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River Valley Bancorp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 14, 2011 02:54PM
River Valley Bancorp. (RIVR) filed Quarterly Report for the period ended 2011-09-30.
Highlight of Business Operations:Proceeds from sales of securities available for sale during the nine-month periods ended September 30, 2011 and September 30, 2010 were $7,585,000 and $9,637,000, respectively. Gross gains of $270,000 resulting from sales and calls of available-for-sale securities were realized during the nine-month period ended September 30, 2011. There were no losses recorded for the period. Comparatively, gross gains of $309,000 and gross losses of $3,000 were realized for the nine-month period ended September 30, 2010.
The difficult lending environment continued to challenge loan production for the Corporation. Total loans, net of the allowance for loan losses, decreased $10.3 million, or 3.9%, from $265.4 million at December 31, 2010 to $255.1 million at September 30, 2011. The decrease was primarily attributable to $4.3 million in non-performing loans removed from the portfolio into real estate held for sale and sales of conventional mortgages into the secondary market. Sales to the Federal Home Loan Mortgage Corporation (Freddie Mac) for the nine months ended September 30, 2011 were $12.8 million, including $1.1 million originated for sale at December 31, 2010 and sold in January. These sales compare to $13.8 million in sales for the nine months ended September 30, 2010. The Corporation s consolidated allowance for loan losses totaled $3.8 million at both September 30, 2011 and December 31, 2010. Provision expense of $2.3 million for the nine months ended September 30, 2011 was offset by net charge-offs of $2.3 million. This compared to provision expense for the nine months ended September 30, 2010 of $1.9 million and net charge-offs of $1.8 million. Net charge-offs for the nine-month period ended September 30, 2011 were primarily comprised of properties that have labored through the foreclosure process, most for as long as two to three years. $453,000 was charged off for a variety of residential properties, including a $200,000 loan charged off due to bankruptcy. $1,008,000 was charged off for nonresidential and commercial real estate properties, including loans previously provisioned by specific reserve allocations and loans relating to a relationship with a local funeral home business. Finally, $818,000 was charged off for land loans, primarily the culmination of foreclosure proceedings with two development relationships in the south-central Indiana area. Funding for the allowance represented 1.46% of total loans as of September 30, 2011 as compared to 1.41% as of December 31, 2010. The allowance at September 30, 2011 is directionally consistent with the balance outstanding at December 31, 2010.
Stockholders equity totaled $33.1 million at September 30, 2011, an increase of $1.6 million, or 5.2%, from the $31.5 million at December 31, 2010. The increase was primarily due to the change in unrealized gains on available-for-sale securities, at a gain position of $2.1 million at September 30, 2011, as compared to $443,000 at December 31, 2010, and year-to-date earnings of $1.2 million. During the nine months ending September 30, 2011, $16,000 was used to purchase 1,000 shares of Corporation stock, in satisfaction of a 2010 award under one of the corporate employee benefit plans, and the Corporation paid dividends totaling $1.2 million to preferred and common shareholders. Dividends to common shareholders for the nine-month period were $.63 per share.
The Corporation s net income for the nine months ended September 30, 2011 totaled $1.2 million, a decrease of $510,000, or 29.5%, from net income reported for the nine-month period ended September 30, 2010. The change in income period to period was comprised of a variety of changes that occurred over the period. Total interest income decreased $777,000, or 5.5%, from $14.1 million for the nine months ended September 30, 2010 to $13.4 million for the same period in 2011, as yields and average balances on interest-earning assets dropped. Offsetting the decrease in interest income was a more dramatic decrease in interest expense, with interest expense for the nine months ended September 30, 2011 of $4.4 million as compared to $5.7 million for the same period in 2010, a decrease of $1.3 million, or 22.8%, period to period, as deposit and borrowing costs of funds dropped from 1.82% at September 30, 2010 to 1.52% at September 30, 2011. Meanwhile, provision expense for the nine-month period ended September 30, 2011 was $2.3 million as compared to $1.9 million for the same period in 2010, an increase of $382,000, reflecting the continuing economic stagnation. Noninterest income decreased $814,000, period to period, primarily due to losses on REO, while noninterest expense increased a slight $216,000, period to period.
For the three-month period ended September 30, 2011, interest income decreased $199,000 from $4.7 million for the period ended September 30, 2010 to $4.5 million for the period ended September 30, 2011, a 4.3% decrease, while interest expense experienced a corresponding decrease of $331,000, from $1.8 million for the three-month period ended September 30, 2010 to $1.5 million for the same period in 2011, an 18.4% decrease. Both decreases are a result of changes in asset average balances and decreases in yields on interest-earning assets and costs of funds on deposits and borrowings.
Stocks Discussed: RIVR,