Bank Mutual Corporation Reports Fourth Quarter and Year-End Earnings.Business Editors MILWAUKEE--(BUSINESS WIRE)--Jan. 30, 2001 Bank Mutual Corporation (Nasdaq:BKMU) reported earnings of $4.8 million for the quarter and $14.7 million for the fiscal year ended December December: see month. 31, 2000. As of December 31, 2000, Bank Mutual's assets totaled $2.8 billion. Book value per share at December 31, 2000, was $12.73 based on shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $284 million. 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 $10.03. 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. ) was 7.70% for the quarter and 7.86% for the year. ROE excluding 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. was 10.60% for the quarter and 9.47% for the year. Further information regarding Bank Mutual's assets, liabilities and operations is attached. On November November: see month. 1, 2000, 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. converted from the mutual to the stock form of organization, completing a 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). that resulted in the creation of Bank Mutual Corporation as its publicly-held holding company. The transactions included Bank Mutual's stock offering and Bank Mutual's related acquisition of First Northern Capital Corp., the holding company for 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. . Bank Mutual is 50.1% owned by Mutual Savings Bancorp, MHC MHC major histocompatibility complex. MHC abbr. major histocompatibility complex MHC major histocompatibility complex. , a mutual holding company whose members are the depositors of Mutual Savings Bank. The remaining 49.9% of Bank Mutual's shares are publicly held. Comparisons of both quarterly and full-year 2000 and 1999 results are substantially affected by developments in the fourth quarter of each fiscal year. As indicated above, the Bank Mutual restructuring occurred in the fourth quarter of 2000, and information prior to that time represents the results of only Mutual Savings. Under the purchase accounting method, First Northern's results are included from its November 1, 2000 acquisition by Bank Mutual. In addition, the 1999 fiscal year and fourth quarter results reflect a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. by Mutual Savings of $15.6 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) of impaired See assistive technology. intangible assets which resulted from a prior acquisition. These factors should be considered when comparing the 2000 and 1999 information which is attached, or analyzing the outlook for 2001. 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 were $0.15 for the 2 months ended December 31, 2000. Because of the timing and structure of the November, 2000 transactions, earnings per share information may not be representative or meaningful. See "Outlook" below. "During 2001 we look forward to completing our first full calendar year in operation as the holding company for Mutual Savings Bank and First Northern Savings Bank. By affiliating two financial institutions with complementary business focuses and significant statewide coverage, we will work to leverage our combined strengths while maintaining a community orientation orientation, in architecture, the disposition of the parts of a building with reference to the points of the compass. From remote antiquity the traditional belief in the efficacy of religious ceremonials performed at dawn toward the rising sun has influenced the and quality customer service," 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. "Both of our operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon are adopting common "best practices" standards with an aim of enhancing uninterrupted customer service. Although this business combination was not predicated on achieving substantial cost savings, we are seeking to attain greater operating efficiencies over time," Crowley added. * * * Outlook Bank Mutual management has identified a number of factors which differ between 2001 and 2000. They may affect the company's operations and results in 2001, and make it difficult to use 2000 results as a basis for the 2001 outlook. - The operations of First Northern Savings Bank will be included in Bank Mutual's reported income for the entire 2001 fiscal year, unlike 2000 when they were included for only two months. - Because First Northern will continue to operate as a separate institution, we also do not expect significant cost savings from combined operations during 2001. Expense growth is expected to otherwise reflect general economic conditions. - Also, Bank Mutual will experience charges to earnings from the amortization of the goodwill and other intangible assets resulting from the First Northern acquisition for the full year rather than two months. During fiscal year 2001 that annual amortization will be approximately $2.8 million. - It appears that 2001 may provide an 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. - Growth in the residential mortgage loan portfolio could decrease, as lower interest rates have historically made fixed-rate mortgage loans, which Bank Mutual sells in the secondary market, more attractive to consumers. - Mortgage refinancings could increase, which may result in higher related fee income. - Bank Mutual may respond to a decline in the mortgage loan portfolio by further emphasizing consumer loans, and commercial real estate and business loans, which can present higher risks than residential mortgages. - Deposit growth tends to be modest in a lowering interest rate environment, if growth is experienced at all. - Bank Mutual had a relatively low level of non-performing loans at the end of 2000. Non-performing loans totaled $3.1 million, or 0.16% of total loans. Assuming that the quality of the portfolio remains stable, Bank Mutual would not anticipate targeting a higher allowance for loan losses. However, if there are declines in the economy in general, increasing levels of non-performing loans in Bank Mutual's portfolio or other changes, Bank Mutual would need to consider those factors in future decisions regarding the allowance. - In connection with the restructuring, Bank Mutual established an employee stock ownership plan, and expects to present a stock incentive plan for shareholder approval at the 2001 annual meeting. Bank Mutual will therefore have compensation expense under the new plans in 2001 that it did not have in 2000. The employee stock ownership plan purchased 888,910 shares in 2000, although the purchase itself did not have an income statement effect on Bank Mutual. Bank Mutual will ultimately need to repurchase shares for future issuance under the stock incentive plan, although Office of Thrift Supervision regulations restrict the amount and timing of those repurchases. Bank Mutual Corporation is the fifth 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 and First Northern Savings Bank, 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 . 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 risks 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 Mutual's 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
Consolidated Statements of Financial Condition
(In thousands)
December 31
----------------------
2000 1999
----------------------
Assets
Cash and due from banks $ 30,625 $ 21,367
Federal funds sold 20,000 25,000
Interest-earning deposits 15,097 132,592
----------- -----------
Cash and cash equivalents 65,722 178,959
Securities available-for-sale, at fair value
Investment securities 94,129 57,763
Mortgage-related securities 464,873 374,100
Loans held for sale 7,469 541
Loans receivable, net 1,972,636 1,082,795
Foreclosed properties & repossessed assets 2,281 3,018
Premises and equipment 43,846 26,871
Federal Home Loan Bank stock, at cost 28,926 13,537
Accrued interest receivable 15,835 8,620
Goodwill 55,967 8,254
Other intangible assets 7,057 3,242
Life insurance policies 14,590 -
Other assets 16,201 11,806
------------ ------------
$ 2,789,532 $ 1,769,506
============ ============
Liabilities and Equity
Liabilities:
Deposits $ 1,894,820 $ 1,343,007
Borrowings 567,624 242,699
Advance payments by borrowers for
taxes and insurance 4,312 1,661
Other liabilities 38,379 18,319
------------ ------------
2,505,135 1,605,686
Shareholders' equity
Preferred stock - $.01 par value;
Authorized - 10,000,000 shares in 2000
Issued and outstanding - none in 2000 - -
Common stock - $.01 par value;
Authorized-100,000,000 shares in 2000
Issued and outstanding -
22,341,665 shares in 2000 223 -
Additional paid-in capital 108,139 -
Retained earnings 184,351 169,746
Unearned ESOP shares (8,959) -
Accumulated other comprehensive income (loss) 643 (5,926)
------------ ------------
284,397 163,820
------------ ------------
$ 2,789,532 $ 1,769,506
============ ============
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued public shares
and purchased First Northern Capital Corp. Information
prior to that date is that of Mutual Savings. The First
Northern acquisition was accounted for by using the
purchase accounting method.
Bank Mutual Corporation and Subsidiaries
Consolidated Statements of Income
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
Interest income:
Loans, including fees $ 33,397 $ 20,045 $ 96,511 $ 79,623
Investments 1,916 1,112 5,412 4,518
Mortgage-related securities 7,904 5,300 31,725 18,479
Interest-earning deposits 800 3,410 2,063 15,682
-------- -------- -------- --------
Total interest income 44,017 29,867 135,711 118,302
Interest expense:
Deposits 20,585 14,985 65,787 61,091
Borrowings 7,521 3,295 18,861 13,933
Advance payment by borrowers
for taxes and insurance 140 104 332 313
-------- -------- -------- --------
Total interest expense 28,246 18,384 84,980 75,337
Net interest income 15,771 11,483 50,731 42,965
Provision for loan losses 147 115 423 350
-------- -------- -------- --------
Net interest income after
provision for loan losses 15,624 11,368 50,308 42,615
Noninterest income:
Service charges on deposits 956 683 2,855 2,552
Brokerage commissions 375 410 1,540 1,447
Insurance commissions 130 92 397 379
Servicing fees on loans sold 96 108 401 447
Loan fees and service charges 156 134 553 670
Gain (loss) on sales of loans 149 (10) 301 497
Gain on sales of securities - 458 - 158
Other 1,100 453 3,203 1,834
-------- -------- -------- --------
Total noninterest income 2,962 2,328 9,250 7,984
Noninterest expenses:
Compensation, payroll taxes
and other employee benefits 5,879 4,254 19,186 17,158
Occupancy 1,122 822 3,779 3,561
Federal deposit insurance
premiums 85 205 295 820
Marketing 109 316 1,990 1,864
Data processing 566 371 1,682 1,329
Furniture and equipment 536 513 1,747 1,989
Amortization of goodwill 561 11,617 1,066 12,908
Amortization of other
intangible assets 132 4,140 331 5,382
Other 1,922 1,826 6,068 6,268
-------- -------- -------- --------
Total noninterest expenses 10,912 24,064 36,144 51,279
-------- -------- -------- --------
Income (loss) before
income taxes 7,674 (10,368) 23,414 (680)
Income taxes (benefit) 2,897 (91) 8,709 3,803
-------- -------- -------- --------
Net income (loss) $ 4,777 $(10,277) $ 14,705 $ (4,483)
======== ======== ======== ========
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued public shares and
purchased First Northern Capital Corp. Information prior to that
date is that of Mutual Savings. The First Northern acquisition was
accounted for by using the purchase accounting method.
Bank Mutual Corporation and Subsidiaries
Suplemental Financial Information (Unaudited)
(Dollars in thousands except per share amounts and ratios)
Loan Originations Three months ended Twelve months ended
and Purchases December 31, December 31,
----------------------------------------------------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
Total real estate loans $ 58,715 $ 27,937 $ 208,919 $ 228,014
Total consumer loans 40,654 26,751 141,943 116,549
Total commercial &
industrial loans 7,521 9,129 23,189 30,288
----------- ---------- ----------- ----------
Total loan originations $ 106,890 $ 63,817 $ 374,051 $ 374,851
=========== ========== =========== ==========
Loan Sales $ 17,305 $ 2,355 $ 32,317 $ 56,861
Loan Portfolio Analysis
At December 31,
------------------------------------------
2000 1999
------------------- ------------------
Mortgage loans:
One to four family $ 1,207,912 $ 743,993
Multi-family real
estate loans 105,925 53,777
Commercial real estate
loans 118,636 52,375
Construction real
estate loans 94,235 26,530
------------------- ------------------
Total real estate
loans 1,526,708 876,675
Consumer loans 441,366 188,252
Commercial & industrial
loans 59,844 39,488
------------------- ------------------
Total loans
receivable 2,027,918 1,104,415
Deductions to gross
loans 55,282 21,620
------------------- ------------------
Total loans receivable,
net $ 1,972,636 $ 1,082,795
=================== ==================
Asset Quality Ratios
Non-performing real
estate loans $ 1,047 $ 3,838
Non-performing consumer
loans 1,324 969
Non-performing
commercial &
industrial loans 750 -
------------------- ------------------
Total non-performing
loans $ 3,121 $ 4,807
Total non-performing
assets $ 5,402 $ 7,825
Non-performing loans to
loans receivable, net 0.16% 0.44%
Non-performing assets
to total assets 0.19% 0.44%
Allowance for loan
losses to
non--performing loans 392.12% 144.54%
Allowance for loan
losses to
non-performing assets 226.55% 88.79%
Allowance for loan
losses to total loans 0.62% 0.64%
Net charge-offs $ 161 $ 257
Net charge-offs to
average loans 0.01% 0.02%
Loan loss allowance $ 12,238 $ 6,948
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued public shares and
purchased First Northern Capital Corp. Information prior to that
date is that of Mutual Savings. The First Northern acquisition
was accounted for by using the purchase accounting method.
Bank Mutual Corporation and Subsidiaries
Suplemental Financial Information (Unaudited)
(Dollars in thousands except per share amounts and ratios)
Operating Ratios Three months Twelve months
---------------- ended December 31, ended December 31,
------------------------ -------------------
2000 1999 2000 1999
---------- --------- --------- --------
Net interest margin 2.75% 2.65% 2.76% 2.44%
Return on average assets 0.78% -2.29% 0.76% -0.24%
Return on average assets,
excluding goodwill and
other intangible assets 0.90% 0.87% 0.84% 0.64%
Return on average
shareholders' equity 7.70% -23.60% 7.86% -2.55%
Return on average
shareholders' equity
excluding goodwill and
other intangible assets 10.60% 10.14% 9.47% 7.71%
Efficiency ratio,
excluding amortization of
goodwill and other
intangible assets 54.98% 60.65% 58.34% 65.20%
Non -interest expense
(excluding amortization
of goodwill and other
intangible assets) as a
percent of average assets 1.69% 1.87% 1.82% 1.82%
Other Information
-----------------
Average earning
assets $ 2,290,743 $ 1,734,621 $ 1,837,863 $ 1,757,507
Average assets $ 2,457,527 $ 1,797,430 $ 1,929,264 $ 1,837,876
Average interest
bearing liabilities $ 2,068,438 $ 1,571,077 $ 1,660,618 $ 1,604,616
Average
shareholders'
equity $ 248,013 $ 174,166 $ 186,981 $ 175,760
Average shareholders'
equity excluding
goodwill and other
intangible assets $ 205,533 $ 152,188 $ 168,909 $ 151,173
Weighted average number
of shares outstanding -
net of unissued
ESOP shares 21,570,803
Average balance of goodwill
and other intangible
assets less applicable
deferred taxes $ 42,480 $ 21,978 $ 18,072 $ 24,587
Amortization of goodwill
and other intangible
assets less applicable
deferred taxes
for the period $ 670 $ 14,134 $ 1,294 $ 16,137
At December 31,
------------------------
2000 1999
---------- ----------
Number of shares
outstanding 22,341,665 N/A
Goodwill and other
intangible assets
less applicable
deferred taxes $ 60,198 $ 10,196
Book value per share $ 12.73 N/A
Tangible book value
per share $ 10.03 N/A
One-year cumulative
Gap/Total Assets -14.9% -5.1%
at December 31,
Weighted Average
------------------------
2000 1999
----------- ---------
Yield on loans 7.70% 7.38%
Yield on all investments 6.81% 6.20%
Combined yield on loans
and all investments 7.48% 6.86%
Cost of deposits 4.96% 4.44%
Cost of borrowings 6.27% 5.58%
Total cost of funds 5.26% 4.63%
Interest rate spread 2.22% 2.24%
Note: Mutual Savings Bank established Bank Mutual Corporation on
November 1, 2000 and simultaneously issued public shares and
purchased First Northern Capital Corp. Information prior to that
date is that of Mutual Savings. The First Northern acquisition was
accounted for by using the purchase accounting method.
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