PRESS RELEASE
Date:
From:
For Publication:
Contact: | October 27, 2005
MutualFirst Financial, Inc.
Immediately
Tim McArdle, Senior Vice President and Treasurer of
MutualFirst Financial, Inc. (765) 747-2818 |
MutualFirst Announces Third Quarter 2005 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, 2005 was $1.6 million, or $.36 for basic and $.35 for diluted earnings per share. This compared to net income for the comparable period in 2004 of $1.7 million, or $.38 for basic and $.37 for diluted earnings per share. Annualized return on assets was ..70% and return on equity was 7.16% for the third quarter of 2005 compared to .84% and 7.62% respectively, for the same period last year.
Net income for the nine months ended September 30, 2005 was $4.9 million or $1.12 for basic and $1.09 for diluted earnings per share. This compared to net income for the comparable period in 2004 of $5.5 million or $1.17 for basic and $1.13 for diluted earnings per share. Annualized return on average assets was .76% and return on average equity was 7.42% for the first three quarters of 2005 compared to .90% and 7.74% respectively, for the same period last year.
On September 16, 2005 the Bank completed the purchase of certain assets and assumption of certain liabilities of Fidelity Federal Savings Bank ("Fidelity") located in Marion, Indiana. The assets purchased included residential real estate mortgage loans of $55.4 million, consumer loans of $14.0 million, commercial real estate loans of $12.8 million and commercial business loans of $3.6 million.
With the addition of Fidelity's assets,MutualFirst's assets totaled $972.0 million at September 30, 2005, an increase from December 31, 2004 of $132.6 million, or 15.8%. Loans, excluding loans held for sale, increased $115.0 million or 16.0%. Consumer loans increased $24.2 million, or 12.4%, and commercial business loans increased $8.2 million, or 15.2%, while residential and commercial real estate loans held in portfolio increased $82.6 million or 17.7%. Mortgage loans held for sale decreased $2.9 million and mortgage loans sold during the first three quarters of 2005 totaled $12.2 million.
Next PageAllowance for loan losses increased $1.3 million to $8.2 million, which includes additional reserves of $1.6 million acquired with the Fidelity purchase and assumption, when comparing September 30, 2005 to December 31, 2004. Net charge offs for the first three quarters of 2005 were $1.6 million or .30% of average loans on an annualized basis compared to $865,000, or .16% of average loans for the comparable period in 2004. The primary reason for the increase was a $240,000 charge-off of a commercial business loan to a distribution center that failed and the collateral (accounts receivable) have proven to be uncollectible. Also, the Bank wrote down $650,000 of an $800,000 commercial business loan because the business generates insufficient cash flow to service the debt and the value of the collateral (fixed assets) is not sufficient to pay off the total debt. As of September 30, 2005 allowance for loan losses as a percentage of loans receivable and non-performing loans was .98% and 119.1%, respectively.
Total deposits were $698.8 million at September 30, 2005 an increase of $98.4 million, or 16.4% from December 31, 2004. The increase included $75.9 million of deposits acquired in the Fidelity purchase and assumption. Total borrowings increased $31.4 million, including $20.5 million with the Fidelity acquisition, to $172.5 million at September 30, 2005 from $141.6 million at December 31, 2004.
Stockholders' equity was unchanged at $87.9 million at September 30, 2005 when compared to December 31, 2004. Increases due to net income of $4.9 million, Employee Stock Ownership Plan (ESOP) shares earned of $549,000, and RRP shares earned of $192,000 were offset by the repurchase of 179,000 shares of common stock for $4.2 million and dividend payments of $1.8 million. Also, the market value of securities available for sale compared to their book value decreased $278,000 from a loss of $89,000 at December 31, 2004 to a loss of $367,000 at September 30, 2005.
Net interest income increased $87,000 from $6.6 million for the three months ended September 30, 2004, to $6.7 million for the three months ended September 30, 2005. The primary reason for the improvement was due to a $55.4 million, or 7.3% increase in average interest earning assets partially offset by a 20 basis point decrease in the net interest margin reflecting the bank's liability sensitive nature as short term interest rates rise. Net interest income decreased $214,000 for the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004. The net interest margin decreased from 3.60% for the nine-month period ended September 30, 2004, to 3.41% for the comparable period in 2005 for the same reason mentioned above. This lower margin was partially offset by a $33.7 million, or 4.5% increase in average interest-earning assets when comparing the first three quarters of 2005 to that of 2004.
2Next PageThe provision for loan losses for the first three quarters of 2005 was $1.3 million, compared to $1.1 million for last year's comparable period due primarily to the increased loan balances year to date. Non-performing loans to total loans at September 30, 2005 were .82% compared to .56% at September 30, 2004. Non-performing assets to total assets were .90% at September 30, 2005 compared to .61% at September 30, 2004. These increases are primarily due to a $1.9 million residential real estate loan secured by a first mortgage being over 90 days past due. Management is confident that the collateral is more than enough to cover the debt and that the Bank will have no loss related to this loan.
Non-interest income increased $76,000 or 4.9%, to $1.7 million for the three months ended September 30, 2005 compared to $1.6 million for the same period in 2004. Increases in service fee income, due to a new overdraft privilege program was partially offset by a $59,000 reduction in the gain on sale of loans due to reduced mortgage refinancing activity in the 2005 quarter and a $24,000 reduction in other income due primarily to reduced gains on the sale of real estate owned. For the nine month period ended September 30, 2005 non-interest income increased $322,000 or 7.0% to $4.9 million compared to $4.6 for the comparable period in 2004. The increase was due primarily to a $637,000 or 28.3% increase in service fee income and a $239,000 or 45.8% increase in commission income due to the overdraft privilege program and increased annuity sales. These increases were partially offset by a $405,000 reduction in the gain on sale of loans due to reduced mortgage refinancing activity in the 2005 period and a $84,000 reduction in other income due primarily to reduced gain on the sale of real estate owned.
Non-interest expense increased $334,000 or 6.1% to $5.8 million for the three months ended September 30, 2005 compared to $5.5 million for the same period in 2004. The increase was due primarily to increased occupancy and equipment expenses which were up $57,000 due to costs related to a new office opened in June of this year in Syracuse, Indiana. Also, we relocated our corporate and investment management and private banking staffs to a recently purchased office building located next to our main office in Muncie. Data processing fees increased $31,000 due to the addition of the new office and the expiration of several contractual credits from our service provider received in the 2004 period and not in the 2005 period. Other expenses increased $118,000 due to increases in legal and consulting services primarily related to regulatory compliance requirements and other general and administrative expense increases. Non-interest expense increased $977,000 or 6.1% to $17.0 million for the nine months ended September 30, 2005 compared to $16.0 million for the same period in 2005 for similar reasons mentioned above.
Income tax expense decreased $93,000 for the three months ended September 30, 2005 compared to the same period in 2004 due to less taxable income. The effective tax rate decreased from 27.3% to 26.3% due to an increased percentage of low income housing tax credits to taxable income when comparing the third quarter of 2005 to the third quarter of 2004. For the nine-month period ended September 30, 2005, income tax expense decreased $438,000 compared to the same period in 2004. The decrease was due primarily to decreased taxable income. The effective tax rate decreased to 27.1% from 29.0% due to an increased percentage of low income housing tax credits to taxable income when comparing the third half of 2005 to the third half of 2004.
3Next PageMutualFirst Financial, Inc. and Mutual Federal Savings Bank are headquartered in Muncie, Indiana with twenty 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 changes in interest rates; the loss of deposits and loan demand to competitors; substantial changes in financial markets; changes in real estate values and the real estate market; or regulatory changes.
4Next Page| MUTUALFIRSTFINANCIAL INC. |
|
| 30-Sep | 31-Dec | | | |
| Selected Financial Condition Data(Unaudited): | 2005 | 2004 |
|
| (000) | (000)
|
| Total Assets | $971,970 | $839,387 |
| Cash and cash equivalents | 19,452 | 19,743 |
| Loans held for sale | 0 | 2,913 |
| Loans receivable, net | 826,707 | 713,022 |
| Investment securities available for sale, at fair value | 40,766 | 39,409 |
| Total deposits | 698,824 | 600,407 |
| Total borrowings | 172,549 | 141,572 |
| Total stockholders' equity | 87,912 | 87,860 |
| |
| Three Months | Three Months | Three Months | Nine Months | Nine Months |
| Ended | Ended | Ended | Ended | Ended |
| 30-Sep | 30-Jun | 30-Sep | 30-Jun | 30-Sep |
| Selected Operations Data (Unaudited): | 2005 | 2005 | 2004 | 2005 | 2004 |
|
|
| (000) | (000) | (000) | (000) | (000) |
| |
| Total interest income | $12,087 | $11,507 | $10,979 | $34,830 | $33,224 |
| Total interest expense | 5,389 | 4,815 | 4,368 | 14,766 | 12,946 |
|
|
|
| Net interest income | 6,698 | 6,692 | 6,611 | 20,064 | 20,278 |
| Provision for loan losses | 444 | 444 | 350 | 1,331 | 1,107 |
|
|
|
| Net interest income after provision |
| for loan losses | 6,254 | 6,248 | 6,261 | 18,733 | 19,171 |
|
|
|
Non-interest income
|
| Fees and service charges | 1,013 | 990 | 806 | 2,889 | 2,251 |
| Equity in gains (losses) of limited partnerships | 44 | (9) | 69 | 18 | 90 |
| Commissions | 206 | 341 | 225 | 761 | 522 |
| Net gain on loan sales and servicing | 93 | 117 | 152 | 359 | 764 |
| Increase in cash surrender value of life insurance | 250 | 250 | 255 | 765 | 760 |
| Other income | 40 | 29 | 63 | 108 | 191 |
|
|
|
| Total non-interest income | 1,646 | 1,718 | 1,570 | 4,900 | 4,578 |
|
|
|
Non-interest expense
|
| Salaries and benefits | 3,435 | 3,380 | 3,304 | 10,221 | 10,073 |
| Occupancy and equipment | 806 | 791 | 748 | 2,418 | 2,129 |
| Data processing fees | 210 | 202 | 179 | 606 | 526 |
| Deposit insurance expense | 20 | 21 | 21 | 62 | 65 |
| Marketing | 204 | 193 | 208 | 536 | 449 |
| Other expenses | 1,117 | 1,048 | 999 | 3,133 | 2,756 |
|
|
|
| Total non-interest expense | 5,792 | 5,635 | 5,459 | 16,976 | 15,998 |
|
|
|
| Income before taxes | 2,108 | 2,331 | 2,372 | 6,657 | 7,751 |
| Income tax provision | 555 | 642 | 648 | 1,807 | 2,245 |
|
|
|
| Net income | $1,553 | $1,689 | $1,724 | $4,850 | $5,506 |
|
|
|
5Next PageAverage Balances, Net Interset Income, Yield Earned and Rates Paid
|
| | Three | | | Nine | |
| | mos ended | | | mos ended | |
| | 9/30/05 | | | 9/30/05 | |
|
|
| Average | Interest | Average | Average | Interest | Average |
| Outstanding | Earned/ | Yield/ | Outstanding | Earned/ | Yield/ |
| Balance | Paid | Rate | Balance | Paid | Rate |
|
|
| (000) | (000) | | (000) | (000) | |
| |
| Interest-Earning Assets: | | | | | | |
| Interest -bearing deposits | $ 2,169 | $ 14 | 2.58% | $ 1,793 | $ 27 | 2.01% |
| Mortgage-backed securities: |
| Available-for-sale | 11,240 | 134 | 4.77 | 11,148 | 392 | 4.69 |
| Investment securities: |
| Available-for-sale | 30,169 | 298 | 3.95 | 29,432 | 803 | 3.64 |
| Loans receivable | 756,434 | 11,548 | 6.11 | 734,166 | 33,328 | 6.05 |
| Stock in FHLB of Indianapolis | 8,746 | 94 | 4.30 | 8,290 | 260 | 4.18 |
|
|
| Total interest-earning assets (1) | 808,758 | 12,088 | 5.98 | 784,829 | 34,810 | 5.91 |
| Non-interest earning assets, net of allowance |
| for loan losses and unrealized gain/loss | 72,944
| | | 71,044
| |
| Total assets | $881,702
| | | $855,873
| |
| Interest-Bearing Liabilities: |
| Demand and NOW accounts | $ 57,980 | 38 | 0.26 | $ 58,656 | 111 | 0.25 |
| Savings deposits | 59,607 | 75 | 0.50 | 61,062 | 182 | 0.40 |
| Money market accounts | 46,354 | 205 | 1.77 | 51,230 | 563 | 1.47 |
| Certificate accounts | 426,755 | 3,579 | 3.35 | 402,954 | 9,788 | 3.24 |
|
|
| Total deposits | 590,696 | 3,897 | 2.64 | 573,902 | 10,644 | 2.47 |
| Borrowings | 146,455 | 1,492 | 4.07 | 139,534 | 4,122 | 3.94 |
|
|
| Total interest-bearing accounts | 737,151 | 5,389 | 2.92 | 713,436 | 14,766 | 2.76 |
| Non-interest bearing deposit accounts | 43,291 | | | 41,314 | |
| Other liabilities | 14,481
| | | 13,930
| |
| Total liabilities | 794,923 | | | 768,680 | |
| Stockholders' equity | 86,779
| | | 87,193
| |
| Total liabilities and stockholders' equity | $881,702
| | | $855,873
| |
| Net earning assets | $71,607
| | | $71,393
| | |
| Net interest income | | $ 6,699
| | | $20,044
| |
| Net interest rate spread | | | 3.06%
| | | 3.15%
|
| Net yield on average interest-earning assets | | | 3.31%
| | | 3.41%
|
| Average interest-earning assets to |
| average interest-bearing liabilities | | | 109.71%
| | | 110.01%
|
6Next Page | 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 |
| 2005 | 2005 | 2004 | 2005 | 2004 |
|
|
|
Selected Financial Ratios and Other Financial
Data (Unaudited):
|
| Share and per share data: | | | | | | |
| Average common shares outstanding | | | | | | |
| Basic | 4,310,148 | 4,352,236 | 4,557,861 | 4,342,519 | 4,695,246 |
| Diluted | 4,417,051 | 4,464,114 | 4,698,863 | 4,460,734 | 4,851,521 |
| Per share: | | | | | | |
| Basic earnings | $0.36 | $0.39 | $0.38 | $1.12 | $1.17 |
| Diluted earnings | $0.35 | $0.38 | $0.37 | $1.09 | $1.13 |
| Dividends | $0.13 | $0.13 | $0.12 | $0.39 | $0.35 |
| |
| Dividend payout ratio | 37.14% | 34.21% | 32.43% | 35.78% | 30.97% |
| |
| Performance Ratios: |
| Return on average assets (ratio of net |
| income to average total assets)(1) | 0.70% | 0.80% | 0.84% | 0.76% | 0.90% |
| Return on average equity (ratio of net |
| income to average equity)(1) | 7.16% | 7.69% | 7.62% | 7.42% | 7.74% |
| Interest rate spread information: |
| Average during the period(1) | 3.06% | 3.21% | 3.39% | 3.15% | 3.33% |
| |
| Net interest margin(1)(2) | 3.31% | 3.45% | 3.51% | 3.40% | 3.60% |
| |
| Efficiency Ratio | 69.42% | 67.00% | 66.73% | 68.00% | 64.36% |
| |
| Ratio of average interest-earning |
| assets to average interest-bearing |
| liabilities | 109.71% | 109.90% | 105.37% | 110.01% | 106.06% |
| |
| Allowance for loan losses: | | | | | |
| Balance beginning of period | $6,909 | $6,737 | $7,020 | $6,867 | $6,779 |
| Charge offs: |
| One- to four- family | 14 | 93 | 50 | 185 | 211 |
| Multi-family | 0 | 0 | 0 | 0 | 0 |
| Commercial real estate | 0 | 6 | 21 | 6 | 34 |
| Construction or development | 0 | 0 | 0 | 0 | 0 |
| Consumer loans | 319 | 237 | 228 | 835 | 737 |
| Commercial business loans | 505 | 150 | 254 | 897 | 369 |
|
|
|
| Sub-total | 838 | 486 | 553 | 1,923 | 1,351 |
| |
| Recoveries: |
| One- to four- family | 10 | 9 | 1 | 22 | 21 |
| Multi-family | 0 | 0 | 0 | 0 | 0 |
| Commercial real estate | 0 | 120 | 154 | 120 | 314 |
| Construction or development | 0 | 0 | 0 | 0 | 0 |
| Consumer loans | 10 | 85 | 51 | 117 | 151 |
| Commercial business loans | 15 | 0 | 0 | 15 | 0 |
|
|
|
| Sub-total | 35 | 214 | 206 | 274 | 486 |
| Net charge offs | 803 | 272 | 347 | 1,649 | 865 |
| Acquired with Fidelity Federal purchase | 1,646 | | | 1,646 |
| Additions charged to operations | 444 | 444 | 350 | 1,332 | 1,109 |
|
|
|
| Balance end of period | $8,196 | $6,909 | $7,023 | $8,196 | $7,023 |
|
|
|
| Net loan charge-offs to average loans (1) | 0.42% | 0.15% | 0.20% | 0.30% | 0.16% |
7Next Page | September 30, | June 30, | September 30, |
| 2005 | 2005 | 2004 |
|
|
| Total shares outstanding | 4,580,129 | 4,608,013 | 4,781,778 |
| Tangible book value per share | $16.18 | $18.82 | $18.58 |
| Nonperforming assets (000's) |
| Loans: Non-accrual | $6,877 | $4,386 | $4,053 |
| Past due 90 days or more | 6 | 694 | 10 |
|
|
| Total nonperforming loans | $6,883 | $5,080 | $4,063 |
| Restructured Loans | 117 | 120 | 120 |
| Real estate owned | 864 | 351 | 285 |
| Other repossessed assets | 866 | 985 | 625 |
|
|
| Total nonperforming assets | $8,730 | $6,536 | $5,093 |
| Asset Quality Ratios: |
| Non-performing assets to total assets | 0.90% | 0.78% | 0.61% |
| Non-performing loans to total loans | 0.82% | 0.69% | 0.57% |
| Allowance for loan losses to non-performing loans | 119.08% | 136.00% | 172.85% |
| Allowance for loan losses to loans receivable | 0.98% | 0.94% | 0.98% |
| |
| (1) Ratios for the three and nine month periods have been annualized. |
| (2) Net interest income divided by average interest earning assets. |
8End