Good morning, ladies and gentlemen, and welcome to the MidWestOne Financial Group, Inc. First Quarter 2024 Earnings Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this call is being recorded, and I would now like to turn the call over to Barry Ray, Chief Financial Officer of MidWestOne Financial Group. You may proceed. Thank you, everyone, for joining us today. We appreciate your participation in our Earnings Conference Call this morning. With me here on the call are Chip Reeves, our Chief Executive Officer, Len Devaisher, our President and Chief Operating Officer, and Gary Sims, our Chief Credit Officer. Following the conclusion of today's conference, a replay of this call will be available on our website. Additionally, a slide deck to complement today's presentation is also available on the investor relations section of our website. Before we begin, let me remind everyone on the call that this presentation contains forward-looking statements related to the financial condition, results of operations, and business of MidWestOne Financial Group, Inc. Forward-looking statements generally include words such as believes, expects, anticipates, 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, changes 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, and good morning. On today's call, I'll provide a high-level overview of our first quarter results and an update on the significant progress in executing our strategic plan initiatives. Len will provide an update on our lines of business, and then Barry will conclude with a more detailed review of our first quarter financial results. Looking at our quarterly highlights, I'm pleased with the seamless closing and integration of Denver Bankshares, which added scale and a low-cost deposit franchise to our existing Denver operations. Our Denver franchise now has loans of $673 million and deposits of $429 million. As we've stated previously, our objective is for the Denver market to be a $1 billion franchise for us in the future. Len will speak further about our progress and our plans in this critical market. Turning to our balance sheet trends, excluding acquired Bank of Denver balances, we delivered 8% annualized loan growth for the first quarter as we continue to benefit from the expansion of our major market banking teams and our customer value proposition, emphasizing larger bank expertise delivered in a high-touch boutique fashion. Additionally, deposits were stable in what's normally a seasonally slow quarter, and we remain cautiously optimistic we'll grow our core deposit franchise through the year ahead. Importantly, in the quarter, because our strategic 2023 balance sheet actions, the acquisition of Denver Bankshares, and continued loan growth, our net interest margin expanded in the first quarter, rising 11 basis points and leading to a 7% quarterly increase in our net interest income. Even if no rate cuts occur in 2024, we anticipate a slow build of margin for the remainder of the year. We continue to expand and up-tier our commercial banking and wealth management businesses have enjoyed solid loan and assets under management growth in our major metro markets of the Twin Cities, Denver, and Metro Iowa. Specifically regarding our wealth management business, our investments in talent and platform, as well as market valuations, led to first quarter revenue of $3.5 million at 10% quarterly and 19% year-over-year increase. In January, we welcomed our new EVP and Head of Wealth Management, Steven Heimermann, and under his leadership, we look to achieve double-digit annual revenue growth in this business segment in the years to come. The first quarter and the beginning of the second quarter of 2024 has seen significant talent acquisition across our bank as we continue to mature and expand our operations consistent with our strategic plan. These senior hires are in commercial banking, credit administration, wealth management, marketing, and treasury management. Even with these talent and platform investments, we remain pleased with our expense discipline as we funded the majority of these investments by reallocating expense reductions into more productive and profitable markets and departments. To conclude, we've made substantial progress in the transformation of MidWestOne, positioning the bank for improved earnings power and returns. The execution of our strategic initiatives is progressing better than we've expected, and I remain very optimistic on what the future holds for our employees and shareholders. I'd like to thank our employees for their continued hard work, their expertise, and their commitment to our company, customers, and communities. This journey would not be possible without their unwavering support. Now, I'd like to turn the call to Len. Thank you, Chip. I'd like to provide some color on the results we're seeing in our deposit, commercial, and wealth business lines. So let's start with deposits. We are pleased that both February and March saw customer deposit gains, mitigating seasonal decline we experienced in January. These gains exclude deposits assumed from the Bank of Denver transaction. In terms of commercial banking, Slide 7 shows that it was Iowa Metro, Colorado, and Twin Cities as our largest contributors to balance growth. The primary drivers include drawdowns on existing CRE construction loans and an acceleration in C&I new production. This includes a nice win by our new agribusiness team, as well as a new manufacturer we've brought across, both with a full relationship, including treasury management. Speaking of commercial, our government guarantee business continues to gain momentum. We see our SBA gain on sale business as a growing driver of fee income. In the first three months of 2024, we recognized $213 thousand, or 65% of what we saw in all of last year, and we believe the next couple of quarters will outpace that strong start. As Slide 8 shows, asset quality metrics for the quarter were stable, including net charge-offs and 30- to 89-day delinquency of only 2 basis points and 20 basis points, respectively. Our non-performing assets ratio saw a slight increase of 2 basis points, while our allowance grew to 1.27% of total loans. As noted in our release, our classified assets ratio declined 36 basis points from the linked quarter. However, two large trucking relationships migrated from pass to special mention in the quarter, driving an increase in our criticized loan balance. Turning to Slide 10. The momentum in wealth management continues, with assets under administration up 11% and revenue up 19% from the same period one year ago. We are encouraged by new talent attraction efforts in this line of business, and we see that as a continuing opportunity for us in 2024. Finally, I want to commend the exceptional work by the team with the Bank of Denver acquisition. From operations to IT, to retail ambassadors and learning and development, it was our smoothest conversion yet. I can tell you from having been on the ground in Denver, that our newest colleagues are settling in very nicely. As Chip mentioned, we see continued upside in Denver. In fact, in the period since our Bank of Denver announcement, we have recruited a new SBA business development officer, a new treasury management officer, and a new senior C&I commercial banker. As referenced in our strategic plan update, selective talent acquisition in our target markets continues to be a focus. With that, I'm pleased to turn the call over to our CFO, Barry Ray, to discuss our financial results. Thank you, Len. I'll walk through our financial statements, beginning with the balance sheet on slide 12. Starting with assets, loans increased $287.7 million, or 7% from the linked quarter to $4.41 billion. Excluding the $207.1 million of loans acquired in the Bank of Denver acquisition, loan growth was $80.6 million, or 8% annualized from the linked quarter. Strength in the first quarter was led by commercial and industrial loans, which increased $30.7 million or 12% annualized from the linked quarter. The overall portfolio yield was 5.51%, a 17 basis point improvement from the linked quarter. The allowance for credit losses increased $4.4 million- $55.9 million, or 1.27% of loans held for investment at March thirty-first. The increase reflected $3.2 million in credit loss expense to establish the day one allowance for credit losses in connection with the Bank of Denver acquisition, as well as additional allowance for credit losses for organic loan growth. Turning to deposits. Total deposits increased to $189.6 million- $5.59 billion at March thirty-first, as compared to December thirty-first. Excluding the $224.2 million of deposits assumed in the Bank of Denver acquisition, deposits were down $34.7 million from year-end 2023. Finishing the balance sheet, total shareholders' equity increased $3.6 million- $528 million, driven primarily by a decrease in accumulated other comprehensive loss. The tangible common equity ratio was 6.43% March 31, 2024, down 47 basis points from year-end 2023, due primarily to the all-cash Denver Bankshares acquisition. Turning to the income statement on Slide 15, we earned net income of $3.3 million or $0.21 per diluted share. During the quarter, we completed the acquisition of Denver Bankshares, resulting in merger-related expenses of $1.3 million and a day one credit loss expense of $3.2 million. In addition, we recorded a negative mortgage servicing right valuation of $368,000 and incurred non-merger-related severance costs of $261,000. Adjusting for these items, adjusted net income was $7.2 million, or $0.46 per diluted common share. Net interest income increased $2.2 million in the first quarter to $34.7 million as compared to the linked quarter, due primarily to higher earning asset volumes and yields, partially offset by higher funding costs and volumes of interest-bearing liabilities. Loan interest income in the first quarter of 2024 included $1.2 million of loan purchase discount accretion, $458,000 of which was attributable to the Bank of Denver acquired loans. The accretable purchase discount for the Bank of Denver loans was provisionally measured during the first quarter at $8.2 million, or 3.8% of acquired loans. We expect to recognize that discount in loan interest income over the 3.1-year weighted average portfolio life. Our tax equivalent net interest margin increased 11 basis points to 2.33% in the first quarter, as compared to 2.22% in the linked quarter, as asset yield increases outpaced funding cost increases. Specifically, earning asset yields increased 20 basis points, partially offset by a 10 basis point increase in our funding costs. The cost of interest-bearing deposits grew much more modestly, up only 6 basis points quarter- over- quarter, compared to the 34 basis point increase we experienced in the prior quarter. This outcome was a key driver in our net interest margin improvement. Non-interest income in the first quarter increased $5.9 million, due primarily to the $5.7 million net loss on our security sale in the fourth quarter of 2023, which did not recur in the current quarter. In addition, wealth management-related revenue increased $310,000 from the linked quarter. Finishing with expenses, total non-interest expense in the first quarter was $35.6 million, an increase of $3.5 million, or 11% from the linked quarter. The first quarter's expenses included $1.3 million of merger-related costs, as well as non-merger-related severance costs of $261,000. Adjusting for those charges, adjusted non-interest expense was $34 million or a 6% increase from the linked quarter. The increase was due to normal annual salary adjustments, incentive accruals, and additional Bank of Denver employee costs. As a reminder, we expect to divest our Florida branches in June 2024, which will result in a reduction to our quarterly expense run rate of about $700,000 beginning in July 2024. Expense control remains a key focus of our management team, and we are very pleased with our execution. With that, I'll turn it back to the operator to open the line for questions. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question, and we will pause here briefly as questions are registered. And our first question is from the line of Brendan Nosal with Hovde. You may proceed. Hey, good afternoon, folks. How are you doing? Hey, Brendan. Brendan. Let me just to start off here, appreciate all the, the commentary you gave on early days of Denver, and I know that it is still quite early there. But just would love to hear you speak about, some of the opportunities that you, you hope to get in front of now with, with the deal closed and the, the new team adds that you just weren't able to get in front of previously. Yeah, Brendan, this is Len, and I would tell you that the story I think is compelling, where folks, we have a new story to tell. We've had obviously, as you know, we've enjoyed a lot of growth out of Denver, starting with the team looked at in 2017. But this doubling down with our partnership with Bank of Denver really allows us to show to talent that what this market means to us. And so I see that showing up since the announcement in the talent recruitment we've been able to achieve. I would say that, you know, overall, I look at it as not only the new talent we've added on, the talent that we've acquired by way of Bank of Denver, and then just looking at balances and having customer conversations, having been on the ground that feel good about momentum. All right. Perfect. Perhaps one more from me. Can you folks offer a little more color around the trucking industry credits that drove the increase in special mentions? Any details like what drove the migration, how well you reserved, and any line of sight to potential loss content you see at this point? Hey, Brendan, this is Gary Sims. You know, we don't have a significant exposure to the trucking industry. Just as a matter of course, you know, our exposure is primarily focused on customers in our markets that we're doing business with. Total exposure is $55 million across the industry. As we started getting in the year-end financials from our customers, we recognized that some of our customers had experienced deterioration in 2023, that prompted us to downgrade a couple of those credits to special mention based on less than expected cash flow. Both of these credits are long-time customers that we do believe have the wherewithal and the staying power to make it through this industry downturn. You did ask what kind of what's driving that? It's really that, you know, the aftereffect from the pandemic, where you had an oversupply of capacity in that space that's caused trucking rates to decline, and so you've got that supply-demand mismatch that's been happening in the industry. So we're watching those customers closely. When we saw the deterioration, we looked at the entire portfolio and the downgrades that you saw were really the ones that we said had some risk in them. I'll stop. Does that make sense, Brendan? Yeah, Gary, that's, that's super helpful color, so thanks for spending the time there. All right, folks, thanks for taking the questions, and next quarter. Great. Thank you, Brendan. Thank you, Brendan. The next question is from the line of Terry McEvoy with Stephens. You may proceed. Hi, good morning, everybody. Thanks for taking my questions. Absolutely, Terry. Maybe, Barry, a question for you. Hi, how's the balance sheet position when you adjust for the two acquisitions? How's that positioned for a higher for longer rate environment? I think Chip said earlier, the margin kind of grind higher without rate cuts, but wondering if you could expand on that. Yeah. We believe that even if we get no rate cuts in 2024, for example, Terry, yeah, we think that the rate of increase of our asset yields, we still have opportunity to where that's going to outpace the cost of funds with our current balance sheet position. You know, we're getting about 4 basis points per month of loan yield increase, and that's been something that's been holding in there. We were pleased that the rate of funding costs slowed down dramatically in the quarter. So we still feel cautiously optimistic that we have opportunity to expand the margin, even with no cuts in 2024, because of the, if that kind of pattern holds for us. So, the risk of that would be the deposit, the funding cost side, Terry. Thanks, thanks for that. And then, the question of wealth management. Nice to see revenue up 10%. Definitely had some help from the markets. Could you talk about new client acquisitions and, and maybe did you have any thoughts on a full year revenue outlook for that business? Yeah, Terry, this is Len. So I don't have the we don't disclose specific new client acquisition numbers, but what I can tell you is we see definitely fruit of the talent that we have been able to add to the organization. And specifically, what I would tell you is we see a lot of nice momentum and partnership between our wealth management bankers and our commercial bankers. And so that's been an area of a really nice momentum. And in terms of growth, you know, I'm looking for just given the investments in that business, including a new hire we made in the Des Moines market, I'd like to see that continue at that double-digit pace when I think about full year. Great. Appreciate that. Thank you, and hope you have a nice weekend. You too. Take care. Thank you, Terry. The next question is from the line of Nathan Race with Piper Sandler. You may proceed. Hey, guys. Good morning. Happy Friday. Happy Friday. Just wanted to, just wanted to kind of think about the, expense run rate. Barry, I think you mentioned about $700,000 of cost savings once the, Florida operation, transaction closes. But just any thoughts on just- Right the run rate overall, the 2Q as well? Yeah, I think 2Q will still be... You know, we don't expect the Florida transaction to close until late in the second quarter, Nate, so it'll be higher in the second quarter. As we look at it and we move out to the third quarter, where we think we'll be through some of these noisy Bank of Denver, Florida divestitures, we're landing somewhere around the $34 million per quarter run rate is what we're expecting for expenses. Okay, great. I appreciate the earlier commentary around kind of the outlook on the credit from particularly tied to the trucking portfolio, but just in terms of how you guys see the reserve trending, you know, you're still operating with pretty healthy levels and, you know, loan growth is solid. It sounds like the pipeline remains pretty strong over the balance of this year. So just curious how you're thinking about, you know, the overall reserve, particularly in light of the rise this quarter tied to the deal in Denver. So, this is Gary. I'll start the conversation, and Barry, if I miss anything, please add in. I mean, what we see from the reserve currently and then on a go-forward basis, we are experiencing loan growth, so we will continue to see us add to the reserves to support that loan growth over the course of time. In terms of the existing portfolio and the risk we see in the portfolio, we believe we are adequately reserved for that risk to date. So I don't see us, you know, unless something changes, being more aggressive in adding to existing reserves to try to support the existing portfolio. So on a go-forward basis, loan growth will be a key driver there. Anything to add, Barry, or is that good? If I could just ask one last one on just the outlook along deposit growth. You know, obviously, legacy balances declined a little bit, but I know you guys have hired a number of relationship managers over the last several quarters. So just curious on kind of the outlook for you guys to kind of resume some core deposit growth over the course of 2024. Yeah, Nathan, this is Len. Certainly, I can tell you every line of business, so from private banking to commercial banking to obviously our retail bankers, everyone's focused. It continues to be the hand-to-hand combat. Obviously, as we think about managing the business. We're being very mindful of being prudent on pricing. And so we're pleased, for example, with the slowdown in the rise of interest-bearing deposit costs quarter-over-quarter, and also mindful of balances. So that balancing act continues, and my expectation is that's going to be an ongoing balancing act in 2024. Okay, great. And just one last one, sorry. Barry, can you just remind us of the margin impact as the Fed rate cuts occur? Yeah, I think if the Fed rate cuts occur, again, we talked earlier about, you know, we still believe our balance sheet is positioned to have some amount of margin expansion without rate cuts, just based upon the repricing dynamics. You know, I think what we would see if we get rate cuts would be, we would have additional margin expansion. I do think that that would also be contingent upon the pace of the rate cuts as well as, as Len said, the continued—Len alluded to in his deposit comments, the continued kind of battle for deposit funding. And so how all those dynamics come together. And so the best answer I can give you, Nate, is I think we expect to see some incremental margin improvement without cuts, and it would be a better margin improvement with some rate cuts. Okay, perfect. Thanks, guys. Thanks, Nate. Thanks, Nate. See you next week. Thank you. The next question is from the line of Damon DelMonte with KBW. You may proceed. Hey, guys, hope everybody's doing well today. Just wanted to see if you could remind us, Barry, kind of what the expectations are for commercial real estate maturities over the upcoming quarters, and what type of opportunity the repricing of those would have on the margin as well. Yeah, so about... Let me get the data. So about 60% of our portfolio would be commercial real estate. And then if I go to the— Yeah, fixed piece of that 60%, or about $1.5 billion. If I look out over the course of the next year, Damon, what's repricing there in fixed rate, it's probably about $160 million of that repricing. Okay. Okay, that's helpful. And then, kind of with regards to fee income, you know, it sounds like, you know, you're hitting—kind of starting to hit your stride here on the wealth management, and that's driving revenues a little bit higher and the SBA platform as well. So as we kind of think about a quarterly cadence for the fee income, is it fair to kind of assume a little bit of a lift off this quarter's operating of, you know, call it $10.1 million, so maybe closer to $10.5 million? Damon, this is Chip. Rather than give you a number, how about this? We were pleased with the first quarter of $10.1 million, especially the momentum in wealth management that Len spoke to. And I'd say that some of the other areas and lines of business are showing accelerated momentum from their first quarter run rate. So we feel good about the momentum as we move into the second quarter, but probably not going to guide you to a specific number. But we feel good about the start and where we're the trajectory. Fair enough. That works. And then just lastly, on the tax rate, Barry, can you just remind us what a good effective tax rate we should be using? Yeah, I think we included in the release, Damon. I think probably around 22% is where we're landing for 2024, is what we expect. Perfect. Okay, great. Thanks. Everything else has been asked and answered. Appreciate it. Great, Damon. Thanks, Damon. Thank you, Damon. The next question is from the line of Brian Martin with Janney Montgomery. You may proceed. Hey, good afternoon, guys. Hey, Brian. Brian. Hey, just, yeah, I guess one question, Barry. Just going back to the margin for just a moment. The, given, you know, the intra-quarter closing, I guess the March margin, how was that trending versus where, where you were for the full quarter? Just to kind of give us, an idea of where the, what the launching point is. Yeah, the March margin, we were 233 for the quarter. The March margin, Brian, would be around 239, so, few basis points higher. Okay. All right. And that, Okay, that would have most of it in there. And then, okay, and then as far as the—just you mentioned, Barry, the, the repricing, just maybe bigger picture, I mean, how much do you expect either, I guess, kind of on the fixed rate side in total, is repricing over the next, you know, 12 months or so? I think you said maybe 150. Was that just a real estate piece? I just don't know if there's other something else in there that would be more significant, or that's kind of a good number to think about in terms of what, what's repricing, you know, kind of over the next 12 months. No, entire, entire. So I'll give the fixed rate. So yeah, what I was talking about earlier was specific to, I believe Damon asked, specific to CRE. So entire fixed rate over the next 12 months, that's about $250 million of fixed rate. And then we also have some adjustable rate that would be around another $180 million. Gotcha. Okay. And then the pickup on that, I mean, what kind of lift are you getting, like, you know, where the new origination yields are today? Yeah, our new, our new origination yields for around 7.61, 7, 7.50, 7.60. And so if you look at some of those yields on those repricing, probably in the high fours to low fives. Yeah, I would just add to that a little bit, Brian, that the mid-7s on the new originations are where we are. So that tends to be associated, you think about new relationships more often, not always, but more often. Renewal, our renewal rate is actually in the low 8s. So, that's sort of the trends we're seeing in the commercial book I'm speaking to specifically there. Yeah. Gotcha. Okay, so that's helpful. And how about, Barry, you mentioned, I think, the accretion number. I guess that should trend up a little bit next quarter. Is that how you think about it, given the full quarter impact? Correct. Yeah, we had about $229,000 a month of benefit. So for two months of that, so about $450,000. So I would say for next quarter, you would expect, you know, call it $250,000 more attributable to the Bank of Denver transaction. Gotcha. Okay. All right. And then maybe one—just one for Gary. Just on the... Gary, can you just, outside of trucking, I think in the past, you've talked about the healthcare and the office portfolio. Can you just remind us, just in terms of how big those portfolios are, and then just maybe what, you know, what dollars of those are, are criticized or classified? Just big picture. Yeah, sure thing, Brian. You know, I'll clarify really where we've seen weakness in the portfolio have been, has been in the office space and in the senior living, more specifically. Not really healthcare, as much as senior living. So I'll start with office. Our non-owner occupied office is $166 million. That represents 3.8% of our portfolio. In terms of, you know, what we've seen in terms of deterioration in that portfolio, getting to the numbers here, 28% of that portfolio is classified, 31% of it is criticized. So, $46 million is classified, and then, $51 million is criticized. So that gives you an idea of what we see in the office portfolio. I'll stop for a second, Brian. Make sense? Yeah, that's... Yeah, that makes sense. I appreciate it. Yeah. Okay, good deal. On the senior living, we have $241 million in that portfolio. That represents 5.5% of the portfolio. In terms of the deterioration we have in that portfolio, classified is 24% of that portfolio. So $57.5 million of that portfolio is rated substandard or worse, and we don't have any special mention credits in that portfolio. So the criticized portion of that portfolio is the same as the classified portion of the portfolio. Gotcha. Does that help, Brian? No migration in either... Yeah, and no migration this quarter in, in either of those portfolios, to speak of? That's correct. The portfolio, in terms of migration, most of those categories were fairly stable, this quarter. Yes. Gotcha. Okay, perfect. And last one for me was Barry. I think you mentioned some haircut from the divestiture of Florida on the expenses. What was that a quarterly? I don't know what the number was. It was a quarterly number, annual number? What was the impact on the expenses related to Florida? Yeah, in my comments, it was a quarterly number, Brian. It was around $700,000, was the impact from Florida. Okay. Gotcha. Okay, perfect. Thank you guys for taking the questions. Thank you, Brian. Thanks, Brian. Thank you, Brian. There are no additional questions waiting at this time. As a reminder, it is star one to ask a question. There are no additional questions waiting at this time. I would like to pass the conference over to the management team for any closing remarks. Great. This is Chip. Thank you, everyone, for joining today. We believe it was a very solid start to the year. We look forward to joining you in 90 days to continue our journey together as we execute on our strategic plan. Thank you. That concludes the MidWestOne Financial Group, Inc. first quarter 2024 earnings call. Thank you for your participation, and enjoy the rest of your day.