NEW BERLIN, Wis., Oct. 27 /PRNewswire-FirstCall/ -- Merchants &
Manufacturers Bancorporation, Inc. ("Merchants") (NASDAQ:MMBI)
announced third quarter 2005 earnings of $1.7 million, or $0.47 per
diluted share, compared to $1.9 million or $0.55 per diluted share
for the third quarter 2004, representing a 10.6% decrease in net
income and a 14.6% decrease in diluted earnings per share. Net
income for the nine months ended September 30, 2005 was $5.2
million; a 7.5% increase from the $4.8 million earned for the same
period in 2004. Diluted earnings per share for the first nine
months of 2005 were $1.40, a 0.7% decrease from the $1.41 earned in
the first nine months of 2004. The decrease in net income for the
current quarter compared to the prior year is partially attributed
to a decline in the net interest margin, which decreased from 3.75%
for the three months ended September 30, 2004 to 3.63% for the
three months ended September 30, 2005. The yields on interest
bearing liabilities have increased more than the yields on interest
earning assets, thus resulting in a decline in the net interest
margin. 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 8.6% from $1.3 billion at September 30,
2004, to $1.4 billion at September 30, 2005. Gross loans increased
11.0% from $1.0 billion at September 30, 2004, to $1.1 billion at
September 30, 2005. Total deposits grew 12.8% from $998.6 million
at September 30, 2004 to $1.13 billion at September 30, 2005. Our
balance sheet growth since September 30, 2004 is due to internal
growth. 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 third
quarter we further realized the advantages and efficiencies of our
new operational platform. Our operational capabilities continue to
improve allowing our community bank personnel to focus on serving
our customers. Thus, we continue to grow the balance sheet
internally and realize operational efficiencies as core net income
during the third quarter increased compared to the second quarter
of 2005 despite pressure on our net interest margin. We expect
these positive trends to continue during 2005 and beyond." Net
interest income was $12.0 million for the three months ended
September 30, 2005 compared to $10.9 million for the same period in
2004, and $35.3 million for the nine months ended September 30,
2005 compared to $30.8 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. WSB generated net-interest income of $926,000 and $2.9
million during the three and nine months ended September 30, 2005,
respectively. Net interest margin was 3.63% and 3.68% for the three
and nine months ended September 30, 2005, respectively, compared to
3.75% 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 wholesale
funding. In addition, our net interest margin has been under
pressure as we have seen our deposit base shift from lower paying
variable rate deposit accounts into higher fixed rate instruments
such as certificate of deposits. While we will continue to focus on
generating low cost core deposits to fund future loan growth, we
continue to believe our balance sheet is positioned to take
advantage of increasing interest rates over the long run.
Merchants' provision for loan losses was $390,000 and $1.2 million
for the three and nine months ended September 30, 2005,
respectively, compared to $431,000 and $1.3 million for the same
periods in the prior year. Merchants' allowance for loan losses to
total loans ratio was 0.94% and 1.06% at September 30, 2005 and
2004, respectively. The ratio of allowance for loan losses to
non-performing loans was 175.4% at September 30, 2005 compared to
199.7% at September 30, 2004. Non-performing assets equaled 0.54%
of total assets at September 30, 2005 compared to 0.56% at
September 30, 2004. Non-interest income for the three and nine
months ended September 30, 2005 was $3.1 million and $10.7 million,
respectively, compared to $3.2 million and $8.6 million for the
same periods in the prior year, a decrease of 1.9% for the third
quarter and an increase of 24.7% year-to-date. Service charges on
deposit accounts increased $170,000 to $1.2 million and $650,000 to
$3.2 million for the three and nine months ended September 30,
2005, respectively. Service charges on loans increased $119,000 to
$861,000 and $1.0 million to $2.5 million for the three and nine
months ended September 30, 2005, respectively. Gains on sales of
mortgage loans were $102,000 and $301,000 for the three and nine
months ended September 30, 2005, respectively, compared to $70,000
and $364,000 for the same periods in the prior year. The gains on
the sale of both assets and securities amounted to $293,000 for the
nine month period ended September 30, 2005 compared to $348,000 for
the same period in the prior year. Other fee income for the nine
month period ending September 30, 2005 included non-recurring fee
income of $540,000 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
$180,000 and $627,000, respectively, during the three and nine
months ended September 30, 2005. Non-interest expense was $12.2
million for the third quarter of 2005 and $37.2 million for the
first nine months of 2005, compared to $11.0 million for the third
quarter of 2004 and $31.3 million for the first nine months of
2004, an increase of 10.3% and 18.9% respectively. Salaries and
employee benefits increased $977,000 for the quarter and $3.6
million year-to-date, occupancy expense increased $32,000 for the
quarter and $881,000 year-to-date and data processing fees
increased $312,000 for the quarter and $1.3 million year-to- date.
The growth in non-interest expense is partially affected by the
acquisition of WSB. The WSB operations added expenses of $842,000
and $2.6 million for the three and nine months ended September 30,
2005, respectively. Non-interest expense for the period ended
September 30, 2004 included $808,000 of expenses incurred for
implementing our "Vision Unlimited" project as well as the cost of
complying with the Sarbanes-Oxley Act of 2002. UNAUDITED Three
Months Ended Sept. 30, Nine Months Ended Sept. 30, 2005 2004 Change
2005 2004 Change (Dollars In Millions, Except Per Share Amounts)
Net Income $1.730 $1.934 (10.55%) $5.172 $4.813 7.46% Basic EPS
$0.47 $0.55 (14.55%) $1.41 $1.41 (0.00%) Diluted EPS $0.47 $0.55
(14.55%) $1.40 $1.41 (0.71%) Merchants & Manufacturers
Bancorporation, Inc. 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. 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 September 30, 2005 2004 % Change (Amounts In
Thousands, Except Share and Per Share Amounts) For the Period:
Interest Income $19,983 $15,877 25.86% Interest Expense 8,006 5,003
60.02% Net Interest Income 11,977 10,874 10.14% Provision for Loan
Losses 390 431 (9.51%) Non-Interest Income 3,147 3,209 (1.93%)
Non-Interest Expense 12,183 11,042 10.33% Income Before Income
Taxes 2,551 2,610 (2.26%) Income Taxes 821 676 21.45% Net Income $
1,730 $1,934 (10.55%) End of Period: 9/30/05 9/30/04 % Change
Assets $1,438,343 $1,323,460 8.68% Loans (gross) 1,118,389
1,007,499 11.01% Allowance for Loan Losses 10,482 10,725 (2.27%)
Deposits 1,126,288 998,621 12.78% Shareholders' Equity 95,179
93,500 1.80% Per Share: Net Income (basic) $0.47 $0.55 (14.55%) Net
Income (diluted) $0.47 $0.55 (14.55%) Book Value $25.72 $25.48
0.94% Dividends Declared $0.18 $0.18 0.00% Average Shares
Outstanding (basic) 3,700,456 3,517,569 Average Shares Outstanding
(diluted) 3,713,688 3,530,769 Ending Shares Outstanding 3,701,104
3,670,145 Key Ratios: Net Interest Margin 3.63% 3.75% Return on
Average Assets 0.48% 0.61% Return on Average Common Equity 7.20%
9.03% Shareholders Equity to Assets Ratio 6.62% 7.06% Tier 1
Capital to Average Assets Ratio 6.53% 7.19% Non-performing
Loans/Total Loans 0.53% 0.53% Non-performing Assets/Total Assets
0.54% 0.56% Allowance for Loan Losses/ Non-performing Loans 175.37%
199.72% UNAUDITED For the Nine Months Ended September 30, 2005 2004
% Change (Amounts In Thousands, Except Share and Per Share Amounts)
For the Period: Interest Income $56,633 $44,821 26.35% Interest
Expense 21,302 14,048 51.64% Net Interest Income 35,331 30,773
14.81% Provision for Loan Losses 1,170 1,332 (12.16%) Non-Interest
Income 10,672 8,558 24.70% Non-Interest Expense 37,185 31,265
18.93% Income Before Income Taxes 7,648 6,734 13.57% Income Taxes
2,476 1,921 28.89% Net Income $5,172 $4,813 7.46% Per Share: Net
Income (basic) $1.41 $1.41 0.00% Net Income (diluted) $1.40 $1.41
(0.71%) Average Shares Outstanding (basic) 3,683,643 3,395,336
Average Shares Outstanding (diluted) 3,695,156 3,421,026 Dividends
Declared $0.54 $0.54 0.00% Key Ratios: Net Interest Margin 3.68%
3.76% Return on Average Assets 0.49% 0.54% Return on Average Common
Equity 7.39% 7.79% DATASOURCE: Merchants & Manufacturers
Bancorporation, Inc. CONTACT: Michael J. Murry, Chairman of the
Board of Directors, +1-414-425-5334, or Frederick R. Klug,
Executive Vice President and Chief Financial Officer,
+1-262-827-5632, both of Merchants & Manufacturers
Bancorporation Web site: http://www.communitybancgroup.com/
Copyright