Brown Deer-based Bank Mutual Corp. reported higher fourth quarter and full-year net income, driven by an increase in net interest income.
The bank reported fourth quarter net income of $3.8 million, or 8 cents per diluted share, up from $2.7 million, or 6 cents per diluted share, in the fourth quarter of 2013.
The 42 percent increase in net income was mainly driven by a decrease in total interest expenses, an increase in net interest income and a lower loan loss provision due to improving portfolio credit quality. However, the bank reported higher occupancy and equipment costs and higher other non-interest expenses.
For the full year, Bank Mutual reported net income of $14.7 million, or 31 cents per diluted share, up from $10.8 million, or 23 cents per diluted share, in 2013.
The bank attributed the year-over-year increase to higher net interest income, lower provision for loan losses, lower compensation-related expenses and lower losses for expenses on foreclosed real estate. However, Bank Mutual reported a non-recurring charge of $518,000 in the first quarter of 2014 related to state income taxes, as well as lower net mortgage banking revenue and higher occupancy and equipment costs.
Net interest income in the fourth quarter of 2014 included a $512,000 call premium the bank received on a mortgage-related security that was called by the issuer. Without that income, the net interest margin for the year would have been two basis points lower, the bank said. In addition, Bank Mutual’s net interest margin has benefitted from an ongoing restructuring of its balance sheet.
“Efforts to restructure our balance sheet the past few years have clearly paid off in 2014, resulting in our highest net interest margin as a public company, as well as a fourth-straight year of higher earnings,” said David Baumgarten, president and chief executive officer. “However, this period of restructuring is drawing to a close and we expect our net interest margin to be slightly lower in 2015. We also expect our non-interest expenses to be higher in 2015. We are confident, though, that growth in our loan portfolio, which has averaged 7.3 percent annually the past three years, can continue to fuel an improvement in earnings in 2015, as will modest improvements in our non-interest sources of revenue.”
The bank’s total assets remained flat at $2.3 billion in 2014.
Bank Mutual Corp. is the third largest financial institution holding company headquartered in Wisconsin based on total assets. Its subsidiary bank, Bank Mutual, operates 75 banking locations in Wisconsin and one in Minnesota.