Business & Personal Checking Accounts – MutualBank

 

Second Quarter 2011 Earnings

Published Thursday, July 14, 2011 7:00 am by Chris Cook

Muncie, Indiana - MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today net income to common shareholders for the second quarter ended June 30, 2011 of $1.2 million, or $.18 for basic and diluted earnings per common share.  This compared to net income available for common shareholder for the same period in 2010 of $1.3 million, or $.19 for basic and diluted earnings per common share. Annualized return on assets was .46% and return on average tangible common equity was 5.14% for the second quarter of 2011 compared to .48% and 5.66% respectively, for the same period of last year.

Net income available for common shareholders for the six months ended June 30, 2011 was $85,000, or $.01 for basic and diluted earnings per common share compared to net income available to common shareholders of $2.2 million, or $.32 for basic and diluted earnings per common share for the six months ended June 30, 2010.  Annualized return on assets was .14% and return on average tangible common equity was .18% for the first half of 2011 compared to .42% and 4.77% respectively, for the same period of last year.

Other financial highlights for the second quarter ended June 30, 2011 included:

  • Gross loans stabilized in the second quarter after declining $29.6 million in the first quarter of 2011.
  • Deposits decreased $12.9 million in the second quarter as higher rate certificate of deposit balances declined $19.2 million.
  • Tangible common equity increased to 7.19% in the second quarter of 2011.
  • Allowance for loan losses to non-performing loans was 52.98% as of June 30, 2011 compared to 52.97% as of March 31, 2011.  Allowance for loan losses to loans receivable was 1.65% as of June 30, 2011 compared to 1.64% as of March 31, 2011.
  • Net charge offs on an annualized basis were .64% in the second quarter 2011 compared to 1.94% in the first quarter of 2011.
  • Net interest margin was 3.19% for the second quarter 2011 compared to 3.14% in the first quarter 2011.
  • Non-interest income for the quarter ended June 30, 2011 increased $453,000 compared to the first quarter 2011.
  • Non-interest expense for the second quarter 2011 decreased $413,000 compared to the first quarter 2011.

“We were encouraged by the positive signs in the second quarter including the positive earnings, increasing net interest margin, increasing non-interest income and decreasing non-interest expense.  The stabilization in the loan portfolio balances and credit metrics was another positive sign in the quarter,” said David W. Heeter, President and CEO.

Balance Sheet

Assets increased $23.0 million as of June 30, 2011 compared to December 31, 2010, primarily due to the increase in investments securities by $59.3 million which were partially offset by decreases in gross loans held for investment and sale of $39.7 million.  The increase in investment securities was in shorter term government agency mortgage backed securities and was primarily funded by proceeds from loan payments and increased deposits.  In the second quarter of 2011, gross loans held for investment and sale stabilized decreasing $474,000 compared to a decrease of $39.2 million in the first quarter of 2011.  Heeter commented, “The stabilization in our loan portfolio was a favorable indicator that loan production has improved compared to the first quarter of this year.”

Deposits increased by $40.0 million as the Bank has seen increased activity in all of its markets for core deposit relationships in the first half of 2011.  The increase in deposits has been primarily in core transactional accounts which increased $46.7 million while certificates of deposit decreased $6.7 million in the first half of 2011. Core transactional deposits increased to 43% of the Bank’s total deposits as of June 30, 2011 compared to 40% as of December 31, 2010. The increase in deposits allowed the Bank to retire higher rate maturing debt, mainly FHLB advances, of $21.9 million in the first half of 2011.

Allowance for loan losses decreased by $415,000, to $16.0 million as of June 30, 2011 compared to December 31, 2010, but increased $160,000 in the second quarter of 2011.  Net charge offs in the second quarter were $1.5 million, or .64% of total loans on an annualized basis, compared to $4.8 million, or 1.94% of total loans on an annualized basis in the first quarter of 2011. The allowance for loan losses to non-performing loans as of June 30, 2011 was 52.98% compared to 52.97% as of March 31, 2011 and 42.16% as of December 31, 2011.  The allowance for loan losses to total loans as of June 30, 2011 was 1.65%, an increase from 1.64% as of March 31, 2011 and December 31, 2011.  Heeter commented, “We believe that our allowance for loan losses adequately reflects the risk in our portfolio and the current risk in the economy as we move forward.”

Stockholders’ equity was $136.0 million at June 30, 2011, an increase of $4.9 from December 31, 2010. The increase was due primarily to unrealized gains on securities of $5.4 million and net income of $987,000. This increase was partially offset by dividend payments of $838,000 to common shareholders and $810,000 to preferred shareholders.  The Company’s tangible book value per share as of June 30, 2011 increased to $14.27 compared to $13.49 as of December 31, 2010 and tangible common equity ratio was 7.19% as of June 30, 2011 compared to 6.93% as of December 31, 2010.  The Bank’s risk-based capital ratio was well in excess of “well-capitalized” levels as defined by all regulatory standards as of June 30, 2011.

Income Statement

Net interest income before the provision for loan losses decreased $324,000 for the quarter ended June 30, 2011 compared to the same period in 2010.  The decrease was a result of the decline in the net interest margin from 3.23% in the second quarter of 2010 to 3.19% in the second quarter of 2011 and a decline in average earning assets of $22.9 million. On a linked quarter basis, net interest income before the provision for loan losses increased $239,000 as net interest margin increased by 5 basis points and average earning assets increased by $9.6 million. 

Net interest income before the provision for loan losses decreased $497,000 for the first half of 2011 compared to the same period in 2010.  The decrease was a result of the decline in the net interest margin from 3.20% in the first half of 2010 to 3.16% in the first half of 2011 and the decline in average earning assets of $13.5 million.

The provision for loan losses for the second quarter of 2011 increased to $1.7 million compared to $1.5 million during last year’s comparable period.  The increase was attributable to increased non-performing loans and non-performing assets when compared to June 30, 2010.  Non-performing loans to total loans at June 30, 2011 was 3.12% compared to 2.49% at June 30, 2010.  Non-performing assets to total assets were 2.67% at June 30, 2011 compared to 2.31% at June 30, 2010.  Net charge offs for the second quarter of 2011 were $1.5 million, or .64% of loans on an annualized basis compared to $1.9 million, or .74% of loans on an annualized basis in the second quarter of 2010.

The provision for loan losses for the first half of 2011 increased to $5.9 million compared to $3.1 million during last year’s comparable period.  The increase was primarily due to net charge offs of $4.8 million in the first quarter of 2011.  The charge offs were for previously identified problem loans that were mostly collateralized by real estate.  Non-performing loans to total loans at June 30, 2011 were 3.12% compared to 3.90% at December 31, 2010.  This decrease in non-performing loans was in all segments of our portfolio.  Non-performing assets to total assets were 2.67% at June 30, 2011 compared to 3.20% at December 31, 2010.

Non-interest income for the second quarter of 2011 was $3.4 million a decrease of $19,000 compared to the second quarter of 2010.  Regulatory changes on overdrafts in July of 2010 resulted in the Company’s reduced service charges on deposit accounts by $161,000 in the second quarter of 2011 compared to the second quarter of 2010.  Gain on loan sales increased $140,000 primarily due to a recovery of $205,000 on previously written down mortgage servicing rights.  On a linked quarter basis, non-interest income increased $453,000, primarily in service charges on deposit accounts of $122,000 and the above mentioned increase in gain on loan sales.

Non-interest income for the first half of 2011 was $6.3 million, a decrease of $238,000 compared to the first half of 2010.  Service charges on deposit accounts decreased primarily due to regulatory changes by $296,000, gain on sale of investments decreased by $245,000 primarily due to fewer sales of investment securities and gain on loan sales decreased by $123,000 primarily due to decreased loan production.  These decreases were offset by the stabilization of values for trust preferred securities which resulted in a $535,000 decrease in other than temporary impairment.

Non-interest expense decreased $422,000 when comparing the second quarter of 2011 with that of 2010.  Repossessed asset expenses decreased by $246,000, FDIC expense related to deposit insurance decreased $121,000 due to the new FDIC fee structure, and software maintenance expense decreased $90,000 in the second quarter of 2011 compared to the same period in 2010.  These decreases were partially offset by increased professional fees of $133,000.

Non-interest expense decreased $280,000 when comparing the first half of 2011 with that of 2010.  Repossessed asset expenses decreased by $278,000, software maintenance expense decreased by $169,000 and FDIC expense related to deposit insurance decreased $59,000 in the first half of 2011 compared to the same period in 2010.  These decreases were partially offset by increased salary and benefit expense of $195,000 and increased professional fees of $151,000.

MutualFirst Financial, Inc. and MutualBank, an Indiana-based financial institution, has thirty-two 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.

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Interesting Facts About Computer Security

In light of the fun fact countdown we have been posting for our 125th Anniversary, our Information Security Department has put together a list of interesting facts about computer security. While they aren't "fun", they should give you an idea of how important it is to take proactive steps to protect you and your data!

  • The first recorded “hackers” were from 1878, only 2 years after the telephone was invented, a group of teenagers were running switchboards for telephones.  They were later fired because they were more interested on how the telephone system worked then making proper connections.  They tried to hack the system to see how it worked.
  • The largest data breach is history was in 2007 where at least 160 million credit and debit card numbers were stolen and a loss of around $200 million as a result.  Albert Gonzalez, one of the persons behind the data breach, was prosecuted and sentenced to 20 years in prison.

  • 3 out of 4 Americans will be a victim to cyber-crime.

  • Data breach investigations increased 54% from 2012.

  • The United States is number one in cyber-crime victims at a whopping 59%.  After that is the United Kingdom at 14%.

  • Retail is the top industry that has been compromised at 35% of all cyber-attacks.

  • The top malware hosting country is the United States at 42%.

  • The most exploited program for vulnerabilities is Java at 78% of all vulnerablities.

  • 85% of all exploits were third-party programs. 

  • The median number of days for a victim of cyber-crime to know they have been compromised is 87 days.

  • 31% of all compromises were a result of weak passwords.

  • The top 5 compromised passwords in 2013 were:

- 123456
- 123456789
- 1234
- Password
- 12345

  • Spam still accounts for 70% of all inbound emails in 2013.

  • 58% of spam e-mail contains information about pharmaceuticals.

  • The top malicious e-mail subject line in 2013 was “Some important information is missing”.

  • The top 6 vulnerabilities

- SQL Injection
- Cross-Site Scripting
- Use of Default Passwords
- Configuration Issues
- Weak Encryption Ciphers
- Denial-of-Service

  • 100% of all mobile apps have had vulnerabilities in them ranging from low severity to critical severity.

  • 68% of mobile vulnerabilities create information leakage which is the highest of mobile vulnerabilities.

  • From 2008 until now, an estimated $1 trillion dollars of data was stolen around the world due to cyber-crimes.

  • In 2009 the world’s largest bot net, a large group of “zombie” computers, were run by Ukrainian gangs with a total of 1.9 million zombie computers from all around the world.

  • 5 cyber-criminals are on FBI’s most wanted list and are responsible for losses ranging from $350,000 - $100 million.

  • The United States loses around $100 billion a year due to cyber crimes.

  • More than 600,000 Facebook accounts alone are compromised every day.

  • 33.63% computers are affected by malware.

- 78.92% are Trojans
- 10.78% are worms
- 7.44% are viruses
- 2.69% are adware
- 0.17% are other malware

 

Sources:
www.floridatechonline.com/online-degree-resources/interesting-facts-on-cyber-security/ 

www.visual.ly/interesting-facts-about-internet-threats-and-security 

Tuesday, August 5, 2014

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