SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 26, 2005
MFB Corp.
(Exact Name of Registrant as Specified in Its Charter)
Indiana 0-23374
(State or Other Jurisdiction of Incorporation) (Commission File Number)
35-1907258
(IRS Employer Identification No.)
4100 Edison Lakes Parkway, Suite 300,
P.O. Box 528, Mishawaka, Indiana 46546
(Address of Principal Executive Offices) (Zip Code)
(574) 277-4200
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 7. Financial Statements and Exhibits
(a) Press release dated April 26, 2005 announcing second quarter
earnings and quarterly dividend declaration.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: April 26, 2005 MFB Corp.
By: /s/ Charles J. Viater
Charles J. Viater,
President and CEO
Exhibit 7
April 25, 2005 Contact: Charles J. Viater
President/CEO
MFB Corp. ANNOUNCES SECOND QUARTER EARNINGS
AND QUARTERLY DIVIDEND DECLARATION
Mishawaka, Indiana - MFB Corp. (NASDAQ/MFBC), parent company
of MFB Financial (the "Bank"), reported today consolidated net income on an
unaudited basis of $796,000, or $0.58 diluted earnings per share for the three
months ended March 31, 2005, an increase from net income of $353,000, or $0.26
diluted earnings per share for the three months ended March 31, 2004. MFB Corp's
consolidated net income for the six months ended March 31, 2005 was $686,000, or
$0.50 diluted earning per share, compared to $972,000, or $0.71 diluted earnings
per share, for the same period last year.
Charles Viater, President and CEO, stated that "Our solid
performance for the quarter reflects continued improvement in our net interest
margin and ongoing focus on asset quality."
In addition, Mr. Viater announced today that the Board of
Directors has declared a cash dividend of $0.125 per share of common stock for
the quarter ended March 31, 2005. The dividend is payable on May 17, 2005 to
holders of record on May 3, 2005.
MFB Corp.'s net interest income before provision for loan
losses for the three month period ended March 31, 2005 totaled $3.5 million
compared to $2.7 million for the same period last year. For the six month
periods ended March 31, 2005 and 2004 net interest income was $7.1 million and
$5.6 million, respectively. The increase in net interest income was due to an
increase in loan and investment interest income, offset by an increase in FHLB
advances and deposit interest expenses. These increases were primarily
attributable to the additional assets and liabilities acquired from Sobieski
Bank in August, 2004.
The provision for (recovery of) loan losses for the second
quarter ended March 31, 2005 was ($29,000) compared to $200,000 for the second
quarter ended March 31, 2004. The provision for loan losses was $271,000 for the
six months ended March 31, 2005 compared to $500,000 for the same period last
year. A decline in non-performing assets, coupled with minimal loan growth has
resulted in a significant reduction in the provision for loan losses this year.
The percentage of non-performing assets to loans was 1.01% at March 31, 2005,
1.07% at September 30, 2004 and 1.22% at March 31, 2004.
Year to date noninterest income decreased from $2.7 million
for the six months ended March 31, 2004 to $1.8 million for the six months ended
March 31, 2005. The significant decrease is primarily the result of the first
quarter non-cash impairment charge through earnings of $948,000 ($626,000 net of
tax) for the decline in the value of $2.0 million of Fannie Mae ("FNMA") and
$2.0 million of Freddie Mac ("FHLMC") floating rate preferred stock securities
MFB holds. For the quarter ended March 31, 2005 a positive mark to market
adjustment was recorded for both securities through the shareholders' equity
section of the balance sheet. Total noninterest income increased from $1.2
million for the second quarter last year to $1.5 million for the second quarter
this year. A mortgage servicing rights valuation impairment charge of $170,000
occurred in the quarter ended March 31, 2004 compared to a valuation recovery of
$159,000 for the quarter ended March 31, 2005. For the three months ended March
31, all other non-interest income decreased from $1.4 million last year to $1.3
million this year primarily due to decreased net realized gains from the sales
of loans.
Noninterest expense increased from $6.7 million for the six
months ended March 31, 2004 to $7.9 million for the same period in 2005.
Occupancy expenses related to the operation of three acquired branches, opening
another branch and new Corporate offices were the significant contributors to
this increase. Additional increases relating to the acquired branches include
the amortization of core deposit and customer relationship intangibles and
increased FDIC insurance premiums. Other areas of increase for the six month
periods include salaries and employee benefits, data processing, charitable
contributions, and advertising expenses. Noninterest expense increased from $3.4
million for the second quarter last year to $3.9 million for the second quarter
this year. The second quarter fluctuations were impacted by the same year to
date items noted above along with decreased consulting expenses for the quarter
ending March 31, 2005 compared to 2004. Income tax expense has increased from
last year for the three month period ended March 31 due to increased income
before income taxes.
MFB Corp.'s total assets have decreased to $520.1 million at
March 31, 2005 from $541.2 million at September 30, 2004. Total loans at March
31, 2005 of $400.3 million increased slightly from the $399.9 million of
September 30, 2004. Commercial loans increased from $160.2 million at September
30, 2004 to $169.4 million at March 31, 2005; consumer loans, including home
equity loans, increased from $38.0 million at September 30, 2004 to $39.4
million at March 31, 2005 and were offset by mortgage loans decreasing from
$200.7 million at September 30, 2004 to $191.6 million at March 31, 2005. As a
result of a special analysis, $1.2 million of mortgage loans, including $664,000
of non-performing mortgage loans, were sold in January 2005 contributing to the
second quarter decline in mortgage loans and non-performing assets. Investment
securities available for sale decreased from $66.0 million at September 30, 2004
to $56.6 million at March 31, 2005.
MFB Corp.'s allowance for loan losses at March 31, 2005 was
1.55% of loans compared to 1.52% at September 30, 2004. For the second quarter
ended March 31, 2005, net charge offs were $131,000 compared to $253,000 net
charge offs for the quarter ended March 31, 2004. In management's opinion, the
allowance for loan losses is adequate to cover probable incurred losses at March
31, 2005.
Total deposits decreased from $357.9 million at September 30,
2004 to $342.6 million at March 31, 2005 and Federal Home Loan Bank advances
decreased from $133.4 million as of September 30, 2004 to $129.4 million as of
March 31, 2005.
Total shareholders' equity increased from $35.9 million at
September 30, 2004 to $37.1 million at March 31, 2005. The book value of MFB
Corp. stock increased from $27.02 at September 30, 2004 to $27.41 at March 31,
2005.
MFB Corp.'s wholly-owned bank subsidiary, MFB Financial,
provides retail and business financial services to the Michiana area through its
eleven banking centers in St. Joseph and Elkhart counties.
MFB CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2005 and September 30, 2004
(in thousands except per share information)
(Unaudited)
March 31, September 30,
2005 2004
----------------- -----------------
----------------- -----------------
ASSETS
Cash and due from financial institutions $ 7,506 $ 9,524
Interest - bearing deposits in other financial institutions - short term 8,152 19,071
----------------- -----------------
Total cash and cash equivalents 15,658 28,595
Securities available for sale 56,605 66,021
Other Investments 12,656 12,628
Loans held for sale 1,819 1,034
Mortgage Loans 191,552 200,705
Commercial Loans 169,384 160,182
Consumer Loans 39,364 39,037
----------------- -----------------
----------------- -----------------
Loans receivable 400,300 399,924
Less: allowance for loan losses (6,201) (6,074)
----------------- -----------------
Loan receivable, net 394,099 393,850
Premises and equipment, net 19,151 19,384
Mortgage servicing rights 2,146 2,092
Cash surrender value of life insurance 5,808 5,707
Goodwill 2,423 2,363
Other intangible assets 2,413 2,693
Other assets 7,342 6,855
----------------- -----------------
Total assets $ 520,120 $ 541,222
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing demand deposits $ 29,260 $ 31,658
Savings, NOW and MMDA deposits 129,958 136,099
Time deposits 183,336 190,136
----------------- -----------------
Total deposits 342,554 357,893
FHLB advances 133,443
129,391
Loans from correspondent banks 6,500 6,500
Accrued expenses and other liabilities 4,570 7,480
----------------- -----------------
Total liabilities 483,015 505,316
Shareholders' equity
Common stock, no par value, 5,000,000 shares authorized;
shares issued: 1,689,417 - 03/31/05 and 9/30/04;
shares outstanding: 1,353,460 - 03/31/05 and 1,329,060 - 9/30/04 12,371 12,486
Retained earnings - substantially restricted 32,555 32,195
Accumulated other comprehensive income (loss),
net of tax of ($198) - 03/31/05 and $38 - 9/30/04 (351) (792)
Treasury stock, 335,957 common shares - 03/31/05;
360,357 common shares - 9/30/04, at cost (7,470) (7,983)
----------------- -----------------
Total shareholders' equity 37,105 35,906
----------------- -----------------
Total Liabilities and Shareholders' equity $ 520,120 $ 541,222
================= =================
MFB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three months and Six months ended March 31, 2005 and 2004
(in thousands except per share information)
Three Months Ended Six Months Ended
March 31, March 31,
2005 2004 2005 2004
-------------- ------------- -------------- --------------
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Interest income
Loans receivable, including fees $ 6,022 $ 5,010 $ 12,112 $ 10,075
Securities - taxable 641 391 1,327 801
Other interest-bearing assets 37 45 92 97
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Total interest income 6,700 5,446 13,531 10,973
Interest expense
Deposits 1,594 1,324 3,207 2,671
FHLB advances and other borrowings 1,619 1,375 3,274 2,747
-------------- --------------
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Total interest expense 3,213 2,699 6,481 5,418
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Net interest income 3,487 2,747 7,050 5,555
Provision for (recovery of) loan losses (29) 200 271 500
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
Net interest income after provision for 3,516 2,547 6,779 5,055
(recovery of) loan losses
Noninterest income
Service charges on deposit accounts 757 732 1,586 1,421
Trust fee income 101 131 200 257
Insurance commissions 50 42 100 92
Net realized gains from sales of loans 179 235 401 545
Mortgage servicing asset recovery (impairment) 159 (170) 21 (2)
Net gain (loss) on securities available for sale - - (948) -
Other 205 225 466 356
-------------- ------------- -------------- --------------
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Total noninterest income 1,451 1,195 1,826 2,669
Noninterest expense
Salaries and employee benefits 1,808 1,666 3,664 3,398
Occupancy and equipment 866 689 1,653 1,221
Professional and consulting fees 133 206 371 343
Data processing expense 198 156 395 277
Other expense 928 682 1,841 1,415
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
Total noninterest expense 3,933 3,399 7,924 6,654
Income before income taxes 1,034 343 681 1,070
Income tax expense (credit) 238 (10) (5) 98
-------------- ------------- -------------- --------------
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Net income $ 796 $ 353 $ 686 $ 972
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Basic earnings per common share $ 0.59 $ 0.27 $ 0.51 $ 0.75
Diluted earnings per common share $ 0.58 $ 0.26 $ 0.50 $ 0.71