COLUMBUS, Ind., Oct. 27 /PRNewswire-FirstCall/ -- Indiana Community Bancorp
(the "Company") (Nasdaq: INCB), the holding company of Indiana Bank and Trust
Company of Columbus, Indiana (the "Bank"), today announced a net loss for the
third quarter of $2.1 million or $(0.71) diluted loss per common share
compared to net income of $1.8 million or $0.54 diluted earnings per common
share for the third quarter of 2008. Year-to-date net loss was $4.5 million
or $(1.60) diluted loss per common share compared to net income of $3.5
million or $1.04 diluted earnings per common share a year earlier. The third
quarter was negatively impacted by a non-cash expense related to the write off
of the Company's total goodwill of $1.4 million. Excluding the impact of the
goodwill write off, the Company's net loss would have been reduced to $684,000
or $(0.20) diluted loss per common share for the quarter. The Company
continued to increase the balance in the allowance for loan losses in light of
the challenging economic cycle by recording a provision for loan losses of
$3.9 million for the third quarter which exceeded net charge offs for the
quarter by $2.0 million. Retail deposit growth remained strong for 2009 as
retail deposits increased $58.1 million for the third quarter and $129.6
million for the year. As of September 30, 2009, shareholders' equity was
$87.8 million and the Company's tangible common equity to assets ratio was
6.34%. Chairman and CEO John Keach, Jr. stated, "The tremendous increase in
core deposits adds significantly to our core franchise. These new deposit
relationships position our Company for future growth as the credit cycle and
economy improve." Executive Vice President and CFO Mark Gorski added,
"Appropriate increases to the allowance for loan losses helps to strengthen
our Company and are prudent based on the current credit environment. We
anticipate that we may need to continue to increase the allowance for loan
losses into 2010."
Balance Sheet
Total assets were $1.1 billion as of September 30, 2009, an increase of $83.6
million from December 31, 2008. Total loans decreased $14.4 million for the
quarter and $40.3 million year-to-date. Commercial and commercial mortgage
loans decreased $3.4 million for the quarter and $11.5 million year-to-date.
The commercial loan portfolio has continued to decline due to the challenging
credit market which has contributed to the decrease in new commercial loan
originations. Residential mortgage and consumer loans decreased $11.0 million
for the quarter and $29.0 million year-to-date. Residential mortgage loan
origination volume has slowed compared to the previous two quarters as the
refinance activity slows. Mortgage loan originations remain substantially
higher than the prior year due to significant refinance activity resulting
from low interest rates. As substantially all new mortgage loans are being
sold in the secondary market, residential mortgage balances continue to
decline. Decreases in the mortgage loan portfolio account for $8.4 million of
the decrease in consumer loans for the quarter and $19.8 million of the
decrease year-to-date.
Total retail deposits increased $58.1 million for the quarter and $129.6
million or 18.7% year-to-date. This substantial growth in retail deposits
occurred in all categories as demand deposits increased $3.0 million, interest
bearing transaction accounts increased $98.2 million and certificates of
deposit increased $28.4 million. The Bank has seen deposit growth from
individual accounts, business accounts and public entity accounts across the
entire market footprint. Management believes that deposit growth reflects
customer preference for insured bank deposits which provide safety of
principal balance plus interest. Additionally, management believes deposit
growth during the third quarter was greater than previous quarters due in part
to the continued negative press and ultimate failure of the Company's largest
competitor in its headquarter market of Columbus, Indiana.
Total wholesale funding decreased $4.5 million for the quarter and $39.9
million year-to-date. The increase in retail deposits provided a source for
the repayment of wholesale funding sources during the year.
Asset Quality
Provision for loan losses totaled $3.9 million for the quarter and $12.8
million year-to-date which represented significant increases over the
comparable periods in 2008. The provision expense for the year has covered
net charge offs and significantly increased the allowance for loan losses.
Net charge offs were $1.9 million for the third quarter and included $1.2
million of commercial loan charge offs and $684,000 of consumer loan charge
offs. Year-to-date net charge offs totaled $9.2 million and included $7.7
million of commercial loan charge offs and $1.5 million of consumer loan
charge offs. Non-performing assets to total assets increased to 3.12% at
September 30, 2009 compared to 2.86% at December 31, 2008. The ratio of the
allowance for loan losses to total loans was increased to 1.60% at September
30, 2009 compared to 1.07% at December 31, 2008.
Net Interest Income
Net interest income decreased $659,000 or 8.8% to $6.8 million for the third
quarter and year-to-date net interest income decreased $1.1 million or 5.1% to
$20.4 million. Net interest margin for the third quarter was 2.88% which was
equal to the second quarter. Year-to-date net interest margin was 2.96% for
2009 compared to 3.38% for 2008. The decrease in net interest margin for the
year was primarily the result of an unusually high balance in interest earning
demand deposits and an increase in non-accrual loans. Due to continued
increases in deposits and reduced loan demand, the excess liquidity has been
invested in short term securities throughout the quarter. Total investment
securities increased $47.2 million for the quarter and $82.8 million
year-to-date. Based on current interest rates, the short term securities have
interest rates below 2%. While this is negatively impacting the net interest
margin currently, the cash flows from these securities will be readily
available to reinvest into loans or to pay down higher cost wholesale funding
when it matures. Management anticipates the net interest margin to increase
slowly due to an expected decrease in deposit costs resulting from reductions
in the pricing of money market accounts and certificates of deposit.
Non Interest Income
Non interest income decreased $1.1 million for the third quarter and $1.2
million year-to-date. Gain on sale of mortgage loans continues to exceed
prior year levels due to increased origination volumes however the quarterly
gap continues to narrow. For the quarter, gain on sale of mortgage loans was
up $105,000 while the year-to-date total has increased $1.0 million. The Bank
discontinued offering brokerage services in September 2008. Brokerage fee
income totaled $419,000 in the third quarter of 2008 and $1.4 million
year-to-date in 2008. Service fees on deposits have run consistently below
prior year levels due primarily to a reduction in overdraft fees. Service
fees on deposits were down $223,000 or 11.8% for the quarter and down $329,000
or 6.5% year-to-date. During the third quarter, miscellaneous income included
a writedown on other real estate of $468,000 related to a former subdivision
loan. Due to further declines in value and lack of sales activity, the
carrying value was reduced an additional 20%.
Non Interest Expenses
Non interest expenses increased $923,000 to $8.0 million for the third quarter
and $452,000 to $22.7 million year-to-date. However, included in expenses for
the third quarter was a non-cash expense related to the write off of $1.4
million of goodwill. Excluding the goodwill write off, expenses decreased
$471,000 or 6.7% for the third quarter and $942,000 or 4.2% year-to-date.
Compensation and employee benefits expense decreased $458,000 or 11.6% for the
third quarter and $1.8 million or 14.4% year-to-date. Four primary factors
contributed to the decrease in compensation and benefits: 1) the Company
froze its defined benefit pension plan effective April 1, 2008 resulting in an
expense reduction of $450,000 for the year, 2) the Company reduced its
workforce by approximately 10% in the third quarter of 2008 resulting in an
expense reduction of approximately $600,000 for the year, 3) the Company
discontinued offering brokerage services effective September 2008 resulting in
an expense reduction of $809,000 for the year and 4) bonus and vacation
related benefits have decreased resulting in an expense reduction of $375,000
for the year. These decreases to compensation and employee benefits were
partially offset by an increase in mortgage commissions of $503,000 as a
result of increased mortgage volumes discussed above. FDIC insurance
increased $287,000 for the third quarter and $1.3 million year-to-date. The
year-to-date increase includes a special assessment of $475,000 with was
recorded in the second quarter. Marketing expense increased $11,000 for the
third quarter and decreased $476,000 year-to-date due to the timing of
advertising associated with the name change which occurred in the first and
second quarters of 2008. The Company anticipates total marketing cost for
2009 to be approximately 20% less than the average marketing expense over the
previous 2 years.
Indiana Community Bancorp is a bank holding company registered with the Board
of Governors of the Federal Reserve System (the "Federal Reserve"), which has
been authorized by the Federal Reserve to engage in activities permissible for
a financial holding company. 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.
INDIANA COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited) September 30, December 31,
2009 2008
---- ----
Assets:
Cash and due from banks $11,460 $22,352
Interest bearing demand deposits 55,433 234
------ ---
Cash and cash equivalents 66,893 22,586
Securities available for sale at fair
value (amortized cost $171,071 and
$90,957) 173,854 91,096
Securities held to maturity at
amortized cost (fair value $3,872
and $3,884) 4,349 4,467
Loans held for sale (fair value
$3,188 and $2,907) 3,123 2,856
Portfolio loans:
Commercial and commercial mortgage
loans 544,666 556,133
Residential mortgage loans 100,416 120,227
Second and home equity loans 98,690 104,084
Other consumer loans 16,774 20,532
Unearned income (126) (241)
---- ----
Total portfolio loans 760,420 800,735
Allowance for loan losses (12,170) (8,589)
------- ------
Portfolio loans, net 748,250 792,146
Premises and equipment 14,624 15,323
Accrued interest receivable 3,936 3,777
Goodwill 0 1,394
Other assets 37,969 35,728
------ ------
TOTAL ASSETS $1,052,998 $969,373
========== ========
Liabilities and Shareholders' Equity:
Liabilities:
Deposits:
Demand $74,680 $71,726
Interest checking 161,027 110,944
Savings 42,336 40,862
Money market 203,200 156,500
Certificates of deposits 342,807 314,425
------- -------
Retail deposits 824,050 694,457
------- -------
Brokered deposits 0 5,420
Public fund certificates 614 10,762
--- ------
Wholesale deposits 614 16,182
--- ------
Total deposits 824,664 710,639
------- -------
FHLB advances 110,346 129,926
Short term borrowings 0 4,713
Junior subordinated debt 15,464 15,464
Other liabilities 14,753 16,619
------ ------
Total liabilities 965,227 877,361
------- -------
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 21,029 20,962
No par common stock; Authorized:
15,000,000 shares Issued and outstanding:
3,358,079 and 3,358,079 21,045 20,985
Retained earnings, restricted 44,558 50,670
Accumulated other comprehensive
income (loss), net 1,139 (605)
----- ----
Total shareholders' equity 87,771 92,012
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,052,998 $969,373
========== ========
INDIANA COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Interest Income:
Short term investments $33 $57 $76 $450
Securities 1,200 704 2,824 2,063
Commercial and
commercial mortgage
loans 7,504 8,019 22,672 23,523
Residential mortgage
loans 1,463 2,018 4,870 6,619
Second and home equity
loans 1,225 1,527 3,756 4,732
Other consumer loans 358 468 1,117 1,453
--- --- ----- -----
Total interest income 11,783 12,793 35,315 38,840
------ ------ ------ ------
Interest Expense:
Checking and savings
accounts 481 157 1,106 673
Money market accounts 608 634 1,697 2,256
Certificates of deposit 2,677 2,863 8,190 9,505
----- ----- ----- -----
Total interest on retail
deposits 3,766 3,654 10,993 12,434
----- ----- ------ ------
Brokered deposits 32 112 139 335
Public funds 4 62 74 109
-- -- -- ---
Total interest on
wholesale deposits 36 174 213 444
-- --- --- ---
Total interest on
deposits 3,802 3,828 11,206 12,878
----- ----- ------ ------
FHLB borrowings 1,061 1,297 3,337 3,825
Other borrowings 0 1 1 1
Junior subordinated debt 87 175 335 594
-- --- --- ---
Total interest expense 4,950 5,301 14,879 17,298
----- ----- ------ ------
Net interest income 6,833 7,492 20,436 21,542
Provision for loan
losses 3,899 987 12,785 3,271
----- --- ------ -----
Net interest income
after provision for loan
losses 2,934 6,505 7,651 18,271
----- ----- ----- ------
Non Interest Income:
Gain on sale of loans 464 359 2,200 1,158
Loss on sale of
securities (37) (18) (37) (437)
Investment advisory
services 0 419 0 1,371
Service fees on deposit
accounts 1,674 1,897 4,722 5,051
Loan servicing income,
net of impairment 122 139 395 413
Miscellaneous 92 589 814 1,690
-- --- --- -----
Total non interest
income 2,315 3,385 8,094 9,246
----- ----- ----- -----
Non Interest Expenses:
Compensation and
employee benefits 3,509 3,967 10,641 12,432
Occupancy and equipment 924 1,079 2,918 3,147
Service bureau expense 465 493 1,457 1,434
FDIC premium 318 31 1,393 72
Marketing 178 167 585 1,061
Goodwill impairment 1,394 0 1,394 0
Miscellaneous 1,213 1,341 4,311 4,101
----- ----- ----- -----
Total non interest
expenses 8,001 7,078 22,699 22,247
----- ----- ------ ------
Income (loss) before
income taxes (2,752) 2,812 (6,954) 5,270
Income tax provision
(credit) (674) 1,010 (2,474) 1,776
---- ----- ------ -----
Net Income (Loss) $(2,078) $1,802 $(4,480) $3,494
======= ====== ======= ======
Basic earnings (loss)
per common share $(0.71) $0.54 $(1.60) $1.04
Diluted earnings (loss)
per common share $(0.71) $0.54 $(1.60) $1.04
Basic weighted average
number of common shares 3,358,079 3,358,079 3,358,079 3,360,199
Dilutive weighted
average number of
common shares 3,358,079 3,358,079 3,358,079 3,360,199
Dividends per common
share $0.010 $0.120 $0.250 $0.520
Supplemental Data: Three Months Ended Year to Date
(unaudited) September 30, September 30,
------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Weighted average
interest rate earned
on total interest-
earning assets 4.97% 5.96% 5.11% 6.10%
Weighted average
cost of total
interest-bearing
liabilities 2.11% 2.51% 2.22% 2.77%
Interest rate spread
during period 2.85% 3.45% 2.89% 3.32%
Net interest margin
(net interest income\
divided by average
interest-earning assets
on annualized basis) 2.88% 3.49% 2.96% 3.38%
Total interest income
divided by average
Total assets (on
annualized basis) 4.50% 5.47% 4.67% 5.62%
Total interest expense
divided by average
total assets (on
annualized basis) 1.89% 2.27% 1.97% 2.50%
Net interest income
divided by average
total assets (on
annualized basis) 2.61% 3.20% 2.70% 3.12%
Return on assets (net
income divided by
average total assets
on annualized basis) -0.79% 0.77% -0.59% 0.51%
Return on equity (net
income divided by
average total equity
on annualized basis) -9.26% 10.49% -6.57% 6.83%
September 30, December 31,
2009 2008
---- ----
Book value per share
outstanding $19.71 $20.98
Nonperforming Assets:
Loans: Non-accrual $26,367 $22,534
Past due 90
days or more 2,779 518
Restructured 504 1,282
--- -----
Total nonperforming
loans 29,650 24,334
Real estate owned, net 3,180 3,335
Other repossessed assets,
net 57 44
-- --
Total Nonperforming
Assets $32,887 $27,713
Nonperforming assets
divided by total
assets 3.12% 2.86%
Nonperforming loans
divided by
total loans 3.90% 3.04%
Balance in Allowance
for Loan Losses $12,170 $8,589
SOURCE Indiana Community Bancorp
John K. Keach, Jr., Chairman, Chief Executive Officer, +1-812-373-7816, or
Mark T. Gorski, Executive Vice President, Chief Financial Officer,
+1-812-373-7379
