PRESS RELEASE
| Date: | February 10, 2005 |
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| From: | MutualFirst Financial, Inc. |
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| For Publication: | Immediately |
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| Contact: | Tim McArdle, Senior Vice President and Treasurer of
MutualFirst Financial, Inc. (765) 747-2818 |
MutualFirst Announces Fourth 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 fourth quarter ended December 31, 2004 was $16,000, or $.00 for both basic and diluted earnings per share. This compared to net income for the comparable period in 2003 of $1.6 million, or $.33 for basic and $.32 for diluted earnings per share. The decrease was due primarily to the one time expenses associated with a separation agreement entered into in November with the Company's former Senior Vice President and Director. The Company's earnings for the fourth quarter would have been $1.7 million ($.38 for diluted earnings per share) without the one time expense. Annualized return on assets was .01% and return on equity was .07% (.82% and 7.70% respectively, without the one time expense) for the fourth quarter of 2004 compared to .79% and 6.69% respectively, for the same period of last year.
Net income for the year ended December 31, 2004 was $5.5 million or $1.19 for basic and $1.16 for diluted earnings per share. This compared to net income for 2003 of $8.1 million or $1.64 for basic and $1.59 for diluted earnings per share. The decrease was due primarily to the one time expense associated with the separation agreement. The Company's earnings for the year would have been $7.2 million ($1.51 for diluted earnings per share) without the one time expense. Annualized return on assets was .67% and return on equity was 5.84% (.88% and 7.65% respectively, without the one time expense) for 2004 compared to 1.01% and 8.43% respectively, for 2003.
Assets totaled $839.4 million at December 31, 2004, an increase from December 31, 2003 of $15.6 million, or 1.9%. Gross loans, excluding loans held for sale, increased $9.1 million, or 1.3%. Consumer loans increased $4.8 million, or 2.5%, and commercial business loans increased $9.3 million, or 20.9%, while commercial and residential mortgage loans held in the portfolio decreased $5.0 million, or 1.0%. Mortgage loans held for sale increased $940,000 and mortgage loans sold during the year totaled $40.8 million. Investment securities available for sale increased $5.9 million, or 17.7%, to increase liquidity.
Allowance for loan losses increased $88,000 from $6.8 million at December 31, 2003 to $6.9 million at December 31, 2004. Net charge offs for 2004 were $1.5 million or .21% of average loans compared to $957,000, or .14% of average loans for 2003. As of December 31, 2004 the allowance for loan losses as a percentage of non-performing loans and total loans was 172.3% and .95%, respectively.
Total deposits were $600.4 million at December 31, 2004, an increase of $21.0 million, or 3.6% from December 31, 2003. Of this growth, $18.5 million was in core deposits. Total borrowings increased $4.5 million to $141.6 million at December 31, 2004 from $137.1 million at December 31, 2003.
Stockholders' equity decreased $9.6 million from $97.5 million at December 31, 2003, to $87.9 million at December 31, 2004. The decrease was due primarily to the repurchase of 623,000 shares of common stock for $14.7 million and dividend payments of $2.1 million. These decreases were partially offset by net income of $5.5 million, Employee Stock Ownership Plan (ESOP) shares earned of $752,000, RRP shares earned (including tax benefits) of $691,000 and stock options exercised for $554,000. Also, the market value of securities available for sale compared to their book value decreased $322,000 from a gain of $234,000 at December 31, 2003 to a loss of $89,000 at December 31, 2004.
Net interest income before provision for loan losses decreased $124,000 to $6.6 million for the three months ended December 31, 2004 compared to $6.8 million for the three months ended December 31, 2003. The net interest margin decreased from 3.59% for the three-month period ended December 31, 2003, to 3.46% for the comparable period in 2004 as yields on interest-earning assets decreased at a more rapid rate than the decrease in the cost of interest-bearing liabilities.
Net interest income decreased $419,000 for the year ended December 31, 2004 compared to the year ended December 31, 2004 due to a lower net interest margin and a lower volume of net earning assets. The net interest margin decreased from 3.73% for the year ended December 31, 2003, to 3.57% for the year ended December 31, 2004 for the same reasons mentioned above.
The provision for loan losses for the fourth quarter of 2004 was $450,000, $75,000 more than last year's comparable period. Non-performing loans to total loans at December 31, 2004 were .55% compared to .46% at December 31, 2003. Non-performing assets to total assets were .64% at December 31, 2004 compared to .57% at December 31, 2003.
Non-interest income increased $76,000 to $1.5 million for the three months ended December 31, 2004 compared to $1.4 million for the same period in 2003. The increase was primarily due to an increase in service fee income and commissions of $321,000 when comparing the two quarters, due to an increased number of checking accounts outstanding, a new overdraft protection program and increased sales of investment products. This increase was partially offset by a decrease in loan sale gains and a smaller increase in cash surrender value of life insurance.
Non-interest income for the year ended December 31, 2004 increased slightly from $6.0 million for the year ended December 31, 2003 to $6.1 million. This increase was primarily due to a $375,000 increase in service fee and commission income, a $376,000 reduction in loss on limited partnerships and $274,000 increase in other income. These changes were partially offset by a decrease in loan sale gains of $504,000 and a smaller increase of cash surrender value of life insurance of $394,000.
Non-interest expense increased $2.9 million or 54.5% to $8.2 million for the three months ended December 31, 2004 compared to $5.3 million for the same period in 2003. The primary reason for the increase was the one time $2.8 million expense associated with the separation agreement announced in November. For the year non-interest expense was up $3.7 million or 18.2% when compared to 2003. The majority of this increase was due to the aforementioned one time separation agreement expense.
Due to the large one time expense, there was an income tax credit of $476,000 for the three months ended December 31, 2004 compared to an income tax expense of $916,000 for the same period in 2003. For the year ended December 31, 2004, income tax expense decreased $1.6 million compared to 2003. The effective tax rate decreased from 29.3% to 24.1% when comparing 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.
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| 31-Dec | 31-Dec |
| Selected Financial Condition Data(Unaudited): | 2004 | 2003 |
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| (000) | (000) |
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| Total Assets | $839,387 | $823,791 |
| Cash and cash equivalents | 19,743 | 23,068 |
| Loans held for sale | 2,913 | 1,975 |
| Loans receivable, net | 713,022 | 703,981 |
| Investment securities available for sale, at fair value | 39,409 | 33,472 |
| Total deposits | 600,407 | 579,362 |
| Total borrowings | 141,572 | 137,103 |
| Total stockholders' equity | 87,860 | 97,520 |
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| Three Months | Three Months | Three Months | Twelve Months | Twelve Months |
| Ended | Ended | Ended | Ended | Ended |
| 31-Dec | 30-Sep | 31-Dec | 31-Dec | 31-Dec |
| Selected Operations Data (Unaudited): | 2004 | 2004 | 2003 | 2004 | 2003 |
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| (000) | (000) | (000) | (000) | (000) |
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| Total interest income | $11,176 | $10,979 | $11,382 | $44,400 | $46,442 |
| Total interest expense | 4,529 | 4,368 | 4,611 | 17,476 | 19,099 |
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| Net interest income | 6,647 | 6,611 | 6,771 | 26,924 | 27,343 |
| Provision for loan losses | 450 | 350 | 375 | 1,557 | 1,450 |
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| Net interest income after provision |
| for loan losses | 6,197 | 6,261 | 6,396 | 25,367 | 25,893 |
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Non-interest income
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| Fees and service charges | 942 | 806 | 735 | 3,193 | 2,927 |
| Equity in gains (losses) of limited partnerships | (38) | 69 | (61) | 52 | (323) |
| Commissions | 331 | 225 | 218 | 854 | 745 |
| Net gain on loan sales and servicing | 89 | 152 | 163 | 852 | 1,357 |
| Increase in cash surrender value of life insurance | 190 | 255 | 294 | 950 | 1,343 |
| Other income | 7 | 63 | 96 | 198 | (74) |
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| Total non-interest income | 1,521 | 1,570 | 1,445 | 6,099 | 5,975 |
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Non-interest expense
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| Salaries and benefits | 6,094 | 3,304 | 3,496 | 16,167 | 13,097 |
| Occupancy and equipment | 731 | 748 | 694 | 2,861 | 2,686 |
| Data processing fees | 105 | 179 | 157 | 630 | 607 |
| Deposit insurance expense | 21 | 21 | 22 | 86 | 89 |
| Marketing | 272 | 208 | 114 | 722 | 640 |
| Other expenses | 971 | 999 | 821 | 3,725 | 3,347 |
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| Total non-interest expense | 8,194 | 5,459 | 5,304 | 24,191 | 20,466 |
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| Income before taxes | (476) | 2,372 | 2,537 | 7,275 | 11,402 |
| Income tax provision | (492) | 648 | 916 | 1,753 | 3,340 |
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| Net income | $16 | $1,724 | $1,621 | $5,522 | $8,062 |
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| Three Months | Three Months | Three Months | Twelve Months | Twelve Months |
| Ended | Ended | Ended | Ended | Ended |
| 31-Dec | 30-Sep | 31-Dec | 31-Dec | 31-Dec |
| Selected Financial Ratios and Other Financial Data (Unaudited): | 2004 | 2004 | 2003 | 2004 | 2003 |
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| Share and per share data: |
| Average common shares outstanding |
| Basic | 4,417,915 | 4,557,861 | 4,891,585 | 4,625,437 | 4,904,007 |
| Diluted | 4,558,347 | 4,698,863 | 5,092,585 | 4,772,036 | 5,084,514 |
| Basic earnings | $0.00 | $0.38 | $0.33 | $1.19 | $1.64 |
| Diluted earnings | $0.00 | $0.37 | $0.32 | $1.16 | $1.59 |
| Dividends | $0.12 | $0.12 | $0.11 | $0.47 | $0.42 |
| Dividend payout ratio | n/a | 32.43% | 34.38% | 40.52% | 26.42% |
| Performance Ratios: |
| Return on average assets (ratio of net |
| income to average total assets)(1) | 0.01% | 0.84% | 0.79% | 0.67% | 1.01% |
| Return on average equity (ratio of net |
| income to average equity)(1) | 0.07% | 7.62% | 6.69% | 5.84% | 8.43% |
| Interest rate spread information: |
| Average during the period(1) | 3.35% | 3.39% | 3.44% | 3.46% | 3.56% |
| Net interest margin(1)(2) | 3.46% | 3.51% | 3.59% | 3.60% | 3.73% |
| Efficiency Ratio | 100.32% | 66.73% | 64.56% | 73.26% | 61.43% |
| Ratio of average interest-earning |
| assets to average interest-bearing |
| liabilities | 104.94% | 105.37% | 106.52% | 106.06% | 106.53% |
| Allowance for loan losses: |
| Balance beginning of period | $7,023 | $7,020 | $6,707 | $6,779 | $6,286 |
| Charge offs: |
| One- to four- family | 38 | 50 | 64 | 249 | 210 |
| Multi-family | 0 | 0 | 0 | 0 | 0 |
| Commercial real estate | 0 | 21 | 59 | 34 | 173 |
| Construction or development | 0 | 0 | 0 | 0 | 0 |
| Consumer loans | 356 | 228 | 387 | 1,093 | 948 |
| Commercial business loans | 247 | 254 | 0 | 616 | 30 |
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| Sub-total | 641 | 553 | 510 | 1,992 | 1,361 |
| Recoveries: |
| One- to four- family | 0 | 1 | 0 | 21 | 27 |
| Multi-family | 0 | 0 | 0 | 0 | 0 |
| Commercial real estate | 12 | 154 | 44 | 326 | 108 |
| Construction or development | 0 | 0 | 0 | 0 | 0 |
| Consumer loans | 25 | 51 | 62 | 176 | 159 |
| Commercial business loans | 0 | 0 | 101 | 0 | 110 |
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| Sub-total | 37 | 206 | 207 | 523 | 404 |
| Net charge offs | 604 | 347 | 303 | 1,469 | 957 |
| Additions charged to operations | 448 | 350 | 375 | 1,557 | 1,450 |
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| Balance end of period | $6,867 | $7,023 | $6,779 | $6,867 | $6,779 |
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| Net loan charge-offs to average loans (1) | 0.34% | 21.00% | 0.17% | 0.21% | 0.14% |
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| | December 31, | September 30, | December 31, |
| | 2004 | 2004 | 2003 |
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| Total shares outstanding | | 4,708,318 | 4,781,778 | 5,268,571 |
| Tangible book value per share | | $18.47 | $18.58 | $18.34 |
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| Nonperforming assets (000's) |
| Loans: Non-accrual | | $3,985 | $4,053 | $3,245 |
| Past due 90 days or more | | 0 | 10 | 10 |
| Restructured | | 120 | 120 | 0 |
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| Total nonperforming loans | | 4,105 | 4,183 | 3,255 |
| Real estate owned | | 340 | 285 | 597 |
| Other repossessed assets | | 894 | 625 | 824 |
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| Total nonperforming assets | | $5,339 | $5,093 | $4,676 |
| Asset Quality Ratios: |
| Non-performing assets to total assets | | 0.64% | 0.61% | 0.57% |
| Non-performing loans to total loans | | 0.55% | 0.57% | 0.46% |
| Allowance for loan losses to non-performing loans | 172.30% | 172.85% | 208.26% |
| Allowance for loan losses to loans receivable | | 0.95% | 0.98% | 0.95% |
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| (1) Ratios for the three month periods have been annualized. |
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| (2) Net interest income divided by average interest earning assets. |
