Microsoft Word 10.0.6612;_AdHocReviewCycleID2112715977_EmailSubjectHere is the
8k_AuthorEmailJennifer.Roth@mfbbank.com_AuthorEmailDisplayNameRoth,
Jennifer_ReviewingToolsShownOnce
UNITED STATES
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 20, 2006
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 2. Results of Operations and Financial Condition.
MFB Corp., an Indiana corporation ("Registrant"), issued a press release which
was publicly disseminated on April 20, 2006 announcing its Second Quarter
Earnings and Quarterly dividend declaration. A copy of the press release is
furnished herewith as Exhibit 99.1. Pursuant to General Instruction B.6 of Form
8-K, this exhibit is not "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, but is instead furnished as required by that instruction.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
99.1 Press Release issued April 20, 2006.
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 20, 2006 MFB Corp.
By: /s/ Charles J. Viater
Charles J. Viater,
President and CEO
Exhibit 99.1
April 20, 2006 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 its consolidated financial results on an
unaudited basis of $815,000, or $0.59 diluted earnings per share for the three
months ended March 31, 2006 an increase from net income of $796,000, or $0.58
diluted earnings per share, for the three months ended March 31, 2005. MFB
Corp's consolidated net income for the six months ended March 31, 2006 was
$418,000, or $0.30 diluted earnings per share, compared to $686,000, or $0.50
diluted earnings per share, for the same period last year.
Charles J. Viater, President and CEO, stated that "We are pleased with
the strong results for the quarter as interest income and noninterest income
have improved from the prior year and we have continued to monitor and control
noninterest expense."
In addition, Mr. Viater announced today that the Board of Directors has
declared a cash dividend of $0.135 per share of common stock for the quarter
ended March 31, 2006. The dividend is payable on May 16, 2006 to holders of
record on May 2, 2006.
MFB Corp.'s net interest income before provision for loan losses for
the three month period ended March 31, 2006 totaled $3.4 million compared to
$3.5 million for the same period last year. For the six month periods ended
March 31, 2006 and 2005 net interest income was $6.9 million and $7.1 million,
respectively. The decrease in net interest income was predominantly due to an
increase in deposit interest expense offset by an increase in investment
interest income and a decrease in FHLB advance interest expense.
The provision for (recovery of) loan losses was ($154,000) for the
quarter ended March 31, 2006 compared to ($29,000) for the same period last
year. The provision for loan losses was $1,901,000 for the six months ended
March 31, 2006 compared to $271,000 for the same period last year. The increase
during the six months ended March 31, 2006 was primarily related to management's
first quarter assessment of a commercial loan to a business experiencing
difficulties with inventory management, trade accounts receivable collections,
financial reporting, and operating cash flow. This loan is primarily secured by
inventory and accounts receivable. After updating our analysis of the value of
this collateral, completing an assessment of the reliability and adequacy of
accounting systems and evaluating the recent financial performance of the
business, the Bank determined that an additional charge to earnings in the
amount of $2,324,000 ($1,411,000 net of tax) for this loan was necessary during
the first quarter ended December 31, 2005. The loan has been placed on
non-accrual status and is now fully reserved. No charge off has been recorded on
this commercial loan because the Bank cannot reasonably estimate at this time
how much of the loan it will ultimately recover. The percentage of
non-performing loans to total loans increased from 0.65% at March 31, 2005 to
2.24% at March 31, 2006.
Noninterest income remained consistent for the quarters ended March 31,
2005 and March 31, 2006 at $1.5 million. Year to date noninterest income
increased from $1.8 million for the six months ended March 31, 2005 to $3.1
million for the six months ended March 31, 2006. The significant increase was
primarily the result of the first quarter non-cash impairment charge to earnings
in December 2004 of $948,000 ($626,000 net of tax) resulting from a decline in
value of $2.0 million of Fannie Mae ("FNMA") and $2.0 million of Freddie Mac
("FHLMC") floating rate preferred stock securities MFB holds. The increase was
also due to the increase in rental income for leasing of the Headquarters
building located in Mishawaka, Indiana.
Noninterest expense was held in check at $4.0 million for the quarter
ended March 31, 2006 compared to $3.9 million for the quarter ended March 31,
2005. Year to date noninterest expense remained unchanged at $7.9 million for
the six month periods ended March 31, 2006 and 2005. A reduction in professional
and consulting fees, was offset by an increase in salaries and employee
benefits, and occupancy and equipment expense.
MFB Corp.'s total assets decreased from $554.9 million at September 30,
2005 to $525.3 million at March 31, 2006. A decrease in cash and cash
equivalents from $54.2 million at September 30, 2005 to $38.3 million at March
31, 2006 was predominantly due to the payoff of FHLB advances totaling $15.0
million during the six months ended March 31, 2006. Total loans at March 31,
2006 of $377.0 million decreased from the $390.7 million at September 30, 2005.
Commercial loans decreased from $157.8 million at September 30, 2005 to $142.6
million at March 31, 2006; mortgage loans decreased slightly from $192.0 million
at September 30, 2005 to $191.6 million at March 31, 2006 and were offset by
consumer loans, including home equity loans, increasing from $40.9 million at
September 30, 2005 to $42.8 million at March 31, 2006. Investment securities
available for sale increased from $63.6 million at September 30, 2005 to $64.7
million at March 31, 2006.
MFB Corp.'s allowance for loan losses at March 31, 2006 was $8.2
million or 2.17% of loans compared to $6.4 million or 1.63% of loans at
September 30, 2005. For the second quarter ended March 31, 2006, net charge offs
were $95,000 compared to $131,000 net charge offs for the quarter ended March
31, 2005. Year to date net charge offs were $102,000 for the six months ended
March 31, 2006 and $144,000 for the six months ended March 31, 2005. In
management's opinion, the allowance for loan losses is adequate to cover
probable incurred losses at March 31, 2006.
Total deposits decreased from $374.4 million at September 30, 2005 to
$361.4 million at March 31, 2006. The decrease in deposits was predominantly due
to a measured reduction in above-average cost deposit products. Federal Home
Loan Bank advances decreased from $125.9 million as of September 30, 2005 to
$109.6 million as of March 31, 2006.
Total shareholders' equity decreased slightly from $38.7 million at
September 30, 2005 to $38.3 million at March 31, 2006. The book value of MFB
Corp.'s stock decreased two cents from $28.52 at September 30, 2005 to $28.50 at
March 31, 2006.
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 and private client
services to the Indianapolis market through its office in Hamilton County. For
more information, go to www.mfbbank.com.
MFB CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 2006 and September 30, 2005
(in thousands except share information)
March 31, September 30,
2006 2005
Assets
Cash and due from financial institutions $ 8,217 $ 7,613
Interest-bearing deposits in other financial institutions - short term 30,056 46,596
Total cash and cash equivalents 38,273 54,209
Securities available for sale 64,669 63,575
Other investments 12,422 12,514
Loans held for sale 411 407
Mortgage loans 191,613 191,970
Commercial loans 142,556 157,804
Consumer loans 42,831 40,921
----------------- -----------------
----------------- -----------------
Loans receivable 377,000 390,695
Less: allowance for loan losses (8,188) (6,388)
----------------- -----------------
-----------------
Loan receivable, net 368,812 384,307
Premises and equipment, net 20,132 20,336
Mortgage servicing rights 2,456 2,341
Cash surrender value of life insurance 6,071 5,964
Goodwill 1,970 2,423
Other intangible assets 1,916 2,134
Other assets 8,184 6,667
-----------------
----------------- -----------------
Total Assets $ 525,316 $ 554,877
================= =================
=================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing demand deposits $ 35,836 $ 36,876
Savings, NOW and MMDA deposits 136,245 153,864
Time deposits 189,358 183,624
----------------- -----------------
-----------------
Total deposits 361,439 374,364
FHLB advances 109,628 125,854
Loans from correspondent banks 6,500 6,500
Trust preferred securities 5,000 5,000
Accrued expenses and other liabilities 4,446 4,486
----------------- -----------------
-----------------
Total liabilities 487,013 516,204
Shareholders' equity
Common stock, no par value, 5,000,000 shares authorized;
shares issued: 1,689,417 - 03/31/06 and 09/30/05;
shares outstanding: 1,344,060 - 03/31/06 and 1,355,860 - 09/30/05 12,377 12,376
Additional paid in capital 29 -
Retained earnings - substantially restricted 34,092 34,027
Accumulated other comprehensive income (loss),
net of tax of ($381) - 03/31/06 and ($175) - 09/30/05 (412) (310)
Treasury stock, 345,357 common shares - 03/31/06 and
333,557 common shares - 09/30/05, at cost (7,783) (7,420)
----------------- -----------------
-----------------
Total shareholders' equity 38,303 38,673
-----------------
----------------- -----------------
Total Liabilities and Shareholders' equity $ 525,316 $ 554,877
================= =================
MFB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three and Six Months Ended March 31, 2006 and 2005
(in thousands except per share information)
Three Months Ended Six Months Ended
March 31 March 31
2006 2005 2006 2005
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Interest income
Loans receivable, including fees $ 6,027 $ 6,022 $ 12,069 $ 12,112
Securities - taxable 805 641 1,578 1,327
Other interest-bearing assets 282 37 632 92
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Total interest income 7,114 6,700 14,279 13,531
Interest expense
Deposits 2,383 1,594 4,619 3,207
FHLB advances and other borrowings 1,317 1,619 2,789 3,274
-------------- ------------
-------------- ------------ --------------- --------------
Total interest expense 3,700 3,213 7,408 6,481
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Net interest income 3,414 3,487 6,871 7,050
Provision for (recovery of) loan losses (154) (29) 1,901 271
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Net interest income after provision for 3,568 3,516 4,970 6,779
(recovery of) loan losses
Noninterest income
Service charges on deposit accounts 779 757 1,628 1,586
Trust fee income 126 101 226 200
Insurance commissions 43 50 91 100
Net realized gains from sales of loans 86 179 171 401
Mortgage servicing asset recovery (impairment) (1) 163 165 25
Net gain (loss) on securities available for sale - - - (948)
Other income 428 201 796 462
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Total noninterest income 1,461 1,451 3,077 1,827
Noninterest expense
Salaries and employee benefits 1,909 1,808 3,871 3,663
Occupancy and equipment 869 866 1,726 1,654
Professional and consulting fees 110 133 201 371
Data processing expense 211 198 425 395
Other expense 857 928 1,705 1,841
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Total noninterest expense 3,956 3,933 7,928 7,924
Income before income taxes 1,073 1,034 119 681
Income tax expense (benefit) 258 238 (299) (5)
-------------- ------------ --------------- --------------
-------------- ------------ --------------- --------------
Net income $ 815 $ 796 $ 418 $ 686
============== ============ =============== ==============
============== ============ =============== ==============
Basic earnings per common share $ 0.60 $ 0.59 $ 0.31 $ 0.51
Diluted earnings per common share $ 0.59 $ 0.58 $ 0.30 $ 0.50