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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 10-Q

 

 

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2004

 

OR

 

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number 000-31207

 

 

BANK MUTUAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Wisconsin   39-2004336

(State or other jurisdiction of

incorporation or organization)

  

(IRS Employer

Identification No.)

 

4949 West Brown Deer Road

Milwaukee, WI 53223

(414) 354-1500

(Address, including Zip Code, and telephone number,

including area code, of registrant’s principal executive offices)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

 

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

 

The number of shares outstanding of the issuer’s common stock $0.01 par value per share, was 78,783,849 shares, at April 30, 2004.

 

Table of Contents

BANK MUTUAL CORPORATION

 

10-Q INDEX

 

          Page No.

PART I.

    FINANCIAL INFORMATION     

Item l.

    Financial Statements     
     Unaudited Consolidated Statements of Financial Condition
as of March 31, 2004 and December 31, 2003 		   3
     Unaudited Consolidated Statements of Income
for the three months ended March 31, 2004 and 2003 		   4
     Unaudited Consolidated Statements of Shareholders’ Equity
for the three months ended March 31, 2004 and 2003 		   5
     Unaudited Consolidated Statements of Cash Flows
for the three months ended March 31, 2004 and 2003 		   6-7
     Notes to Unaudited Consolidated Financial Statements    8-20

Item 2.

    Management’s Discussion and Analysis of Financial Condition and Results of Operations    21-36

Item 3.

    Quantitative and Qualitative Disclosures about Market Risk    37-40

Item 4.

    Controls and Procedures    41

PART II.

    OTHER INFORMATION     

Item 2

    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities    42

Item 4

    Submission of Matters to a Vote of Security Holders    42

Item 6.

    Exhibits and Reports on Form 8-K    43
     Signatures    44

 

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Table of Contents

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

BANK MUTUAL CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

     March 31
2004
     December 31
2003
  
     (In thousands)  

Assets

                 

Cash and due from banks

    $ 30,466     $ 36,384  

Federal funds sold

      —         30,000  

Interest-earning deposits

      1,024       20,119  
    
 

Cash and cash equivalents

      31,490       86,503  

Securities available-for-sale, at fair value:

                 

Investment securities

      68,824       67,833  

Mortgage-related securities

      1,095,249       1,053,349  

Loans held for sale

      12,784       4,056  

Loans receivable, net

      1,698,587       1,712,278  

Goodwill

      52,570       52,570  

Other intangible assets

      4,907       5,073  

Mortgage servicing rights

      4,453       4,698  

Other assets

      125,125       122,167  
    
 
     $ 3,093,989     $ 3,108,527  
    
 

Liabilities and shareholders’ equity

                 

Liabilities:

                 

Deposits

    $ 2,007,445     $ 2,052,290  

Borrowings

      299,919       299,491  

Advance payments by borrowers for taxes and insurance

      10,674       2,987  

Other liabilities

      34,559       22,679  
    
 
       2,352,597       2,377,447  

Shareholders’ equity:

                 

Preferred stock – $.01 par value:

                 

Authorized– 20,000,000 shares in 2004 and 10,000,000 in 2003
Issued and outstanding – none in 2004 and 2003

                 

Common stock – $.01 par value:

      —         —    

Authorized– 200,000,000 shares in 2004 and 100,000,000 in 2003
Issued – 78,783,849 shares in 2004 and 78,775,779 in 2003

                 

Outstanding – 78,783,849 shares in 2004; and 78,775,779 in 2003

      788       788  

Additional paid-in capital

      496,628       495,990  

Retained earnings

      245,964       241,958  

Unearned ESOP shares

      (5,469 )     (5,766 )

Accumulated other comprehensive income

      5,321       149  

Unearned deferred compensation

      (1,840 )     (2,039 )
    
 

Total shareholders’ equity

      741,392       731,080  
    
 
     $ 3,093,989     $ 3,108,527  
    
 

 

See Notes to Unaudited Consolidated Financial Statements.

 

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Table of Contents

BANK MUTUAL CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

     Three Months Ended
March 31
  
     2004
    2003
  
     (In thousands, except
per share data)		  

Interest income:

                

Loans

    $ 23,897    $ 27,685  

Investment securities

      1,030      1,182  

Mortgage-related securities

      11,626      7,353  

Interest-earning deposits

      108      476  
    
  

Total interest income

      36,661      36,696  

Interest expense:

                

Deposits

      10,724      13,893  

Borrowings

      3,841      4,607  

Advance payments by borrowers for taxes and insurance

      4      10  
    
  

Total interest expense

      14,569      18,510  
    
  

Net interest income

      22,092      18,186  

Provision for loan losses

      490      258  
    
  

Net interest income after provision for loan losses

      21,602      17,928  

Noninterest income:

                

Service charges on deposits

      1,073      1,030  

Brokerage and insurance commissions

      772      677  

Loan related fees and servicing revenue

      535      (84 )

Gain on sales of loans

      380      1,767  

Other

      1,087      1,115  
    
  

Total noninterest income

      3,847      4,505  
    
  

Noninterest expenses:

                

Compensation, payroll taxes and other employee benefits

      8,599      7,682  

Occupancy and equipment

      2,812      2,664  

Amortization of other intangible assets

      165      165  

Other

      3,177      2,870  
    
  

Total noninterest expenses

      14,753      13,381  
    
  

Income before income taxes

      10,696      9,052  

Income taxes

      3,622      3,183  
    
  

Net income

    $ 7,074    $ 5,869  
    
  

Per share data:

                

Earnings per share – basic

    $ 0.09    $ 0.08  
    
  

Earnings per share – diluted

    $ 0.09    $ 0.08  
    
  

Cash dividends paid

    $ 0.040    $ 0.027  
    
  

 

See Notes to Unaudited Consolidated Financial Statements.

 

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Table of Contents

BANK MUTUAL CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

 

    Common
Stock
   Additional
Paid-In
Capital
     Retained
Earnings
     Unearned
ESOP
Shares
     Accumulated
Other
Comprehensive
Income
     Unearned
Deferred
Compensation
     Treasury
Stock
     Total
  
    (In thousands)  

For the Three Months Ended March 31, 2004

                                                              

Balance at January 1, 2004

   $ 788   $ 495,990     $ 241,958     $ (5,766 )   $ 149     $ (2,039 )   $ —       $ 731,080  

Comprehensive income

                                                              

Net income

     —       —         7,074       —         —         —         —         7,074  

Other comprehensive income

                                                              

Change in net unrealized gain on securities available-for-sale, net of deferred income tax liability of $2,965

     —       —         —         —         5,172       —         —         5,172  
                                                         

Total comprehensive income

     —       —         —         —         —         —         —         12,246  

Committed ESOP shares

     —       612       —         297       —         —         —         909  

Exercise of stock options

     —       26       —         —         —         —         —         26  

Amortization of deferred compensation

     —       —         —         —         —         199       —         199  

Cash dividends ($0.040 per share)

     —       —         (3,068 )     —         —         —         —         (3,068 )
   
 
 
 
 
 
 
 

Balance at March 31, 2004

   $ 788   $ 496,628     $ 245,964     $ (5,469 )   $ 5,321     $ (1,840 )   $ —       $ 741,392  
   
 
 
 
 
 
 
 

For the Three Months Ended March 31, 2003

                                                              

Balance at January 1, 2003

   $ 820   $ 108,477     $ 224,932     $ (6,647 )   $ 10,487     $ (3,133 )   $ (11,861 )   $ 323,075  

Comprehensive income: