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[AMERIANA BANCORP LETTERHEAD]
Contact: Jerome J. Gassen
President and Chief Executive Officer
(765) 529-2230
AMERIANA BANCORP REPORTS SECOND QUARTER, FIRST HALF RESULTS
NEW CASTLE, Ind. (August 9, 2006) - Ameriana Bancorp (NASDAQ: ASBI) today
announced results for the second quarter and six months ended June 30, 2006.
Highlights of the second quarter included year-over-year growth in total assets
and the Company's loan portfolio as Ameriana remains focused on its
repositioning plan, including the expansion of its commercial lending efforts.
As expected, however, the Company's net income for the second quarter and first
half of 2006 declined from year-earlier amounts because of the benefit of
significant lease recoveries in the first and second quarters of 2005.
Net interest income for the quarter was $2,204,000 compared with
$2,477,000 in the year-earlier period. The change in net interest income
reflected ongoing margin compression in the face of a flattened yield curve and
a rising-rate environment. In the quarter, the provision for loan losses totaled
$75,000 versus a credit to the allowance for loan losses of $982,000 in the same
period last year, with the latter reflecting a $1,100,000 recovery from certain
lease pools reserved and written off in earlier periods. Largely because of the
disparity in the loan loss provision for the periods and the decline in net
interest income, net income for the second quarter totaled $5,000 or $0.00 per
diluted share compared with net income of $730,000 or $0.23 per diluted share
reported in the same period last year.
Net interest income for the first half of 2006 was $4,448,000 versus
$4,903,000 in the comparable period last year and, as for the quarter, reflected
ongoing margin pressure in 2006. The provision for loan losses for the first six
months of 2006 was $150,000 versus a credit to the allowance for loan losses of
$3,032,000 in the year-earlier period, which reflected $3,400,000 of lease
recoveries. Because of the benefit of the lease recoveries last year and the
decline in net interest income, net income for the first half of 2006 declined
to $223,000 or $0.07 per share from $1,490,000 or $0.47 per share for the first
half of 2005.
Commenting on the results, Jerome J. Gassen, President and Chief
Executive Officer, said, "During this past quarter, we made further strides in
our plan to reposition Ameriana, as we continued to move away from a savings and
loan platform to add more balance to operations, with particular emphasis on
expanding our commercial lending business and consumer banking activities.
Obviously, this progress has been obscured for the past year because of the
lease recoveries we made in 2005, but since we have now lapped those
year-earlier events, we expect future results to be more readily comparable and
our progress to be more directly apparent.
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ASBI Reports Second Quarter Results
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August 9, 2006
"To further our efforts in building an organization that can sustain a
higher level of performance and profitability," Gassen added, "we have continued
to develop our expertise in commercial lending. Following important steps taken
late last year to add new lenders to this area and create a new, separate
function for credit administration, we recently added two more commercial
lenders to our team. Already this team, in place since mid-2005, has begun to
produce concrete results as seen by a year-over-year increase in our loan
portfolio of almost 15% or $28,338,000. Importantly, we have achieved this
growth even as we have moved away from certain loans involving speculative
building, which entails higher risk. With the addition of these two new senior
lenders, we expect that our commercial lending business will continue to expand
in the second half."
Ameriana's net interest income during the second quarter continued to
show margin compression as a result of a flattened yield curve and a rising-rate
environment. Commenting on these trends, and the outlook for improved margins in
the second half of the year, Gassen noted that certain lower-yielding
investments will begin to mature soon and continue into 2007. As these
investments are redeployed into higher-yielding assets, at current market rates,
the Company expects to see year-over-year improvements in margins beginning in
the second half of 2006. A more stable rate environment in the second half of
the year, with a continued pause in interest-rate hikes by the Federal Reserve
Board, also would benefit net interest margins by allowing the repricing of
interest-earning assets to match earlier increases in Ameriana's cost of funds.
Other income for the second quarter of 2006 remained largely unchanged
at $951,000 versus $958,000 in the year-earlier period. For the first half of
2006, other income declined to $1,936,000 from $2,116,000, primarily because of
a gain on the sale of land in the first quarter of 2005. Other expense for the
second quarter fell to $3,291,000 from $3,537,000 in the same quarter last year
as lower legal and professional fees more than offset higher salaries and
employee benefits, primarily associated with the expansion of the Company's
commercial lending team. For the first half of 2006, other expense declined to
$6,352,000 from $8,238,000 in the first half of 2005, reflecting lower pension
expense due to a $1,100,000 voluntary pension plan contribution in 2005 and
lower legal and professional fees, which helped offset higher salaries and
employee benefits.
Concluding, Gassen said, "Overall, we are gratified by the fundamental
progress we witnessed in the Company's business during the second quarter and
are encouraged about the opportunities we see to further these efforts in the
second half of the year. The outlook for possible margin improvement beginning
later in 2006 appears good, considering the expected maturity of certain
lower-yielding investments in our portfolio and the prospects of a more stable
interest rate environment. Also, we expect continued growth in loan volume,
reflecting initiatives to expand our commercial loan portfolio. Coupled with an
ongoing focus on asset quality and expense control, we believe Ameriana is
poised to demonstrate profitable growth in the second half of 2006 as we
continue to implement our strategies to improve long-term performance."
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ASBI Reports Second Quarter Results
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August 9, 2006
Ameriana Bancorp is a bank holding company. Through its wholly owned
subsidiary, Ameriana Bank and Trust, SB, the Company offers an extensive line of
banking services and provides a range of investments and securities products
through banking centers in the central Indiana area. Ameriana owns Ameriana
Insurance Agency, a full-service insurance agency, and has interests in Family
Financial Holdings, Inc. and Indiana Title Insurance Company. Ameriana Financial
Services offers securities and insurance products through Linsco/Private Ledger.
This news release contains forward-looking statements within the
meaning of the federal securities laws. Statements in this release that are not
strictly historical are forward-looking and are based upon current expectations
that may differ materially from actual results. These forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those anticipated by the statements made herein. These risks and
uncertainties involve general economic trends, changes in interest rates, loss
of deposits and loan demand to other financial institutions, substantial changes
in financial markets; changes in real estate value and the real estate market,
regulatory changes, possibility of unforeseen events affecting the industry
generally, the uncertainties associated with newly developed or acquired
operations, the outcome of pending litigation, and market disruptions and other
effects of terrorist activities. The Company undertakes no obligation to update
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unforeseen events, except as
required under the rules and regulations of the Securities and Exchange
Commission.
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AMERIANA BANCORP
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
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2006 2005 2006 2005
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Interest income $ 5,474 $ 4,837 $ 10,807 $ 9,494
Interest expense 3,270 2,360 6,359 4,591
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Net interest income 2,204 2,477 4,448 4,903
Provision (adjustment) for loan losses 75 (982) 150 (3,032)
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Net interest income after provision for loan losses 2,129 3,459 4,298 7,935
Other income 951 958 1,936 2,116
Other expense 3,291 3,537 6,352 8,238
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Income (loss) before income taxes (211) 880 (118) 1,813
Income tax expense (benefit) (216) 150 (341) 323
------------ ----------- ----------- ----------
Net income $ 5 $ 730 $ 223 $ 1,490
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Basic and diluted earnings per share $ 0.00 $ 0.23 $ 0.07 $ 0.47
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Weighted average shares outstanding:
Basic 3,205 3,155 3,200 3,154
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Diluted 3,209 3,168 3,205 3,169
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Dividends declared per share $ 0.16 $ 0.16 $ 0.32 $ 0.32
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JUNE 30 DEC. 31 JUNE 30
2006 2005 2005
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Total assets $ 434,616 $ 449,369 $ 428,705
Cash and cash equivalents 7,362 14,270 9,499
Investment securities held to maturity -- -- 166,836
Investment securities available for sale 154,861 168,686 12,206
Loans, net 223,451 218,291 195,113
Deposits 334,462 339,351 335,869
Borrowed funds 58,514 66,889 47,387
Shareholders' equity 34,073 35,657 38,969
Loans accounted for on a non-accrual basis 4,459 2,468 7,050
Book value per share 10.75 11.23 12.35