River Valley Bancorp. has a market cap of $20.9 million; its shares were traded at around $13.8999 with a P/E ratio of 12 and P/S ratio of 0.9. The dividend yield of River Valley Bancorp. stocks is 6%. River Valley Bancorp. had an annual average earning growth of 8.4% over the past 10 years.
Highlight of Business Operations:At March 31, 2010, the Corporation s consolidated assets totaled $395.2 million, a slight decrease of $934,000, or .2%, from December 31, 2009. Despite the negligible change in assets overall, positive movement was experienced in certain areas. Interest-bearing demand deposits held by the Corporation increased by $5.3 million to $14.8 million at March 31, 2010. This compared to $9.5 million at December 31, 2009. The increase was primarily a result of $6.0 million in new deposits in the south central Indiana branches, $2.0 million in proceeds from the sale of available-for-sale investments sold to take advantage of gain positions, and moderate sales on loans into the secondary market with proceeds from those sales to Federal Home Loan Mortgage Corporation (Freddie Mac) of $3.4 million. Over the same period, the Corporation repaid $8.0 million in borrowings with the Federal Home Loan Bank of Indianapolis (FHLB) with total borrowings at the FHLB of $71.0 million at March 31, 2010 as compared to $79.0 million as of December 31, 2009.
Borrowing totaled $78.2 million at March 31, 2010 versus $86.2 million at December 31, 2009, a drop of $8.0 million, or 9.3%, period to period, as the Corporation used portions of excess liquidity to pay down advances. Of total borrowings, $71.0 million and $79.0 million, respectively, represented Federal Home Loan Bank (FHLB) advances with average rates of 4.60% and 4.56% at the respective dates. These balances and average rates on advances from the FHLB represent a reduction from the same at March 31, 2009 which were $86.0 million and 4.67%. The drop in average balances and rates, March 2009 to March 2010, resulted in a $204,000, or 18.4%, decrease in the cost of borrowing period to period. Borrowing costs of $906,000 for the three months ended March 31, 2010 compared to $1.1 million for the same period in 2009.
The Corporation s net income for the three months ended March 31, 2010, totaled $719,000, an increase of $176,000, or 32.4%, from the net income of $543,000 reported for the period ended March 31, 2009. The increase in income for the 2010 period was primarily attributable to a significant decrease in the cost of funds, period to period, as deposit and borrowing cost of funds dropped from 2.62% at March 31, 2009 to 2.13% at March 31, 2010. This drop translated to a $397,000, or 16.7%, decrease in interest expense period to period. This compared to a slight decrease in income from interest-earning assets of $159,000, or 3.3%, for the same period, with the yield on loans changing only negligibly from 6.01% at March 31, 2009 to 6.04% a year later, and average balances for the loan portfolio declining. Yields on investments dropped, from 4.11% at March 31, 2009 to 3.62% at March 31, 2010. However, income from investments increased from March 2009 to March 2010 due to the nearly $12.0 million increase in investments held. That increase was comprised roughly of a $3.0 million increase each in federal agency securities and municipal securities plus an $8.0 million increase in residential mortgage-backed agency securities. Corporate investments dropped by $2.0 million over the same period. Gain on loan sales to the secondary market, a significant contributor to net income in 2009, decreased in the first three months of 2010, with income for the three-month period ended March 31, 2010 at $87,000 as compared to $373,000 for the same period in 2009, a decrease of $286,000, or 76.7%.
Total interest expense for the same period decreased by $397,000, or 16.7%, from the $2.4 million reported at March 31, 2009 to $2.0 million at March 31, 2010. For the three months ended March 31, 2010 interest expense from deposits totaled $1.1 million while interest expense from borrowings totaled $906,000, as compared to $1.3 million and $1.1 million for the same period in 2009. Of the overall decrease in interest expense, $193,000 was attributable to interest expense on deposits, primarily fixed-maturity deposits, as the effect of the Fed rate cuts in 2008 continued to affect depositors and widen the spread on interest bearing balances. Over the same period, the Corporation experienced a decrease of $204,000 on interest expense for borrowings as advances were repaid and the average balance of funds borrowed from the FHLB dropped. The average rate paid on those borrowings dropped from 4.67% at March 31, 2009 to 4.60% at March 31, 2010.
Non-performing loans as of March 31, 2010 were $7.1 million, an increase of $2.8 million, from the $4.3 million at the same point in 2009, primarily reflecting the addition of two large relationships during the second quarter of 2009. Of the total non-performing loans of $7.1 million at March 31, 2010, approximately $5.2 million have been past due for more than 12 months, were reduced by partial charge-off of confirmed losses in December of 2009, and are in the lengthy process of work out or foreclosure. Delinquency for loans 30-59 days past due as of March 31, 2010 totaled $1.1 million as compared to $1.7 million at the same point in 2009. Net charge-offs for the three-month period ended March 31, 2010 resulted in a net recovery of $219,000, the result of a $240,000 recovery on a loan previously reduced by a partial charge-off, as compared to net charge-offs of $147,000 for the same period in 2009. While management believes that the allowance for losses on loans is adequate at March 31, 2010, based upon the available facts and circumstances, there can be no assurance that the loan loss allowance will be adequate to cover losses on non-performing assets in the future.
Other income decreased by $260,000 during the three months ended March 31, 2010 to $778,000, as compared to the $1.0 million reported for the same period in 2009. The decrease was due primarily to the decrease in loan sales into the secondary market, period to period. Gains on sales to the FHLMC (Freddie Mac) for the three months ending March 31, 2010 totaled $87,000 a decrease of $286,000 from the $373,000 recorded for the same period ended March 31, 2009. Period to period, service fees and charges, which includes income from overdrawn deposit accounts (NSF fees) decreased $36,000 as customers appeared to be more frugal in their spending habits. Offsetting that decrease were losses on foreclosed real estate owned, which were less for the three-month period ended March 31, 2010, at $16,000, as compared to net losses of $46,000 at the same point in 2009. Unlike interest income, “Other Income” is not always readily predictable and is subject to variations depending on outside influences.
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