Bank Mutual Corp. (BKMU, Financial) filed Quarterly Report for the period ended 2012-06-30.
Bank Mutual Corporation has a market cap of $194.6 million; its shares were traded at around $4.21 with a P/E ratio of 35 and P/S ratio of 1.7. The dividend yield of Bank Mutual Corporation stocks is 1%.
Net Interest Income Net interest income decreased by $1.3 million or 7.8% and by $2.2 million or $6.8% during the three and six months ended June 30, 2012, compared to the same periods in 2011. These decreases were primarily attributable to a decline in the Company’s net interest margin, which was 2.47% and 2.56% during the three- and six-month periods of 2012, respectively, compared to 2.82% in each of the 2011 periods. These declines were primarily the result of a lower interest rate environment during the first six months of 2012 compared to the same period in 2011, which reduced the return on the Company’s earning assets more than the cost of its funding sources. This development was partially offset by the favorable impact of higher earning assets in the 2012 periods compared to the same periods of 2011. During first six months of 2012 the Company completed the purchase of $158.9 million in mortgage-related securities that were funded by $158.9 million in term advances from the FHLB of Chicago. These investments consisted of mortgage-backed securities issued and guaranteed by Fannie Mae and secured by multi-family residential loans. The securities have a weighted-average life of 7.7 years, a yield of 2.31%, and yield-maintenance fees that discourage the underlying borrowers from prepaying the loans. The term advances from the FHLB of Chicago have a weighted-average life of 5.5 years and cost of 1.47%. The purpose of this transaction was to supplement growth in the Company’s earning assets. The Company classified these securities as held-to-maturity because it has the ability and intent to hold them until they mature.
Overview The Company’s total assets increased by $136.5 million or 5.5% during the six months ended June 30, 2012. During the period the Company’s held-to-maturity securities increased by $158.6 million, its interest-earning deposits, which consist principally of overnight investments, increased by $102.8 million, and its loan portfolio increased by $28.9 million. These developments were partially offset by a $94.2 million decrease in the Company’s available-for-sale securities and a $21.7 million decrease in its investment in the common stock of the FHLB of Chicago. Also during the period, the Company’s borrowings from the FHLB of Chicago increased by $158.3 million and its deposit liabilities decreased by $38.5 million. The Company’s total shareholders’ equity increased from $265.8 million at December 31, 2011, to $269.5 million at June 30, 2012. Non-performing assets decreased from $99.9 million or 4.00% of total assets at December 31, 2011, to $66.9 million or 2.54% at June 30, 2012. The following paragraphs describe these changes in greater detail, as well as other changes in the Company’s financial condition during the six months ended June 30, 2012.
Loans Receivable Loans receivable increased by $28.9 million or 2.2% during the six months ended June 30, 2012. Total loans originated for portfolio increased by $76.1 million or 49.4% during the first six months of 2012 compared to the same period in 2011. A portion of this improvement came from increased originations of commercial business loans, which increased by $22.6 million or 77.9% during the first six months of 2012 compared to the same period in 2011. Management attributes this increase to recent efforts to improve the Company’s share of the mid-tier commercial banking market (defined as business entities with sales revenues of $5 to $100 million), which was a new market segment for the Company in 2011. In the past year-and-a-half the Company has added experienced leaders to its senior management team and hired a number of commercial relationship managers and support personnel experienced in managing and selling financial services to the mid-tier commercial banking market. In the near term the Company expects to add additional professionals capable of serving this market segment, although there can be no assurances as to the extent or timing of such staff additions or the impact on operating results.
Although the Company’s non-performing loans have declined in recent periods, such loans remain elevated due to weak economic conditions and high unemployment. These developments have strained the financial condition of many borrowers and have resulted in elevated levels of loan delinquencies. As a result, many properties securing the Company’s loans have experienced increased vacancy rates, reduced lease rates, and/or delays in unit sales, as well as lower real estate values. The Company’s non-performing loans were $50.4 million or 3.74% of loans receivable as of June 30, 2012, compared to $75.1 million or 5.69% of loans receivable as of December 31, 2011. Non-performing assets, which includes non-performing loans, were $66.9 million or 2.54% of total assets and $99.9 million or 4.00% of total assets as of these same dates, respectively. The decline in non-performing loans during the six months ended June 30, 2012, was primarily attributable to five loans that aggregated $12.6 million that were paid off, one loan for $2.5 million that was returned to performing status due to the improved condition of the borrower, and two loans that aggregated $2.2 million that were transferred to foreclosed real estate. All of these loans were secured by commercial and multi-family real estate. In addition, non-performing one- to four-family loans declined by $3.4 million or 22.8% and non-performing commercial business loans declined by $407,000 or 24.8% during the six months ended June 30, 2012. In addition, foreclosed properties and repossessed assets, which is a component of non-performing assets, declined by $8.3 million or 33.4% during the six months ended June 30, 2012, for reasons previously described.
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Bank Mutual Corporation has a market cap of $194.6 million; its shares were traded at around $4.21 with a P/E ratio of 35 and P/S ratio of 1.7. The dividend yield of Bank Mutual Corporation stocks is 1%.
Highlight of Business Operations:
Overview The Company’s net income was $1.3 million or $0.03 per diluted share and $2.5 million or $0.05 per diluted share for the three- and six-month periods ended June 30, 2012, respectively. These amounts compared to net losses of $51.4 million or $1.12 per diluted share and $50.3 million or $1.10 per diluted share in the same periods of 2011, respectively. The losses in the 2011 periods were caused by a $52.6 million non-cash goodwill impairment in the second quarter of that year. Excluding this impairment, the Company’s earnings during the three- and six-month periods in 2011 were $1.2 million or $0.03 per diluted share and $2.2 million or $0.05 per diluted share, respectively. The following paragraphs describe the reasons for the changes in the Company’s earnings during the three- and six-month periods ended June 30, 2012 and 2011, along with other matters affecting the Company’s operations.Net Interest Income Net interest income decreased by $1.3 million or 7.8% and by $2.2 million or $6.8% during the three and six months ended June 30, 2012, compared to the same periods in 2011. These decreases were primarily attributable to a decline in the Company’s net interest margin, which was 2.47% and 2.56% during the three- and six-month periods of 2012, respectively, compared to 2.82% in each of the 2011 periods. These declines were primarily the result of a lower interest rate environment during the first six months of 2012 compared to the same period in 2011, which reduced the return on the Company’s earning assets more than the cost of its funding sources. This development was partially offset by the favorable impact of higher earning assets in the 2012 periods compared to the same periods of 2011. During first six months of 2012 the Company completed the purchase of $158.9 million in mortgage-related securities that were funded by $158.9 million in term advances from the FHLB of Chicago. These investments consisted of mortgage-backed securities issued and guaranteed by Fannie Mae and secured by multi-family residential loans. The securities have a weighted-average life of 7.7 years, a yield of 2.31%, and yield-maintenance fees that discourage the underlying borrowers from prepaying the loans. The term advances from the FHLB of Chicago have a weighted-average life of 5.5 years and cost of 1.47%. The purpose of this transaction was to supplement growth in the Company’s earning assets. The Company classified these securities as held-to-maturity because it has the ability and intent to hold them until they mature.
Overview The Company’s total assets increased by $136.5 million or 5.5% during the six months ended June 30, 2012. During the period the Company’s held-to-maturity securities increased by $158.6 million, its interest-earning deposits, which consist principally of overnight investments, increased by $102.8 million, and its loan portfolio increased by $28.9 million. These developments were partially offset by a $94.2 million decrease in the Company’s available-for-sale securities and a $21.7 million decrease in its investment in the common stock of the FHLB of Chicago. Also during the period, the Company’s borrowings from the FHLB of Chicago increased by $158.3 million and its deposit liabilities decreased by $38.5 million. The Company’s total shareholders’ equity increased from $265.8 million at December 31, 2011, to $269.5 million at June 30, 2012. Non-performing assets decreased from $99.9 million or 4.00% of total assets at December 31, 2011, to $66.9 million or 2.54% at June 30, 2012. The following paragraphs describe these changes in greater detail, as well as other changes in the Company’s financial condition during the six months ended June 30, 2012.
Loans Receivable Loans receivable increased by $28.9 million or 2.2% during the six months ended June 30, 2012. Total loans originated for portfolio increased by $76.1 million or 49.4% during the first six months of 2012 compared to the same period in 2011. A portion of this improvement came from increased originations of commercial business loans, which increased by $22.6 million or 77.9% during the first six months of 2012 compared to the same period in 2011. Management attributes this increase to recent efforts to improve the Company’s share of the mid-tier commercial banking market (defined as business entities with sales revenues of $5 to $100 million), which was a new market segment for the Company in 2011. In the past year-and-a-half the Company has added experienced leaders to its senior management team and hired a number of commercial relationship managers and support personnel experienced in managing and selling financial services to the mid-tier commercial banking market. In the near term the Company expects to add additional professionals capable of serving this market segment, although there can be no assurances as to the extent or timing of such staff additions or the impact on operating results.
Although the Company’s non-performing loans have declined in recent periods, such loans remain elevated due to weak economic conditions and high unemployment. These developments have strained the financial condition of many borrowers and have resulted in elevated levels of loan delinquencies. As a result, many properties securing the Company’s loans have experienced increased vacancy rates, reduced lease rates, and/or delays in unit sales, as well as lower real estate values. The Company’s non-performing loans were $50.4 million or 3.74% of loans receivable as of June 30, 2012, compared to $75.1 million or 5.69% of loans receivable as of December 31, 2011. Non-performing assets, which includes non-performing loans, were $66.9 million or 2.54% of total assets and $99.9 million or 4.00% of total assets as of these same dates, respectively. The decline in non-performing loans during the six months ended June 30, 2012, was primarily attributable to five loans that aggregated $12.6 million that were paid off, one loan for $2.5 million that was returned to performing status due to the improved condition of the borrower, and two loans that aggregated $2.2 million that were transferred to foreclosed real estate. All of these loans were secured by commercial and multi-family real estate. In addition, non-performing one- to four-family loans declined by $3.4 million or 22.8% and non-performing commercial business loans declined by $407,000 or 24.8% during the six months ended June 30, 2012. In addition, foreclosed properties and repossessed assets, which is a component of non-performing assets, declined by $8.3 million or 33.4% during the six months ended June 30, 2012, for reasons previously described.
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