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 DATASOURCE: Indiana
Community Bancorp CONTACT: 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
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