Business & Personal Checking Accounts – MutualBank

 

2011 Earnings

Indiana Community Bank – MutualBank

Published Monday, February 6, 2012 7:00 am by Chris Cook

MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the “Bank”), announced today that net income available to common shareholders for the year ended December 31, 2011 was $1.4 million, or $.20 for basic and diluted earnings per common share.  This compared to net income available to common shareholders for the year ended December 31, 2010 of $4.7 million, or $.69 for basic and diluted earnings per common share.  Return on assets was .24% and return on average tangible common equity was 1.39% for the year ended 2011 compared to .45% and 4.96% respectively, for the year ended 2010.

Highlights for the year ended December 31, 2011 include:

  • Redemption of the TARP preferred shares and the corresponding warrants from the United States Treasury.
  • Inclusion into the Small Business Lending Fund (SBLF).
  • Converted the Bank charter from a Federal Thrift to a State Commercial Bank as of January 1, 2012 after a successful conversion examination from the FDIC and the Indiana Department of Financial Institutions in 2011.
  • Net interest margin for 2011 was 3.16% compared to 3.19% in 2010.
  • Provision for loan losses increased to $13.1 million in 2011 compared to $7.1 million in 2010.
  • Non-interest income increased $1.9 million in 2011 over 2010.
  • Non-interest expense decreased $601,000 in 2011 versus 2010.

“2011 saw significant positive momentum for MutualFirst.  The ability to payoff our TARP preferred shares and change charters in 2011 indicates the health of our institution.” said David W. Heeter, President and CEO.  

Net income available to common shareholders for the three months ended December 31, 2011 was $687,000, or $.10 for basic and diluted earnings per common share. This compared to a net income available to common shareholders for the three months ended December 31, 2010 of $1.4 million, or $.20 for basic and diluted earnings per share. Annualized return on average assets was .29% and return on average tangible common equity was 2.73% for the three months ended December 31, 2011 compared to 0.50% and 5.61% respectively, for the same period last year.

Balance Sheet

Assets totaled $1.4 billion at December 31, 2011, an increase from December 31, 2010 of $20.9 million, or 1.5%, as cash received from loan sales and prepayments was reinvested into securities. Gross loans, excluding loans held for sale, decreased $78.0 million, or 7.8%.  A decrease in residential mortgage loans of $23.0 million, or 5.0% was primarily due to loans sold in 2011 of $80.2 million, which includes a $44.5 million loan sale in December 2011 to sell mortgage loans that had a propensity to refinance more quickly due to the interest rate environment.  A decrease in consumer loans of $25.4 million, or 11.2% was primarily due to decreases in RV/Boat loans of $18.5 million and home equity loans of $6.7 million as prepayments exceeded current year’s production.  A decrease in commercial loans of $31.1 million, or 9.9% was primarily due to certain loans prepaying, primarily loans of concern and working through problem loans in 2011.  The paydowns in the loan portfolio were used to increase investment securities available for sale by $85.7 million, or 35.0% which were primarily invested in agency mortgage-backed securities.

Total deposits were $1.2 billion at December 31, 2011 an increase of $45.3 million, or 4.0% from December 31, 2010. This increase was due to increases in transactional deposits of $74.9 million and a decline in certificates of deposit of $29.6 million. Transactional deposits compared to total deposits increased to 45% as of December 31, 2011 compared to 40% as of December 31, 2010 as the Bank continues to strategically increase the transactional deposits as a percentage of total deposits.  Total borrowings decreased $27.8 million to $113.9 million at December 31, 2011 from $141.7 million at December 31, 2010.  The decrease in total borrowings was a direct result of increasing transactional deposits and paying down maturing borrowings in order to reduce interest costs.

Allowance for loan losses increased to $16.8 million as of December 31, 2011 compared to $16.4 million as of December 31, 2010. Net charge offs for the quarter ended December 31, 2011 were $3.7 million, or 1.53% of average loans on an annualized basis compared to $1.9 million, or .74% of average loans for 2010.  Net charge offs for the year ended December 31, 2011 were $12.7 million, or 1.31% of average loans compared to $7.1 million, or .69% of average loans for the comparable period in 2010.  The allowance for loan losses as a percentage of non-performing loans and total loans was 52.81% and 1.83%, respectively at December 31, 2011 compared to 51.60% and 1.64%, respectively at December 31, 2010.  Heeter commented, “We have written down a portion of our non-performing credits to provide us flexibility to manage them, without large future losses.  We believe the current level of allowance is adequate for the current level of risk in our portfolio.”

Stockholders’ equity was $132.8 million at December 31, 2011, an increase of $1.6 million, or 1.2% from December 31, 2010. The increase was a result of net income of $3.5 million and accumulated other comprehensive income increased $5.3 million due to an increase in unrealized gains on securities and derivatives. The increase was partially offset by dividend payments of $1.7 million to common shareholders and $1.8 million to preferred shareholders.  The transaction out of TARP and into the SBLF reduced equity by $4.4 million as the TARP preferred shares and the repurchase of warrants decreased equity by $33.3 million, while the offering through the SBLF increased equity by $28.9 million.  MutualFirst Financial, Inc. tangible common equity increased to 7.05% as of December 31, 2011 compared to 6.92% as of December 31, 2010.  The Bank’s risk-based capital ratio increased to 14.33% as of December 31, 2011 from 13.79% as of December 31, 2010.  The Bank’s capital ratios are well in excess of “well-capitalized” levels as defined by all regulatory standards.

Income Statement

Net interest income before the provision for loan losses decreased $884,000 from $42.2 million for the year ended December 31, 2010 to $41.3 million for the year ended December 31, 2011 and decreased $167,000 in the fourth quarter 2011 compared to the same period in 2010.  The primary reason for the decrease for the year 2011 and the fourth quarter 2011 was a decline in average earning assets of $18.4 million and $17.3 million, respectively, due primarily to a decreasing loan portfolio.  Net interest margin declined by 3 basis points and 1 basis point, respectively, during the year 2011 and the fourth quarter of 2011 as compared to the comparable 2010 periods due to interest-earning assets declining slightly faster than interest-bearing liabilities.

The provision for loan losses for the year ended 2011 was $13.1 million, an increase of $6.1 million from 2010, and $4.0 million in the fourth quarter of 2011, an increase of $2.2 million compared to the fourth quarter of 2010.  The increases in the provision were primarily due to increased net charge offs of $12.7 million in 2011 compared to $7.1 million in 2010 and $3.7 million in the fourth quarter of 2011 compared to $1.9 million in the fourth quarter of 2010.  The increase in charge offs were associated with our commercial loan portfolio, mainly non-owner occupied commercial real estate. Allowance for loan losses to loans receivable was 1.83% as of December 31, 2011 compared to 1.64% as of December 31, 2010.  Heeter stated, “Although these credit costs are significant, we believe we are now positioned for more normalized costs moving forward.”

Non-interest income increased $1.9 million in 2011 over 2010 and $1.5 million in the fourth quarter of 2011 compared to the fourth quarter of 2010.    Increases in non-interest income included gain on sale of securities as gains were taken on mortgage-backed investments that appeared to be prepaying faster and to strategically reposition a portion of the investment portfolio into variable rates.  Also, the investment portfolio stabilized and the Bank saw a decrease in other than temporary impairment.  Gain on loan sales increased as the Bank sold $45 million of 1-4 family mortgage loans in the fourth quarter of 2011 that had a higher probability to refinance due to the low interest rate environment.  Decreases in non-interest income include service fees on transactional deposit accounts, which decreased mainly due to the changes in overdraft regulations in 2010.  Commission income also decreased as the Bank’s income from brokerage and annuity sales declined due to lower commission percentages on sales.

Non-interest expense decreased by $601,000 in 2011 compared to 2010 and increased $115,000 in the fourth quarter of 2011 compared to the fourth quarter of 2010.  Reductions in non-interest expense in 2011 compared to 2010 were aided by closing one branch, reducing occupancy expenses, and the changing FDIC assessment calculation,   causing a reduction in the Bank’s deposit insurance premiums.   Salaries and benefits increased primarily due to stock options that were granted and mostly expensed in the fourth quarter of 2011.  The charter conversion to a State Commercial Bank and a Bank Holding Company increased professional fees.  Professional fees also increased due to increased legal fees on problem loans when compared to 2010.  Heeter commented, “We have been able to successfully reduce our non-interest expense during the last couple of years and continue to look for ways to reduce our expenses further.”

Heeter concluded, “The economic and regulatory environment continues to create uncertainty for financial institutions.  We believe the worst is behind us and are cautiously optimistic that more normalized earnings will be attainable as credit costs begin to decline.”

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 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 Banking Security Measures for the 21st Century

clientuploads/21st-Century-Securitysquare180.pngMany of us are constantly connected to the online world these days. This means that the potential is there for our computers and personal information to be compromised which greatly increases the risk of ID theft and financial fraud to occur. However, by taking some basic precautions you can significantly reduce the risk of your computing environment being compromised. Following these simple guidelines should help your computing environment become more secure:

Keep your computer and software up-to-date

Keep your computers and network equipment secured with the latest software updates and enable automatic updates whenever possible.  This includes updates to third party applications such as Java and Adobe Products.  

Use hard drive encryption

In the event your machine is lost or stolen, drive encryption can prevent others from accessing the data on your hard drive.  The purpose is to encrypt or scramble your data on your machine so that it can only be read with your encryption key.Many operating systems offer drive encryption.  Microsoft offers Bitlocker and Apple has FileVault. There are also other third party encryption offerings.   

Enable your firewall

Think of the firewall to your computer as the fence around your property.  If there were multiple holes cut in the fence, it wouldn’t be very useful at keeping people out.  Firewalls are typically enabled by default on Windows machines, but double check to make sure it’s on.  Here are instructions to do so if you are using Windows 7. Only allow necessary applications inbound access through your firewall. The same principles apply to your network firewall. 

Configure your screensaver

Set an auto-locking screensaver so your account gets locked out after a few minutes.  This is useful if you forget to lock your machine when are away from it. On Windows machines this can usually be done by pressing the “Windows Key” and the “L” button simultaneously.

Make your passwords stronger

The longer and more complex the password, the better.  At least 16 characters with a combination of upper and lowecase letters, numbers, and special characters is a best practice.

Configure your router

Use the strongest wireless security available (currently WPA2-CCMP) with a long and complex password for your wireless network. Disable WPS on your wireless router for greater security.   

 


Think that some secure banking information
of yours has been compromised?

If you suspect that your personal financial information has been compromised, call MutualBank Customer Support at 800-382-8031.


 

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