Report to Shareholders - Third Quarter, 1997
I am very pleased to report a definitive merger agreement has
been finalized with P.T.C. Bancorp. The agreement is consistent with
the agreement in principle announced in June. The process of filing
with multiple regulators has begun and we now expect the merger to be
completed early in 1998.
We remain confident that the merger will be very beneficial to
the shareholders, employees and communities of both organizations.
Upon completion, Indiana United will have consolidated assets
approaching $650 million, market capitalization of approximately $100
million, and will present an even greater financial force with 29
offices in twelve eastern and southern Indiana counties.
Net income of $906,250 in the third quarter was $588,661 or 185%
above the comparable 1996 period. As reported last year, however, the
1996 third quarter included one time tax effected charges of $474,178
associated with structural changes within the thrift industry, as
mandated by Congress. When those non-recurring charges are excluded
from last year's earnings, the current period gain was still a robust
14.5%. Earnings per share of $.72 exceeded normalized earnings of the
prior year period by $.09 or 14.3% and surpassed reported earnings by
$.47 or 188%.
For the nine months ended September 30, 1997, net income was
$2,867,649, compared to $1,798,638 in the similar period in 1996. On
a per share basis, earnings of $2.29 exceeded normalized earnings for
the first nine months of 1996 by $.51 or 28.7%.
Earnings continue to reflect solid loan growth, particularly in
commercial loans and non-residential consumer loans. Loan quality by
all measurements remains comfortably within the highest 5% of latest
available peer group averages. Based on our solid core earnings, some
low yielding investment securities were sold to support our future net
interest margin. The after-tax loss on these sales equaled $.04 per
share in the third quarter.
The comparative year to date performance measurements for the
last three years detailed on page two showcase the strong gains we
have made in every major category. We expect future comparisons to
reflect continued gains.
The months ahead will give birth to a significant event in our
corporate evolution and I am excited about our future. However, we do
not intend to relax our growth strategy with the consummation of the
P.T.C. Bancorp merger. We remain committed to advancing our market
share in the communities we now serve and will aggressively seek to
expand into any new markets we believe will enhance shareholder value.
Every action we take is dedicated to rewarding shareholders,
employees and the communities we serve. Thank you for your trust and
confidence in our vision.
/s/ Robert E. Hoptry
Robert E. Hoptry
Chairman and President
Financial Highlights - Third Quarter 1997
Three Months Ended Percent
September 30 Change
EARNINGS 1997 1996
Net Income $906,250 $317,589 185.4
Net Income Per Share 0.72 0.25 188.0
Dividends Paid Per Share 0.26 0.21 23.8
Nine Months Ended
September 30
1997 1996
Net Income $2,867,649 $1,798,638 59.4
Net Income Per Share 2.29 1.40 63.6
Dividends Paid Per Share .74 .61 21.3
As of September 30
BALANCE SHEET (In Thousands) 1997 1996
Total Assets $342,051 $321,397 6.4
Total Loans 244,237 215,028 13.6
Total Deposits 285,760 271,031 5.4
Total Common Equity 30,084 26,738 12.5
As of September 30
SHARE DATA 1997 1996
Shares Outstanding 1,250,897 1,250,897
Book Value $24.05 $20.98 14.6
Closing Market Price $41.00 $25.75 59.2
Market/Book Ratio 170% 123%
SHAREHOLDER INFORMATION
The common shares of the Company are listed on the NASDAQ National
Market System under the symbol IUBC. In newspaper listings, the
Company's shares are frequently listed under IndUtd.
Primary market makers are:
J.J.B. Hilliard / W.L. Lyons, Inc.
NatCity Investments, Inc.
Stifel, Nicolaus & Company, Inc.
GRAPHS
Key Performance Measurements As of September 30*
* Excluding one-time thrift charges in 1996.
Year Percent
Return on Average Common Equity(%) 1995 9.28
1996 11.21
1997 13.39
Year Percent
Return on Average Assets(%) 1995 0.78
1996 0.97
1997 1.14
Year Percent
Net Interest Margin(%) 1995 3.72
1996 3.98
1997 4.13
Year Percent
Efficiency Ratio(%) 1995 67.99
1996 61.14
1997 55.32