MutualFirst Announces Fourth Quarter and Year End 2012 Earnings

Feb 08, 2013, 09:00 ET from MutualFirst Financial, Inc.

MUNCIE, Ind., Feb. 8, 2013 /PRNewswire/ -- MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the "Bank"), announced today net income to common shareholders for the fourth quarter ended December 31, 2012 of $1.6 million, or $.23 for basic and diluted earnings per common share.  This compared to net income available to common shareholders for the same period in 2011 of $687,000, or $.10 for basic and diluted earnings per common share. Annualized return on assets was .56% and return on average tangible common equity was 6.10% for the fourth quarter of 2012 compared to .29% and 2.73% respectively, for the same period of last year.

Net income available to common shareholders for the year ended 2012 was $5.8 million, or $.83 for basic earnings per common share and $.82 for diluted earnings per common share compared to net income available to common shareholders of $1.4 million, or $.20 for basic and diluted earnings per common share for the year ended 2011.  Return on assets was .50% and return on average tangible common equity was 5.47% for the year ended 2012 compared to .24% and 1.39% respectively, for the year ended 2011.

Other financial highlights for the fourth quarter ended December 31, 2012 included:

  • Gross loans increased $22.7 million, or 2.4% in the fourth quarter of 2012.
  • Deposits decreased $9.0 million in the fourth quarter of 2012.
  • Tangible common equity increased to 7.62% and tangible book value increased to $15.33 as of December 31, 2012 compared to 7.05% and $14.38, respectively, as of December 31, 2011.
  • Non-performing assets increased $757,000 in the fourth quarter of 2012; however, declined $7.8 million compared to December 31, 2011. 
  • Net charge offs on an annualized basis were .35% in the fourth quarter of 2012 compared to 1.53% in the same period of 2011.  Net charge offs for the year ended 2012 were 0.71% compared to 1.31% for year ended 2011.
  • In the fourth quarter, the Bank sold investments of $51 million for gains of $1.3 million and prepaid $27.8 million in FHLB advances with a prepayment penalty of $804,000, to remove negative spread off of the balance sheet.  The remaining cash from the sale of investments was used to fund the growth in the loan portfolio during the quarter. 
  • Net interest margin was 3.04% for the fourth quarter of 2012 compared to 3.09% in the same period of 2011.   On a linked quarter basis, net interest margin declined from 3.05%.
  • Non-interest income for the quarter ended December 31, 2012 decreased $879,000 compared to the same period in 2011, primarily due to gains on the sale of a $45 million mortgage loan portfolio in the fourth quarter of 2011 that was not repeated in 2012.   On a linked quarter basis, non-interest income increased $127,000.
  • Non-interest expense for the fourth quarter of 2012 increased $427,000 over the same period in 2011 and increased $472,000 over the linked quarter.  This increase was a result of a prepayment penalty of $804,000 due to the early payoff of $27.8 million in FHLB advances.  Without the one-time prepayment penalty, non-interest expense would have declined $377,000 compared to the fourth quarter of 2011 and declined $332,000 over the linked quarter.

"We are pleased to see a significant earnings increase in 2012." said David W. Heeter, President and CEO. "We are building earnings momentum as the economy stabilizes."

Balance Sheet

Assets decreased $4.8 million as of December 31, 2012 compared to December 31, 2011, primarily due to the $73.5 million decrease in cash and investments primarily offset by an increase of $68.3 million in the gross loan portfolio.  Mortgage loans have increased $65.6 million in 2012 as mortgage refinance activities remain brisk.  The commercial loan portfolio increased $6.0 million in 2012.  The consumer loan portfolio declined $3.3 million in 2012 compared to a decline of $25.4 million in 2011.  In the fourth quarter of 2012, gross loans increased by $22.7 million, primarily due to a $14.8 million increase in commercial loans and an $8.6 million increase in mortgage loans.  These increases were partially offset by a decline in consumer loans of $674,000.  Heeter commented, "We are very pleased with the loan growth we experienced in the fourth quarter."  To help mitigate interest rate risk, the Bank has sold its 30 year fixed rate mortgage loan production in the secondary market.  In 2012, the Bank sold $45.3 million in fixed rate mortgage loans compared to $80.2 million during 2011, which included a $45 million mortgage portfolio sale. Securities of $98.3 million were sold to fund loan growth to redeploy funds into higher earning assets and to paydown maturing FHLB advances.  The Bank also prepaid $27.8 million of FHLB advances in the fourth quarter resulting in a loss of $804,000.

Deposits increased by $17.4 million as of December 31, 2012 compared to December 31, 2011, as the Bank continues to see growth in core transactional accounts.  The increase in the core transactional accounts was $81.7 million, while certificates of deposit decreased $64.4 million in 2012. Core transactional deposits increased to 51% of the Bank's total deposits as of December 31, 2012 compared to 45% as of December 31, 2011. The increase in deposits, along with liquidation of securities, has allowed the Bank to fund loan growth this year.  FHLB advances have decreased by $26.8 million as the Bank prepaid certain FHLB advances in the fourth quarter to remove negative net interest income spread.

Allowance for loan losses decreased by $777,000, to $16.0 million as of December 31, 2012 compared to December 31, 2011 as the Bank's specific allocation on impaired loans has declined by $600,000 primarily through charge offs of those specific allocations.  Net charge offs in the fourth quarter were $848,000, or .35% of total loans on an annualized basis.  Net charge offs for 2012 were $6.8 million, or .71% of total loans. The allowance for loan losses to non-performing loans as of December 31, 2012 increased to 67.72% compared to 52.81% as of December 31, 2011.  The allowance for loan losses to total loans as of December 31, 2012 was 1.63%, a decrease from 1.83% as of December 31, 2011.  Heeter commented, "We continue to see steady improvement in the credit cycle, and continue to feel our allowance adequately reflects the risk in our portfolio."

Stockholders' equity was $139.5 million at December 31, 2012, an increase of $6.9 million from December 31, 2011. The increase was due primarily to net income of $7.3 million and unrealized gains on securities of $1.3 million. The increase was partially offset by dividend payments of $3.1 million to common and preferred shareholders.  The Company's tangible book value per share as of December 31, 2012 increased to $15.33 compared to $14.38 as of December 31, 2011 and the tangible common equity ratio was 7.62% as of December 31, 2012 compared to 7.05% as of December 31, 2011.  The Company's and the Bank's risk-based capital ratios were in excess of "well-capitalized" levels as defined by all applicable regulatory standards as of December 31, 2012.

Income Statement

Net interest income before the provision for loan losses increased $56,000 for the quarter ended December 31, 2012 compared to the same period in 2011.  The increase was a result of an increase in average earning assets of $27.6 million, partially offset by a decline in net interest margin of 5 basis points.  On a linked quarter basis, net interest income before the provision for loan losses decreased $204,000 primarily due to a decrease in average earning assets of $22.4 million

Net interest income before the provision for loan losses decreased $675,000 for 2012 compared to 2011.  The decrease was a result of the 11 basis point decline in the net interest margin from 3.16% in 2011 compared to 3.05% in 2012, which was partially offset by an increase in average earning assets of $25.7 million.

The provision for loan losses for the fourth quarter of 2012 decreased to $1.4 million compared to $4.0 million during last year's comparable period.  The decrease was due to management's ongoing evaluation of the adequacy of the allowance for loan losses, which was partially attributable to net charge offs decreasing to $848,000, or .35% of loans on an annualized basis in the fourth quarter of 2012 compared to net charge offs of $3.7 million, or 1.53% of loans on an annualized basis in the fourth quarter of 2011.  Non-performing loans to total loans at December 31, 2012 declined to 2.40% compared to 3.47% at December 31, 2011.  Non-performing assets to total assets declined to 2.21% at December 31, 2012 compared to 2.75% at December 31, 2011. 

The provision for loan losses for 2012 decreased to $6.0 million compared to $13.1 million during 2011.  The decrease was primarily due to a reduction in net charge offs to $6.8 million in 2012 compared to net charge offs of $12.7 million in 2011.  Non-performing loans decreased $8.2 million, or 26% as of December 31, 2012 compared to December 31, 2011.

Non-interest income for the fourth quarter of 2012 was $4.5 million, a decrease of $879,000 compared to the fourth quarter of 2011.  Gain on sale of loans and servicing of loans decreased by $1.8 million in the fourth quarter of 2012 compared to the same period in 2011 primarily due to a $45 million mortgage loan portfolio sale that occurred in 2011, which was not repeated in 2012.  This decrease was partially offset by an increase in gain on investment sales of $1.0 million. Service fee income on deposit accounts decreased by $178,000, as fees collected on overdraft transactions have declined due to a decrease in overdraft transactions.  On a linked quarter basis, non-interest income increased $127,000.

Non-interest income for 2012 was $15.5 million, a decrease of $485,000 compared to 2011.  Gain on sale of loans and related servicing of loans decreased by $982,000 in 2012 compared to 2011 primarily due to the same reasons stated above in addition to decreases in service fee income on deposits of $495,000, primarily related to reduced overdraft fee income.  These decreases were partially offset by increases in gain on sale of investments of $2.8 million.

Non-interest expense increased $427,000 when comparing the fourth quarter of 2012 with that of 2011.  The increase was primarily due to a prepayment penalty of $804,000 related to the prepayment of FHLB advances.  On a linked quarter, non-interest expense increased $472,000 for the same reason.

Non-interest expense decreased $150,000 when comparing 2012 with 2011.  Decreases related to non-interest expense have been a result of decreased occupancy and equipment expense of $126,000, a reduction in salaries and benefit expense of $355,000 primarily due to savings on employee health insurance, decreased deposit insurance expense of $231,000 and decreased intangible expense of $198,000.  These decreases were partially offset by increases in software subscriptions and maintenance of $170,000 and increases in marketing expense of $144,000.

"We believe the markets we serve have stabilized.  Although far from robust, we think our opportunities are good to continue improving performance," Heeter added.

MutualFirst Financial, Inc. and MutualBank, an Indiana-based financial institution, has thirty-one full-service retail financial centers in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash Counties in Indiana.  MutualBank also has two Wealth Management and Trust offices located in Carmel and Crawfordsville, Indiana and a loan origination office in New Buffalo, Michigan.  MutualBank is a leading residential lender in each of the market areas it serves, and provides a full range of financial services including commercial lending, wealth management and trust services and Internet banking services.  The Company's stock is traded on the NASDAQ National Market under the symbol "MFSF" and can be found on the internet at www.bankwithmutual.com.

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.

December 31,

September 30,

December 31,

Balance Sheet (Unaudited):

2012

2012

2011

(000)

(000)

(000)

Assets

Cash and cash equivalents

$32,778

$44,319

$56,638

Investment securities - AFS

281,197

342,863

330,878

Loans held for sale

5,106

4,072

1,441

Loans, gross

985,583

962,911

917,275

Allowance for loan loss

(16,038)

(15,536)

(16,815)

Net loans

969,545

947,375

900,460

Premise and equipment 

32,240

32,344

32,025

FHLB of Indianapolis stock

14,391

14,391

14,391

Investment in limited partnerships

2,602

2,730

3,113

Cash surrender value of life insurance

48,410

48,076

47,023

Prepaid FDIC premium

1,647

1,947

2,821

Core deposit and other intangibles

2,411

2,634

3,373

Deferred income tax benefit

16,033

14,896

17,386

Foreclosed real estate

6,946

6,184

6,525

Other assets

9,099

10,565

11,119

Total assets

1,422,405

1,472,396

1,427,193

Liabilities and Stockholders' Equity

Deposits

1,184,009

1,193,031

1,168,357

FHLB advances

74,675

113,194

101,451

Other borrowings

11,606

11,812

12,410

Other liabilities

12,623

15,084

12,348

Stockholders' equity

139,492

139,275

132,627

Total liabilities and stockholders' equity

1,422,405

1,472,396

1,427,193

Three Months

Three Months

Three Months

Twelve Months

Twelve Months

Ended

Ended

Ended

Ended

Ended

December 31,

September 30,

December 31,

December 31,

December 31,

Income Statement (Unaudited):

2012

2012

2011

2012

2011

(000)

(000)

(000)

(000)

(000)

Total interest income

$13,431

$13,908

$14,614

$55,348

$61,353

Total interest expense

3,320

3,593

4,559

14,704

20,034

   Net interest income

10,111

10,315

10,055

40,644

41,319

Provision for loan losses

1,350

1,475

4,000

6,025

13,100

Net interest income after provision

  for loan losses

8,761

8,840

6,055

34,619

28,219

  Non-interest income

Fees and service charges

1,616

1,644

1,794

6,492

6,987

Net gain (loss) on sale of investments

1,256

1,095

209

2,831

2,048

Other than temporary impairment of securities

0

0

0

0

(193)

Equity in losses of limited partnerships

(127)

(124)

(128)

(498)

(384)

Commissions

980

859

857

3,894

3,691

Net gain (loss) on loan sales 

481

541

2,243

1,870

2,928

Net servicing fees

(77)

(16)

14

(203)

(278)

Increase in cash surrender value of life insurance

334

340

350

1,351

1,420

Gain (Loss) on sale of other real estate and repossessed assets

(41)

30

(67)

(564)

(426)

Other income 

86

12

115

351

216

Total non-interest income

4,508

4,381

5,387

15,524

16,009

  Non-interest expense

Salaries and benefits

5,425

5,273

5,587

21,335

21,690

Occupancy and equipment

1,329

1,353

1,108

5,162

5,288

Data processing fees

361

361

375

1,539

1,529

Professional fees

428

420

472

1,616

1,641

Marketing

388

488

405

1,602

1,458

Deposit insurance

321

312

321

1,260

1,491

Software subscriptions and maintenance

325

384

332

1,471

1,301

Intangible amortization

217

229

267

962

1,160

Repossessed assets expense

190

247

196

881

942

Other  expenses

1,621

1,066

1,115

4,437

3,915

Total non-interest expense

10,605

10,133

10,178

40,265

40,415

Income  before taxes

2,664

3,088

1,264

9,878

3,813

Income tax provision (benefit)

661

915

215

2,632

329

Net income 

2,003

2,173

1,049

7,246

3,484

Preferred stock dividends and amortization

362

362

362

1,446

2,115

Net income available to common shareholders

$1,641

$1,811

$687

$5,800

$1,369

Pretax preprovision earnings

$3,652

$4,201

$4,902

$14,457

$14,798

Average Balances,  Net Interest Income, Yield Earned and Rates Paid

Three

Three

mos ended

mos ended

12/31/2012

12/31/2011

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

$21,374

$12

0.22%

$38,228

$23

0.24%

 Mortgage-backed securities:

Available-for-sale

277,819

1,767

2.54

257,923

1,670

2.59

 Investment securities:

Available-for-sale

38,557

189

1.96

32,127

193

2.40

 Loans receivable

976,411

11,336

4.64

958,325

12,637

5.27

Stock in FHLB of Indianapolis

14,391

127

3.53

14,391

91

2.53

Total interest-earning assets (3)

1,328,552

13,431

4.04

1,300,994

14,614

4.49

Non-interest earning assets, net of allowance 

  for loan losses and unrealized gain/loss

114,964

123,090

     Total assets

$1,443,516

$1,424,084

Interest-Bearing Liabilities:

 Demand and NOW accounts

$257,302

203

0.32

$217,200

291

0.54

 Savings deposits

108,183

6

0.02

97,718

13

0.05

 Money market accounts

96,975

83

0.34

81,098

134

0.66

 Certificate accounts

583,791

2,449

1.68

655,850

3,216

1.96

 Total deposits

1,046,251

2,741

1.05

1,051,866

3,654

1.39

 Borrowings

110,210

579

2.10

103,092

905

3.51

  Total interest-bearing accounts

1,156,461

3,320

1.15

1,154,958

4,559

1.58

Non-interest bearing deposit accounts

133,023

123,471

Other liabilities

14,941

12,614

  Total liabilities

1,304,425

1,291,043

Stockholders' equity

139,091

133,041

    Total liabilities and stockholders' equity

$1,443,516

$1,424,084

Net earning assets

$172,091

$146,036

Net interest income

$10,111

$10,055

Net interest rate spread

2.90%

2.91%

Net yield on average interest-earning assets

3.04%

3.09%

Average interest-earning assets to

  average interest-bearing liabilities

114.88%

112.64%

Three Months

Three Months

Three Months

Twelve Months

Twelve Months

Ended

Ended

Ended

Ended

Ended

December 31,

September 30,

December 31,

December 31,

December 31,

  Selected Financial Ratios and Other Financial Data (Unaudited):

2012

2012

2011

2012

2011

Share and per share data:

 Average common shares outstanding

   Basic

6,991,044

6,949,126

6,919,543

6,951,727

6,907,015

   Diluted

7,122,459

7,074,896

6,928,731

7,055,684

6,976,633

 Per common share:

   Basic earnings 

$0.23

$0.26

$0.10

$0.83

$0.20

   Diluted earnings

$0.23

$0.26

$0.10

$0.82

$0.20

   Dividends

$0.06

$0.06

$0.06

$0.24

$0.24

Dividend payout ratio

26.09%

23.08%

60.00%

29.27%

120.00%

Performance Ratios:

   Return on average assets (ratio of net

      income to average total assets)(1)

0.56%

0.59%

0.29%

0.50%

0.24%

   Return on average tangible common equity (ratio of net 

      income to average tangible common equity)(1)

6.10%

6.83%

2.73%

5.47%

1.39%

   Interest rate spread information:

    Average during the period(1)

2.90%

2.90%

2.91%

2.89%

2.97%

    Net interest margin(1)(2)

3.04%

3.05%

3.09%

3.05%

3.16%

Efficiency Ratio

72.54%

68.95%

65.91%

71.69%

70.50%

    Ratio of average interest-earning

     assets to average interest-bearing

     liabilities

114.88%

114.22%

112.64%

114.33%

112.66%

Allowance for loan losses:

       Balance beginning of period

$15,536

$16,003

$16,481

$16,815

$16,372

       Charge offs:

          One- to four- family

249

505

777

1,901

3,432

          Commercial real estate

240

1,346

1,939

3,603

7,532

          Consumer loans

434

268

490

1,608

2,126

          Commercial business loans

0

137

728

890

728

              Sub-total

923

2,256

3,934

8,002

13,818

        Recoveries:

          One- to four- family

40

195

37

239

274

          Commercial real estate

1

14

0

375

146

          Consumer loans

32

103

141

375

741

          Commercial business loans

2

2

90

211

0

              Sub-total

75

314

268

1,200

1,161

Net charge offs

848

1,942

3,666

6,802

12,657

Additions charged to operations

1,350

1,475

4,000

6,025

13,100

Balance end of period

$16,038

$15,536

$16,815

$16,038

$16,815

    Net loan charge-offs to average loans (1)

0.35%

0.81%

1.53%

0.71%

1.31%

December 31,

September 30,

December 31,

2012

2012

2011

Total shares outstanding

7,055,502

6,993,971

6,987,586

Tangible book value per share

$15.33

$15.40

$14.38

Tangible common equity to tangible assets

7.62%

7.33%

7.05%

 Nonperforming assets (000's)

Non-accrual loans

One- to four- family

$10,791

$9,862

$10,080

Commercial real estate

8,439

8,969

16,906

Consumer loans

2,865

2,869

2,565

Commercial business loans

1,315

1,412

1,160

Total non-accrual loans

23,410

23,112

30,711

Accruing loans past due 90 days or more

273

757

1,127

Total nonperforming loans

23,683

23,869

31,838

    Real estate owned

6,945

6,184

6,525

    Other repossessed assets

755

573

867

 Total nonperforming assets

$31,383

$30,626

$39,230

Performing restructured loans (4)

10,345

7,855

8,402

Asset Quality Ratios:

Non-performing assets to total assets 

2.21%

2.08%

2.75%

Non-performing loans to total loans

2.40%

2.48%

3.47%

Allowance for loan losses to non-performing loans

67.72%

65.09%

52.81%

Allowance for loan losses to loans receivable

1.63%

1.61%

1.83%

(1)    Ratios for the three month periods have been annualized.

(2)    Net interest income divided by average interest earning assets.

(3)   Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves.

(4) Performing restructured loans are excluded from non-performing ratios.  Restructured loans that are on non-accrual are in the non-accrual loan categories.

 

SOURCE MutualFirst Financial, Inc.



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