MUTUALFIRST FINANCIAL, INC. MUNCIE, Ind., Jan. 30, 2015 /PRNewswire/ -- MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the "Bank"), announced today record net income to common shareholders for the fourth quarter ended December 31, 2014 of $3.6 million, or $.50 for basic earnings per common share and $.48 for diluted earnings per common share. This compared to net income available to common shareholders for the same period in 2013 of $2.3 million, or $.32 for basic earnings per common share and $.31 for diluted earnings per common share. Annualized return on average assets was 1.01% and return on average tangible common equity was 12.30% for the fourth quarter of 2014 compared to .75% and 8.48% respectively, for the same period of last year.
Net income available to common shareholders for the year ended 2014 increased by 36.7% to $10.8 million, or $1.51 for basic earnings per common share and $1.46 for diluted earnings per common share compared to net income available to common shareholders of $7.9 million, or $1.12 for basic earnings per common share and $1.09 for diluted earnings per common share for the year ended 2013. Return on average assets was .77% and return on average tangible common equity was 9.37% for the year ended 2014 compared to .66% and 7.42% respectively, for the year ended 2013.
Other financial highlights for the fourth quarter 2014 and the year ended 2014:
-- The common stock dividend to shareholders increased 67% in 2014.
-- Loan growth was led by non-real estate consumer lending growth of 14.6%
and commercial loan growth of 10.4% as overall loan growth was 3.8% in
2014.
-- Asset quality improved as foreclosed real estate and other repossessed
assets declined 52% in the fourth quarter of 2014 and 61% for the year
ended 2014.
-- Non-performing assets decreased $4.5 million, or 30% in the fourth
quarter of 2014 and $6.3 million, or 37% compared to December 31, 2013.
-- Net charge offs on an annualized basis were 0.03% in the fourth quarter
of 2014 compared to 0.04% in the same period of 2013. Net charge offs
for the year ended 2014 were 0.11% compared to 0.40% for year ended
2013.
-- Stockholder's equity increased $15.9 million in 2014. Tangible book
value increased to $17.22 per share at the end of 2014 compared to
$15.46 per share at the end of 2013. Tangible common equity increased
to 8.77% of tangible assets in December of 2014 compared to 7.91% in
December of 2013.
-- Net interest margin increased to 3.23% for the fourth quarter of 2014
compared to 3.17% in the same period of 2013 and increased to 3.26% in
2014 compared to 3.13% in 2013.
-- The effective tax rate declined as a $600,000 deferred tax allowance was
recovered in the fourth quarter of 2014 due to the sale of five trust
preferred securities.
-- MutualBank completed an acquisition of approximately $40 million in
trust assets and the acquisition of Summit Mortgage in 2014.
"2014 was a successful year for MutualFirst Financial, Inc.," said David W. Heeter, President and CEO. "The current growth in commercial and consumer lending, complimented by the acquisition of businesses that will provide ongoing non-interest income, continue to build earnings momentum for the company."
Balance Sheet
Assets increased $32.7 million, or 2.4% as of December 31, 2014 compared to December 31, 2013, primarily due to the $37.3 million, or 3.8% increase in the gross loan portfolio. Increases in the gross loan portfolio were the result of increased commercial lending of $30.1 million, or 10.4%, increased non-real estate consumer lending of $14.6 million, or 14.6% and increased junior lien and line of credit mortgages of $1.7 million, or 2.5%. These increases were partially offset by a decline in first lien mortgage loans of $9.1 million, or 1.8%. To help mitigate interest rate risk, the Bank sells a majority of its 15 and 30 year fixed rate mortgage loan production in the secondary market. In 2014, the Bank sold $62.8 million in fixed rate mortgage loans, which included $24.6 million from Summit Mortgage, compared to $70.5 million during 2013. Heeter commented, "We are pleased with the commercial and consumer loan growth in 2014. We believe this growth is sustainable and will allow us to continue to change the mix of our assets as part of our overall commercial banking strategy."
Deposits decreased by $33.8 million as of December 31, 2014 compared to December 31, 2013, although, the Bank continued to see growth in core transactional accounts. The increase in the core transactional accounts was $36.8 million, while certificates of deposit decreased $70.6 million in 2014. Core transactional deposits increased to 63% of the Bank's total deposits as of December 31, 2014 compared to 58% as of December 31, 2013. 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 $244,000, to $13.2 million as of December 31, 2014 compared to December 31, 2013 as the Bank's specific allocation on impaired loans declined by $335,000 primarily through payoffs on those loans. Net charge offs in the fourth quarter of 2014 were $81,000, or 0.03% of total loans on an annualized basis. Net charge offs for 2014 were $1.1 million, or .11% of total loans. The allowance for loan losses to non-performing loans as of December 31, 2014 increased to 177.04% compared to 156.15% as of December 31, 2013. The allowance for loan losses to total loans as of December 31, 2014 was 1.30%, a decrease from 1.37% as of December 31, 2013. Non-performing loans to total loans at December 31, 2014 declined to 0.73% compared to 0.88% at December 31, 2013. Non-performing assets to total assets declined to 0.75% at December 31, 2014 compared to 1.22% at December 31, 2013.
Stockholders' equity was $127.5 million at December 31, 2014, an increase of $15.9 million from December 31, 2013. This increase was due primarily to net income of $10.8 million, increases in other comprehensive income of $6.0 million and the exercise of stock options of $1.3 million. These increases were partially offset by common stock dividend payments of $2.3 million. The Company's tangible book value per share as of December 31, 2014 increased to $17.22 per share compared to $15.46 per share as of December 31, 2013 and the tangible common equity ratio was 8.77% as of December 31, 2014 compared to 7.91% as of December 31, 2013. 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, 2014.
Income Statement
Net interest income before the provision for loan losses increased $435,000 for the quarter ended December 31, 2014 compared to the same period in 2013. The increase was a result of an improvement in net interest margin of 6 basis points and an increase in average earning assets of $27.7 million, due to average loan growth of $40.2 million. On a linked quarter basis, net interest income before the provision for loan losses decreased $1,000, primarily due to a decrease in net interest margin of 3 basis points.
Net interest income before the provision for loan losses increased $1.8 million for 2014 compared to 2013. The increase was a result of net interest margin improving by 13 basis points and an increase in average earning assets of $4.8 million, due to average loan growth of $18.6 million offset by a decline in average investments of $13.1 million.
There was no provision for loan losses for the fourth quarter of 2014 compared to a recovery of $950,000 during last year's comparable period. This was due to management's ongoing evaluation of the adequacy of the allowance for loan losses, minimal net charge offs and improving credit quality, despite the increase in the total loan portfolio.
The provision for loan losses for 2014 decreased to $850,000 compared to $1.3 million during 2013. The decrease was primarily due to a reduction in net charge offs to $1.1 million in 2014 compared to net charge offs of $3.9 million in 2013. Non-performing loans decreased $1.2 million, or 13% as of December 31, 2014 compared to December 31, 2013.
Non-interest income for the fourth quarter of 2014 was $4.5 million, an increase of $1.3 million compared to the fourth quarter of 2013. This increase was due to an increase in gain on sale of REOs of $535,000. Other increases included gain on sale of loans of $643,000 aided by the sale of loans obtained as part of the acquisition of Summit Mortgage in the third quarter of 2014 and an increase in commission income of $223,000 aided by increased activity in our trust and wealth management areas. These increases were offset by a smaller increase of $161,000 in cash value of life insurance as a policy bonus was paid in the fourth quarter of 2013 that was not repeated in 2014 and a decline of $123,000 in gain on sale of securities, as five trust preferred securities were liquidated in the fourth quarter of 2014. On a linked quarter basis, non-interest income increased $940,000 primarily due to the reasons above.
Non-interest income for 2014 was $14.4 million, an increase of $822,000 compared to 2013. Acquisitions of Summit Mortgage and a trust portfolio in 2014 helped increase gain on sale of loans by $997,000 and increased commission income by $514,000. These gains were partially offset by a decline in gain on sale of investments of $522,000 and a decline in servicing fees of $442,000 primarily due to valuation recoveries in 2013 that were not duplicated in 2014.
Non-interest expense increased $199,000 when comparing the fourth quarter of 2014 with the same period of 2013. The increase was primarily due to the acquisition of Summit Mortgage in the third quarter. Other reasons for the increase were increases in advertising and promotion of $136,000, as MutualBank celebrated its 125(th) anniversary and an increase in other expenses of $169,000 primarily due to a $166,000 FHLB prepayment penalty, which was offset by a loan prepayment penalty reflected in net interest income. On a linked quarter, non-interest expense increased $464,000 primarily due to the expenses previously discussed.
Non-interest expense increased $1.7 million when comparing 2014 with 2013. These increases were related to salaries and benefits increasing by $1.1 million primarily due to the acquisition of Summit Mortgage and normal salary increases and increases in occupancy and equipment of $206,000 primarily due to the harsh winter at the beginning of 2014. Increases in professional fees of $234,000 were related to increased legal fees associated with certain REOs and investment management services.
The effective tax rate for the fourth quarter of 2014 was 15.8% compared to 27.9% in 2013. The decrease was related to a recovery of a valuation allowance of $600,000 that was established at the time certain trust preferred securities were other than temporarily impaired. Five trust preferred securities were sold in the fourth quarter of 2014 and the valuation allowance was no longer warranted.
"2014 continued the earnings momentum that has been built over the last few years," Heeter added. "We believe 2014 was another building block in enhancing shareholder value and expect to continue the momentum into 2015."
MutualFirst Financial, Inc. is the parent company of MutualBank, an Indiana-based financial institution. MutualBank has thirty full-service retail financial centers in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash Counties in Indiana. MutualBank 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 also operates a wholly owned subsidiary of Summit Mortgage which operates out of Fort Wayne, Indiana. 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.
MUTUALFIRST FINANCIAL INC.
----------- --------------
December 31, September 30, December 31,
Balance Sheet (Unaudited): 2014 2014 2013
-------------------------- ---- ---- ----
(000) (000) (000)
Assets
Cash and cash equivalents $29,575 $20,499 $25,285
Investment securities - AFS 260,806 264,056 264,348
Loans held for sale 6,140 6,440 1,888
Loans, gross 1,016,686 1,008,717 979,378
Allowance for loan loss (13,168) (13,249) (13,412)
------- ------- -------
Net loans 1,003,518 995,468 965,966
Premise and equipment, net 30,939 30,765 31,471
FHLB of Indianapolis stock 11,964 14,391 14,391
Investment in limited partnerships 1,582 1,709 2,092
Deferred tax asset 12,969 14,114 17,002
Cash value of life insurance 51,002 50,709 49,843
Goodwill 1,800 1,800 0
Core deposit and other intangibles 1,105 1,250 1,629
Other assets 12,707 8,601 9,057
Total assets $1,424,107 $1,409,802 $1,391,405
========== ========== ==========
Liabilities and Stockholders' Equity
Deposits $1,079,320 $1,098,849 $1,113,084
FHLB advances 192,442 168,523 142,928
Other borrowings 10,174 10,353 10,890
Other liabilities 14,634 16,773 12,861
Stockholders' equity 127,537 122,142 111,642
Total liabilities and stockholders' equity $1,424,107 $1,416,640 $1,391,405
========== ========== ==========
Three Months Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended Ended
December 31, September 30, December 31, December 31 December 31,
Income Statement (Unaudited): 2014 2014 2013 2014 2013
----------------------------- ---- ---- ---- ---- ----
(000) (000) (000) (000) (000)
Total interest income $12,893 $12,803 $12,847 $51,178 $51,667
Total interest expense 2,254 2,163 2,643 8,923 11,224
----- ----- ----- ----- ------
Net interest income 10,639 10,640 10,204 42,255 40,443
Provision (credit) for loan losses 0 0 (950) 850 1,300
--- --- ---- --- -----
Net interest income after provision (credit)
for loan losses 10,639 10,640 11,154 41,405 39,143
------ ------ ------ ------ ------
Non-interest income
-------------------
Service fee income 1,597 1,518 1,607 5,995 5,989
Net realized gain (loss) on sales of AFS securities (123) 75 0 313 835
Commissions 1,380 1,228 1,157 4,868 4,354
Equity in losses of limited partnerships (76) (124) (116) (385) (453)
Net gain on sale of loans 841 444 198 1,849 852
Net servicing fees 69 66 86 114 556
Increase in cash value of life insurance 293 295 454 1,158 1,396
Net gain (loss) on sale of other real estate and repossessed assets 268 (81) (267) (53) (320)
Other income 265 153 61 515 343
--- --- --- --- ---
Total non-interest income 4,514 3,574 3,180 14,374 13,552
----- ----- ----- ------ ------
Non-interest expense
--------------------
Salaries and employee benefits 6,099 6,088 6,128 23,560 22,492
Net occupancy expenses 495 494 615 2,258 2,087
Equipment expenses 528 450 461 1,872 1,837
Data processing fees 378 373 349 1,558 1,431
Advertising and promotion 504 387 368 1,497 1,464
ATM and debit card expense 344 370 325 1,320 1,132
Deposit insurance 240 239 254 1,019 1,145
Professional fees 374 376 421 1,628 1,394
Software subscriptions and maintenance 432 418 382 1,652 1,452
Other real estate and repossessed assets 184 161 244 631 773
Other expenses 1,294 1,052 1,125 4,383 4,480
----- ----- ----- ----- -----
Total non-interest expense 10,872 10,408 10,672 41,378 39,687
------ ------ ------ ------ ------
Income before taxes 4,281 3,806 3,662 14,401 13,008
Income tax provision 677 1,112 1,023 3,583 3,808
----- -----
Net income 3,604 2,694 2,639 10,818 9,200
Preferred stock dividends and amortization - - 346 - 1,257
Net income available to common shareholders $3,604 $2,694 $2,293 $10,818 $7,943
====== ====== ====== ======= ======
Pre-tax pre-provision earnings (1) $4,281 $3,806 $2,366 $15,251 $13,051
------ ------ ------ ------- -------
Average Balances, Net Interest Income, Yield Earned and Rates Paid
-------------------------------------------------------------------
Three Three
months ended months ended
12/31/2014 12/31/2013
---------- ----------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
------- ---- ---- ------- ---- ----
(000) (000) (000) (000)
Interest-Earning Assets:
Interest -bearing deposits $25,465 $5 0.08% $23,264 $10 0.17%
Mortgage-backed securities:
Available-for-sale 208,417 1,380 2.65 216,651 1,459 2.69
Investment securities:
Available-for-sale 50,995 336 2.64 57,023 366 2.57
Loans receivable 1,018,415 11,034 4.33 978,201 10,886 4.45
Stock in FHLB of Indianapolis 13,969 138 3.95 14,391 126 3.50
------ --- ---- ------ --- ----
Total interest-earning assets (2) 1,317,261 12,893 3.92 1,289,530 12,847 3.99
Non-interest earning assets, net of allowance
for loan losses and unrealized gain/loss 108,639 111,206
Total assets $1,425,900 $1,400,736
========== ==========
Interest-Bearing Liabilities:
Demand and NOW accounts $260,638 153 0.23 $268,827 163 0.24
Savings deposits 123,892 3 0.01 118,618 3 0.01
Money market accounts 148,630 96 0.26 118,958 78 0.26
Certificate accounts 409,387 1,199 1.17 486,050 1,840 1.51
------- ----- ---- ------- ----- ----
Total deposits 942,547 1,451 0.62 992,453 2,084 0.84
Borrowings 184,605 803 1.74 121,099 559 1.85
------- --- ---- ------- --- ----
Total interest-bearing accounts 1,127,152 2,254 0.80 1,113,552 2,643 0.95
Non-interest bearing deposit accounts 157,965 143,639
Other liabilities 16,325 14,135
------ ------
Total liabilities 1,301,442 1,271,326
Stockholders' equity 124,458 129,410
------- -------
Total liabilities and stockholders' equity $1,425,900 $1,400,736
========== ==========
Net earning assets $190,109 $175,978
======== ========
Net interest income $10,639 $10,204
======= =======
Net interest rate spread 3.12% 3.04%
==== ====
Net yield on average interest-earning assets 3.23% 3.17%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 116.87% 115.80%
====== ======
Three Months Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended Ended
December 31, September 30, December 31, December 31, December 31,
Selected Financial Ratios and Other Financial Data (Unaudited): 2014 2014 2013 2014 2013
--------------------------------------------------------------- ---- ---- ---- ---- ----
Share and per share data:
Average common shares outstanding
Basic 7,211,450 7,178,055 7,107,294 7,160,700 7,076,877
Diluted 7,445,530 7,407,144 7,314,436 7,391,831 7,257,818
Per common share:
Basic earnings $0.50 $0.38 $0.32 $1.51 $1.12
Diluted earnings $0.48 $0.36 $0.31 $1.46 $1.09
Dividends $0.10 $0.08 $0.06 $0.32 $0.24
Dividend payout ratio 20.83% 22.22% 19.35% 21.92% 22.02%
Performance Ratios:
Return on average assets (ratio of net
income to average total assets)(3) 1.01% 0.76% 0.75% 0.77% 0.66%
Return on average tangible common equity (ratio of net
income to average tangible common equity)(3) 12.30% 9.07% 8.48% 9.37% 7.42%
Interest rate spread information:
Average during the period(3) 3.12% 3.16% 3.04% 3.15% 2.99%
Net interest margin(3)(4) 3.23% 3.26% 3.17% 3.26% 3.13%
Efficiency Ratio 71.75% 73.22% 79.74% 73.07% 73.50%
Ratio of average interest-earning
assets to average interest-bearing
liabilities 116.87% 116.09% 115.80% 115.76% 115.79%
Allowance for loan losses:
Balance beginning of period $13,249 $13,243 $14,454 $13,412 $16,038
Charge offs:
Mortgage first lien 182 141 170 572 888
Mortgage - lines of credit and junior liens 49 29 65 371 498
Commercial real estate 44 0 28 44 341
Construction and development 0 0 0 244 1,371
Consumer loans 205 20 111 651 563
Commercial business loans 0 0 4 0 878
--- --- --- --- ---
Sub-total 480 190 378 1,882 4,539
Recoveries:
Mortgage first lien 3 23 217 31 273
Mortgage - lines of credit and junior liens 1 0 1 4 16
Commercial real estate 17 0 0 24 14
Construction and development 249 41 0 297 2
Consumer loans 47 68 31 255 256
Commercial business loans 82 64 37 177 52
--- --- --- --- ---
Sub-total 399 196 286 788 613
Net charge offs (recoveries) 81 (6) 92 1,094 3,926
Additions charged to operations 0 0 (950) 850 1,300
--- --- ---- --- -----
Balance end of period $13,168 $13,249 $13,412 $13,168 $13,412
======= ======= ======= ======= =======
Net loan charge-offs to average loans (3) 0.03% 0.00% 0.04% 0.11% 0.40%
December 31, September 30, December 31,
2014 2014 2013
---- ---- ----
Total shares outstanding 7,236,002 7,197,891 7,117,179
Tangible book value per share $17.22 $16.55 $15.46
Tangible common equity to tangible assets 8.77% 8.42% 7.91%
Nonperforming assets (000's)
Non-accrual loans
Mortgage first lien $3,499 $4,334 $4,057
Mortgage - lines of credit and junior liens 658 199 421
Commercial real estate 2,023 2,073 1,349
Construction and development 209 613 1,103
Consumer loans 218 341 361
Commercial business loans 605 637 1,109
--- --- -----
Total non-accrual loans 7,212 8,197 8,400
Accruing loans past due 90 days or more 226 217 188
--- --- ---
Total nonperforming loans 7,438 8,414 8,588
Real estate owned 2,829 6,334 8,150
Other repossessed assets 476 504 283
--- --- ---
Total nonperforming assets $10,743 $15,252 $17,021
Performing restructured loans (5) $4,618 $4,432 $10,016
Asset Quality Ratios:
Non-performing assets to total assets 0.75% 1.08% 1.22%
Non-performing loans to total loans 0.73% 0.83% 0.88%
Allowance for loan losses to non-performing loans 177.04% 157.46% 156.15%
Allowance for loan losses to loans receivable 1.30% 1.31% 1.37%
(1) Pre-tax pre-provision income is calculated by taking net income available to common shareholders and adding income tax provision and provision for loan losses.
(2) Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves.
(3) Ratios for the three month periods have been annualized.
(4) Net interest income divided by average interest earning assets.
(5) Performing restructured loans are excluded from non-performing ratios. Restructured loans that are on non-accrual are in the non-accrual loan categories.
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SOURCE MutualFirst Financial, Inc.
