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Indiana Community Bancorp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 3, 2010 04:18PM
Indiana Community Bancorp (INCB) filed Quarterly Report for the period ended 2010-03-31.
Highlight of Business Operations:
The $2.1 million provision for loan losses remained relatively unchanged for the quarters ended March 31, 2010 and March 31, 2009. Net charge offs were $613,000 for the current quarter compared to $1.8 million for the first quarter of 2009. The $2.1 million provision for loan losses for the current quarter was primarily due a $1.5 million net increase in reserves on impaired loans, as well as $613,000 of current quarter charge offs. The increase in reserves on impaired loans related to three commercial loans which are having cash flow concerns. The allowance for loan losses increased $1.5 million during the first quarter related primarily to the increase in the reserves on impaired loans. See the Critical Accounting Policies, Allowance for Loan Losses section for a description of the systematic analysis the Bank uses to determine its allowance for loan losses.
Total interest expense for the three month period ended March 31, 2010 decreased $1.2 million or 24.8% as compared to the same period a year ago. The weighted average interest rates paid on average interest bearing liabilities decreased 66 basis points, from the three month period ended March 2009 to the three month period ended March 2010. The decrease in rates paid on interest bearing liabilities resulted from the changing mix of interest bearing liabilities. Due to the restructuring transaction discussed previously the average of FHLB advances decreased $72.6 million in the current quarter as compared to the same quarter of the prior year. Additionally, average balances of public funds and brokered deposits decreased $10.8 million and $4.9 million, respectively. Increases in average balances of lower cost interest checking, money market accounts and certificates of deposits were $58.4 million, $47.2 million and $20.4 million, respectively.
Non interest expenses decreased $125,000 or 1.7% to $7.1 million for the quarter. Loan expenses decreased $247,000 or 54.4% due primarily to a $234,000 reduction in the expenses associated with problem loan workouts. The largest increase in other non interest expense was attributable to FDIC insurance expense. This expense increased $207,000 or 69.0% over the same quarter of the prior year. In the quarter ended March 2010, the assessment rate more than doubled compared to the rate in effect for the quarter ended March 2009. Additionally, due to deposit growth, the amount of deposits the assessment was applied against increased $144.4 million. Real estate owned expenses increased $125,000. This increase was due primary to increased balances of real estate owned property and the taxes associated with these properties. Miscellaneous expenses decreased $176,000 or 20.6% due to minor decreases in various categories including communication expense which decreased $76,000.
A tax credit of $52,000 was recorded for the first quarter ended March 2010 while tax expense of $201,000 was recorded for the first quarter ended March 2009. In the quarter ended March 2010, the Company recorded pretax income of $366,000 million resulting in a tax credit of $52,000 after considering permanent tax differences. In the quarter ended March 2009, the Company recorded pretax income of $641,000 resulting in tax expense of $201,000. The tax calculation for the quarters ended March 31, 2010 and 2009 includes the benefit of approximately $345,000 and $330,000 of tax-exempt income, respectively.
Total assets as of March 31, 2010, were $1.0 billion, which represented a slight increase of $13.5 million or 1.3% from December 31, 2009, total assets of $1.0 billion. The most significant change in the balance sheet was the $48.9 million increase in securities available for sale that was funded by the $16.2 million growth in deposits and the $32.5 million decrease in cash and cash equivalents. The increase in securities available for sale was the result of management s decision to reduce the available amount of cash by investing in short term investments with higher yields to improve the net interest margin. Retail deposits increased across all categories. Demand accounts increased $399,000. Interest bearing checking accounts increased $3.8 million. Savings accounts increased $3.4 million. Money market deposit accounts increased $5.5 million. Certificates of deposit increased $3.1 million.
Shareholders' equity increased $318,000 during the first three months of 2010. Retained earnings increased $418,000 from net income and decreased $303,000 for dividend payments on common and preferred stock, and $25,000 for the amortization of the discount on preferred stock. The Company reduced its quarterly dividends from $.12 to $.01 per share for the third quarter ending September 30, 2009. Common stock increased $11,000 from recognition of compensation expense associated with vesting of stock options. Additionally, the Company had other comprehensive income from unrealized gains in its securities available for sale portfolio, net of tax, of $192,000 for the three months ended March 31, 2010.
Stocks Discussed: INCB,