PRESS RELEASE
Date: | April 20, 2006 | ||
From: | MutualFirst Financial, Inc. | ||
For Publication: | Immediately | ||
Contact: | Tim McArdle, Senior Vice President and Treasurer of MutualFirst Financial, Inc. (765) 747-2818 |
MutualFirst Announces First quarter 2006 Earnings
MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of Mutual Federal Savings Bank (the "Bank"), announced today that net income for the first quarter ended March 31, 2006 was $1.6 million, or $.37 for basic and $.36 for diluted earnings per share. This compared to net income for the same period in 2005 of $1.6 million, or $.37 for basic and $.36 for diluted earnings per share. Annualized return on assets was .65% and return on average tangible equity was 8.32% for the first quarter of 2006 compared to ..77% and 7.39% respectively, for the same period of last year.
Assets totaled $963.7 million at March 31, 2006, a decrease from December 31, 2005 of $8.2 million, or .8%. Gross loans, excluding loans held for sale, decreased $5.1 million, or .6%. Consumer loans decreased $1.2 million or .6%, and commercial loans decreased $1.6 million, or 1.2%, while residential mortgage loans held in the portfolio decreased $4.4 million, or .9%. Residential mortgage loans held for sale decreased $327,000 and mortgage loans sold during the quarter totaled $4.7 million compared to $4.3 million sold in the first quarter of last year. First quarter seasonality and paydowns are the primary reasons for the decreased loan balances. The current loan pipeline is strong and indicates future growth. Investment securities available for sale increased $1.1 million, or 2.8%.
Allowance for loan losses was $8.0 million at March 31, 2006, lower by $71,000 from December 31, 2005. Net charge offs for the quarter ended March 31, 2006 were $464,000 or .22% of average loans on an annualized basis compared to $574,000, or .32% of average loans for the comparable period in 2005. As of March 31, 2006, the allowance for loan losses as a percentage of non-performing loans and total loans was 122.5% and ..97%, respectively, compared to 108.4% and .98%, respectively at December 31, 2005.
Total deposits were $705.0 million at March 31, 2006, an increase of $20.4 million, or 3.0% from December 31, 2005. This increase was due primarily to growth in core demand and savings deposits of $21.7 million, growth in retail certificates of deposit of $7.5 million and increased brokered deposits of $2.7 million. These increases were partially offset by decreases in public funds of $10.0 million and money market accounts of $1.5 million. Total borrowings decreased $29.9 million to $157.9 million at March 31, 2006 from $187.8 million at December 31, 2005 due to the payment of several maturing and variable rate FHLB advances.
Stockholders' equity was $88.9 million at March 31, 2006, an increase of $65,000, or .1% from December 31, 2005. Net income of $1.6 million, Employee Stock Ownership Plan (ESOP) shares earned of $170,000, RRP shares earned of $38,000 and options exercised netting $290,000 were partially offset by the repurchase of 59,000 shares of common stock for $1.3 million and dividend payments of $637,000. Also, unrealized loss on securities available for sale increased $100,000 from $375,000 at December 31, 2005 to $475,000 at March 31, 2006.
Net interest income before the provision for loan losses increased $357,000 from $6.7 million for the three months ended March 31, 2005 to $7.0 million for the three months ended March 31, 2006. The primary reason for the improvement was due to a $109.2 million, or 14.2% increase in average interest earning assets (mainly due to the Fidelity Federal purchase in September of 2005), partially offset by a 27 basis point decrease in the net interest margin reflecting the Bank's liability sensitive nature, as short term interest rates rose.
The provision for loan losses for the first quarter of 2006 was $393,000, down from $444,000 for last year's comparable period and the linked quarter. The decrease was due to decreased net charge offs, improving delinquency trends and lower loan balances. Non-performing loans to total loans at March 31, 2006 were .79% compared to .90% at December 31, 2005. Non-performing assets to total assets were .94% at March 31, 2006 compared to 1.03% at December 31, 2005.
Non-interest income increased $128,000 to $1.7 million for the three months ended March 31, 2006 compared to $1.5 million for the same period in 2005. The increase was primarily due to increased service fees on transaction accounts.
Non-interest expense increased $672,000 or 12.1% to $6.2 million for the three months ended March 31, 2006 compared to $5.5 million for the same period in 2005. The increase was due primarily to increased salaries and benefits which were up $343,000 due to annual salary adjustments, increased health insurance costs and increased staffing for two new branches opened; one in May of 2005 and the other with the purchase of the Fidelity Federal operation in September of 2005. Other expenses increased $242,000 due to increased professional fees of $48,000 primarily related to regulatory compliance requirements, a $60,000 increase on REO expenses due to more repossessed properties, and other general and administrative expense increases related to the opening of the new branches.
Income tax expense decreased $90,000 for the three months ended March 31, 2006 compared to the same period in 2005 due to less taxable income. The effective tax rate decreased from 27.5% to 25.0% due to an increased percentage of low income housing tax credits to taxable income when comparing the first quarter of 2005 and the first quarter of 2006, respectively.
MutualFirst 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, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.
MUTUALFIRST FINANCIAL INC. | |
31-Mar | 31-Dec | |
Selected Financial Condition Data(Unaudited): | 2006 | 2005 |
(000) | (000) | |
Total Assets | $963,678 | $971,829 |
Cash and cash equivalents | 17,503 | 22,365 |
Loans held for sale | 1,695 | 2,022 |
Loans receivable, net | 817,475 | 822,547 |
Investment securities available for sale, at fair value | 41,191 | 40,081 |
Total deposits | 704,977 | 684,554 |
Total borrowings | 157,853 | 187,792 |
Total stockholders' equity | 88,858 | 88,794 |
Three Months Ended 31-Mar 2006 (000) | Three Months Ended 31-Dec 2005 (000) | Three Months Ended 31-Mar 2005 (000) | |||||
Selected Operations Data (Unaudited): | |||||||
Total interest income | $13,588 | $13,648 | $11,237 | ||||
Total interest expense | 6,557 | 6,404 | 4,563 | ||||
Net interest income | 7,031 | 7,244 | 6,674 | ||||
Provision for loan losses | 393 | 444 | 444 | ||||
Net interest income after provision | |||||||
for loan losses | 6,638 | 6,800 | 6,230 | ||||
Non-interest income | |||||||
Fees and service charges | 1,007 | 1,137 | 886 | ||||
Equity in gains (losses) of limited partnerships | 12 | 117 | (17) | ||||
Commissions | 198 | 221 | 214 | ||||
Net gain on loan sales and servicing | 134 | 62 | 149 | ||||
Increase in cash surrender value of life insurance | 237 | 190 | 265 | ||||
Other income | 76 | 41 | 39 | ||||
Total non-interest income | 1,664 | 1,768 | 1,536 | ||||
Non-interest expense | |||||||
Salaries and benefits | 3,749 | 3,571 | 3,406 | ||||
Occupancy and equipment | 879 | 879 | 822 | ||||
Data processing fees | 218 | 216 | 194 | ||||
Marketing | 144 | 265 | 139 | ||||
Other expenses | 1,230 | 1,441 | 988 | ||||
Total non-interest expense | 6,220 | 6,372 | 5,549 | ||||
Income before taxes | 2,082 | 2,196 | 2,217 | ||||
Income tax provision | 520 | 594 | 610 | ||||
Net income | $1,562 | $1,602 | $1,607 |
Average Balances, Net Interest Income, Yield Earned and Rates Paid | |||||||
Three mos ended 3/31/2006 | Three mos ended 3/31/2005 | ||||||
Average | Interest | Average | Average | Interest | Average | ||
Outstanding | Earned/ | Yield/ | Outstanding | Earned/ | Yield/ | ||
Balance | Paid | Rate | Balance | Paid | Rate | ||
(000) | (000) | ||||||
Interest-Earning Assets: | |||||||
Interest -bearing deposits | $2,097 | $12 | 2.29% | $1,540 | $7 | 1.82% | |
Mortgage-backed securities: | |||||||
Available-for-sale | 9,761 | 106 | 4.34 | 11,129 | 130 | 4.67 | |
Investment securities: | |||||||
Available-for-sale | 30,057 | 327 | 4.35 | 28,357 | 228 | 3.22 | |
Loans receivable | 826,381 | 13,023 | 6.30 | 720,140 | 10,787 | 5.99 | |
Stock in FHLB of Indianapolis | 10,125 | 120 | 4.74 | 8,022 | 85 | 4.24 | |
Total interest-earning assets (1) | 878,421 | 13,588 | 6.19 | 769,188 | 11,237 | 5.84 | |
Non-interest earning assets, net of allowance | |||||||
for loan losses and unrealized gain/loss | 84,419 | 68,701 | |||||
Total assets | $962,840 | $837,889 | |||||
Interest-Bearing Liabilities: | |||||||
Demand and NOW accounts | $79,698 | 160 | 0.80 | $60,122 | 33 | 0.22 | |
Savings deposits | 62,521 | 77 | 0.49 | 62,117 | 40 | 0.26 | |
Money market accounts | 43,028 | 187 | 1.74 | 55,445 | 166 | 1.20 | |
Certificate accounts | 466,220 | 4,364 | 3.74 | 383,586 | 3,020 | 3.15 | |
Total deposits | 651,467 | 4,788 | 2.94 | 561,270 | 3,259 | 2.32 | |
Borrowings | 163,517 | 1,769 | 4.33 | 136,905 | 1,304 | 3.81 | |
Total interest-bearing accounts | 814,984 | 6,557 | 3.22 | 698,175 | 4,563 | 2.61 | |
Non-interest bearing deposit accounts | 44,340 | 39,336 | |||||
Other liabilities | 14,472 | 13,397 | |||||
Total liabilities | 873,796 | 750,908 | |||||
Stockholders' equity | 89,044 | 86,981 | |||||
Total liabilities and stockholders' equity | $962,840 | $837,889 | |||||
Net earning assets | $63,437 | $71,013 | |||||
Net interest income | $7,031 | $6,674 | |||||
Net interest rate spread | 2.97% | 3.23% | |||||
Net yield on average interest-earning assets | 3.20% | 3.47% | |||||
Average interest-earning assets to | |||||||
average interest-bearing liabilities | 107.78% | 110.17% |
Three Months Ended 31-Mar | Three Months Ended 31-Dec | Three Months Ended 31-Mar | |||||
Selected Financial Ratios and Other Financial Data (Unaudited): | 2006 | 2005 | 2005 | ||||
Share and per share data: | |||||||
Average common shares outstanding | |||||||
Basic | 4,269,197 | 4,289,030 | 4,366,150 | ||||
Diluted | 4,357,474 | 4,382,879 | 4,501,208 | ||||
Per share: | |||||||
Basic earnings | $0.37 | $0.37 | $0.37 | ||||
Diluted earnings | $0.36 | $0.37 | $0.36 | ||||
Dividends | $0.14 | $0.14 | $0.13 | ||||
Dividend payout ratio | 38.89% | 37.84% | 36.11% | ||||
Performance Ratios: | |||||||
Return on average assets (ratio of net | |||||||
income to average total assets)(1) | 0.65% | 0.66% | 0.77% | ||||
Return on average tangible equity (ratio of net | |||||||
income to average tangible equity)(1) | 8.32% | 8.57% | 7.39% | ||||
Interest rate spread information: | |||||||
Average during the period(1) | 2.97% | 3.06% | 3.37% | ||||
Net interest margin(1)(2) | 3.20% | 3.27% | 3.47% | ||||
Efficiency Ratio | 71.54% | 70.71% | 67.59% | ||||
Ratio of average interest-earning | |||||||
assets to average interest-bearing | |||||||
liabilities | 107.78% | 107.67% | 104.30% | ||||
Allowance for loan losses: | |||||||
Balance beginning of period | $8,100 | $8,196 | $6,867 | ||||
Charge offs: | |||||||
One- to four- family | 222 | 118 | 78 | ||||
Multi-family | 0 | 0 | 0 | ||||
Commercial real estate | 0 | 0 | 0 | ||||
Construction or development | 0 | 0 | 0 | ||||
Consumer loans | 247 | 442 | 279 | ||||
Commercial business loans | 25 | 57 | 242 | ||||
Sub-total | 494 | 617 | 599 | ||||
Recoveries: | |||||||
One- to four- family | 0 | 0 | 3 | ||||
Multi-family | 0 | 0 | 0 | ||||
Commercial real estate | 0 | 0 | 0 | ||||
Construction or development | 0 | 0 | 0 | ||||
Consumer loans | 30 | 77 | 22 | ||||
Commercial business loans | 0 | 0 | 0 | ||||
Sub-total | 30 | 77 | 25 | ||||
Net charge offs | 464 | 540 | 574 | ||||
Acquired with Fidelity Federal purchase | |||||||
Additions charged to operations | 393 | 444 | 444 | ||||
Balance end of period | $8,029 | $8,100 | 6,737 | ||||
Net loan charge-offs to average loans (1) | 0.22% | 0.26% | 0.32% |
March 31, 2006 | December 31, 2005 | March 31, 2005 | |||||
Total shares outstanding | 4,513,476 | 4,552,218 | 4,673,444 | ||||
Tangible book value per share | $16.65 | $16.42 | $18.61 | ||||
Nonperforming assets (000's) | |||||||
Loans: Non-accrual | $4,416 | $5,421 | $4,499 | ||||
Accruing loans past due 90 days or more | 2,025 | 1,960 | 0 | ||||
Restructured loans | 115 | 116 | 120 | ||||
Total nonperforming loans | 6,556 | 7,497 | 4,619 | ||||
Real estate owned | 1,647 | 1,507 | 550 | ||||
Other repossessed assets | 823 | 978 | 679 | ||||
Total nonperforming assets | $9,026 | $9,982 | $5,848 | ||||
Asset Quality Ratios: | |||||||
Non-performing assets to total assets | 0.94% | 1.03% | 0.69% | ||||
Non-performing loans to total loans | 0.79% | 0.90% | 0.62% | ||||
Allowance for loan losses to non-performing loans | 122.47% | 108.04% | 149.74% | ||||
Allowance for loan losses to loans receivable | 0.97% | 0.98% | 0.94% | ||||
(1) Ratios for the three month period have been annualized. | |||||||
(2) Net interest income divided by average interest earning assets. |