GNADENHUTTEN, Ohio, April 26, 2005 (PRIMEZONE) -- Indian Village Bancorp, Inc. (OTCBB:IDVB), the holding company for Indian Village Community Bank, today reported results for the three months and nine months ended March 31, 2005, and that it intends to record an other-than-temporary non-cash, non-operating impairment charge of approximately $280,000 after-tax, or $(0.75) per diluted share, in the quarter ended March 31, 2005, related to certain Fannie Mae and Freddie Mac preferred stock that it holds.
Indian Village holds these investment grade securities as part of its available-for-sale investment portfolio. Although these issues are equity securities, experts in the investment industry acknowledge that these securities act like a bond and are priced similar to the way bonds are priced. In March 2004, the Emerging Issues Task Force of the Financial Accounting Standards Board released its Issue No. 03-1, regarding the Other Than Temporary Impairment of Investments. FASB has not made a finalized ruling on Issue No. 03-1 to date. As a result of this release, the accounting profession determined that an equity security must be considered other than temporarily impaired if there is a material reduction in the market price of the security from its book value. After analyzing the market value of the preferred stock issues we hold in our portfolio it is estimated that under Generally Accepted Accounting Principles the market devaluations should be recorded as a reduction in comprehensive income. The Bank has been closely following the market valuations of these securities and recent financial news on these agencies, and has concluded in consultation with its independent accountants, that these securities are other-than-temporarily impaired under guidance provided by Financial Accounting Standards Board (FASB) 115.
"We are simply making an `abundance of caution' move as we do not believe the non-cash impairment charge reflects the true long-term value of these investments," said Marty Lindon President and CEO. "We believe this is the conservative interpretation of current accounting standards.
"We look forward to delivering strong results to our shareholders and to the communities we serve. We believe this adjustment at this time eliminates uncertainty about the potential future effects of either of these issues," Lindon added.
Net loss for the three months ended March 31, 2005 totaled $(218,000) compared to net income of $94,000 for the same period in 2004, a decrease of $312,000. Net loss was $(66,000) for the nine months ended March 31, 2005 compared to net income of $301,000 for the nine months ended March 31, 2004, a decrease of $367,000. Earnings per share for the period ending March 31, 2004 have been restated to reflect the 10% stock dividend paid to shareholders on January 6, 2005. Basic earnings (loss) per share were $(0.59) and $0.24 for the three months ended March 31, 2005 and March 31, 2004, respectively. Diluted earnings (loss) per share were $(0.59) and $0.23 for the three months ended March 31, 2005 and March 31, 2004, respectively. Basic earnings (loss) per share were $(0.18) and $0.76 for the nine months ended March 31, 2005 and March 31, 2004, respectively. Diluted earnings (loss) per share were $(0.18) and $0.74 for the nine months ended March 31, 2005 and March 31, 2004, respectively.
Net income excluding the impairment charge for the three months ended March 31, 2005 totaled $62,000 compared to net income of $94,000 for the same period in 2004, a decrease of $32,000, or 34.0%. Net income excluding the impairment charge for the nine months ending March 31, 2005 totaled $214,000 compared to net income of $301,000 for the nine months ended March 31, 2004, a decrease of $87,000, or 28.9%. Basic earnings per share excluding the impairment charge were $0.17 and $0.24 for the three months ended March 31, 2005 and March 31, 2004, respectively. Diluted earnings per share excluding the impairment charge were $0.16 and $0.23 for the three months ended March 31, 2005 and March 31, 2004, respectively. Basic earnings per share excluding the impairment charge were $0.58 and $0.76 for the nine months ended March 31, 2005 and March 31, 2004, respectively. Diluted earnings per share excluding the impairment charge were $0.57 and $0.74 for the nine months ended March 31, 2005 and March 31, 2004, respectively.
Net interest income after the provision for loan losses for the three months ended March 31, 2005 totaled $511,000 as compared to $487,000 for the same period in 2004, an increase of $24,000, or 4.9%. Net interest income after the provision for loan losses totaled $1.6 million for the nine months ended March 31, 2005, an $117,000 increase from the same period in 2004. Total interest income was $1.3 million for the three months ended March 31, 2005, a $21,000 increase from the same three months period in 2004. Total interest income was $3.9 million for the nine months ended March 31, 2005, a $98,000 increase from the same nine month period in 2004. Total interest income increased primarily because of a shift in interest-earning assets from securities available for sale to higher yielding loans. Interest expense for the three months ended March 31, 2005 was $742,000, a $4,000 decrease from the same period one year prior. Interest expense for the nine months ended March 31, 2005 was $2.3 million, a $10,000 decrease from the same period in 2004. Interest expense decreased due to a decrease in borrowings offset by an increase in deposits. The provision for loan losses for the three months ended March 31, 2005 was $31,000 compared to $30,000 for March 31, 2004. The provision for loan losses for the nine months ended March 31, 2005 was $91,000 compared to $100,000, a decrease of $9,000, or 9.0%.
Non-interest income (loss) for the three months ended March 31, 2005 was $(250,000), compared to $88,000 for the same period in 2004, a decrease of $338,000. For the nine months ended March 31, 2005, non-interest income (loss) was $(152,000) a decrease of $370,000 from the same period in 2004. The decrease in non-interest income was primarily attributed to the impairment charge and a decrease in realized gains on sales of securities. Non-interest expense for the three months ended March 31, 2005 was $475,000, an $11,000 decrease from the same period in 2004. Non-interest expense for the nine months ended March 31, 2005 was $1.5 million, an $114,000, or 8.3% increase from the same period in 2004. The primary factors contributing to the increase in non-interest expense was the increase in salaries and employee benefits, occupancy and equipment, data processing and other expenses. Other expenses primarily increased due to several ongoing projects the Bank is undertaking to improve customer service, including offering check imaging to our customers, changing our debit card/ATM processing and offering a fully operational web-site to our customers by the end of fiscal 2005.
At March 31, 2005 total assets were $97.3 million compared to $99.6 million at June 30, 2004, a decrease of $2.3 million, or 2.3%. Securities available for sale decreased to $25.2 million at March 31, 2005 from $37.3 million at June 30, 2004, a decrease of $12.0 million, or 32.3%. Net loans receivable increased to $59.7 million at March 31, 2005 from $53.9 million at June 30, 2004, an increase of $5.8 million, or 10.8%. The increase in net loans receivable consists primarily of an increase in residential and consumer loans. Deposits increased to $61.5 million at March 31, 2005 from $60.5 million at June 30, 2004, an increase of $909,000, or 1.5%. The increase in total deposits consists primarily of an increase to certificates of deposit offset by a decrease in non-interest bearing demand deposit accounts. Borrowings from the FHLB totaled $26.8 million at March 31, 2005, compared to $30.5 million at June 30, 2004, a decrease of $3.7 million, or 12.2%.
Non-performing assets consisted of $208,000 of nonaccrual loans at March 31, 2005, or 0.2% of total assets, a decrease of $377,000 from June 30, 2004. The nonaccrual loans consisted of $158,000 in residential loans and $50,000 in consumer loans. The allowance for loan losses totaled $264,000 at March 31, 2005, representing 126.9% of nonaccrual loans and 0.44% of gross loans receivable. At June 30, 2004 the allowance for loan losses totaled $237,000 and represented 40.5% of nonaccrual loans and 0.44% of gross loans receivable.
Total equity was $8.0 million at March 31, 2005, compared to $7.4 million at June 30, 2004. The increase in equity was the result of an increase in accumulated other comprehensive income. At March 31, 2005 book value per share was $19.55. At March 31, 2005, the Bank exceeded all regulatory capital requirements to be categorized as "well capitalized" under applicable law and regulations.
This press release contains certain forward-looking statements within the meaning of the federal securities laws. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or actual effect of future plans or strategies is inherently uncertain. Factors which could have a material effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by law or regulation, the Company disclaims any obligation to update such forward-looking statements.
Indian Village Bancorp, Inc. is headquartered at 100 South Walnut Street, Gnadenhutten, Ohio 44629.
Selected Financial Condition and Operating Data
(Dollars in thousands except per share data)
(Unaudited)
March 31, June 30,
2005 2004
--------------------------------
Total Assets $ 97,338 $ 99,644
Loans receivable, net 59,737 53,915
Securities available for sale 25,241 37,288
Deposits 61,450 60,541
Total borrowings 26,804 30,542
Total equity 7,994 7,422
Book value per share $ 19.55(a) $ 20.32(a)
Common shares outstanding 436,547 392,755
Three Months Ended Nine Months Ended
March 31, March 31,
2005 2004 2005 2004
----------------------------------------
Interest Income $ 1,284 $ 1,263 $ 3,930 $ 3,832
Interest Expense 742 746 2,265 2,275
Provision for loan losses 31 30 91 100
Net interest income 511 487 1,574 1,457
Non-interest income (loss) (250) 88 (152) 218
Non-interest expense 475 486 1,484 1,370
Income (loss) before taxes (214) 89 (62) 305
Income tax expense (benefit) 4 (5) 4 4
Net income (loss) (218) 94 (66) 301
Earnings (loss) per
share (basic) $ (0.59) $ 0.26 $ (0.18) $ 0.83
Earnings (loss) per
share (diluted) $ (0.59) $ 0.25 $ (0.18) $ 0.81
(a) Represents total equity divided by outstanding number of common
shares at each respective period end. ESOP shares are considered
outstanding for this calculation unless unearned.