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Indiana Business Bancorp (OTCBB: IBBI), the holding company for Indiana Business Bank, announced results for the quarter and year ended December 31, 2012.
The company recorded a profit of $340,724 or $.23 per share and $862,085 or $.57 per share for the quarter and year ended December 31, 2012. Net income includes recognition of a tax benefit in the amount of $100,000 for the quarter and $250,000 for the year from the carryover of net operating losses. Pre-tax profit was $240,724 and $612,085 for the quarter and year ended December 31, 2012. Pre-tax performance for the 2012 periods reflects improvements of 18.5% and 11.5% over the year earlier periods, respectively.
The improvement in profits for the year is due primarily to lower credit costs and increased net interest income. The net interest margin improved from 4.04% in 2011 to 4.65% in 2012, despite a lower level of earning assets, due to a 40 basis point reduction in the cost of funds and a 20 basis point improvement in the yield on earning assets.
Non-interest income for the year was $408,964, compared to $555,177 in 2011. The difference is almost completely attributed to the variance in gains recorded from the sale of Small Business Administration (SBA) loans. In 2011, the company reported substantial gains from the sale of two large loans from a single borrower. Gains on sale of SBA loans totaled $293,718 in 2012 and $440,876 in 2011.
Non-interest expense (generally salaries and other operating expenses) increased by 3% compared to the previous year. The increase is due to higher salary levels reflecting annual merit increases and the higher cost of employee benefits. The majority of remaining expense categories were flat or below 2011 levels.
The provision for loan loss declined from $515,000 during 2011 to $278,000 during 2012. The reduced provision expense for the year reflects the improved credit profile of the loan portfolio and lower loan balances. At December 31, 2012, the allowance for loan losses was $1,210,763, which represented 2.35% of total loans.
Non-accrual loans, Other Real Estate Owned (OREO) and renegotiated loans totaled $4,851,280 at December 31, 2012, which reflected a 17% reduction from December 31, 2011. Non-performing assets, which consist of non-accrual loans, OREO, and loans past due more than 90 days were $2,018,135 at year end, which reflected a 46% reduction from the prior year.
All of the Bank’s capital ratios substantially exceeded the amounts needed to be considered “well capitalized” at December 31, 2012.
President and CEO, James S. Young stated, “Our staff is pleased that 2012 results improved upon a strong 2011 performance. Although most in our industry are fighting shrinking net interest margins, our ability to maintain yield and decrease our cost of funds, allows us to maintain a margin that was better than most of our peers.” Young added, “We will continue to work toward achieving improvements in the credit risk aspect of our business by working with borrowers. We believe 2013 will be challenging but expect, and have planned for, quality growth throughout the year.”
About Indiana Business Bancorp and Indiana Business Bank
Indiana Business Bancorp is a bank holding company whose operations are conducted through its subsidiary, Indiana Business Bank, a state-chartered, locally-owned and managed commercial bank formed for the purpose of providing highly-personalized banking services for small to medium-sized businesses, their owners and professional services firms in the Indianapolis, Indiana metropolitan area. The Bank provides a full line of commercial banking loan, deposit, and cash management services that are delivered in a highly personalized manner by experienced banking professionals. The Bank specializes in serving the commercial and consumer banking needs of small to medium sized businesses and their owners, and professionals located primarily throughout Central Indiana.
We routinely post important information for investors on our website, http://www.indianabb.com, in the “About” section under “Investor Relations”. We intend to use this website as a means of providing financial and other information to investors and other interested parties. Accordingly, investors should monitor our website, in addition to following our press releases and other presentations. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Indiana Business Bank and Indiana Business Bancorp’s business which are not historical facts are “forward-looking statements” that involve risks and uncertainties which may cause actual results to differ materially from expected results, including: the impact of a slowdown or recession on our borrowing customers; volatility in the financial markets; general, regional and local economic conditions and their effect on interest rates; competition among banks and other financial intermediaries within the Indianapolis metropolitan market; risks that borrowers may default on their loans; and changes in regulations and accounting policies affecting financial institutions.
FINANCIAL SUMMARY FOR INDIANA BUSINESS BANCORP
As of and for the
As of and for the
|Net Interest Income||736,865||734,356||2,899,383||2,827,927|
|Provision for Loan Losses||40,000||55,000||278,000||515,000|
Pre Tax Net Income
|Def Tax Benefit||100,000||250,000||250,000||250,000|
|After Tax Net Income||340,724||453,193||862,085||799,190|
|Per Share Data|
|Net Earnings per share||.23||.30||.57||.53|
Weighted Average Shares Outstanding
|Balance Sheet Data||
December 31, 2012
|December 31, 2011|
|Allowance for Loan Losses||1,210,763||1,468,949|
|Total Shareholders’ Equity||9,804,269||8,926,659|