INDIANA COMMUNITY BANCORP 
By COLUMBUS, Ind., Jan. 26 /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 2009 of $5.8 million or $(2.09) diluted loss per common share compared to net income of $5.0 million or $1.47 diluted earnings per common share for 2008. During the fourth quarter of 2009, the Company had a net loss of $1.4 million or $(0.50) diluted loss per common share compared to net income of $1.5 million or $0.43 diluted earnings per common share during the fourth quarter of 2008. The fourth quarter was negatively impacted by prepayment fees on FHLB advances which totaled $3.8 million. This expense was partially offset by security gains of approximately $2.0 million. Management estimates that as a result of the FHLB advance prepayment, the Company's net interest income will improve by approximately $2.0 million annually beginning in 2010 as compared to the annualized results from the fourth quarter of 2009. This projected increase in net interest income is expected to result in a net interest margin of approximately 3.25% which would represent an increase of 38 basis points over the net interest margin in the fourth quarter of 2009. Excluding the impact of the FHLB advance prepayment and the securities sale gains, the Company's net loss would have been reduced to approximately $364,000 or $(0.20) diluted loss per common share for the fourth quarter. The major factor which negatively impacted the results for 2009 was the significant increase in the provision for loan losses. The Company increased the balance in the allowance for loan losses throughout 2009 due to the challenging economic cycle. Net charge offs for 2009 totaled $11.7 million compared to $2.7 million in 2008 and the provision expense for 2009 totaled $16.2 million compared to $4.3 million in 2008. The provision for loan losses totaled $3.4 million for the fourth quarter which exceeded net charge offs for the quarter by $943,000. Retail deposit growth remained strong for 2009 as retail deposits increased $15.7 million for the fourth quarter and $145.3 million for the year. As of December 31, 2009, shareholders' equity was $84.9 million and the Company's tangible common equity to assets ratio was 6.32%. Chairman and CEO John Keach, Jr. stated, "The banking industry faced numerous challenges during 2009. In addition to meeting those challenges head on, we focused on implementing changes with an eye toward a brighter future. Our efforts to reduce our core operating costs and to improve our net interest margin should translate to improvements in our bottom line." Executive Vice President and CFO Mark Gorski added, "Capitalizing on market disruption to grow our core deposit base has allowed us to significantly reduce our overall funding cost which will generate increased net interest income in future periods."
Balance Sheet
Total assets were $1.0 billion as of December 31, 2009, an increase of $41.0 million from December 31, 2008. Total loans decreased $22.6 million for the quarter and $63.0 million year-to-date. Commercial and commercial mortgage loans decreased $16.7 million for the quarter and $28.2 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. Also contributing to the decrease in commercial loans during the quarter was the transfer of $9.6 million from loans to other real estate owned during the fourth quarter. Residential mortgage and consumer loans decreased $5.9 million for the quarter and $34.9 million year-to-date. Mortgage loan originations remain substantially higher than the prior year due to significant refinance activity resulting from low interest rates; however, the majority of the refinance activity occurred in the first half of 2009. 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 $2.9 million of the decrease in consumer loans for the quarter and $22.7 million of the decrease year-to-date.
Total retail deposits increased $15.7 million for the quarter and $145.3 million or 20.9% year-to-date. This substantial growth in retail deposits during 2009 occurred in all categories as demand deposits increased $9.2 million, interest bearing transaction accounts increased $111.5 million and certificates of deposit increased $24.6 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 that the high level of deposit growth during the year was due in part to the banking market disruption that occurred in the Company's southeast Indiana footprint.
Total wholesale funding decreased $55.5 million for the quarter and $95.3 million year-to-date. During the fourth quarter, the Company prepaid $55.3 million of FHLB advances with a weighted average rate of 4.5% to reduce interest expense and improve net interest margin in future periods as yields on investment alternatives were in most cases substantially less than the rates being paid for the advances.
Asset Quality
Provision for loan losses totaled $3.4 million for the quarter and $16.2 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 $2.5 million for the fourth quarter and included $2.2 million of commercial loan charge offs and $273,000 of consumer loan charge offs. Year-to-date net charge offs totaled $11.7 million and included $9.9 million of commercial loan charge offs and $1.8 million of consumer loan charge offs. Total non-performing assets increased $1.5 million for the fourth quarter and $6.7 million year-to-date to $34.4 million at December 31, 2009. Non-performing assets to total assets increased to 3.41% at December 31, 2009 compared to 2.86% at December 31, 2008. The ratio of the allowance for loan losses to total loans increased to 1.78% at December 31, 2009 compared to 1.07% at December 31, 2008.
Net Interest Income
Net interest income decreased $145,000 or 2.0% to $7.1 million for the fourth quarter and year-to-date net interest income decreased $1.3 million or 4.4% to $27.5 million. Net interest margin for the fourth quarter was 2.87% which was consistent with the previous two quarters. Year-to-date net interest margin was 2.93% for 2009 compared to 3.35% 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 was invested in short term securities throughout the year. During the fourth quarter, the Company prepaid $55.3 million of FHLB advances with a weighted average rate of 4.5%. This transaction should significantly reduce the Company's interest expense in future periods which will translate to expected improvement in net interest income. Additionally, during January 2010, the Company restructured the remaining balance of FHLB advances thereby reducing the interest expense on the remaining portfolio of $55 million from 3.0% to approximately 1.9% based on current interest rates.
Non Interest Income
Non interest income increased $1.9 million for the fourth quarter and $738,000 year-to-date, however, included in non interest income for the fourth quarter was $1.9 million in net gain on sale of securities. Excluding the net gain on sale of securities, non interest income would have been flat for the fourth quarter. 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 $142,000 while the year-to-date total has increased $1.2 million. The Bank discontinued offering brokerage services in September 2008. Brokerage fee income totaled $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 $115,000 or 6.6% for the quarter and down $444,000 or 6.5% year-to-date. Miscellaneous income included a write-down on other real estate owned of $468,000 related to a former subdivision loan.
Non Interest Expenses
Non interest expenses increased $4.1 million to $10.7 million for the fourth quarter and $4.6 million to $33.4 million year-to-date, however, included in non interest expenses for the fourth quarter was $3.8 million in FHLB prepayment fees. Compensation and employee benefits expense increased $205,000 or 6.0% for the fourth quarter and decreased $1.6 million or 10.0% year-to-date. Four primary factors contributed to the year-to-date decrease in compensation and benefits: 1) the Company froze its defined benefit pension plan effective April 1, 2008 resulting in an expense reduction of $354,000 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 $387,000 for the year. These decreases to compensation and employee benefits were partially offset by an increase in mortgage commissions of $577,000 as a result of increased mortgage volumes discussed above. FDIC insurance increased $178,000 for the fourth quarter and $1.5 million year-to-date. The year-to-date increase includes a special assessment of $454,000. Marketing expense decreased $464,000 year-to-date due to the timing of advertising associated with the name change which occurred in the first and second quarters of 2008.
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.
INDIANA COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited) December 31, December 31,
2009 2008
---- ----
Assets:
Cash and due from banks $10,808 $22,352
Interest bearing demand deposits 41,253 234
------ ---
Cash and cash equivalents 52,061 22,586
Securities available for sale at fair value
(amortized cost $149,031 and $90,957) 149,633 91,096
Securities held to maturity at amortized cost
(fair value $3,802 and $3,884) 4,084 4,467
Loans held for sale (fair value $6,213 and
$2,907) 6,075 2,856
Portfolio loans:
Commercial and commercial mortgage loans 527,946 556,133
Residential mortgage loans 97,551 120,227
Second and home equity loans 97,071 104,084
Other consumer loans 15,312 20,532
Unearned income (99) (241)
--- ----
Total portfolio loans 737,781 800,735
Allowance for loan losses (13,113) (8,589)
------- ------
Portfolio loans, net 724,668 792,146
Premises and equipment 15,151 15,323
Accrued interest receivable 3,533 3,777
Goodwill - 1,394
Other assets 55,118 35,728
------ ------
TOTAL ASSETS $1,010,323 $969,373
========== ========
Liabilities and Shareholders' Equity:
Liabilities:
Deposits:
Demand $80,938 $71,726
Interest checking 170,226 110,944
Savings 42,520 40,862
Money market 207,089 156,500
Certificates of deposits 339,025 314,425
------- -------
Retail deposits 839,798 694,457
------- -------
Brokered deposits - 5,420
Public fund certificates 507 10,762
--- ------
Wholesale deposits 507 16,182
--- ------
Total deposits 840,305 710,639
------- -------
FHLB advances 55,000 129,926
Short term borrowings - 4,713
Junior subordinated debt 15,464 15,464
Other liabilities 14,630 16,619
------ ------
Total liabilities 925,399 877,361
------- -------
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 21,054 20,962
No par common stock; Authorized: 15,000,000
shares
Issued and outstanding: 3,358,079 and
3,358,079 21,060 20,985
Retained earnings, restricted 42,862 50,670
Accumulated other comprehensive loss, net (52) (605)
--- ----
Total shareholders' equity 84,924 92,012
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,010,323 $969,373
========== ========
INDIANA COMMUNITY BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(unaudited)
Three Months Ended Year to Date
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Interest Income:
Short term
investments $23 $12 $99 $462
Securities 1,340 815 4,164 2,878
Commercial and
commercial mortgage
loans 7,520 7,883 30,192 31,406
Residential mortgage
loans 1,322 1,897 6,192 8,516
Second and
home equity
loans 1,236 1,454 4,992 6,186
Other consumer
loans 335 437 1,452 1,890
--- --- ----- -----
Total interest
income 11,776 12,498 47,091 51,338
------ ------ ------ ------
Interest Expense:
Checking and
savings accounts 573 308 1,679 981
Money market
accounts 538 611 2,235 2,867
Certificates
of deposit 2,543 2,760 10,733 12,265
----- ----- ------ ------
Total interest
on retail
deposits 3,654 3,679 14,647 16,113
----- ----- ------ ------
Brokered deposits - 91 139 426
Public funds 3 76 77 185
--- --- --- ---
Total interest
on wholesale
deposits 3 167 216 611
--- --- --- ---
Total interest
on deposits 3,657 3,846 14,863 16,724
----- ----- ------ ------
FHLB
borrowings 941 1,234 4,278 5,059
Other
borrowings - - 1 1
Junior
subordinated
debt 76 171 411 765
--- --- --- ---
Total interest
expense 4,674 5,251 19,553 22,549
----- ----- ------ ------
Net interest
income 7,102 7,247 27,538 28,789
Provision for
loan losses 3,433 1,021 16,218 4,292
----- ----- ------ -----
Net interest
income after
provision for
loan losses 3,669 6,226 11,320 24,497
----- ----- ------ ------
Non Interest
Income:
Gain on sale
of loans 430 288 2,630 1,446
Gain/(loss)
on sale
of securities 1,862 - 1,825 (437)
Investment advisory
services - - - 1,371
Service fees
on deposit
accounts 1,625 1,740 6,347 6,791
Loan servicing
income, net
of impairment 135 138 530 551
Miscellaneous 532 528 1,346 2,218
--- --- ----- -----
Total non
interest income 4,584 2,694 12,678 11,940
----- ----- ------ ------
Non Interest
Expenses:
Compensation
and employee
benefits 3,616 3,411 14,257 15,843
Occupancy
and equipment 936 1,012 3,854 4,159
Service bureau
expense 434 483 1,891 1,917
FDIC
premium 392 214 1,785 286
Marketing 192 180 777 1,241
Goodwill impairment - - 1,394 -
FHLB advances
prepayment fee 3,813 - 3,813 -
Miscellaneous 1,321 1,287 5,632 5,388
----- ----- ----- -----
Total non
interest expenses 10,704 6,587 33,403 28,834
------ ----- ------ ------
Income (loss)
before income
taxes (2,451) 2,333 (9,405) 7,603
Income tax
provision (credit) (1,082) 824 (3,556) 2,600
------ --- ------ -----
Net Income
(Loss) $(1,369) $1,509 $(5,849) $5,003
======= ====== ======= ======
Basic earnings
(loss) per
common share $(0.50) $0.43 $(2.09) $1.47
Diluted earnings
(loss) per
common share $(0.50) $0.43 $(2.09) $1.47
Basic weighted average
number of
common shares 3,358,079 3,358,079 3,358,079 3,359,666
Dilutive weighted average
number of
common shares 3,358,079 3,358,079 3,358,079 3,365,131
Dividends per
common share $0.010 $0.120 $0.260 $0.640
Supplemental Data: Three Months Ended Year to Date
(unaudited) December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Weighted average
interest rate earned
on total
interest-earning
assets 4.76% 5.62% 5.00% 5.97%
Weighted average
cost of total
interest-bearing
liabilities 1.93% 2.42% 2.14% 2.68%
Interest rate spread
during period 2.82% 3.21% 2.86% 3.29%
Net interest margin
(net interest
income divided by
average interest-
earning assets on
annualized basis) 2.87% 3.26% 2.93% 3.35%
Total interest
income divided by
average
Total assets
(on annualized
basis) 4.43% 5.19% 4.61% 5.51%
Total interest
expense divided by
average total
assets (on
annualized basis) 1.76% 2.18% 1.91% 2.42%
Net interest
Income divided by
average total assets
(on annualized
basis) 2.67% 3.01% 2.70% 3.09%
Return on assets (net
income divided by
average total
assets on
annualized basis) -0.51% 0.63% -0.57% 0.54%
Return on equity (net
income divided by
average total
equity on
annualized basis) -6.22% 7.99% -6.48% 7.11%
December 31, December 31,
2009 2008
---- ----
Book value per share
outstanding $18.86 $20.98
Nonperforming Assets:
Loans: Non-accrual $19,889 $22,534
Past due 90
days or
more 1,410 518
Restructured 500 1,282
--- -----
Total
nonperforming
loans 21,799 24,334
Real estate
owned, net 12,603 3,335
Other
repossessed
assets, net 23 44
--- ---
Total
Nonperforming
Assets $34,425 $27,713
Nonperforming
assets divided by
total assets 3.41% 2.86%
Nonperforming
loans divided by
total loans 2.95% 3.03%
Balance in
allowance for Loan
Losses $13,113 $8,589
SOURCE Indiana Community Bancorp
