Bank Mutual reports lower profit in Q4

Lower net interest income, higher employee costs contributed

Bank Mutual headquarters
The Bank Mutual headquarters in Brown Deer.

Brown Deer-based Bank Mutual Corp. on Wednesday announced fourth quarter net income of $3.7 million, or 8 cents per diluted share, down from $3.8 million, or 8 cents per share, in the fourth quarter of 2014.

Bank Mutual headquarters
The Bank Mutual headquarters in Brown Deer.

The company attributed the profit decrease to lower net interest income, lower deposit-related fees, lower income from bank-owned life insurance, higher compensation and benefits expense, and higher occupancy, equipment and data processing costs.

Net interest income was down $703,000, or 3.9 percent, in the fourth quarter. The bank attributed the decline to lower net interest margin, despite more earning assets and more funding from non-interest bearing checking accounts in the quarter.

Deposit-related fees and charges brought in $2.8 million, down from $3 million in the same period a year ago. Income from bank-owned life insurance was $459,000 in the quarter, down from $638,000 in the fourth quarter of 2014.

Compensation, payroll taxes and other employee benefits expenses totaled $11.2 million in the fourth quarter, up from $10.9 million in the same period a year ago. And occupancy, equipment and data processing costs increased from $3.3 million in 2014’s fourth quarter to $3.8 million in the fourth quarter of 2015.

In December, Bank Mutual closed four branches and froze its employee benefit pension plan to reduce costs.

For the full year, Bank Mutual reported net income of $14.2 million, or 31 cents per share, down from $14.7 million, or 31 cents per share, in 2014.

As of December 31, Bank Mutual had assets of $2.5 billion, up from $2.3 billion at the end of 2014.

“We are pleased that net interest income in the fourth quarter increased for the second consecutive quarter in 2015, due principally to 3.2 percent loan growth in the fourth quarter,” said David Baumgarten, president and chief executive officer. “We will continue to emphasize origination of variable-rate loans in 2016 to manage our exposure to the possibility of rising rates. Because these loans tend to have lower initial yields than the existing loans in our portfolio, we anticipate that our net interest margin could decline slightly in 2016, even if market interest rates rise. We remain optimistic, however, that growth in our loan portfolio in 2016 will continue to offset declines in our net interest margin and that net interest income will increase in 2016.”

Bank Mutual, the largest bank headquartered in the Milwaukee area, has about 700 employees. It has 64 branches in Wisconsin and one in Minnesota.

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Molly Dill, former BizTimes Milwaukee managing editor.

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