Bank Mutual Corporation Reports First Quarter Earnings.Business Editors MILWAUKEE-(BUSINESS WIRE)--April 24, 2001-Bank Mutual Corporation (Nasdaq: BKMU) completed its first full quarter of operations after its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). to a publicly-held holding company in the fourth quarter of 2000 and reported earnings of $4.8 million, or $0.22 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , for the three months ended March 31, 2001. Cash earnings per share (excludes the amortization of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ) for the first quarter of 2001 were $0.26. Bank Mutual Corporation is the fourth largest financial institution holding company headquartered in the state of Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee . Its two subsidiary banks, Mutual Savings Bank Mutual savings bank A state-chartered savings bank which is owned by its depositors and managed by a fiduciary board of trustees. and First Northern Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , operate 69 offices in the state of Wisconsin and one office in Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces . Comparisons of the quarterly results are substantially affected by the November November: see month. 1, 2000 restructuring in which Mutual Savings Bank converted from the mutual to the stock form of organization, resulting in the creation of Bank Mutual Corporation as a publicly-held holding company. The transactions included Bank Mutuals stock offering and Bank Mutuals related acquisition of First Northern Capital Corp. the holding company for First Northern Savings Bank. The restructuring and First Northern acquisition occurred in the fourth quarter of 2000 and information prior to that time represents the results of only Mutual Savings Bank. The Federal Reserves actions in the first quarter of 2001 resulted in reduced market interest rates, which caused an increase in mortgage loan refinancings from adjustable rate mortgage This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. loans to fixed rate mortgage loans. The increased popularity of fixed rate mortgage loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , and the subsequent sale of these fixed rate mortgage loans, resulted in a modest growth in total assets. Total assets at March 31, 2001 were $2.81 billion as compared to $2.79 billion at December December: see month. 31, 2000. The net interest margin at March 31, 2001 was 2.69% as compared to 2.75% for the fourth quarter of 2000 and 2.78% for the first quarter of 2000. Deposits grew $66.3 million in the first quarter of 2001 to $1.96 billion which management believes is primarily a result of the uncertainties in the stock market which prompted consumers to place their funds in stable, insured accounts Insured account A bank or financial account that is insured for the benefit of the depositor, protecting against loss in the event that the savings institution becomes insolvent. See: FDIC. . The growth in deposits coupled with the sale of fixed rate mortgage loans resulted in Bank Mutual reducing its borrowings to $516.0 million at March 31, 2001 from $567.6 million at the end of 2000. We are pleased with the progress of our operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. in adopting common best practices" standards while enhancing quality customer service and attaining operating efficiencies. We are developing a solid operating foundation that will give us the flexibility to meet shareholder and customer wants and needs in the future said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. T. Crowley Crowley (krou`lē), city (1990 pop. 13,983), seat of Acadia parish, SW La.; inc. 1888. It is a shipping, milling, and storage center for a large rice-growing area and has a rice experiment station. Oil and natural gas wells are located nearby. , Jr., Chairman and Chief Executive Officer of Bank Mutual Corporation. In addition, we were very pleased to announce and pay our first cash dividend in the first quarter of 2001. We paid a $.07 per share cash dividend on March 5, 2001 to shareholders of record on February February: see month. 21, 2001. Bank Mutuals asset quality continues to be very good. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. to total loans at March 31, 2001 were 0.16% and non-performing assets to total assets were 0.19%. Both of these ratios are indications of the economic strength within the state of Wisconsin as compared to other parts of the country, and the underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards used by the operating subsidiaries. Book value per share was $13.12 and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per share was $10.48 at March 31, 2001. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on average equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) for the first quarter of 2001 was 6.65% and the annualized ROE excluding amortization of goodwill and other intangible assets for the same period was 9.90%. The annualized return on average assets (ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). ) for the first quarter of 2001 was .69% and the annualized ROA excluding amortization of goodwill and other intangible assets for the same period was .83%. Further information regarding Bank Mutuals assets, liabilities and operations is attached. Outlook (The following are forward looking statement; see "Cautionary Statements" below.) Bank Mutuals management has identified a number of factors which may affect the companys operations and results in 2001. They are as follows: -- Mutual Savings Bank and First Northern Savings Bank will continue to operate as separate operating subsidiaries and, therefore, we do not expect significant cost savings from combined operations during 2001. Expense growth is expected to reflect general economic conditions. -- 2001 may provide a continuing environment of declining interest rates. If that is the case, there are a number of effects that Bank Mutual, like other financial institutions, could experience. -- The decrease in the mortgage loan portfolio could continue, as fixed rate mortgage loans become more attractive to consumers. Bank Mutual sells most of its fixed rate mortgage loans to the secondary market. -- If mortgage loan refinancings continue as they have in the first quarter of 2001, fee income could increase. -- Bank Mutual may further emphasize consumer loans, and commercial real estate and business loans, which can present higher risks than residential mortgages. -- Deposit growth may or may not continue, depending upon the uncertainties of the stock market. -- If deposit growth continues along with the continued sale of fixed rate mortgage loans, borrowings could be reduced. [pilcrow (paragraph sign)] -- The first quarter of 2001 includes compensation expense relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Employee Stock Ownership Plan established by Bank Mutual in its restructuring. However, Bank Mutual has not incurred any expenses relating to the proposed stock incentive plan since it has not been approved by the shareholders. Cautionary Statements The discussions in this news release which are not historical statements contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risk and uncertainties. Statements which are not historical statements, include those under Outlook" and those in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future or which use terms such as believe, expect," and anticipate." Bank Mutuals actual future results could differ in important and material ways from those discussed. Many factors could cause or contribute to such differences. These factors include changing interest rates, changes in demand for loans or other services, competition from other institutions, the results of our lending activities and loan loss experience, the need to continue to integrate our operations, general economic developments, and other factors discussed in our filings with the Securities and Exchange Commission.
Bank Mutual Corporation and Subsidiaries
Unaudited Consolidated Statements of Financial Condition
March 31, December 31,
2001 2000
(In Thousands)
Assets
Cash and due from banks $ 36,101 $ 30,625
Federal funds sold 26,670 20,000
Interest-earning deposits 58,207 15,097
------ ------
Cash and cash equivalents 120,978 65,722
Securities available-for-sale,
at fair value:
Investment securities 107,680 94,129
Mortgage-related securities 460,118 464,873
Loans held for sale 26,840 7,469
Loans receivable, net 1,915,458 1,972,636
Goodwill 54,893 55,967
Other intangible assets 6,892 7,057
Other assets 118,416 121,679
------- -------
$ 2,811,275 $ 2,789,532
========= =========
Liabilities and Shareholders'
Equity Liabilities:
Deposits $ 1,961,075 $ 1,894,820
Borrowings 515,957 567,624
Advance payments by borrowers
for taxes and insurance 12,719 4,312
Other liabilities 28,458 38,379
------ ------
2,518,209 2,505,135
Shareholders' equity:
Preferred stock - $.01 par value:
Authorized - 10,000,000 shares in
2001 and 2000
Issued and outstanding -
none in 2001 and 2000 - -
Common stock - $.01 per value:
Authorized - 100,000,000 shares
in 2001 and 2000
Issued and outstanding -
22,341,665 shares in 2001 and 2000 223 223
Additional paid-in capital 108,151 108,151
Retained earnings 188,374 184,351
Unearned ESOP shares (9,000) (8,971)
Accumulated other comprehensive
income (loss) 5,318 643
----- ---
293,066 284,397
------- -------
$ 2,811,275 $ 2,789,532
========= =========
Bank Mutual Corporation and Subsidiaries
Unaudited Consolidated Statements of Income
Three months ended March 31,
2001 2000
---------- ----------
(In Thousands)
Interest income:
Loans $ 38,707 $ 20,341
Investments 2,128 1,109
Mortgage-related securities 7,772 7,699
Interest-earning deposits 687 683
---------- ----------
Total interest income 49,294 29,832
Interest expense:
Deposits 22,973 14,778
Borrowings 8,631 3,375
Advance payment by
borrowers for taxes
and insurance 36 26
---------- ----------
Total interest expense 31,640 18,179
---------- ----------
Net interest income 17,654 11,653
Provision for loan losses 101 76
---------- ----------
Net interest income after
provision for loan losses 17,553 11,577
Noninterest income:
Service charges on deposits 1,021 577
Brokerage and insurance
commissions 522 492
Loan related fees 355 271
Gain on sales of loans 399 8
Gain (loss) on sales of
securities - 18
Other 1,052 524
---------- ----------
Total noninterest income 3,349 1,890
Noninterest expenses:
Compensation, payroll taxes
and other employee benefits 6,780 4,508
Occupancy and equipment 2,700 1,743
Amortization of goodwill 775 168
Amortization of other
intangible assets 165 66
Other 2,772 2,081
---------- ----------
Total noninterest expenses 13,192 8,566
---------- ----------
Income before income taxes 7,710 4,901
Income taxes 2,907 1,855
---------- ----------
Net income $ 4,803 $ 3,046
========== ==========
Per share data:
Earnings per share-basic
and diluted $ 0.22 N/A
==========
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued common stock to the
public and purchased First Northern Capital Corp. Information
prior to that date is that of Mutual Savings Bank. The First
Northern acquisition was accounted for by using the purchase
accounting method.
Bank Mutual Corporation and Subsidiaries
Supplemental Financial Information (Unaudited)
Three months ended March 31,
2001 2000
-------------- -------------
(Dollars in thousands except
per share amounts and ratios)
Originations
Mortgage loans $ 97,158 $ 26,696
Consumer loans 48,790 30,032
Commercial business loans 4,005 2,218
------------- -------------
Total loan originations 149,953 58,946
Purchases
Mortgage loans - 15,425
------------- -------------
Total loan purchases - 15,425
Total loans originated and purchased $ 149,953 $ 74,371
============ ===========
Loan Sales $ 38,264 $ 1,138
============= ============
Loan Portfolio Analysis
March 31, December 31,
2001 2000
-------------- --------------
Mortgage loans:
One-to-four family $ 1,159,481 $ 1,207,912
Multi-family 106,646 105,925
Commercial real estate 119,042 118,636
Construction and development 90,947 94,235
-------------- -------------
Total mortgage loans 1,476,116 1,526,708
Consumer loans 433,366 441,366
Commercial & industrial loans 59,764 59,844
-------------- -------------
Total loans receivable 1,969,246 2,027,918
Deductions to gross loans 53,788 55,282
-------------- -------------
Total loans receivable, net $ 1,915,458 $ 1,972,636
============= =============
Asset Quality Ratios
March 31, December 31,
2001 2000
------------- -------------
Non-performing mortgage loans $ 987 $ 730
Non-performing consumer loans 463 383
Non-performing commercial and
industrial loans 699 750
Accruing loans delinquent
90 days or more 896 1,258
------------- -------------
Total non-performing loans $ 3,045 $ 3,121
Total non-performing assets $ 5,388 $ 5,402
============= ============
Non-performing loans to total loans 0.16% 0.16%
Non-performing assets to total assets 0.19% 0.19%
Allowance for loan losses to
non-performing loans 403.45% 392.12%
Allowance for loan losses to
non-performing assets 228.01% 226.55%
Allowance for loan losses
to total loans 0.64% 0.62%
Net charge-offs $ (54) $ (161)
Net charge-offs to average loans 0.00% 0.01%
Allowances for loan losses $ 12,285 $ 12,238
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued common stock to the
public and purchased First Northern Capital Corp. Information
prior to that date is that of Mutual Savings Bank. The First
Northern acquisition was accounted for by using the purchase
accounting method.
Bank Mutual Corporation and Subsidiaries
Supplemental Financial Information (Unaudited)
(Dollars in thousands except per share amounts and ratios)
Operating Ratios (annualized) Three months ended March 31,
----------------------------- 2001 2000
----------- -----------
Net interest margin 2.69% 2.78%
Return on average assets 0.69% 0.70%
Return on average assets, excluding goodwill
and other intangible assets 0.83% 0.75%
Return on average shareholders' equity 6.65% 7.48%
Return on average shareholders' equity
excluding goodwill and other intangible
assets 9.90% 8.52%
Efficiency ratio, excluding amortization of
goodwill and other intangible assets 58.62% 61.87%
Noninterest expense (excluding amortization
of goodwill and other intangible assets) as a
percent of average assets 1.75% 1.91%
Other Information Three months ended March 31,
----------------- 2001 2000
----------- -----------
Average earning assets $ 2,628,967 $ 1,676,720
Average assets $ 2,796,914 $ 1,742,530
Average interest bearing liabilities $ 2,332,128 $ 1,516,776
Average shareholders' equity $ 288,871 $ 162,903
Average shareholders' equity excluding
goodwill and other intangible assets $ 229,303 $ 152,778
Weighted average number of shares
outstanding net of unissued ESOP shares 21,450,050 N/A
Average balance of goodwill and other
intangible assets less applicable
deferred taxes $ 59,568 $ 10,124
Amortization of goodwill and other
intangible assets less applicable deferred
taxes for the period $ 873 $ 207
March 31, December 31,
2001 2000
----------- -----------
Number of shares outstanding 22,341,665 22,341,665
Goodwill and other intangible assets less
applicable deferred taxes $ 59,021 $ 60,198
Book value per share $ 13.12 $ 12.73
Tangible book value per share $ 10.48 $ 10.04
March 31, December 31,
2001 2000
----------- -----------
Yield on loans 7.66% 7.70%
Yield on all investments 6.44% 6.81%
Combined yield on loans and all investments 7.35% 7.48%
Cost of deposits 4.91% 4.96%
Cost of borrowings 5.99% 6.27%
Total cost of funds 5.13% 5.26%
Interest rate spread 2.22% 2.22%
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued common stock to the
public and purchased First Northern Capital Corp. Information
prior to that date is that of Mutual Savings Bank. The First
Northern acquisition was accounted for by using the purchase
accounting method.
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