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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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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