the quarter, the allowance for credit losses declined $2.9 million to $49.2 million, or 1.28% of loans held for investment at December 31st. The decline was due to net loan charge-offs of $3.5 million, partially offset by credit loss expense of $0.6 million. Deposits were down slightly from the linked quarter, but up 6.9% to $5.5 billion as compared to year-end 2021. During the quarter, we experienced increased competition for deposits which required us to raise our rates to maintain deposit relationships. Looking at this more closely, the cost of interest-bearing liabilities increased [44] basis points to 1.08%, comprised of increases to our interest-bearing deposits, short-term borrowing costs, and long-term debt costs. Finishing the balance sheet, total shareholders' equity rose $20.6 million to $490.8 million, driven primarily by net income of $60 million and a favorable change in AOCI of $7.6 million. Partially offset by cash dividends of $3.7 million. Turning to the income statement. Net interest income declined $2.1 million in the fourth quarter to $43.6 million as compared to the linked quarter, due primarily to the higher cost of funds, combined with the increased level of high cost borrowings and partially offset by the increase in interest earning asset levels and yields. Our net interest margin declined 15 basis points to 2.93% in the fourth quarter as compared to 3.08% in the linked quarter. Our NIM was impacted in the fourth quarter by an increase in our funding costs, which rose more rapidly than the increase in our total interest earning asset yields. Non-interest income in the fourth quarter declined $1.6 million to $10.9 million as compared to the linked quarter. The decline was primarily due to an $800,000 decline in loan revenue due to a smaller increase in the fair value of our mortgage servicing rights and a decline in our mortgage origination fee income, combined with a $700,000 decrease in other income due primarily to a one-time settlement recorded in the third quarter of 2022, which was partially offset by an increase of $2.5 million in the bargain purchase gain recorded in connection with the IOFB acquisition. Finishing with expenses. Total non-interest expense in the fourth quarter was $34.4 million, a slight decline of $200,000 from the linked quarter. The decline was largely due to a $400,000 decline in merger-related expenses from the IOFB acquisition related to data processing, marketing, and legal and professional fees, partially offset by a $400,000 increase in compensation employee benefits at MOFG, reflecting an increase in incentive compensation expense. Looking forward, we believe our quarterly expense run rate will approximate the fourth quarter of 2022 level, excluding merger-related costs. With that, I'll turn it back to the operator to open the line for questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star follow by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is unmuted locally. We have our first question comes from Brendan Nosal from Piper Sandler. Brendan, your line is now open. Brendan? Operator, we're not hearing Brendan. Can you poke Brendan? Brendan, your line is now open. Brendan, I think we got you now. Hey, can you guys hear me? We can, Brendan. Hi. Yeah. Hello. Hey, sorry about that, folks. My apologies. Maybe just to start off on the equation between kind of loan growth and funding. It sounds like, you know, mid-single digit pace on loan growth is a reasonable expectation. I'm just kind of curious on how you think about funding that growth looking ahead. I mean, it looks like the securities reinvestment can fund a piece, but just kind of thinking about the balance of that. Brendan, this is Barry. I'll start. Yeah, the securities cash flows would fund upwards of about to the mid-single digits of loan growth. To the extent that we are able to exceed that particular target, then, you know, we're looking at wholesale funding sources. What we're looking at right now are broker deposits as an alternative, given their favorable cost over the short run, and then obviously FHLB advances. Got it. Got it. Okay. Maybe a second one, just on kind of general deposit pricing pressures, you know, assuming we get a couple more hikes out of the Fed here, you know, where do you think we are in the cycle of pricing pressures at this point? I think we're in the thick of deposit pricing pressures is how it feels, Brendan. I think we indicated in our release that our cycle to date deposit data has been 15%, which I think we believe is respectable when we see what's happening out there in the industry. It did ramp up in the, in the fourth quarter-over-quarter to 25%, which we also indicated in the release. I expect those pressures to continue then perhaps those quarter-over-quarter betas to ramp up as well. Got it. Okay. At least until the, you know, the, FOMC, you know, reaches their terminal rate, whenever that may be. Brendan, this is Chip. Actually it's two. Through the cycle or at least to date through the cycle, you know, we've been actually pretty impressed with our granular core deposit franchise in terms of a beta of only 15%. What I'll tell you is we're gonna vigilantly protect, you know, that core deposit franchise and the granularity of it. I would expect to Barry's point, you know, that beta to rise here and this deposit pressures continue. We also believe it's, you know, a huge part of our franchise value, we're going to protect it. Understood. All right. Thank you for taking our questions. Thank you, Brendan. Thank you, Brendan. We have our next question comes from Terry McEvoy from Stephens. Terry, your line is now open. Hi. Thanks. good morning, everyone. How are you? Good. Hi, Terry. Morning, Terry. Maybe start off with how far along are you through the portfolio review of the loan portfolio? I guess said another way, should we expect additional kind of credit actions to resolve some of those legacy loan issues? Yeah, let me I'll go ahead and hit this first, and then we also have Gary Sims, our Chief Credit Officer, with us, Terry. When I first joined, obviously November 1st, one of the first pieces that we began to look at was, let's finish the credit job of the legacy credit issues. We put in place, obviously, the review, and then went with the actions that we did. Ultimately, anything that we did not believe we would be able to resolve in 2023, we remedied through either a sale or some other resolution. With that impact, we were able to reduce that non-performing asset ratio down to 24 basis points. Gary, if you wanna speak to any more of those particulars or even the portfolio as a whole. Yeah, thanks, Chip. You know what I see from the portfolio and the, and specifically the non-performing portfolio that we have left on the books at December 31, there is still potential resolutions as Chip identified in 2023. I think that existing book will continue to resolve and decline throughout 2023. You know, as we've talked about before, we do a very thorough review of the portfolio at the end of the year and touch virtually every credit of material size at by the end of the year. We don't see a migration continued into the non-performing book in 2023. Generally, I think you're gonna continue to see that book go down as we continue to resolve credits. Does that help? It does, yeah. Thank you both for the response. Then as a follow-up, when I look at your shareholder value strategy slide, one of the third or fourth bullets down says, strengthening the commercial banking franchise. Should I interpret that as adding commercial bankers? If so, is that in your expense outlook? What about incremental products? Do you have the product set to compete within the commercial banking space to the degree that you can be successful? This is Chip, Terry. I'm gonna do a couple of comments and then turn it to Len Devaisher who really led this effort over the last 24 months. I believe what you'll see as we, you know, begin to unveil more of our strategic plans for internally within the bank as well as for the external market, we'll have more of a lean into our commercial banking space than even we do today, and we've made significant progress the last two years. In terms of talent and where it goes, absolutely, in terms of adding commercial bankers, and I think we'll be adding those in our select metro markets of Minneapolis, Denver, and Metro Iowa. In terms of our product set, I think some of the things that we'll begin to continue to accelerate is our treasury management initiatives as well. Len, any further comments there? I think, Chip, that hits it well. I think the only thing I might add is we do feel like the to the extent there's any clouds of uncertainty on a macro level over this environment, that there will be opportunities for companies like ours that can take advantage and take share when the risk profile is there, the pricing makes sense, where other folks might be on the sidelines a little bit. We enjoy that loan-to-deposit ratio that positions us to do that. I think that helps our recruiting story. Terry, I think the second part of your question is that in the expense base today. Just in terms of the guidance that Barry mentioned, we have a significant number of new hires built into that new base, but it will also take a reallocation of some of our current expense base to ensure that we hit that guidance. Great. Thanks for taking my questions. Appreciate it. Yep, absolutely, sir Terry. Thank you, Terry. We have our next question comes from Damon DelMonte from KBW. Damon, your line is now open. Hey, good morning, everyone. Hope you guys are all doing well today. just wanted to. Good morning. To dig in a little bit more on the margin. Morning. I just wanted to dig in a little bit more on the margin. I, you know, understand you're seeing some near-term pressure here. You know, Barry, if you guys, you know, there's two more rate hikes of 25 basis points by the Fed, just kind of given the market dynamics and, you know, on the funding side of the equation, can you give us a little bit more perspective on where the margin could kind of bottom out? Yes. It's obviously, Damon, there's a lot of puts and takes with respect to where the margin ultimately lands. I'll do my best to answer your question. I think that in the near term, there will be downward pressure on the margin as expected as the FOMC continues to increase short-term rates and our deposit betas pick up as we discussed earlier. That's gonna be on the liability side. On the asset side, we will have some benefit on the asset side to those same rates. There's about 17% of our portfolio reprices every within a quarter or so. Those would be some of the positives. The reason why it's difficult to articulate where it's going to bottom is, you know, there's uncertainty around what's going to happen, you know, what's going to happen to deposits, for example. The shape of the yield curve is a challenge. It's difficult to answer. My best answer, Damon, is I think there's gonna be some downward pressure in the near term. Okay. Can you, do you have the December margin for the, for the month? I think we're around 287 for the month of December. Okay. All right. It ended higher than for the quarter. Okay. All right. Great. Thank you. You know, just with respect to exposure to asset classes, which may come under additional pressure in the coming quarters. You guys do a lot in the office space. Can you remind us what your exposure is there? Yeah, this is Gary Sims, Chief Credit Officer. I will answer that for us, Damon. Go ahead, Gary. Hey, Damon. You know. Thanks, Gary. Like most of, like most banks our size, office is not really a preferred asset class right now. As a result, we're not overexposed. We have 4.5% of our portfolio in office. That's down year-to-year. That's down from 4.7 down to 4.5. To give you an idea, you know, our stance on it, when you look at our construction category, we don't have any office exposure in our construction category. For the most part, we're not doing new office space. That probably gives you the best idea of how we feel about office. The existing office portfolio, primarily, well, about 60% of it is in the Minnesota and Twin Cities market. We feel that that portfolio is relatively stable right now, backed up by good leases, et cetera. We're just not in the market to be adding to that exposure right now. Does that help? Great. Yeah, that's very helpful. I appreciate the color. That's all that I had for now. Thanks a lot. Thank you. Thank you, Damon. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is unmuted locally. We have our next question comes from Brian Martin from Janney. Brian, your line is now open. Hi, good morning, everyone. Good morning. Good morning, Brian. Hey, just, maybe one last one, Barry. I'd have to beat a dead horse on the margin, but it sounds as though, without quantifying where they go, it sounds like maybe the margin troughs in second quarter. Is that how you would think about it today based on the pressure and the competitive factors that you're currently experiencing? Second quarter to second quarter and maybe potentially flat into the third quarter and then maybe some positive benefit in the latter half of the year, Brian, is how I think about it. Yeah. Okay. Just remind us the level of you talked about, I think, a portion of reprices. You know, how much of the loan book would reprice over maybe the next 12 months? Do you have a handle on what that is, or could you give us a little perspective on that? I think about 35% of our earning assets, reprice and/or mature over the course of a year. Okay. 35%. The new loan yield you're putting on today, the origination rate, where was it? I I think you said that or maybe I missed it. Yeah, in my comments, it was, just above 6% was the, was the coupon, average coupon in the fourth quarter. Gotcha. Okay. Cool. Thank you. How about just maybe, I don't know, maybe it's for you, Barry, or someone else, Chip, just on the, you know, the fee income outlook. I mean, Chip talked about the opportunities on the wealth side, you know, maybe being a little muted with, you know, the performance in the market this year. Sounds like a significant opportunity. Maybe just to kind of frame up, you know, the outlook on mortgage and wealth is just kind of fee income in general, how we should think about that, or at least maybe near term and maybe mortgage divulged, you know, at your, you know, as you kind of unveil your plan. Any help on the fee income side would be appreciated. Yeah, Brian, I, you know, minus equity valuations, we're bullish on the wealth management space here at MOFG right now. You know, Len mentioned that about $180 million of AUM was brought on in 2022. We believe that number will increase and potentially increase substantially here in 2023. Obviously, equity valuations may determine a little bit of actually what comes to the revenue line item there. Mortgage banking is challenged. I think we know that from other earnings. The housing inventory is still low. Rates are high. Our pipelines in the mortgage business, you know, it's obviously seasonally adjusted as well now, but are challenged. That is a business that frankly we do not expect, you know, great momentum in 2023. Okay. Maybe just in general, how to think about, you know, the maybe growth. I don't know whether you look at growth year-over-year and in fee income and aggregate or just, you know, there's a lot of puts and takes last year as far as delays go, going through there. So just trying to think about what the run rate is, you know, a realistic run rate to start the year and maybe as you progress and get some momentum. Is fourth quarter's level kind of that level or is it, you know, should we be thinking about it being lower to start? No, I think it. You know, this is Chip again, Brian. Yeah, that 8.5 To $9 million range is, I think a good range to begin the year. Okay, perfect. Just last one for me, more housekeeping. Just on the outlook for accretion in Denver. Any insight as far as how that may evolve through the year? I guess is it, you know, just kind of stair-step down from where we are today? Is that, you know, how to best think about it absent any significant payoffs or pay downs? Is this a good level? Yeah, that's the way I think about it, Brian. Take the fourth quarter and stair-step it down throughout the year and in future years as well. Okay. Okay, that's all I had. Thank you for taking the questions, guys. Thanks, Brian. Thanks, Brian. Thank you, Brian. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star four followed by one on your telephone keypad now. We have no further questions on the line. I will now hand back to the team for closing remarks. Great. Thanks everyone for joining today. I look forward to sharing more of our strategic plan and priorities in late April as we continue our journey to becoming a top performing bank. Thanks, everyone. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.