MUNCIE, Ind., April 24, 2015 /PRNewswire/ -- MutualFirst Financial, Inc. (NASDAQ: MFSF), the holding company of MutualBank (the "Bank"), announced today net income available to common shareholders for the first quarter ended March 31, 2015 increased to $2.5 million, or $.34 for basic and $.33 for diluted earnings per common share. This compared to net income available to common shareholders during the same period in 2014 of $2.0 million, or $.28 for basic and $.27 for diluted earnings per common share. Annualized return on assets was .70% and return on average tangible common equity was 7.91% for the first quarter of 2015 compared to .58% and 7.18% respectively, for the same period of last year.

Financial highlights for the first quarter ended March 31, 2015 included:

• Increased the common stock dividend by 20%.
• Strong loan growth in strategic areas.  Non-real estate consumer loans grew at an annualized rate of 21.0% and commercial loans grew at an annualized rate of 8.7%.
• Net recoveries totaled $49,000 for the first quarter of 2015; compared to net charge offs of $392,000, or 0.16% of loans on an annualized basis, for the first quarter of 2014. 
• Core deposits continued to increase.  Core transactional deposit accounts increased $18.1 million to 64% of total deposits.  
• Net interest income increased $99,000 compared to the first quarter of 2014.
• Non-interest income for the quarter ended March 31, 2015 increased $1.0 million compared to the first quarter of 2014 primarily due to an increase in gains on sale of loans. 

"We are pleased with the continued momentum in earnings and loan growth," said David W. Heeter, President and CEO. "We believe this momentum will continue as we embark on a new strategic plan."

In the first quarter of 2015, the Bank elected an accounting change to better align the recognition of low income housing tax credits and the corresponding amortization of the low income housing from the equity method of accounting to a proportional method of amortization. This change has been made retrospective and all comparisons in this release are as if this change was made at the beginning of 2014.

Balance Sheet

Assets increased $6.7 million as of March 31, 2015 compared to December 31, 2014, primarily due to the increase in gross loans of $6.9 million and investments of $6.7 million. The increase in the gross loan portfolio was primarily due to a $6.9 million increase in the commercial loan portfolio and an increase of $6.0 million in the non-residential consumer loan portfolio. These increases were partially offset by a decline in the consumer residential portfolio of $6.0 million. Loans held for sale increased by $4.6 million in the first quarter of 2015 as mortgage production increased, which was aided by the acquisition of Summit Mortgage in the third quarter of 2014. Loans sold in the first quarter were $26.2 million compared to $5.4 million in the same time period last year. Available for sale securities increased by $6.7 million as cash held at the end of 2014 was invested in municipal and mortgage related securities. Cash and cash equivalents declined $10.9 million primarily to fund the increases in loans and investments. Heeter commented, "We have been successful in all of our markets in increasing our commercial loan portfolio, as we have set out to do in our new strategic plan. The growth in our commercial portfolio, a 12% increase over the last twelve months, along with our non-residential consumer lending, a 19% increase over the last twelve months, will benefit us as we continue to change the mix of our earning assets."

Deposits increased by $6.8 million in the first quarter of 2015. This increase was primarily due to increases in core transactional accounts of $18.1 million, partially offset by a decline in certificates of deposit of $11.3 million. Core transactional deposits increased to 64% of the Bank's total deposits as of March 31, 2015 compared to 63% as of December 31, 2014 and 60% as of March 31, 2014.

The allowance for loan losses increased by $49,000 to $13.2 million as of March 31, 2015 as compared to December 31, 2014. The allowance for loan losses to non-performing loans as of March 31, 2015 was 176.3% compared to 177.0% as of December 31, 2014. The allowance for loan losses to total loans as of March 31, 2015 was 1.29%, compared to 1.30% as of December 31, 2014.

Stockholders' equity was $130.5 million at March 31, 2015, an increase of $3.7 million from December 31, 2014. The increase was a result of net income of $2.5 million, an increase of $1.3 million due to exercising of stock options and an increase in unrealized gains on the investment portfolio of $526,000. These increases were partially offset by dividend payments of $885,000 to common shareholders. The Company's tangible book value per share as of March 31, 2015 increased to $17.33 compared to $17.03 as of December 31, 2014 and the tangible common equity ratio was 8.95% as of March 31, 2015 compared to 8.68% as of December 31, 2014. The Company's and the Bank's risk-based capital ratios were well in excess of "well-capitalized" levels as defined by all regulatory standards as of March 31, 2015.

Income Statement

Net interest income before the provision for loan losses increased $99,000 for the quarter ended March 31, 2015 compared to the same period in 2014. The increase was a result of an increase in earning assets of $35.5 million partially offset by a decline in the net interest margin from 3.26% in the first quarter of 2014 to 3.20% in the first quarter of 2015.

There was no provision for loan losses in the first quarter of 2015 compared to $350,000 during last year's comparable period. The decrease was due to management's ongoing evaluation of the adequacy of the allowance for loan losses and was impacted by net recoveries of $49,000 in the first quarter of 2015 compared to net charge offs of $392,000 in the first quarter of 2014. Non-performing loans to total loans at March 31, 2015 were 0.73% compared to 0.80% as of March 31, 2014. Non-performing assets to total assets were 0.72% at March 31, 2015 compared to 1.12% at March 31, 2014.

Non-interest income for the first quarter of 2015 was $4.0 million, an increase of $1.0 million compared to the first quarter of 2014. Non-interest income increased as gains on sales of loans improved by $802,000 primarily due to an increase in sold loans in the first quarter of 2015. Gain on sale of investments increased in the first quarter of 2015 compared to the first quarter of 2014 by $90,000. Commission income also increased by $39,000 when comparing the first quarter of 2015 to the first quarter of 2014. Commission income comes from trust, wealth management, and brokerage business lines. Service fee income on deposit accounts increased by $17,000 primarily due to an increasing level of checking accounts and increasing interchange income, primarily offset by declining overdraft fee revenue.

Non-interest expense increased $771,000 when comparing the first quarter of 2015 with that of 2014. This increase was a result of an increase in salaries and benefits of $657,000 and professional fees of $92,000. The increase in salaries and benefits was a result of the acquisition of Summit Mortgage, annual salary increases and an increase in health insurance premiums when compared to the first quarter of 2014. The increase in professional fees was primarily a result of a threatened proxy contest costing the Company $153,000 in expenses. Summit Mortgage, acquired in August 2014, accounted for $516,000 of the increased expenses.

Heeter concluded, "We are pleased with this quarter's results and continuing to increase shareholder value is our top priority. We continue to seek ways to improve on the momentum that has been established over the last few years."

MutualFirst Financial, Inc. is the parent company of MutualBank, an Indiana-based financial institution since 1889. MutualBank has thirty full-service retail financial centers in Delaware, Elkhart, Grant, Kosciusko, Randolph, St. Joseph and Wabash Counties in Indiana. MutualBank has two offices located in Carmel and Crawfordsville, Indiana specializing in wealth management and trust services and a loan origination office in New Buffalo, Michigan. MutualBank also operates a wholly owned subsidiary named Summit Mortgage which operates out of Fort Wayne, Indiana. MutualBank provides a full range of financial services including commercial and business banking, personal banking, wealth management, trust services, investments and internet banking services. The Company's stock is traded on the NASDAQ National Market under the symbol "MFSF" and can be found online at www.bankwithmutual.com.

Statements contained in this release, which are not historical facts, are forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.

CONTACT: Chris Cook, Senior Vice President, Treasurer and CFO of MutualFirst Financial, Inc. (765) 747-2945