Bank Mutual restructures debt ;Community Bank & Trust joins U.S. DOT lending program
Bank Mutual restructures debt
The board of directors of Milwaukee-based Bank Mutual Corp. has approved a balance sheet restructuring as part of an overall strategy to strengthen the company going forward.
"Our board of directors approved the early repayment of $756.0 million in FHLB (Federal Home Loan Bank) advances and Bank Mutual is recognizing a one-time charge of $53.6 million, net of the related income tax effect. These advances carried a very high, above-market interest rate, so this action will significantly reduce our annual interest expense in future periods," said Michael Crowley Jr., chairman and chief executive officer of Bank Mutual.
The FHLB advances that were repaid had a remaining average maturity of approximately six years and a weighted-average cost of 4.17 percent, or $31.5 million, on an annual basis.
"As a result, we were experiencing a negative interest spread on the advances because we have not been able to lend or invest at rates higher than 4.17 percent in the current environment. This has had a significant adverse impact on our net interest income over the past few quarters," Crowley said.
Bank Mutual utilized cash and other overnight investments to retire the advances.
Crowley also announced that Bank Mutual expects to record charges related to loan loss provisions of approximately $18.0 million to $21.0 million during the fourth quarter, net of the related income tax effect.
Bank Mutual expects that its non-performing assets will be approximately $140.0 million to $150.0 million or 5.40 to 5.80 percent of total assets at the end of the year.
"As we review all of our business lines, we remain very optimistic about the outlook for Bank Mutual," said David Baumgarten, who was appointed Bank Mutual’s president earlier this year. "We are expanding our commercial banking capabilities and have recently hired a number of experienced commercial bankers to help us with these initiatives. More staff additions are in the works.”
Community Bank & Trust joins U.S. DOT lending program
Sheboygan-based Community Bank & Trust has been named a new participating lender in the Short Term Lending Program (STLP) by the U.S. Department of Transportation. The bank joins 21 other participating lenders across the country to offer this service.
The program will allow Community Bank & Trust to assist Disadvantaged Business Entities, Woman Owned Businesses Entities, and Minority Owned Business Entities in procuring essential working capital resources for Transportation Related Construction Projects.
“Participating in the STLP is a natural fit for our bank,” said Anthony Jovanovich, chairman and CEO of the bank. “We welcome the opportunity to utilize the STLP as part of our continued support of small businesses in these challenging economic times.”
