Business & Personal Checking Accounts – MutualBank

 

Announcing Increased Fourth Quarter and Year End 2013 Earnings

Published Friday, February 7, 2014 by Chris Cook, Senior Vice President and CFO

Muncie, Indiana - 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, 2013 of $2.3 million, or $.32 for basic earnings per common share and $.31 for diluted earnings per common share.  This compared to net income available to common shareholders for the same period in 2012 of $1.6 million, or $.23 for basic and diluted earnings per common share. Annualized return on assets was .75% and return on average tangible common equity was 8.48% for the fourth quarter of 2013 compared to .56% and 6.10% respectively, for the same period of last year.

Net income available to common shareholders for the year ended 2013 was $7.9 million, or $1.12 for basic earnings per common share and $1.10 for diluted earnings per common share compared to net income available to common shareholders of $5.8 million, or $.83 for basic earnings per common share and $.82 for diluted earnings per common share for the year ended 2012.  Return on assets was .66% and return on average tangible common equity was 7.42% for the year ended 2013 compared to .50% and 5.47% respectively, for the year ended 2012.

Other financial highlights for the fourth quarter ended December 31, 2013 included:

  • MutualFirst Financial fully redeemed the remaining preferred shares held by the United States Treasury as part of the Small Business Lending Fund (SBLF) with no dilution to common shareholders.  MutualFirst redeemed $7.2 million in April of 2013.
  • Tangible common equity increased to 7.91% and tangible book value increased to $15.46 as of December 31, 2013 compared to 7.62% and $15.33, respectively, as of December 31, 2012.
  • Non-performing assets decreased $3.5 million, or 17% in the fourth quarter of 2013 and $14.4 million, or 46% compared to December 31, 2012. 
  • Net charge offs on an annualized basis were 0.04% in the fourth quarter of 2013 compared to 0.35% in the same period of 2012.  Net charge offs for the year ended 2013 were 0.40% compared to 0.71% for year ended 2012.
  • Net interest margin was 3.17% for the fourth quarter of 2013 compared to 3.04% in the same period of 2012.  
  • Provision for loan losses was a recovery of $950,000 in the fourth quarter of 2013 compared to a provision $1.4 million in the fourth quarter of 2012.  The decrease was due to management’s ongoing evaluation of the adequacy of the allowance for loan losses, which factors in the reduction of non-performing assets and net charge offs.  Provision for loan losses in 2013 was $1.3 million compared to $6.0 million in 2012.
  • Non-interest income for the quarter ended December 31, 2013 decreased $1.3 million compared to the same period in 2012, primarily due to gains on the sale of investments and loans in the fourth quarter of 2012 that were not repeated in 2013.   On a linked quarter basis, non-interest income decreased $94,000 primarily due to gains on sale of investments in the third quarter of 2013 that were not repeated in the fourth quarter.
  • Non-interest expense for the fourth quarter of 2013 increased $67,000 over the same period in 2012 and increased $1.5 million over the linked quarter.  The increase on a linked quarter basis was primarily due to one-time reductions in health insurance due to lower claims and property taxes due to reassessments in the third quarter of 2013 that were not repeated in the fourth quarter of 2013.

“We are pleased with the earnings momentum that was created in 2013.” said David W. Heeter, President and CEO. “The ability to redeem SBLF, improve asset quality and maintain expenses are all key factors in continuing our earnings momentum.”

Balance Sheet

Assets decreased $29.9 million as of December 31, 2013 compared to December 31, 2012, primarily due to the $24.3 million decrease in cash and investments to fund the redemption of the preferred stock issued to participate in SBLF.  Loans and loans held for sale declined $9.4 million in 2013.  First lien mortgage loans have decreased $6.2 million in 2013 as mortgage refinance activities slowed.  The consumer loan portfolio declined $3.9 million, offset by an increase in commercial loans of $3.9 million in 2013.  To help mitigate interest rate risk, the Bank has sold its 15 and 30 year fixed rate mortgage loan production in the secondary market.  In 2013, the Bank sold $70.5 million in fixed rate mortgage loans compared to $45.3 million during 2012.

Deposits decreased by $70.9 million as of December 31, 2013 compared to December 31, 2012, however, the Bank continues to see growth in core transactional accounts.  The increase in the core transactional accounts was $35.1 million, while certificates of deposit decreased $106.1 million in 2013. Core transactional deposits increased to 58% of the Bank’s total deposits as of December 31, 2013 compared to 51% as of December 31, 2012.  The Bank allowed higher costing certificates of deposit to run off as it was able to meet its funding needs through the increase in core transactional accounts and lower cost borrowings.

Allowance for loan losses decreased by $2.6 million, to $13.4 million as of December 31, 2013 compared to December 31, 2012 as the Bank’s specific allocation on impaired loans declined by $1.4 million primarily through charge offs of those specific allocations.  Net charge offs in the fourth quarter of 2013 were $92,000, or 0.04% of total loans on an annualized basis.  Net charge offs for 2013 were $3.9 million, or .40% of total loans. The allowance for loan losses to non-performing loans as of December 31, 2013 increased to 156.15% compared to 67.72% as of December 31, 2012.  The allowance for loan losses to total loans as of December 31, 2013 was 1.37%, a decrease from 1.63% as of December 31, 2012.  Non-performing loans to total loans at December 31, 2013 declined to 0.88% compared to 2.40% at December 31, 2012.  Non-performing assets to total assets declined to 1.22% at December 31, 2013 compared to 2.21% at December 31, 2012.  Heeter commented, “We have seen remarkable improvement in our asset quality, and continue to feel our allowance appropriately reflects the risk in our portfolio.”

Stockholders’ equity was $111.6 million at December 31, 2013, a decrease of $27.9 million from December 31, 2012. This decrease was due primarily to the redemption of the preferred stock in the SBLF of $28.9 million.  Other reductions in stockholders’ equity included unrealized losses of $6.2 million on the investment portfolio and dividend payments of $1.7 million to common shareholders and $1.3 million to preferred shareholders.  These decreases were partially offset by net income of $9.2 million.  The Company’s tangible book value per share as of December 31, 2013 increased to $15.46 compared to $15.33 as of December 31, 2012 and the tangible common equity ratio was 7.91% as of December 31, 2013 compared to 7.62% as of December 31, 2012.  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, 2013.

Income Statement

Net interest income before the provision for loan losses increased $93,000 for the quarter ended December 31, 2013 compared to the same period in 2012.  The increase was a result of an improvement in net interest margin of 13 basis points, partially offset by a decline in average earning assets of $39.0 million.  On a linked quarter basis, net interest income before the provision for loan losses decreased $36,000, primarily due to a decrease in average earning assets of $2.9 million and net interest margin staying the same.

Net interest income before the provision for loan losses decreased $201,000 for 2013 compared to 2012.  The decrease was a result of a decline in average earning assets of $40.1 million, partially offset by an increase in net interest margin of 11 basis points.

The provision for loan losses for the fourth quarter of 2013 was a recovery of $950,000 compared to a provision of $1.4 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 $92,000, or 0.04% of loans on an annualized basis in the fourth quarter of 2013 compared to net charge offs of $848,000, or 0.35% of loans on an annualized basis in the fourth quarter of 2012.  Credit quality also has improved substantially in 2013, resulting in a lower provision.   

The provision for loan losses for 2013 decreased to $1.3 million compared to $6.0 million during 2012.  The decrease was primarily due to a reduction in net charge offs to $3.9 million in 2013 compared to net charge offs of $6.8 million in 2012.  Non-performing loans decreased $15.1 million, or 64% as of December 31, 2013 compared to December 31, 2012.

Non-interest income for the fourth quarter of 2013 was $3.2 million, a decrease of $1.3 million compared to the fourth quarter of 2012.  Gain on sale of investments decreased $1.3 million and gain on sale of loans decreased $283,000 in the fourth quarter of 2013 compared to the same period in 2012.  This decrease was partially offset by an increase in commission income of $177,000.  On a linked quarter basis, non-interest income decreased $94,000 primarily due to gain on sale of investments in the third quarter not being repeated in the fourth quarter of 2013.

Non-interest income for 2013 was $13.6 million, a decrease of $2.0 compared to 2012.  Gain on sale of investments decreased by $2.0 million and gain on sale of loans decreased by $1.0 million.  While more mortgage loans were sold in 2013 compared to 2012, rates increased throughout the year reducing the gains in the portfolio.  Service fees on deposit accounts declined by $503,000 primarily due to reduced overdraft fee income.   These decreases were partially offset by increases in commission income of $460,000, a $244,000 reduction in losses on sale of other real estate and the recovery of mortgage servicing rights of $665,000.

 

Non-interest expense increased $67,000 when comparing the fourth quarter of 2013 with that of 2012.  The increase was primarily due to increases in salaries and benefits of $703,000.  This increase was due to higher health insurance premiums of $337,000 due to large claims in the quarter and a reduction of $201,000 on compensation deferred due to fewer loan originations when compared to the fourth quarter of 2012.  Other expenses declined by $670,000 primarily due to a prepayment penalty of $804,000 related to the prepayment of FHLB advances in the fourth quarter of 2012 that was not repeated in 2013.  On a linked quarter, non-interest expense increased $1.5 million primarily due to one-time property tax refunds and a reduction in our health insurance costs in the third quarter of 2013.  Salary expense increased on a linked quarter basis as salary accruals increased due to the achievement of certain financial targets for management and other employees.

Non-interest expense decreased $578,000 when comparing 2013 with 2012.  Other expense decreased by $739,000 primarily due to the one-time penalty on FHLB advances in 2012 as described above.  Salaries and benefits increased $1.2 million due primarily to $645,000 in annual salary increases and incentive payouts and a reduction of $415,000 in compensation deferral due to fewer originated loans compared to 2012.

“We believe we have been able to enhance shareholder value in 2013 and our objective is to continue the momentum that was created in 2013,” Heeter added.

MutualFirst Financial, Inc. is the parent company of MutualBank, an Indiana-based financial institution. The company has thirty full-service retail financial centers in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash Counties in Indiana.  MutualBank also has two offices located in Carmel and Crawfordsville, Indiana specializing in wealth management and trust services and a loan origination office in New Buffalo, Michigan.  MutualBank is a leading mortgage lender in each of the market areas it serves, and provides a full range of financial services including business banking, wealth management, trust services, investments 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 Litigation 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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5 Easy Tips to Make Secure Online Purchases

Purchasing holiday gifts online curled up under a blanket and sipping hot chocolate sure beats braving the elements and shopping crowds sometimes.

But with the added convenience of online shopping comes some increased risk of valuable information being stolen, such as credit card numbers or your account log in information for online retailers.

With the holiday season and Cyber Monday upon us, here are 5 easy tips to keep in mind when making any online purchase:

1. Make sure the device you are using is secure.

Use an antivirus program that is set to automatically update. It is also a best practice to install all the latest updates of your operating system as well as updates to all programs you have installed. Apple, Microsoft, and other software providers regularly release updates to protect against all types of security risks.

2. Make sure the wireless network you’re on is secure.

Many public wireless networks offered by businesses, while convenient, are not always the most secure. When making a purchase online, make sure the network you are on is using some sort of security measure that requires you to enter a password to connect. The latest and most secure wireless network encryption is WPA2-CCMP. If the network is not secured, it’s best to purchase online from a secured network.

3. Make sure the retailer’s website is secure.

When shopping online, always look in the address bar for https:// at the beginning of a web address. The “s” used in “https” signifies an encrypted connection from your computer to the company’s webserver. This is used to pass sensitive data between the two devices and prevents criminals from snooping the contents of the information sent (credit card number, SSN, etc.).

4. Use strong and unique passwords.

If you’re like the majority of individuals, you probably have 2-3 passwords that you use for all of your online accounts. While these are easy to remember, this isn’t a best practice. If someone discovers your password(s), they now have access to many of your important accounts. We instead recommend using unique and strong passwords for all your online retailer accounts. Strong passwords generally contain a combination of upper and lower case letters, numbers, and special characters (!, #, *, etc.).

5. Watch for phishing emails.

During the holiday season, the amount of phishing emails sent out increases as many criminals seek to falsely represent retailers. If an email looks suspicious or asks for your account information, do not open it or click on any links inside of it. Additionally, the majority of retailers will never include attachments in their emails but phishing emails sometimes do so don’t open any suspicious attachments.

Stay warm and stay safe this holiday season!

Monday, December 1, 2014

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