COLUMBUS, Ind., Oct. 26, 2010 (GLOBE NEWSWIRE) -- Indiana Community Bancorp (the "Company") (Nasdaq:INCB), the holding company of Indiana Bank and Trust Company of Columbus, Indiana (the "Bank"), today announced net income for the third quarter of $2.0 million or $0.51 diluted earnings per common share compared to a net loss of $2.1 million or $(0.71) diluted loss per common share a year earlier. Year-to-date net income was $4.1 million or $0.96 diluted earnings per common share compared to a net loss of $4.5 million or $(1.60) diluted loss per common share a year earlier. Net income for the third quarter of 2010 increased $334,000 compared to the second quarter of 2010 primarily due to an increase in net interest income of $496,000. Total loans increased $1.3 million for the quarter and $14.6 million year-to-date while total deposits increased $21.7 million for the quarter and $57.1 million year-to-date. Chairman and CEO John Keach, Jr. stated, "We are pleased with the improvement in quarterly earnings driven by higher net interest income. We continue to strive to improve our balance sheet structure, particularly our deposit mix, to improve margin and increase net interest income." Executive Vice President and CFO Mark Gorski added, "The expense discipline of our management team is reflected in the improvement in our efficiency ratio to 63.5% for the quarter."
Balance Sheet
Total assets were $1.1 billion as of September 30, 2010, an increase of $64.0 million from December 31, 2009. Total loans increased $1.3 million for the quarter and $14.6 million year-to-date. Commercial and commercial mortgage loans increased $3.7 million for the quarter and $24.1 million year-to-date. Residential mortgage loans and consumer loans decreased $2.4 million for the quarter and $9.5 million year-to-date. Commercial loan growth occurred during each quarter of 2010 resulting from adding a few new commercial relationships each quarter coupled with providing funding for existing customers. Consumer and mortgage loans have continued to decline during the year due to lackluster demand. While mortgage refinance activity has been strong, the Bank continues to sell the majority of these loans in the secondary market servicing released.
Total retail deposits increased $21.7 million for the quarter and $57.1 million year-to-date. The growth in retail deposits is being driven primarily from growth in the interest bearing checking and money market categories which increased $21.3 million for the quarter and $63.0 million year-to-date. For the third quarter, the increase in these categories was primarily driven by a significant increase in public entity deposits totaling $19.4 million. One of the bank's public entity customers had a substantial increase in their deposit account associated with funding earmarked for building construction – these funds are expected to be disbursed between now and the end of 2011. These increases were offset by a reduction in higher cost certificates of deposit which decreased $7.4 million for the quarter and $12.9 million year-to-date.
Asset Quality
Provision for loan losses totaled $1.6 million for the quarter and $5.2 million year-to-date which represent significant decreases from comparable periods in 2009. Net charge offs were $1.3 million for the quarter and $3.6 million year-to-date. As a result, the allowance for loan losses increased by $365,000 for the quarter to $14.7 million at September 30, 2010. The ratio of the allowance for loan losses to total loans increased to 1.95% at September 30, 2010 compared to 1.78% at December 31, 2009. Total non-performing assets increased $4.2 million for the quarter and $4.3 million year-to-date to $38.8 million at September 30, 2010. The increase in non-performing assets during the third quarter related primarily to an increase in restructured loans of $5.1 million. This increase was comprised primarily of various retail strip center loans to one customer. Non-performing assets to total assets was 3.61% at September 30, 2010. As disclosed in prior quarters, the Bank has a signed letter of intent for the purchase of its largest other real estate owned property. Based on communications with the buyer, management now expects the sale to close in the first quarter of 2011 although there can be no guarantee that the transaction will close on such terms. The delay in the closing involves the time necessary for the buyer to secure HUD financing.
Pre-Tax Pre-Provision Earnings
Due to the volatility in earnings for banks, management continually monitors pre-tax pre-provision (PTPP) earnings (defined as net income plus tax expense plus provision expense). During 2010, the Company's PTPP earnings have been as follows: third quarter $4.1 million, second quarter $3.9 million, first quarter $2.5 million. The increase in PTPP earnings from the first quarter of 2010 to the third quarter of 2010 totaled $1.6 million and has been driven primarily by an increase in net interest income of $952,000 along with an increase in gain on sale of mortgage loans and increased service fees on deposits.
Net Interest Income
Net interest income increased $1.5 million or 22.3% to $8.4 million for the quarter and $3.2 million or 15.6% to $23.6 million year-to-date. The increase in net interest income was primarily attributable to significant improvement in the net interest margin. Net interest margin for the quarter was 3.36%, which represented an increase of 8 basis points on a linked quarter basis and an increase of 49 basis points compared to the fourth quarter of 2009. The increase in the net interest margin was primarily due to the Company's balance sheet repositioning which was executed in December 2009 and January 2010. The prepayment and restructuring of the FHLB advances aided in reducing the Company's overall cost of interest-bearing liabilities. Additionally, the net interest margin was aided by a decrease in deposit costs which have been driven down during the year due to overall market conditions and the improvement in the mix of the deposit base as higher cost certificates of deposits are replaced with transaction accounts.
Non Interest Income
Non interest income increased $699,000 for the quarter and increased $15,000 year-to-date. Gain on sale of loans increased $96,000 for the quarter and decreased $854,000 year-to-date. The fluctuation in mortgage rates and the historic low rates have resulted in various waves of refinance activity. A significant reduction in interest rates that began late in 2008 resulted in increased mortgage refinance activity and origination volumes during the majority of 2009. Then beginning in the second quarter of 2010, another reduction in mortgage rates led to additional refinance volumes. Gain on sale of securities totaled $485,000 for the quarter. While not a core activity, the Bank sold securities during the third quarter to reposition a portion of the securities portfolio. Miscellaneous income increased $252,000 for the quarter and $464,000 year-to-date. The majority of the miscellaneous income increase was due to fee income from trust and investment management, which increased $42,000 for the quarter and $385,000 year-to-date due to an increase in assets under management. In addition, miscellaneous income included a net loss on the writedown of other real estate of $215,000 for the quarter and $576,000 year-to-date.
Non Interest Expenses
Non interest expenses decreased $775,000 to $7.2 million for the quarter and $1.5 million to $21.2 million year-to-date. During the third quarter of 2009, management wrote off the carrying value of goodwill which totaled $1.4 million. Compensation and employee benefits expense increased $219,000 for the quarter and $146,000 or 1.4% year-to-date. FDIC insurance expense increased $195,000 for the quarter and $155,000 year-to-date. The Bank's efficiency ratio was 63.5% for the third quarter and 66.9% year-to-date.
Indiana Community Bancorp is a bank holding company registered with the Board of Governors of the Federal Reserve System. Indiana Bank and Trust Company, its principal subsidiary, is an FDIC insured state chartered commercial bank. Indiana Bank and Trust Company was founded in 1908 and offers a wide range of consumer and commercial financial services through 20 branch offices in central and southeastern Indiana.
Forward-Looking Statement
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as "expects," "intends," "believes," and "should," which are necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented. Indiana Community Bancorp undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. The Company's ability to predict future results involves a number of risks and uncertainties, some of which have been set forth in the Company's most recent annual report on Form 10-K, which disclosures are incorporated by reference herein.
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INDIANA COMMUNITY BANCORP |
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| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except share data) | ||
| (unaudited) | September 30, | December 31, |
| 2010 | 2009 | |
| Assets: | ||
| Cash and due from banks | $11,577 | $10,808 |
| Interest bearing demand deposits | 1,771 | 41,253 |
| Cash and cash equivalents | 13,348 | 52,061 |
| Interest bearing time deposits | 150 | 410 |
| Securities available for sale at fair value (amortized cost $243,165 and $149,031) | 246,665 | 149,633 |
| Securities held to maturity at amortized cost (fair value $0 and $3,392) | -- | 3,674 |
| Loans held for sale (fair value $5,494 and $6,213) | 5,356 | 6,075 |
| Portfolio loans: | ||
| Commercial and commercial mortgage loans | 551,997 | 527,946 |
| Residential mortgage loans | 92,503 | 97,551 |
| Second and home equity loans | 95,805 | 97,071 |
| Other consumer loans | 12,266 | 15,312 |
| Unearned income | ( 202) | ( 99) |
| Total portfolio loans | 752,369 | 737,781 |
| Allowance for loan losses | (14,704) | (13,113) |
| Portfolio loans, net | 737,665 | 724,668 |
| Premises and equipment | 16,498 | 15,151 |
| Accrued interest receivable | 4,003 | 3,533 |
| Other assets | 50,606 | 55,118 |
| TOTAL ASSETS | $1,074,291 | $1,010,323 |
| Liabilities and Shareholders' Equity: | ||
| Liabilities: | ||
| Deposits: | ||
| Demand | $84,482 | $80,938 |
| Interest checking | 218,005 | 170,226 |
| Savings | 45,952 | 42,520 |
| Money market | 222,315 | 207,089 |
| Certificates of deposits | 326,175 | 339,025 |
| Retail deposits | 896,929 | 839,798 |
| Public fund certificates | 503 | 507 |
| Wholesale deposits | 503 | 507 |
| Total deposits | 897,432 | 840,305 |
| FHLB advances | 53,095 | 55,000 |
| Junior subordinated debt | 15,464 | 15,464 |
| Other liabilities | 18,145 | 14,630 |
| Total liabilities | 984,136 | 925,399 |
| Commitments and Contingencies | ||
| Shareholders' equity: | ||
|
No par preferred stock; Authorized: 2,000,000 shares Issued and outstanding: 21,500 and 21,500; Liquidation preference $1,000 per share |
21,130 | 21,054 |
|
No par common stock; Authorized: 15,000,000 shares Issued and outstanding: 3,385,079 and 3,358,079 |
21,164 | 21,060 |
| Retained earnings, restricted | 46,001 | 42,862 |
| Accumulated other comprehensive income (loss), net | 1,860 | (52) |
| Total shareholders' equity | 90,155 | 84,924 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $1,074,291 | $1,010,323 |
| INDIANA COMMUNITY BANCORP | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (in thousands, except share and per share data) | ||||
| (unaudited) | Three Months Ended | Nine Months Ended | ||
| September 30, | September 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Interest Income: | ||||
| Securities and interest bearing deposits | $1,451 | $1,233 | $3,990 | $2,900 |
| Commercial and commercial mortgage loans | 7,724 | 7,504 | 22,512 | 22,672 |
| Residential mortgage loans | 1,134 | 1,463 | 3,505 | 4,870 |
| Second and home equity loans | 1,142 | 1,225 | 3,450 | 3,756 |
| Other consumer loans | 263 | 358 | 837 | 1,117 |
| Total interest income | 11,714 | 11,783 | 34,294 | 35,315 |
| Interest Expense: | ||||
| Checking and savings accounts | 480 | 481 | 1,455 | 1,106 |
| Money market accounts | 388 | 608 | 1,329 | 1,697 |
| Certificates of deposit | 2,103 | 2,677 | 6,820 | 8,190 |
| Total interest on retail deposits | 2,971 | 3,766 | 9,604 | 10,993 |
| Brokered deposits | -- | 32 | -- | 139 |
| Public funds | 2 | 4 | 6 | 74 |
| Total interest on wholesale deposits | 2 | 36 | 6 | 213 |
| Total interest on deposits | 2,973 | 3,802 | 9,610 | 11,206 |
| FHLB advances | 298 | 1,061 | 823 | 3,337 |
| Other borrowings | -- | -- | -- | 1 |
| Junior subordinated debt | 85 | 87 | 235 | 335 |
| Total interest expense | 3,356 | 4,950 | 10,668 | 14,879 |
| Net interest income | 8,358 | 6,833 | 23,626 | 20,436 |
| Provision for loan losses | 1,638 | 3,899 | 5,229 | 12,785 |
| Net interest income after provision for loan losses | 6,720 | 2,934 | 18,397 | 7,651 |
| Non Interest Income: | ||||
| Gain on sale of loans | 560 | 464 | 1,346 | 2,200 |
| Gain on securities | 485 | -- | 497 | -- |
| Other than temporary impairment losses | (139) | (37) | (194) | (37) |
| Service fees on deposit accounts | 1,638 | 1,674 | 4,820 | 4,722 |
| Loan servicing income, net of impairment | 126 | 122 | 362 | 395 |
| Miscellaneous | 344 | 92 | 1,278 | 814 |
| Total non interest income | 3,014 | 2,315 | 8,109 | 8,094 |
| Non Interest Expenses: | ||||
| Compensation and employee benefits | 3,728 | 3,509 | 10,787 | 10,641 |
| Occupancy and equipment | 958 | 924 | 2,872 | 2,918 |
| Service bureau expense | 493 | 465 | 1,461 | 1,457 |
| FDIC insurance expense | 513 | 318 | 1,548 | 1,393 |
| Marketing | 172 | 178 | 561 | 585 |
| Miscellaneous | 1,362 | 2,607 | 4,013 | 5,705 |
| Total non interest expenses | 7,226 | 8,001 | 21,242 | 22,699 |
| Income (loss) before income taxes | 2,508 | (2,752) | 5,264 | (6,954) |
| Income tax provision (credit) | 489 | (674) | 1,142 | (2,474) |
| Net Income (loss) | $2,019 | $(2,078) | $4,122 | $(4,480) |
| Basic earnings (loss) per common share | $0.51 | $(0.71) | $0.96 | $(1.60) |
| Diluted earnings (loss) per common share | $0.51 | $(0.71) | $0.96 | $(1.60) |
| Basic weighted average number of common shares | 3,358,079 | 3,358,079 | 3,358,079 | 3,358,079 |
| Dilutive weighted average number of common shares | 3,358,543 | 3,358,079 | 3,358,235 | 3,358,079 |
| Dividends per common share | $0.010 | $0.010 | $0.030 | $0.250 |
| Supplemental Data: | Three Months Ended | Year to Date | ||
| (unaudited) | September 30, | September 30, | ||
| 2010 | 2009 | 2010 | 2009 | |
|
Weighted average interest rate earned on total interest-earning assets |
4.71% | 4.91% | 4.79% | 5.09% |
|
Weighted average cost of total interest-bearing liabilities |
1.38% | 2.11% | 1.51% | 2.22% |
| Interest rate spread during period | 3.33% | 2.79% | 3.27% | 2.87% |
|
Net interest margin (net interest income divided by average interest-earning assets on annualized basis) |
3.36% | 2.85% | 3.30% | 2.95% |
| Total interest income divided by average | ||||
| Total assets (on annualized basis) | 4.36% | 4.50% | 4.39% | 4.67% |
|
Total interest expense divided by average total assets (on annualized basis) |
1.25% | 1.89% | 1.37% | 1.97% |
|
Net interest income divided by average total assets (on annualized basis) |
3.11% | 2.61% | 3.03% | 2.70% |
|
Return on assets (net income divided by average total assets on annualized basis) |
0.75% | -0.79% | 0.53% | -0.59% |
|
Return on equity (net income divided by average total equity on annualized basis) |
9.03% | -9.26% | 6.35% | -6.57% |
| September 30, | December 31, | |||
| 2010 | 2009 | |||
| Book value per share outstanding | $ 20.39 | $ 19.02 | ||
| Nonperforming Assets: | ||||
| Loans: Non-accrual | $ 18,752 | $ 19,889 | ||
| Past due 90 days or more | 141 | 1,410 | ||
| Restructured | 8,751 | 499 | ||
| Total nonperforming loans | 27,644 | 21,798 | ||
| Real estate owned, net | 11,106 | 12,603 | ||
| Other repossessed assets, net | 12 | 24 | ||
| Total Nonperforming Assets | $ 38,762 | $ 34,425 | ||
| Nonperforming assets divided by total assets | 3.61% | 3.41% | ||
| Nonperforming loans divided by total loans | 3.67% | 2.95% | ||
| Balance in Allowance for Loan Losses | $ 14,704 | $ 13,113 | ||