Wisconsin Banking News

Bank Mutual pays off debt, reports $76.4 million loss in fourth quarter

Brown Deer-based Bank Mutual Corp. reported a fourth quarter net loss of $76.4 million, or $1.68 per diluted share, compared to net income of $1.5 million, or 3 cents per diluted share, in the fourth quarter of 2009.

For all of 2010 Bank Mutual had a net loss of $72.6 million, or $1.59 per diluted share, compared to net income of $13.7 million, or 29 cents per diluted share in 2009

The company said that the loss was due in large part to a charge related to repayment of $756 million that it had borrowed from the Federal Home Loan Bank of Chicago.

Bank Mutual said it repaid what it had borrowed from the Federal Home Loan Bank and had a one-time charge of $53.6 million net of the related tax effect.

“We decided to repay certain borrowings from the FHLB of Chicago prior to their six-year average maturity,” said Michael Crowley Jr., chairman and chief executive officer of Bank Mutual. “These borrowings carried a very high, above-market interest rate, so this action will significantly reduce our annual interest expense in future periods. Our strong capital and excellent liquidity positions have given us the flexibility to take these important steps, which we believe will facilitate future growth and profitability. We were able to utilize available cash and overnight investments to retire this debt and did no need to sell assets in the fourth quarter. As a result of this transaction, our total assets declined significantly during the fourth quarter.”

Bank Mutual also had a $20.4 million provision for loan losses in the fourth quarter.

“In recent months we noted a substantial increase in the number of our commercial real estate borrowers whose properties were experiencing increased vacancies, declining lease rates, or delays in unit sales, as well as continued declines in real estate values,” Crowley said.

Bank Mutual management expects the company’s growth to be “challenging” in the near term. However, the management says it has taken steps in recent months to improve the outlook for the company’s growth.

“We are currently in the process of expanding our commercial banking capabilities and have recently hired a number of experienced commercial bankers to help us with these initiatives,” said David Baumgarten, Bank Mutual president. “Additional staff additions are in the works that will also improve our sales culture in our retail network.”

 

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