NEW BERLIN, Wis., Oct. 26 /PRNewswire-FirstCall/ -- Merchants &
Manufacturers Bancorporation, Inc. ("Merchants") (NASDAQ:MMBI)
announced net income of $1.6 million, or $0.43 per diluted share,
for the three months ended September 30, 2006 compared to $1.7
million, or $0.47 per diluted share for the three months ended
September 30, 2005, representing an 8.8% decrease in net income.
Net income for the nine months ended September 30, 2006 was $4.0
million; a 23.2% decrease from the $5.2 million earned for the same
period in 2005. Diluted earnings per share for the nine months
ended September 30, 2006 were $1.07, a 23.6% decrease from the
$1.40 earned in the same period in the prior year. The decrease in
earnings for the nine months ended September 30, 2006 compared to
the same period in the prior year is partially attributable to
non-recurring items incurred during 2005. The nine months ended
September 30, 2006 included pre-tax non-recurring income of
$204,000 compared to $784,000 for the same period in 2005. Earnings
were also affected by a decline in the net interest margin to 3.38%
for the nine months ended September 30, 2006 compared to 3.68% for
the same period in the prior year. The decrease in our net interest
margin is due to our funding loan growth with more expensive
wholesale funding compared to the lower cost of core deposits.
Merchants' total assets increased 3.2% from $1.4 billion at
September 30, 2005, to $1.5 billion at September 30, 2006. Gross
loans increased 5.9% from $1.1 billion at September 30, 2005, to
$1.2 billion at September 30, 2006 due to internal loan growth.
Total deposits grew 1.1% from $1.13 billion at September 30, 2005
to $1.14 billion at September 30, 2006 primarily due to an increase
in brokered deposits. Michael J. Murry, Chairman, stated, "We
continue to make significant quarter over quarter progress.
Earnings per share increased from $0.28 in the first quarter of
2006 to $0.37 in the second quarter of 2006 representing a 32.1%
increase. Subsequently, earnings per share increased from $0.37 in
the second quarter of 2006 to $0.43 in the third quarter of 2006
representing a 16.2% increase. While loan volume decreased during
the quarter due to two significant pay-offs, our net interest
margin held steady at 3.37% after six consecutive quarters of
declining margins. The main driver of the quarter over quarter
increase in earnings was strong loan fee income and minimal
increases in operating expenses." Net interest income was $11.7
million for the three months ended September 30, 2006 compared to
$12.0 million for the same period in the prior year, and $34.6
million for the nine months ended September 30, 2006 compared to
$35.3 million for the same period in the prior year. The net
interest margin was 3.37% and 3.38% for the three and nine months
ended September 30, 2006, respectively, compared to 3.63% and 3.68%
for the same periods in the prior year. The decline in net interest
margin was due to strong loan growth which was funded with higher
cost wholesale funding instead of lower cost core deposits. For the
three and nine months ended September 30, 2006 and 2005, the
provision for loan losses was $390,000 and $1.2 million,
respectively, in each period. The ratio of allowance for loan
losses to total loans was 0.98% and 0.94% at September 30, 2006 and
2005, respectively. The ratio of allowance for loan losses to
non-performing loans was 106.7% at September 30, 2006 compared to
175.4% at September 30, 2005. The ratio of non-performing assets to
total assets equaled 0.75% at September 30, 2006 compared to 0.54%
at September 30, 2005. Non-interest income for the three and nine
months ended September 30, 2006 was $3.6 million and $10.6 million,
respectively, compared to $3.1 million and $10.7 million for the
three and nine months ended September 30, 2005, an increase of
14.4% for the quarter and a decrease of 0.4% year-to-date. We
continue to have modest increases in service charges on deposit
accounts and loan fee income that are partially offset by continued
slowing of the mortgage loan market as interest rates continue to
climb. The year over year decrease in non-interest income for the
nine month period is also attributable to one- time net gains of
$784,000 during 2005 compared to $204,000 in 2006. Non-interest
expense for the three and nine months ended September 30, 2006 was
$12.5 million and $38.3 million, respectively, compared to $12.2
million and $37.2 million for the same periods in the prior year,
an increase of 2.9% and 3.0%, respectively. Salaries and employee
benefits increased $357,000 for the quarter and $1.2 million
year-to-date primarily due to a significant increase in the cost of
health insurance and normal pay increases. Most other operating
expenses continue to trend down as occupancy expense decreased
$15,000 for the quarter and $191,000 year-to-date and marketing and
business development decreased $75,000 for the quarter and $124,000
year-to- date. Effective January 1, 2006, the Corporation adopted
FAS 123(R) which resulted in additional compensation cost of $5,000
and $70,000 for the three and nine months ended September 30, 2006,
respectively. UNAUDITED Three Months Ended Sept. 30, Nine Months
Ended Sept. 30, 2006 2005 Change 2006 2005 Change (Dollars In
Millions, Except Per Share Amounts) Net Income $ 1.578 $ 1.730
(8.8%) $ 3.973 $5.172 (23.2%) Basic EPS $0.43 $0.47 (8.5%) $1.08
$1.41 (23.4%) Diluted EPS $0.43 $0.47 (8.5%) $1.07 $1.40 (23.6%)
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 48 offices in the
communities they serve with more than 100,000 clients and total
assets of $1.5 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 September 30, 2006 2005 % Change
(Dollars In Thousands, Except Share and Per Share Amounts) For the
Period: Interest Income $23,599 $19,983 18.10% Interest Expense
11,901 8,006 48.65% Net Interest Income 11,698 11,977 (2.33%)
Provision for Loan Losses 390 390 0.00% Non-Interest Income 3,601
3,147 14.43% Non-Interest Expense 12,541 12,183 2.94% Income Before
Income Taxes 2,368 2,551 (7.17%) Income Taxes 790 821 (3.78%) Net
Income $1,578 $ 1,730 (8.79%) End of Period: 9/30/06 9/30/05 %
Change Assets $1,484,635 $1,438,343 3.22% Loans (gross) 1,184,350
1,118,389 5.90% Allowance for Loan Losses 11,550 10,482 10.19%
Deposits 1,138,141 1,126,288 1.05% Shareholders' Equity 94,955
95,179 (0.24%) Per Share: Net Income (basic) $0.43 $0.47 (8.51%)
Net Income (diluted) $0.43 $0.47 (8.51%) Book Value $25.75 $25.72
0.14% Dividends Declared $0.18 $0.18 0.00% Average Shares
Outstanding (basic) 3,687,180 3,700,456 Average Shares Outstanding
(diluted) 3,699,330 3,713,688 Ending Shares Outstanding 3,687,180
3,701,104 Key Ratios: Net Interest Margin 3.37% 3.63% Return on
Average Assets 0.42% 0.48% Return on Average Common Equity 6.52%
7.20% Shareholders Equity to Assets Ratio 6.40% 6.62% Tier 1
Capital to Average Assets Ratio 6.37% 6.53% Non-performing
Loans/Total Loans 0.91% 0.53% Non-performing Assets/Total Assets
0.75% 0.54% Allowance for Loan Losses/ Non-performing Loans 106.70%
175.37% UNAUDITED For the Nine Months Ended September 30, For the
Period: 2006 2005 % Change Interest Income $67,857 $56,633 19.82%
Interest Expense 33,247 21,302 56.07% Net Interest Income 34,610
35,331 (2.04%) Provision for Loan Losses 1,170 1,170 0.0%
Non-Interest Income 10,635 10,672 (0.35%) Non-Interest Expense
38,292 37,185 2.98% Net Before Tax 5,783 7,648 (24.39%) Income Tax
1,810 2,476 (26.90%) Net Income $3,973 $5,172 (23.18%) Per Share:
Net Income (basic) $1.08 $1.41 (23.40%) Net Income (diluted) $1.07
$1.40 (23.57%) Average Shares Outstanding (basic) 3,694,847
3,683,643 Average Shares Outstanding (diluted) 3,709,617 3,695,156
Dividends Declared $0.54 $0.54 0.0% Key Ratios: Net Interest Margin
3.38% 3.68% Return on Average Assets 0.36% 0.49% Return on Average
Common Equity 5.54% 7.39% 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, Inc. Web site: http://www.communitybancgroup.com/
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