x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2007
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXHANGE
ACT OF
1934 FOR THE TRANSITION PERIOD FROM -
TO
|
Maryland
|
35-2085640
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
Number)
|
Page
Number
|
||||
PART
I - FINANCIAL INFORMATION
|
||||
Item
1.
|
Financial
Statements
|
|||
Consolidated
Condensed Balance Sheets
|
1
|
|||
Consolidated
Condensed Statements of Income
|
2
|
|||
Consolidated
Condensed Statement of Stockholders’ Equity
|
3
|
|||
Consolidated
Condensed Statements of Cash Flows
|
4
|
|||
Notes
to Unaudited Consolidated Condensed Financial Statements
|
5
|
|||
|
||||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
7
|
||
and
Results of Operations
|
|
|||
|
||||
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
14
|
||
|
||||
Item
4.
|
Controls
and Procedures
|
15
|
||
|
||||
PART
II - OTHER INFORMATION
|
||||
|
||||
Item
1.
|
Legal
Proceedings
|
16
|
||
|
||||
Item
1A.
|
Risk
Factors
|
16
|
||
|
||||
Item
2.
|
Unregistered
Sales of Equity Changes in Securities and Use of Proceeds
|
16
|
||
|
||||
Item
3.
|
Defaults
Upon Senior Securities
|
16
|
||
|
||||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
16
|
||
|
||||
Item
5.
|
Other
Information
|
17
|
||
|
||||
Item
6.
|
Exhibits
|
17
|
||
|
||||
Signature
Page
|
17
|
|||
|
||||
Exhibits
|
18
|
PART
1 FINANCIAL INFORMATION
|
|||||||
ITEM
1. Financial Statements
|
|
June
30,
|
December
31,
|
|||||
|
2007
|
2006
|
|||||
(Unaudited)
|
|
||||||
Assets
|
|||||||
Cash
|
$
|
22,559,006
|
$
|
23,235,328
|
|||
Interest-bearing
demand deposits
|
1,235,914
|
1,679,544
|
|||||
Cash
and cash equivalents
|
23,794,920
|
24,914,872
|
|||||
Interest-bearing
deposits
|
193,000
|
293,000
|
|||||
Investment
securities available for sale
|
39,709,332
|
41,070,091
|
|||||
Loans
held for sale
|
1,001,450
|
1,329,700
|
|||||
Loans
|
803,480,438
|
813,781,179
|
|||||
Allowance
for loan losses
|
(8,277,752
|
)
|
(8,155,693
|
)
|
|||
Net
loans
|
795,202,686
|
805,625,486
|
|||||
Premises
and equipment
|
15,162,401
|
15,431,475
|
|||||
Federal
Home Loan Bank of Indianapolis stock, at cost
|
9,938,400
|
9,938,400
|
|||||
Investment
in limited partnerships
|
3,350,287
|
3,460,818
|
|||||
Cash
surrender value of life insurance
|
29,775,760
|
29,120,760
|
|||||
Foreclosed
real estate
|
1,518,210
|
1,273,449
|
|||||
Interest
receivable
|
3,279,343
|
3,622,133
|
|||||
Goodwill
|
14,187,943
|
13,786,468
|
|||||
Deferred
income tax benefit
|
4,742,923
|
4,376,318
|
|||||
Other
assets
|
6,805,491
|
6,599,462
|
|||||
Total
assets
|
$
|
948,662,146
|
$
|
960,842,432
|
|||
Liabilities
|
|||||||
Deposits
|
|||||||
Non-interest-bearing
|
$
|
50,263,421
|
$
|
47,142,407
|
|||
Interest
bearing
|
640,666,589
|
656,216,247
|
|||||
Total
deposits
|
690,930,010
|
703,358,654
|
|||||
Federal
Home Loan Bank advances
|
154,336,045
|
157,425,176
|
|||||
Other
borrowings
|
1,467,803
|
1,426,769
|
|||||
Advances
by borrowers for taxes and insurance
|
3,678,633
|
1,833,661
|
|||||
Interest
payable
|
1,980,924
|
1,829,168
|
|||||
Other
liabilities
|
8,602,670
|
7,704,686
|
|||||
Total
liabilities
|
860,996,085
|
873,578,114
|
|||||
Commitments
and Contingent Liabilities
|
|||||||
Stockholders'
Equity
|
|||||||
Preferred
stock, $.01 par value
|
|||||||
Authorized
and unissued --- 5,000,000 shares
|
|||||||
Common
stock, $.01 par value
|
|||||||
Authorized
--- 20,000,000 shares
|
|||||||
Issued
and outstanding ---4,329,183 and 4,366,636 shares
|
43,292
|
43,666
|
|||||
Additional
paid-in capital
|
33,034,889
|
33,101,586
|
|||||
Retained
earnings
|
57,033,346
|
56,698,546
|
|||||
Accumulated
other comprehensive income (loss)
|
(379,640
|
)
|
(354,734
|
)
|
|||
Unearned
employee stock ownership plan (ESOP) shares
|
(2,065,826
|
)
|
(2,224,746
|
)
|
|||
Total
stockholders' equity
|
87,666,061
|
87,264,318
|
|||||
Total
liabilities and stockholders' equity
|
$
|
948,662,146
|
$
|
960,842,432
|
See
notes to consolidated condensed financial statements.
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30
|
June
30
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||||
Interest
Income
|
|||||||||||||
Loans
receivable, including fees
|
$
|
13,405,006
|
$
|
13,304,483
|
$
|
26,555,556
|
$
|
26,327,949
|
|||||
Investment
seurities:
|
|||||||||||||
Mortgage-backed
securities
|
111,722
|
115,587
|
228,299
|
221,862
|
|||||||||
Federal
Home Loan Bank stock
|
110,275
|
124,825
|
237,457
|
244,825
|
|||||||||
Other
investments
|
398,024
|
352,202
|
786,212
|
678,728
|
|||||||||
Deposits
with financial institutions
|
30,800
|
14,615
|
57,672
|
26,862
|
|||||||||
Total
interest income
|
14,055,827
|
13,911,712
|
27,865,196
|
27,500,226
|
|||||||||
Interest
Expense
|
|||||||||||||
Passbook
savings
|
72,365
|
77,705
|
142,538
|
154,579
|
|||||||||
Certificates
of deposit
|
5,196,614
|
4,575,898
|
10,294,805
|
8,939,815
|
|||||||||
Daily
Money Market accounts
|
161,524
|
173,246
|
316,802
|
360,363
|
|||||||||
Demand
and NOW acounts
|
726,664
|
331,161
|
1,400,661
|
490,955
|
|||||||||
Federal
Home Loan Bank advances
|
1,768,094
|
1,984,551
|
3,568,851
|
3,738,263
|
|||||||||
Other
interest expense
|
16,106
|
15,606
|
31,712
|
31,212
|
|||||||||
Total
interest expense
|
7,941,367
|
7,158,167
|
15,755,369
|
13,715,187
|
|||||||||
Net
Interest Income
|
6,114,460
|
6,753,545
|
12,109,827
|
13,785,039
|
|||||||||
Provision
for losses on loans
|
532,500
|
525,000
|
865,000
|
918,000
|
|||||||||
Net
Interest Income After Provision for Loan Losses
|
5,581,960
|
6,228,545
|
11,244,827
|
12,867,039
|
|||||||||
Other
Income
|
|||||||||||||
Service
fee income
|
1,245,876
|
1,112,769
|
2,309,411
|
2,119,867
|
|||||||||
Equity
in losses of limited partnerships
|
(26,591
|
)
|
(13,437
|
)
|
(53,183
|
)
|
(1,875
|
)
|
|||||
Commissions
|
243,883
|
154,357
|
441,211
|
352,450
|
|||||||||
Net
gains on sales of loans
|
79,104
|
96,255
|
147,322
|
193,261
|
|||||||||
Net
servicing fees
|
16,644
|
5,180
|
39,030
|
41,948
|
|||||||||
Increase
in cash surrender value of life insurance
|
317,500
|
267,000
|
655,000
|
504,000
|
|||||||||
Other
income
|
77,932
|
54,950
|
148,067
|
131,281
|
|||||||||
Total
other income
|
1,954,348
|
1,677,074
|
3,686,858
|
3,340,932
|
|||||||||
Other
Expenses
|
|||||||||||||
Salaries
and employee benefits
|
3,654,317
|
3,626,434
|
7,293,241
|
7,375,396
|
|||||||||
Net
occupancy expenses
|
362,645
|
328,309
|
778,270
|
716,198
|
|||||||||
Equipment
expenses
|
328,823
|
308,834
|
646,460
|
621,088
|
|||||||||
Data
processing fees
|
298,484
|
214,152
|
554,040
|
431,773
|
|||||||||
Automated
teller machine
|
172,421
|
194,364
|
347,035
|
372,991
|
|||||||||
Professional
fees
|
177,410
|
232,963
|
356,065
|
491,427
|
|||||||||
Advertising
and promotion
|
228,743
|
298,061
|
437,470
|
442,476
|
|||||||||
Other
expenses
|
981,941
|
1,018,247
|
2,010,699
|
1,990,632
|
|||||||||
Total
other expenses
|
6,204,784
|
6,221,364
|
12,423,280
|
12,441,981
|
|||||||||
Income
Before Income Tax
|
1,331,524
|
1,684,255
|
2,508,405
|
3,765,990
|
|||||||||
Income
tax expense
|
203,000
|
336,800
|
335,700
|
856,450
|
|||||||||
Net
Income
|
$
|
1,128,524
|
$
|
1,347,455
|
$
|
2,172,705
|
$
|
2,909,540
|
|||||
Basic
earnings per share
|
$
|
0.27
|
$
|
0.32
|
$
|
0.53
|
$
|
0.68
|
|||||
Diluted
earnings per share
|
$
|
0.27
|
$
|
0.31
|
$
|
0.52
|
$
|
0.67
|
|||||
Dividends
per share
|
$
|
0.15
|
$
|
0.14
|
$
|
0.30
|
$
|
0.28
|
See
notes to consolidated condensed financial statements.
|
|||||||||||||
Accumulated
|
|||||||||||||||||||||||||
Common
Stock
|
Additional
|
Other
|
Unearned
|
||||||||||||||||||||||
Shares
|
paid-in
|
Comprehensive
|
Retained
|
Comprehensive
|
ESOP
|
||||||||||||||||||||
Outstanding
|
Amount
|
capital
|
Income
|
Earnings
|
Income
(Loss)
|
shares
|
|
Total
|
|||||||||||||||||
Balances,
December 31, 2006, as reported
|
4,366,636
|
$
|
43,666
|
$
|
33,101,586
|
$
|
56,698,546
|
($354,734
|
)
|
($2,224,746
|
)
|
$
|
87,264,318
|
||||||||||||
Comprehensive
income
|
|||||||||||||||||||||||||
Net
income for the period
|
$
|
2,172,705
|
$
|
2,172,705
|
2,172,705
|
||||||||||||||||||||
Other
comprehensive income, net of tax
|
|||||||||||||||||||||||||
Net
unrealized losses on securities
|
(24,906
|
)
|
(24,906
|
)
|
(24,906
|
)
|
|||||||||||||||||||
Comprehensive
income
|
$
|
2,147,799
|
|||||||||||||||||||||||
ESOP
shares earned
|
151,541
|
158,920
|
310,461
|
||||||||||||||||||||||
Cash
dividends ($.30 per share)
|
(1,300,353
|
)
|
(1,300,353
|
)
|
|||||||||||||||||||||
RRP
shares earned
|
10,528
|
10,528
|
|||||||||||||||||||||||
Stock
repurchased and retired
|
(43,453
|
)
|
(434
|
)
|
(315,706
|
)
|
(537,552
|
)
|
(853,692
|
)
|
|||||||||||||||
Stock
options exercised
|
6,000
|
60
|
86,940
|
87,000
|
|||||||||||||||||||||
Balances,
June 30, 2007
|
4,329,183
|
43,292
|
$
|
33,034,889
|
$
|
57,033,346
|
($379,640
|
)
|
($2,065,826
|
)
|
$
|
87,666,061
|
|||||||||||||
See
notes to consolidated condensed financial statements.
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2007
|
|
2006
|
|||||
Operating
Activities
|
|||||||
Net
income
|
$
|
2,172,705
|
$
|
2,909,540
|
|||
Items
not requiring (providing) cash
|
|||||||
Provision
for loan losses
|
865,000
|
918,000
|
|||||
ESOP
shares earned
|
310,461
|
332,789
|
|||||
RRP
shares earned
|
10,528
|
75,282
|
|||||
Depreciation
and amortization
|
1,311,864
|
1,293,976
|
|||||
Deferred
income tax
|
(350,000
|
)
|
(52,049
|
)
|
|||
Loans
originated for sale
|
(11,748,865
|
)
|
(12,663,431
|
)
|
|||
Proceeds
from sales of loans held for sale
|
12,103,665
|
11,543,088
|
|||||
Gains
on sales of loans held for sale
|
(147,322
|
)
|
(193,261
|
)
|
|||
Change
in
|
|||||||
Interest
receivable
|
342,790
|
281,784
|
|||||
Other
assets
|
28,743
|
(568,264
|
)
|
||||
Interest
payable
|
151,756
|
307,262
|
|||||
Other
liabilities
|
897,984
|
(67,447
|
)
|
||||
Cash
value of life insurance
|
(655,000
|
)
|
(504,000
|
)
|
|||
Other
adjustments
|
35,813
|
550,835
|
|||||
Net
cash provided by operating activities
|
5,330,122
|
4,164,104
|
|||||
Investing
Activities
|
|||||||
Net
change in interest earning deposits
|
100,000
|
-
|
|||||
Purchases
of securities available for sale
|
(568,879
|
)
|
(3,560,872
|
)
|
|||
Proceeds
from matuities and paydowns of securities available for
sale
|
1,869,443
|
2,261,590
|
|||||
Proceeds
from sales of securities available fro sale
|
-
|
154,840
|
|||||
Net
change in loans
|
8,003,005
|
(8,960,183
|
)
|
||||
Purchases
of premises and equipment
|
(444,584
|
)
|
(900,274
|
)
|
|||
Proceeds
from real estate owned sales
|
635,776
|
840,777
|
|||||
Cash
paid in acquisition, net
|
(515,475
|
)
|
-
|
||||
Other
investing activities
|
50,335
|
(81,265
|
)
|
||||
Net
cash provided by (used in) investing activities
|
9,129,621
|
(10,245,387
|
)
|
||||
Financing
Activities
|
|||||||
Net
change in
|
|||||||
Noninterest-bearing,
interest-bearing demand and savings deposits
|
7,614,160
|
15,690,593
|
|||||
Certificates
of deposits
|
(20,042,804
|
)
|
(15,933,015
|
)
|
|||
Repayment
of note payable
|
(240,678
|
)
|
(30,679
|
)
|
|||
Proceeds
from FHLB advances
|
204,150,000
|
257,750,000
|
|||||
Repayment
of FHLB advances
|
(207,088,800
|
)
|
(250,262,089
|
)
|
|||
Net
change in advances by borrowers for taxes and insurance
|
1,844,972
|
333,716
|
|||||
Stock
repurchased
|
(853,692
|
)
|
(2,926,645
|
)
|
|||
Proceeds
from stock options exercised
|
87,000
|
377,000
|
|||||
Cash
dividends
|
(1,300,353
|
)
|
(1,218,611
|
)
|
|||
Other
financing activities
|
250,500
|
-
|
|||||
Net
cash (used in) provided by financing activities
|
(15,579,695
|
)
|
3,780,270
|
||||
Net
Change in Cash and Cash Equivalents
|
(1,119,952
|
)
|
(2,301,013
|
)
|
|||
Cash
and Cash Equivalents, Beginning of Year
|
24,914,872
|
22,364,583
|
|||||
Cash
and Cash Equivalents, End of Year
|
$
|
23,794,920
|
$
|
20,063,570
|
|||
Additional
Cash Flows Information
|
|||||||
Interest
paid
|
$
|
15,603,613
|
$
|
13,407,925
|
|||
Income
tax paid
|
230,000
|
1,050,000
|
|||||
Transfers
from loans to foreclosed real estate
|
932,584
|
936,779
|
|||||
Mortgage
servicing rights capitalized
|
120,772
|
113,498
|
|||||
See
Notes to Consolidated Financial Statements
|
Three
Months Ended Ended June 30,
|
|
||||||||||||||||||
|
|
2007
|
|
2006
|
|
||||||||||||||
|
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
|
|
|
||||||
|
|
|
|
Average
|
|
Per-Share
|
|
|
|
Average
|
|
Per-Share
|
|
||||||
|
|
Income
|
|
Shares
|
|
Amount
|
|
Income
|
|
Shares
|
|
Amount
|
|
||||||
|
|
(000's)
|
|
|
|
|
|
(000's)
|
|||||||||||
Basic
Earnings Per Share
|
|||||||||||||||||||
Income
available to common shareholders
|
$
|
1,129
|
4,120,844
|
$
|
0.27
|
$
|
1,347
|
4,227,308
|
$
|
0.32
|
|||||||||
Effect
of Dilutive securities
|
|||||||||||||||||||
Stock
options and RRP grants
|
53,142
|
76,346
|
|||||||||||||||||
Diluted
Earnings Per Share
|
|||||||||||||||||||
Income
available to common stockholders and assumed conversions
|
$
|
1,129
|
4,173,986
|
$
|
0.27
|
$
|
1,347
|
4,303,654
|
$
|
0.31
|
Six
Months Ended Ended June 30,
|
|
|
|||||||||||||||||
|
|
2007
|
|
2006
|
|
||||||||||||||
|
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
|
|
|
||||||
|
|
|
|
Average
|
|
Per-Share
|
|
|
|
Average
|
|
Per-Share
|
|
||||||
|
|
Income
|
|
Shares
|
|
Amount
|
|
Income
|
|
Shares
|
|
Amount
|
|
||||||
|
|
(000's)
|
|
|
|
|
|
(000's)
|
|
|
|||||||||
Basic
Earnings Per Share
|
|||||||||||||||||||
Income
available to common shareholders
|
$
|
2,173
|
4,125,935
|
$
|
0.53
|
$
|
2,910
|
4,248,603
|
$
|
0.68
|
|||||||||
Effect
of Dilutive securities
|
|||||||||||||||||||
Stock
options and RRP grants
|
60,168
|
82,311
|
|||||||||||||||||
Diluted
Earnings Per Share
|
|||||||||||||||||||
Income
available to common stockholders and assumed conversions
|
$
|
2,173
|
4,186,103
|
$
|
0.52
|
$
|
2,910
|
4,330,914
|
$
|
0.67
|
Changes
|
NPV
as % of PV of Assets
|
|||||||||||||||
In
Rates
|
$
Amount
|
$
Change
|
%
Change
|
NPV
Ratio
|
Change
|
|||||||||||
+300
bp
|
58,286
|
-45,416
|
-44
|
%
|
6.79
|
%
|
-443
bp
|
|||||||||
+200
bp
|
74,945
|
-28,757
|
-28
|
%
|
8.51
|
%
|
-272
bp
|
|||||||||
+100
bp
|
89,486
|
-14,216
|
-14
|
%
|
9.92
|
%
|
-130
bp
|
|||||||||
0
bp
|
103,702
|
11.22
|
%
|
|||||||||||||
-100
bp
|
114,324
|
10,622
|
10
|
%
|
12.12
|
%
|
90
bp
|
|||||||||
-200
bp
|
120,058
|
16,356
|
16
|
%
|
12.52
|
%
|
129
bp
|
|||||||||
-300
bp
|
126,889
|
23,187
|
22
|
%
|
12.98
|
%
|
176
bp
|
Changes
|
NPV
as % of PV of Assets
|
|||||||||||||||
In
Rates
|
$
Amount
|
$
Change
|
%
Change
|
NPV
Ratio
|
Change
|
|||||||||||
+300
bp
|
52,500
|
-45,832
|
-47
|
%
|
5.89
|
%
|
-440
bp
|
|||||||||
+200
bp
|
68,204
|
-30,128
|
-31
|
%
|
7.48
|
%
|
-281
bp
|
|||||||||
+100
bp
|
83,485
|
-14,847
|
-15
|
%
|
8.94
|
%
|
-135
bp
|
|||||||||
0
bp
|
98,332
|
10.29
|
%
|
|||||||||||||
-100
bp
|
111,179
|
12,847
|
13
|
%
|
11.38
|
%
|
109
bp
|
|||||||||
-200
bp
|
117,805
|
19,473
|
20
|
%
|
11.86
|
%
|
157
bp
|
|||||||||
-300
bp
|
121,809
|
23,477
|
24
|
%
|
12.08
|
%
|
179
bp
|
(a) |
An
evaluation of the Company’s disclosure controls and procedures (as defined
in Rule 13a -15(c) under the Securities Exchange Act of 1934 (the
“Act”)
was carried out under the supervision and with the participation
of the
Company’s Chief Executive Officer, Chief Financial Officer and several
other members of the Company’s senior management. The Company’s Chief
Executive Officer and Chief Financial Officer concluded that the
Company’s
disclosure controls and procedure as currently in effect are effective
in
ensuring that the information required to be disclosed by the Company
in
the reports it files or submits under the act is (i) accumulated
and
communicated to the Company’s management (including the Chief Executive
Officer and the Chief Financial Officer) in a timely manner, and
(ii)
recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. There have been no changes in our
internal control over financial reporting (as defined in Rule 13a
- 15(f)
under the Act) that occurred during the quarter ended June 30, 2007
that
has materially affected, or is likely to materially affect our internal
control over financial reporting.
|
|
|
|
|
Total
Number of
|
|
Maximum
Number of
|
|
||||||
|
|
|
|
|
|
Shares
Purchased
|
|
Shares
that May Yet
|
|
||||
|
|
Total
Number of
|
|
Average
Price
|
|
As
Part of Publicly
|
|
Be
Purchased
|
|
||||
|
|
Shares
Purchased
|
|
Per
Share
|
|
Announced
Plan
|
|
Under
the Plan
|
|||||
|
68,502 | (1) | |||||||||||
April
1, 2007 - April 30, 2007
|
3,116
|
$
|
19.13
|
3,116
|
65,386
|
||||||||
May
1, 2007 - May 31, 2007
|
22,627
|
19.24
|
22,627
|
42,759
|
|||||||||
June
1, 2007 - June 30, 2007
|
2,204
|
18.86
|
2,204
|
40,555
|
|||||||||
27,947
|
$
|
19.20
|
27,947
|
|
FOR
|
|
VOTE
WITHHELD
|
||||
|
|||||||
Edward
J. Dobrow
|
3,740,053
|
139,586
|
|||||
David
W. Heeter
|
3,739,803
|
139,836
|
FOR
|
3,868,792
|
|||
AGAINST
|
10,271
|
|||
ABSTAIN
|
576
|
(a) |
Exhibits
|
MutualFirstFinancial, Inc. | ||
|
|
|
Date: August 9, 2007 | By: | /s/ David W. Heeter |
David
W. Heeter
President
and Chief Executive Officer
|
||
|
|
|
Date: August 9, 2007 | By: | /s/ Timothy J. McArdle |
Timothy
J. McArdle
Senior
Vice President and Treasurer
|
||