Bank Mutual profit increases 10%

Increased lending, branch closures contribute


Brown Deer-based Bank Mutual Corp. on Wednesday reported a 10 percent increase in second quarter net income, driven by an increase in mortgage lending and savings from its recent branch closures.

The bank reported net income of $3.9 million, or 9 cents per diluted share, up from $3.6 million, or 8 cents per share, in the second quarter of 2015.

Bank Mutual headquarters
The Bank Mutual headquarters in Brown Deer.

Total interest income was $20.2 million, up from $19.3 million in the second quarter of 2015. Non-interest income totaled $7 million, up from $5.9 million in the same period a year ago.

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The company attributed the increase mainly to higher net interest income, higher loan-related fees, lower compensation-related expenses, and lower occupancy, equipment and data processing costs. It also benefited from net gains and expenses on foreclosed real estate versus the year-ago quarter.

Bank Mutual originated $43.3 million in mortgage loans in the second quarter, up from $30.5 million in the second quarter of 2015. Retail and commercial loans both decreased.

The compensation and occupancy expenses decreased due to the bank’s move to freeze benefits under its defined benefit pension plan in December, as well as its closure of 11 branches since the first quarter of 2015.

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The results were partially offset by higher advertising and marketing expenses, higher income tax expense and a higher provision for loan losses in the second quarter of 2016 versus the second quarter of 2016. Bank Mutual made the $1.2 million provision for loan losses, compared with a $752,000 recovery in the prior year quarter, due to slowed global economic growth conditions.

“Annualized loan growth of almost 16 percent in the second quarter of 2016 continued to exceed our expectations and contributed to our best quarter ever for loan-related fee income,” said David Baumgarten, president and chief executive officer. “However, that same rate environment continued to put pressure on our net interest margin, which declined for the second quarter in a row. Even with this development, the dollar amount of our second quarter net interest income was the highest it has been since 2009…excluding the impact call premiums from mortgage securities had in prior periods. We are also pleased that our earnings in 2016 have improved over prior-year period earnings despite a meaningful increase in our provision for loan losses in the most recent quarter. Although we believe the credit quality in our loan portfolio remains strong, recent economic and market developments noted in this release prompted us to end a long period of recoveries in our allowance for loan losses.”

Bank Mutual operates 64 branches in Wisconsin and one in Minnesota. It is the third-largest financial institution headquartered in Wisconsin by total assets, with $2.6 billion.

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