2021 Annual Report

the lowest in our history. We partially compensated for this compression with an increase in earning assets which was largely driven by the robust increase in bank deposits during the year. Critical to our success in 2022 and beyond is increasing the growth in our commercial loan portfolio. We believe that we are positioned to do just that. We have reorganized MidWest One Bank’s Commercial Banking Division under the leadership of Executive Vice President Chase Stafford. We have seen strong growth from our Denver banking office and expect that to continue. We believe we have increasing momentum in our SW Florida Naples and Fort Myers offices. A new and seasoned leadership team is in place in the Twin Cities. We also foresee excellent growth in our home market in Iowa City. This is a people-centric business and we believe the team in place is the strongest and most experienced in our company’s history. One element that will support commercial banking growth is the formation of a Business Banking unit. This unit will serve many of our small business borrowers. When the rollout is complete, our borrowers will be able to apply for these loans digitally and receive very quick turn- around for approval and loan closing. Not only will this be more convenient for most of our borrowers, but it will also be an efficient method of delivery for the bank. Non-interest income must rise as a percentage of total revenues. We have always had a strong presence in Wealth Management in our legacy Iowa markets. This service has been delivered via a strong Trust Department and our Investment Services Department, which is com- prised of licensed investment representatives. In late 2020, we were able to add three Trust professionals in our Twin Cities market. This team delivered solid performance; the Trust Department saw an overall revenue increase from the prior year of 17.4 percent, while the Investment Services Department saw an increase of 27.8 percent. Combined, the total increase from the prior year in investment services and trust activities revenue was 21.2 percent. In late 2021, we were able to add four more Trust professionals to expand our already strong franchise in Eastern Iowa, and we added an investment representative to our Dubuque

market to serve and grow an excellent client base there. To say we are optimistic about 2022 and beyond is an understatement! We believe there is strong market demand for our brand of wealth management within our geographic footprint. The home mortgage business is cyclical and we rode a wave in 2020-21. 2021 was again a year in which our Home Mortgage Center contributed mightily to company- wide earnings. Not only did we originate more than $382 million in 1-4 family home loans, but we also built our mortgage servicing portfolio to the year-end level of $1.138 billion. We regard our expertise in 1-4 family lending as a gateway to more retail banking relationships and, indeed, that is what happened in 2021 as the partnership between these two important parts of our bank was strong. We also recognize that as interest rates on home loans rise in 2022, the contribution from this line of business is likely to fall. We continue to invest in our technology platforms. It is important to remember that technology in a commercial bank affects not only interactions with customers, but also the complex inner-workings of the bank. When we can use technology to make our customers’ lives simpler, we become an ever more essential partner to them. But we also must raise our game inside the walls of the company by using automation and artificial intelligence to increase efficiency. Projects completed in 2021 or in process as we start 2022 include: • Continued digital banking platform enhancements • New contactless and mobile wallet payment solutions • Enterprise workflow which has saved hundreds of hours of staff time • Digital signature expansion • Streamlined business lending platform • Enterprise data warehouse that can help us make better data driven decisions • A new and greatly enhanced platform for our Trust Department As noted above, the asset quality in the loan portfolio continues its improvement. Our net charged off loans peaked in 2017 and have been consistently declining since

and we showed a net recovery of charged off loans in 2021. We also note that our nonperforming loans ratio declined 21.1 percent in 2021. We expect further improvement in 2022 and also note that, at 1.52 percent, our credit loss reserve as a percentage of bank loans (net of PPP) is very strong. Improvement in asset quality as well as in economic conditions allowed us to release significant credit loss re- serves into income in 2021. Just as adding reserves in 2020 hampered bank earnings, so, too, did the reserve releases create a wind at our back in 2021. We applaud the efforts of our Credit Administration team, our Special Assets Depart- ment and our bankers in the field as we have improved asset quality by working as One team. We believe we have been good managers of our share- holders’ capital. For several years, we’ve operated slightly below our peers in terms of various capital to asset ratios. We believe we’ve prudently leveraged our capital position. Due to the larger than expected expansion of the balance sheet in 2021, our tangible equity fell to 7.49 percent at year-end 2021. We believe the risk profile of the company has changed little over the past year; in fact one measure of this is reflected in our total capital to risk-weighted assets ratio of 13.09 percent, which was down slightly from 13.41 percent at year-end 2020. Our acquisition of Iowa First Bancshares Corp. fits nicely into our existing geographic footprint and allows us to show better earnings visibility into 2022-23. Iowa First operates in two major market in Southern Iowa, Mus- catine and Fairfield. When the merger is consummated, MidWest One will command the number one deposit market share in four counties in Southern Iowa: Mahaska (MWO operates in Oskaloosa), Keokuk (Sigourney and North En- glish), Jefferson (Fairfield) and Muscatine (West Liberty and Muscatine). This was announced as an all cash transaction and will add approximately $500 million to our asset base. The transaction is estimated to be accretive to 2022 earnings. Iowa First shares MidWest One ’s commitment to strong customer care and passionate community support.

Net Interest Margin (%)

2.80 2.90 3.00 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90

FY2017

FY2018

FY2019

FY2020

FY2021

MOFG

Peer

Midwest Banks

Price / LTM EPS (X)

6.00 14.00 22.00 30.00 38.00 46.00 54.00 62.00

FY2017

FY2018

FY2019

FY2020

FY2021

MOFG

Peer

Midwest Banks

Total Return Performance

360.00

310.00

260.00

210.00

160.00

110.00

60.00

12/31/2016

12/31/2017

12/31/2018

12/31/2019

12/31/2020

12/31/2021

MidWestOne Financial Group, Inc.

NASDAQ Composite Index

S&P U.S. BMI Banks - Midwest Region Index

MidWest One Financial Group, Inc. 2021 Annual Report

MidWest One Financial Group, Inc. 2021 Annual Report