MutualFirst Announces 2009 Earnings
MUNCIE, Ind., Feb. 11 /PRNewswire-FirstCall/ -- MutualFirst Financial, Inc. (Nasdaq: MFSF), the holding company of MutualBank (the "Bank"), announced today that net income available to common shareholders for the year ended December 31, 2009 was $1.4 million, or $.20 for basic and diluted earnings per common share. This compared to a net loss for the year ended December 31, 2008 of $22.1 million, or $4.22 for basic and diluted earnings per common share. Return on assets was .23% and return on average tangible common equity was 1.49% for the year ended 2009 compared to a negative 1.91% and a negative 28.04% respectively, for the year ended 2008.
"We are pleased to report positive annual earnings through this difficult economic environment, which has included historically high levels of credit expense on the loan portfolio and other than temporary impairments on the investment portfolio," said David W. Heeter, President and CEO.
Assets totaled $1.4 billion at December 31, 2009, an increase from December 31, 2008 of $10.1 million, or 0.7% as cash received from loan sales and prepayments was reinvested into securities. Gross loans, excluding loans held for sale, decreased $52.1 million, or 4.6%. Increases in commercial loans of $8.7 million, or 2.6% were offset by decreases in consumer loans of $8.6 million, or 3.3% and residential mortgage loans held in the portfolio of $52.2 million, or 9.8%. Residential mortgage loans held for sale increased $1.0 million and mortgage loans sold during the year 2009 totaled $160.0 million compared to $92.9 million sold during the year 2008. Total loan originations for the year ended December 31, 2009 were approximately $335 million, a 68% increase over 2008. Despite the increased originations, loan prepayments and mortgage loan sales have led to a decrease in loan balances. Increases in investment securities available for sale of $53.7 million, or 69.5% primarily due to investments in highly rated municipal, corporate and mortgage-backed securities and cash and cash equivalents of $6.6 million helped offset the decreases in the loan portfolio.
The net loss for the three months ended December 31, 2009 was $1.6 million, or $.24 for basic and diluted earnings per common share. The net loss for the quarter was a direct result of $2.4 million of other than temporary impairment charges on several investments. This compared to a net loss for the comparable period in 2008 of $24.9 million, or $3.65 for basic and diluted earnings per share. The net loss in fourth quarter 2008 was primarily due to a goodwill impairment charge of $29.0 million. Annualized return on average assets was a negative .34% and return on average tangible common equity was a negative 7.06% for the three months ended December 31, 2009 compared to a negative 7.13% and a negative 108.92% respectively, for the same period last year.
Allowance for loan losses was $16.4 million at December 31, 2009, an increase of $1.3 million from December 31, 2008. Net charge offs for the quarter ended December 31, 2009 were $1.9 million, or .69% of average loans on an annualized basis compared to $1.9 million, or .66% of average loans for the comparable period in 2008. Net charge offs for the year ended December 31, 2009 were $5.2 million, or .47% of average loans compared to $3.2 million, or .34% of average loans for the comparable period in 2008. The allowance for loan losses as a percentage of non-performing loans and total loans was 50.38% and 1.53%, respectively at December 31, 2009 compared to 69.41% and 1.34%, respectively at December 31, 2008 and 50.68% and 1.53%, respectively at September 30, 2009. On a linked quarter basis net charge offs increased from an annualized .50% of average loans for the quarter ended September 30, 2009 to .69% for the current quarter. Heeter commented, "We continue to actively monitor our loan portfolio and we believe our allowance is adequate."
Total deposits were $1.0 billion at December 31, 2009 an increase of $82.7 million, or 8.6% from December 31, 2008. This increase was due to increases in certificates of deposit of $62.1 million and transactional deposits of $20.6 million. Total borrowings decreased $81.1 million to $198.0 million at December 31, 2009 from $279.1 million at December 31, 2008. The decrease in total borrowings was a direct result of increasing retail deposits and paying down maturating borrowings helping to reduce interest costs.
Stockholders' equity was $129.7 million at December 31, 2009, a decrease of $788,000, or 0.6% from December 31, 2008. The decrease was due primarily to dividend payments of $2.9 million to common shareholders and $1.4 million to preferred shareholders. This decrease was partially offset by net income of $3.2 million and Employee Stock Ownership Plan (ESOP) shares earned of $215,000. Accumulated other comprehensive income increased $170,000 as unrealized gains on securities and derivatives of $325,000 were partially offset by a $155,000 unrealized loss on a benefit plan. The Bank's risk-based capital ratio is 12.75% and the tier one capital ratio is 11.50%. The Bank's capital ratios are well in excess of "well-capitalized" levels as defined by all regulatory standards.
Net interest income before the provision for loan losses decreased $263,000 from $10.5 million for the three months ended December 31, 2008 to $10.3 million for the three months ended December 31, 2009. The primary reason for the decrease was a decrease in net interest margin of 17 basis points to 3.24% in the fourth quarter 2009 compared to 3.41% for the fourth quarter 2008. This decrease was partially offset by an increase in average earning assets of $30.1 million due to an increased investment portfolio. On a linked quarter basis, net interest income increased $38,000 primarily due to an increase in net interest margin of 3 basis points, partially offset by a decrease in average earning assets of $8.4 million.
Net interest income before the provision for loan losses increased $7.7 million from $33.5 million for the year ended December 31, 2008 to $41.2 million for the year ended December 31, 2009. The primary reason for the increase was an increase in average earning assets of $239.5 million due to the acquisition of MFB Corp in the third quarter of 2008. Net interest margin remained unchanged at 3.22% for the years ended December 31, 2009 and 2008.
The provision for loan losses for the fourth quarter of 2009 was $1.7 million, a decrease of $3.1 million from last year's comparable period. This decline was due to the fourth quarter of 2008 provision of $4.8 million to sufficiently meet the Bank's internal allowance calculation due to the declining economic and loan factors. The current provision continues to provide sufficient additional allowance to meet the Bank's internal allowance calculation. Non-performing loans to total loans at December 31, 2009 were 3.03% compared to 1.93% at December 31, 2008. This increase in non-performing loans was primarily due to an increased level of non-performing residential property loans. Non-performing assets to total assets were 2.86% at December 31, 2009 compared to 1.92% at December 31, 2008. On a linked quarter basis, non-performing loans to total loans at December 31, 2009 were 3.03% compared to 3.02% at September 30, 2009. This increase in non-performing loans was primarily due to a decreased level of total loans as non-performing loans decreased $208,000. Non-performing assets to total assets were 2.86% at December 31, 2009 compared to 2.74% at September 30, 2009.
The provision for loan losses for the year ended 2009 was $6.5 million, a decrease of $500,000 from 2008. The provision for loan losses continued to exceed net charge offs and added an additional $1.3 million to the allowance. Allowance for loan losses to loans receivable was 1.53% as of December 31, 2009 compared to 1.34% as of December 31, 2008.
Non-interest income increased $599,000 to $1.8 million for the three months ended December 31, 2009 compared to the same period in 2008. This increase is primarily due to increases in service fees on transaction accounts of $19,000, increases in commission income of $243,000 primarily due to an increase in income on trust services, increases in limited partnership income of $407,000 primarily due to one-time gains of $427,000, and increases in net gain on sale of loans of $596,000 primarily due to a $500,000 mortgage servicing rights impairment in the fourth quarter of 2008, which was not duplicated in 2009. These increases were partially offset by a decrease in gains on sale of investments of $936,000 due to impairment charges of $2.4 million on securities taken in the fourth quarter of 2009 compared to $1.2 million taken in the fourth quarter 2008.
For the year ended December 31, 2009 non-interest income increased $6.6 million to $13.2 million compared to $6.5 million for the same period in 2008. The reasons for the increases are primarily due to the acquisition of MFB Corp in the third quarter 2008, the impairment charge taken in the third quarter of 2008, and increased mortgage banking income in 2009.
Non-interest expense decreased $28.2 million to $11.9 million for the three months ended December 31, 2009 compared to $40.1 million for the same period in 2008. The fourth quarter 2008 included a goodwill impairment charge of $29.0 million. The increases in the current quarter non-interest expense compared to the same period in 2008 included increases in occupancy and equipment expense of $222,000 primarily due to increased property taxes, increases in data processing of $85,000, increases in deposit insurance of $208,000 primarily due to higher premium rates and increased deposits, and increases in repossessed asset expense of $494,000 primarily due to increased repossessed assets. The decreases in the current quarter non-interest expense compared to the same period in 2008 included a decrease in salaries and employee benefits of $54,000, a decrease in marketing expense of $73,000, a decrease in software subscriptions and maintenance of $42,000, a decrease in intangible amortization of $44,000 and a decrease in other expenses of $29.0 million related to the goodwill impairment charge.
For the year ended December 31, 2009 non-interest expense decreased $19.1 million to $44.5 million compared to $63.6 million for the same period in 2008. The reasons for the increase after excluding the $29.0 million goodwill impairment charge were due to the acquisition of MFB Corp in the third quarter of 2008, increased FDIC assessments, which included a one-time $630,000 in the second quarter 2009, and credit related expenses on the loan portfolio.
MutualFirst Financial, Inc. and MutualBank, an Indiana-based financial institution, has thirty-three 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 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.
Selected Financial Condition December 31, December 31,
Data(Unaudited): 2009 2008
---------------------------- ---- ----
(000) (000)
Total Assets $1,398,881 $1,388,827
Cash and cash equivalents 46,341 39,703
Loans held for sale 2,521 1,541
Loans receivable, net 1,059,694 1,113,132
Investment securities held to
maturity 8,147 9,676
Investment securities available
for sale, at fair value 130,914 77,255
Total deposits 1,045,196 962,514
Total borrowings 197,960 279,104
Total stockholders' equity 129,727 130,515
Three Three Three Twelve Twelve
Months Months Months Months Months
Ended Ended Ended Ended Ended
Selected Operations December September December December December
Data 31, 30, 31, 31, 31,
(Unaudited): 2009 2009 2008 2009 2008
------------------------ ---- ---- ---- ---- ----
(000) (000) (000) (000) (000)
Total interest income $17,378 $17,682 $19,108 $71,852 $65,179
Total interest expense 7,097 7,439 8,564 30,624 31,639
----- ----- ----- ------ ------
Net interest
income 10,281 10,243 10,544 41,228 33,540
Provision for
loan losses 1,650 1,650 4,763 6,500 7,020
----- ----- ----- ----- -----
Net interest income
after provision
for loan losses 8,631 8,593 5,781 34,728 26,520
----- ----- ----- ------ ------
Non-interest income
-------------------
Fees and service
charges 1,936 1,956 1,917 7,458 6,257
Net gain (loss)
on sale of
investments (2,019) 60 (1,083) (1,800) (3,716)
Equity in gains
(losses) of
limited
partnerships 341 (78) (66) 108 (158)
Commissions 849 710 606 3,047 1,796
Net gain (loss)
on loan sales 258 582 (338) 2,622 1,141
Increase in cash
surrender value
of life insurance 390 385 413 1,573 1,323
Other income (loss) 25 33 (268) 145 (121)
--- --- ---- --- ----
Total non-
interest income 1,780 3,648 1,181 13,153 6,522
----- ----- ----- ------ -----
Non-interest
expense
------------
Salaries and
benefits 6,076 5,823 6,130 23,047 19,118
Occupancy and
equipment 1,482 1,424 1,260 5,677 4,509
Data processing fees 407 388 322 1,510 1,192
Professional fees 319 310 312 1,291 1,133
Marketing 397 408 470 1,530 1,461
Deposit insurance 414 416 206 2,263 512
Software
subscriptions
and maintenance 334 367 376 1,378 1,011
Intangible
amortization 359 372 403 1,525 805
Repossessed
assets expense 899 446 405 2,025 875
Other expenses 1,191 993 30,234 4,261 33,009
Total non-
interest expense 11,878 10,947 40,118 44,507 63,625
------ ------ ------ ------ ------
Income (loss)
before taxes (1,467) 1,294 (33,156) 3,374 (30,583)
Income tax provision
(benefit) (278) 52 (8,309) 211 (8,485)
---- --- ------ --- ------
Net income (loss) (1,189) 1,242 (24,847) 3,163 (22,098)
Preferred stock
dividends and
amortization 451 451 31 1,803 31
--- --- --- ----- ---
Net income (loss)
available to
common
shareholders ($1,640) $791 ($24,878) $1,360 ($22,129)
======= ==== ======== ====== ========
Average Balances, Net Interest
Income, Yield Earned and Rates Paid
------------------------------------
Three Three
mos ended mos ended
12/31/2009 12/31/2008
---------- ----------
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 $31,203 $14 0.18% $8,855 $22 0.99%
Mortgage-
backed
securities:
Available-
for-sale 101,110 990 3.92 49,950 707 5.66
Held-to-
maturity 8,899 120 5.39 9,796 187 7.64
Investment
securities:
Available-
for-sale 26,190 323 4.93 20,475 241 4.71
Loans
receivable 1,082,263 15,882 5.87 1,130,529 17,729 6.27
Stock in
FHLB of
Indianapolis 18,632 50 1.07 18,632 222 4.77
------ --- ---- ------ --- ----
Total
interest-
earning
assets (3) 1,268,297 17,379 5.48 1,238,237 19,108 6.17
Non-interest
earning assets,
net of
allowance
for loan
losses and
unrealized
gain/loss 125,854 155,839
------- -------
Total assets $1,394,151 $1,394,076
========== ==========
Interest-
Bearing
Liabilities:
Demand and
NOW
accounts $159,242 172 0.43 $169,002 328 0.78
Savings
deposits 85,759 34 0.16 81,372 105 0.52
Money
market
accounts 49,826 120 0.96 47,161 203 1.72
Certificate
accounts 640,102 4,570 2.86 573,707 5,005 3.49
------- ----- ---- ------- ----- ----
Total
deposits 934,929 4,896 2.09 871,242 5,641 2.59
Borrowings 211,071 2,201 4.17 280,390 2,923 4.17
------- ----- ---- ------- ----- ----
Total
interest-
bearing
accounts 1,146,000 7,097 2.48 1,151,632 8,564 2.97
Non-
interest
bearing
deposit
accounts 100,376 94,006
Other
liabilities 16,410 20,612
------ ------
Total
liabilities 1,262,786 1,266,250
Stockholders'
equity 131,365 127,826
------- -------
Total
liabilities
and
stockholders'
equity $1,394,151 $1,394,076
========== ==========
Net earning
assets $122,297 $86,605
======== =======
Net interest
income $10,282 $10,544
======= =======
Net interest
rate spread 3.00% 3.20%
==== ====
Net yield
on average
interest-
earning
assets 3.24% 3.41%
==== ====
Average
interest-
earning
assets to
average
interest-
bearing
liabilities 110.67% 107.52%
====== ======
Three Three Three Twelve Twelve
Months Months Months Months Months
Selected Financial Ended Ended Ended Ended Ended
Ratios and December September December December December
Other Financial Data 31, 30, 31, 31, 31,
(Unaudited): 2009 2009 2008 2009 2008
-------------------- ---- ---- ---- ---- ----
Share and per share
data:
Average common
shares
outstanding
Basic 6,853,643 6,845,697 6,820,638 6,840,659 5,249,135
Diluted 6,853,672 6,846,025 6,821,158 6,840,748 5,253,477
Per common
share:
Basic
earnings ($0.24) $0.12 ($3.65) $0.20 ($4.22)
Diluted
earnings ($0.24) $0.12 ($3.65) $0.20 ($4.22)
Dividends $0.06 $0.12 $0.16 $0.42 $0.64
Dividend
payout
ratio -25.00% 100.00% -4.38% 210.00% -15.17%
Performance
Ratios:
Return on
average
assets
(ratio of
net income to
average total
assets)(1) -0.34% 0.23% -7.13% 0.23% -1.91%
Return on
average tangible
common equity
(ratio of net
income to
average tangible
common equity)(1) -7.06% 3.48% -108.92% 1.49% -28.04%
Interest
rate spread
information:
Average
during the
period(1) 3.00% 2.97% 3.20% 2.98% 3.01%
Net interest
margin(1)(2) 3.24% 3.21% 3.41% 3.22% 3.22%
Efficiency
Ratio 98.48% 78.81% 342.14% 81.84% 158.82%
Ratio of
average
interest-
earning
assets to
average
interest-
bearing
liabilities 110.67% 110.23% 107.52% 110.22% 107.14%
Allowance
for loan
losses:
Balance
beginning
of period $16,620 $16,348 $12,217 $15,107 $8,352
Charge offs:
One- to
four-family 979 218 139 1,728 480
Multi-family 0 0 0 0 0
Commercial
real estate 169 585 1,224 1,291 1,548
Construction
or
development 0 0 0 0 0
Consumer loans 994 779 623 3,154 2,174
Commercial
business loans 0 0 200 83 230
--- --- --- --- ---
Sub-total 2,142 1,582 828 6,256 4,432
Recoveries:
One- to
four- family 16 0 0 110 42
Multi-family 0 0 0 0 0
Commercial
real estate 6 35 244 184 558
Construction
or
development 0 0 0 0 0
Consumer loans 264 169 69 767 556
Commercial
business
loans 0 0 0 2 57
--- --- --- --- ---
Sub-total 286 204 313 1,063 1,213
Net charge offs 1,856 1,378 1,873 5,193 3,219
Acquired with MFB
Financial acquisition 0 2,954
Additions charged to
operations 1,650 1,650 4,763 6,500 7,020
----- ----- ----- ----- -----
Balance end
of period $16,414 $16,620 $15,107 $16,414 $15,107
======= ======= ======= ======= =======
Net loan
charge-offs to
average loans (1) 0.69% 0.50% 0.66% 0.47% 0.34%
December September December
31, 30, 31,
2009 2009 2008
---- ---- ----
Total shares outstanding 6,984,754 6,984,754 6,984,754
Tangible book value per share $13.09 $13.22 $12.99
Tangible common equity to tangible
assets 6.77% 6.85% 6.79%
Nonperforming assets (000's)
Non-accrual loans
One- to four- family $14,617 $16,100 $7,917
Commercial real estate 8,986 9,269 7,723
Consumer loans 3,610 3,501 1,851
Commercial business loans 1,873 2,192 2,507
----- ----- -----
Total non-accrual loans 29,086 31,062 19,998
Accruing loans past due 90 days or
more 1,934 1,266 1,473
Restructured loans 1,563 463 293
----- --- ---
Total nonperforming loans 32,583 32,791 21,764
Real estate owned 5,424 4,095 2,979
Other repossessed assets 2,027 1,440 1,861
----- ----- -----
Total nonperforming assets $40,034 $38,326 $26,604
Asset Quality Ratios:
Non-performing assets to total
assets 2.86% 2.74% 1.92%
Non-performing loans to total
loans 3.03% 3.02% 1.93%
Allowance for loan losses to non-
performing loans 50.38% 50.68% 69.41%
Allowance for loan losses to loans
receivable 1.53% 1.53% 1.34%
(1) Ratios for the three month period 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.
SOURCE MutualFirst Financial, Inc.
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