10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM - TO Commission File Number: 000-27905 MutualFirst Financial, Inc. -------------------------------------------------------------------------------- (Exact Name of registrant specified in its charter) Maryland 35-2085640 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 110 East Charles Street, Muncie, Indiana 47305 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (765) 747-2800 --------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] The number of shares of the Registrant's common stock, without par value, outstanding as of JUNE 30, 2000 was 5,819,611.
FORM 10 - Q MutualFirst Financial, Inc. INDEX Page PART I - FINANCIAL INFORMATION Number Item 1. Financial Statements Consolidated Condensed Balance Sheets at June 30, 2000 and December 31, 1999 Consolidated 3 Condensed Statement of Income for the three and six months ended June 30, 2000 and June 30, 1999 4 Consolidated Condensed Statement of Stockholders' Equity for the six months ended June 30, 2000 5 Consolidated Condensed Statement of Cash Flows for the six months ended June 30, 2000 and June 30, 1999 6 Notes to Unaudited Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 8 and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 14 Signature Page 15
2 PART 1 FINANCIAL INFORMATION ITEM 1. Financial Statements
MUTUALFIRST FINACIAL, INC. AND SUBSIDIARY Consolidated Condensed Balance Sheet (Unaudited) June 30, December 31, 2000 1999 ------------ ------------ Assets Cash $16,485,222 $19,217,186 Interest-bearing deposits 1,102,396 765,945 ------------ ------------ Cash and cash equivalents 17,587,618 19,983,131 Trading assets, at fair value 1,234,884 Investment securities: Available for sale 31,818,789 29,598,800 Held to maturity (fair value of $11,208,000 and $12,106,000) 11,683,979 12,449,013 ------------ ------------ Total investment securities 43,502,768 42,047,813 Loans 467,989,840 446,438,992 Allowance for loan losses (3,342,342) (3,652,073) ------------ ------------ Net loans 464,647,498 442,786,919 Premises and equipment 7,819,134 7,800,460 Federal Home Loan Bank of Indianapolis stock, at cost 5,338,500 5,338,500 Investment in limited partnerships 5,135,738 5,274,840 Cash surrender value of life insurance 11,088,611 10,806,957 Foreclosed real estate 1,419,644 728,737 Interest receivable: Loans 2,336,944 2,134,656 Mortgage-backed securities 54,508 58,687 Investment securities and interest-bearing deposits 473,639 459,616 Core deposit intangibles and goodwill 1,359,112 1,466,928 Deferred income tax benefit 2,722,531 2,670,886 Other assets 2,486,613 1,730,426 ------------ ------------ Total assets $565,972,858 $544,523,440 ============ ============ Liabilities Deposits Non-interest-bearing 21,287,756 14,360,929 Interest bearing 371,489,091 350,243,469 ------------ ------------ Total deposits 392,776,847 364,604,398 Federal Home Loan Bank Advances 64,767,011 72,289,384 Other Borrowings 1,706,996 2,608,354 Advances by borrowers for taxes and insurance 1,333,691 1,289,179 Interest payable 1,334,120 2,153,475 Other Liabilities 5,031,966 4,866,330 ------------ ------------ Total liabilities 466,950,631 447,811,120 ============ ============ Stockholders' Equity Preferred stock, $.01 par value Authorized and unissued --- 20,000,000 shares Common stock, $.01 par value Authorized --- 20,000,000 shares Issued and outstanding --- 5,819,611 58,196 58,196 Additional paid-in capital 56,732,884 56,740,190 Retained earnings 46,909,107 44,647,767 Accumulated other comprehensive loss (387,174) (284,047) Unearned employee stock ownership plan (ESOP) shares (4,290,786) (4,449,786) ------------ ------------ Total stockholders' equity 99,022,227 96,712,320 ------------ ------------ Total liabilities and stockholders' equity $565,972,858 $544,523,440 ============ ============
See notes to consolidated condensed financial statements. 3
MUTUALFIRST FINACIAL, INC. AND SUBSIDIARY Consolidated Condensed Statement of income (Unaudited) Three Months Ended Six Months Ended June 30 June 30 ------------------------- -------------------------- 2000 1999 2000 1999 ----------- ------------ ----------- ----------- Interest Income Loans receivable, including fees $9,038,297 $7,931,710 $17,743,917 $15,766,994 Trading account securities 17,735 8,192 24,441 Investment securities Mortgage-backed securities available for sale 240,529 62,150 478,668 158,332 Federal Home Loan Bank stock 106,187 72,050 212,373 143,308 Other investments 489,865 294,781 955,684 543,361 Deposits with financial institutions 9,062 23,841 22,533 109,777 ---------- ---------- ---------- ---------- Total interest income 9,883,940 8,402,267 19,421,367 16,746,213 ---------- ---------- ---------- ---------- Interest Expense Passbook savings 200,410 214,747 400,446 425,879 Certificates of deposit 3,379,056 3,358,424 6,658,783 6,698,021 Daily money market accounts 328,747 254,986 649,434 468,461 Demand and NOW acounts 122,703 161,945 243,971 323,704 Federal Home Loan Bank advances 953,123 660,820 1,763,097 1,325,858 Other interest expense 3,476 5,497 9,576 ---------- ---------- ---------- ---------- Total interest expense 4,984,039 4,654,398 9,721,228 9,251,499 ---------- ---------- ---------- ---------- Net Interest Income 4,899,901 3,747,869 9,700,139 7,494,714 Provision for loan losses 171,250 190,000 342,500 380,000 ---------- ---------- ---------- ---------- Net Interest Income After Provision for Loan Losses 4,728,651 3,557,869 9,357,639 7,114,714 ---------- ---------- ---------- ---------- Other Income Service fee income 511,892 448,054 988,489 835,621 Net realized gains on sales of available-for-sale securities 32,326 32,326 Net trading account profit (loss) (62,594) 25,116 (74,703) Equity in losses of limited partneships (88,160) (7,779) (90,707) (10,327) Commissions 170,926 100,740 298,907 183,574 Increase in cash surrender value of life insurance 161,655 105,000 281,655 210,000 Other income 144,138 63,147 230,872 152,766 ---------- ---------- ---------- ---------- Total other income 900,451 678,894 1,734,332 1,329,257 ---------- ---------- ---------- ---------- Other Expenses Salaries and employee benefits 1,809,368 1,592,979 3,657,573 3,162,038 Net occupancy expenses 172,241 159,470 351,414 326,260 Equipment expenses 187,527 188,167 382,226 340,240 Data processing fees 124,560 118,895 252,844 249,908 Deposit insurance expense 20,789 44,181 40,787 99,181 Advertising and promotion 114,609 139,375 225,864 234,002 Other expenses 868,458 592,516 1,566,177 1,174,898 ---------- ---------- ---------- ---------- Total other expenses 3,297,552 2,835,583 6,476,885 5,586,527 ---------- ---------- ---------- ---------- Income Before Income Tax 2,331,550 1,401,180 4,615,086 2,857,444 Income tax expense 763,000 453,500 1,539,000 934,000 ---------- ---------- ---------- ---------- Net Income $1,568,550 $ 947,680 $3,076,086 $1,923,444 ========== ========== ========== ========== Basic earnings per share $0.29 $0.57 Diluted earnings per share $0.29 $0.57 Dividends per share $0.07 $0.14
See notes to consolidated condensed financial statements. 4 MUTUALFIRST FINACIAL, INC. AND SUBSIDIARY Consolidated Condensed Statement of Stockholders' Equity For the Six Months Ended June 30, 2000 (Unaudited) Common Stock --------------------- Additional Shares paid-in Outstanding Amount capital ------------------------------------- Balances January 1, 2000 5,819,611 $58,196 $56,740,190 Comprehensive income Net income for the period Other comprehensive loss, net of tax Unrealized losses on securities Comprehensive income ESOP shares earned (7,306) Cash dividends ($.14 per share) ---------------------------------- Balances, June 30, 2000 5,819,611 $58,196 $56,732,884 ==================================
Accumulated Other Unearned Comprehensive Retained Comprehensive ESOP Income Earnings Loss shares Total -------------------------------------------------------------------- Balances January 1, 2000 $44,647,767 ($284,047) ($4,449,786) $96,712,320 Comprehensive income Net income for the period $3,076,086 3,076,086 3,076,086 Other comprehensive loss, net of tax Unrealized losses on securities (103,127) (103,127) (103,127) ---------- Comprehensive income $2,972,959 ========== ESOP shares earned 159,000 151,694 Cash dividends ($.14 per share) (814,746) (814,746) ----------------------------------------------------- Balances, June 30, 2000 $46,909,107 ($387,174) ($4,290,786) $99,022,227 =====================================================
See notes to consolidated condensed financial statements. 5
MUTUALFIRST FINACIAL, INC. AND SUBSIDIARY Consolidated Condensed Statement of Cash Flows (Unaudited) Six Months Ended for June 30, ------------------------------- 2000 1999 ------------ ------------ Operating Activities Net income $ 3,076,086 $ 1,923,444 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 342,500 380,000 Securities gains (32,326) Net loss on sale of real estate owned 94,363 34,077 Securities accretion, net (17,747) (9,458) ESOP shares earned 151,694 Equity in losses of limited partnerships 90,707 10,327 Amortization of net loan origination costs 937,081 108,723 Amortization of core deposit intangibles and goodwill 107,816 117,769 Depreciation and amortization 373,817 333,241 Deferred income tax 96,135 Change in Trading account securities 1,234,884 (1,357,734) Interest receivable (212,132) (300,300) Other assets (604,492) 1,164,057 Interest payable (819,355) (475,514) Other liabilities 13,941 (129,436) Increase in cash surrender value of life insurance (281,654) (210,000) Other adjustments 131,602 ----------- ----------- Net cash provided by operating activities 4,487,509 1,784,607 ----------- ----------- Investing Activities Purchases of securities available for sale (3,389,592) (2,014,539) Proceeds from maturities and paydowns of securities available for sale 1,040,782 963,216 Proceeds from sales of securities available for sale 4,874,497 Purchases of securities held to maturity (6,006,993) Proceeds from maturities and paydowns of securities held to maturity 756,830 4,175,686 Net change in loans (24,309,456) (23,276,595) Purchases of premises and equipment (392,490) (390,906) Proceeds from real estate owned sales 416,009 203,149 Distribution from limited partnership 48,395 5,521 Other investing activities (31,984) (6,543) ----------- ----------- Net cash used by investing activities (25,861,506) (21,473,507) ----------- ----------- Financing Activities Net change in Noninterest-bearing, interest bearing demand and savings deposits 1,685,941 948,842 Certificates of deposits 26,486,508 17,614,093 Short-term borrowings (840,000) Repayment of note payable (61,358) (30,678) Proceeds from FHLB advances 125,500,000 32,000,000 Repayment of FHLB advances (133,022,373) (31,270,716) Net change in advances by borrowers for taxes and insurance 44,512 89,422 Dividends Paid (814,746) ----------- ----------- Net cash provided by financing activities 18,978,484 19,350,963 ----------- ----------- Net Change in Cash and Cash Equivalents (2,395,513) (337,937) Cash and Cash Equivalents, Beginning of Year 19,983,131 12,938,102 ----------- ----------- Cash and Cash Equivalents, End of Period $17,587,618 $12,600,165 =========== =========== Additional Cash Flows Information Interest paid 10,540,583 9,727,013 Income tax paid 1,176,000 670,000 Transfers from loans to foreclosed real estate 1,169,296 394,862
See notes to consolidated condensed financial statements. 6 MutualFirst Financial, Inc. and Subsidiaries NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1: Basis of Presentation The consolidated financial statements include the accounts of MutualFirst Financial, Inc. (the "Company"), its wholly owned subsidiary, Mutual Federal Savings Bank, a federally chartered savings bank ("Mutual Federal"), and Mutual Federal's two wholly owned subsidiaries, First MFSB Corporation and Third MFSB Corporation. A summary of significant accounting policies is set forth in Note 1 of Notes to Financial Statements included in the December 31, 1999 Annual Report to Shareholders. All significant inter-company accounts and transactions have been eliminated in consolidation. The interim consolidated condensed financial statements have been prepared in accordance with instructions to Form 10-Q, and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The interim consolidated condensed financial statements at June 30, 2000, and for the three month and six month periods ended, June 30, 2000 and 1999 have not been audited by independent accountants, but in the opinion of management, reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for such periods. NOTE 2: Earnings Per Share Earnings per share have been computed based upon the weighted average common and common equivalent shares outstanding during the period subsequent to Mutual Federal's conversion to a stock savings bank on December 29, 1999. Unearned Employee Stock Ownership Plan shares have been excluded from the computation of average common shares outstanding. For the three months and six months ended June 30, 2000, weighted average shares outstanding for basic and diluted earnings per share were 5,386,557 and 5,382,582 respectively. NOTE 3: Business Combination On June 7, 2000, the Company signed a definitive agreement to acquire Marion Capital Holdings, Inc. (Marion, Indiana). The acquisition will be accounted for under the purchase method of accounting. Under the terms of the agreement, the Company will exchange 1.862 shares of the Company's common stock for each share of Marion Capital Holdings, Inc.'s common stock. The transaction is subject to approval by shareholders of Marion Capital Holdings, Inc. and appropriate regulatory agencies. As of June 30, 2000, Marion Capital Holdings, Inc. had total assets and shareholders' equity of $198,867,000 and $31,785,000, respectively. 7 Item #2: Management's Discussion and Analysis of Financial Condition and Results of Operations. General MutualFirst Financial, Inc., a Maryland Corporation (the "Company"), was organized in September, 1999. On December 29, 1999, it acquired the common stock of Mutual Federal Savings Bank ("Mutual Federal") upon the conversion of Mutual Federal from a federal mutual savings bank to a federal stock savings bank. Mutual Federal was originally organized in 1889 and currently conducts its business from thirteen full service offices located in Delaware, Randolph, and Kosciusko Counties, Indiana, with its main office located in Muncie. Mutual Federal's principal business consists of attracting deposits from the general public and originating fixed rate and adjustable rate loans secured primarily by first mortgage liens on one-to- four family residential real estate. Mutual Federal's deposit accounts are insured up to applicable limits by the SAIF of the FDIC. Mutual Federal offers a number of financial services, including: (1) one-to-four family residential real estate loans; (2) commercial real estate loans; (3) real estate construction loans; (4) land loans; (5) multi-family residential loans; (6) consumer loans, including home equity loans, automobile loans, recreational vehicle and boat loans; (7) commercial loans; (8) money market demand accounts ("MMDA's"); (9) savings accounts; (10) checking accounts; (11) NOW accounts; and (12) certificates of deposit. Mutual Federal currently owns two subsidiaries, First MFSB Corporation and Third MFSB Corporation. The assets of First MFSB Corporation consist of an investment in Family Financial Life Insurance Company. Family Financial is an Indiana stock insurance company that primarily engages in retail sales of mortgage and credit life insurance products in connection with loans originated by its shareholder financial institutions. Third M.F.S.B., which does business as Mutual Financial Services, offers tax-deferred annuities, long-term health and life insurance products. All securities related products and services made available through Mutual Financial Services are offered by a third party independent broker-dealer. The Company's results of operations depend primarily upon the level of net interest income, which is the difference between the interest income earned on interest earning assets, such as loans and investments, and costs incurred with respect to interest bearing liabilities, primarily deposits and borrowings. Results of operations also depend upon the level of the Company's non-interest income, including fee income and service charges, and the level of its non-interest expense, including general and administrative expenses. Financial Condition Assets totaled $566 million at June 30, 2000, an increase from December 31, 1999 of $21.5 million for an annualized growth rate of 7.9%. This growth occurred in net loans, up $21.9 million from year-end 1999 primarily due to a $16.8 million increase in consumer loans. Loan growth was funded by growth of deposits and a reduction of cash and cash equivalents. 8 Deposits totaled $392.8 million at June 30, 2000 an increase of $28.2 million or an annualized rate of 15.5% from December 31, 1999. Increases in Public Entity Deposits of $23.4 million, and increases in short-term savings and transaction type accounts of $7 million account for this growth. Total borrowings decreased $8.4 million to $66.5 million, as a result of the utilization of a portion of the proceeds from the stock sale and a reduction of cash, which had been held for Y2K purposes. Stockholders' equity increased $2.3 million from $96.7 million at December 31, 1999 to $99 million at June30, 2000. The increase was due to net income for the six months ended June 30, 2000 of $3.1 million and Employee Stock Ownership Plan (ESOP) shares earned of $152,000. Cash dividends declared of $815,000 and an increase in the unrealized loss on available for sale securities of $103,000 partially offset these increases. Comparison of the operating results for the three months ended June 30, 2000 and 1999. Net income was $1.6 million or 29 cents for both basic and diluted earnings per share for the quarter ended June 30, 2000. This compared to net income for the comparable period in 1999 of $948,000. The increase in earnings was primarily due to an increase in net interest income partially offset by increases in non-interest expenses and income tax expense. The annualized return on average assets was 1.13% and .83% for the three months ended June 30, 2000, and 1999, respectively. Interest income increased $1.5 million or 17.6% from $8.4 million for the three months ended June 30, 1999 to $9.9 million for the same period in 2000. Interest expense increased $300,000 or 7.1% from $4.7 million for the three months ended June 30, 1999, to $5.0 million for the same period in 2000. As a result, net interest income for the three months ended June 30, 2000 increased $1.2 million or 30.7% compared to the same period in 1999. The increase in net interest income was due primarily to an increase of $46 million in the average outstanding loans receivable and $19.1 million in the average balance of investment securities available for sale. The increase in average loans outstanding was due to increased loan demand. The increase in investment securities available for sale was primarily attributable to proceeds received in conjunction with the Company's stock issuance. Also, the net interest rate spread increased to 3.25% for the three months ended June 30, 2000 from 3.16% during the same period in 1999, primarily due to the use of the proceeds received with the company's stock issuance. The Company's provision for loan losses for the three-months ended June 30, 2000 was $171,000 compared to $190,000 for the same period in 1999. Mutual Federal reviews all loans on an individual basis when the loan reaches 90 days past due, at which point they are put on non-accrual status. At June 30, 2000 and December 31, 1999, respectively, non-accrual loans were $416,000 and $753,000. The allowance for loan losses was $3.3 million or .71% of net loans and $3.7 million or approximately .82% of net loans at June 30, 2000 and December 31, 1999, respectively. 9 Non-interest income increased $221,000, or 32.5% for the three months ended June 30, 2000 compared to the same period in 1999 primarily due to transaction account growth resulting in an increase in service fee income and commissions of $64,000 and no net trading account activity compared to a trading loss of $63,000 for the three month period ended June 30, 1999. Non-interest expense increased $461,000 or 16.3% for the three months ended June 30, 2000 compared to the same period in 1999. Salaries and employee benefits were $1.8 million for the three months ended June 30, 2000 compared to $1.6 million for the 1999 period, an increase of $200,000 or 12.5%. This increase resulted primarily from $80,000 of compensation expense related to the ESOP, and the additions to staffing for a new in-store branch opened in 1999. In addition, both the commercial and consumer lending staffs were expanded. Other expenses also increased $280,000 for the three months ended June 30, 2000 compared to the same period in 1999. The increase in other expenses resulted from nominal increases in a variety of expense categories. These increases were partially offset by a $47,000 decrease in deposit insurance expense and charitable contributions from the three months ended June 30, 2000 compared to the same period of 1999. Income tax expense increased $310,000 for the three months ended June 30, 2000 compared to the same period in 1999. The increase was a result of increased taxable income for the period. Comparison of the operating results for the six months ended June 30, 2000 and 1999. Net income was $3.1 million or 57 cents for both basic and diluted earnings per share for the six-month period ended June 30, 2000. This compared to net income for the comparable period in 1999 of $1.9 million. The increase in earnings was primarily due to an increase in net interest income partially offset by an increase in non-interest expenses and income tax expense. The annualized return on average assets was 1.12% and .80% for the six-month period ended June 30, 2000, and 1999, respectively. Interest income increased $2.7 million, or 16.2%, from $16.7 million for the six months ended June 30, 1999 to $19.4 million for the same period in 2000. Interest expense increased $470,000, or 5.1%, from $9.3 million for the six-months ended June 30, 1999 to $9.7 million the same period in 2000. As a result, net interest income for the six months ended June 30, 2000 increased $2.2 million, or 29.4%, compared to the same period in 1999. The increase in net interest income was due primarily to a $46.3 million increase in the average outstanding balance of loans receivable and a $20.2 million increase in the average outstanding balance of investment securities available for sale. The increase in average loans outstanding was due to increased loan demand. The increase in investment securities available for sale was from proceeds received in conjunction with the Company's stock issuance. Net proceeds of the Company's stock issuance after cost, and excluding the shares issued for the ESOP, were $49.9 million. 10 Also, the net interest rate spread increased to 3.24% for the six months ended June 30, 2000 from 3.22% during the same period in 1999. The Company's provision for loan losses for the six months ended June 30, 2000 was $342,000, compared to $380,000 for the same period in 1999. Mutual Federal reviews all loans on an individual basis when the loan reaches 90 days past due, at which point they are put on non-accrual status. Non-interest income increased $400,000, or 30.5%, for the six months ended June 30, 2000 compared to the same period in 1999 primarily due to transaction account growth resulting in an increase in service fee income and commissions of $268,000 and a gain of $25,000 on net trading account activity compared to a trading loss of $75,000 for the six months ended June 30, 1999. Non-interest expense increased $900,000, or 16.1% for the six months ended June 30, 2000, compared to the same period in 1999. Salaries and employee benefits were $3.7 million for the six months ended June 30, 2000, compared to $3.2 million for the 1999 period, an increase of $500,000, or 15.6%. This increase resulted primarily from $152,000 of compensation expense related to the ESOP, and the additions to staffing for a new in-store branch opened in 1999. In addition, both the commercial and consumer lending staffs were expanded. Other expenses also increased $391,000 for the six months ended June 30, 2000, compared to the same period in 1999. The increase in other expenses resulted from nominal increases in a variety of expense categories. These increases were partially offset by a $58,000 decrease in deposit insurance expense from the six months ended June 30, 2000, compared to the same period in 1999 due to a rate reduction. Income tax expense increased $605,000 for the six months ended June 30, 2000, compared to the same period in 1999. The increase was a result of increased taxable income for the period. Liquidity and Capital Resources The standard measure of liquidity for savings associations is the ratio of cash and eligible investments to a certain percentage of net withdrawable savings accounts and borrowings due within one year. The minimum required ratio is currently set by Office of Thrift Supervision regulation at 4%. As of June 30, 2000, Mutual Federal had liquid assets of $45.9 million and a liquidity ratio of 8.95%. 11 ITEM #3 - Quantitative and Quantitative Disclosures about Market Risk Presented below as of June 30, 2000 and 1999 is an analysis performed by the OTS of Mutual Federal's interest risk as measured by changes in Mutual Federal's net portfolio value ("NPV") for instantaneous and sustained parallel shifts in the yield curve, in 100 basis point increments, up and down 300 basis points. June 30, 2000 Net Portfolio Value NPV as % of PV Assets Changes --------------------- In Rates $ Amount $ Change % Change NPV Ratio Change -------- -------- -------- -------- --------- ------- +300 bp 43,916 -29,825 -40% 8.57% -478 bp +200 bp 54,010 -19,732 -27% 10.27% -308 bp +100 bp 64,143 -9,598 -13% 11.90% -146 bp 0 bp 73,742 13.35% -100 bp 81,582 7,840 11% 14.47% +112 bp -200 bp 86,101 12,359 17% 15.05% +169 bp -300 bp 90,096 16,354 22% 15.52% +217 bp June 30, 1999 Net Portfolio Value NPV as % of PV Assets Changes --------------------- In Rates $ Amount $ Change % Change NPV Ratio Change -------- -------- -------- -------- --------- ------- +300 bp 21,591 -24,027 -53% 4.75% -460 bp +200 bp 30,255 -15,363 -34% 6.49% -286 bp +100 bp 38,555 -7,063 -15% 8.07% -128 bp 0 bp 45,618 9.35% -100 bp 50,475 4,858 11% 10.18% +83 bp -200 bp 53,776 8,158 18% 10.69% +135 bp -300 bp 56,963 11,345 25% 11.18% +183 bp The analysis at June 30, 2000 indicates that there have been no material changes in market interest rates for Mutual Federal's interest rate sensitivity instruments which would cause a material change in the market risk exposures which effect the quantitative and qualitative risk disclosures as presented in item 7A of the Company's annual report on Form 10-K for the period ended December 31, 1999. 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and use of Proceeds None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to Vote of Security Holders. On April 26, 2000, the Company held its annual meeting of the shareholders. A total of 4,472,556 shares of common stock were represented in person or by proxy at the meeting. William V. Hughes was elected to the Board of Directors for a three-year term expiring in 2003. 4,378,731 shares were voted in favor of the election of the nominee and there were 93,825 votes withheld. R. Donn Roberts was elected to the Board of Directors for a three-year term, expiring in 2003. 4,370,827 shares were voted in favor of the election of the nominee and there were 101,729 votes withheld. James D. Rosema was elected to the Board of Directors for a three-year expiring in 2003. 4,366,506 shares were voted in favor of the election of the nominee and there were 106,050 votes withheld. The shareholders approved and ratified the appointment of Olive LLP as the Company's independent auditors for the fiscal year ending December 31, 2000. There were 4,416,526 shares voted in favor, 49,950 were voted against, and 6,080 abstentions. Item 5. Other Information. None. 13 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 27. Financial Data Schedule (b) On June 8, 2000 the Company filed a current report on Form 8-K disclosing the merger between MutualFirst Financial, Inc. and Marion Capital Holdings. The Agreement and Plan of Reorganization is attached to Form 8-K as an Exhibit thereto. 14 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MutualFirst Financial, Inc. Date: August 11, 2000 By: /s/ R. Donn Roberts ------------------------- R. Donn Roberts President and Chief Executive Officer Date: August 11, 2000 By: /s/ Timothy J. McArdle ---------------------------- Timothy J. McArdle Senior Vice President and Treasurer 15