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River Valley Bancorp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 14, 2012 10:19AM

River Valley Bancorp. (RIVR) filed Quarterly Report for the period ended 2012-06-30. River Valley Bancorp has a market cap of $24.3 million; its shares were traded at around $15.86 with a P/E ratio of 19.1 and P/S ratio of 1.1. The dividend yield of River Valley Bancorp stocks is 5.2%. River Valley Bancorp had an annual average earning growth of 1.2% over the past 10 years.



Highlight of Business Operations:

The difficult lending environment continued to challenge loan production for the Corporation. Total loans, net of the allowance for loan losses, decreased $1.1 million, or 0.4%, from $253.1 million at December 31, 2011 to $252.0 million at June 30, 2012. Over the six-month period, $1.4 million in non-performing loans moved from the portfolio into real estate held for sale, while sales of conventional mortgages into the secondary market remained strong. Sales to the Federal Home Loan Mortgage Corporation (Freddie Mac) for the six months ended June 30, 2012 were $15.2 million. These sales compare to $7.9 million in sales for the six months ended June 30, 2011.

Net interest income was $6.0 million for the six months ended June 30, 2012 and $5.9 million for the same period in 2011, with an increase period to period of $103,000, or 1.7%. This reflects the effects of increasing spread between interest-earning assets and interest-bearing liabilities, 3.48% as of June 30, 2012 as compared to 3.46% at the same point in 2011, combined with changes in the mix of the underlying assets and liabilities.

Other income increased by $393,000, or 24.7%, during the six months ended June 30, 2012 to $2.0 million, as compared to the $1.6 million reported for the same period in 2011. The increase was due primarily to net gains on loan sales as well as net gains on sales of available-for-sale securities. These gains were offset by an increase in losses, period to period, on disposals of assets, primarily other real estate owned. Net losses on premises, equipment and other real estate owned were $394,000 for the six-month period ended June 30, 2012, as compared to $149,000 for the same period in 2011, a change of $245,000. These losses were offset by increases in income from merchant interchange fees, $220,000 for the six months ended June 30, 2012 as compared to $200,000 for the same period in 2011, increased gains on the sale of available-for-sale securities, $331,000 for the six months ended June 30, 2012 as compared to $165,000 for the same period in 2011, and gains on the sale of loans into the secondary market, primarily to Freddie Mac, $509,000 for the six months ended June 30, 2012 as compared to $229,000 for the same six months in 2011. While sales into the secondary market for the first six months of 2012 exceeded the same for 2011, this trend may not continue into the remainder of 2012 as origination of loans for sale are expected to decline as underwriting continues to be tight and refinance activity declines. The only other notable increase in other income for the six-month period was in fees and charges relative to deposit accounts, primarily overdraft fees, which increased $84,000, period to period, with the total income from these fees $998,000 for the six-month period ended June 30, 2012 as compared to $914,000 for the same period in 2011, primarily due to increased overdraft activity. Unlike interest income, “Other Income” is not always readily predictable and is subject to variations depending on outside influences, including regulatory changes.

During 2011, the Corporation realized strong income from the widening of the margin between interest-earning assets and interest-bearing liabilities. This trend has somewhat stabilized, with net interest income nearly identical for the three-month periods, 2012 to 2011. Total interest income for the three-month period ended June 30, 2012 was $4.2 million as compared to $4.3 million for the same period in 2011, a decrease of $104,000, or 2.4%. Conversely, total interest expense for the three-month period ended June 30, 2012 was $1.3 million as compared to $1.5 million for the same period in 2011, a decrease of $202,000, or 13.8%. Provision expense decreased $52,000 or 13.9% from $374,000 for the three months ended June 30, 2011 to $322,000 for the three months ended June 30, 2012.

Other income increased by $425,000, or 63.1%, during the three months ended June 30, 2012 to $1.1 million, as compared to the $674,000 reported for the same period in 2011. The increase was due primarily to increases in income from the sale of loans into the secondary market, period to period. Gains on sales to the FHLMC (Freddie Mac) for the three months ending June 30, 2012 totaled $225,000 an increase of $157,000 over the $68,000 recorded for the same period ended June 30, 2011. Sales to the Federal Home Loan Mortgage Corporation (Freddie Mac) for the three months ended June 30, 2012 were $6.1 million, down from fourth quarter 2011 sales of $11.2 million, but a strong increase over the $2.2 million recorded for the three-month period ended June 30, 2011. Sales into the secondary market have been strong during the first six months of 2012 as consumers take advantage of record low interest rates. Gains on the sale of available-for-sale investments also contributed $157,000 to the overall increase in other income, period to period, with gains of $197,000 for the three-month period ended June 30, 2012 as compared to $40,000 for the same period in 2011 as management took advantage of gain positions on investments with short-term maturities or call positions. Other notable increases in other income, period to period, included service fees and charges, which includes income from ATM usage. Service fees and charges increased to $501,000 for the three-month period ended June 30, 2012 from $460,000 for the comparable period in 2011, an increase of $41,000. Unlike interest income, “other income” is not always readily predictable and is subject to variations depending on outside influences.

Read the The complete Report



Stocks Discussed: RIVR,
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