MILWAUKEE, Oct. 16, 2013 /PRNewswire/ -- Bank Mutual
Corporation (NASDAQ: BKMU) reported net income of $2.9 million or $0.06 per diluted share in the third quarter of
2013, which was a 47.9% improvement over net income of $2.0 million or $0.04 per diluted share in the same quarter in
2012. Year-to-date, Bank Mutual Corporation ("Bank Mutual")
reported net income of $8.1 million
or $0.17 per diluted share in 2013,
which was 82.1% higher than the $4.4
million or $0.10 per diluted
share reported during the same nine-month period in 2012. The
improvements in net income between these periods were due primarily
to higher net loan servicing fee revenue, higher net interest
income, lower net losses and expenses on foreclosed real estate,
and lower federal deposit insurance premiums. These developments
were partially offset by lower gains on sales of loans, higher
compensation-related costs, and a larger provision for loan losses.
David A. Baumgarten, President
and Chief Executive Officer of Bank Mutual noted, "We are pleased
that our quarterly earnings increased for a sixth straight quarter
despite a decline in net mortgage banking revenue, which we
anticipated." Mr. Baumgarten added, "Improvements in our
operating results continue to be led by increases in our net
interest margin and growth in our loan portfolio."
Bank Mutual's net interest income increased by $1.2 million or 7.6% and by $3.8 million or 8.4% during the three and nine
months ended September 30, 2013,
respectively, compared to the same periods in 2012. These
increases were primarily attributable to a 45 basis point
improvement in Bank Mutual's net interest margin, from 2.61% during
the nine months ended September 30,
2012, to 3.06% during the same period in the current
year. This improvement was due in part to an improved earning
asset mix and an improved deposit funding mix between the
periods. Bank Mutual's average loans receivable (which
generally have higher yields) increased by $35.7 million or 2.6% between the year-to-date
periods and its average mortgage-related securities, investment
securities, and overnight investments (which generally have lower
yields) declined by $215.2 million or
23.0% in the aggregate between the periods. With respect to
Bank Mutual's deposit funding mix, its average checking and savings
deposits (which generally have a lower interest cost or no interest
cost) increased by $38.6 million or
3.9% in the aggregate between the year-to-date periods and its
average certificates of deposit (which generally have a higher
interest cost) declined by $255.1
million or 25.8% between the periods.
Also contributing to the improvement in net interest margin
between the year-to-date periods in 2013 and 2012 was a 35 basis
point decline in the average cost of Bank Mutual's certificates of
deposit, as well as Bank Mutual's repayment of $100.0 million in high-cost borrowings from the
FHLB of Chicago in the third
quarter of 2012. Management anticipates that Bank Mutual's
cost of certificates of deposit will continue to decline modestly
in the near term as older, higher-cost certificates of deposit
continue to mature and are replaced by lower cost deposits,
although there can be no assurances.
The favorable impact of the aforementioned developments on net
interest income was partially offset by a $179.5 million or 7.7% decrease in average
earning assets during the year-to-date period in 2013 compared to
the same period in 2012. Bank Mutual's earning assets have
declined in recent periods as it has used cash flows from its
mortgage-related securities portfolio to fund a decline in its
certificates of deposit, as previously noted.
Bank Mutual's provision for loan losses was $707,000 in the third quarter of 2013 compared to
$657,000 in the same quarter last
year. The provision for the nine months ended September 30, 2013, was $3.3 million compared to $2.4 million in the same period last year.
Bank Mutual's provision in the 2013 periods was due in part to
increases in general loan loss allowances related to growth in its
multi-family, commercial real estate, and commercial business loan
portfolios. Also contributing to the provision in the third
quarter of 2013 was a $536,000 loss
on a commercial real estate loan secured by a multi-family real
estate property.
In the 2012 periods Bank Mutual recorded loan loss provisions
against a number of larger multi-family, commercial real estate,
and business loan relationships. These losses were partially
offset by loss recaptures on non-performing loans that paid off
during the periods, as well as recoveries of previously charged-off
loans. In addition, Bank Mutual increased its general loss
allowances modestly during the year-to-date period in 2012 due
primarily to growth in its loan portfolio.
Bank Mutual's non-performing loans and classified loans have
trended lower in recent periods. Although
general economic, employment, and real estate conditions continue
to slowly improve in Bank Mutual's markets, current conditions
continue to be challenging for certain borrowers, particularly
those whose loans are secured by commercial real estate or land.
As such, there can be no assurances that non-performing loans
and/or classified loans will continue to trend lower in future
periods or that Bank Mutual's provision for loan losses will not
vary considerably in future periods.
Service charges on deposits declined slightly during the three
months ended September 30, 2013,
compared to the same period in 2012, but increased modestly between
the nine month periods ended as of the same dates. Bank
Mutual has experienced slower growth in this revenue line item in
recent periods due primarily to changes in customer spending
patterns, which has resulted in lower levels of revenue from
overdraft charges. Management attributes this development to
relatively slow economic growth in recent periods, which management
believes has impacted customer spending habits.
Brokerage and insurance commissions were $658,000 during the third quarter of 2013, a
$20,000 or 2.9% decrease from the
same period in the previous year. On a year-to-date basis,
this source of revenue was $2.3
million in 2013, a $104,000 or
4.7% increase from the same period in 2012. This revenue item
consists of commissions earned on sales of tax-deferred annuities,
mutual funds, and certain other securities, as well as personal and
business insurance products. Commission revenue in the 2013
year-to-date period benefited from higher sales of equity-related
investments earlier in the year, which management attributes to
general improvements in equity markets during that time
period. Commission revenue from this source declined,
however, during the third quarter of 2013 compared to the same
period in the prior year. The 2013 periods also include
modest increases in commission revenue from sales of tax-deferred
annuities, which management attributes to the continued popularity
of such investments in generally lower interest rate
environments.
Net loan-related fees and servicing revenue was $471,000 during the three months ended
September 30, 2013, compared to a
loss of $1.1 million in the same
period of the previous year. On a year-to-date basis, this
revenue was $2.7 million during the
nine months ended September 30, 2013,
compared to a loss of $2.3 million in
the same period of 2012. The following table presents the
components of net loan-related fees and servicing revenue for the
periods indicated:
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
2013
|
2012
|
|
2013
|
2012
|
|
(Dollars in
thousands)
|
Gross servicing
fees
|
$727
|
$664
|
|
$2,164
|
$2,104
|
Mortgage servicing
rights amortization
|
(542)
|
(982)
|
|
(2,335)
|
(3,004)
|
Mortgage servicing
rights valuation recovery (loss)
|
90
|
(944)
|
|
2,319
|
(1,919)
|
Loan servicing revenue, net
|
275
|
(1,262)
|
|
2,148
|
(2,819)
|
Other loan fee
income
|
196
|
171
|
|
511
|
471
|
Loan-related fees and servicing revenue, net
|
$471
|
$(1,091)
|
|
$2,659
|
$(2,348)
|
The change in the valuation allowance that Bank Mutual maintains
against its mortgage servicing rights ("MSRs") is recorded as a
recovery or loss, as the case may be, in the period in which the
change occurs. Higher market interest rates for residential
loans in recent periods have resulted in lower prepayment
expectations on the loans underlying the MSRs, which resulted in a
decrease in the valuation allowance during the three- and
nine-month periods then ended. In contrast, lower market
interest rates in the 2012 periods resulted in higher prepayment
expectations and an increase in the valuation allowance during
those periods. As of September 30,
2013, Bank Mutual had a $77,000 valuation allowance against MSRs with a
book value of $9.0 million. As
of the same date Bank Mutual serviced $1.2
billion in loans for third-party investors compared to
$1.1 billion one year ago.
Gains on sales of loans were $794,000 in the third quarter of 2013 compared to
$3.4 million in the same quarter last
year. Year-to-date, gains on sales of loans were $4.0 million in 2013 compared to $9.9 million in 2012. Bank Mutual typically
sells in the secondary market most of the fixed-rate, one- to
four-family mortgage loans that it originates. During the
three and nine months ended September 30,
2013, sales of these loans were $51.3
million or 53.2% lower and $121.9
million or 34.5% lower than they were during the same
periods in 2012, respectively. Recent increases in market
interest rates have resulted in lower originations and sales of
fixed-rate, one- to four-family loans in the 2013 periods compared
to the same periods in 2012. Also contributing to the
decrease in gains on sales of loans in 2013 was a decline in Bank
Mutual's average gross profit margin on the sales of loans.
Management attributes this decline to the reduced burden that
consumer demand has placed on the loan production capacity of the
mortgage banking industry as a whole, due to a recent increase in
market interest rates, which has caused gross profit margins to
decrease. If these trends continue, management anticipates
that Bank Mutual's gains on sales of loans will continue to decline
in the fourth quarter of 2013 and will be substantially lower in
2014 than they were in 2012 and 2013.
During the year-to-date period in 2012 Bank Mutual recorded
$543,000 in gains on sales of
investments related to the sale of $20.4
million in mortgage-related securities. Bank Mutual
did not sell any securities in 2013.
During the year-to-date period in 2012 Bank Mutual recorded
$336,000 in net other-than-temporary
impairment ("OTTI") losses. These losses consisted of the
credit portion of the total OTTI loss related to Bank Mutual's
investment in certain private-label collateralized mortgage
obligations ("CMOs") rated less than investment grade. Bank
Mutual did not have any net OTTI losses in 2013.
The increases in the cash surrender value of Bank Mutual's life
insurance policies during the three and nine month periods in 2013
were $817,000 and $2.0 million, respectively. These amounts
compared to $528,000 and $1.6 million during the same periods in 2012,
respectively. These increases were caused by higher payouts
associated with excess death benefits in the 2013 periods compared
to the prior year periods.
Other non-interest income was $1.6
million and $4.6 million
during the three and nine month periods in 2013, respectively,
compared to $1.5 million and
$4.5 million during the same periods
in 2012, respectively. Most of the increase in the 2013
periods was caused by fees generated from a debit card cash rewards
program that Bank Mutual introduced to checking account customers
in 2013.
Compensation-related expenses increased by $301,000 or 2.9% and $1.1
million or 3.4% during the three and nine months ended
September 30, 2013, respectively,
compared to the same periods in 2012, respectively. These
increases were due primarily to annual merit increases and
increases in payroll-related taxes. These
developments were partially offset by a modest decline in employee
healthcare costs due to a renegotiation of such costs with the
insurance provider.
Occupancy and equipment expenses increased by $88,000 or 3.1% and $295,000 or 3.4% during the three and nine months
ended September 30, 2013,
respectively, compared to the same periods in the prior year,
respectively. These increases were principally caused by
increases in data processing costs, certain repairs and maintenance
on Bank Mutual's facilities, and for the year-to-date period,
increased snow removal costs earlier in 2013 compared to 2012.
Federal deposit insurance premiums were $438,000 and $1.5
million during the three and nine months ended September 30, 2013, respectively. These
amounts compared to $831,000 and
$2.5 million during the same periods
in 2012, respectively. The decrease in the 2013 periods was
caused by an improvement earlier in the year in Bank Mutual's
financial condition and operating results. Under the Federal
Deposit Insurance Corporation's ("FDIC") risk-based premium
assessment system, these improvements resulted in lower deposit
insurance costs for Bank Mutual in 2013.
Net losses and expenses on foreclosed real estate were
$716,000 and $2.3 million during the three and nine months
ended September 30, 2013,
respectively. These amounts compared to $1.7 million and $5.5
million in the same periods of last year,
respectively. Bank Mutual has experienced lower losses and
expenses on foreclosed real estate in recent periods due to lower
levels of foreclosed properties.
Other non-interest expense increased by $70,000 or 2.8% during the three months ended
September 30, 2013, compared to the
same period in 2012. Year-to-date, this expense decreased by
$330,000 or 4.3% in 2013 compared to
the same period in 2012. The quarterly increase was primarily
the result of increased professional fees related to certain
special projects during the quarter. On a year-to-date
basis, however, professional fees were substantially lower due
primarily to reduced expenditures related to loan workout
efforts.
Income tax expense was $1.5
million and $1.0 million
during the three months ended September 30,
2013 and 2012, respectively, and was $4.2 million and $2.1
million during the nine months ended September 30, 2013 and 2012, respectively.
Bank Mutual's effective tax rates ("ETRs") during the three-month
periods in 2013 and 2012 were 34.1% and 34.8%, respectively.
The ETRs during the nine-month periods in these same years were
34.1% and 32.3%, respectively. Bank Mutual's ETR will vary
from period to period depending primarily on the impact of
non-taxable revenue items, such as tax-exempt interest income and
earnings from bank-owned life insurance ("BOLI"). Bank
Mutual's ETR will generally be higher in periods in which these
non-taxable revenue items comprise a smaller portion of pre-tax
income.
Bank Mutual's total assets decreased by $84.9 million or 3.5% during the nine months
ended September 30, 2013.
During the period Bank Mutual's mortgage-related securities
available-for-sale decreased by $75.4
million due primarily to regular repayments, its cash and
cash equivalents decreased by $28.0
million due principally to seasonal factors, and its loans
held-for-sale decreased by $8.1
million due to a higher interest rate environment.
These developments were partially offset by a $40.3 million increase in Bank Mutual's loan
portfolio. Also during the period, Bank Mutual's deposit
liabilities decreased by $99.1
million and its advance payments by borrowers increased by
$25.7 million, the latter due to
seasonal factors. Bank Mutual's total shareholders' equity
increased from $271.9 million at
December 31, 2012, to $276.2 million at September 30, 2013.
Bank Mutual's loans receivable increased by $40.3 million or 2.9% during the nine months
ended September 30, 2013. Total
loans originated for portfolio were $364.7
million during this period compared to $367.3 million during the same period in
2012. Originations of construction and development
loans, which consist mostly of multi-family projects, were
substantially higher in 2013 than they were in 2012. This
increase was attributable to elevated demand for multi-family
properties caused by a general decline in the level of home
ownership in recent periods. The increase in the origination
of these types of loans was largely offset by declines in
originations of consumer loans and commercial and industrial loans
in 2013 compared to the prior year. Management attributes
these declines to higher interest rates, slower economic growth and
related uncertainties, and increased competition for these types of
loans in its local markets.
Bank Mutual's deposit liabilities decreased by $99.1 million or 5.3% during the nine months
ended September 30, 2013.
Certificates of deposit declined by $148.5
million or 18.3% during the period while core deposits,
consisting of checking, savings and money market accounts,
increased by $49.3 million or 4.7%.
Bank Mutual continues to closely manage the rates it offers
on certificates of deposit to control its overall liquidity
position, which has resulted in a decline in certificates of
deposit in recent periods. Core deposits have increased in
recent periods in response to management's efforts to increase
sales of such products and related services to commercial
businesses, as well as efforts to focus its retail sales efforts on
such products and related services. Also contributing to the
increase in core deposits in recent periods, however, is customer
reaction to the low interest rate environment. Management
believes that this environment has encouraged some customers to
switch to core deposits in an effort to retain flexibility in the
event interest rates rise in the future.
Bank Mutual's shareholders' equity increased from $271.9 million at December
31, 2012, to $276.2 million at
September 30, 2013. This
increase was caused by net income during the period, partially
offset by the payment of cash dividends of $0.07 per share to shareholders during the nine
months ended September 30,
2013. Also impacting shareholders' equity during the period
was a $1.0 million increase in
accumulated other comprehensive loss primarily caused by a decline
in the fair value of Bank Mutual's available-for-sale
securities. This development was the result of a recent
increase in market interest rates which had an adverse impact on
the fair value of Bank Mutual's available-for-sale
securities. The book value of Bank Mutual's common stock was
$5.95 per share at September 30, 2013, compared to $5.87 per share at December 31, 2012.
Bank Mutual's ratio of shareholders' equity to total assets was
11.84% at September 30, 2013,
compared to 11.24% at December 31,
2012. The increase in this ratio was caused by the reasons
noted in the previous paragraph. Also contributing was a
decline in Bank Mutual's total assets during the period, as
previously described. Bank Mutual's subsidiary bank is "well
capitalized" for regulatory capital purposes. As of
June 30, 2013 (the latest information
available), the subsidiary bank had a total risk-based capital
ratio of 18.23% and a Tier 1 capital ratio of 10.69%. The
minimum ratios to be considered "well capitalized" under current
supervisory regulations are 10% for total risk-based capital and 6%
for Tier 1 capital. The minimum ratios to be considered
"adequately capitalized" are 8% and 4%, respectively.
Earlier in 2013 the Board of Governors of the Federal Reserve
("FRB") and the Office of the Comptroller of the Currency ("OCC")
published final regulatory capital rules under Basel III.
These new rules will become effective on January 1, 2015, although certain aspects of the
new rules will phase in over the following four years. At
this time management does not expect these new rules to have a
significant impact on the regulatory capital of Bank Mutual's
subsidiary bank, its financial condition, or its results of
operations, although there can be no assurances. In addition,
the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the "Dodd-Frank Act") will eventually impose specific capital
requirements on savings and loan holding companies such as Bank
Mutual. These developments, as well as other requirements
that could be imposed by regulators, may impact the ability of Bank
Mutual and/or its subsidiary bank to pay dividends or, in the case
of Bank Mutual, repurchase its common stock.
Bank Mutual's non-performing loans were $16.7 million or 1.16% of loans receivable as of
September 30, 2013, compared to
$25.8 million or 1.84% of loans
receivable as of December 31,
2012. Non-performing assets, which includes non-performing
loans, were $26.0 million or 1.12% of
total assets and $39.8 million or
1.64% of total assets as of these same dates,
respectively. Bank Mutual's non-performing assets and
classified loans have declined in recent periods. However,
this trend is subject to many factors that are outside of Bank
Mutual's control, such as economic and market conditions. As
such, there can be no assurances that Bank Mutual's non-performing
assets and classified loans will continue to decline in future
periods or that there will not be significant variability in Bank
Mutual's provision for loan losses from period to period.
Bank Mutual's allowance for loan losses was $22.8 million or 1.58% of total loans at
September 30, 2013, compared to
$21.6 million or 1.54% of total loans
at December 31, 2012. As a
percent of non-performing loans, Bank Mutual's allowance for loan
losses was 136.2% at September 30,
2013, compared to 83.6% at December
31, 2012. Management believes the allowance for loan
losses at September 30, 2013, was
adequate to cover probable and estimable losses in Bank Mutual's
loan portfolio as of that date. However, future increases to
the allowance may be necessary and results of operations could be
adversely affected if future conditions differ from the assumptions
used by management to determine the allowance for loan losses as of
the end of the period.
Bank Mutual Corporation is the third largest financial
institution holding company headquartered in the state of
Wisconsin as of June 30, 2013 (the latest information
available). Its stock is quoted on the NASDAQ Global Select
Market under the ticker BKMU. Its subsidiary bank, Bank
Mutual, operates 75 banking locations in the state of Wisconsin and one in Minnesota.
Cautionary
Statements
This report contains or incorporates by reference various
forward-looking statements concerning Bank Mutual's prospects that
are based on the current expectations and beliefs of
management. Forward-looking statements may contain, and are
intended to be identified by, words such as "anticipate,"
"believe," "estimate," "expect," "objective," "projection,"
"intend," and similar expressions; the use of verbs in the future
tense and discussions of periods after the date on which this
report is issued are also forward-looking statements. The
statements contained herein and such future statements involve or
may involve certain assumptions, risks, and uncertainties, many of
which are beyond Bank Mutual's control, that could cause Bank
Mutual's actual results and performance to differ materially from
what is stated or expected. In addition to the assumptions
and other factors referenced specifically in connection with such
statements, the following factors could impact the business and
financial prospects of Bank Mutual: general economic
conditions, including volatility in credit, lending, and financial
markets; declines in the real estate market, which could further
affect both collateral values and loan activity; continuing
relatively high unemployment and other factors which could affect
borrowers' ability to repay their loans; negative developments
affecting particular borrowers, which could further adversely
impact loan repayments and collection; legislative and regulatory
initiatives and changes, including action taken, or that may be
taken, in response to difficulties in financial markets and/or
which could negatively affect the rights of creditors; monetary and
fiscal policies of the federal government; the effects of further
regulation and consolidation within the financial services
industry, including substantial changes under the Dodd-Frank Act;
regulators' increasing expectations for financial institutions'
capital levels and restrictions imposed on institutions, as to
payments of dividends or otherwise, to maintain or achieve those
levels, including the possible effects of new regulatory capital
requirements under Basel III; pending and/or potential rulemaking
or other actions by the Consumer Financial Protection Bureau
("CFPB"); potential regulatory or other actions affecting Bank
Mutual or its subsidiary bank; potential changes in the Federal
National Mortgage Association ("Fannie Mae") and the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), which could impact the
home mortgage market; increased competition and/or
disintermediation within the financial services industry; changes
in tax rates, deductions and/or policies; potential further changes
in FDIC premiums and other governmental assessments; changes in
deposit flows; changes in the cost of funds; fluctuations in
general market rates of interest and/or yields or rates on
competing loans, investments, and sources of funds; demand for loan
or deposit products; illiquidity of financial markets and other
negative developments affecting particular investment and
mortgage-related securities, which could adversely impact the fair
value of and/or cash flows from such securities; changes in
customers' demand for other financial services; Bank Mutual's
potential inability to carry out business plans or strategies;
changes in accounting policies or guidelines; natural disasters,
acts of terrorism, or developments in the war on terrorism; the
risk of failures in computer or other technology systems or data
maintenance, or breaches of security relating to such systems; and
the factors discussed in Bank Mutual's filings with the Securities
and Exchange Commission, particularly under Part I, Item 1A, "Risk
Factors," of Bank Mutual's 2012 Annual Report on Form 10-K.
Bank Mutual
Corporation and Subsidiaries
|
Unaudited
Consolidated Statements of Financial Condition
(Dollars in
thousands, except per share data)
|
|
|
|
September
30
|
|
December
31
|
|
2013
|
|
2012
|
ASSETS
|
|
|
|
Cash and due
from banks
|
$29,812
|
|
$50,030
|
Interest-earning deposits
|
29,208
|
|
37,029
|
Cash and
cash equivalents
|
59,020
|
|
87,059
|
Mortgage-related securities available-for-sale,
at fair value
|
474,824
|
|
550,185
|
Mortgage-related securities held-to-maturity,
at amortized cost
|
|
|
|
(fair value of $154,243 in
2013 and $163,589 in 2012)
|
156,011
|
|
157,558
|
Loans
held-for-sale
|
2,619
|
|
10,739
|
Loans
receivable (net of allowance for loan losses of
$22,770
|
|
|
|
in 2013 and $21,577 in
2012)
|
1,442,595
|
|
1,402,246
|
Foreclosed
properties and repossessed assets
|
9,306
|
|
13,961
|
Mortgage
servicing rights, net
|
8,889
|
|
6,821
|
Other
assets
|
180,053
|
|
189,695
|
|
|
|
|
Total
assets
|
$2,333,317
|
|
$2,418,264
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Deposit
liabilities
|
$1,768,750
|
|
$1,867,899
|
Borrowings
|
205,199
|
|
210,786
|
Advance
payments by borrowers for taxes and insurance
|
30,624
|
|
4,956
|
Other
liabilities
|
49,656
|
|
59,837
|
Total
liabilities
|
2,054,229
|
|
2,143,478
|
Equity:
|
|
|
|
Preferred stock - $0.01 par value:
|
|
|
|
Authorized - 20,000,000
shares in 2013 and 2012
|
|
|
|
Issued and outstanding -
none in 2013 and 2012
|
-
|
|
-
|
Common
stock - $0.01 par value:
|
|
|
|
Authorized - 200,000,000
shares in 2013 and 2012
|
|
|
|
Issued - 78,783,849 shares
in 2013 and 2012
|
|
|
|
Outstanding - 46,432,284
shares in 2013 and 46,326,484 in 2012
|
788
|
|
788
|
Additional paid-in capital
|
489,152
|
|
489,960
|
Retained
earnings
|
150,083
|
|
145,231
|
Accumulated other comprehensive loss
|
(5,702)
|
|
(4,717)
|
Treasury
stock - 32,351,565 shares in 2013 and 32,457,365 in
2012
|
(358,127)
|
|
(359,409)
|
Total shareholders'
equity
|
276,194
|
|
271,853
|
Non-controlling interest in real estate
partnership
|
2,894
|
|
2,933
|
Total equity including
non-controlling interest
|
279,088
|
|
274,786
|
|
|
|
|
Total liabilities and
equity
|
$2,333,317
|
|
$2,418,264
|
Bank Mutual
Corporation and Subsidiaries
|
Unaudited
Consolidated Statements of Income
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Interest
income:
|
|
|
|
|
|
|
|
Loans
|
$16,132
|
|
$16,514
|
|
$48,314
|
|
$49,142
|
Mortgage-related securities
|
3,597
|
|
4,134
|
|
11,062
|
|
13,228
|
Investment securities
|
9
|
|
30
|
|
32
|
|
130
|
Interest-earning deposits
|
20
|
|
19
|
|
86
|
|
54
|
Total interest
income
|
19,758
|
|
20,697
|
|
59,494
|
|
62,554
|
Interest
expense:
|
|
|
|
|
|
|
|
Deposits
|
1,787
|
|
3,543
|
|
6,725
|
|
11,467
|
Borrowings
|
1,190
|
|
1,554
|
|
3,613
|
|
5,735
|
Advance
payment by borrowers for taxes and insurance
|
-
|
|
1
|
|
1
|
|
2
|
Total interest
expense
|
2,977
|
|
5,098
|
|
10,339
|
|
17,204
|
Net interest
income
|
16,781
|
|
15,599
|
|
49,155
|
|
45,350
|
Provision for
loan losses
|
707
|
|
657
|
|
3,329
|
|
2,438
|
Net interest income
after provision for loan losses
|
16,074
|
|
14,942
|
|
45,826
|
|
42,912
|
Non-interest
income:
|
|
|
|
|
|
|
|
Service
charges on deposits
|
1,780
|
|
1,832
|
|
5,058
|
|
5,055
|
Brokerage and insurance commissions
|
658
|
|
678
|
|
2,328
|
|
2,224
|
Loan-related fees and servicing revenue, net
|
471
|
|
(1,091)
|
|
2,659
|
|
(2,348)
|
Gain on
loan sales activities, net
|
794
|
|
3,412
|
|
4,036
|
|
9,867
|
Gain on
sales of investments, net
|
-
|
|
-
|
|
-
|
|
543
|
Other-than-temporary impairment ("OTTI") losses:
|
|
|
|
|
|
|
|
Total OTTI
losses
|
-
|
|
-
|
|
-
|
|
(909)
|
Non-credit portion of
OTTI losses
|
-
|
|
-
|
|
-
|
|
573
|
Net OTTI
losses
|
-
|
|
-
|
|
-
|
|
(336)
|
Income
from bank-owned life insurance ("BOLI")
|
817
|
|
528
|
|
1,966
|
|
1,578
|
Other
non-interest income
|
1,623
|
|
1,486
|
|
4,595
|
|
4,468
|
Total non-interest
income
|
6,143
|
|
6,845
|
|
20,642
|
|
21,051
|
Non-interest
expense:
|
|
|
|
|
|
|
|
Compensation, payroll taxes, and other employee
benefits
|
10,766
|
|
10,465
|
|
32,827
|
|
31,738
|
Occupancy and equipment
|
2,923
|
|
2,835
|
|
8,862
|
|
8,567
|
Federal
insurance premiums
|
438
|
|
831
|
|
1,481
|
|
2,533
|
Advertising and marketing
|
377
|
|
376
|
|
1,432
|
|
1,446
|
Losses
and expenses on foreclosed real estate, net
|
716
|
|
1,748
|
|
2,291
|
|
5,496
|
Other
non-interest expense
|
2,605
|
|
2,535
|
|
7,339
|
|
7,669
|
Total non-interest
expense
|
17,825
|
|
18,790
|
|
54,232
|
|
57,449
|
Income before income
tax expense
|
4,392
|
|
2,997
|
|
12,236
|
|
6,514
|
Income tax
expense
|
1,497
|
|
1,044
|
|
4,173
|
|
2,107
|
Net income before
non-controlling interest
|
2,895
|
|
1,953
|
|
8,063
|
|
4,407
|
Net loss
attributable to non-controlling interest
|
13
|
|
13
|
|
39
|
|
42
|
Net
income
|
$2,908
|
|
$1,966
|
|
$8,102
|
|
$4,449
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
Earnings
per share-basic
|
$0.06
|
|
$0.04
|
|
$0.17
|
|
$0.10
|
Earnings
per share-diluted
|
$0.06
|
|
$0.04
|
|
$0.17
|
|
$0.10
|
Cash
dividends paid
|
$0.03
|
|
$0.01
|
|
$0.07
|
|
$0.03
|
Bank Mutual
Corporation and Subsidiaries
|
Unaudited
Supplemental Financial Information
|
(Dollars in
thousands, except per share amounts and
ratios)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30
|
|
September
30
|
Loan Originations
and Sales
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Mortgage loans
originated for portfolio:
|
|
|
|
|
|
|
|
|
One- to
four-family
|
|
$25,852
|
|
$19,136
|
|
$71,227
|
|
$70,131
|
Multi-family
|
|
5,075
|
|
21,460
|
|
34,574
|
|
48,425
|
Commercial real estate
|
|
23,415
|
|
10,579
|
|
33,620
|
|
26,951
|
Construction and development
|
|
88,906
|
|
31,911
|
|
133,930
|
|
59,131
|
Total mortgage
loans
|
|
143,248
|
|
83,086
|
|
273,351
|
|
204,638
|
Consumer loan
originations
|
|
20,311
|
|
30,422
|
|
45,966
|
|
87,578
|
Commercial
business loan originations
|
|
22,906
|
|
23,484
|
|
45,350
|
|
75,080
|
Total loans originated
for portfolio
|
|
$186,465
|
|
$136,992
|
|
$364,667
|
|
$367,296
|
|
|
|
|
|
|
|
|
|
Mortgage loans
originated for sale
|
|
$33,941
|
|
$111,366
|
|
$222,684
|
|
$359,514
|
|
|
|
|
|
|
|
|
|
Mortgage loan
sales
|
|
$45,107
|
|
$96,450
|
|
$230,643
|
|
$352,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
|
|
|
|
Loan Portfolio
Analysis
|
|
2013
|
|
2012
|
|
|
|
|
Mortgage
loans:
|
|
|
|
|
|
|
|
|
One- to
four-family
|
|
$443,948
|
|
$465,170
|
|
|
|
|
Multi-family
|
|
256,610
|
|
264,013
|
|
|
|
|
Commercial real estate
|
|
255,106
|
|
263,775
|
|
|
|
|
Construction and development
|
|
232,056
|
|
129,348
|
|
|
|
|
Total mortgage
loans
|
|
1,187,720
|
|
1,122,306
|
|
|
|
|
Consumer
loans
|
|
247,979
|
|
246,913
|
|
|
|
|
Commercial
business loans
|
|
156,838
|
|
132,436
|
|
|
|
|
Total
loans receivable
|
|
1,592,537
|
|
1,501,655
|
|
|
|
|
Allowance for
loan losses
|
|
(22,770)
|
|
(21,577)
|
|
|
|
|
Undisbursed
loan proceeds and deferred fees and costs
|
(127,172)
|
|
(77,832)
|
|
|
|
|
Total
loans receivable, net
|
|
$1,442,595
|
|
$1,402,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans serviced
for others
|
|
$1,159,342
|
|
$1,147,722
|
|
|
|
|
Bank Mutual
Corporation and Subsidiaries
|
Unaudited
Supplemental Financial Information (continued)
|
(Dollars in
thousands, except per share amounts and
ratios)
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
Non-Performing
Loans and Assets
|
|
2013
|
|
2012
|
Non-accrual
mortgage loans:
|
|
|
|
|
One- to
four-family
|
|
$5,031
|
|
$8,192
|
Multi-family
|
|
4,209
|
|
6,824
|
Commercial real
estate
|
|
4,324
|
|
6,994
|
Construction and development
loans
|
|
1,389
|
|
937
|
Total non-accrual mortgage loans
|
|
14,953
|
|
22,947
|
Non-accrual
consumer loans:
|
|
|
|
|
Secured by real
estate
|
|
779
|
|
1,514
|
Other consumer
loans
|
|
61
|
|
59
|
Total non-accrual consumer loans
|
|
840
|
|
1,573
|
Non-accrual
commercial business loans
|
|
296
|
|
693
|
Total non-accrual loans
|
|
16,089
|
|
25,213
|
Accruing loans
delinquent 90 days or more
|
|
626
|
|
584
|
Total non-performing loans
|
|
16,715
|
|
25,797
|
Foreclosed
properties and repossessed assets
|
|
9,306
|
|
13,961
|
Total non-performing assets
|
|
$26,021
|
|
$39,758
|
Non-performing
loans to loans receivable, net
|
|
1.16%
|
|
1.84%
|
Non-performing
assets to total assets
|
|
1.12%
|
|
1.64%
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
Special Mention
and Substandard Loans
|
|
2013
|
|
2012
|
(includes all
non-performing loans, above)
|
|
|
|
|
Mortgage
loans:
|
|
|
|
|
One- to
four-family
|
|
$5,648
|
|
$8,472
|
Multi-family
|
|
11,784
|
|
8,969
|
Commercial real estate
|
|
50,712
|
|
56,842
|
Construction and development
|
|
17,207
|
|
15,446
|
Total mortgage
loans
|
|
85,351
|
|
89,729
|
Consumer
loans
|
|
840
|
|
1,631
|
Commercial
business loans
|
|
6,298
|
|
4,007
|
Total
|
|
$92,489
|
|
$95,367
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended September 30
|
Activity in
Allowance for Loan Losses
|
|
2013
|
|
2012
|
Balance at the
beginning of the period
|
|
$21,577
|
|
$27,928
|
Provision for
loan losses
|
|
3,329
|
|
2,438
|
Charge-offs:
|
|
|
|
|
One- to
four-family
|
|
(934)
|
|
(2,292)
|
Multi-family
|
|
(536)
|
|
(857)
|
Commercial real estate
|
|
(493)
|
|
(4,149)
|
Construction and development loans
|
|
(148)
|
|
(2,545)
|
Consumer
loans
|
|
(1,108)
|
|
(555)
|
Commercial business loans
|
|
(199)
|
|
(48)
|
Total
charge-offs
|
|
(3,418)
|
|
(10,446)
|
Total recoveries
|
|
1,282
|
|
1,059
|
Net
charge-offs
|
|
(2,136)
|
|
(9,387)
|
Balance at the
end of the period
|
|
$22,770
|
|
$20,979
|
Net charge-offs
to average loans, annualized
|
|
0.20%
|
|
0.90%
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
Allowance
Ratios
|
|
2013
|
|
2012
|
Allowance for
loan losses to non-performing loans
|
|
136.22%
|
|
83.64%
|
Allowance for
loan losses to total loans
|
|
1.58%
|
|
1.54%
|
Bank Mutual
Corporation and Subsidiaries
|
Unaudited
Supplemental Financial Information (continued)
|
(Dollars in
thousands, except per share amounts and
ratios)
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
|
|
|
|
Deposit
Liabilities Analysis
|
|
2013
|
|
2012
|
|
|
|
|
Non-interest-bearing checking
|
|
$163,109
|
|
$143,684
|
|
|
|
|
Interest-bearing checking
|
|
229,499
|
|
236,380
|
|
|
|
|
Savings
accounts
|
|
225,479
|
|
217,170
|
|
|
|
|
Money market
accounts
|
|
487,238
|
|
458,762
|
|
|
|
|
Certificates of
deposit
|
|
663,425
|
|
811,903
|
|
|
|
|
Total deposit liabilities
|
|
$1,768,750
|
|
$1,867,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30
|
|
September
30
|
Selected Operating
Ratios
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net interest
margin (1)
|
|
3.17%
|
|
2.71%
|
|
3.06%
|
|
2.61%
|
Net interest
rate spread
|
|
3.08%
|
|
2.60%
|
|
2.98%
|
|
2.51%
|
Return on
average assets
|
|
0.50%
|
|
0.31%
|
|
0.46%
|
|
0.23%
|
Return on
average shareholders' equity
|
|
4.23%
|
|
2.90%
|
|
3.94%
|
|
2.20%
|
Efficiency
ratio (2)
|
|
77.76%
|
|
83.72%
|
|
77.70%
|
|
86.79%
|
Non-interest
expense as a percent of average assets
|
|
3.04%
|
|
2.97%
|
|
3.05%
|
|
3.03%
|
Shareholders'
equity to total assets at end of period
|
|
11.84%
|
|
10.95%
|
|
11.84%
|
|
10.95%
|
|
|
|
|
|
|
|
|
|
(1) Net interest
margin is determined by dividing net interest income by average
earning assets for the periods
indicated.
|
|
|
(2) Efficiency ratio
is determined by dividing non-interest expense by the sum of net
interest income and non-interest income (excluding investment gains
and net OTTI) for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30
|
|
September
30
|
Other
Information
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Average earning
assets
|
|
$2,116,946
|
|
$2,304,518
|
|
$2,138,573
|
|
$2,318,064
|
Average
assets
|
|
2,342,945
|
|
2,529,706
|
|
2,367,940
|
|
2,528,257
|
Average
interest bearing liabilities
|
|
1,841,996
|
|
2,065,010
|
|
1,884,309
|
|
2,101,271
|
Average
shareholders' equity
|
|
274,675
|
|
271,414
|
|
273,955
|
|
269,651
|
Weighted
average number of shares outstanding:
|
|
|
|
|
|
|
|
|
As
used in basic earnings per share
|
|
46,239,354
|
|
46,193,694
|
|
46,226,697
|
|
46,189,775
|
As
used in diluted earnings per share
|
|
46,488,501
|
|
46,222,925
|
|
46,395,880
|
|
46,203,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
December
31
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
Number of
shares outstanding (net of treasury shares)
|
|
46,432,284
|
|
46,326,484
|
|
|
|
|
Book value per
share
|
|
$5.95
|
|
$5.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Net Interest Rate Spread
|
|
September
30
2013
|
|
December
31
2012
|
|
|
|
|
Yield on
loans
|
|
4.33%
|
|
4.56%
|
|
|
|
|
Yield on
investments
|
|
2.34%
|
|
2.36%
|
|
|
|
|
Combined yield
on loans and investments
|
|
3.72%
|
|
3.82%
|
|
|
|
|
Cost of
deposits
|
|
0.37%
|
|
0.63%
|
|
|
|
|
Cost of
borrowings
|
|
2.29%
|
|
2.37%
|
|
|
|
|
Total cost of
funds
|
|
0.57%
|
|
0.81%
|
|
|
|
|
Interest rate
spread
|
|
3.15%
|
|
3.01%
|
|
|
|
|
SOURCE Bank Mutual Corporation