PRESS RELEASE
Date: | October 21, 2004 |
From: | MutualFirst Financial, Inc. |
For Publication: | Immediately |
Contact: | Tim McArdle, Senior Vice President and Treasurer of MutualFirst Financial, Inc. (765) 747-2818 |
MutualFirst Announces Third Quarter 2004 Earnings
MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of Mutual Federal Savings Bank (the "Bank"), announced today that net income for the third quarter ended September 30, 2004 was $1.7 million, or $.38 for basic and $.37 for diluted earnings per share. This compared to net income for the comparable period in 2003 of $2.0 million, or $.41 for basic and $.39 for diluted earnings per share. The decrease was due primarily to a reduction in net interest income. Annualized return on assets was .84% and return on equity was 7.62% for the third quarter of 2004 compared to .98% and 8.27% respectively, for the same period of last year.
Net income for the nine months ended September 30, 2004 was $5.5 million or $1.17 for basic and $1.13 for diluted earnings per share. This compared to net income for the comparable period in 2003 of $6.4 million or $1.28 for basic and $1.24 for diluted earnings per share. Annualized return on assets was .90% and return on equity was 7.74% for the first nine months of 2004 compared to 1.09% and 9.03% respectively, for the same period of last year.
Assets totaled $830.1 million at September 30, 2004, a $6.4 million increase from December 31, 2003. Loans, excluding loans held for sale, increased $2.3 million. Consumer loans increased $5.2 million, or 2.7%, and commercial business loans increased $6.5 million, or 14.6%, while commercial and residential mortgage loans held in portfolio decreased $9.4 million, or 2.0%. Mortgage loans held for sale decreased slightly and mortgage loans sold year-to-date totaled $36.6 million. Investment securities available for sale increased $6.2 million, or 18.4%, to increase liquidity.
Allowance for loan losses increased $244,000 from $6.8 million at December 31, 2003 to $7.0 million at September 30, 2004. Net charge offs for the first nine months of 2004 were $865,000 or .16% of average loans on an annualized basis compared to $654,000, or ..13% of average loans for the comparable period in 2003. As of September 30, 2004 the allowance for loan losses as a percentage of loans receivable and non-performing loans was .98% and 172.85%, respectively.
Total deposits were $587.5 million at September 30, 2004 an increase of $8.2 million, or 1.4% from December 31, 2003. Of this growth, $5.4 million was in non-interest bearing deposits. Total borrowings increased $1.2 million to $138.3 million at September 30, 2004 from $137.1 million at December 31, 2003.
Stockholders' equity decreased $7.8 million from $97.5 million at December 31, 2003, to $89.7 million at September 30, 2004. The decrease was due primarily to the repurchase of 535,852 shares of common stock for $12.6 million and dividend payments of $1.8 million. These decreases were partially offset by net income of $5.5 million, Employee Stock Ownership Plan (ESOP) shares earned of $560,000, RRP shares earned of $450,000 and stock options exercised for $355,000. Also, the market value of securities available for sale compared to their book value decreased $256,000 from a gain of $234,000 at December 31, 2003 to a loss of $22,000 at September 30, 2004.
Net interest income decreased $225,000 from $6.8 million for the three months ended September 30, 2003, to $6.6 million for the three months ended September 30, 2004 due to lower net interest margin and a lower volume of net earning assets. The net interest margin decreased from 3.70% for the three-month period ended September 30, 2003, to 3.51% for the comparable period in 2004 as yields on interest-earning assets decreased at a faster rate than the decrease in the cost of interest-bearing liabilities.
Net interest income decreased $294,000 for the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003 due to a lower net interest margin and a lower volume of net earning assets. The net interest margin decreased from 3.78% for the nine-month period ended September 30, 2003, to 3.60% for the comparable period in 2004 for the same reason mentioned above.
The provision for loan losses for the third quarter of 2004 was $350,000, $25,000 more than last year's comparable period. Non-performing loans to total loans at September 30, 2004 were .57% compared to .46% at December 31, 2003. Non-performing assets to total assets were .61% at September 30, 2004 compared to .57% at December 31, 2003.
Non-interest income increased $436,000 to $1.6 million for the three months ended September 30, 2004 compared to $1.1 million for the same period in 2003. The increase was primarily due to an increase in gains on sale of loans of $201,000 in the third quarter of 2004 compared to the third quarter of 2003. Also, service fee income and commissions were up $109,000 when comparing the two quarters due to an increased number of checking accounts outstanding and increased sales of investment products. In addition, equity in gains of limited partnerships was up $107,000 when compared to the year ago quarter.
Non-interest income for the nine months ended September 30, 2004 was little changed when compared to the nine months ended September 30, 2003. An increase in the equity in gains of limited partnerships of $353,000 was partially offset by a lower increase in cash surrender value of life insurance of $290,000 in the 2004 period compared to the comparable period in 2003.
Non-interest expense increased $441,000 or 8.8% to $5.5 million for the three months ended September 30, 2004 compared to $5.0 million for the same period in 2003. Salaries and employee benefits were up $180,000, primarily due to a $73,000 increase in health insurance premiums and a $47,000 reduction of deferred compensation related to mortgage originations when comparing the two quarters. For the nine-month period non-interest expense was up $836,000 or 5.5% when comparing the first nine months of 2004 to the same period in 2003. The majority of this increase was due to a $473,000 increase in salaries and employee benefits (which included a $189,000 increase in health insurance costs).
Income tax expense was little changed for the three months ended September 30, 2004 compared to the same period in 2003 due to lower taxable income being offset by a higher effective tax rate. For the nine-month period ended September 30, 2004, income tax expense decreased $179,000 compared to the same period in 2003. The decrease was due primarily to decreased taxable income. The effective tax rate increased from 27.3% to 29.0% when comparing the two nine month periods ended September 30, 2003 and 2004, respectively.
MutualFirst Financial, Inc. and Mutual Federal Savings Bank are headquartered in Muncie, Indiana with seventeen full service offices in Delaware, Randolph, Kosciusko and Grant counties.
Statements contained in this release, which are not historical facts, are forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.
MUTUALFIRSTFINANCIAL INC. | ||||||
30-Sep | 31-Dec | |||||
Selected Financial Condition Data(Unaudited): | 2004 | 2003 | ||||
(000) | (000) | |||||
Total Assets | $830,142 | $823,791 | ||||
Cash and cash equivalents | 17,849 | 23,068 | ||||
Loans held for sale | 1,371 | 1,975 | ||||
Loans receivable, net | 706,028 | 703,981 | ||||
Investment securities available for sale, at fair value | 39,640 | 33,472 | ||||
Total deposits | 587,539 | 579,362 | ||||
Total borrowings | 138,344 | 137,103 | ||||
Total stockholders' equity | 89,732 | 97,520 | ||||
Three Months | Three Months | Three Months | Nine Months | Nine Months | ||
Ended | Ended | Ended | Ended | Ended | ||
30-Sep | 30-Jun | 30-Sep | 30-Sep | 30-Sep | ||
Selected Operations Data (Unaudited): | 2004 | 2004 | 2003 | 2004 | 2003 | |
(000) | (000) | (000) | (000) | (000) | ||
Total interest income | $10,979 | $11,048 | $11,532 | $33,224 | $35,060 | |
Total interest expense | 4,368 | 4,211 | 4,696 | 12,946 | 14,488 | |
Net interest income | 6,611 | 6,837 | 6,836 | 20,278 | 20,572 | |
Provision for loan losses | 350 | 530 | 325 | 1,107 | 1,075 | |
Net interest income after provision | ||||||
for loan losses | 6,261 | 6,307 | 6,511 | 19,171 | 19,497 | |
Non-interest income | ||||||
Fees and service charges | 806 | 743 | 745 | 2,251 | 2,192 | |
Equity in gains (losses) of limited partnerships | 69 | 19 | (38) | 90 | (262) | |
Commissions | 225 | 154 | 178 | 522 | 528 | |
Net gain on loan sales and servicing | 152 | 217 | (50) | 764 | 873 | |
Increase in cash surrender value of life insurance | 255 | 247 | 254 | 760 | 1,050 | |
Other income | 63 | 88 | 45 | 191 | 149 | |
Total non-interest income | 1,570 | 1,468 | 1,134 | 4,578 | 4,530 | |
Non-interest expense | ||||||
Salaries and benefits | 3,304 | 3,329 | 3,124 | 10,073 | 9,601 | |
Occupancy and equipment | 748 | 684 | 708 | 2,129 | 1,993 | |
Data processing fees | 179 | 150 | 140 | 526 | 449 | |
Deposit insurance expense | 21 | 22 | 22 | 65 | 67 | |
Marketing | 208 | 147 | 203 | 449 | 526 | |
Other expenses | 999 | 866 | 821 | 2,756 | 2,527 | |
Total non-interest expense | 5,459 | 5,198 | 5,018 | 15,998 | 15,163 | |
Income before taxes | 2,372 | 2,577 | 2,627 | 7,751 | 8,864 | |
Income tax provision | 648 | 763 | 644 | 2,245 | 2,424 | |
Net income | $1,724 | $1,814 | $1,983 | $5,506 | $6,440 | |
Three Months | Three Months | Three Months | Nine Months | Nine Months | ||
Ended | Ended | Ended | Ended | Ended | ||
Selected Financial Ratios and Other Financial Data | 30-Sep | 30-Jun | 30-Sep | 30-Sep | 30-Sep | |
(Unaudited): | 2004 | 2004 | 2003 | 2004 | 2003 | |
Share and per share data: | ||||||
Average common shares outstanding | ||||||
Basic | 4,557,861 | 4,732,176 | 4,876,306 | 4,695,246 | 5,014,673 | |
Diluted | 4,698,863 | 4,879,960 | 5,070,744 | 4,851,521 | 5,189,196 | |
Per share: | ||||||
Basic earnings | $0.38 | $0.38 | $0.41 | $1.17 | $1.28 | |
Diluted earnings | $0.37 | $0.37 | $0.39 | $1.13 | $1.24 | |
Dividends | $0.12 | $0.12 | $0.11 | $0.35 | $0.31 | |
Dividend payout ratio | 32.43% | 32.43% | 28.21% | 30.97% | 25.00% | |
Performance Ratios: | ||||||
Return on average assets (ratio of net | ||||||
income to average total assets)(1) | 0.84% | 0.89% | 0.98% | 0.90% | 1.09% | |
Return on average equity (ratio of net | ||||||
income to average equity)(1) | 7.62% | 7.59% | 8.27% | 7.74% | 9.03% | |
Interest rate spread information: | ||||||
Average during the period(1) | 3.39% | 3.53% | 3.55% | 3.46% | 3.61% | |
Net interest margin(1)(2) | 3.51% | 3.66% | 3.70% | 3.60% | 3.78% | |
Efficiency Ratio | 66.73% | 62.59% | 62.96% | 64.36% | 60.41% | |
Ratio of average interest-earning | ||||||
assets to average interest-bearing | ||||||
liabilities | 105.37% | 106.04% | 106.44% | 106.06% | 106.54% | |
Allowance for loan losses: | ||||||
Balance beginning of period | $7,020 | $6,799 | $6,539 | $6,779 | $6,286 | |
Charge offs: | ||||||
One- to four- family | 50 | 111 | 53 | 211 | 146 | |
Multi-family | 0 | 0 | 0 | 0 | 0 | |
Commercial real estate | 21 | 13 | 0 | 34 | 114 | |
Construction or development | 0 | 0 | 0 | 0 | 0 | |
Consumer loans | 228 | 255 | 180 | 737 | 561 | |
Commercial business loans | 254 | 0 | 11 | 369 | 30 | |
Sub-total | 553 | 379 | 244 | 1,351 | 851 | |
Recoveries: | ||||||
One- to four- family | 1 | 2 | 0 | 21 | 27 | |
Multi-family | 0 | 0 | 0 | 0 | 0 | |
Commercial real estate | 154 | 2 | 64 | 314 | 64 | |
Construction or development | 0 | 0 | 0 | 0 | 0 | |
Consumer loans | 51 | 66 | 17 | 151 | 97 | |
Commercial business loans | 0 | 0 | 6 | 0 | 9 | |
Sub-total | 206 | 70 | 87 | 486 | 197 | |
Net charge offs | 347 | 309 | 157 | 865 | 654 | |
Additions charged to operations | 350 | 530 | 325 | 1,109 | 1,075 | |
Balance end of period | $7,023 | $7,020 | $6,707 | $7,023 | $6,707 | |
Net loan charge-offs to average loans (1) | 0.20% | 0.18% | 0.09% | 0.16% | 0.13% | |
September 30, | June 30, | September 30, | ||||
2004 | 2004 | 2003 | ||||
Total shares outstanding | 4,781,778 | 4,949,919 | 5,265,802 | |||
Tangible book value per share | $18.58 | $18.45 | $18.13 | |||
Nonperforming assets (000's) | ||||||
Loans: Non-accrual | $4,053 | $3,366 | $2,956 | |||
Past due 90 days or more | 10 | 543 | 0 | |||
Restructured | 120 | 0 | 0 | |||
Total nonperforming loans | 4,183 | 3,909 | 2,956 | |||
Real estate owned | 285 | 303 | 717 | |||
Other repossessed assets | 625 | 463 | 595 | |||
Total nonperforming assets | $5,093 | $4,675 | $4,268 | |||
Asset Quality Ratios: | ||||||
Non-performing assets to total assets | 0.61% | 0.57% | 0.52% | |||
Non-performing loans to total loans | 0.57% | 0.55% | 0.42% | |||
Allowance for loan losses to non-performing | ||||||
loans | 172.85% | 179.59% | 226.89% | |||
Allowance for loan losses to loans receivable | 0.98% | 1.00% | 0.96% | |||
(1) Ratios for the three and nine month periods have been annualized. | ||||||
(2) Net interest income divided by average interest earning assets. |