October 15, 1996 Point of Contact: Charles J. Viater
President/CEO
MFB CORP. ANNOUNCES FOURTH QUARTER EARNINGS
Mishawaka, Indiana - MFB Corp. (NASDAQ/MFBC) (the "Corporation"),
parent company of Mishawaka Federal Savings (the "Bank"), today reported on an
unaudited basis a consolidated net loss of $197,000 or ($.10) per share for the
three months ended September 30, 1996, compared to net income of $239,000 or
$.12 per share for the three month period ended September 30, 1995. Net income
on an unaudited basis for the fiscal year ended September 30, 1996 was $975,000
or $.48 per share compared to $1,236,000 or $.59 for the twelve months ended
September 30, 1995. The current year income levels were significantly reduced as
the result of a one time special assessment to recapitalize the Savings
Association Insurance Fund. This non-recurring expense amounts to approximately
$577,000 on an after tax basis or the equivalent of $.29 per share. Had this
special assessment not been incurred, net income for the three months ended
September 30, 1996 would have been approximately $380,000 or $.20 per share and
for the year ended September 30, 1996 net income would have amounted to
$1,552,000 or $.76 per share. Charles J. Viater, President and CEO, indicated
that "This special assessment has been anticipated, though the timing was beyond
the control of the Bank. Future earnings are anticipated to more than offset the
impact on current earnings as the significant disparity between insurance
premiums paid by banks and those paid by savings institutions is eliminated over
time. Had this one time assessment not occurred, quarterly net income would have
shown strong improvement of 59% over the same quarter last year and net income
for the fiscal year would have grown by over 25% based on a year over year
comparison."
Net interest income after provision for loan losses for the most recent
three month and twelve month periods totaled $1.70 million and $6.10 million,
respectively, compared to $1.32 million and $5.57 million for the same periods
one year ago. During the three months ended September 30, 1996 total interest
income increased by $799,000 compared to the same period one year ago primarily
as a result of the increase in earning assets. Total interest expense increased
$423,000 reflecting the growth in savings account deposits as well as the growth
in borrowed funds. For the twelve months ended September 30, 1996 total interest
income increased $1,809,000 while total interest expense increased $1,270,000.
"The Corporation achieved significant earning asset growth in the past year.
This growth was the catalyst for the improvement in net interest income,"
according to Viater.
There was no significant change in noninterest income during the three
months ended September 30, 1996 compared to the same period one year ago. For
the twelve months ended September 30, 1996 noninterest income increased $57,000
over the twelve months ended September 30, 1995. Noninterest expense increased
from $1,000,000 during the three months ended September 30, 1995 to $2,098,000
during the three months ended September 30, 1996 and from $3.83 million to $4.86
million for the comparative twelve month periods ended September 30, 1996 and
September 30, 1995, respectively. These increases are primarily attributable to
the one time special assessment of approximately $955,000 (on a pre-tax basis)
discussed above.
The Corporation has increased total assets from $187.1 million at
September 30, 1995 to $225.8 million as of September 30, 1996, an increase of
$38.7 million (or 20.7%) during the most
recent twelve month period. "Asset growth allows us to better leverage our
capital position and enhance shareholder value," according to Charles J. Viater,
President and CEO of the company. "Loan demand has been strong," he added. Total
net loans have increased from $121.2 million at September 30, 1995 to $152.1
million at September 30, 1996, an increase of $30.9 million (or 25.5%) during
this twelve month period. Loan growth has been funded primarily by growth in
total savings deposits of $14.4 million, the use of $5.7 million of cash and
cash equivalents and the proceeds from the maturity of $10.8 million in
securities.
Additional asset growth was achieved through a leveraging strategy that
involved the purchase of mortgage related and government agency securities.
These acquisitions were funded primarily with borrowings from the Federal Home
Loan Bank which totaled $24.5 million as of September 30, 1996. As of September
30, 1996 the leveraging portfolio accounted for approximately $26 million of the
total assets of the Corporation.
While achieving this substantial growth, the Corporation continues to
maintain asset quality that compares favorably to its industry peer group. The
ratio of nonperforming assets to total assets as of September 30, 1996 was .09%
compared to .17% as of September 30, 1995.
The Bank is a wholly owned subsidiary of MFB Corp., with assets of $224
million as of September 30, 1996. The Bank provides retail and small business
financial services to the South Bend/Mishawaka area through its main office in
Mishawaka and three branch locations through the community.