Good morning, ladies and gentlemen, and welcome to the MidWestOne Financial Group, Inc.'s Second Quarter 2025 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. I would now like to turn the call over to Barry Ray, Chief Financial Officer of MidWestOne Financial Group. 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 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 relating 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. Good morning, and we appreciate everyone joining for this quarter's call. Today, I'll provide a high-level overview of our second quarter results, as well as highlights regarding the continued execution of our strategic initiatives. Len will provide an update on our lines of business, and Barry will conclude with a more detailed review of the second quarter. Let's turn first to the positives. Due to the expertise of our MidWestOne Bank team, we continue to execute well on our 2025 strategic initiatives. Typical in balance sheet management, solid loan growth of 7.4% and backlog loan repricing led to a 13 basis point expansion in our tax equivalent net interest margin and 5% late quarter net interest income growth. Based upon third-quarter pipelines and business activities, mid-single digit loan growth remains our expectation for the second half of 2025. Our relationship-focused key income businesses, which are part of our strategic plan roadmap, performed well in the second quarter, with wealth management revenues up 5% late quarter and SBA originations and gain-on-sale exceeding expectations. We also remain committed to building out the talent base to become a consistent, high-performing company. The second quarter brought significant new commercial banker hires in the Twin Cities and Denver and wealth management hires in the Twin Cities. Len will speak further about these initiatives and the expected organizational impact. Even as we invest for the long term, we remain focused on our expense discipline, and we are pleased with our second quarter non-interest expense results. Half the quality and net income were impacted by a single $24 million Twin Cities suburban CRE office loan originated in June 2022 and previously classified that moved to non-accrual in the quarter. A receiver has been put in place, resolution action dead finished, and a specific reserve established, which increased our allowance for credit losses ratio to 1.50% and significantly increased our quarterly credit loss expense. Outside this loan, asset quality metrics generally improved in the quarter, with the criticized asset ratio decreasing 32 basis points and net charge-offs of only 2 basis points. We completed a third-party review of CRE office loans greater than $1 billion, and there is 100% risk rating encouraged. We view this loan, while large, as an isolated issue. Thank you to our team members who continue to take outstanding care of our customers and welcome new relationships to MidWestOne. I'm encouraged by the strength we are building in our balance sheet, our capital position, and our underlying earnings momentum, which position this company well for the remainder of 2025. Now I'd like to turn the call over to Len. Thank you, Chip. Let's start with deposits. End-of-period deposits were down slightly, while average deposits were flat. We are pleased to see non-interest-bearing balances in the quarter ahead of both the latest quarter and the year-ago quarter. Our deposit pipeline has picked up with some of the talent additions that Chip mentioned, and we continue to focus our efforts on commercial and consumer deposit segments with a disciplined approach to public funds bids. As we anticipated, loan growth picked up in the second quarter with strength in C&I lending, offsetting small declines in agricultural and commercial real estate. We also benefited from solid momentum in home equity lending from our consumer franchise. As Chip mentioned, we continue to forecast mid-single-digit loan growth in the second half of the year, noting that this quarter showed the focus on organic loan growth with commercial loan production of $215 million, the highest production we've seen in the last six quarters. Just like deposits, the loan pipeline is also benefiting from our recent talent addition. In terms of our fee businesses, we saw strength from wealth management up on a late quarter and year-over-year basis, SBA, treasury management, and momentum in mortgage with ready loan production up 20% year- over- year. You'll recall that the SBA vertical was one of the focused initiatives in our strategic plan, and we see that bearing fruit. Year-to-date SBA fee income is double the same period last year, and MidWestOne is now in the top 10% in the nation on the fiscal year-to-date SBA 7(a) production. Speaking of executing on our strategic plan, the commercial and wealth hires in the Twin Cities and Denver represent deliberate and opportunistic expansions with experienced bankers who are hitting the ground running, introducing new opportunities for us to deliver sound, profitable growth. With that, I'm pleased to turn the call over to Barry. Thank you, Len. Starting with the balance sheet on slide 11, total assets declined slightly from March 31st, 2025, as decreased cash balances and lowered securities volumes were only partially offset by increased loan volumes. Len covered the loan and deposit changes, so I'll touch on shareholders' equity, which increased $9 million from March 31st, 2025 to $589 million due to a $5 million increase in retained earnings and a favorable $6 million adjustment to accumulated other comprehensive loss, partially offset by a $1 million increase in treasury stock. The company's consolidated CET1 ratio was 11.02% at June 30th, 2025, up 5 basis points from March 31st, 2025, reflecting somewhat muted growth due to higher credit loss expense recognized here in the second quarter. Turning to the income statement, on slide 13, we reported net income of $10 million or $0.48 per diluted common share. Net interest income increased $2.5 million in the second quarter to $50 million as compared to the latest quarter, due primarily to higher earning asset volumes and yields, as well as lower funding costs, partially offset by higher funding volumes. Loan interest income in the second quarter of 2025 included $1.1 million of loan purchase discount accretion compared to $1.2 million in the latest quarter. Our tax equivalent net interest margin and core net interest margin, which excludes loan purchase discount accretion, both expanded 13 basis points to 3.57% and 3.49% respectively in the second quarter. The increase in core net interest margin was due primarily to expansion in core earning asset yields of 12 basis points, coupled with a 2 basis point decline in the cost of interest-bearing liabilities. The core loan portfolio yield for the second quarter was 5.70%, an increase of 10 basis points from the latest quarter, while the average yield on new loan originations during the second quarter was 6.76%. On the liability side, the cost of interest-bearing deposits decreased 2 basis points from the latest quarter to 2.29%. Non-interest income in the second quarter of 2025 was $10.2 million compared to $10.1 million in the latest quarter. Adjusting for precarious gains and losses and mortgage servicing right valuations, non-interest income was up $200,000 due to increases in our wealth management business, card revenue, mortgage originations fee revenue, and SBA gain-on-sale revenue compared to the latest quarter. Finishing with expenses, total non-interest expense was $35.8 million in the second quarter, a decrease of $0.5 million from the latest quarter. Driving the improvement was the receipt of $1.1 million in tax credit funds related to the employee retention credit, which was recognized as a reduction to compensation and employee benefits, as well as a $0.3 million decrease in core data processing expense. Partially offsetting these favorable decreases were increases in equipment, primarily driven by increased software license expense, and marketing, primarily driven by increased online advertising and direct mail campaigns. Given recent talent investments, we are revising our 2025 annual expense guide to a range of $146 million- $148 million. With that, I'll turn it back to the operator to open the line for questions. Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad now. If you change your mind and would like to exit the queue, please dial star followed by two. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question today will be from the line of Brendan Nosal with Hovde Group. Please go ahead. Your line is now open. Hey, good morning, everybody. Hope you're doing well. Hi, Brendan. Good morning. We were just starting off here on growth for the quarter. The C&I growth looks particularly strong. Could you just unpack this quarter's C&I growth, whether you know new credits or line draws, any noteworthy industries, and then what regions were really contributing to that? Yeah, Brendan, Len, I can get. Yeah, thanks, Chip. I can give you some color on that. What is encouraging to me is I am seeing and we are seeing what I like to call the Allstate. What I mean is really contributions across the footprint. I see and I look at bankers in Denver, bankers in Twin Cities, bankers in community, and bankers in our Iowa metro markets. In terms of industry, we definitely see distribution, actually manufacturing, and both B2B and B2C type segments. There's a mix of existing nameplates and new nameplates. Another thing that we feel good about is the CRE production was softer in the second quarter. The CRE that I'm seeing is more owner-occupied. You saw our CRE balances fall back a little bit. We had some multifamily and one hotel loan that paid off and went to the secondary market the way we expect and so forth. You know we've got some capacity there as I look ahead. All right, great. It's helpful to call it. One more from me. When you turn to the margin, I think even last quarter, you know at the time, you saw continued opportunities to grind the core margins higher. We certainly saw that play out this quarter. I'm just kind of curious for your updated thoughts for the next half of the year, whether you see continue to work the core margins higher into year-end and then just see to some of the drivers there. Thank you. Yeah, thanks, Brendan. Yeah, we were very pleased with the 13 basis points of net interest margin expansion in the second quarter. We believe there still continues to be opportunity. I'm going to stick with the grind higher on the net interest margin. What's going to be driving it, Brendan, is not too terribly different than what we experienced in the second quarter. It's going to be a new loan origination that hires coupons, backlog repricing, principally on the asset side for the margin expansion, and perhaps some continued benefit on the funding side as the time deposits continue to reprice at a lower cost. Those would be your thoughts on the margin and the drivers of it, Brendan. Thank you. All right. Fantastic. Thanks for the reflections. Thanks, Brendan. Our next question today will be from the line of Terry McEvoy with Stephens Inc. Please go ahead. Your line is open. Thanks. Good morning. How are you guys doing? Pretty good, Terry. I think, the market's thanks. A bit surprised with that one loan, which was about 20% of your non-owner-occupied office CRE. I guess the direct question is, what happened? Was it just wrong building, wrong location, originated at the wrong time? Maybe as a follow-up, could you just go through any other larger credits within CRE? I know on page eight, you can look at the non-owner-occupied office, but any other larger loans that would be helpful. Hey, Terry. This is Gary Sims. I'll start the conversation and then ask my teammates to add in if I miss anything. We'll start with that larger loan. As we identified, it is a non-owner-occupied office in suburban Minneapolis. We did originate it in 2022. Currently, the property is 85% occupied. There is rollover risk in 2025 that could take it to 65% occupied. The property is actually cash-flowing as it exists today. However, it was graded substandard non-accrual at the beginning of the quarter. As we went into the quarter, we stopped getting paid, which indicated to us that the sponsor was not utilizing the funds that they were receiving to make our payments. We took decisive action to start the legal process to get control of that asset, started the receivership process, and felt like that necessitated taking it to non-accrual. That's kind of the background on that particular asset. As you note, it is the largest asset in the office portfolio. As you go down the office portfolio, the next largest asset is a $12 million asset that is in downtown Minneapolis. It is pass-rated, good occupancy, good cash flow, and a good sponsor. We also identified in our investor materials the additional office assets that we've identified as substandard, the largest of that being an $8.2 million asset that we do have substandard accrual. It is current and do have a sponsor that is supporting it on an ongoing basis. I'll stop for a minute, see if that gives you some good color on the portfolio, and also ask my teammates if they have anything to add. Yeah, Terry, any follow-up questions on that one? Great, great color. Thanks for all that. Maybe as a follow-up, the expenses for $146- $148 million, maybe talk about, I think you call it operational efficiencies, where you're investing there, as well as additional hires. It sounds like you had an active Q2 on the hiring front. Hey, Terry, we got a few things going on there. This is Chip. On the hiring front, we were able to bring over a team on the C&I side of the business in the Twin Cities from some, what I'll call just M&A disruption in that marketplace. We also brought over a few wealth individuals in that marketplace. At the same time, we also hired a new Region President in the Denver marketplace, also from some M&A disruption in that city. Overall, very active on the talent acquisition, talent investment standpoint. Some of the major projects on the technology initiative side, we continue with what internally we call OneConnect, but ServiceNow, which is an end-to-end workflow management system for the back office. In October, we have a new commercial digital banking platform that will be rolled out to our customer base. We're doing a heck of a lot of business automation internally now as well. I think for the most part, we've been able to cover what I'd say are investment just through gaining more efficiencies. The revised guidance that Barry gave is probably up, I think, about $1 million in terms of the range, is really from the talent hires that we did in the Twin Cities marketplace. Perfect. That's great. Thanks for taking my questions. Yep. Thanks, Terry. The next question will be from the line of Damon DelMonte with KBW. Please go ahead. Your line is open. Hey, good morning, everyone. Hope you're all doing well today. Thanks for taking my question. To talk a little bit about credit and kind of outside of the events in this quarter, as we kind of think about the provisioning going forward, and kind of given, you know, the continued optimism in loan growth, Barry, just looking for a little color on how you think about the provision over the back half of the year. Yeah, I expect provision expense to go down to more, I'll call it normalized levels in the back half of the year. Damon, certainly our allowance coverage ratio reflected that one single CRE credit. As we get resolution on that credit, I expect the coverage ratio to go back down to our more historical levels at the 120 range. We believe we have a good reinvent on the loss on that loan. I think credit lot like this will be very much more like historical levels. Thanks. Okay. All right. Helpful. On the securities portfolio and w hat I'd also say. I'm sorry. Hey, Damon, this is Chip. What I'd also say is, you know, the specific reserve that increased our credit loss expense with the single loan, I would say that it's likely or potentially expected that as the receiver that's in place gives us some more detailed information and begins to have some conversations with the tenants here in the third quarter, we'll likely be in a position to reflect the charge-off likely in the third quarter of that too. The asset itself will not be completely resolved at that point, but I think we'll be in a position to likely take the charge-off. Got it. Basically, you're sort of in price discovery mode where you'll get a better handle on things and you can kind of get rid of a portion that you need to. We haven't updated the appraisal on an as-is basis that describes it as a distressed property. We think we've been conservative in our credit loss expense adjustment. We believe we have it all, but I would say we will know complete information here in the third quarter. I do believe we have it all. Okay. Great. On the securities portfolio this quarter, average balances came down. Do you expect us to kind of hold steady, or do you think more cash flow runoff will just be redeployed into loans? Yeah, part of that will be driven by what's happening on the deposit side, Damon. Right now what we are is redeploying those cash flows into loans. To the extent that the deposit growth picks up relative to loan growth, I would expect to invest those in the securities portfolio. It's going to be a function of what's happening on the deposit side. I would say probably continued runoff with respect to reinvesting into the loan portfolio. Okay. Great. Just last quick question here on the tax rate, Barry. I think this quarter is lower than in first quarter, but how do we feel about it for the back half of the year? Thanks. Yeah. Hey, Damon. We expect our tax rates for the year to be around 22%. Higher than what we were in the second quarter, that reflected an annual effective tax rate adjustment. We expect it to be 22%, Damon. Great. Thank you very much for taking my questions. Thank you. The next question today will be from the line of Nathan Race with Piper Sandler. Please go ahead. Your line is open. Hey, guys. Good afternoon. Thanks for taking the questions. Going back to some of the hires that you've made in the quarter, curious on a couple of fronts. One, are there any non-traditional, non-solicitant employees? Can these folks just kind of start producing out of the gates? Also, how do you see these hires impacting those franchises long-term, both near and long-term growth outlooks? Nathan, this is Len. I'll talk about that. What I would tell you is because these are really seasoned and established bankers in the market, there's a lot of relationship that they have developed across the years. We feel good about their ability to not be on the sidelines, but to be on the field immediately. What I would tell you in terms of impact is, you know, these hires are specifically in the commercial and wealth segments, and those things tend to have a bit longer sales cycles. I think the real impact, I think it's probably more in 2026 than in 2025. I can tell you they've hit the ground running. Okay. Great. Barry, I apologize for the analyst modeling question, but I was hoping you can maybe just kind of narrow your margin expectations for the back half of this year. It sounds like the bias is up, but not probably to the same degree we saw this quarter. Just curious how you think about the margin as long as the Fed Remains on pause. You're likely in the third quarter. How do you think about the margin responding to, you know, maybe a 25 basis point cut at some point in the future. Thank you, Nate. I'm not expecting the 13 basis points of margin expansion that we got in the second quarter, not necessarily where we're thinking the second half of the year. Probably somewhere in the four to five basis points per quarter is what we expect based upon what we see. We do have that expectation does contemplate two 25 basis points cuts to the Fed funds target in the second half of the year, really in the fourth quarter mostly. That's kind of how we're thinking about it. Not quite the magnitude of expansion that we saw in the second quarter, Nathan. Okay. Great. That's really helpful. Maybe one last one for Chip. It seems like this credit event in the quarter has been really idiosyncratic. Outside of that, you guys said deep building of capital nicely going forward. This is a good problem to have. Just curious what the appetite is to buy back these days relative to continuous organic growth or other kind of inorganic opportunities that could arise. Great, thanks for the question, Nate. I agree. We see CET1, and I'll stay on probably seeing CET1. Our range that we've communicated previously is our target range of 11% to 11.5%. We just edged over that with the second quarter results. I think 11.02. Obviously, with the stock reaction here today, and we were active in the market in the June timeframe with some purchases. I would say that kind of first and foremost for this quarter, we'd be supportive of our stock, especially at the levels that we're seeing this morning. As for whenever we believe it's below intrinsic value, we'd like to be in the market. I would move to support the dividend. The last one, Nate, is I've run around our institution and spoken to many analysts and institutional investors saying, the bigger is not better, better is better. When you get better, then we'll get bigger. Our underlying performance is getting much, much better. Our infrastructure is ready. As we continue to perform here over the second half of the year, we're beginning to have some dialogue on the M&A front. Ultimately, we'll be focused on performance here in the third and fourth quarter. Got it. Makes sense. I appreciate all the color. Thanks, guys. Thanks, Nate. As a quick reminder, for any further questions, please dial star followed by one on your telephone keypad now. The next question will be from the line of Brian Martin with Janney. Please go ahead, your line is open. Hey, good afternoon, guys. Hey, Brian. Most of my stuff was kind of answered there. Barry, just remind me on the loan repricing and the bond repricing, how much of that you see over the next 12 months? I think with the securities possibly being redeployed into loans, can you talk about the size of that securities portfolio relative to assets over time that you kind of think about where that trends to? I think I work back to neighbor because, you know, maybe you know the next 12- 18 months out where you see that drifting through. Sure, Brian. To your first part of your question, the loan they're repricing over the next year, we've got $418 million of fixed-rate loans with a weighted average yield of 4.61% that are repricing over the next 12 months. We've got another $180 million of securities cash flows over the next 12 months. With respect to the portfolio itself, it's around 20% of assets is what we're targeting, and we're close to right around that right now. I would expect a 15%- 20% range is probably where we would target for the size of the portfolio, Brian. Gotcha. Okay. That's helpful. Thanks. How about just on the shift on the, you know, I guess whomever on the gain-on-sale, you know, the SBA revenue, can you just remind me what it was year to date? It looked like it was stronger at least last year in the second half of the year. Just wondering, from year- over- year, I guess the expected pickup in performance in the second half. It's, you know, the growth is year-over-year growth is stronger in the second half of this year versus last year, or is that, maybe I have that number wrong? If you can clarify the SBA contributions. Yeah, so the SBA contribution to that, Brian, I mean, we're budgeting and targeting and where we've been here in the first half, likely to be that kind of in the second half too, is around $500,000 or so a quarter of SBA gain-on-sale. As you know, sometimes that business could be lumpy, but over the course of 2025, I think it'll end up being about that $2 million or so gain-on-sale. Okay. What was it in the first half of the year, Chip, ballpark? Yeah, I think Barry Ray's going to look that one up here for you, Brian. Okay. Yeah, that's fine. I can even follow up offline. No big deal. Just your thought on the greatest opportunity today in terms of the fee income businesses and the opportunities there. Where is the biggest upside to that, the big flying level of fee income today when you look at the next 12, 18 months? I'm highly encouraged with our wealth management business right now, Brian, and Jeff. It was up 5% in the quarter. We continue to make strides there, both in what I'll call operating model platform as well as talent. In the quarter, we've been able to establish a much more efficient, what I call small accounts customer platform. Our new originations in terms of new clients of assets under management coming to the institution, I think the most recent snapback is always 55%- 60% of our new clients were bringing greater than $3 million of assets under management to us. That bodes well for us as we move into the future as well. Steve Heimermann, joined us from Northern Trust in January of last year to run that business for us. I think we're making some terrific strides. That is one that we're highly optimistic about and encouraged by over in a long-term fashion, Brian. Gotcha. And Barry, your new SBA is $860,000. $860,000. Okay. I appreciate that. Just last one, Chip, was on the M&A side. If you talk about better is better, I guess if you look at a potential target, what's important today to make you better, or what are the priorities on if you do look at M&A? Is it more just size? Is it geography? Is it a business line? What are the priorities there? If you can just remind us of the size of potential targets, is this something you'd rather do a couple of small deals or would you rather do a larger transaction? I think what we've been pretty consistent in stating there, right? We begin to explore, Brian. What I'd say is that, you know, from a map, the geography and the map is very important to our institution. Ultimately, take I-35 from the Twin Cities on down to Kansas City, I-80 from the Iowa border on through Iowa, and you know, it goes through Omaha. You ultimately move to the rest of Nebraska, take a left-hand turn, and you're in Denver. We have plenty of geography for $6.2- $6.3 billion in assets. We need to get deeper into some of that geography. That would be the math size-wise, you know, $500 million to probably a max of, you know, $1.5 billion - $2 billion or so in size. We'd like it to be digestible for us, and then somehow the franchise that we would partner with would need to make us better. Does it make us better in terms of essentially density within that map, or do they have business lines that can be accretive to us? The math must work for us as well, and the last one obviously has to be management and culture. Those are the things that we are beginning to look at. Those are the conversations that we're beginning to have. What I'd say is third quarter especially, we are going to prove that this underlying earnings momentum is more visible than it was here in the second quarter. Perhaps we'll begin to turn attention to potentially getting a little bit larger. Yeah. Brian, I'm just going to—oh, go ahead, Len. Sorry. Sorry. Sorry. Brian, pardon my interruption. I just, I think I heard you ask about year-to-date SBA that Barry answered, but you asked for a comparative, and I just pulled that up. Year-to-date 2025 was the $860 number, and year-to-date 2024 was $430. That sort of gives you a relative sense of traction there. Gotcha. Okay. Last time, just on your comment, Chip, it sounds like the M&A is likely to get that ROA about up to your barometer of 1% plus exit in a year before you think about doing something on that front. Is that still kind of when you think about potential M&A? Brian, what I'd say here is, yeah, ultimately, if you add move our credit loss expense to just what's consensus, let's say, versus obviously the heightened level because of the isolated credit issue, if you just use consensus, we were probably between a 1.05% and 1.10% ROA here in this quarter. We are producing, our underlying earnings momentum is at our targeted levels and probably at what we've communicated to our analysts and our investment community. I'm getting pretty comfortable with this organization in terms of being M&A ready. However, I do believe we need to perform in the third quarter and continue to prove that. Okay. That's what I was getting at. It sounds like the underlying performance is really good enough and it's just like an isolated incident here. Thank you for taking the questions. Absolutely. Thanks, Brian. Thank you. This concludes Q&A, and I will now hand back to Chip Reeves for closing remarks. Thanks, everyone, for joining today's call. Despite the isolated credit issue that we've discussed, I am truly pleased with the continued transformation of our company. Our strong balance sheet capitalization and underlying earnings momentum really do position us well for the second half of this year and as we move into 2026. Thank you all for joining today and have a good afternoon. This concludes the MidWestOne Financial Group, Inc. Second Quarter 2025 earnings call. Thank you for joining. You may now disconnect your line.