On Dec 27, Zacks Investment Research upgraded Mutualfirst Financial Inc. (MFSF) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Mutualfirst Financial has witnessed positive estimate revision on the back of strong third-quarter 2013 results and the recent redemption of its remaining preference shares. Further, the company has delivered positive earnings surprises in the last 4 quarters, with an average beat of 16.0%. Moreover, the long-term expected earnings growth rate for this stock is 2%.
On Dec 26, Mutualfirst Financial declared redemption of all its remaining preference shares that were issued to Treasury under the Small Business Lending Fund program. The redemption not only reduced the company’s interest expenses, but also paved the way for improved capital ratios. Further, the company did not incur any additional debt or dilute common stock for funding the redemption, thereby reflecting a solid liquidity position.
On Oct 22, Mutualfirst Financial reported its third-quarter results with earnings per share of 30 cents, beating the Zacks Consensus Estimate by 25.0%.
Results benefited from lower-than-expected operating expenses and declining provision for credit losses, partially offset by a fall in net interest income and non interest income.
Non interest expenses declined 7.9% year over year to $9.3 million. Moreover, loan balances increased 1.5% year over year to 9.7 billion. Also, asset quality improved with non-performing assets as a percentage of total assets declining 62 bps to 1.46% and provision fro credit losses declining significantly by almost 50% to 0.7 million.
On the flip side, net interest income were down roughly 1% to year over year to 10.2 million, while non interest income declined 11% year over year to 3 million.
Additionally, over the last 60 days, Zacks Consensus Estimate for 2013 remained stable at $1.02 per share. However, for 2014, it advanced 9.1% to $1.20 per share.
Other Stocks to Consider
Other saving and loan institutes worth considering include Washington Federal Inc. (WAFD), Great Southern Bancorp Inc. (GSBC) and Teche Holding Company (TSH). All these stocks carry the same Zacks Rank as Mutualfirst Financial.