Brown Deer-based Bank Mutual Corp. today reported first quarter net income was $2.5 million, up 120 percent from $1.2 million the same quarter a year ago.
The company attributed the earnings increase to higher net interest income, higher net loan servicing fee revenue and lower net losses and expenses on foreclosed real estate.
Net interest income was $1.3 million for the quarter, up 8.6 percent from the first quarter of 2012. The increase came mostly from a 32 basis point net interest margin improvement, from 2.65 percent a year ago to 2.97 percent in the most recent quarter. Bank Mutual achieved the improvement through changes to its earning asset and deposit funding mixes.
Bank Mutual saw a 19 basis point decline in the average cost of certificates of deposit. The company also repaid $100 million in high cost borrowings from the Federal Home Loan Bank of Chicago in the second quarter of 2012. Both contributed to the improved net interest margin.
“Our net interest margin improved for the third quarter in a row on the strength of improved earning asset and funding mixes, as well as lower absolute funding costs,” said chairman and chief executive officer Michael Crowley Jr.
Bank Mutual did, however, report lower gains on loan sales and a higher provision for loan losses. Average earning assets declined to $67.1 million, down 3 percent from a year ago. Its provision for loan losses was $891,000, up from $51,000 in the same quarter last year.
The bank said its loan portfolio has seen continued effects of slow economic growth, relatively high unemployment and low real estate values.
“Strengthening our net interest margin is a high priority for us, which will offset expected declines in revenue from our mortgage banking operations as the year progresses,” said president David Baumgarten.
Baumgarten will officially take the helm as CEO on July 1. Crowley will retire into the role of chairman of the board of directors.
Looking forward, Baumgarten plans to focus on making acquisitions.