Brown Deer-based Bank Mutual Corp. Wednesday reported its first quarter profit was up 26 percent, driven in part by its recent closure of several branches and the resulting cost savings.
The bank’s first quarter net income was $4.5 million, or 10 cents per diluted share, up from $3.6 million, or 8 cents per share, in the first quarter of 2015.
The company attributed the increase to higher net interest income, higher loan-related fees, lower compensation-related expenses and lower occupancy, equipment and data processing costs.
Compensation-related expenses were down $697,000, or 6.2 percent, compared to the first quarter of 2015. The decrease was attributed 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, which decreased its employee numbers. Four of the closures occurred last month, which Bank Mutual said it expects to result in annual net cost savings of $1 million.
Similarly, occupancy, equipment and data processing expenses were down $268,000, or 7.1 percent, year-over-year. There were $269,000 in one-time costs associated with announcing seven of the branch closures in the first quarter of 2015. Other occupancy-related costs declined $300,000 year-over-year as a result of the closures.
Loans also contributed to Bank Mutual’s first quarter growth. It originated or sold $127.2 million in commercial loans in the quarter, up from $93.3 million in the same quarter a year ago. Loan-related fees brought in $1.3 million in the first quarter, up from $437,000 in the first quarter of 2015.
“Annualized loan growth of almost 11 percent in the first quarter exceeded expectations as a favorable rate environment and a relatively mild winter lifted our commercial and multi-family lending,” said David Baumgarten, president and chief executive officer of Bank Mutual. “This also pushed our loan fee income to $1.3 million in the first quarter, which is the highest it’s ever been. Revenue from our brokerage and insurance and mortgage banking lines of business were both down compared to the first quarter of last year. However, both of these businesses posted better results than we had expected in the first quarter of 2016, which we are hopeful will continue for the remainder of the year.”
Net interest income was up 2.8 percent from last year’s first quarter.
Bank Mutual plans to increase its marketing and advertising spending by 20 to 25 percent this year to increase sales and expand its brand awareness.
The bank’s total assets were $2.5 billion in the first quarter, up 1.2 percent from the first quarter of 2015.
Bank Mutual now operates 64 branches in Wisconsin and one in Minnesota. It is the third-largest financial institution headquartered in Wisconsin by total assets.