Merchants & Manufacturers Bancorporation, Inc. 2nd Quarter
Earnings Announced NEW BERLIN, Wis., July 28 /PRNewswire-FirstCall/
-- Merchants & Manufacturers Bancorporation, Inc. ("Merchants")
announced second quarter 2005 earnings of $1.6 million, or $0.44
per diluted share, compared to $1.5 million or $0.44 per diluted
share for the second quarter 2004, representing an 11.4% increase
in net income. The increase in net income for the current quarter
compared to the prior year is due to strong balance sheet growth,
strength in our core banking business and increased operating
efficiencies. Net income for the six months ended June 30, 2005 was
$3.4 million; a 19.6% increase from the $2.9 million earned for the
same period in 2004. Diluted earnings per share for the first six
months of 2005 were $0.93, an 8.1% increase from the $0.86 earned
in the first six months of 2004. The quarter-to-quarter and
year-to-date comparisons are impacted by Merchants' acquisition of
Random Lake Bancorp, Limited ("Random") and its subsidiary
Wisconsin State Bank ("WSB") on August 12, 2004. The acquisition
was accounted for using the purchase method of accounting, and
accordingly, the assets and liabilities of Random were recorded at
their respective fair values on the acquisition date. Merchants
acquired approximately $102.3 million in assets, $72.9 million in
loans, $80.0 million in deposits and recognized goodwill and
intangible assets of approximately $6.1 million related to the
transaction. Merchants' total assets increased 20.9% from $1.2
billion at June 30, 2004, to $1.4 billion at June 30, 2005. Gross
loans increased 22.8% from $904.4 million at June 30, 2004, to $1.1
billion at June 30, 2005. Total deposits grew 16.5% from $918.8
million at June 30, 2004 to $1.1 billion at June 30, 2005. Our
balance sheet growth since June 30, 2004 is due to internal growth
as well as the acquisition of WSB. Michael J. Murry, Chairman,
stated, "2004 was a year of significant change and transition for
our organization. We took significant steps to reduce the risk
inherent in a larger organization and invested heavily in building
an operational platform that will allow for future expansion.
During the second quarter we further realized the advantages and
efficiencies of our new operational platform. Our operational
capabilities continue to improve while our community bank personnel
generated significant internal growth during the second quarter.
For example, loan growth continued to be strong in the second
quarter increasing 12.1% on an annualized basis. In addition, we
continue to realize the operational efficiencies as net income
during the second quarter increased compared to the first quarter
of 2005. We expect these positive trends to continue during 2005
and beyond." Net interest income was $11.8 million for the three
months ended June 30, 2005 compared to $10.1 million for the same
period in 2004, and $23.4 million for the six months ended June 30,
2005 compared to $19.9 million for the same period in 2004. The
increase is due to the revenue resulting from the acquisition of
WSB, as well as the increase in loan volume funded by the growth in
deposits and borrowings. WSB generated net interest income of $1.0
million and $2.0 million during the three and six months ended June
30, 2005, respectively. Net interest margin was 3.68% and 3.70% for
the three and six months ended June 30, 2005, respectively,
compared to 3.77% and 3.76% for the same periods in the prior year.
The decline in net interest margin was due to strong loan growth
which was funded with deposit growth as well as higher cost
borrowings. We will focus on generating low cost deposits to fund
continued loan growth. Due to the repositioning of our balance
sheet in 2003 and 2004, we believe we are positioned to take
advantage of increasing interest rates. Merchants' provision for
loan losses was $390,000 and $780,000 for the three and six months
ended June 30, 2005, respectively, compared to $451,000 and
$901,000 for the same periods in the prior year. Merchants'
allowance for loan losses to total loans ratio was 0.94% and 1.07%
at June 30, 2005 and 2004, respectively. The ratio of allowance for
loan losses to non-performing loans was 166.9% at June 30, 2005
compared to 209.6% at June 30, 2004. Non- performing assets equaled
0.54% of total assets at June 30, 2005 compared to 0.56% at June
30, 2004. Non-interest income for the three and six months ended
June 30, 2005 was $3.4 million and $7.5 million, respectively,
compared to $2.7 million and $5.4 million for the same periods in
the prior year, an increase of 29.3% for the second quarter and an
increase of 40.7% year-to-date. Service charges on deposit accounts
increased $252,000 to $1.0 million and $480,000 to $2.0 million for
the three and six months ended June 30, 2005, respectively. Service
charges on loans increased $595,000 to $949,000 and $893,000 to
$1.7 million for the three and six months ended June 30, 2005,
respectively. Gains on sales of mortgage loans decreased $54,000
and $95,000 for the three and six months ended June 30, 2005,
respectively compared to the prior year. In addition, net gains on
the sale of assets and securities amounted to zero and $395,000 for
the three and six months ended June 30, 2005, respectively,
compared to $164,000 and $341,000 during the same periods in 2004.
Other fee income for the six month period ending June 30, 2005
included non-recurring fee income of $490,000 related to the sale
of Pulse EFT Association to Discover Financial Services as well as
additional income related to the acquisition of WSB. WSB generated
non-interest income of $204,000 and $447,000, respectively, during
the three and six months ended June 30, 2005. Non-interest expense
was $12.4 million for the second quarter of 2005 and $25.0 million
for the first six months of 2005, compared to $10.2 million for the
second quarter of 2004 and $20.2 million for the first six months
of 2004, an increase of 22.5% and 23.6% respectively. Salaries and
employee benefits increased $1.2 million for the quarter and $2.6
million year-to-date, occupancy expense increased $455,000 for the
quarter and $849,000 year-to-date and data processing fees
increased $484,000 for the quarter and $970,000 year-to-date. The
growth in non-interest expense is partially affected by the
acquisition of WSB. The WSB operations added expenses of $860,000
and $1.7 million for the three and six months ended June 30, 2005,
respectively. UNAUDITED Three Months Ended Six Months Ended June
30, June 30, 2005 2004 Change 2005 2004 Change (Dollars In
Millions, Except Per Share Amounts) Net Income $ 1.639 $ 1.472
11.4% $ 3.442 $ 2.879 19.6% Basic EPS $0.45 $0.44 2.3% $0.94 $0.86
9.3% Diluted EPS $0.44 $0.44 0.0% $0.93 $0.86 8.1% Merchants &
Manufacturers Bancorporation, Inc. (OTC:MMBI) (BULLETIN BOARD:
MMBI) is a financial holding company headquartered in New Berlin,
Wisconsin, a suburb of Milwaukee. Through our Community Financial
Group network, we operate seven banks in Wisconsin (Community Bank
Financial, Fortress Bank, Franklin State Bank, Grafton State Bank,
Lincoln State Bank, The Reedsburg Bank and Wisconsin State Bank),
one bank in Minnesota (Fortress Bank Minnesota) and one bank in
Iowa (Fortress Bank Cresco). Our banks are separately chartered
with each having its own name, management team, board of directors
and community commitment. Together, our banks operate 45 offices in
the communities they serve with more than 100,000 clients and total
assets of $1.4 billion. In addition to traditional banking
services, our Community Financial Group network also provides our
clients with a full range of financial services including
investment and insurance products, residential mortgage services,
private banking capabilities and tax consultation and tax
preparation services. Merchants' shares trade on the
"bulletin-board" section of the NASDAQ Stock Market under the
symbol "MMBI." Certain statements contained in this press release
constitute or may constitute forward-looking statements about
Merchants which we believe are covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. This release contains
forward-looking statements concerning the Corporation's prospects
that are based on the current expectations and beliefs of
management. When used in written documents, the words anticipate,
believe, estimate, expect, objective and similar expressions are
intended to identify forward-looking statements. The statements
contained herein and such future statements involve or may involve
certain assumptions, risks and uncertainties, many of which are
beyond the Corporation's control, that could cause the
Corporation's actual results and performance to differ materially
from what is expected. In addition to the assumptions and other
factors referenced specifically in connection with such statements,
the following factors could impact the business and financial
prospects of the Corporation: general economic conditions;
legislative and regulatory initiatives; monetary and fiscal
policies of the federal government; deposit flows;
disintermediation; the cost of funds; general market rates of
interest; interest rates or investment returns on competing
investments; demand for loan products; demand for financial
services; changes in accounting policies or guidelines; and changes
in the quality or composition of the Corporation's loan and
investment portfolio; and the result of the Corporation's
discussions with the WDR. Such uncertainties and other risk factors
are discussed further in the Corporation's filings with the
Securities and Exchange Commission. The Corporation undertakes no
obligation to make any revisions to forward-looking statements
contained in this release or to update them to reflect events or
circumstances occurring after the date of this release. UNAUDITED
At or for the Three Months Ended June 30, (Amounts In Thousands,
Except Share and Per Share Amounts) For the Period: 2005 2004 %
Change Interest Income $18,931 $14,576 29.9% Interest Expense 7,115
4,503 58.0% Net Interest Income 11,816 10,073 17.3% Provision for
Loan Losses 390 451 (13.5%) Non-Interest Income 3,432 2,654 29.3%
Non-Interest Expense 12,425 10,141 22.5% Income Before Tax 2,433
2,135 14.0% Taxes 794 663 19.8% Net Income $1,639 $1,472 11.4% End
of Period: 6/30/05 6/30/04 % Change Assets $1,420,996 $1,175,882
20.9% Loans (gross) 1,110,235 904,402 22.8% Allowance for Loan
Losses 10,381 9,716 6.8% Deposits 1,070,465 918,809 16.5%
Shareholders' Equity 94,351 79,974 18.0% Per Share: Net Income
(basic) $0.45 $0.44 2.3% Net Income (diluted) $0.44 $0.44 0.0% Book
Value $25.51 $23.97 6.4% Dividends Declared $0.18 $0.18 0.0%
Average Shares Outstanding (basic) 3,676,129 3,335,842 Average
Shares Outstanding (diluted) 3,688,793 3,358,672 Ending Shares
Outstanding 3,699,253 3,335,930 Key Ratios: Net Interest Margin
3.68% 3.77% Return on Average Assets 0.46% 0.51% Return on Average
Common Equity 7.03% 7.28% Shareholders Equity to Assets Ratio 6.64%
6.80% Tier 1 Capital to Average Assets Ratio 6.52% 6.85%
Non-performing Loans/Total Loans 0.56% 0.51% Non-performing
Assets/Total Assets 0.54% 0.56% Allowance for Loan Losses/
Non-performing Loans 166.87% 209.61% UNAUDITED For the Six Months
Ended June 30, For the Period: 2005 2004 % Change Interest Income
$36,650 $28,944 26.6% Interest Expense 13,296 9,045 47.0% Net
Interest Income 23,354 19,899 17.4% Provision for Loan Losses 780
901 (13.4%) Non-Interest Income 7,525 5,349 40.7% Non-Interest
Expense 25,002 20,223 23.6% Income Before Tax 5,097 4,124 23.6%
Taxes 1,655 1,245 32.9% Net Income $3,442 $2,879 19.6% Per Share:
Net Income (basic) $0.94 $0.86 9.3% Net Income (diluted) $0.93
$0.86 8.1% Average Shares Outstanding (basic) 3,675,098 3,333,548
Average Shares Outstanding (diluted) 3,685,565 3,364,185 Dividends
Declared $0.36 $0.36 0.0% Key Ratios: Net Interest Margin 3.70%
3.76% Return on Average Assets 0.50% 0.50% Return on Average Common
Equity 7.48% 7.13% DATASOURCE: Merchants & Manufacturers
Bancorporation, Inc. CONTACT: Michael J. Murry, Chairman and Chief
Executive Officer, +1-414-425-5334, or Frederick R. Klug, Executive
Vice President and Chief Financial Officer, +1-262-827-5632, both
of Merchants & Manufacturers Bancorporation, Inc. Web site:
http://www.communitybancgroup.com/
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