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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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102 South Clinton St.
Iowa City, Iowa 52240
(319) 356-5800

March 20, 2015

Dear Shareholder:

        MidWestOne Financial Group, Inc., an Iowa corporation, has entered into an Agreement and Plan of Merger pursuant to which Central Bancshares, Inc. will merge with and into MidWestOne Financial Group, Inc., with MidWestOne Financial Group, Inc. remaining as the surviving corporation (the "Merger"). The consideration for the Merger includes $64.0 million of cash and 2,723,083 shares of our common stock, which represent approximately 32.5% of our outstanding shares of common stock prior to the issuance of such shares, based on our outstanding shares of common stock at February 27, 2015.

        We cordially invite you to attend the special meeting of shareholders of MidWestOne Financial Group, Inc. to be held at 10:00 a.m. (Central Time) on April 23, 2015, at the Company's headquarters located at 102 South Clinton Street, Iowa City, Iowa, at which our shareholders will consider a proposal to approve the Merger, pursuant to the Agreement and Plan of Merger, dated November 20, 2014, between MidWestOne Financial Group, Inc., and Central Bancshares, Inc., and issuance of shares of our common stock in connection therewith. Our shares of common stock are listed on The NASDAQ Global Select Market under the symbol "MOFG." Therefore, pursuant to Iowa law and Rule 5635(a) of The NASDAQ Stock Market LLC, the issuance of more than 20% of our outstanding common stock requires approval by a majority of the total votes cast on the proposal at a meeting of shareholders at which a quorum is present. Our shareholders will also be asked to approve a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies to approve the issuance of shares of our common stock. We encourage you to carefully read the accompanying Notice of Special Meeting of Shareholders and proxy statement, which discuss the business to be conducted at the meeting in greater detail.

        We recommend that you vote your shares "FOR" the Merger and issuance of shares of our common stock in connection therewith and "FOR" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

        This is a special meeting and is not our regular annual shareholders' meeting, which has been postponed until the summer as a result of the pending Merger. You are welcome to attend the special meeting although there will not be a reception or financial presentation, which will take place at the annual shareholders' meeting. Whether or not you plan to attend the meeting in person, please take the time to vote by completing and mailing the enclosed proxy card or by following the telephone or Internet voting procedures described on the proxy card. This will assure that your shares are represented at the meeting.

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102 South Clinton St.
Iowa City, Iowa 52240

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 23, 2015

To Our Shareholders:

        The special meeting of the shareholders of MidWestOne Financial Group, Inc. will be held at 10:00 a.m. (Central Time) on April 23, 2015, at the Company's headquarters located at 102 South Clinton Street, Iowa City, Iowa, for the following purposes:

1.

to approve the merger of Central Bancshares, Inc. with and into MidWestOne Financial Group, Inc., with MidWestOne Financial Group, Inc., remaining as the surviving corporation (the "Merger") pursuant to the Agreement and Plan of Merger, dated November 20, 2014, between MidWestOne Financial Group, Inc., and Central Bancshares, Inc. (the "Merger Agreement") and issuance of 2,723,083 shares of our common stock, subject to certain adjustments, in connection therewith;



2.

to approve any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in order to approve the Merger and issuance of shares of our common stock; and



3.

to transact such other business as may properly be brought before the special meeting, or any adjournments or postponements of the special meeting, including whether or not to adjourn the special meeting.

        Under Iowa law, we are required to obtain shareholder approval of the Merger and issuance of shares of our common stock in connection therewith. In addition, because our common stock is listed on The NASDAQ Global Select Market, Rule 5635(a) of The NASDAQ Stock Market LLC requires that the issuance of shares of our common stock in connection with the Merger receive the approval of our shareholders. Therefore, the proposal regarding the Merger and the issuance of shares of our common stock in connection therewith must be approved by a majority of the total votes cast on the proposal.

        In the event that it is necessary to postpone or adjourn the special meeting, for, among other reasons, the solicitation of additional votes to approve the proposal regarding the Merger and issuance of shares of our common stock in connection therewith, we also have submitted the question of adjournment to the shareholders as a separate matter for their consideration. The adjournment proposal must be approved by the affirmative vote of a majority of the votes cast on the proposal at the meeting.

        Your board of directors unanimously recommends that you vote "FOR" the Merger and issuance of shares of our common stock in connection therewith and "FOR" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

        Only shareholders of record on our books at the close of business on February 27, 2015, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. In the event there are an insufficient number of votes for a quorum, the meeting may be adjourned or postponed in order to permit us to further solicit proxies.

Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to Be Held on April 23, 2015.

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        Our proxy statement for the special meeting of shareholders to be held on April 23, 2015 and other proxy materials are available at http://irsolutions.snl.com/docs.aspx?iid=1021746.

Iowa City, Iowa
March 20, 2015

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE TAKE THE TIME TO VOTE BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD OR BY FOLLOWING THE TELEPHONE OR INTERNET VOTING PROCEDURES DESCRIBED ON THE PROXY CARD. IF YOU DO ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH. YOU MAY REVOKE THE PROXY CARD AT ANY TIME PRIOR TO ITS EXERCISE.

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MIDWESTONE FINANCIAL GROUP, INC.

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PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS

APRIL 23, 2015

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        This proxy statement and the accompanying proxy card are being furnished to our shareholders in connection with the solicitation by our board of directors of proxies to be used at the special meeting of shareholders to be held at 10:00 a.m. (Central Time) on April 23, 2015, at the Company's headquarters located at 102 South Clinton Street, Iowa City, Iowa, or at any adjournments or postponements of the meeting. This proxy statement is first being mailed to our shareholders on or about March 20, 2015.

QUESTIONS AND ANSWERS

        The following is information regarding the merger, the meeting and the voting process, presented in a question and answer format. As used in this proxy statement, the terms "MidWestOne Financial," "the Company," "we," "our," and "us" all refer to MidWestOne Financial Group, Inc. and its consolidated subsidiaries. The term "MidWestOne Bank" and "the Bank" refer to the Company's wholly-owned banking subsidiary, MidWestOne Bank, Iowa City, Iowa. The term "Central" refers to Central Bancshares, Inc., a Minnesota corporation. The term "Merger Agreement" refers to the Agreement and Plan of Merger, dated November 20, 2014, between the Company and Central, as may be amended. The term "Merger" refers to the merger of Central with and into the Company pursuant to the terms of the Merger Agreement. The term "Shareholder Agreement" refers to the Shareholder Agreement, dated November 20, 2014, by and among the Company, the John M. Morrison Revocable Trust #4 (the "Shareholder"), CBSI LLC (f/k/a CBS LLC) (the "TruPS Holder"), the holder of all outstanding preferred securities of CBI Capital Trust III (the "TruPS"), Riverbank Insurance Center, Inc., the holder of all outstanding Class A units (the "Insurance Agency Units") of Central Insurance Agency, LLC (the "Insurance Agency Owner") and John M. Morrison, an individual with common control over the Shareholder, the TruPS Holder and the Insurance Agency Owner ("Mr. Morrison").

Q:

What is a proxy?

A:

A proxy is a document, also referred to as a "proxy card," on which you authorize someone else to vote for you in the way that you want to vote. You may also choose to abstain from voting. The proxy is being solicited by our board of directors.

Q:

What is a proxy statement?

A:

A proxy statement is a document, such as this one, required by the Securities and Exchange Commission (the "SEC") that, among other things, explains the items on which you are asked to vote on the proxy card.

Q:

Why am I receiving this proxy statement and the accompanying proxy card?

A:

You are receiving this proxy statement and the accompanying proxy card from us because on February 27, 2015, the record date for the special meeting, you owned shares of MidWestOne Financial common stock. This proxy statement describes the matters that will be presented for consideration by our shareholders at the special meeting to be held on April 23, 2015. It also gives you information concerning the matters to assist you in making an informed decision.

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When you sign the enclosed proxy card or otherwise vote pursuant to the instructions set forth in the proxy card, you appoint the proxy holders as your representatives at the meeting. The proxy holders will vote your shares as you have instructed, thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you plan to attend the meeting, we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change and you are unable to attend in person.

If you have signed and returned the proxy card and an issue comes up for a vote at the meeting that is not identified on the card, the proxy holders will vote your shares, pursuant to your proxy, in accordance with their judgment.

Q:

What matters will be voted on at the meeting?

A:

You are being asked to vote on: (i) the Merger and issuance of 2,723,083 shares of our common stock, as may be adjusted, in connection therewith pursuant to the terms of the Merger Agreement; and (ii) any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in order to approve the issuance of shares of our common stock. These matters are more fully described in this proxy statement.

Q:

What is the Merger?

A:

The Company and Central have entered into the Merger Agreement, pursuant to which Central will merge with and into the Company, with the holders of Central common stock receiving, in the aggregate, 2,723,083 shares of the Company's common stock and $64.0 million in cash, subject to certain possible adjustments, as described further under "The Merger—Merger Consideration," in exchange for their shares of Central common stock (the "Merger Consideration").

The Shareholder owned all of the shares of Central's common stock on the date of the Merger Agreement and as of this proxy statement. The Merger was approved by the Shareholder by written consent on November 20, 2014. The Merger cannot be completed on the terms described in the Merger Agreement unless, among other things, the shareholders of the Company approve the Merger and issuance of our common stock in connection therewith.

Q:

What is the purpose of this vote?

A:

Our shareholders are being asked to approve the Merger and issuance of our common stock in connection therewith pursuant to Iowa law. In addition, because the Company's common stock is listed on The NASDAQ Global Select Market, Rule 5635(a) of The NASDAQ Stock Market LLC requires that our shareholders approve any proposed issuance of common stock in connection with the acquisition of another company if: (i) the common stock to be issued has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of the stock; or (ii) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. The number of shares to be issued in connection with the Merger represents approximately 32.5% of our outstanding shares of common stock prior to the issuance of such shares, based on our outstanding shares of common stock at February 27, 2015. As a result, our shareholders must approve the issuance of shares of our common stock in connection with the Merger pursuant to the Rules governing our listing on The NASDAQ Global Select Market as well as Iowa law.

In addition, our shareholders are being asked to approve any adjournment of the special meeting, if necessary or appropriate, to allow time for further solicitation of proxies in the event there are insufficient votes present at the special meeting, in person or by proxy, to approve the issuance of shares of our common stock.

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Q:

Why do the Company and Central want to merge?

A:

The Company and Central believe that the proposed Merger will create a strong, independent financial services institution, headquartered in Iowa with operations in Iowa, Minnesota, Wisconsin and southwest Florida, with greater resources and the potential to achieve greater earnings and balance sheet growth than each of the organizations on a standalone basis. The Company and Central believe their customers will appreciate the expanded geographic presence of the Company following the Merger, and their shareholders will benefit from owning stock in a company with greater capital and resources. The Merger is expected to create a platform for expanding the Company's branch network and, if opportunities arise, possible future strategic transactions and acquisition opportunities.

Q:

What will shareholders receive in the Merger?

A:

Central shareholders:    The shares of Central's common stock will be exchanged for 2,723,083 shares of the Company's common stock and $64.0 million in cash, subject to certain possible adjustments, as described further under "The Merger—Merger Consideration." Each outstanding share of the Company's common stock will remain outstanding after the Merger. The Company currently plans to finance the cash portion of the merger consideration through the combination of a dividend from the Bank and a loan from a third-party correspondent lender. It is estimated that holders of Central's common stock will own approximately 24.5% of the outstanding common stock of the Company following the Merger. As of the date of this proxy statement, the Shareholder owned all of Central's common stock.

Company shareholders:    Our shareholders will not receive any Merger Consideration if the Merger is completed but will continue to hold the shares of the Company's common stock that they currently hold. The Company will issue common stock and cash as Merger Consideration to the holders of Central common stock as set forth above and our current shareholders will be diluted. It is estimated that the current holders of the Company's common stock will own approximately 75.5% of the outstanding common stock of the Company following the Merger.

Q:

Will the value of the Merger Consideration change between now and the time of completion of the Merger?

A:

Although the number of shares of the Company's common stock that the Company will issue in the Merger is fixed, the value of the Merger Consideration will fluctuate based upon the market price of the Company's common stock. As of November 19, 2014, the value of the Merger Consideration to be paid by the Company was approximately $135.1 million, based on the closing price of $26.10 per share of Company common stock on that date. The value of the Merger Consideration to be paid by the Company will fluctuate to the extent that the price of the Company's common stock exceeds or is less than $26.10 per share at closing. The Merger Agreement also provides, however, that Central may terminate the Merger Agreement if the price of the Company's common stock decreases below a certain amount, but in such instance, the Company will have the option to increase the cash portion of the Merger Consideration to prevent such a termination, as described further under "The Merger—Merger Consideration."

Q:

When do you expect to complete the Merger?

A:

We are working to complete the Merger in the second quarter of 2015. However, the closing of the Merger is contingent on a number of closing conditions, and we cannot guarantee when or if all of these conditions will be met.

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Q:

How many votes may I cast?

A:

Generally, you are entitled to cast one vote for each share of stock you owned on the record date. The proxy card included with this proxy statement indicates the number of shares owned by an account attributable to you as of the record date.

Q:

How many votes are needed for each proposal?

A:

A majority of the votes cast on the proposals at the meeting will approve each matter that arises at the special meeting. The Merger and issuance of shares of our common stock in connection therewith and the adjournment of the special meeting are both considered to be non-routine matters. As a result, if your shares are held by a broker or other fiduciary, it cannot vote your shares on these matters unless it has received voting instructions from you.

Abstentions and broker non-votes, if any, will not be counted as votes cast, but will count for purposes of determining whether or not a quorum is present. Accordingly, so long as a quorum is present, abstentions and broker non-votes will have no effect on any of the matters presented for a vote at the special meeting.

Q:

How do I vote?

A:

After reviewing this document, submit your proxy using any of the proxy delivery or voting methods indicated on the proxy card. By submitting your proxy, you authorize the individuals named in it to represent you and vote your shares at the special meeting in accordance with your instructions. Your vote is important. Whether or not you plan to attend the special meeting, please submit your proxy card promptly in the enclosed envelope or vote telephonically or through the Internet by following the instructions on the proxy card.

If you sign and return your proxy card but do not mark the card to provide voting instructions, the shares represented by your proxy card will be voted "for" the Merger and issuance of shares of our common stock in connection therewith and "for" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

If you are a beneficial owner and a broker or other fiduciary is the record holder (which is usually referred to as "street name" ownership), then you received this proxy statement from the record holder of the shares that you beneficially own. The record holder should have given you instructions for directing how the record holder should vote your shares. It will then be the record holder's responsibility to vote your shares for you in the manner you direct.

If you want to vote in person, please come to the meeting. We will distribute written ballots to anyone who wants to vote at the meeting. Please note, however, that if your shares are held in the name of a broker or other fiduciary (i.e., in street name), you will need to arrange to obtain a legal proxy from the record holder in order to vote in person at the meeting. Even if you plan to attend the special meeting, we ask that you complete and return your proxy card in advance of the special meeting in case your plans change.

Q:

If I hold shares in the name of a broker, who votes my shares?

A:

Under the rules of various national and regional securities exchanges, brokers and other fiduciaries that hold securities on behalf of beneficial owners generally may vote on routine matters even if they have not received voting instructions from the beneficial owners for whom they hold securities, but are not permitted to vote on non-routine matters unless they have received such voting instructions. The Merger and issuance of shares of our common stock in connection therewith and the adjournment of the special meeting are considered to be non-routine matters. Thus, if you do not provide instructions to your broker as to how it should vote the shares

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beneficially owned by you, your broker generally will not be permitted to vote on the matters described in this proxy statement.

We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be brought before the meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures.

Q:

How will my shares of common stock held in the employee stock ownership plan be voted?

A:

We maintain an employee stock ownership plan ("ESOP") that owns 295,314 or 3.5% of the current outstanding shares of our common stock. Employees of the Company and the Bank participate in the ESOP. As of the record date, 274,057 shares have been allocated to ESOP participants. Each ESOP participant has the right to instruct the trustee of the plan how to vote the shares of our common stock allocated to his or her account under the ESOP. If an ESOP participant properly executes the voting instruction card, the ESOP trustee will vote the participant's shares in accordance with the participant's instructions. Shares of our common stock held in the ESOP, but not allocated to any participant's account, and allocated shares for which no voting instructions are received from participants, will be voted by the trustee in proportion to the results of the votes cast on the issue by the participants and beneficiaries.

Q:

What does it mean if I receive more than one proxy card?

A:

It means that you have multiple holdings reflected in our stock transfer records and/or in accounts with stockbrokers. Please sign and return ALL proxy cards to ensure that all of your shares are voted.

Q:

What if I change my mind after I return my proxy card?

A:

If you hold your shares in your own name, you may revoke your proxy and change your vote at any time before the polls close at the meeting. You may do this by:

•

signing another proxy card with a later date and returning that proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717, by mail;

•

timely submitting another proxy via the telephone or Internet, if that is the method that you originally used to submit your proxy;

•

sending notice to us that you are revoking your proxy; or

•

voting in person at the meeting.

All written notices of revocation and other written communications with respect to revocation of proxies should be sent to: MidWestOne Financial Group, Inc., 102 South Clinton St., Iowa City, Iowa 52240, Attention: Corporate Secretary. If you hold your shares in the name of your broker or other fiduciary and desire to change your voting instructions, you will need to contact that party directly.

Q:

How many votes do we need to hold the special meeting?

A:

A majority of the shares that are outstanding and entitled to vote as of the record date must be present in person or by proxy at the meeting in order to hold the meeting and conduct business. Shares are counted as present at the meeting if the shareholder either:

•

is present and votes in person at the meeting; or

•

has properly submitted a signed proxy card or other form of proxy (through the telephone or Internet).

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On February 27, 2015, the record date, there were 8,370,309 shares of common stock issued and outstanding. Therefore, at least 4,185,155 shares need to be present, in person or by proxy, at the special meeting.

Q:

What options do I have in voting on each of the proposals?

A:

You may vote "for," "against" or "abstain" on each proposal properly brought before the meeting.

Q:

How does the board recommend that I vote?

A:

The board of directors of the Company approved the Merger Agreement, determined that the issuance of shares of our common stock in connection with the Merger is in the best interests of the Company's shareholders, and unanimously recommends that Company shareholders vote "FOR" the Merger and issuance of shares of our common stock in connection therewith and "FOR" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

Q:

How will my shares be voted if I return a blank proxy card?

A:

If you sign and date your proxy card but do not indicate how you want to vote, your proxies will be counted as a vote "FOR" the Merger and issuance of shares or our common stock in connection therewith and "FOR" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, and in the discretion of the persons named as proxies on any other matters properly presented at the special meeting.

Q:

Where do I find the voting results of the meeting?

A:

If available, we will announce voting results at the meeting. The voting results also will be disclosed in a Form 8-K that we expect to file within four business days after the meeting.

Q:

Do I have the right to dissent and obtain the "fair value" for my shares?

A:

No. None of Iowa corporate law, our articles of incorporation or our bylaws provide our shareholders with the right to dissent with respect to the Merger or the issuance of shares of our common stock in connection with the Merger.

Q:

Are there any restrictions on the shares being issued?

A:

Yes. The shares of our common stock issued in the Merger will be issued under an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"). The shares will therefore be restricted securities and may not be sold absent registration under the Securities Act or pursuant to Rule 144 under the Securities Act or another available exemption from registration. Additionally, the Shareholder and certain of its affiliated entities are parties to the Shareholder Agreement, which generally prohibits the sale of our common stock for a period of one year following the consummation of the Merger.

Q:

What are the material U.S. federal income tax consequences of the Merger to Company shareholders?

A:

The Merger, the issuance of shares of our common stock, and the other transactions associated with the Merger are not expected to have any tax effect on our current shareholders for U.S. federal income tax purposes.

The U.S. federal income tax consequences of the Merger described above and elsewhere in the proxy statement may not apply to all shareholders and will depend on each shareholder's specific factual

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situation. Accordingly, we strongly urge you to consult your own independent tax advisor for a full understanding of the particular tax consequences of the Merger to you.

Q:

Who bears the cost of soliciting proxies?

A:

We will bear the cost of soliciting proxies. In addition to solicitations by mail, our officers, directors or employees may solicit proxies in person or by telephone. These persons will not receive any special or additional compensation for soliciting proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.

Q:

Who can answer my questions?

A:

You should contact the Company's Corporate Secretary at 102 South Clinton Street, P.O. Box 1700, Iowa City, Iowa 52244-1700, via telephone at (319) 356-5800 or via email at webmaster@midwestone.com.

YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON.

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SUMMARY

        This summary highlights selected information contained elsewhere in this document. This summary may not contain all of the information important to you. We urge you to read this entire document carefully, including the exhibits and appendices, to make sure that you understand the Merger fully. See "Where You Can Find More Information" included elsewhere in this document. Each item in this summary contains a reference to the page in this document where such item is discussed in further detail.

The Companies (page 29 for the Company and page 29 for Central)

MidWestOne Financial Group, Inc.

        MidWestOne Financial Group, Inc. is a $1.8 billion holding company headquartered in Iowa City, Iowa. The Company provides financial services to individuals, businesses, governmental units and institutional customers in central and east-central Iowa through its wholly owned subsidiaries, MidWestOne Bank and MidWestOne Insurance Services, Inc. As of February 28, 2015, the Bank operated in central and east-central Iowa through 25 full service banking locations. The Bank is actively engaged in many areas of commercial banking, including: acceptance of demand, savings and time deposits; making commercial, real estate, agricultural and consumer loans; and other banking services tailored for its individual customers. As of December 31, 2014, the Company, on a consolidated basis, had assets of approximately $1.8 billion, deposits of approximately $1.4 billion, and shareholders' equity of approximately $192 million.

        The Company's executive offices are located at 102 South Clinton Street, Iowa City, Iowa 52240, its telephone number is (319) 356-5800, and its website is maintained at www.midwestone.com. The Company's common stock is traded on The NASDAQ Global Select Market under the symbol "MOFG."

Central Bancshares, Inc.

        Central Bancshares, Inc. is a $1.18 billion holding company headquartered in Golden Valley, Minnesota. Central provides commercial and retail loan and deposit services principally to customers within the Minneapolis-St. Paul metropolitan area of Minnesota, western Wisconsin and southwest Florida through its wholly owned subsidiary, Central Bank. As of February 28, 2015, Central Bank operated in Minnesota through 13 banking locations, in Wisconsin through 7 banking locations and in Florida through 2 banking locations. The southwest area of Florida makes up approximately four percent of Central's consolidated assets and operations. As of December 31, 2014, Central, on a consolidated basis, had assets of approximately $1.18 billion, deposits of approximately $1.06 billion, and shareholders' equity of approximately $80.4 million.

        Central's executive offices are located at 945 Winnetka Avenue North, Suite 145, Golden Valley, Minnesota 55427, its telephone number is (763) 512-5299, and its website is maintained at www.centralbnk.com.

Special Meeting of Shareholders (page 30)

        The Company will hold its special meeting of shareholders on April 23, 2015, at 10:00 a.m. (Central Time) at the Company's headquarters located at 102 South Clinton Street, Iowa City, Iowa, to vote on: (i) the Merger and issuance of 2,723,083 shares of our common stock in connection with the Merger; and (ii) any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in order to approve the issuance of shares of our common stock.

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Record Date (page 30)

        If you owned shares of our common stock at the close of business on February 27, 2015, the record date for the special meeting, you are entitled to vote on the issuance of shares of our common stock in connection with the Merger, the adjournment of the special meeting, as well as any other matters considered at the special meeting. On the record date, there were 8,370,309 shares of our common stock outstanding. You will have one vote at the meeting for each share of common stock you owned on the record date

Voting (page 30)

        A majority of the votes cast at the meeting is required to approve each of (i) the Merger and issuance of shares of our common stock in connection therewith; and (ii) the adjournment of the special meeting. As of February 11, 2015, our directors and executive officers and their affiliates beneficially owned approximately 7.1% of the outstanding shares of our common stock.

Appraisal Rights (see page 31)

        Neither the Merger nor the issuance of shares of our common stock in connection with the Merger creates a right to dissent or otherwise seek appraisal rights for our shareholders.

The Merger (page 33)

        Under the terms of the Merger Agreement, Central will merge with and into the Company, with the Company being the surviving corporation. Following the Merger, each of the Bank and Central Bank will continue in existence as wholly owned subsidiaries of the Company. The Merger Agreement is attached as Appendix A and is incorporated into this proxy statement by reference. We encourage you to read the Merger Agreement carefully as it is the legal document that governs the Merger.

Merger Consideration (page 33)

        If and when the Merger is consummated, each outstanding share of Central common stock will be exchanged for a pro rata portion of 2,723,083 shares of the Company's common stock and $64.0 million in cash, subject to certain possible adjustments. The Company currently plans to finance the cash portion of the Merger Consideration through the combination of a dividend from the Bank and a loan from a third party correspondent lender.

Effective Time of the Merger (see page 33)

        The Merger is currently expected to close in the second quarter of 2015. However, the closing of the Merger is conditioned on the satisfaction of certain conditions to closing contained in the Merger Agreement. Neither the Company nor Central can predict the actual date on which the Merger will be completed because the closing is subject to factors beyond each company's control.

Our Reasons for the Merger and Board Recommendation (see page 36)

        The Company and Central believe that the proposed Merger will create a strong, independent financial services institution, headquartered in Iowa with operations in Iowa, Minnesota, Wisconsin and southwest Florida, with greater resources and the potential to achieve greater earnings and balance sheet growth than each of the organizations on a standalone basis. You can find a more detailed discussion of the background of the Merger and our reasons for the Merger in this proxy statement under "The Merger—Background of the Merger" and "The Merger—Our Reasons for the Merger and Board Recommendation." The discussion of our reasons for the Merger includes forward-looking statements about possible or assumed future results of our operations and the performance of the

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Company after the Merger. For a discussion of factors that could affect these future results, see "Cautionary Note Regarding Forward-Looking Statements."

        Our board of directors has determined that the issuance of shares of our common stock in connection the Merger, the Merger Agreement and the transactions contemplated by the Merger Agreement are advisable and in the best interests of the Company and our shareholders and has approved the Merger Agreement. Our board of directors unanimously recommends that our shareholders vote "FOR" the approval of the Merger and issuance of shares or our common stock in connection therewith.

Fairness Opinion of Sandler O'Neill & Partners, L.P., the Company's Financial Advisor (page 39)

        Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") has delivered a written opinion, dated November 20, 2014, to the Company's board of directors that the Merger Consideration to be paid in the Merger is fair to the Company from a financial point of view. We have attached this opinion to this document as Appendix B. You should read this opinion carefully to understand the procedures followed, matters considered and limitations on the reviews undertaken by Sandler O'Neill in providing its opinion.

Regulatory Approvals (page 47)

        The Merger Agreement provides that closing of the Merger is conditioned on the receipt of all required regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve") and the Minnesota Department of Commerce.

Management and Operations after the Merger (page 47)

        The present management groups of both companies will share the responsibility of managing the Company after the completion of the Merger. The executive management team of the Company following the Merger will include officers of both the Company and Central. The board of directors of the Company following the Merger will initially be comprised of thirteen members, eight designated by the Company and five designated by Central.

Interests of Certain Persons in the Merger (page 51)

        Each of the directors and executive officers of the Company owns shares of our common stock, as further detailed under "Security Ownership of Certain Beneficial Owners and Management." Certain directors and officers of the Company will also have positions with the Company after the Merger, and certain directors and officers of Central have entered into employment agreements and/or change in control agreements with the Company. Additionally, certain directors and officers of the Company will receive the benefit of the Shareholder Agreement. See "The Merger Agreement—Shareholder Agreement." The Company will provide indemnification and directors' and officers' liability insurance for the Company's directors and officers.

NASDAQ Listing (page 55)

        The Company will list the shares of its common stock to be issued in connection with the Merger on The NASDAQ Global Select Market under the symbol "MOFG."

Restrictions on the Resale of the Shares of Our Common Stock (page 55)

        The shares of our common stock issued in the Merger will be issued under an exemption from registration under the Securities Act. The shares will therefore be restricted securities and may not be sold absent registration under the Securities Act or pursuant to Rule 144 under the Securities Act or

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another available exemption from registration. Additionally, the sole shareholder of Central and certain of its affiliated entities are parties to the Shareholder Agreement, which generally prohibits the sale of our common stock for a period of one year following the consummation of the Merger. The Shareholder Agreement also grants to the sole Shareholder of Central certain registration rights and permits the sales of common stock issued in the Merger pursuant to such registrations beginning 180 days after the closing of the Merger.

Conditions to Completion of the Merger (page 55)

        The completion of the Merger depends on a number of conditions being met. Subject to exceptions described in the Merger Agreement, these include:

•

the receipt of the required approvals from our shareholders;



•

the receipt of all necessary consents and approvals;



•

the accuracy of the respective representations and warranties of the Company and Central in the Merger Agreement;



•

compliance in all material respects by each of the Company and Central with their respective covenants and agreements in the Merger Agreement;



•

the absence of any event that has had or would be reasonably likely to have a material adverse effect on the other party;



•

the receipt from McGladrey LLP ("McGladrey") of a tax opinion that the Merger qualifies as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");



•

the absence of any proceeding, statute, rule, regulation, injunction or other order prohibiting the consummation of performance of the transactions contemplated by the Merger Agreement;



•

the approval for listing on The NASDAQ Global Select Market of the shares of our common stock to be issued in the Merger;



•

compliance by Central's shareholders and affiliates subject to the Shareholder Agreement with the covenants and obligations in the Shareholder Agreement;



•

the amount of Central's adjusted shareholder's equity not being less than $70 million; and



•

the receipt of financing to fund the Merger Consideration.

Termination of the Merger Agreement (page 61)

        The parties can mutually agree at any time to terminate the Merger Agreement without completing the Merger. Also, either party can decide, without the consent of the other, to terminate the Merger Agreement if the Merger has not been completed by June 30, 2015, unless the failure to complete the Merger by that time is due to a violation of the Merger Agreement by the party seeking to terminate the Merger Agreement.

        In addition, either the Company or Central can terminate the Merger Agreement if the conditions to its respective obligation to complete the Merger have not been satisfied, other than through the failure of that party to comply with its obligations under the Merger Agreement or the Shareholder Agreement.

        Additionally, the Company can terminate the Merger Agreement if certain issues with respect to the titles or surveys of Central's real property are discovered and Central fails to correct such issues, and either the Company or Central can terminate the Merger Agreement if environmental issues

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relating to Central's real property are discovered and the costs to remediate such issues exceed $1,000,000.

        Either the Company or Central can also terminate the Merger Agreement if any regulatory agency required to approve the proposed transactions has issued a final, non-appealable order denying the proposed transactions, or any application, filing or notice for regulatory approval has been withdrawn at the request or recommendation of the applicable regulatory agency.

        The Merger Agreement also provides that Central may terminate the Merger Agreement if the price of the Company's common stock decreases below a certain amount, but, in such instance, the Company will have the option of increasing the cash portion of the Merger Consideration to prevent such a termination.

Shareholder Agreement (page 63)

        Concurrently with the execution of the Merger Agreement, the Company, the Shareholder, the TruPS Holder, the Insurance Agency Owner and Mr. Morrison entered into the Shareholder Agreement. The Shareholder Agreement contains many important agreements between the parties thereto with respect to the Merger, certain special rights and obligations relating to the shares of common stock of the Company issued in conjunction with the Merger and certain other transactions between the parties. The Shareholder Agreement is attached as Exhibit G to the Merger Agreement found in Appendix A and is incorporated into this proxy statement by reference. We encourage you to read the Shareholder Agreement carefully for a complete understanding of its terms and provisions and the obligations of the Company, the Shareholder, the TruPS holder, the Insurance Agency Owner and Mr. Morrison thereunder.

Certain Material U.S. Federal Income Tax Consequences (page 64)

        The Merger, the issuance of shares of our common stock in connection with the Merger, and the other transactions associated with the Merger are not expected to have any tax effect on our current shareholders for U.S. federal income tax purposes.

        The parties intend for the Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. It is a condition to the Company and Central's obligation to complete the Merger that they receive an opinion from McGladrey, dated the closing date of the Merger, to the effect that the Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code.

        See "Material U.S. Federal Income Tax Consequences of the Merger" for a more detailed discussion of the tax consequences of the Merger.

        The U.S. federal income tax consequences described above may not apply to all holders of the Company's common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your independent tax advisor for a full understanding of the particular tax consequences of the Merger and the related transactions to you.

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MARKET PRICE AND DIVIDEND INFORMATION

        Our common stock is traded on The NASDAQ Global Select Market under the symbol "MOFG." The following table sets forth the reported high and low sales prices of shares of our common stock, and the quarterly cash dividends per share declared, in each case for the periods indicated. The high and low sales prices are based on intraday sales for the periods reported.

        On November 20, 2014, the last full trading day before the public announcement of the Merger Agreement, the high and low sales prices of shares of our common stock as reported on The NASDAQ Global Select Market were $25.98 and $25.32, respectively. On March 4, 2015, the last practicable trading day before the date of this proxy statement, the high and low sales prices of shares of our common stock as reported on The NASDAQ Global Select Market were $28.51 and $28.02, respectively.

        As of March 4, 2015, the last date prior to printing this proxy statement for which it was practicable to obtain this information, there were approximately 480 registered holders of our common stock and approximately 1,938 beneficial holders and one registered holder of Central common stock.

        Each of our shareholders is advised to obtain current market quotations for our common stock. The market price of our common stock will fluctuate between the date of this proxy statement and the date of completion of the Merger. No assurance can be given concerning the market price of our common stock before or after the effective date of the Merger. Changes in the market price of our common stock prior to the completion of the Merger will affect the market value of the stock portion of the Merger Consideration that Central shareholders will receive upon completion of the Merger.

        Historical market price information regarding Central is not provided because there is no public market for Central's common stock. Central has elected to be taxed as a Subchapter S corporation and, therefore, the Shareholder is responsible to pay any tax liabilities of Central. Central has historically paid dividends to the Shareholder to, in part, allow the Shareholder to pay the tax liability associated with Central's earnings. Central paid a dividend of $1.8 million between January 1, 2015, and the date of this proxy statement and expects to pay another dividend of $10.0 million to the Shareholder between the date of this proxy statement and the date of the Merger. Dividends of $9.6 million were paid in 2014, $9.6 million were paid in 2013 and $9.0 million were paid in 2012. Pursuant to the terms of the Merger Agreement, Central may declare and pay tax dividends equal to forty percent of Central's net income earned between January 31, 2015 and the effective time of the Merger.

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SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY

        The following table presents selected consolidated historical financial data for the periods and at the dates indicated for the Company. You should read the following table in conjunction with the consolidated financial statements and notes thereto included in reports that the Company has previously filed with the SEC.

        Historical results do not necessarily indicate the results that you can expect for any future period. Management believes that all adjustments (which include only normal recurring adjustments) necessary to arrive at a fair presentation of the Company's interim results of operations have been included.

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SUPPLEMENTARY FINANCIAL INFORMATION OF THE COMPANY

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SELECTED HISTORICAL FINANCIAL DATA OF CENTRAL

        The following table presents selected consolidated historical financial data for the periods and at the dates indicated for Central. You should read the following table in conjunction with the consolidated financial statements and notes thereto included in this proxy statement beginning on page F-1.

        Historical results do not necessarily indicate the results that you can expect for any future period. Management believes that all adjustments (which include only normal recurring adjustments) necessary to arrive at a fair presentation of Central's interim results of operations have been included.

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SELECTED CONSOLIDATED PRO FORMA FINANCIAL DATA OF
THE COMPANY AND CENTRAL

        The following table shows selected consolidated pro forma financial data reflecting the merger of Central with the Company, assuming the companies had been combined at the dates and for the periods shown. The pro forma amounts reflect certain purchase accounting adjustments, which are based on estimates that are subject to change depending on fair values as of the Merger completion date. These adjustments are described in the notes to the unaudited pro forma combined financial statements that follow this presentation under the caption "Unaudited Pro Forma Combined Condensed Consolidated Financial Information." The pro forma financial information in the table below does not include any projected cost savings, revenue enhancements or other possible financial benefits of the Merger to the Company and does not attempt to suggest or predict future results. The pro forma financial data also assumes that 2,723,083 shares of Company common stock were issued pursuant to the Merger. This information also does not necessarily reflect what the historical financial condition or results of operations of the Company following the Merger would have been had the Company and Central been combined as of the dates and for the periods shown.

 

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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL INFORMATION

        The accompanying unaudited pro forma combined balance sheet data assumes the Merger took place as of December 31, 2014. The unaudited pro forma consolidated balance sheet data combines the audited consolidated balance sheet data of the Company as of December 31, 2014, and the audited consolidated balance sheet data of Central as of December 31, 2014.

        The accompanying unaudited pro forma combined statement of income data presents the audited consolidated statement of income data of the Company for the year ended December 31, 2014, combined with Central's audited consolidated statement of income data for the year ended December 31, 2014. The unaudited pro forma combined statement of income gives effect to the Merger as if it had occurred as of the beginning of the period.

        The unaudited pro forma financial information is provided for informational purposes only. The unaudited pro forma financial information is not necessarily, and shall not be assumed to be, an indication of the results that would have been achieved had the Merger been completed as of the dates presented or that may be achieved in the future.

        The pro forma financial information includes purchase accounting adjustments to record the assets and liabilities of Central at their estimated fair values and to record certain exit costs related to Central. The pro forma adjustments included herein are subject to updates as additional information becomes available and as additional analyses are performed. Any change in the fair value of the net assets of Central will change the estimated purchase accounting adjustments and the amount of the purchase price allocable to goodwill. Additionally, changes to Central's shareholders' equity, including net income from January 1, 2015, through the date the Merger is completed, will also change the amount of goodwill recorded. Final adjustments may be materially different from the unaudited pro forma adjustments presented herein.

        The Company and Central anticipate that the Merger will provide the Company with financial benefits that include increased revenue opportunities and reduced operating expenses, but these financial benefits are not reflected in the pro forma information. Accordingly, the pro forma information does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the Company would have been had the companies been combined during the periods presented.

        Historical results do not necessarily indicate the results that you can expect for any future period. We believe that all adjustments (which include only normal recurring adjustments) have been included that are necessary to arrive at a fair presentation of the results of operations.

        The unaudited pro forma financial information presented below should be read together with the historical financial statements of the Company and Central, including the related notes and the other financial information in this document, including Central's financial statements beginning on page F-1 and in reports that the Company has previously filed with the SEC.

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Pro Forma Statement of Income for the Year Ended December 31, 2014 (Unaudited)

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Pro Forma Statement of Condition for the Year Ended December 31, 2014 (Unaudited)

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UNAUDITED COMPARATIVE PRO FORMA PER SHARE DATA

        The following table presents certain comparative historical, pro forma and pro forma equivalent per share financial information for the Company and Central that reflects the Merger using the purchase method of accounting.

        The pro forma and equivalent pro forma per share information gives effect to the Merger as if the Merger had been effective on December 31, 2014. The information in the following table is based on, and should be read together with, the historical financial information that appears elsewhere in this document and in the Company's audited financial statements previously filed with the SEC and Central's audited financial statements beginning on page F-1 (together, the "Unaudited Pro Forma Combined Condensed Consolidated Financial Information").

        The information listed as "Equivalent Pro Forma Per Central Share" was obtained by multiplying the pro forma amount listed by the Company by 418.94, which is the number of shares of our common stock to which each share of Central would convert, based on the number of shares outstanding on December 31, 2014.

        We expect that we will incur Merger and integration charges as a result of combining the Company and Central. We also anticipate that the Merger will provide the Company with financial benefits that include reduced operating expenses and the opportunity to earn more revenue. The pro forma information does not reflect these expenses or benefits and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the Company would have actually been had our companies been combined as of the dates or for the periods presented.

        The market price of the Company's common stock will likely fluctuate between the date of this document, the date on which the Merger is completed and after the Merger. Because the number of shares to be received by Central shareholders is fixed, the value of the Merger Consideration paid by the Company will fluctuate as the price of the Company's common stock changes.

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RISK FACTORS

        In addition to the other information included in this proxy statement, including the matters addressed under "Cautionary Note Regarding Forward-Looking Statements," you should carefully consider the following risks before deciding whether to vote for the issuance of shares of our common stock in connection with the Merger. You should also consider the other information in this proxy statement and the other documents we file with the SEC, especially the Risk Factors included in the Company's Form 10-K for the year ended December 13, 2014. See "Where You Can Find More Information" on page 87.

The number of shares to be issued in the Merger is generally fixed and will not be adjusted to reflect changes in the Company's stock value prior to the effective time of the Merger.

        The Merger Agreement provides that each of the outstanding shares of Central's common stock will be converted into the right to receive a pro rata portion of 2,723,083 shares of the Company's common stock and $64.0 million of cash. The number of shares is generally fixed and will not be adjusted to reflect any changes in the value of the Company's common stock between the date of the Merger Agreement and the effective time of the Merger. The number of shares could be adjusted if the value of the Company's common stock declines, to preserve the tax treatment of the Merger, as discussed further under "The Merger—Merger Consideration." When you vote, you will not know the exact value of the shares of the Company's common stock that Central shareholders will receive in the Merger, and the value of the Merger Consideration to be paid to Central's shareholders will not be known at the time of the special meeting.

        Moreover, the value of the Company's common stock may also rise or fall after the Merger. Stock price changes may result from a variety of factors, including completion of the Merger, general market and economic conditions, changes in our respective businesses, operations and prospects and regulatory considerations. Many of these factors are beyond the Company's control, and it is possible that the market value of the Company's common stock at the time of the Merger and afterward may be substantially higher or lower than current market value.

The fairness opinion obtained by the Company from its financial advisor will not reflect changes in circumstances prior to the Merger.

        Sandler O'Neill, the Company's financial advisor, delivered a "fairness opinion" to the Company's board of directors. The fairness opinion provides that, as of the date the parties executed the Merger Agreement, the Merger Consideration is fair from a financial point of view to the Company. The opinion does not reflect changes that may occur or may have occurred after the date the Merger Agreement was executed, including changes to the operations and prospects of Central and/or the Company, changes in general market and economic conditions or other factors. Any such changes to the facts on which the opinion is based, or other factors, may alter the relative value of Central and/or the Company.

Future results of the Company may differ materially from the pro forma financial information presented in this proxy statement.

        The Company's future results may be materially different from those shown in the pro forma financial information presented in this proxy statement that show only a combination of the Company's and Central's historical results. Charges that the Company will record due to the Merger may be higher or lower than estimated, depending upon how costly or difficult it is to integrate the two companies. Furthermore, these charges may decrease the Company's capital that could be used for income-earning investments in the future.

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Difficulties in combining the operations of Central and the Company may prevent the Company from achieving the expected benefits from the Merger.

        The Company may not be able to achieve fully the strategic objectives and operating efficiencies it hopes to achieve in the Merger. The success of the Merger will depend on a number of factors, including the Company's ability to:

•

integrate the operations of Central and the Company, including successfully integrating and combining the technology, financial, credit, security and legal reporting systems and controls of the Company and Central;



•

maintain existing relationships with depositors, especially Central's depositors, so as to minimize withdrawals of deposits after the Merger;



•

maintain and enhance existing relationships with borrowers so as to limit unanticipated losses from loans made by Central Bank and the Bank;



•

control the incremental non-interest expense so as to maintain overall operating efficiencies; and



•

compete effectively in the communities served by Central and the Company.

The market price of our common stock may decline as a result of the Merger.

        The market price of our common stock may decline as a result of the Merger for a number of reasons including if:

•

the Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts;



•

the effect of the Merger on our business and prospects is not consistent with the expectations of financial or industry analysts; or



•

investors react negatively to the effect on our business and prospects from the Merger.

Inability to satisfy closing conditions could delay or prevent completion of the Merger.

        Completion of the Merger is conditioned upon the receipt and continued effectiveness of all material governmental authorizations, consents, orders and approvals. The Company and Central intend to pursue all required approvals in accordance with the Merger Agreement. No assurance can be given that the required consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, if all such other consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the Merger Agreement. See "The Merger Agreement—Conditions to Completion of the Merger" for a discussion of the conditions to the completion of the Merger and "The Merger—Regulatory Approvals" for a description of the regulatory approvals necessary in connection with the Merger.

Uncertainties associated with the Merger may cause a loss of employees and may otherwise affect the future business and operations of the Company and Central.

        The Company's success after the Merger will depend in part upon its ability to retain key employees of the Company and Central. Current and prospective employees of the Company and Central may experience uncertainty about their roles with the Company following the Merger. This may adversely affect the ability of each of the Company and Central to attract and retain key management, sales, marketing, technical and other personnel. In addition, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Company following the Merger. Accordingly, no assurance can be given that the combined company

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will be able to attract or retain key employees of the Company and Central to the same extent that those companies have been able to attract or retain their own employees in the past. These factors could contribute to the Company not achieving the expected benefits from the Merger within the desired time frames, if at all.

If the Merger is not completed, the Company will have incurred substantial expenses without realizing the expected benefits of the Merger.

        The Company has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing this proxy statement and all filing and other fees paid to the SEC in connection with the Merger. If the Merger is not completed, the Company would have to recognize these expenses without realizing the expected benefits of the Merger.

Holders of the Company's common stock will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

        Holders of the Company's common stock currently have the right to vote in the election of the board of directors and on other matters affecting the Company. As of the date of this proxy statement, Central had one shareholder and it is currently expected that the Shareholder will receive shares in the Merger constituting approximately 24.5% of the outstanding shares of the Company's common stock immediately after the Merger. As a result, current shareholders of the Company as a group will own approximately 75.5% of the outstanding shares of the Company's common stock immediately after the Merger. Because of this, current Company shareholders may have less influence than they now have on the management and policies of the Company.

The Company will issue a large number of shares of common stock in connection with the Merger, which will result in substantial dilution to our existing shareholders. Our shareholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

        The consideration for the Company's acquisition of Central consists of cash and shares of our common stock. The Company will issue 2,723,083 shares pursuant to the Merger, which represents approximately 32.5% of our voting shares prior to the issuance, based on our outstanding capital stock at February 27, 2015. The Company's issuance of shares will result in substantial percentage dilution of our existing shareholders' ownership interests. The Company's issuance of shares of our common stock may also have an adverse impact on the Company's net income per share in fiscal periods that include (or follow) the closing of the Merger. If the Company is unable to realize the strategic and financial benefits currently anticipated from the Merger, our shareholders will have experienced substantial dilution of their ownership interest without receiving any commensurate benefit.

As shares of our common stock issued in the Merger become eligible for resale, the sale of those shares could adversely impact our stock price.

        The shares of our common stock issued in the Merger will be restricted securities and may not be sold absent registration under the Securities Act or pursuant to Rule 144 of the Securities Act or another available exemption from registration. Accordingly, the shares of our common stock issued in the Merger, which represent a substantial number of shares of our common stock, will become eligible for resale 180 days after the closing date under Rule 144. Pursuant to the Shareholder Agreement, the Shareholder is entitled to certain customary registration rights relating to the shares of common stock of the Company it receives in conjunction with the Merger. Our stock price may suffer a significant decline if there were to be a sudden increase in the number of shares sold in the public market or market perception that the increased number of shares available for sale will exceed the demand for our common stock. However, the Shareholder Agreement generally restricts the sole shareholder of

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Central and certain of its related entities from selling their shares of our common stock until the first anniversary of the effective time of the Merger without our prior approval.

The existence of a large shareholder may adversely affect the market price of our common stock and could delay, hinder or prevent a change in corporate control or result in the entrenchment of management and the board of directors, and the large shareholder has a contractual right to maintain its percentage ownership in our company.

        As of the date of this proxy statement, the Shareholder owned all of the outstanding common stock of Central, and as a result of the Merger, will own 24.5% of our common stock. Accordingly, subject to the terms of the standstill arrangements set forth in the Shareholder Agreement, the Shareholder will likely have the ability to influence the outcome of matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all our assets. In addition, the Shareholder may have the ability to influence our management, affairs and operations. Accordingly, this concentration of ownership may harm the market price of our common stock by delaying, deferring or preventing a change in control or impeding a merger, consolidation, takeover or other business combination. Additionally, Mr. Morrison, the individual who controls the Shareholder, will also be a director of the Company after the consummation of the Merger and will be able to influence the Company's management, affairs and operations in that capacity as well.

        The ownership of a large block of stock by a single shareholder may also reduce our market liquidity. Should the Shareholder determine to sell any of its holdings in the future, sales of substantial amounts of our common stock on the market, or even the possibility of these sales, may adversely affect the market price of our common stock. These sales, or even the possibility of these sales, also may make it more difficult for us to raise capital through the issuance of equity securities at a time and at a price we deem appropriate.

        Moreover, the Shareholder has a contractual right to maintain its percentage ownership in the Company. Specifically, under the terms of the Shareholder Agreement, if the Company were to engage in a new issuance of our securities, the Shareholder has preemptive rights to purchase an amount of our securities that would enable it to maintain its same percentage of ownership in the Company following the new issuance. The Shareholder has these rights until the earlier to occur of November 20, 2017 and the date on which the Shareholder or Mr. Morrison beneficially own less than 10% of the outstanding shares of our common stock. Thus, while other holders of our securities would risk suffering a reduction in percentage ownership in connection with a new issuance of securities by us, the Shareholder and Mr. Morrison would, through this preemptive right, have the opportunity to avoid a reduction in percentage ownership.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        All statements other than statements of historical facts included or incorporated by reference in this proxy statement, including, without limitation, statements in this proxy statement regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "should," "could," "would," "plans," "intend," "project," "estimate," "forecast," "may" or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

        Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following:

•

the risks of mergers, including the merger with Central, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;



•

credit quality deterioration or pronounced and sustained reduction in real estate market values could cause an increase in our allowance for credit losses and a reduction in net earnings;



•

our management's ability to reduce and effectively manage interest rate risk and the impact of interest rates in general on the volatility of our net interest income;



•

changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing;



•

fluctuations in the value of our investment securities;



•

governmental monetary and fiscal policies;



•

legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators (particularly with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the extensive regulations promulgated and to be promulgated thereunder, as well as the Basel III regulatory capital reforms and issued rules), and changes in the scope and cost of Federal Deposit Insurance Corporation insurance and other coverages;



•

the ability to attract and retain key executives and employees experienced in banking and financial services;



•

the sufficiency of the allowance for loan losses to absorb the amount of actual losses inherent in our existing loan portfolio;



•

our ability to adapt successfully to technological changes to compete effectively in the marketplace;



•

credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio;



•

the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies,

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money market and other mutual funds, and other financial institutions operating in our markets or elsewhere or providing similar services;

•

the failure of assumptions underlying the establishment of allowances for loan losses and estimation of values of collateral and various financial assets and liabilities;



•

volatility of rate-sensitive deposits;



•

operational risks, including data processing system failures or fraud;



•

asset/liability matching risks and liquidity risks;



•

the costs, effects and outcomes of existing or future litigation;



•

changes in general economic or industry conditions, nationally or in the communities in which we conduct business;



•

changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; and



•

other factors and risks described under "Risk Factors" in this proxy statement and in our Annual Report on Form 10-K for the period ended December 31, 2014.

        We qualify all of our forward-looking statements by the foregoing cautionary statements. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations are not necessarily indicative of our future results.

INFORMATION ABOUT THE COMPANY

        MidWestOne Financial Group, Inc. is a $1.8 billion holding company headquartered in Iowa City, Iowa. The Company provides financial services to individuals, businesses, governmental units and institutional customers in central and east-central Iowa through its wholly owned subsidiaries, MidWestOne Bank and MidWestOne Insurance Services, Inc. As of December 31, 2014, the Bank operated in central and east-central Iowa through 25 full-service banking locations. The Bank is actively engaged in many areas of commercial banking, including: acceptance of demand, savings and time deposits; making commercial, real estate, agricultural and consumer loans; and other banking services tailored for its individual customers. As of December 31, 2014, the Company, on a consolidated basis, had assets of approximately $1.8 billion, deposits of approximately $1.4 billion, and shareholders' equity of approximately $192 million.

        The Company's executive offices are located at 102 South Clinton Street, Iowa City, Iowa 52240, its website is maintained at www.midwestone.com, and its common stock is traded on The NASDAQ Global Select Market under the symbol "MOFG." Additional information about the Company and its business is included in documents incorporated by reference in this proxy statement. See "Where You Can Find More Information."

INFORMATION ABOUT CENTRAL

        Central Bancshares, Inc. is a $1.18 billion holding company headquartered in Golden Valley, Minnesota. Central provides commercial and retail loan and deposit services principally to customers within the Minneapolis-St. Paul metropolitan area of Minnesota, western Wisconsin and southwest Florida through its wholly owned subsidiary, Central Bank. As of February 28, 2015, Central Bank operated in Minnesota through 13 banking locations, in Wisconsin through 7 banking locations and in Florida through 2 banking locations. The southwest area of Florida makes up approximately four percent of Central's consolidated assets. As of December 31, 2014, Central, on a consolidated basis, had assets of approximately $1.18 billion, deposits of approximately $1.06 billion, and shareholders' equity of approximately $80.4 million.

        Central's executive offices are located at 945 Winnetka Avenue North, Suite 145, Golden Valley, Minnesota 55427; its telephone number is (763) 512-5299; and its website is maintained at www.centralbnk.com.

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SPECIAL MEETING OF SHAREHOLDERS

Date, Place, Time and Purpose

        Our special meeting of shareholders will be held at the Company's headquarters located at 102 South Clinton Street, Iowa City, Iowa, on April 23, 2015, at 10:00 a.m. (Central Time). At our special meeting, our shareholders will be asked to approve the Merger and issuance of shares of our common stock in connection therewith. Under the Merger Agreement, Central will merge with and into the Company, with the Company surviving the Merger. Each share of Central's common stock outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a pro rata portion of $64.0 million of cash and 2,723,083 shares of our common stock.

        Our shareholders will also be asked to approve any adjournment of the special meeting, if necessary or appropriate, to allow time for further solicitation of proxies in the event there are insufficient votes present at the special meeting, in person or by proxy, to approve the issuance of shares of our common stock.

        Each copy of this proxy statement mailed to our shareholders is accompanied by a proxy card for use at the special meeting.

Record Date, Voting Rights, Required Vote and Revocability of Proxies

        Only holders of our common stock of record at the close of business on February 27, 2015, will be entitled to receive notice of and to vote at the special meeting. As of the record date, there were 8,370,309 shares of our common stock outstanding and entitled to vote, with each such share entitled to one vote. As of February 11, 2015, the directors and executive officers of the Company and their affiliates beneficially owned a total of approximately 7.1% of the outstanding shares of our common stock.

        Our shareholders should complete and return their proxy card accompanying this document or follow the alternative voting instructions described on the proxy card to ensure that their votes are counted at the special meeting, regardless of whether they plan to attend the special meeting. To be sure that your shares are represented at the meeting, please either complete and promptly mail the enclosed proxy card in the envelope provided for this purpose or vote by following the telephone or Internet voting procedures described on the proxy card. If your shares are registered in the name of a bank or brokerage firm, telephone or Internet voting will be available to you only if offered by your bank or broker and such procedures are described on the voting form sent to you.

        The presence at the meeting, in person or by proxy, of at least a majority of the shares of our common stock entitled to vote at the special meeting will constitute a quorum.

        Approval of each of the proposals requires the affirmative vote of a majority of the votes cast on the proposal at the meeting.

        Abstentions will not be counted as votes cast, but will count for purposes of determining whether or not a quorum is present. Accordingly, so long as a quorum is present, abstentions will have no effect on any of the matters presented for a vote at the special meeting. Shares treated as broker non-votes on one or more proposals will be included for purposes of calculating the presence of a quorum but will not be counted as votes cast. If you do not instruct your broker, bank or nominee how to vote your shares, your shares will not be included in the number of shares voting on the proposal and will have no effect on whether the proposal is approved.

        Shares of our common stock represented by properly executed proxies received at or prior to the special meeting will be voted at the special meeting in the manner specified by the holders of such shares. Properly executed proxies that do not contain voting instructions will be voted "for" approval of the Merger, "for" approval of the issuance of shares of our common stock in connection with the

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Merger and "for" any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

        You may revoke your proxy and change your vote at any time before the polls close at the special meeting by:

•

signing another proxy card with a later date and returning that proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717, by mail;



•

timely submitting another proxy via the telephone or Internet, if that is the method that you originally used to submit your proxy;



•

sending notice to us that you are revoking your proxy; or



•

voting in person at the meeting.

        All written notices of revocation and other written communications with respect to revocation of proxies should be sent to: MidWestOne Financial Group, Inc., 102 South Clinton St., Iowa City, Iowa 52240, Attention: Corporate Secretary. Your proxy will not be revoked automatically solely by your attending the special meeting. You must submit a proper ballot at the meeting to revoke your prior proxy. If you have instructed a broker, bank or other nominee to vote your shares, you must follow the directions received from your nominee to change those voting instructions.

ESOP Participant Voting

        For participants in the ESOP, the proxy card will also serve as a voting instruction card for the trustee of the ESOP with respect to shares held in the participants' accounts. A participant cannot direct the voting of shares allocated to the participant's account in the ESOP unless the proxy card is signed and returned to Broadridge in the return envelope provided. If proxy cards representing shares in the ESOP are not returned, those shares will be voted by the ESOP trustee in proportion to the results of the votes cast on the issue by the participants and beneficiaries.

Solicitation of Proxies

        The Company will pay the cost of soliciting proxies. In addition to this mailing, our directors, officers and employees may solicit proxies in person or by telephone. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.

        No person is authorized to give any information or to make any representation not contained in this proxy statement and, if given or made, such information or representation should not be relied upon as having been authorized by the Company or any other person. The delivery of this proxy statement does not, under any circumstances, create any implication that there has been no change in the business or affairs of the Company or Central since the date of the proxy statement.

Appraisal Rights

        The proposals being voted on at the special meeting do not create a right to dissent or otherwise seek appraisal rights under Iowa law or our articles of incorporation or bylaws.

Recommendation of our Board

        Our board has approved the Merger Agreement and the transactions it contemplates and believes that the proposal to approve the issuance of our common stock in connection with the Merger is in the best interests of the Company and our shareholders. Our board unanimously recommends that our shareholders vote "FOR" the Merger and issuance of shares of our common stock in connection

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therewith and "FOR" any resolution to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. See "The Merger—Our Reasons for the Merger and Board Recommendation."

PROPOSAL NO. 1—APPROVAL OF THE MERGER AND ISSUANCE OF COMMON STOCK IN CONNECTION THEREWITH

        The Merger Agreement provides that the consideration to be paid to Central shareholders with respect to the Merger will consist of shares of our common stock and cash. Iowa law requires shareholder approval of any merger in which the surviving company will issue voting shares in excess of 20% of the voting power of the shares outstanding immediately prior to the merger. In addition, our common stock is listed on The NASDAQ Global Select Market. Rule 5635(a) of The NASDAQ Stock Market LLC requires that issuers with securities listed on The NASDAQ Global Select Market, such as the Company, receive shareholder approval of, among other things, the issuance of securities in a transaction exceeding 20% of the number of shares of the issuer's common stock or the voting power outstanding before the transaction. As of February 27, 2015, we had 8,370,309 shares of common stock outstanding, and we intend to issue approximately 2,723,083 shares of our common stock, subject to possible adjustment, as set forth in the Merger Agreement, or approximately 32.5% of our currently outstanding shares of common stock, in the Merger.

        Therefore, we are required to obtain the approval of our shareholders under Iowa law and Rule 5635(a) of The NASDAQ Stock Market LLC, to consummate the Merger and issue the stock portion of the Merger Consideration payable in connection with the Merger. The Merger and issuance of our common stock in connection therewith must be approved by the affirmative vote of a majority of the total votes cast on the proposal at the special meeting.

        Our board of directors has determined that the Merger and issuance of shares of our common stock in connection therewith is in the best interests of the Company and our shareholders. Our board of directors unanimously recommends that our shareholders vote "FOR" the proposal to approve the Merger and issuance of shares of our common stock in connection therewith.

PROPOSAL NO. 2—ADJOURNMENT OF THE MEETING

        In addition to the proposal relating to the Merger and issuance of shares of our common stock in connection therewith, our shareholders will also be asked to approve any adjournment of the special meeting, if necessary or appropriate, to allow time for further solicitation of proxies in the event there are insufficient votes present at the special meeting, in person or by proxy, to approve the issuance of shares of our common stock. The adjournment proposal must be approved by the affirmative vote of a majority of the total votes cast on the proposal at the special meeting.

        Our board of directors unanimously recommends that our shareholders vote "FOR" the proposal to approve any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

OTHER MATTERS

        We are not aware of any business to come before the special meeting other than those matters described in this proxy statement. However, if any other matter should properly come before the meeting, it is intended that holders of the proxies will act in accordance with their best judgment.

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THE MERGER

        The following discussion contains material information pertaining to the Merger and the related transactions. This discussion is subject to and qualified in its entirety by reference to the Merger Agreement and the opinion of our financial advisor attached as appendices to this document. We urge you to read the appendices in their entirety.

General

        The boards of directors of the Company and Central have approved the Merger Agreement. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, Central will merge with and into the Company, with the Company surviving the Merger. The separate existence of Central will terminate, and certificates representing shares of Central common stock will represent only the right to receive the Merger Consideration.

        The Merger Agreement provides that the Company and Central each has the right to revise the structure of the Merger so long as such revision does not delay the closing date of the Merger, result in any adverse changes to the economic benefits, costs, tax consequences or form of consideration that Central shareholders receive under the Merger Agreement, or alter the proposed corporate governance structure of any entity.

Merger Consideration

        At the effective time of the Merger, each share of Central common stock issued and outstanding will be converted into the right to receive a pro rata portion of the Merger Consideration, which shall consist of 2,723,083 shares of the Company's common stock plus cash equal to $64.0 million, subject to certain possible adjustments, as described further below. All shares of Central common stock held by Central as treasury stock will be canceled at the effective time of the Merger and will not be converted into the right to receive a portion of the Merger Consideration.

        The Merger Agreement also provides that Central may terminate the Merger Agreement if the price of the Company's common stock decreases below a certain amount. If Central elects to terminate the Merger Agreement pursuant to such provision, the Company will have the option of increasing the cash portion of the Merger Consideration to prevent such a termination.

        Additionally, the Merger Agreement provides that the amount of cash and stock paid as Merger Consideration may be adjusted in order to preserve the tax status of the Merger as a "reorganization" under Section 368(a) of the Code. Pursuant to the terms of the Merger Agreement, if the value of the Company's common stock to be issued as Merger Consideration would be less than forty percent of the aggregate Merger Consideration, then the number of shares of the Company's common stock to be issued as Merger Consideration will be increased, and the amount of cash to be paid as Merger Consideration will be decreased, so that the value of the Company's common stock to be issued as Merger Consideration is equal to forty percent of the aggregate Merger Consideration.

Effective Time of the Merger

        Unless otherwise agreed to by the Company and Central, the Merger will become effective upon the close of business on the day in which articles of merger reflecting the Merger are filed with the Secretary of State of the State of Iowa and the Secretary of State of the State of Minnesota. Unless otherwise agreed to by the Company and Central, the closing of the Merger will occur on the tenth business day of the calendar month following the calendar month in which occurred the last to occur of the receipt of all required regulatory approvals, the expiration of all statutory waiting periods relating to such regulatory approvals and the receipt of the approvals of the shareholders of the Company and Central.

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        We anticipate that the Merger will become effective during the second quarter of 2015; however, we cannot assure you that the necessary regulatory approvals required for the Merger will be obtained or that other conditions precedent to the Merger can or will be satisfied. Either party's board of directors may terminate the Merger Agreement if, among other things, the Merger is not completed by June 30, 2015, unless it is not completed because of the failure by the party seeking termination to comply fully with its obligations under the Merger Agreement. See "The Merger Agreement—Conditions to Completion of the Merger" and "The Merger Agreement—Termination."

Background of the Merger

        Central's sole shareholder, board of directors and senior management have regularly reviewed and evaluated Central's business, strategic direction, performance, prospects and strategic alternatives. In the first part of 2014, Central's board and senior management began more in-depth discussions among themselves regarding Central's strategic alternatives, including possibly partnering with another financial institution. They discussed the advantages and disadvantages of remaining an independent operating concern, the historical performance and strategic direction of Central and the ability to grow as an independent organization. They also discussed the range of possible valuations and potential transaction partners. As part of this discussion, they considered the anticipated general increases in regulatory costs and capital requirements throughout the industry and their effect on Central, the continuing low interest rate environment, succession planning for directors and senior management, as well as trends in mergers and acquisitions in the financial services sector.

        The Company's board has also regularly and actively considered the Company's business and strategic direction while focusing on the Company's asset quality, capital position and the communities that it serves. As the economy in its market area stabilized and showed indications of sustained recovery, they continued to emphasize the Company's asset quality and they also began to explore ways to take advantage of the different opportunities to grow, both organically and through strategic transactions. In this regard, the Company's executive management has regularly met from time to time with financial advisors, including representatives from Sandler O'Neill, to discuss various trends in the industry, the merger and acquisition market and particular financial institutions that could be strategic partners. The executive management team regularly reported this information to the full board of directors to keep the directors properly knowledgeable and informed on the Company's strategic alternatives.

        In early March, 2014, during conversations with representatives from Sandler O'Neill, the Company's management team became aware that Central may be interested in pursuing initial discussions with the Company regarding a possible affiliation. At the Company's request and based upon publicly-available information, Sandler O'Neill prepared a preliminary financial analysis of how a possible transaction between the two organizations could be structured. Following a review of this analysis, the Company's management team instructed Sandler O'Neill to arrange a meeting between Mr. Funk, the Company's Chief Executive Officer, and Mr. Morrison, Central's Chairman of the Board and beneficial owner of all of Central's common stock.

        During the spring and into the summer of 2014, the Company's management team continued to evaluate possible transactions with other financial institutions. In July, 2014, the Company's management team again spoke to Mr. Morrison and reviewed additional financial analysis prepared by Sandler O'Neill. For the next several weeks, members of the Company's management had several conversations with Central's management team regarding a possible affiliation, with a focus on one another's respective market areas as well as the corporate and social culture of each of the organizations. Representatives of Sandler O'Neill facilitated many of these discussion, which were informal, preliminary in nature and generally intended to gauge each party's interest for possible future discussions, and the parties did not focus on possible pricing or specific financial terms of any transaction.

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        Following these meetings, the parties agreed to continue to communicate with one another and to update their respective boards of directors regarding the discussions to determine if there was mutual interest to pursue more formal discussions regarding a possible strategic transaction between the Company and Central. The parties also had discussions regarding the form of consideration and possible pricing for a transaction. On August 18, Mr. Morrison met with the Company's board to continue discussions regarding corporate governance, social and cultural matters to help determine whether a combination was possible.

        On August 19, 2014, the executive teams for both entities met, with representatives of Sandler O'Neill, and, based upon their preliminary due diligence, agreed to some preliminary, non-binding terms for a possible transaction. The parties determined that they would not use a non-binding letter of intent to further the terms of a transaction, but instead would preliminarily agree on the primary financial terms for a transaction; continue conducting due diligence on one another; and negotiate the remaining terms through presentation materials prepared by Sandler O'Neill as well as through drafts of a definitive agreement.

        Following that meeting, the Company's board met with representatives from Sandler O'Neill and Barack Ferrazzano Kirschbaum & Nagelberg LLP ("Barack Ferrazzano") and discussed corporate governance matters, the possible advantages of combining with Central and the ability for the companies to successfully complete a transaction. The board also discussed the likely financial terms of a transaction with Central, including the issuance of shares of the Company common stock, and the financial impact of such a transaction, including the dilution of the current Company shareholders. As a result of that discussion, the board authorized management to continue its discussions with Central regarding a possible transaction and to move forward with more complete due diligence on Central.

        In early September, the parties entered into a formal non-disclosure agreement and both companies focused on conducting in-depth due diligence on each other's organization and operations. The management teams continued discussions regarding corporate governance matters; possible corporate structures of a transaction; and the treatment of Central's existing subordinated debt and trust preferred securities, including during a meeting between the management teams held in Iowa City on September 14. Representatives of Barack Ferrazzano prepared the initial draft of the Merger Agreement and Shareholder Agreement and, after multiple discussions with the Company's management team, delivered the initial draft of the Merger Agreement and the Shareholder Agreement to Fredrikson & Byron, P.A., Central's legal counsel ("Fredrikson"), in mid-September, 2014. Over the next several weeks, the parties focused their discussions on the terms of the proposed Shareholder Agreement, particularly the provisions of the voting agreement, the standstill arrangement, the length of time the agreement is effective following the proposed transaction and the shareholder's ability to appoint representatives to the Company's board of directors.

        Following their preliminary agreement to the principal terms of the proposed Shareholder Agreement in early October, the parties continued their due diligence review of one another. The Company retained a third party to conduct a more detailed review of Central's loans subject to loss share agreements with the FDIC, as well as the loan portfolio associated with Central's Florida operations. At the Company's board of directors meeting held in mid-October, the management team reported on its due diligence review of Central as well as the status of the Shareholder Agreement. Representatives of Barack Ferrazzano and Sandler O'Neill also provided the board with presentations regarding legal and financial matters, respectively.

        Fredrikson provided the Company with its comments to the proposed Merger Agreement in late October and the parties had numerous discussions to negotiate the terms of the Merger Agreement, including the representations, covenants and closing conditions contained in the agreement. The pricing terms remained consistent with the terms included in the original draft of the agreement. Additionally, the Company provided drafts of the employment-related agreements to Central and the executives

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being asked to enter into an agreement. Through late October and early November, the parties' management teams continued discussions regarding the Merger Agreement and the employment-related agreements. Following several discussions, the parties agreed to move toward announcing a transaction during the week of November 17th. At this time, the Company formalized its agreement with Sandler O'Neill, which had been advising the Company throughout the negotiations.

        The parties continued negotiations on the covenants and closing conditions contained in the Merger Agreement, the terms and structure of the employment-related agreements as well as the final provisions contained in the Shareholder Agreement. On November 14, 2014, Mr. Funk met with Central's management team in Minnesota, and the parties reached an agreement on the primary open items on the Merger Agreement and agreed to have their respective boards consider the agreements for approval the following week.

        On November 17, 2014, the Company's board held a meeting to discuss the proposed transaction and to review the Merger Agreement and the Shareholder Agreement. Representatives of Barack Ferrazzano reviewed in detail the terms of the agreements and also discussed a possible timetable for the transaction based on final approval of the agreement during November, as well as other legal issues including the board's fiduciary duties to the Company's shareholders. Representatives of Sandler O'Neill also reviewed with the board its analysis of the financial terms contained in the Merger Agreement. The board also discussed the advantages and rationales for proceeding with the transaction and determined that it was still in the best interests of the Company's shareholders to proceed with the transaction on the terms provided in the Merger Agreement. It was determined at the conclusion of the meeting that the management team and the Company's advisors would continue discussions with Central to finalize the Merger Agreement, Shareholder Agreement and the employment-related agreements. The board agreed to hold a meeting on November 20, 2014 to discuss the results of the further discussions and to consider the Merger Agreement and the Shareholder Agreement for formal approval at that time.

        Over the next several days, the parties and their advisors continued negotiating the final terms of the agreements and, on November 20, 2014, the Company's board reviewed the final terms of the Merger Agreement and the changes that were made following the meeting held on November 18, 2014. Representatives of Barack Ferrazzano gave a presentation regarding the final terms of the agreement presented, and Sandler O'Neill presented its formal fairness opinion and supporting analysis based on the terms provided for in the Merger Agreement. Based on this and the board's previous discussions, the Company's board approved the Merger Agreement and the Shareholder Agreement, and the transactions contemplated by each. On that date, the Central board also discussed the final Merger Agreement and the Central board of directors approved the Merger Agreement and the transactions contemplated in the agreement.

        On November 20, 2014, each of the Merger Agreement and Shareholder Agreement was executed by the parties. The Company and Central issued a joint press release on November 21, 2014 announcing the execution of the Merger Agreement.

Our Reasons for the Merger and Board Recommendation

        Our board of directors believes that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger and issuance of shares of our common stock, are fair to, and in the best interests of, the Company and its shareholders. Accordingly, our board unanimously recommends that our shareholders vote "FOR" the approval of the Merger and issuance of the shares of our common stock in connection therewith.

        The Company's board has concluded that the proposed Merger offers shareholders an extremely attractive opportunity to achieve the board's strategic business objectives. These objectives include

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increasing shareholder value, expanding the business into new markets, more effectively leveraging its capital, achieving a more attractive cost structure and growing the size of the business.

        In deciding to approve the Merger Agreement and the transactions it contemplates, the Company's board consulted with management, as well as its legal counsel and financial advisors, and considered numerous factors, including the following:

•

the fact that the Merger would provide the Company entry into the attractive, large metropolitan markets of Minneapolis and St. Paul, Minnesota through the acquisition of one of a limited number of sizable, strong banking franchises;



•

the low-risk balance sheet of Central, including loss share coverage on a portion of Central's loan portfolio, and attractive legacy credit metrics;



•

the potential for significant pro forma earnings acceleration for the Company through organic loan and deposit growth capacity, low cost funding (compared to funding available in the Company's Iowa markets), and identified and achievable cost savings;



•

the well-respected and local management team at Central;



•

the franchise value enhancement that the Merger offers, enhancing a publicly-traded, high performing community bank with approximately $3 billion in assets operating in two complementary geographies, the stable and attractive Iowa markets and the attractive growth markets of Minneapolis and St. Paul, Minnesota;



•

information with respect to the businesses, earnings, operations, financial condition, prospects, capital levels and asset quality of the Company and Central, both individually and as a combined company; in particular, the Company's board focused on the strategic fit of the business lines and the operating philosophies of the two institutions;



•

the consistency of the Merger with the Company's long-term strategic vision to seek profitable future expansion in surrounding states, providing the foundation for expansion of its geographic footprint, leading to continued growth in overall shareholder value;



•

the complementary nature of the businesses of the Company and Central, the absence of overlap in the market areas served by each and the anticipated improved stability of the Company's business and earnings in varying economic and market climates relative to the Company on a stand-alone basis;



•

the opportunity to build greater brand recognition and awareness over a larger geographic area;



•

the governance arrangements with respect to the Company post-Merger, including representation on the Company's board of directors from both companies and shared management responsibilities;



•

the belief of the Company's senior management and board of directors that the two companies share a common vision with respect to delivering financial performance and shareholder value;



•

the advantages of a combination with an institution such as Central that already has an established market share in the Minnesota, Wisconsin and southwest Florida markets and has offices in attractive locations in such states that presently are not served by the Company;



•

the fact that the market capitalization of the combined institution, as compared with the Company's market capitalization as a stand-alone entity, is expected to provide the Company with increased access to capital markets to finance the Company's capital requirements, and in addition would provide for enhanced market visibility;

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•

the fact that the higher market capitalization of the Company is expected to enhance the attractiveness of the Company's stock going forward, which would make the stock more attractive as consideration to be used in future acquisition opportunities that may generate increased shareholder value;



•

the current and prospective economic and competitive environments facing the Company and other financial institutions, characterized by intensifying competition from both banks and non-bank financial service organizations, and the growing costs associated with regulatory compliance in the industry;



•

the belief that, while no assurances could be given, the business and financial advantages contemplated in connection with the Merger were likely to be achieved within a reasonable time frame;



•

the opinion of Sandler O'Neill that, as of November 20, 2014, the Merger Consideration was fair from a financial point of view to the Company; and



•

the likelihood that the Merger will be approved by the relevant bank regulatory authorities in a timely manner.

        In addition, the Company's board considered the following negative factors that potentially created risks if the board approves the Merger:

•

the possibility that the Merger and related integration process could result in the loss of key employees, the disruption of the Company's business and the loss of customers;



•

the possibility that the anticipated benefits of the Merger may not be realized, including the expected cost savings, due to the potential Merger-related restructuring charges, among other expenses;



•

the potential risk of diverting management focus and resources from operational matters while working to implement the Merger;



•

the possibility that the governance arrangements of the combined company would lead to a loss of directors whose service to the Company has been effective and valuable;



•

the influence and effect that a large shareholder would have on the management and operations of the Company; and



•

the risks of the type and nature described under the caption "Risk Factors," in this proxy statement.

        The Company's board ultimately concluded, however, that the anticipated benefits of combining with Central were likely to substantially outweigh the preceding risks. Thus, in the view of the Company's board, the balance of factors weighed in favor of approving the Merger and recommending that shareholders approve the issuance of shares of our common stock in connection therewith.

        The above discussion of the information and factors considered by the Company's board is not intended to be exhaustive, but includes the material factors the board considered. In arriving at its determination to approve the Merger Agreement and the transactions it contemplated, and to recommend that our shareholders vote to approve the issuance of our common stock in connection with the Merger, the Company's board did not assign any relative or specific weights to the above factors, and individual directors may have given differing weights to different factors. The Company's board unanimously recommends that its shareholders vote to approve the issuance of our common stock in connection with the Merger.

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Fairness Opinion of Sandler O'Neill & Partners, L.P., the Company's Financial Advisor

        By letter dated November 11, 2014, the Company retained Sandler O'Neill to act as its financial advisor in connection with its acquisition of Central, whereby Central will merge with and into the Company. Sandler O'Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O'Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

        Sandler O'Neill acted as financial advisor to the Company in connection with the proposed transaction and participated in certain of the negotiations leading to the execution of the Merger Agreement between the Company and Central. At the November 20, 2014 meeting at which the Company's board considered and approved the Merger Agreement, Sandler O'Neill delivered to the board its oral opinion, that, as of such date, the Merger Consideration was fair to the Company from a financial point of view. The full text of Sandler O'Neill's opinion is annexed hereto as Appendix B. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O'Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. the Company's shareholders are urged to read the entire opinion carefully in connection with their consideration of the proposed Merger.

        Sandler O'Neill's opinion speaks only as of the date of the opinion. The opinion was directed to the Company's board and is directed only to the fairness of the Merger Consideration to the Company from a financial point of view. It does not address the underlying business decision of the Company to engage in the Merger or any other aspect of the Merger and is not a recommendation to any of the Company's shareholders as to how such shareholder should vote at the special meeting with respect to the Merger or any other matter.

        In connection with rendering its November 20, 2014 opinion, Sandler O'Neill reviewed and considered, among other things:

•

the Merger Agreement;



•

certain publicly available financial statements and other historical financial information of the Company that Sandler O'Neill deemed relevant;



•

certain publicly available financial statements and other historical financial information of Central that Sandler O'Neill deemed relevant;



•

median publicly available analyst earnings estimates for the Company for the years ending December 31, 2014 and December 31, 2015 and an estimated long-term earnings per share growth rate for the years thereafter as provided by senior management of the Company;



•

internal financial projections for Central for the years ending December 31, 2014 through December 31, 2018 as provided by senior management of Central and confirmed by senior management of the Company;



•

the pro forma financial impact of the Merger on the Company based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies as determined by the senior management of the Company;



•

a comparison of certain financial and other information for the Company and Central with similar publicly available information for certain other commercial banks, the securities of which are publicly traded;



•

the terms and structures of other recent mergers and acquisition transactions in the commercial banking sector;

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•

the current market environment generally and in the commercial banking sector in particular; and



•

such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler O'Neill considered relevant.

        Sandler O'Neill also discussed with certain members of senior management of the Company the business, financial condition, results of operations and prospects of the Company and held similar discussions with the senior management of Central regarding the business, financial condition, results of operations and prospects of Central.

        In performing its review, Sandler O'Neill has relied upon the accuracy and completeness of all of the financial and other information that was available to it from public sources, that was provided to Sandler O'Neill by the Company and Central or that was otherwise reviewed by Sandler O'Neill and Sandler O'Neill assumed such accuracy and completeness for purposes of preparing its opinion. Sandler O'Neill relied on, without independent verification or investigation, the assessments of the management of the Company as to the Company's existing and future relationships with key employees and partners, clients, products and services and Sandler O'Neill assumed, with the Company's consent, that there will be no developments with respect to any such matters that would affect Sandler O'Neill's analyses or opinion. Sandler O'Neill has further relied on the assurances of the senior management of the Company and Central that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading in any material respect. Sandler O'Neill did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of the Company or Central or any of their respective subsidiaries. Sandler O'Neill did not make an independent evaluation of the adequacy of the allowance for loan losses of the Company, Central or the combined entity after the Merger and Sandler O'Neill has not reviewed any individual credit files relating to the Company or Central. Sandler O'Neill has assumed, with the Company's consent, that the respective allowances for loan losses for both the Company and Central are adequate to cover such losses and will be adequate on a pro forma basis for the combined entity.

        In preparing its analyses, Sandler O'Neill used publicly available median earnings estimates and an estimated long-term growth rate for the Company. With respect to Central, Sandler O'Neill used internal financial projections as provided by the senior management of Central and confirmed by the senior management of the Company. Sandler O'Neill also received and used in its analyses certain projections of transaction costs, purchase accounting adjustments, expected cost savings and other synergies which were prepared by and/or reviewed with the senior management of the Company. With respect to these projections, the respective senior managements of the Company and Central confirmed to Sandler O'Neill that those projections reflected the estimates and judgments of those respective managements of the future financial performance of the Company and Central, respectively, and Sandler O'Neill has assumed that such performance would be achieved and further have assumed that they have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. Sandler O'Neill expresses no opinion as to such estimates or the assumptions on which they are based. Sandler O'Neill has assumed that there has been no material change in the respective assets, financial condition, results of operations, business or prospects of the Company and Central since the date of the most recent financial data available to it. Sandler O'Neill has also assumed in all respects material to our analysis that the Company and Central would remain as a going concern for all periods relevant to its analyses and that the Merger will be consummated as a tax-free reorganization under Section 368 of the Internal Revenue Code. Sandler O'Neill expresses no opinion as to any of the legal, accounting and tax matters relating to the Merger and any other transactions contemplated in connection therewith.

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        Sandler O'Neill has also assumed, with the Company's consent, that (i) each of the parties to the Agreement will comply in all material respects with all material terms of the Agreement and all related agreements, that all of the representations and warranties contained in such agreements are true and correct in all material respects, that each of the parties to such agreements will perform in all material respects all of the covenants required to be performed by such party under the agreements and that the conditions precedent in such agreements are not waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company or the Merger and (iii) the Merger and any related transaction will be consummated in accordance with the terms of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements.

        Sandler O'Neill's opinion is necessarily based on financial, economic, regulatory, market and other conditions as in effect on, and the information made available to it as of, the date hereof. Events occurring after the date hereof could materially affect our views. Sandler O'Neill has not undertaken to update, revise, reaffirm or withdraw this letter or otherwise comment upon events occurring after the date hereof. Sandler O'Neill renders no opinion as to the trading values of the Company's common shares at any time.

        Sandler O'Neill has acted as financial advisor to the board of directors of the Company in connection with the Merger and a portion of its fees are contingent upon the closing of the Merger. Sandler O'Neill also will receive a fee for providing this opinion. The Company has also agreed to indemnify Sandler O'Neill against certain liabilities arising out of its engagement. In the ordinary course of its business as a broker-dealer, Sandler O'Neill may purchase securities from and sell securities to the Company and Central and their affiliates. Sandler O'Neill may also actively trade the securities of the Company and Central or their affiliates for our own account and for the accounts of its customers.

        Sandler O'Neill's opinion is directed to the board of directors of the Company in connection with its consideration of the Merger. Its opinion is directed only to the fairness, from a financial point of view, of the Merger Consideration to the Company and does not address the underlying business decision of the Company to engage in the Merger, the form or structure of the Merger, the relative merits of the Merger as compared to any other alternative business strategies that might exist for the Company or the effect of any other transaction in which the Company might engage. Sandler O'Neill's opinion shall not be reproduced or used for any other purposes, without Sandler O'Neill's prior written consent, which consent will not be unreasonably withheld. Sandler O'Neill's opinion has been approved by Sandler O'Neill's fairness opinion committee. Sandler O'Neill does not express any opinion as to the fairness of the amount or nature of the compensation to be received in the Merger by the Company's officers, directors, or employees, or class of such persons, relative to the compensation to be received in the Merger by any other shareholders of the Company.

        In rendering its November 20, 2014 opinion, Sandler O'Neill performed a variety of financial analyses. The following is a summary of the material analyses performed by Sandler O'Neill, but is not a complete description of all the analyses underlying Sandler O'Neill's opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. In arriving at its opinion, Sandler O'Neill did not attribute any particular weight to any analysis or factor that it considered. Rather, Sandler O'Neill made qualitative judgments as to the significance and relevance of each analysis and factor. Sandler O'Neill did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion; rather Sandler O'Neill

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made its determination as to the fairness of the Merger Consideration on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O'Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O'Neill's comparative analyses described below is identical to Central and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of the Company, Central and the companies to which they are being compared.

        In performing its analyses, Sandler O'Neill also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of the Company and Sandler O'Neill. The analysis performed by Sandler O'Neill is not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Sandler O'Neill prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the Company at the board's November 20, 2014 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. The analysis and opinion of Sandler O'Neill was among a number of factors taken into consideration by the Company's board of directors in making its determination to approve the Merger Agreement and the transactions contemplated by the Merger Agreement (including the Merger) and the analyses described below should not be viewed as determinative of the decision of the Company's board or management with respect to the fairness of the Merger.

Summary of Proposal.

        Sandler O'Neill reviewed the financial terms of the proposed transaction. Pursuant to the terms of the transaction, upon the effective date of the Merger, each share of Central common issued and outstanding immediately prior to the Effective Time, shall become and automatically be converted into the right to receive a pro rata portion of 2,723,083 shares of the Company's common stock and $64 million in cash. Using the Company's closing stock price of $26.10 as of November 19, 2014, Sandler O'Neill arrived at an aggregate transaction value of $135.1 million. Based upon financial information for Central as of or for the quarter ending September 30, 2014, Sandler O'Neill calculated the following transaction ratios, on both a GAAP, generally accepted accounting principles in the United States, and adjusted basis:

Transaction Multiples (GAAP Basis)

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Transaction Multiples (Adjusted Basis)

Comparable Company Analysis.

        Sandler O'Neill used publicly available information to perform a comparison of selected financial and market trading information for Central.

        Sandler O'Neill also used publicly available information to compare selected financial and market trading information for Central and a specific group of financial institutions selected by Sandler O'Neill. The Central peer group consisted of the following selected financial institutions:

Peer Group(1):

        The analysis compared publicly available financial information for Central and the median financial and market trading data for the Central peer group as of and for the last twelve months ended September 30, 2014. The table below sets forth the data for Central and the median data for the

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Central peer group as of and for the twelve months ended September 30, 2014, with pricing data as of November 19, 2014.

Net Present Value Analysis.

        Sandler O'Neill performed an analysis that estimated the present value per share of Central common stock through December 31, 2018. Sandler O'Neill based the analysis on internal financial projections for Central for the years ending December 31, 2014 through December 31, 2018 as provided by the senior management of Central and confirmed by the senior management of the Company.

        To approximate the terminal value of Central common stock at December 31, 2018, Sandler O'Neill applied price to earnings multiples of 12.0x to 17.0x and multiples of tangible book value ranging from 110% to 185%. The income streams and terminal values were then discounted to present values using different discount rates ranging from 10.0% to 16.0%, which were selected to reflect varying assumptions regarding potential desired rates of return of holders of Central common stock.

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        Sandler O'Neill also considered and discussed with the Company's board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O'Neill performed a similar analysis assuming Central's net income varied from 25.0% above projections to 25.0% below projections. This analysis resulted in the following reference ranges of aggregate values for Central common stock using a discount rate of 12.87%.

Analysis of Selected Merger Transactions.

        Sandler O'Neill reviewed the terms of merger transactions announced from January 1, 2013 through November 19, 2014 involving United States-based banks nationwide, and those in which the target was headquartered in the Midwest in which the target's assets were greater than $500 million and less than $2.0 billion, with target nonperforming assets to assets less than 3.0%, and target tangible common equity to tangible assets between 5.0% and 12.0%. Sandler O'Neill deemed these transactions to be reflective of the proposed Company and Central combination. Sandler O'Neill reviewed the following ratios and multiples: transaction price to book value per share, transaction price to tangible book value per share, transaction price to last twelve months earnings, and core deposit premium. As illustrated in the following table, Sandler O'Neill compared the proposed merger multiples (on both a GAAP and adjusted basis) to the median multiples of the comparable transactions.

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Comparable Transaction Multiples

Sandler O'Neill's Compensation.

        Sandler O'Neill has acted as financial advisor to the Company's board of directors in connection with the merger. The Company has agreed to pay Sandler O'Neill a transaction fee equal to 1.175% of aggregate purchase price, $250,000 of which became due and payable in immediately available funds upon the signing of a definitive agreement to effect the Merger, with the remainder due and payable in immediately available funds on the day of closing of the Merger. Sandler O'Neill received a fee of $250,000 for rendering its fairness opinion to the Company's board of directors which was payable upon issuance of the opinion and will be credited against the transaction fee due at the completion of the Merger. The Company has also agreed to reimburse Sandler O'Neill for its reasonable out-of-pocket expenses and to indemnify Sandler O'Neill against certain liabilities arising out of its engagement. Sandler O'Neill's fairness opinion was approved by Sandler O'Neill's fairness opinion committee. In the past, Sandler O'Neill has performed certain investment banking services for Central and received fees totaling $246,000.

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Regulatory Approvals

        It is a condition to the completion of the Merger that the parties receive all necessary regulatory approvals with respect to the Merger. Neither the Company nor Central is aware of any material governmental approvals or actions that are required to complete the Merger, except as described below. If any other approval or action is required, the parties will also seek this approval or action. However, we cannot assure you that these approvals or actions will be obtained.

        The Merger of Central with and into the Company is subject to the prior approval of the Federal Reserve and the Minnesota Department of Commerce. On December 19, 2014, the Company filed an application with the Federal Reserve and the Minnesota Department of Commerce for prior approval of the Merger and has since been working with the regulators to obtain the necessary approvals. Neither the Company nor Central know of any reason why the Federal Reserve and the Minnesota Department of Commerce would not approve the Merger.

        There can be no assurances that any other requisite regulatory approvals or waivers that may be required will be received in a timely manner, in which event the consummation of the Merger may be delayed. If the Merger is not completed on or before June 30, 2015, either the Company or Central may terminate the Merger Agreement (see "The Merger Agreement—Termination").

Management and Operations after the Merger

        We specifically negotiated and named in the Merger Agreement those individuals who will serve as the Company's executive officers following the Merger. We also negotiated in the Merger Agreement that the board of directors of the Company following the Merger will initially consist of eight directors appointed by the Company and four directors appointed by Central.

Directors of the Company following the Merger

        We expect that the following persons will serve as the directors of the Company after the Merger:

Directors of the Company Following the Merger

        Biographical information concerning the proposed directors of the Company following the Merger is provided below:

        Charles N. Funk.    Mr. Funk, age 60, is currently the President and Chief Executive Officer of the Company and the Bank, and will serve as the President and Chief Executive Officer of the Company and the Bank following the Merger. He joined the Bank in these same roles in November 2000. Prior

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to that, he held positions as President and Central Region Manager and Chief Investment Officer for Brenton Bank, Des Moines. Mr. Funk currently serves on the faculty of the Colorado Graduate School of Banking in Boulder, Colorado, and the Iowa School of Banking. Previously, he taught for the Stonier Graduate School of Banking at Georgetown University. He also serves on the board of directors of Iowa SourceMedia Group and of the American Bankers Association, and was the Chairman of the Iowa Bankers Association in 2010-2011. Mr. Funk graduated with a B.A. from William Jewell College.

        William N. Ruud.    Dr. Ruud, age 62, is the president of the University of Northern Iowa, located in Cedar Falls, Iowa. Dr. Ruud became a director of the Company in September 2013. Dr. Ruud previously served on the board of directors of First Interstate Bank Corporation, Southern Idaho (now Wells Fargo) from 1994-1997.

        John M. Morrison.    Mr. Morrison, age 77, has served as the Chairman of Central Bancshares, Inc. since 1988, and as a director of Central Bank since 1988. Mr. Morrison also serves as the Chairman of the University of St. Thomas. Among his prior experience, Mr. Morrison has also served as a director of three publicly traded companies. Mr. Morrison received his Bachelor's degree from the University of Minnesota and attended law school at LaSalle University. He received an honorary Dr. of Law degree from the University of St. Thomas. Among other attributes, skills and qualifications, we believe that Mr. Morrison's service as a board member of public and private companies enable him to bring valuable insight and knowledge to the Company's board.

        Michael A. Hatch.    Mr. Hatch, age 66, has been employed as a trial and litigation attorney with Blackwell Burke P.A. since 2007. Among his prior experience, Mr. Hatch served as Minnesota's Attorney General from 1999-2007, and he has served on the boards of a number of insurance companies. He earned his Bachelor's degree from the University of Minnesota-Duluth and his Juris Doctorate from the University of Minnesota Law School. Among other attributes, skills and qualifications, we believe that Mr. Hatch's service as a board member of insurance companies and extensive experience in the Minnesota legal arena enable him to bring valuable insight and knowledge to the Company's board.

        Richard R. Donohue.    Mr. Donohue, age 65, is the former Managing Partner of TD&T CPAs and Advisors, P.C. in Cedar Rapids, Iowa, a certified public accounting firm in which he is involved in all phases of the practice. Mr. Donohue joined the board of directors of the former MidWestOne Financial in 1999. He became a director of the Company upon completion of our merger with the former MidWestOne Financial in March 2008. Mr. Donohue was appointed to the board of directors of the Bank in 2009.

        Stephen L. West.    Mr. West, age 69, is the majority owner and Chairman of West Music Company Inc., a musical instrument and supply store headquartered in Coralville, Iowa. He has been a director of the Company and the Bank since 1991. Mr. West is also the Treasurer of Accent LLC, a private-label musical instruments company, and the President of WestInvest, L.C., a family investment vehicle.

        Ruth E. Stanoch.    Ms. Stanoch, age 56, has been a corporate affairs consultant since 2008. Among her prior experiences, in 2010, Ms. Stanoch served as the senior advisor to Minnesota's governor-elect, Mark Dayton, and from 1994-2007, was employed with Thompson Legal & Regulatory. Between 2010 and 2012, Ms. Stanoch also served on various committees of the Board of Directors of Archipelago Learning, Inc., a leading subscription-based online education company. She received her Bachelor's degree from the University of Minnesota, and was a policy fellow at the University of Minnesota's Humphrey Institute of Public Affairs. Among other attributes, skills and qualifications, we believe that Ms. Stanoch's extensive corporate experience, leadership at a large corporation and previous service on a public company board provide valuable experience to the Company's board.

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        Kurt R. Weise.    Mr. Weise, age 57, has served as the President of Central since 1988 and as the Chairman of the Board of Central Bank since 1994. In addition, Mr. Weise has served in various finance and banking roles with Mr. Morrison and certain of his associates since 1985. Mr. Weise received his Bachelor's degree from Winona State University and he is a CPA. Among other attributes, skills and qualifications, we believe that Mr. Weise's leadership as President of Central, his years of experience in finance and banking, and his status as a CPA enable him to bring valuable insight and knowledge to the Company's board.

        Robert J. Latham.    Mr. Latham, age 72, is the Chairman and President of Latham & Associates, Inc. in Cedar Rapids, Iowa, a utility analysis and consulting company, and is an economic and strategic analyst for the utility industry, with over 30 years of experience. Mr. Latham became a director of the Company and the Bank in 2011. He previously served on the board of directors of First National Bank in Iowa City, Iowa. He currently serves as Chairman of the Board of Peoples Trust and Savings Bank in Clive, Iowa. We consider Mr. Latham to be a qualified candidate for service on the board and the Compensation Committee due to his skills and expertise developed as a successful utility industry analyst, and his knowledge of and experience in the banking industry.

        Tracy S. McCormick.    Ms. McCormick, age 54, is a retired Vice President in investment banking for J.P. Morgan & Co., Incorporated. Ms. McCormick is the daughter of our former Chairman and current Director Emeritus, W. Richard Summerwill, and became a director of the Company in 2011 following his retirement from the board. Ms. McCormick was educated at the University of Michigan and the London School of Economics and Political Science.

        Kevin W. Monson.    Mr. Monson, age 63, is currently the Chairman of the Company and the Bank, and will serve as the Vice Chairman of the Board of the Company and of the Bank following the Merger. He is the President, Managing Partner and the largest shareholder of Neumann Monson, Inc., an architectural services firm headquartered in Iowa City. He became a director of the Company and the Bank in 2005. Mr. Monson is also the majority partner in Tower Partners, a real estate investment partnership.

        Richard J. Schwab.    Mr. Schwab, age 63, is a self-employed entrepreneur, angel fund investor, real estate investor and business owner, and is also a certified public accountant. He became a director of the Company in July 2013. Mr. Schwab was a director of the Company from 2004 to 2008, and has been a director of the Bank since 2004.

        Larry D. Albert.    Mr. Albert, age 64, has served as the Chief Executive Officer and as a director of Central Bank since 1996. Mr. Albert received his Bachelor's degree from Westmar University and his MBA from the University of St. Thomas. Among other attributes, skills and qualifications, we believe Mr. Albert is uniquely qualified to serve as a director because, as Chief Executive Officer of Central Bank, he is the person most familiar with Central Bank's business and industry and most capable of effectively identifying strategic priorities and leading the execution of strategy.

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Executive Officers of the Company Following the Merger

        The following persons will serve as executive officers of the Company after the Merger:

        Biographical information concerning the proposed non-director executive officers of the Company following the Merger is provided below:

        Susan R. Evans.    Ms. Evans, age 57, is currently the Chief Operating Officer of the Company and the Bank, and will serve as the Chief Operating Officer of the Company and the Bank following the Merger. Ms. Evans joined the Company in 2001 as Vice President-Retail Banking of the Bank, and was appointed to her current role as Chief Operating Officer in August 2009. She has more than thirty years of banking experience, previously serving as Indianola Market President of Brenton Bank, Des Moines, as well as Retail Market and Sales Manager for U.S. Bank, Des Moines.

        Gary J. Ortale.    Mr. Ortale, age 64, is currently Executive Vice President and Chief Financial Officer of the Company, and will serve as the Executive Vice President and Chief Financial Officer of the Company following the Merger. He was appointed to his current position in May 2009, after serving as our Interim Chief Financial Officer since January 2009. Prior to that time, he was the Senior Vice President and Chief Risk Officer of the Bank, a position he assumed upon consummation of our merger with the former MidWestOne Financial in March 2008. Prior to that merger, Mr. Ortale had been serving as the Treasurer of the Company and the Senior Vice President-Chief Financial Officer of the Bank since 2002. He began with the Company and the Bank as their Vice President and Controller in 1987. Mr. Ortale has a B.S. in accounting from Drake University.

        Kent L. Jehle.    Mr. Jehle, age 55, is currently the Executive Vice President and Chief Credit Officer of the Company and the Bank, and will serve as the Executive Vice President and Chief Credit Officer of the Company and the Bank following the Merger. He became the Company's Executive Vice President and Chief Credit Officer upon consummation of our merger with the former MidWestOne Financial in March 2008. Prior to that merger, Mr. Jehle had been serving as the Bank's Executive Vice President-Commercial Banking since 2004. He has been with the Company and the Bank since 1986.

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        James M. Cantrell.    Mr. Cantrell, age 55, is currently Vice President and Chief Risk Officer of the Company and Senior Vice President and Chief Risk Officer of the Bank, and will serve as the Vice President and Chief Risk Officer of the Company and the Bank following the Merger. He joined the Company in his current position in July 2009. Prior to joining the Bank, he had been with Provident Bank in Baltimore, Maryland, since 2008, where he served as Senior Vice President and Director of Treasury Operations. In that capacity, he was responsible for management of asset/liability activities, investment portfolio accounting, and derivative activity and compliance. Prior to that, he was employed as the Senior Vice President and Treasurer of Mercantile-Safe Deposit and Trust Company in Baltimore, Maryland, where he had been employed since 2001. Mr. Cantrell has a B.A. in business and economics from Wittenberg University.

        Katie A. Lorenson.    Ms. Lorenson, age 34, has served as the Senior Vice President and Chief Financial Officer of Central and Central Bank since 2011. Prior to joining Central, Ms. Lorenson was a Manager with McGladrey, in the Financial Institutions practice, where she gained nearly 10 years of experience serving community banks in audit and accounting matters as well as mergers, acquisitions, and FDIC loss share accounting and best practices. Ms. Lorenson received her Bachelor's degree in accounting from Minnesota State University Moorhead. Ms. Lorenson is a certified public accountant and a member of the American Institute of Certified Public Accountants and the Minnesota Society of Certified Public Accountants.

        Karin M. Taylor.    Ms. Taylor, age 47, has served as the Chief Risk Officer of Central Bank since 2009. Prior to joining Central, she worked as a Director in the Risk Management Consulting practice at McGladrey. She has 25 years of experience in industry and consulting including management of various operational, lending and retail divisions, regulatory compliance, internal audit, process design and workflow management. Ms. Taylor received her Bachelor's degree from St. Olaf College.

        For information regarding the interests of certain officers and directors in the Merger, see "—Interests of Certain Persons in the Merger."

Employee Benefits

        Following the consummation of the Merger, all employees of Central will become employees of the Company, and, except as described under "The Merger—Interests of Certain Persons in the Merger—Employment Agreements," the Company will provide such employees with employee benefit plans and compensation opportunities that are substantially similar to the employee benefit plans and compensation opportunities that are available to similarly-situated employees of the Company. Such employees will receive credit under the Company employee benefit plans for all years of employment with Central. In addition, the Company will use commercially reasonable efforts to waive any waiting periods applicable to employee benefit plans, to waive pre-existing condition exclusions from employee benefit plans, and to ensure that any eligible expenses incurred during the plan year are taken into account to satisfy deductible, coinsurance and out-of-pocket requirements. The Company, as the surviving entity, has also agreed to implement a short-term severance plan.

Interests of Certain Persons in the Merger

General

        Each of the directors and executive officers of the Company owns our common stock, as further detailed under "Security Ownership of Certain Beneficial Owners and Management." Additionally, some members of the Company's and Central's respective management and boards of directors may be deemed to have interests in the Merger that are in addition to their interests as shareholders generally. These interests include, among other things, the continuation of certain of our officers and directors as officers and directors, respectively, of the combined company, and the continued indemnification and providing of directors' and officers' liability insurance for these directors and officers after the Merger.

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The board of directors of the Company was aware of these interests and considered them, together with the other matters described in this proxy statement, in approving the Merger Agreement and the Merger. Additionally, certain directors and officers of the Company will receive the benefit of the Shareholder Agreement. See "The Merger Agreement—Shareholder Agreement."

Directors and Officers

        Certain of the Company's current directors and officers will have positions with the combined company after the Merger. See "—Management and Operations after the Merger" for further details with respect to the positions these individuals hold currently at the Company and the Bank and the positions that they will hold following the Merger. The Company's current directors and officers are not entering into any employment agreements and are not receiving any additional compensation in connection with the Merger.

Employment-Related Agreements

        Employment Agreement with Kurt Weise.    The Company has entered into an employment agreement with Kurt Weise. The employment agreement with Mr. Weise will become effective immediately upon the consummation of the Merger and will have an initial term of two years following the effective date. The term of the agreement will be automatically extended for an additional year beginning on the second January 1 that follows the effective date and each January 1 thereafter, unless either party gives at least 90 days prior notice of non-renewal. Upon the occurrence of a change in control of the Company, the agreement will automatically remain in effect for two years following the change in control and will then terminate.

        The employment agreement provides Mr. Weise with an initial base salary of $250,000. The base salary will be reviewed annually beginning January 1, 2016, and may be adjusted at the discretion of the Company's Chief Executive Officer. The agreement provides that Mr. Weise will be eligible to receive performance-based annual incentive bonuses, in accordance with the Company's annual incentive plan, and also to receive employee benefits on as favorable a basis as other similarly situated senior executives of the Company.

        The employment agreement provides for severance benefits in the event Mr. Weise is terminated by the Company other than for cause or by the executive for good reason ("Termination"). For a Termination during the employment period that does not occur in connection with a change in control of the Company, Mr. Weise would be entitled to receive an amount equal to 100% of his base salary. For a Termination that occurs within six months before or within 24 months after a change in control of the Company ("Covered Period"), Mr. Weise would be entitled to receive an amount equal to 200% of his base salary plus bonus ("Base Compensation"). Any severance paid in connection with a Termination during a Covered Period would be paid in a single lump sum.

        Following any Termination, whether or not occurring during a Covered Period, Mr. Weise and his eligible dependents would also be entitled to continued coverage under the medical and dental plans of the Company for so long as each was eligible to and did elect COBRA continuation coverage. Mr. Weise would be required to pay an amount for such coverage that is the same as what an active employee pays for such coverage.

        All severance benefits under the employment agreement are contingent upon Mr. Weise's execution and non-revocation of a general release and waiver of claims against the Company. Further, Mr. Weise's employment agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of the Company by Mr. Weise during and after his employment with the Company, and prohibiting Mr. Weise from competing with the Company and from soliciting its employees or customers during employment and after termination of employment for any reason. The

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non-competition and non-solicitation provisions apply for a period of 15 months following any termination of employment.

        Change in Control Agreements—Ms. Taylor and Ms. Lorenson.    The Company has entered into change in control agreements with Karin Taylor and Katie Lorenson. The change in control agreements with Ms. Taylor and Ms. Lorenson will become effective immediately upon the consummation of the Merger and will have an initial term of one year following the effective date. The term of each agreement will be automatically extended for an additional year on each anniversary of the effective date, unless either party gives at least three months prior notice of non-renewal. If a change in control occurs within six months after the effective date of the termination of the change in control agreement, then any such termination of the agreement shall be considered ineffective. Upon the occurrence of a change in control of the Company during the term (or during the six months following a termination of the agreement), the change in control agreement will automatically remain in effect for 12 months following the change in control and will then terminate.

        Each agreement provides for severance benefits upon the executive's Termination that occurs within six months before or within 12 months after a change in control of the Company. The amount of the severance benefit to which each executive would be entitled is equal to 125% of her Base Compensation. The executives and their eligible dependents would also be entitled to continued coverage under the medical and dental plans of the Company for so long as they were eligible to and did elect COBRA continuation coverage. The executives would be required to pay an amount for such coverage that is the same as what an active employee pays for such coverage.

        All severance benefits under the change in control agreement are contingent upon the executive's execution and non-revocation of a general release and waiver of claims against the Company. Further, the agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of the Company by the executives during and after their employment with the Company, and prohibiting the executives from competing with the Company and from soliciting its employees or customers during employment and after termination of employment for any reason. The non-competition and non-solicitation provisions apply for a period of 12 months following any termination of employment; provided, however, that the non-competition provisions shall not apply if the executive's Termination occurs other than within six months before or within 12 months after a change in control of the Company.

        Company Employee Covenant Agreements—Messrs. Joyce, Cook, Alberg and Faust.    The Company has entered into employee covenant agreements with Mitch Joyce, Mitch Cook, Jack Alberg and Scott Faust. The employee covenant agreements with Messrs. Joyce, Cook, Alberg and Faust will become effective immediately upon the consummation of the Merger.

        Each agreement provides for a retention bonus in the aggregate amount of $75,000 to be paid to the executive. $50,000 of such retention bonus will be paid upon the effective date of the agreement and the remaining $25,000 will be paid on the first anniversary of the effective date, provided the executive is still employed with the Company. If the executive's employment with the Company is terminated by the Company without cause prior to payment of the remaining $25,000, the executive shall continue to be entitled to the payment of such amount on the first anniversary of the effective date. In addition to the retention bonus, each executive will receive an award of 1,000 restricted stock units ("RSUs") pursuant and subject to the terms and conditions of the Company's 2008 Equity Incentive Plan. Provided that the executive remains employed with the Company through each of three vesting dates, 500 RSUs will vest 18 months following the effective date of the agreement, 250 RSUs will vest 30 months following the effective date and the remaining 250 RSUs will vest 42 months following the effective date.

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        The agreements also provide for severance benefits if the executive's Termination occurs on or before the second anniversary of the effective date of the agreement. The amount of the severance benefit to which each executive would be entitled is equal to his annual base salary.

        All severance benefits under the employee covenant agreement are contingent upon the executive's execution and non-revocation of a general release and waiver of claims against the Company. Further, the agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of the Company by the executives during and after their employment with the Company, and prohibiting the executives from competing with the Company and from soliciting its employees or customers during employment and after termination of employment for any reason. The non-competition provisions apply for a period of 90 days following any termination of employment and the non-solicitation provisions apply for a period of 12 months following any termination of employment; provided, however, that the non-competition provisions shall not apply, and the duration of the non-solicitation provisions shall be reduced from 12 months to six months, if the executive's employment is terminated by the Company other than for cause or by the executive for good reason.

        Central Employee Covenant Agreements—Messrs. Weise, Joyce, Cook, Alberg and Faust, and Mses. Taylor and Lorenson.    Central has entered into employee covenant agreements with Kurt Weise, Mitch Joyce, Mitch Cook, Jack Alberg, Scott Faust, Karin Taylor and Katie Lorenson. Each agreement became effective upon its signing. The agreements will expire without effect if the Merger is not consummated.

        In exchange for agreeing to restrictive covenants described in the agreement, each executive received a $500 payment from Central at the time the agreement was executed. Each executive will be permitted to retain the cash payment in the event his or her agreement expires. The agreement contains restrictive covenants prohibiting the unauthorized disclosure of confidential information of Central by the executives during and after their employment with Central. The agreements also prohibit the executives from competing with Central and from soliciting its employees or customers during employment and after certain terminations of employment. The non-competition provisions apply for a period of 90 days following any voluntary resignation of employment by the executive or termination of employment by Central for cause and the non-solicitation provisions apply for a period of 12 months following any termination of employment.

Indemnification and Insurance

        The Company will continue to indemnify current directors and officers of the Company that remain with the Company following the Merger and the new directors designated by Central. The Company will also continue to maintain directors' and officers' liability insurance for these directors and officers after the Merger.

        Further, The Company has agreed that for a period of three years following the Merger it will indemnify and advance expenses to the present and former directors and officers of Central and its subsidiaries with respect to matters occurring prior to the effective time of the Merger to the extent that such persons are entitled to indemnification under Central's governing documents, as in effect on the date of the Merger Agreement. In addition, the Company has agreed to acquire and maintain for a period of three years director's and officer's liability insurance that serves to cover the persons who are currently covered by Central's director and officer liability policies of insurance. Finally, the Company will indemnify and provide directors' and officers' liability insurance for the individuals at Central who serve with the Company after the consummation of the Merger.

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NASDAQ Listing

        The Company agreed to cause the shares of its common stock to be issued upon consummation of the Merger to be authorized for listing on The NASDAQ Global Select Market, subject to official notice of issuance, prior to the effective time of the Merger.

Restrictions on the Resale of the Shares of our Common Stock

        The shares of our common stock issued to the Shareholder pursuant to the Merger will not be registered under the Securities Act in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act for the issuance of shares not involving a public offering. Accordingly, SEC rules provide that the shares of our common stock issued in connection with the Merger may not be resold under Rule 144 of the Securities Act in the public market for at least six months after the Merger. Thereafter, the Shareholder, which is an affiliate of the Company, would be permitted to sell its shares of our stock under Rule 144 if it satisfies certain requirements of Rule 144, including requirements with respect to volume limitations, manner of sale and the filing of a Form 144 with the SEC, and further provided that we have made available adequate current public information concerning us. However, in connection with the execution of the Merger Agreement, the Shareholder and Mr. Morrison entered into the Shareholder Agreement, which generally prohibits them from selling or otherwise disposing of shares of the Company through and including the first anniversary of the effective time of the Merger. The Shareholder Agreement also grants to the Shareholder certain registration rights and permits sales of common stock issued in the Merger pursuant to such registrations beginning 180 days after the closing of the Merger.

THE MERGER AGREEMENT

        The following is a summary of the material terms of the Merger Agreement and related transactions. This description does not provide a complete description of all the terms and conditions of the Merger Agreement. It should be read in conjunction with the information provided under "The Merger" in this proxy statement. The summary provided below is qualified in its entirety by the appendices to this document, including the Merger Agreement, which is attached as Appendix A to this proxy statement and which is incorporated into this proxy statement by reference.

Conditions to Completion of the Merger

        The respective obligations of the Company and Central to complete the Merger are subject to the satisfaction of certain mutual conditions, including the following:

•

the receipt of the required approvals from the Company's shareholders;



•

the receipt of all consents and approvals and the expiration of all waiting periods with respect to such approvals;



•

the lack of any statute, rule, regulation, injunction or other order that would prohibit the consummation or performance of the transactions contemplated by the Merger Agreement;



•

the receipt of a tax opinion from McGladrey; and



•

the shares of common stock of the Company to be issued in the Merger having been approved for listing on The NASDAQ Global Select Market.

        In addition to the mutual conditions described above, the obligation of Central to complete the Merger is subject to the satisfaction, unless waived by Central, of the following other conditions:

•

the Company's representations and warranties must be true and correct as of the date of the Merger Agreement and as of the closing date (unless a specific date is stated), subject to the

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materiality standard set forth in the Merger Agreement, and Central must have received a certificate of the Company to that effect;

•

the Company must have complied in all material respects with all covenants and obligations required to be performed or complied with by it under the Merger Agreement prior to the effective time, and Central must have received a certificate of the Company to that effect;



•

there must be no proceedings against the Company challenging or preventing, delaying, making illegal or interfering with the transactions contemplated by the Merger Agreement; and



•

there must not be any event or occurrence that has had or would be reasonably likely to have a material adverse effect on the Company on a consolidated basis.

        In addition to the mutual conditions described above, the obligation of the Company to complete the Merger is subject to the satisfaction, unless waived by the Company, of the following other conditions:

•

Central's representations and warranties must be true and correct as of the date of the Merger Agreement and as of the closing date (unless a specific date is stated), subject to the materiality standard set forth in the Merger Agreement, and the Company must have received a certificate of Central to that effect;



•

Central must have complied in all material respects with all covenants and obligations required to be performed or complied with by it under the Merger Agreement prior to the effective time, and the Company must have received a certificate of Central to that effect;



•

The Shareholder and the affiliated parties subject to the Shareholder Agreement must have complied with the covenants and obligations required to be performed or complied with by them under the Shareholder Agreement prior to the effective time;



•

there must be no proceedings against Central challenging or preventing, delaying, making illegal or interfering with the transactions contemplated by the Merger Agreement;



•

there must not be any event or occurrence that has had or would be reasonably likely to have a material adverse effect on Central on a consolidated basis;



•

the amount of Central's adjusted shareholders' equity must not be less than $70 million; and



•

the Company must have received financing to fund the Merger Consideration.

        The foregoing is an outline of the types of conditions precedent to the obligations of the Company and Central contained in the Merger Agreement, a copy of which is included at Appendix A. You should carefully review the entire agreement and in particular Articles 9 and 10, containing the detailed conditions to each party's obligation to close.

Representations and Warranties of the Parties

        The Merger Agreement contains representations and warranties the Company and Central made to each other. The assertions embodied in those representations and warranties were made as of specific dates and are subject to important exceptions, limitations and supplemental information. The representations and warranties are qualified by information in confidential disclosure schedules that the Company and Central have exchanged in connection with signing the Merger Agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in important part by the underlying disclosure schedules. Please note that the representations and warranties made by the parties in the Merger Agreement will not survive the closing of the Merger.

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        The representations and warranties that the Company and Central made to each other include representations and warranties as to, among other things:

•

the corporate organization and existence of each party and its subsidiaries;



•

the corporate power and authority of each party to carry on its business, to enter into the Merger Agreement and to make the Merger Agreement valid and binding on it;



•

no conflict between the Merger Agreement and (i) its articles of incorporation and bylaws or (ii) laws, orders, agreements or similar instruments that are binding on that party and its subsidiaries;



•

required governmental approvals and regulatory consents;



•

the capitalization of each party and its subsidiaries;



•

the completeness of its filings with its regulators and the absence of any material misstatement or omission therein;



•

the adequacy of its allowance for loan and lease losses to provide for possible or specific losses on loans;



•

the lack of any undisclosed liabilities incurred outside of the ordinary course of business since September 30, 2014, the lack of changes in its business or operations since that date, and the lack of any material adverse effect on it since that date;



•

compliance with laws;



•

the lack of any litigation or regulatory violations or orders that would have a material adverse effect on it;



•

the absence of broker's fees, except as specifically disclosed by each party; and



•

the lack of any reason why regulatory approvals would be denied or delayed.

        In addition to the mutual representations and warranties described above, Central made representations and warranties as to, among other things:

•

the proper maintenance of corporate books and records;



•

the status of its assets and properties;



•

the timely filing of tax returns and payment of taxes;



•

the status of its employee benefit plans and arrangements;



•

the existence of material contracts and the lack of any defaults thereunder;



•

the insurance owned or held by Central;



•

compliance with and the lack of proceedings or orders related to environmental laws;



•

the proper administration of fiduciary accounts;



•

the lack of any claims for indemnification; and



•

the material interests and loans of insiders of Central.

        In addition to the mutual representations and warranties described above, the Company made representations and warranties as to, among other things:

•

the completeness and timeliness of the Company's filings with the SEC, including the financial statements included with such filings, and the absence of any material misstatement or omission therein.

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        The foregoing is an outline of the types of representations and warranties made by the parties and contained in the Merger Agreement, a copy of which is included at Appendix A. You should carefully review the entire agreement, and in particular Articles 4 and 5, containing the detailed representations and warranties of the parties.

Conduct of Business Pending Consummation of the Merger

        Each of the Company and Central have agreed to conduct its respective business in accordance with guidelines in the Merger Agreement.

Negative Covenants.

        Central has agreed that until the effective time, without the prior written consent of the Company, which may not be unreasonably withheld or delayed, and subject to exceptions specified in the Merger Agreement and in the disclosure schedules, it will not, and will cause its subsidiaries not to, among other things:

•

change its authorized or issued capital stock; grant any stock option or right to purchase shares of its capital stock; issue any security convertible into such capital stock or evidences of indebtedness (except in connection with customer deposits); grant any registration rights; purchase or redeem any shares of its capital stock; or declare or pay any dividend with respect to its capital stock, except that Central may declare and pay to its shareholders up to $11.8 million in cash dividends, which amount is subject to adjustment, and up to forty percent of Central's net income earned between January 31, 2015 and the effective time of the Merger;



•

amend its articles of incorporation or charter (or similar organizational documents) or bylaws or adopt any resolutions with respect to the same;



•

pay or increase any bonus, salary or other compensation to any of its shareholders, directors, officers or employees, except, with respect to employees, for normal salary and bonus increases made in the ordinary course of business consistent with past practice or made in accordance with any then-existing benefit plan;



•

enter into any employment, consulting, non-competition, change in control, severance or similar contract with any shareholder, director, officer or employee;



•

adopt, amend (except for any amendment necessary to comply with any legal requirement) or terminate, or increase the payments to or benefits under, any benefit plan;



•

enter into, terminate or extend any joint venture or similar agreement pursuant to any contract or any similar transaction;



•

except for the Merger Agreement, enter into any new, or modify, amend, renew or extend (through action or inaction) the terms of any existing lease, contract or license that has a term of more than one year or that involves the payment by it or any subsidiary of more than $100,000 in the aggregate, except for contracts affecting other real estate owned;



•

loan, or commit to make, renew, extend the term or increase the amount of any loan, to any person if such loan or any other loans to such person or an affiliate of such person is on the "watch list" or similar internal report, or has been classified as "substandard," "doubtful," "loss," or "other loans specially mentioned" or listed as a "potential problem loan"; provided, that Central and any subsidiary shall not be prohibited from honoring any existing contractual obligation;



•

sell (other than any sale in the ordinary course of business consistent with past practice), lease or otherwise dispose of any of its assets or properties or mortgage, pledge or allow for the

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imposition of any lien or other encumbrance upon any of its material assets or properties, except for tax and other liens that arise by operation of law and with respect to which payment is not past due and except for pledges or liens: (i) required to be granted in connection with the acceptance of government deposits; (ii) granted in connection with repurchase or reverse repurchase agreements; or (iii) otherwise incurred in the ordinary course of business consistent with past practice;

•

incur any obligation or liability (fixed or contingent) other than in the ordinary course of business consistent with past practice;



•

cancel or waive any claims or rights with a value in excess of $100,000;



•

make any investment of a capital nature exceeding $100,000 or aggregate investments of a capital nature exceeding $500,000;



•

except for the transactions contemplated by the Merger Agreement, merge or consolidate with or into any other person, or acquire any stock, equity interest or business of any other person;



•

materially change any policies and practices with respect to liquidity management and cash flow planning, marketing, deposit origination, lending, budgeting, profit and tax planning, accounting or any other material aspect of its business or operations, except for such changes as may be required in the opinion of the management of Central to respond to then-current market or economic conditions or as may be required by any regulatory authorities;



•

file any applications for additional branches, open any new office or branch, close any current office or branch or relocate operations from existing locations;



•

discharge or satisfy any material lien or encumbrance on its assets or repay any material indebtedness for borrowed money, except for obligations incurred and repaid in the ordinary course of business consistent with past practice;



•

enter into any contract or agreement to buy, sell, exchange or otherwise deal in any assets or series of assets in a single transaction in excess of $100,000 in aggregate value, except for sales of "other real estate owned" and other repossessed properties or the acceptance of a deed in lieu of foreclosure;



•

purchase or otherwise acquire any investments, direct or indirect, in any derivative securities, financial futures or commodities or enter into any interest rate swap, floors and option agreements or other similar interest rate management agreements; or



•

hire any employee with an annual salary in excess of $125,000, except for employees at will who are hired to replace employees who have resigned or whose employment has otherwise been terminated.

        The Company has agreed that until the effective time, without the prior written consent of Central, and subject to exceptions specified in the Merger Agreement and in the disclosure schedules, it will not, and will cause its subsidiaries not to, among other things:

•

make, declare, pay or set aside for payment any dividend on or in respect of, or declare of make any distribution on any shares of its common stock (other than dividends from its wholly owned subsidiaries to it or another of its wholly owned subsidiaries), except that the Company may declare and pay to its shareholders a quarterly cash dividend not to exceed $0.16 per share of the Company's common stock;



•

adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its common stock;



•

amend its articles of incorporation or bylaws (or similar organizational documents); or

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•

implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable regulatory accounting requirements.

Affirmative Covenants.

        Central has also agreed to take affirmative actions under the Merger Agreement, including the following:

•

conduct its business only in the ordinary course of business consistent with past practice;



•

use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers, employees and agents, and maintain the relations and goodwill with its suppliers, customers, landlords, creditors, employees, agents and others having business relationships with it;



•

confer with the Company concerning potentially material issues affecting Central's operations;



•

enter into loan and deposit transactions only in accordance with its formal loan policy and, in that connection, from the date of the Merger Agreement to the closing date, not enter into any new credit or new lending relationship in excess of $5,000,000 with any person and any director or officer of, or any owner of a 10% or greater equity interest in, such person;



•

consistent with past practice, maintain an allowance for possible loan and lease losses which is adequate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding;



•

maintain all of its assets necessary for the conduct of its business in the same operating condition and repair, reasonable wear and tear and damage by fire or unavoidable casualty excepted, and maintain policies of insurance upon its assets and with respect to the conduct of its business in amounts and kinds comparable to that in effect on the date of the Merger Agreement and pay all premiums on such policies when due;



•

only buy or sell Federal Funds or reinvest dividends paid on securities owned as of the date of the Merger Agreement, and not buy or sell any securities held, or intended to be held, for investment (as part of its application for regulatory approval of the Merger, the Company has entered into commitments with the Federal Reserve pursuant to which the Company has agreed that it will not enforce this covenant);



•

file in a timely manner all required filings with all regulatory authorities and cause such filings to be true and correct in all material respects; and



•

maintain its books, accounts and records in the usual, regular and ordinary manner, on a basis consistent with prior years, and comply with all legal requirements.

        The Company has also agreed to take affirmative actions under the Merger Agreement, including the following:

•

conduct its business in the ordinary course of business in all material respects;



•

use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships;



•

take no action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of Central or the Company to obtain any permits, consents, approvals and authorizations from any applicable regulatory authority for approval of the transactions contemplated by the Merger Agreement, to perform its covenants and agreements under the Merger Agreement or to consummate the transactions contemplated by the Merger Agreement; and

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•

assume the due and punctual performance and observance of the covenants to be performed by Central pursuant to the junior subordinated debentures issued by Central to certain trusts relating to the trust preferred securities issued by such trusts.

Shareholder Approvals.

        The Company has agreed that it will take, in accordance with applicable law and its respective governing documents, all actions necessary to convene a shareholder meeting and to solicit the required shareholder approval necessary to consummate the Merger and to issue shares of its common stock in satisfaction of a portion of the Merger Consideration, and to obtain from its shareholders a vote approving the Merger and issuance of shares. Central has already obtained approval of the Merger Agreement by the Shareholder.

Employment Agreements.

        The Company has agreed to enter into employment agreements with certain officers and employees of Central. See "Proposal No. 1—The Issuance of Common Stock in Connection with the Merger—Interests of Certain Persons—Employment-Related Agreements" for information concerning these employment agreements.

MidWestOne Foundation Donation.

        Central has agreed to make a donation of $950,000 to the MidWestOne Foundation, which will be payable at or prior to the closing. The Company shall, at or after the effective time, cause: (i) the number of directors of the MidWestOne Foundation to be set at six, consisting of three Central directors and three MidWestOne Financial directors; and (ii) the articles of incorporation of MidWestOne Foundation to be amended such that the purpose of the MidWestOne Foundation is to provide a pool of funds to be used to enhance community and cultural well-being within the trade areas in which the Company operates.

        The foregoing is an outline of the types of covenants made by the Company and Central contained in the Merger Agreement, a copy of which is included at Appendix A. You should carefully review the entire agreement and in particular Articles 6, 7 and 8 containing the detailed covenants of the parties.

Termination

        Ability to Terminate the Merger Agreement.    The Merger Agreement may be terminated and the Merger abandoned at any time before it becomes effective by the Company or Central, as follows:

•

by the mutual consent of the boards of directors of the Company and Central;



•

by the Company if (i) any closing condition of the Company has not been satisfied or satisfaction of any such condition becomes impossible (other than through the failure of the Company to comply with its obligations under the Merger Agreement or the Shareholder Agreement), and (ii) the Company has not waived such condition prior to the closing date;



•

by Central if (i) any closing condition of Central has not been satisfied or satisfaction of any such condition becomes impossible (other than through the failure of Central to comply with its obligations under the Merger Agreement or the Shareholder Agreement), and (ii) Central has not waived such condition prior to the closing date;



•

by the Company if certain issues with respect to the titles or surveys of Central's real property are discovered and Central fails to correct such issues;



•

by the Company or Central if environmental issues relating to Central's real property are discovered and the costs to remediate such issues exceed $1,000,000;

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•

by the Company or Central if any regulatory agency required to approve the proposed transactions has issued a final, non-appealable order denying the proposed transactions, or any application, filing or notice for regulatory approval has been withdrawn at the request or recommendation of the applicable regulatory agency; provided, that the party seeking to terminate the Merger Agreement may not terminate the Merger Agreement if its failure (or the failure of any of its affiliates) to fulfill its obligations under the Merger Agreement or the Shareholder Agreement is the cause of the denial or request to withdraw the application;



•

by Central, during the ten business day period commencing on the determination date, if the market value of the Company's common stock is less than $19.10 per share and the performance of the Company's common stock trails that of the NASDAQ Bank Index by certain agreed-upon amounts; provided, that the Company may offer to increase the cash portion of the Merger Consideration in such circumstance to prevent such a termination; or



•

if the closing shall not have occurred at or before June 30, 2015; provided, that the party seeking to terminate the Merger Agreement may not terminate the Merger Agreement if its failure (or the failure of any of its affiliates) to fulfill its obligations under the Merger Agreement or the Shareholder Agreement is the cause of the delay.

        Effect of Termination.    Except as described below with respect to confidentiality, if the Merger Agreement is terminated, it will become void, neither party shall have any liability under the Merger Agreement and all rights and obligations of each party under the Merger Agreement will cease. However, the confidentiality provisions contained in the Merger Agreement shall survive termination. Additionally, termination of the Merger Agreement will not release either party from any liability or obligation to the other party arising from an intentional breach of the Merger Agreement prior to its termination or the failure to timely satisfy the conditions precedent to the obligations of a party, if attributable to the actions or inactions of such party. Upon the termination of the Merger Agreement, the Shareholder Agreement will terminate as well.

        The foregoing is an outline of the termination provisions contained in the Merger Agreement, a copy of which is included at Appendix A. You should carefully review the entire agreement and in particular Article 11, containing the detailed termination provisions.

Waiver and Amendment

        Any provision in the Merger Agreement may be amended or waived by a written agreement executed by both parties to the Merger Agreement. However, the Merger Agreement may not be amended or waived if the amendment, modification or supplement materially adversely affects the shareholders of Central, as the shareholders of Central have already approved the Merger Agreement. Additionally, the Merger Agreement may not be amended or waived if the amendment, modification or supplement materially adversely affects our shareholders after our shareholders approve the issuance of shares.

Indemnification and Insurance

        The Company has agreed that for a period of three years following the Merger it will indemnify and advance expenses to the present and former directors and officers of Central and its subsidiaries with respect to matters occurring prior to the effective time of the Merger to the extent that such persons are entitled to indemnification under Central's governing documents as in effect on the date of the Merger Agreement.

        In addition, the Company has agreed to acquire and maintain for a period of three years director's and officer's liability insurance that serves to cover the persons who are currently covered by Central's

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director and officer liability policies of insurance, which insurance will contain substantially similar coverage and amounts as coverage provided under Central's current insurance policies.

Shareholder Agreement

        Concurrently with the execution of the Merger Agreement, the Company, the Shareholder, the TruPS Holder, the Insurance Agency Owner and Mr. Morrison entered into the Shareholder Agreement. Among other things, pursuant to the terms of the Shareholder Agreement:

•

at or prior to the closing of the Merger, the Company will acquire the Insurance Agency Units, representing 75% of the outstanding units of Central Insurance Agency, LLC, for $2.6 million;



•

the Company will purchase the TruPS from the TruPS Holder for aggregate consideration equal to the liquidation amount of the TruPS, plus accumulated and unpaid distributions through the date of purchase, no later than the second anniversary of the effective time of the Merger, or, if earlier, promptly upon:



•

the consummation of certain securities offerings by the Company in conjunction with a capital-raising transaction, or



•

the death of Mr. Morrison;



•

the Company will pay the TruPS Holder certain quarterly premiums from the effective time of the Merger until such time as the Company shall have purchased the TruPS;



•

the Shareholder, the Insurance Agency Owner, the TruPS Holder and Mr. Morrison are subject to certain customary "standstill" provisions until the one hundred eightieth day following the fourth anniversary of the effective time of the Merger;



•

the Shareholder, the Insurance Agency Owner, the TruPS Holder and Mr. Morrison shall vote their shares of common stock of the Company:



•

in favor of the nominees to the Company's board of directors, as approved by the board, through the Company's 2018 annual meeting of shareholders, provided that such nominees include those persons required to be appointed to the board pursuant to the Merger Agreement,



•

in favor of all proposals of the Company's board of directors, except any proposal that affects such party's interests in particular (as distinct from the interests of the shareholders of the Company, as a whole), through the Company's 2017 annual meeting of shareholders, and



•

against any shareholder proposal not approved or recommended by the Company's board of directors through the Company's 2017 annual meeting of shareholders;



•

the Shareholder and Mr. Morrison are entitled to certain preemptive rights with respect to Company securities until the first to occur of November 20, 2017 and the date on which the Shareholder or Mr. Morrison beneficially own less than ten percent of the outstanding shares of the common stock of the Company;



•

the Shareholder, the Insurance Agency Owner, the TruPS Holder and Mr. Morrison are subject to a general prohibition on the sale or transfer of shares of common stock of the Company until the first anniversary of the effective time of the Merger;



•

the Company is generally entitled to a right of first refusal in the event that any of the Shareholder, the Insurance Agency Owner, the TruPS Holder and Mr. Morrison desire to sell shares of common stock of the Company following the first anniversary of the effective time of the Merger; and

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•

the Shareholder is entitled to certain customary registration rights relating to the shares of common stock of the Company it receives in conjunction with the Merger following the one hundred eightieth day after the effective time of the Merger.

        Pursuant to its terms, the Shareholder Agreement will terminate upon the termination of the Merger Agreement. The provisions of the Shareholder Agreement regarding registration rights and certain indemnification matters relating thereto will generally terminate on the date on which no party entitled to such rights under the Shareholder Agreement beneficially owns at least ten percent of the shares of the common stock of the Company issued in conjunction with the Merger and entitled to be registered for resale pursuant to such registration rights.

        The foregoing description of the Shareholder Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Shareholder Agreement, a copy of which is included at Appendix A as Exhibit G to the Merger Agreement. You should carefully review the entire Shareholder Agreement for a complete understanding of its terms and provisions and the obligations of the Company, the Shareholder, the TruPS holder, the Insurance Agency Owner and Mr. Morrison thereunder.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

        The Merger, the issuance of shares of our common stock in connection with the Merger, and the other transactions associated with the Merger are not expected to have any tax effect on current Company shareholders for U.S. federal income tax purposes.

        The parties intend for the Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. It is a condition to the Company and Central's obligation to complete the Merger that they receive an opinion from McGladrey, dated the closing date of the Merger, to the effect that the Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code. This opinion will be based on representation letters provided by the Company and Central and on customary factual assumptions. The opinion will not be binding on the Internal Revenue Service. The Company and Central have not sought and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the Merger, and as a result, there can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below.

        THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER DESCRIBED IN THIS PROXY STATEMENT MAY NOT APPLY TO ALL SHAREHOLDERS AND WILL DEPEND ON EACH SHAREHOLDER'S SPECIFIC FACTUAL SITUATION. ACCORDINGLY, WE STRONGLY URGE YOU TO CONSULT YOUR OWN INDEPENDENT TAX ADVISOR FOR A FULL UNDERSTANDING OF THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO YOU.

ACCOUNTING TREATMENT

        The Merger will be accounted for using the acquisition method of accounting under GAAP as applied in the United States. Under this method of accounting, the Company will record the assets acquired and liabilities assumed of Central at their fair market values. Any difference between the purchase price and the fair market value of the net tangible and identifiable intangible assets and liabilities is recorded as goodwill, which, in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, will not be amortized for financial accounting purposes, but will be evaluated annually for impairment.

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CENTRAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        Central Bancshares, Inc. is the holding company for Central Bank, a Minnesota state non-member bank with its main office in Golden Valley, Minnesota. Central Bank is headquartered in Golden Valley, Minnesota and it operates a total of 22 branch locations in Minnesota, Wisconsin and Florida. It provides full service retail banking in the communities in which its branch offices are located. Central's net income for the year ended December 31, 2014 was $13.9 million compared to $13.8 million of net income for the year ended December 31, 2013. Return on assets and return on tangible common equity for year-ended 2014 were 1.20% and 18.54%, respectively, compared to 1.16% and 19.22%, respectively, for the year-ended 2013.

        Assets increased slightly during 2014 from $1.15 billion at December 31, 2013 to $1.18 billion at December 31, 2014. Deposits increased by 1.8% during this period to $1.06 billion. Total bank loans registered an increase of $98.9 million, or 12.3%, in the year-over-year comparisons. This loan growth helped maintain net interest income levels at nearly $48 million. Central's noninterest expense in 2014 was $39.6 million or 6.5% less than in 2013

        Asset quality continues to be strong, nonperforming loans covered under loss sharing agreements with the FDIC decreased $12 million from 2013 to 2014. OREO decreased significantly from $21.2 million in 2013 to $9.8 in 2014. Nonperforming non-covered loans remained stable at $4.1 million at December 31, 2014. As of December 31, 2014, the allowance for bank loan losses was $15.2 million, or 1.69% of total bank loans, compared with $19.3 million, or 2.41% of total bank loans, at December 31, 2013.

Critical Accounting Estimates

        Central's management has identified the following critical accounting policies and practices relative to the reporting of its results of operations and financial condition. These accounting policies relate to the allowance for loan losses, purchased loans, indemnification assets, business combinations, intangible assets, and fair value of available for sale investment securities.

Allowance for Loan Losses

        The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that collectability of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb estimated losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans and prior loan loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrower's ability to pay.

Purchased loans

        All purchased loans (nonimpaired and impaired) are initially measured at fair value as of the acquisition date in accordance with applicable authoritative accounting guidance. Credit discounts are included in the determination of fair value. An allowance for credit losses is not recorded at the acquisition date for loans purchased.

        Individual loans acquired through the completion of a transfer, including loans that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that Central will be unable to collect all contractually required payments receivable, are referred to herein as "purchased impaired loans." In determining the acquisition date fair value and estimated credit

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losses of purchased impaired loans, and in subsequent accounting, Central accounts for loans individually. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the "nonaccretable difference," are not recognized as a yield adjustment or as a loss accrual or valuation allowance. Expected cash flows at the purchase date in excess of the fair value of loans, if any, are recorded as interest income over the expected life of the loans if the timing and amount of the future cash flows are reasonably estimable. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. The present value of any decreases in expected cash flows after the purchase date is recognized by recording an allowance for credit losses and a provision for loan losses. If Central does not have the information necessary to reasonably estimate cash flows to be expected, it may use the cost-recovery method or cash-basis method of income recognition.

        For purchased loans acquired that are not deemed impaired at acquisition, credit loss discounts representing the principal losses expected over the life of the loan are a component of the initial fair value and are treated as a nonaccretable difference. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. Subsequent to the purchase date, the methods utilized to estimate the required allowance for credit losses for these loans are similar to originated loans. The remaining differences between the purchase price and the unpaid principal balance at the date of acquisition are recorded in interest income over the life of the loans.

Covered assets and indemnification assets

        Loans and OREO covered under loss-sharing or similar credit protection agreements with the FDIC are reported respectively in loans or OREO. The related FDIC indemnification asset is reported separately. In accordance with applicable authoritative accounting guidance, all purchased loans, OREO, and the related indemnification assets are recorded at fair value at the date of purchase.

        Subsequent to the initial recording, the indemnified asset is subject to impairment testing. Additionally, if expected cash flows on covered assets increase, Central accounts for the associated decrease in the indemnification asset by amortizing the change over the lessor of the contractual term of the indemnification agreement or the remaining life of the indemnification asset.

Fair Value estimates of business combinations

        Central records assets and liabilities acquired through a business combination at fair value. Since August 2009, Central has acquired 8 community banks. A brief summary of each is described below:

        On August 28, 2009, Central Bank assumed all nonbrokered deposits and approximately $186.4 million in loans and OREO, net of a $24.0 million discount, of Mainstreet Bank, headquartered in Forest Lake, Minnesota, in a loss-share transaction facilitated by the FDIC. Central Bank shares in the losses on assets (loans and OREO) covered under the agreement (referred to as "covered loans" and "covered other real estate owned"). On initial losses up to $8.4 million, the FDIC has agreed to cover losses 100 percent. On the next $90.0 million of losses, the FDIC has agreed to reimburse Central Bank for 80 percent of losses. On all remaining losses, the FDIC has agreed to reimburse Central Bank for 95 percent of losses. The transaction generated a 2009 pretax gain of $2.8 million and core deposit intangibles of $203,000.

        On October 2, 2009, Central Bank assumed all nonbrokered deposits and approximately $26.1 million in loans and OREO, net of a $10.0 million discount, of Jennings State Bank, headquartered in Spring Grove, Minnesota, in a loss-share transaction facilitated by the FDIC. Central Bank shares in the losses on assets (loans and OREO) covered under the agreement. On losses up to $7.0 million, the FDIC has agreed to reimburse Central Bank for 80 percent of losses. On losses

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exceeding $7.0 million, the FDIC has agreed to reimburse Central Bank for 95 percent of losses. The transaction generated a pretax gain of $7.5 million and core deposit intangibles of $50,000.

        On October 23, 2009, Central Bank assumed all nonbrokered deposits and approximately $52.0 million in loans and OREO, net of a $12.9 million discount, of Riverview Community Bank, headquartered in Otsego, Minnesota, in a loss-share transaction facilitated by the FDIC. Central Bank shares in the losses on assets (loans and OREO) covered under the agreement. On losses up to $16.0 million, the FDIC has agreed to reimburse Central Bank for 80 percent of losses. On losses exceeding $16.0 million, the FDIC has agreed to reimburse Central Bank for 95 percent of losses. The agreement also requires Central Bank to reimburse the FDIC at the end of a 10-year period for 50 percent of gains over and above certain stated amounts as specified in the agreement, if actual losses are less than certain benchmarks as established by the FDIC. As of December 31, 2014 and 2013, Central estimated no amounts will be due under this clause, and therefore, no liability has been recorded. The transaction generated a pretax gain of $7.3 million and core deposit intangibles of $100,000.

        On November 20, 2009, Central Bank assumed all nonbrokered deposits and approximately $30.6 million in loans and OREO, net of a $14.8 million discount, of Commerce Bank of Southwest Florida, headquartered in Fort Meyers, Florida, in a loss-share transaction facilitated by the FDIC. Central Bank shares in the losses on assets (loans and OREO) covered under the agreement. On losses up to $18.0 million, the FDIC has agreed to reimburse Central Bank for 80 percent of losses. On losses exceeding $18.0 million, the FDIC has agreed to reimburse Central Bank for 95 percent of losses. The agreement also requires Central Bank to reimburse the FDIC at the end of a 10-year period for 50 percent of gains over and above certain stated amounts as specified in the agreement, if actual losses are less than certain benchmarks as established by the FDIC. As of December 31, 2014 and 2013, the Company estimated approximately $106,000 will be due under this clause, and therefore, a liability has been recorded. The transaction generated a pretax gain of $8.7 million and core deposit intangibles of $100,000

        On April 15, 2011, Central Bank assumed all nonbrokered deposits and approximately $13.2 million in loans and OREO, net of a discount of $3.3 million, of Rosemount National Bank, headquartered in Rosemount, Minnesota, in a nonshared-loss transaction facilitated by the FDIC. The transaction generated a pretax gain of $560,000.

        On October 7, 2011, Central Bank assumed all nonbrokered deposits and approximately $343.4 million in loans and OREO, net of a discount of $89.2 million, of The Riverbank, headquartered in Osceola, Wisconsin, in a loss-share transaction facilitated by the FDIC. Central Bank shares in the losses on assets (certain loans and OREO) covered under the agreement. The agreement also requires Central Bank to reimburse the FDIC at the end of a 10-year period for 50 percent of gains over and above certain stated amounts as specified in the agreement, if actual losses are less than certain benchmarks as established by the FDIC. As of December 31, Central estimated approximately $260,000 will be due under this clause, and therefore, a liability has been recorded. The transaction generated a pretax gain of $11.7 million and core deposit intangibles of $1.3 million.

        On July 13, 2012, Central Bank acquired 100 percent of the stock of Bank of Naples, headquartered in Naples, Florida, including all liabilities and approximately $67.8 million in loans and OREO, net of a discount of $10.9 million, in a private transaction. The transaction resulted in goodwill of $437,000.

        On April 11, 2014 Central Bank acquired 100 percent of the stock of First Financial Holdings, Inc. and its wholly owned subsidiary, First National Bank and Trust, headquartered in Barron, Wisconsin, from a related party. The acquisition included total assets of approximately $43.0 million, including loans of approximately $27.0 million, and total liabilities of approximately $41.0 million, including

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deposits of approximately $38.0 million, from the Barron and Rice Lake, Wisconsin locations. The transaction resulted in goodwill of $88,000.

Intangible Assets

        Intangible assets arise from business combinations. As a general matter, intangible assets generated from business combinations and deemed to have indefinite lives are not subject to amortization and are instead tested for impairment at least annually. The intangible assets reflected on Central's financial statements are goodwill and core deposit intangibles. The establishment and subsequent amortization, when required by the accounting standards, of these intangible assets involves the use of significant estimates and assumptions. These estimates and assumptions include, among other things, the estimated cost to service deposits acquired, discount rates, estimated attrition rates and useful lives. Actual future results may differ from those estimates. Central assesses these intangible assets for impairment annually or more often if conditions indicate a possible impairment. Periodically Central evaluates the estimated useful lives of intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.

Fair Value of Available for Sale Securities

        Securities available for sale are reported at fair value, with unrealized gains and losses reported as a separate component of accumulated other comprehensive income, net of deferred income taxes. Declines in fair value of individual securities, below their amortized cost, are evaluated by management to determine whether the decline is temporary or "other-than-temporary." Declines in the fair value of available for sale securities below their cost that are deemed "other-than-temporary" are reflected in earnings as impairment losses. In determining whether other-than-temporary impairment exists, management considers whether: (1) Central has the intent to sell the security, (2) it is more likely than not that Central will be required to sell the security before recovery of the amortized cost basis, and (3) Central does not expect to recover the entire amortized cost basis of the security. When Central determines that other-than-temporary-impairment ("OTTI") has occurred, the amount of the OTTI recognized in earnings depends on whether it intends to sell the security or whether it is more likely than not Central will be required to sell the security before recovery of its amortized cost basis. If Central intends to sell the security, or it is more likely than not Central will be required to sell, the security before recovery of its amortized cost basis, the OTTI recognized in earnings is equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date. If Central does not intend to sell the security, and it is not more likely than not that it will be required to sell before recovery of its amortized cost basis, the OTTI is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected, using the original yield as the discount rate, and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in accumulated other comprehensive income (loss), net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. The assessment of whether an OTTI exists involves a high degree of subjectivity and judgment and is based on the information available to management at the time.

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Results of Operations—Three-Year Period Ended December 31, 2014

Summary

        Central's consolidated net income for the year ended December 31, 2014 was $13.9 million compared to net income of $13.8 million, for the year ended December 31, 2013. Noninterest expense decreased to $39.6 million for the year ended December 31, 2014 from $42.4 million for 2013. A decrease in noninterest income was a result of changes in the collectability of the FDIC indemnification asset. Also, gains on the sales of mortgage loans were down 45% from 2013 to 2014 due to a slowdown in volume.

        The consolidated net income for the year ended December 31, 2013 was $13.8 million compared to net income of $18.5 million for the year ended December 31, 2012. The decrease in consolidated net income was due primarily to the recording in 2012 of $5.8 million of acquisition gains relating to the RiverBank transaction. Net interest income increased by $3.5 million or 7.8%, from 2012 to 2013. This increase in net interest income was partially offset by an increase in noninterest expense to $42.3 million for the year ended December 31, 2013 from $40.1 million for 2012.

        Central ended 2014 with an allowance for loan losses of $15.2 million, which represented 142.7% coverage of its nonperforming loans at December 31, 2014 as compared to 85.2% coverage of its nonperforming bank loans at December 31, 2013 and 97.8% at December 31, 2012. Nonperforming loans totaled $10.7 million as of December 31, 2014 compared with $22.7 million and $22.5 million at December 31, 2013 and December 31, 2012, respectively. For the year ended December 31, 2014, the provision for loan losses decreased to $0.2 million from $3.3 million for 2013, which had decreased from $3.8 million for 2012.

        Various operating and equity ratios for Central Bank are presented in the table below for the years indicated. Average equity to average assets is a measure of capital adequacy that presents the percentage of average total shareholders' equity compared to Central's average assets. The equity to assets ratio is expressed using the period-end amounts instead of an average amount. As of December 31, 2014, under regulatory standards, Central Bank had capital levels in excess of the minimums necessary to be considered "well capitalized," which is the highest regulatory designation.

Net Interest Income

        Net interest income is the difference between interest income and fees earned on earning assets, less interest expense incurred on interest-bearing liabilities. Interest rate levels and volume fluctuations within earning assets and interest-bearing liabilities impact net interest income.

        The following table shows the consolidated average balance sheets, detailing the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid

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for the interest-bearing liabilities, and the related interest rates/yields for the periods, or as of the dates, shown. Average information is provided on a daily average basis.

Earning Assets, Sources of Funds, and Net Interest Margin

        Average earning assets increased $24.1 million, or 2.3%, to $1.07 billion in 2014 compared to $1.05 billion in 2013. Average earning assets in 2013 increased by $65.4 million, or 6.6%, from 2012. The growth in the average balance of earning assets in 2014 was due primarily to an increase in average loans outstanding of $55.5 million, or 7.0%, and a decrease in Central's portfolio of investment securities of $7.0 million, or 4.0%. Growth in the average balance of earning assets in 2013 was due primarily to an increase in its portfolio of investment securities of $39.6 million, or 29.5%, and an increase in average loans outstanding of $28.5 million, or 3.7%. Interest-bearing deposits averaged $770.4 million for the year ended December 31, 2014, a decrease of $48.7 million, or 5.9%, from the average balance for the year ended December 31, 2013. An increase in borrowed funds of $7.4 million was a result of the issuance of subordinated debt in June of 2013. Interest-bearing deposits averaged $819.1 million for the year ended December 31, 2013, an increase of $41.0 million, or 5.3%, from the average balance for the year ended December 31, 2012. A decrease in borrowed funds of $76.0 million during 2012 was a result of a payoff of FHLB advances.

        Interest income decreased $0.9 million, or 1.7%, to $53.3 million in 2014 from $54.2 million in 2013. Interest income in 2013 increased $2.8 million, or 5.4%, to $54.2 million from $51.4 million in 2012. Interest income declined in 2014 due primarily to lower yields in loans and investment securities, and despite higher volumes. In 2013, interest income rose due primarily to higher volumes in loans and

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investment securities, and despite lower yields. Central's yield on average earning assets was 4.96% in 2014 compared to 5.16% in 2013 and 5.23% in 2012. These declines were due to the historically lower rate environment resulting from the interest rate policy being pursued by the Federal Reserve.

        Interest expense decreased during 2014 by $0.7 million, or 11.2%, to $5.3 million from $6.0 million in 2013. Interest expense in 2013 decreased by $2.3 million, or 27.4%, from 2012. The decrease in interest expense during 2014 and the decrease in 2013 was due to the continued low interest rate environment coupled with lower volumes of interest-bearing deposits in 2014 and in 2013 the continued downward repricing of interest-bearing deposits. The average rate paid on interest-bearing liabilities was 0.66% in 2014 compared to 0.71% in 2013 and 0.98% in 2012.

        Net interest income, decreased 0.6% in 2014 to $48.0 million from $48.25 million in 2013. The lower rates paid on all categories of interest-bearing liabilities combined with their lower volumes; offset the lower yields on earning assets during 2014. Net interest income in 2013 increased by $3.5 million, or 7.8%, from 2012. Net interest margin, which is Central's net interest income expressed as a percentage of average earning assets was unchanged at 4.47% during 2014 compared to 4.59% in 2013, and was 4.39% in 2012. The net interest spread was 4.30% in 2014 compared to 4.45% in 2013 and 4.25% in 2012.

Provision for Loan Losses

        The provision for loan losses is a current charge against income and represents an amount which management believes is sufficient to maintain an adequate allowance for known and probable losses. In assessing the adequacy of the allowance for loan losses, management considers the size, composition, and quality of the loan portfolio measured against prevailing economic conditions, regulatory guidelines, historical loan loss experience and credit quality of the portfolio. When a determination is made by management to charge off a loan balance, such charge-off is recorded against the allowance for loan losses.

        Central's provision for loan losses was $0.2 million during 2014 compared to $3.3 million in 2013 and $3.8 million in 2012. The decrease in provision expense during 2014 was reflective of management's belief that the allowance for loan losses was adequate based on the inherent risk in the portfolio as of December 31, 2014. The higher level of provision expense during 2012 and 2013 than in 2014, was reflective of management's assessment of the then-current risk in the loan portfolio as compared to the allowance for loan losses. During 2012 and 2013, Central's net charge-offs were $6.3 million and $6.0 million, compared to $4.3 million in 2014. The reduction since 2013 in the level of charge-offs and provision expense is indicative of Central's belief that weak credits have been identified and adequately provided for. See further discussion of the nonperforming loans, under the Nonperforming Assets section.

Noninterest Income

        Total noninterest income declined to $5.8 million, a decrease of $5.5 million, from $11.2 million in 2013. Net gains on the sale of available for sale securities for the year ended December 31, 2014 decreased from $0.5 million for 2014 to $0.3 million for 2013. Mortgage origination declined to $1.3 million from $2.4 million in the year ended December 31, 2013, mainly due to a lower level of origination of loans sold on the secondary market, as refinancing activity slowed. As a result of changes in the estimated collectability of the indemnification asset from the FDIC, less FDIC indemnification income was recorded in 2014 by $4.0 million as compared to 2013.

        The decrease in noninterest income for 2013 compared to 2012 was primarily due to bargain purchase gains from business combinations recorded in 2012 of $5.8 million and mortgage origination fees decreasing by $0.7 million, or 21.7%, to $2.4 million for 2013, compared to $3.1 million for 2012. The drop in mortgage origination fees resulted from fewer loans being refinanced in 2013 compared to 2012.

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Noninterest Expense

        In 2014 noninterest expense decreased $2.8 million, or 6.6%, Salaries and employee benefits decreased $1.3 million or 5.5% compared to 2013. Full-time equivalent employee levels were 306, 298 and 311 at December 31, 2014, 2013 and 2012, respectively. With the exception of a small increase in FDIC insurance and an increase in the amortization of the FDIC indemnification asset most other noninterest expense categories experienced a decline for the year ended December 31, 2014, compared with 2013.

        Noninterest expense increased $2.3 million, or 5.7%, in 2013 compared to 2012. Salaries and employee benefits increased $0.4 million, or 1.8%, primarily due to annual salary and benefit rate increases. Net occupancy and equipment increased $0.7 million, or 12.7%, from $5.2 million in 2012 to $5.9 million in 2013. This increase was a result of an upgrade to various data processing systems in 2013. Also, OREO costs went from $0.9 million in 2012 to $1.7 million in 2013, and then down to $0.4 million in 2014. This cost fluctuation is reflective of the OREO that was acquired in several purchased banks. This work-out activity has now slowed significantly.

Financial Condition—December 31, 2014 and 2013

Summary

        Central's total assets increased $26.6 million, or 2.3%, to $1.18 billion as of December 31, 2014 from $1.15 billion as of December 31, 2013. This increase resulted primarily from loan growth of $98.9 million. Central's loan-to-deposit ratio, increased to 84.9% at year-end 2014 compared to 76.9% at year-end 2013.

        Total liabilities increased by $19.3 million from December 31, 2013 to December 31, 2014. The change was primarily due to an increase in deposits of $18.3 million, or 1.8%, to $1.06 billion as of December 31, 2014 from $1.04 billion at December 31, 2013. The increase in deposits was concentrated in noninterest bearing demand deposits.

        Shareholders' equity increased by $7.3 million, primarily due to 2014 net income of $13.9 million, as well as an increase in accumulated other comprehensive income of $3.0 million, reflecting the

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market value change of Central's portfolio of investment securities available for sale. The increases were partially offset by the payment of $9.6 million in cash dividends to common shareholders.

Investment Securities

        Central's investment securities portfolio is managed to provide both a source of liquidity and earnings. Investment securities serve as a source of liquidity, and the size of the portfolio varies along with fluctuations in levels of deposits and loans. Central's investment securities portfolio totaled $167.3 million at December 31, 2014 compared to $174.3 million at December 31, 2013. The decrease was due primarily to its need for liquidity as loan balances increased during 2014. Central's loan activity is discussed more fully in the Loans section while its deposits held are discussed more fully in the Deposits section.

        Securities available for sale are carried at fair value. As of December 31, 2014, the fair value of its securities available for sale was $128.5 million and the amortized cost was $129.7 million. There were $1.1 million of gross unrealized gains and $2.3 million of gross unrealized losses in its investment securities available for sale portfolio for a net unrealized gain of $1.2 million.

        U.S. government and agency securities as a percentage of total securities increased to 19.4% at December 31, 2014, from 18.3% at December 31, 2013. Investments in residential mortgage-backed securities increased to 67.7% of total securities at December 31, 2014, as compared to 63.5% of total securities at December 31, 2013. As of December 31, 2014 and 2013, Central's mortgage-backed and related securities portfolio consisted of securities backed by one- to four- family mortgage loans and underwritten to the standards of and guaranteed by the following government-sponsored agencies: FHLMC, FNMA and GNMA. The receipt of principal, at par, and interest on mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that Central believes that its mortgage-backed securities do not expose it to credit-related losses.

        Central considers many factors in determining the composition of its investment portfolio including tax-equivalent yield, credit quality, duration, expected cash flows and prepayment risk, as well as the liquidity position and the interest rate risk profile of Central Bank.

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        The composition of securities available for sale was as follows:

 

        Securities held to maturity are carried at amortized cost. As of December 31, 2014, the amortized cost of these securities was $38.8 million and the estimated fair value was $39.2 million.

        The composition of securities held to maturity was as follows:

 

        See Note 2. "Investment," and Note 17. "Fair Value Measurements" to Central's consolidated financial statements for additional information related to the investment portfolio.

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        Contractual maturities of available-for-sale securities:

        Contractual maturities of held-to-maturity securities:

Loans

        The composition of loans (before deducting the allowance for loan losses), was as follows:

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        Central's loan portfolio, before allowance for loan losses, increased 12.3% to $900.7 million as of December 31, 2014 from $801.9 million at December 31, 2013. A significant portion of the overall loan increase occurred in commercial real estate loans, which increased $62.9 million, or 15.7%, to $464.5 million as of December 31, 2014, from $401.7 million as of December 31, 2013. This growth was primarily due to increased activity with existing business customers and participations with other community banks. Residential real estate loans increased $22.4 million, or 17.7%, to $149.4 million as of December 31, 2014, from $127 million at December 31, 2013. Commitments under standby letters of credit, unused lines of credit and other conditionally approved credit lines, totaled approximately $132.9 million and $122.9 million as of December 31, 2014 and 2013, respectively.

        Central's loan to deposit ratio increased to 84.9% at year-end 2014 from 76.9% at the end of 2013. The increase in this ratio is reflective of the increased demand for loans in its market area.

Nonperforming Assets

        Interest on loans is accrued daily on the outstanding balances. For impaired loans, accrual of interest is discontinued on a loan when management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. Interest on these loans is recognized only when actually paid by the borrower if collection of the principal is likely to occur.

        Central determines a loan to be delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent, unless the credit is well secured and in the process of collection.

        Central experienced a significant decrease in total nonperforming assets during 2014 as compared to 2013. Total nonperforming assets were $20.5 million at December 31, 2014, compared to $43.9 million at December 31, 2013, a $23.4 million, or 53.3%, decrease. Nonperforming loans decreased $12.1 million during 2014, and nonperforming other assets (OREO) decreased $11.4 million. The largest category of nonperforming loans was commercial real estate loans, with a balance of $4.2 million at December 31, 2014. The remaining nonperforming loans consisted of $3.3 million residential real estate loans and $1.3 million construction loans. All other categories of nonperforming loans were $1.0 million or less. The decrease in OREO consisted of $15.1 million of sales in 2014 compared to $26.2 million in sales in 2013; however, loans transferred in to OREO was $5.1 million in 2014 compared to $17.0 million in 2013. All of the OREO property was acquired through foreclosures and Central is actively working to sell all properties held as of December 31, 2014. Other real estate is carried at the lower of cost or fair value less estimated costs of disposal. Additional discounts could be required to market and sell the properties, resulting in a write down through expense.

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        Recorded investment in nonaccrual loans and loans past due 90 days or more and still accruing interest by class of loans are as follows:

 

        Nonperforming loans decreased from $22.7 million, or 2.83% of total bank loans, at December 31, 2013, to $10.7 million, or 1.18% of total bank loans, at December 31, 2014. Central had a recorded investment of $15.2 million and $21.1 million in impaired loans which were modified in a troubled debt restructuring as of December 31, 2014 and 2013, respectively. Central modified 31 and 21 loans through rate reductions in 2014 and 2013, respectively. The remaining 24 and 29 noncovered loan modifications in 2014 and 2013, respectively, were extensions of maturities. In 2014, seven troubled debt restructurings totaling $0.8 million subsequently defaulted compared to 22 loans totaling $5.7 million which subsequently defaulted in 2013.

        A loan is considered to be impaired when, based on current information and events, it is probable that Central will not be able to collect all amounts due. The accrual of interest income on impaired loans is discontinued when there is reasonable doubt as to the borrower's ability to meet contractual payments of interest or principal. Interest income on these loans is recognized to the extent interest payments are received and the principal is considered fully collectible.

        The gross interest income collected and recognized in interest income in the years ended December 31, 2014, 2013 and 2012 on impaired loans was $3.8 million, $3.7 million, and $3.4 million, respectively.

        In addition to the non-performing and past due loans mentioned above, Central also has identified loans for which management has concerns about the ability of the borrowers to meet existing repayment terms. The loans are generally secured by either real estate or other borrower assets; reducing the potential for loss should they become non-performing. Although these loans are generally identified as potential problem loans, it is possible that they will not become non-performing loans.

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Allowance for Loan Losses

        The following table shows activity affecting the allowance for loan losses:

 

 

 

        Central utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under its risk-rating system, Central classifies problem and potential problem loans as "Special Mention," "Substandard" and "Doubtful," which correspond to risk ratings six, seven and eight, respectively. Substandard loans, risk-rated seven, include those characterized by the distinct possibility that Central will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk-rated eight, have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose Central to sufficient risk to warrant classification in one of the aforementioned

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categories but possess weaknesses that deserve management's close attention, are deemed to be Special Mention, or risk-rated six. Risk ratings are updated any time the situation warrants.

        There were no changes to Central's methodology for determining the allowance for loan losses during the year ended December 31, 2014. Classified and impaired loans are reviewed per the requirements of FASB ASC Topic 310. Central reviews all impaired and nonperforming loans individually on a quarterly basis to determine their level of impairment due to collateral deficiency or insufficient cash-flow based on a discounted cash-flow analysis. Loans 90+ days past due that are still accruing interest are reviewed no less than quarterly to determine if there is a strong reason that the credit should not be placed on non-accrual.

Intangible Assets

        Goodwill represents the excess of the purchase price over the fair value of net assets acquired in the Bank of Naples and First National Bank of Barron acquisition occurring on July 13, 2012 and April 11, 2014, respectively. Goodwill will be subject to an impairment test at least on an annual basis. Central did not recognize any goodwill impairment in 2014 or 2013.

        As a result of its acquisitions, Central has other intangible assets consisting of core deposit intangibles that had, as of December 31, 2014 and 2013, a remaining weighted-average amortization period of approximately 1.73 and 2.09 years, respectively.

        Intangible assets totaled $0.5 million and $0.8 million at December 31, 2014 and 2013, respectively. Intangible assets declined by $0.3 million during the year ended December 31, 2014, due to core deposit amortization during the year. There was no impairment charges during 2014 or 2013 related to its other intangible assets.

Deposits

        The deposit portfolio grew $18.3 million, or 1.8%, in 2014 to $1.06 billion at December 31, 2014 from $1.04 billion at December 31, 2014. There was a notable shift in the makeup of the deposit portfolio as customer's moved money out of time deposits to demand and savings deposits. Noninterest bearing demand deposits increased $43.1 million or 16.6% in 2014 to $303.0 million from $259.9 million. Money market and savings accounts also increased during the year from $480.0 million at December 31, 2013 to $486.8 million at December 31, 2014. Time certificates, on the other hand, decreased $31.5 million or 10.4% from a December 31, 2013 balance of $302.7 million to a balance of $271.2 million at December 31, 2014.

        Composition of deposits:

        Included in the totals above are approximately $257.1 million and $240.3 million of deposits that meet or exceed the FDIC insurance limit of $250,000 as of December 31, 2014 and 2013, respectively.

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        Scheduled maturities of time deposits are as follows:

Short-Term Borrowings

        Securities sold under agreements to repurchase remained consistent with a December 31, 2014 balance of $5.3 million compared to a December 31, 2013 balance of $5.5 million. Central has pledged certain investment securities with a fair value of $10.7 million and $12.3 million at December 31, 2014 and 2013, respectively. The agreements mature daily and carry a weighted-average interest rate of 1.43% and 2.55% at December 31, 2014 and 2013, respectively.

Long-term Debt and Other Borrowings

        Long-term debt is in the form of subordinated debentures and junior subordinated debentures that have been issued to a statutory trust that issued trust preferred securities.

Subordinated Notes Payable

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Notes Payable

        The revolving and term note debt payable to US Bank is secured by 100% of the stock of the Bank. The agreement contains restrictions regarding, among other matters, a requirement to maintain "well-capitalized" status; a requirement to not exceed certain ratios of noncurrent loans, classified assets, and OREO to capital; a minimum allowance for loan losses as a percent of total loans; and a minimum fixed charge coverage ratio. Central was in compliance with the requirements of the agreement as of December 31, 2014 and 2013.

Off-Balance Sheet Transactions

        During the normal course of business, Central becomes a party to financial instruments with off-balance-sheet risk in order to meet the financing needs of its customers. These financial instruments include commitments to make loans and open-ended revolving lines of credit. Central follows the same credit policy (including requiring collateral, if deemed appropriate) to make such commitments as is followed for those loans that are recorded in its financial statements. Central's exposure to credit losses in the event of nonperformance is represented by the contractual amount of the commitments. Central's management does not expect any significant losses as a result of these commitments. Off-balance-sheet transactions are more fully discussed in Note 13 to Central's consolidated financial statements.

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        The following table summarizes Central's off-balance-sheet commitments by expiration period, as of December 31, 2014:

Capital Resources

        The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks. Risk-based capital ratios are established by allocating assets and certain off-balance-sheet commitments into four risk-weighted categories. These balances are then multiplied by the factor appropriate for that risk-weighted category. The guidelines require bank holding companies and their subsidiary banks to maintain a total capital to total risk-weighted asset ratio of not less than 8.00%, of which at least one half must be Tier 1 capital, and a Tier 1 leverage ratio of not less than 4.00%. As of December 31, 2014, Central had a total capital to total risk-weighted asset ratio of 12.53%, a Tier 1 capital to risk-weighted asset ratio of 11.28% and a Tier 1 leverage ratio of 7.88%; Central Bank had ratios of 13.59%, 12.34%, and 8.62%, respectively. Central Bank exceeds the regulatory capital guidelines necessary to be considered well-capitalized.

Liquidity

        Liquidity management involves the ability to meet the cash flow requirements of depositors and borrowers. Central conducts liquidity management on both a daily and long-term basis. Central adjusts its investments in liquid assets based upon management's assessment of expected loan demand, projected loan sales, expected deposit flows, yields available on interest-bearing deposits, and the objectives of its asset/liability management program. Excess liquidity is invested according to its investment policy and managed to policy parameters detailed in its asset-liability policy.

        Central's most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold. The balances of these assets are dependent on its operating, investing, lending, and financing activities during any given period.

        Generally, Central's principal sources of funds are deposits, principal repayments on loans, proceeds from the sale of loans, cash flow from its investment portfolio, Central's Federal Funds lines of credit, and funds provided by operations. While scheduled loan amortization and maturing interest-bearing deposits are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by economic conditions, the general level of interest rates, and competition. Central utilized particular sources of funds based on comparative costs and availability. Central Bank is a member of the Federal Home Loan Bank system and utilizes it as a secondary source of liquidity. At December 31, 2014 and 2013, Central had no advances from the FHLB outstanding, although its borrowing capacity was $92.0 million at December 31, 2014.

        Net cash provided by operations was another major source of liquidity. The net cash provided by operating activities was $4.2 million for the year ended December 31, 2014. The net cash used in operating activities was $5.7 million for the year ended December 31, 2013.

Recent Accounting Pronouncements

        In April 2014, the FASB issued ASU No. 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer

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Mortgage Loans Upon Foreclosure. This ASU provides guidance on when a loan should be derecognized and collateral assets recognized during an in substance repossession or foreclosure. The objective of this ASU is to eliminate diversity in practice related to the topic. The ASU states creditors are considered to have physical possession of residential real estate property when either the creditor obtains title for the property or the borrower transfers all interest in the property through a deed or other legal agreement. When physical possession occurs, the loan should be derecognized and collateral assets recognized. This update is effective for annual and interim periods beginning after December 15, 2014, and is not expected to have a material impact on Central's consolidated financial statements.

        In September 2014, the FASB issued ASU No. 2014-09, Revenue Recognition—Revenue from Contracts with Customers (Topic 606). This ASU provides guidance on when to recognize revenue from contracts with customers. The objective of this ASU is to eliminate diversity in practice related to this topic and to develop guidance that would streamline and enhance revenue recognition requirements. The ASU defines five steps to recognize revenue including, identify the contract with a customer, identify the performance obligations in the contract, determine a transaction price, allocate the transaction price to the performance obligations and then recognize the revenue when or as the entity satisfies a performance obligation. This update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and Central is currently assessing the potential impact to the consolidated financial statements.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth certain information with respect to the beneficial ownership of our common stock at February 11, 2015, by each director, by each named executive officer of the Company, and by all directors and executive officers of the Company as a group. Beneficial ownership has been determined for this purpose in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act'), under which a person is deemed to be the beneficial owner of securities if he or she has or shares voting power or investment power in respect of such securities or has the right to acquire beneficial ownership of securities within 60 days of February 11, 2015. Percentage of common stock outstanding before the Merger is based on 8,358,473 shares of our common stock outstanding as of February 11, 2015, and percentage of common stock outstanding after

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the Merger assumes the issuance of 2,723,083 shares of our common stock in connection with the Merger.

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        Other Beneficial Owners.    The following table sets forth certain information on each person known to the Company to be the beneficial owner of more than 5% of the Company's common stock. The ownership information is as of February 11, 2015.

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SHAREHOLDER COMMUNICATIONS WITH THE BOARD AND
NOMINATION AND PROPOSAL PROCEDURES

General Communications with the Board

        Shareholders may contact the Company's board of directors by contacting the Corporate Secretary at MidWestOne Financial Group, Inc., 102 South Clinton Street, P.O. Box 1700, Iowa City, Iowa 52244-1700 or (319) 356-5800. All communications will be forwarded directly to either the Chairman of the Board, the chairman of the Audit Committee or the Chief Executive Officer, as appropriate, unless they are primarily commercial in nature or related to an improper or irrelevant topic.

Nominations for Director

        In accordance with our bylaws, a shareholder may nominate a director for election to the board at an annual meeting of shareholders by delivering written notice of the proposed director nomination to our Corporate Secretary, at the above address, not less than 60 days nor more than 90 days in advance of the first anniversary date (month and day) of the previous year's annual meeting. However, because the Company anticipates holding its 2015 annual meeting in June of 2015, which will be more than 30 days after the anniversary of the last year's meeting, we will announce, in a Form 8-K, the date by which shareholder nominees for director for the 2015 annual meeting need to be received by the Company. Such nominations must include the following information with respect to each nominee: name; age; business and residential address; principal occupation or employment; the class and number of shares of the Company's stock which are beneficially owned by him or her; and any other information relating to him or her that would be required to be disclosed on Schedule 13D pursuant to regulations under the Exchange Act. In addition, the following information about the shareholder making the nomination must be included: name and address; name and principal address of any other beneficial shareholders known by him or her to support the shareholder's nominee; and the class and number of shares of the Company's stock which are beneficially owned by all such persons. Our board of directors may reject any nomination by a shareholder, and the proposed nomination will not be accepted if presented at the shareholder meeting, if such nomination is not timely made in accordance with the foregoing requirements.

Other Shareholder Proposals

        In accordance with our bylaws, a shareholder may propose other business to be considered at an annual meeting of shareholders by delivering written notice of the proposed business to our Corporate Secretary, at the above address, not less than 60 days nor more than 90 days in advance of the first anniversary date (month and day) of the previous year's annual meeting. Such notice to the Corporate Secretary must include: a brief description of the business desired to be brought before the annual meeting; the reasons for conducting such business at the annual meeting; any material interest in such business of such shareholder; and the beneficial owner, if any, on whose behalf the proposal is made. In addition, the following information about the shareholder making the proposal must be included: name and address of the shareholder and any other beneficial owner on whose behalf the proposal is brought; and the class and number of shares of the Company's capital stock that are owned beneficially and of record by all such persons. Our board of directors may reject any proposal by a shareholder, and the proposal will not be accepted if presented at the shareholder meeting, if such proposal is not timely made in accordance with the foregoing requirements.

        For all other shareholder proposals to be considered for inclusion in our proxy statement and form of proxy relating to our annual meeting of shareholders to be held in 2015, pursuant to our bylaws shareholder proposals normally would have needed to be received by our Corporate Secretary, at the above address, no later than November 14, 2014 and must otherwise comply with the rules and

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regulations set forth by the SEC. However, because the Company anticipates holding its 2015 annual meeting in June of 2015, which will be more than 30 days after the anniversary of last year's meeting, the SEC regulations provide that any proposals need to be received in a reasonable time before the Company prints and sends its proxy materials. For the 2015 annual meeting, the Company would appreciate notice of any such proposals prior to April 1, 2015.

WHERE YOU CAN FIND MORE INFORMATION

        The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended. As a result, the Company files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at its public reference room at 100 F Street NE, Washington, DC 20549. You can call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. The Company's SEC filings are also available free of charge to the public at the website maintained by the SEC at www.sec.gov, as well as on our website at www.midwestone.com. Information on the Company's website is not incorporated by reference herein, and the Company's web address is included as an inactive textual reference only. Upon written or oral request of any person, the Company will provide, without charge and by first class mail or other equally prompt means within one business day of receipt of such request, a copy of any or all of the documents incorporated herein by reference, other than exhibits to the documents, unless the exhibits are specifically incorporated by reference into the documents that this proxy statement incorporates. Requests for copies in writing or by telephone should be directed to:

MidWestOne Financial Group, Inc.
Attn: Corporate Secretary
102 South Clinton Street, P.O. Box 1700
Iowa City, Iowa 52244-1700
(319) 356-5800

        The SEC allows the Company to "incorporate by reference" the information we file with the SEC, which means that the Company can disclose important information to you by referring to our other filings with the SEC. The information incorporated by reference is considered a part of this proxy statement, and information that the Company files later with the SEC will automatically update and supersede the information contained in this proxy statement. The Company incorporates by reference the following documents the Company has filed and will file after the date hereof with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than information in these documents that is not deemed to be filed with the SEC:

•

our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 5, 2015; and



•

our Current Reports on Form 8-K filed with the SEC on February 9, 2015.

        A statement contained in this proxy statement or in a document incorporated or deemed to be incorporated by reference into this proxy statement will be deemed to be modified or superseded to the extent that a statement contained in any subsequently filed document that is incorporated by reference into this proxy statement modifies or supersedes that statement. Any statements so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this proxy statement. The information contained in this proxy statement with respect to the Company was provided by the Company and the information contained in this proxy statement with respect to Central was provided by Central.

* * * * *

ALL SHAREHOLDERS ARE URGED TO SIGN AND MAIL THEIR PROXIES PROMPTLY.

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