MUNCIE, Ind., July 16 /PRNewswire-FirstCall/ -- MutualFirst Financial, Inc. , the holding company of Mutual Bank (the "Bank"), announced today that net income for the second quarter ended June 30, 2008 was $1.2 million, or $.30 for basic and diluted earnings per share. This compared to net income for the comparable period in 2007 of $1.1 million, or $.27 for basic and diluted earnings per share. Annualized return on assets was .49% and return on tangible equity was 6.58% for the second quarter of 2008 compared to .48% and 6.24% respectively, for the same period last year.
Net income for the six months ended June 30, 2008 was $2.4 million or $.60 for basic and diluted earnings per share. This compared to net income for the comparable period in 2007 of $2.2 million or $.53 for basic and $.52 for diluted earnings per share. Annualized return on average assets was .50% and return on average tangible equity was 6.69% for the first half of 2008 compared to .46% and 6.01% respectively, for the same period last year.
The comparative increase of income for the three and six month periods was primarily due to the increase in net interest margin and non-interest income. Increased expenses, including one time charges due to re-branding the bank, technological changes, and merger related expenses partially offset the increase in net interest margin. "We are pleased with the increased income in the second quarter, especially after the increased expenses due to the renaming of the bank and the pending merger with MFB Corp.," Dave Heeter, President and CEO of MutualFirst said.
Assets totaled $975.5 million at June 30, 2008, an increase from December 31, 2007 of $12.9 million, or 1.3%. Loans, excluding loans held for sale, decreased $9.0 million or 1.1%. Consumer loans decreased $3.6 million, or 1.6%, while commercial loans increased $5.0 million, or 3.5%, and residential mortgage loans held in the portfolio decreased $10.4 million, furthering our strategy to reduce the percentage of fixed rate real estate mortgage loans to total loans. Mortgage loans held for sale decreased $584,000 and mortgage loans sold during the first half of 2008 totaled $28.2 million compared to $12.1 million during the same period in 2007. The decreased loan balances were due primarily to an increase in sales of fixed rate real estate mortgage loans. Investment securities available for sale increased $10.8 million, or 24.8%, offsetting the reduction in the loan portfolio. Cash and cash equivalents increased $6.4 million, or 27.0% as the bank's interest earning cash accounts increased.
Allowance for loan losses increased $252,000 to $8.6 million when comparing June 30, 2008 to December 31, 2007. Net charge offs for the first half of 2008 were $1.1 million, or .27% of average loans on an annualized basis compared to $744,000, or .18% of average loans for the comparable period in 2007. On a linked quarter basis, net charge offs compared to average loans were .28% in the second quarter 2008 compared to .26% in the first quarter 2008. As of June 30, 2008 the allowance for loan losses as a percentage of loans receivable and non-performing loans was 1.07% and 78.35%, respectively, compared to 1.03% and 169.16%, respectively, at December 31, 2007.
Total deposits were $677.7 million at June 30, 2008, an increase from $666.4 million at December 31, 2007. This increase was due primarily to increases in core demand, money market and savings deposits of $4.2 million and wholesale deposits of $15.8 million. The increase was partially offset by decreases in certificates of deposit of $8.7 million. Total borrowings increased $3.1 million to $199.7 million at June 30, 2008 from $196.6 million at December 31, 2007.
Stockholders' equity decreased $3.6 million, or 4.1%, from $87.0 million at December 31, 2007, to $83.4 million at June 30, 2008. The decrease was due primarily to a decrease in the market value of securities available for sale compared to their book value of $3.5 million from a loss of $414,000 at December 31, 2007 to a loss of $3.9 million at June 30, 2008. This decrease was due primarily to price decreases, caused chiefly by illiquid credit markets, in certain investment grade trust preferred securities owned by the bank. CEO Heeter commented, "We believe pricing for the trust preferred securities will improve as the financial markets become more stable. We have the ability and intent to continue to hold these investments until then." Other decreases in stockholders' equity resulted from the use of $1.4 million to repurchase 109,000 shares of common stock and dividend payments of $1.3 million. These decreases were partially offset by net income of $2.4 million, and Employee Stock Ownership Plan (ESOP) and RRP shares earned of $211,000. Heeter also stated that, "the bank continues to be well capitalized by all regulatory standards".
Net interest income before the provision for loan losses increased $685,000 from $6.1 million for the three months ended June 30, 2007 to $6.8 million for the three months ended June 30, 2008. The reasons for the increase were an $8.1 million, or .9%, increase in average interest earning assets and a 28 basis point increase in the net interest margin. On a linked quarter basis, net interest margin increased to 3.13% for the three months ended June 30, 2008 compared to 2.94% for the three months ended March 31, 2008.
Net interest income before the provision for loan losses increased $1.1 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007. The reasons for the increase were similar to those stated above. Average interest earning assets increased $6.9 million, or 8.0% and the net interest margin increased by 22 basis points from 2.82% for the six months ended June 30, 2007 to 3.04% for the same period in 2008.
The provision for loan losses for the second quarter of 2008 was $733,000, compared to $533,000 for last year's comparable period. Non-performing loans to total loans at June 30, 2008 were 1.37% compared to .61% at June 30, 2007. Non-performing assets to total assets were 1.51% at June 30, 2008 compared to .80% at June 30, 2007. On a linked quarter basis, non-performing loans to total loans decreased from 1.44% for the quarter ended March 31, 2008 to 1.37% for the quarter ended June 30, 2008.
The provision for loan losses for the six months ended June 30, 2008 was $1.3 million compared to $865,000 for last year's comparable period. The increased provision for the six months ended 2008 compared to the same time period in 2007 was a result of increased non-performing assets, mostly in one- to four-family and commercial real estate loans and foreclosed real estate. Non-performing assets were 1.51% at June 30, 2008 compared to .80% at June 30, 2007.
Non-interest income increased $155,000 to $2.1 million, or 7.9%, for the three months ended June 30, 2008 compared to the same period in 2007. The increase was due primarily to increases in service fees on transaction accounts of $119,000, or 9.6%, increases in commission income of $64,000, or 26.2%, and increases in net gain on loan sales and servicing $61,000, or 63.5%.
For the six month period ended June 30, 2008 non-interest income increased $543,000, or 14.7%, to $4.2 million compared to $3.7 million for the same period in 2007. The reasons are similar to those mentioned above.
Non-interest expense increased $667,000 to $6.9 million, or 10.8%, for the three months ended June 30, 2008 compared to the same period in 2007. Increases in current quarter non-interest expense compared to the same period in 2007 include increases in occupancy and equipment expense of $135,000, primarily due to a new branch office in Elkhart County, increases in salaries and employee benefits of $238,000, primarily due to salary adjustments and new employees for the Elkhart County branch, increases in marketing expense of $88,000, primarily due to re-branding of the bank's name, and increases in other expenses of $207,000, primarily due to FDIC premium increases and expenses related to the bank's name change.
For the six month period ended June 30, 2008 non-interest expense increased $1.0 million, or 7.6%, to $13.4 million compared to $12.4 million for the same period in 2007. The reasons for the increase are similar to those mentioned above.
Income tax expense decreased $72,000 for the three months ended June 30, 2008 compared to the same period in 2007 due primarily to less income subject to income taxes. The effective tax rate also decreased from 15.2% to 10.0% due to an increased percentage of low income housing tax credits to taxable income when comparing the second quarter of 2008 to the second quarter of 2007, respectively.
For the six-month period ended June 30, 2008, income tax expense decreased $54,000 compared to the same period in 2007. The decrease was due primarily to less income subject to income taxes. The effective tax rate also decreased from 13.3% to 10.6% due to an increased percentage of low income housing tax credits to taxable income when comparing the first half of 2008 to the first half of 2007, respectively.
MutualFirst Financial, Inc. and Mutual Bank are headquartered in Muncie, Indiana with twenty-two full service offices in Delaware, Elkhart, Grant, Kosciusko, Randolph, and Wabash counties.
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 changes in interest rates; the loss of deposits and loan demand to competitors; substantial changes in financial markets; changes in real estate values and the real estate market; or regulatory changes.
MUTUALFIRST FINANCIAL INC. ==================================================== 30-Jun 31-Dec Selected Financial Condition Data (Unaudited): 2008 2007 ------------------------------------------------------------------------- (000) (000) Total Assets $975,452 $962,517 Cash and cash equivalents 30,042 23,648 Loans held for sale 1,061 1,645 Loans receivable, net 792,743 802,436 Investment securities available for sale, at fair value 54,516 43,692 Total deposits 677,677 666,407 Total borrowings 199,705 196,638 Total stockholders' equity 83,431 87,014 Three Three Three Six Six Months Months Months Months Months Ended Ended Ended Ended Ended 30-Jun 31-Mar 30-Jun 30-Jun 30-Jun Selected Operations Data 2008 2008 2007 2008 2007 (Unaudited): -------------------------------------------------------- ----------------- (000) (000) (000) (000) (000) Total interest income $13,489 $13,757 $14,056 $27,246 $27,865 Total interest expense 6,689 7,397 7,941 14,086 15,755 -------------------------- ----------------- Net interest income 6,800 6,360 6,115 13,160 12,110 Provision for loan losses 733 612 533 1,345 865 -------------------------- ----------------- Net interest income after provision for loan losses 6,067 5,748 5,582 11,815 11,245 -------------------------- ----------------- Non-interest income ------------------------------ Fees and service charges 1,365 1,159 1,246 2,525 2,309 Equity in losses of limited partnerships (24) (24) (27) (47) (53) Commissions 308 292 244 600 441 Net gain on loan sales and servicing 157 210 96 367 187 Increase in cash surrender value of life insurance 276 277 317 553 655 Other income 27 206 78 232 148 -------------------------- ----------------- Total non-interest income 2,109 2,120 1,954 4,230 3,687 -------------------------- ----------------- Non-interest expense ------------------------------ Salaries and benefits 3,892 3,818 3,654 7,711 7,293 Occupancy and equipment 999 998 864 1,997 1,772 Data processing fees 243 267 298 510 554 Professional fees 231 209 177 440 356 Marketing 317 230 229 547 437 Other expenses 1,189 980 982 2,168 2,011 -------------------------- ----------------- Total non-interest expense 6,871 6,502 6,204 13,373 12,423 -------------------------- ----------------- Income before taxes 1,305 1,366 1,332 2,672 2,509 Income tax provision (benefit) 131 151 203 282 336 -------------------------- ----------------- Net income $1,174 $1,215 $1,129 $2,390 $2,173 ========================== ================= Average Balances, Net Interest Income, Yield Earned and Rates Paid ------------------------------------------------------------------- Three Three mos ended mos ended 6/30/2008 6/30/2007 ------------------------------------------------------- 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 $6,951 $27 1.55% $3,187 $31 3.89% Mortgage-backed securities: Available-for- sale 16,141 219 5.43 9,041 112 4.96 Investment securities: Available-for- sale 33,205 362 4.36 30,525 398 5.22 Loans receivable 801,027 12,747 6.37 806,907 13,405 6.65 Stock in FHLB of Indianapolis 10,395 134 5.16 9,938 110 4.43 ----------------------------------------------------- Total interest- earning assets (3) 867,719 13,489 6.22 859,598 14,056 6.54 Non-interest earning assets, net of allowance for loan losses and unrealized gain/loss 89,475 87,451 --------- --------- Total assets $957,194 $947,049 ========= ========= Interest-Bearing Liabilities: Demand and NOW accounts $123,177 $290 0.94% $123,554 727 2.35 Savings deposits 55,487 73 0.53 56,666 72 0.51 Money market accounts 22,229 75 1.35 25,167 162 2.57 Certificate accounts 419,724 4,142 3.95 446,168 5,197 4.66 ----------------------------------------------------- Total deposits 620,617 4,580 2.95 651,555 6,158 3.78 Borrowings 185,197 2,109 4.56 140,767 1,784 5.07 ----------------------------------------------------- Total interest- bearing accounts 805,814 6,689 3.32 792,322 7,942 4.01 Non-interest bearing deposit accounts 49,274 50,829 Other liabilities 15,626 16,143 --------- --------- Total liabilities 870,714 859,294 Stockholders' equity 86,480 87,755 --------- --------- Total liabilities and stockholders' equity $957,194 $947,049 ========= ========= Net earning assets $61,905 $67,276 ========= ========= Net interest income $6,800 $6,114 ======== ======== Net interest rate spread 2.90% 2.53% ========= ========= Net yield on average interest-earning assets 3.13% 2.85% ========= ========= Average interest- earning assets to average interest- bearing liabilities 107.68% 108.49% ========= ========= Three Three Three Six Six Selected Financial Months Months Months Months Months Ratios and Other Ended Ended Ended Ended Ended Financial Data 30-Jun 31-Mar 30-Jun 30-Jun 30-Jun (Unaudited): 2008 2008 2007 2008 2007 --------------------------------------------------- --------------------- Share and per share data: Average common shares outstanding Basic 3,970,982 4,003,509 4,120,844 3,987,123 4,125,935 Diluted 3,970,982 4,003,509 4,173,986 3,987,123 4,186,103 Per share: Basic earnings $0.30 $0.30 $0.27 $0.60 $0.53 Diluted earnings $0.30 $0.30 $0.27 $0.60 $0.52 Dividends $0.16 $0.16 $0.15 $0.32 $0.30 Dividend payout ratio 53.33% 53.33% 55.56% 53.33% 57.69% Performance Ratios: Return on average assets (ratio of net income to average total assets)(1) 0.49% 0.51% 0.48% 0.50% 0.46% Return on average tangible equity (ratio of net income to average tangible equity)(1) 6.58% 6.80% 6.24% 6.69% 6.01% Interest rate spread information: Average during the period(1) 2.90% 2.68% 2.53% 2.79% 2.51% Net interest margin(1)(2) 3.13% 2.94% 2.85% 3.04% 2.82% Efficiency Ratio 77.12% 76.67% 76.89% 76.90% 78.64% Ratio of average interest-earning assets to average interest-bearing liabilities 107.68% 107.57% 108.49% 107.59% 108.24% Allowance for loan losses: Balance beginning of period $8,440 $8,352 $8,219 $8,352 $8,156 Charge offs: One- to four- family 113 2 64 115 184 Multi-family 0 0 0 0 0 Commercial real estate 153 31 0 184 0 Construction or development 0 0 0 0 0 Consumer loans 541 548 314 1,089 727 Commercial business loans 0 30 267 30 267 ------------------------------- --------------------- Sub-total 807 611 645 1,418 1,178 Recoveries: One- to four- family 35 2 48 37 48 Multi-family 0 0 0 0 0 Commercial real estate 0 0 0 0 0 Construction or development 0 0 0 0 0 Consumer loans 203 28 121 231 185 Commercial business loans 0 57 1 57 201 ------------------------------- --------------------- Sub-total 238 87 170 325 434 Net charge offs 569 524 475 1,093 744 Additions charged to operations 733 612 533 1,345 865 ------------------------------- --------------------- Balance end of period $8,604 $8,440 $8,277 $8,604 $8,277 =============================== ===================== Net loan charge-offs to average loans (1) 0.28% 0.26% 0.24% 0.27% 0.18% June 30, March 31, June 30, 2008 2008 2007 ------------------------------------ Total shares outstanding 4,118,079 4,179,879 4,329,183 Tangible book value per share $16.60 $17.13 $16.71 Nonperforming assets (000's) Loans: Non-accrual $10,526 $10,625 $4,383 Accruing loans past due 90 days or more 350 809 400 Restructured loans 105 106 110 ------------------------------------ Total nonperforming loans 10,981 11,540 4,893 Real estate owned 2,302 1,478 1,519 Other repossessed assets 1,483 1,120 1,207 ------------------------------------ Total nonperforming assets $14,766 $14,138 $7,619 Asset Quality Ratios: Non-performing assets to total assets 1.51% 1.47% 0.80% Non-performing loans to total loans 1.37% 1.44% 0.61% Allowance for loan losses to non-performing loans 78.35% 73.14% 169.16% Allowance for loan losses to loans receivable 1.07% 1.05% 1.03% (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.
