Third Quarter 2012 Earnings / MutualBank

Business & Personal Checking Accounts – MutualBank

 

Third Quarter 2012 Earnings

Published Wednesday, October 31, 2012 by Chris Cook, Senior Vice President, Treasurer and CFO for MutualFirst Financial, Inc.

MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today net income to common shareholders for the third quarter ended September 30, 2012 of $1.8 million, or $.26 for basic and diluted earnings per common share.  This compared to net income available to common shareholders for the same period in 2011 of $596,000, or $.09 for basic and diluted earnings per common share. Annualized return on assets was .59% and return on average tangible common equity was 6.83% for the third quarter of 2012 compared to .41% and 2.37% respectively, for the same period of last year.

Net income available to common shareholders for the nine months ended September 30, 2012 was $4.2 million, or $.60 for basic earnings per common share and $.59 for diluted earnings per common share compared to net income available to common shareholders of $682,000, or $.10 for basic and diluted earnings per common share for the nine months ended September 30, 2011.  Annualized return on assets was .48% and return on average tangible common equity was 5.31% for the nine months ended in 2012 compared to .23% and .93% respectively, for the same period of last year.

Other financial highlights for the third quarter ended September 30, 2012 included:

Gross loans increased $8.5 million in the third quarter of 2012.
Deposits increased $21.5 million in the third quarter of 2012.
Tangible common equity increased to 7.33% in the third quarter of 2012 and tangible book value increased to $15.40.
Non-performing assets declined $2.2 million, or 6.7% in the third quarter of 2012 and declined $8.6 million, or 21.9% compared to December 31, 2011.  Classified assets declined $5.8 million, or 9.5% in the third quarter of 2012.
Net charge offs on an annualized basis were .81% in the third quarter of 2012 compared to 1.11% in the same period of 2011.  Net charge offs on a linked quarter decreased from 1.04%.
Net interest margin was 3.05% for the third quarter of 2012 compared to 3.19% in the same period of 2011.   On a linked quarter basis, net interest margin declined from 3.10%.
Non-interest income for the quarter ended September 30, 2012 decreased $283,000 compared to the same period in 2011.   On a linked quarter basis, non-interest income increased $676,000.
Non-interest expense for the third quarter of 2012 increased $97,000 over the same period in 2011.  Non-interest expense increased $200,000 over the linked quarter. 

“We are pleased to see continued improvement in our earnings and increased loan production,” said David W. Heeter, President and CEO.

Balance Sheet
Assets increased $45.2 million as of September 30, 2012 compared to December 31, 2011, primarily due to the $45.6 million increase in the gross loan portfolio.  Mortgage loans have increased $57.0 million in 2012 as mortgage refinance activities remain brisk.  The commercial loan portfolio has declined $8.8 million in 2012, while the consumer loan portfolio has declined $2.6 million.  In the third quarter of 2012, gross loans increased by $8.5 million.  Mortgage loans increased $12.0 million and consumer loans increased by $1.7 million.  These increases were offset by declines in the commercial loan portfolio of $5.2 million.  Investments securities have increased by $12.0 million over the end of 2011, but decreased by $22.5 million in the third quarter to fund current loan growth.  To help mitigate interest rate risk, the Bank has sold its 30 year fixed rate mortgage loan production in the secondary market.  In the first nine months of 2012, the Bank has sold $34.7 million in fixed rate mortgage loans compared to $26.1 million during the first nine months of 2011.

Deposits increased by $26.4 million as of September 30, 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 $66.9 million, while certificates of deposit decreased $40.5 million, in the first nine months of 2012. Core transactional deposits increased to 50% of the Bank’s total deposits as of September 30, 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 increased by $11.7 million as the Bank has lengthened out maturing advances to help mitigate interest rate risk.

Allowance for loan losses decreased by $1.3 million, to $15.5 million as of September 30, 2012 compared to December 31, 2011 as the Bank’s specific allocation on impaired loans have declined by $1.5 million primarily through charge offs of those specific allocations.  Net charge offs in the third quarter were $1.9 million, or .81% of total loans on an annualized basis.  Net charge offs for the first nine months of 2012 were $6.0 million, or .84% of total loans on an annualized basis. The allowance for loan losses to non-performing loans as of September 30, 2012 was 65.09% compared to 52.81% as of December 31, 2011.  The allowance for loan losses to total loans as of September 30, 2012 was 1.61%, a decrease from 1.83% as of December 31, 2011.  Heeter commented, “We continue to actively monitor our loan portfolio and 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 $139.3 million at September 30, 2012, an increase of $6.6 million from December 31, 2011. The increase was due primarily to net income of $5.2 million and unrealized gains on securities of $3.3 million. The increase was offset by dividend payments of $2.3 million to common and preferred shareholders.  The Company’s tangible book value per share as of September 30, 2012 increased to $15.40 compared to $14.38 as of December 31, 2011 and the tangible common equity ratio was 7.33% as of September 30, 2012 compared to 7.05% as of December 31, 2011.  The Company’s and the Bank’s risk-based capital ratio were well in excess of “well-capitalized” levels as defined by all applicable regulatory standards as of September 30, 2012.

Income Statement
Net interest income before the provision for loan losses decreased $80,000 for the quarter ended September 30, 2012 compared to the same period in 2011.  The decrease was a result of a decline in net interest margin by 14 basis points, partially offset by an increase in average earning assets of $46.8 million comparing the third quarter of 2012 with the same period in 2011.  On a linked quarter basis, net interest income before the provision for loan losses decreased $35,000. 

Net interest income before the provision for loan losses decreased $730,000 for the nine months ended of 2012 compared to the same period in 2011.  The decrease was a result of the decline in the net interest margin from 3.18% in the first nine months of 2011 to 3.05% in the first nine months of 2012, which was partially offset by an increase in average earning assets of $23.8 million.

The provision for loan losses for the third quarter of 2012 decreased to $1.5 million compared to $3.2 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 $1.9 million, or .81% of loans on an annualized basis in the third quarter of 2012 compared to net charge offs of $2.7 million, or 1.11% of loans on an annualized basis in the third quarter of 2011.  Net charge offs have exceeded provision primarily due to charge offs related to previously identified loans which had established specific allocations.  Non-performing loans to total loans at September 30, 2012 were 2.48% compared to 2.82% at September 30, 2011.  Non-performing assets to total assets were 2.08% at September 30, 2012 compared to 2.43% at September 30, 2011. 

The provision for loan losses for the first nine months of 2012 decreased to $4.7 million compared to $9.1 million during last year’s comparable period.  The decrease was primarily due to a reduction net charge offs to $6.0 million in the first nine months of 2012 compared to net charge offs of $9.0 million in the same period in 2011.  Non-performing loans to total loans at September 30, 2012 were 2.48% compared to 3.47% at December 31, 2011.  Non-performing loans decreased $8.0 million, or 25% as of September 30, 2012 compared to December 31, 2011.

Non-interest income for the third quarter of 2012 was $4.4 million, a decrease of $283,000 compared to the third quarter of 2011.  Gain on sale of loans and servicing of loans increased by $617,000 in the third quarter of 2012 compared to the same period in 2011.  This increase was offset by a decrease in gain on investment sales of $669,000. Service fee income on deposit accounts decreased by $218,000 as fees collected on overdrafts have declined as overdraft transactions have decreased.  On a linked quarter basis, non-interest income increased $676,000 primarily due to gain on sale of investments.

Non-interest income for the nine months ended of 2012 was $11.0 million, an increase of $390,000 compared to the same period of 2011.  Gain on sale of loans and servicing income off of loans increased by $869,000 in the nine months ended in 2012 compared to the same period in 2011.  These increases were partially offset by decreases in gain on sale of investments of $264,000 primarily due to decreased sales in 2012, decreases in service fee income on deposits of $144,000 primarily related to less overdraft fee income, and an increase in losses on sale of real estate owned of $165,000. 

Non-interest expense increased $97,000 when comparing the third quarter of 2012 with that of 2011.  The increase was primarily due to approximately $200,000 expense related to property taxes to maintain secure collateral on a large problem loan.  On a linked quarter, non-interest expense increased $200,000 for the above stated reasons.

Non-interest expense decreased $580,000 when comparing the first nine months of 2012 with that of 2011.  Decreases related to non-interest expense have been a result of decreased occupancy and equipment expense of $347,000, a reduction in salaries and benefit expense of $193,000 primarily due to savings on employee health insurance, decreased deposit insurance expense of $231,000 and decreased intangible expense of $149,000.  These decreases were partially offset by increases in software subscriptions and maintenance of $176,000 and increases in marketing expense of $161,000.

“Enhancing shareholder value continues to be our top priority.  While there is still uncertainty surrounding the fiscal cliff and the impact to the economy, we believe we continue to improve and strengthen our ability to perform for our shareholders.” commented Heeter.
 

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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Personal Social Media Account Security

For many of us, social media has become a part of our everyday lives and helps us conveniently keep tabs on the people and topics we care most about.

Recently however, there has been an increase of social media account take overs by cybercriminals. As stated in the media, one contributing factor in some of the social media account takeovers has been the use of weak passwords.


Tips for creating a stronger password:


  • Passwords should typically:
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    • contain at least 1 number
    • contain at least 1 special character (!@#$$%)
    • contain both upper and lower case characters.
  • Do not use your name, date of birth, maiden name, mother’s maiden name, address, or other easily guessable words for passwords. 
  • Another way to create a strong password is to use a series of words that do not relate to each other. For example, JumpingFastRelaxStop!#.

 


Social media additional security options:


Another way to help avoid social media account takeover is to use the additional security options available. Two-factor authentication adds an extra layer of security that drastically decreases your chances of account takeover. Two-factor authentication is essentially the using of two separate components to verify your identity, the combination of something you HAVE with something you KNOW. A good example of two-factor authentication you most likely are already used to is withdrawing cash from an ATM, for example. Having both your debit card AND knowing a pin number is required to complete the withdrawal and protect your identity.

A popular and convenient two-factor authentication method is using a combination of both an online password and a text message verification sent to your phone. Enabling this type of authentication typically follows this process:

  1. Enter your password into Facebook or another website
  2. Immediately receive a text on your phone with a temporary pass key
  3. Enter the passkey received back on the site/app and you’re logged in

This may seem like overkill, but enabling this two-factor authentication will drastically decrease the chances of your social accounts being hacked. And actually, the process of setting up and using this authentication is pretty simple and convenient.

 


How to enable two-factor authentication:


Many popular social networks like Facebook, Twitter, LinkedIN, and others already support two-factor authentication. To learn more about how to do so on the most popular sites on the web, be sure to check out this article:

http://socialcustomer.com/2014/04/how-to-enable-two-factor-authentication-on-50-top-websites-including-facebook-twitter-and-others.html

Wednesday, April 22, 2015

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