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[AMERIANA BANCORP LETTERHEAD]
Contact:
Ameriana Bancorp
Jerome J. Gassen, (765) 529-2230
President and Chief Executive Officer
AMERIANA BANCORP REPORTS THIRD QUARTER RESULTS
NEW CASTLE, Ind. (October 31, 2006) - Ameriana Bancorp (NASDAQ:ASBI) today
announced results for the three and nine months ended September 30, 2006. The
Company reported further growth in its loan portfolio during the third quarter
as Ameriana continued to reposition its balance sheet to improve the yield on
earning assets and expand its role in commercial lending. Concurrent with loan
growth, Ameriana also has witnessed ongoing improvement in overall loan quality.
Net income for the third quarter of 2006, however, declined from the same period
last year primarily because of continued pressure on net interest margin, the
write-down of other real estate owned pending its upcoming sale, and higher
salaries and employee benefits, particularly as related to the ramp-up in
staffing for Ameriana's commercial lending activities.
Ameriana posted a net loss for the third quarter of $92,000 or $0.03
per diluted share compared with net income of $396,000 or $0.12 per diluted
share reported in the same period last year. The loss was due largely to a
$175,000 write-down on a partially developed parcel of land carried as other
real estate owned. The sale agreement, entered into during the third quarter, is
expected to close during the fourth quarter. Net interest income for the quarter
declined to $2,157,000 compared with $2,526,000 in the year-earlier period,
reflecting the effects of a relatively flat yield curve. In this environment,
Ameriana's term deposits have matured and re-priced at higher rates, causing a
rise in the Company's cost of funds that outpaced the increase in interest
income. This is evidenced by a decline of 39 basis points in the Company's net
interest margin to 2.24% for the third quarter of 2006 versus 2.63% for the
year-earlier quarter. Ameriana's provision for loan losses totaled $75,000
versus $35,000 in the same period last year. The increase was due to loan
growth, offset by a decrease in net charge-offs.
Commenting on the results, Jerome J. Gassen, President and Chief
Executive Officer, said, "There were many positive highlights in our operations
for the third quarter, but they could not overcome the write-down of other real
estate owned and the impact of the decline in net interest income this quarter.
The results also were affected by higher salaries and employee benefits,
primarily due to staff recently added in our commercial lending department and
trailing costs associated with the closing of our trust department.
Additionally, we continue to aggressively pursue our contract claims against RLI
Insurance Co., the insurer of a lease pool purchased from Commercial Money
Center, Inc.
"Although conditions remain challenging in the near term, we remain
optimistic about the long-term direction of the Company and the new strategies
we are pursuing," Gassen continued. "Loans have increased 19% or $39 million
over September 30, 2005, due to several initiatives, such as the ramp-up of
commercial lending, increased production of first real estate mortgages, and
loan purchases, which have yielded these positive results. At the same time, we
continue to post
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ASBI Reports Third Quarter Results
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October 31, 2006
improvements in overall loan quality, with ongoing reductions in the amount of
criticized and classified loans. Lastly, our cost of funds, while rising
recently, began to stabilize as the third quarter ended, and we now appear to be
positioned for improved margins in the future. As we go forward, we expect the
positive impact of these factors to be more telling in our financial
performance."
Net income for the first nine months of 2006 declined to $131,000 or
$0.04 per share from $1,886,000 or $0.59 per share for the first nine months of
2005, with the year-over-year change reflecting the benefit of significant lease
recoveries in the first and second quarters of 2005. Net interest income for the
first nine months of 2006 was $6,605,000 versus $7,429,000 in the comparable
period last year due to the flattening yield curve and rising short-term
interest rates. The provision for loan losses for the first nine months of 2006
was $225,000 versus a credit to the allowance for loan losses of $2,997,000 in
the year-earlier period relating to $3,400,000 of lease recoveries in 2005.
Other income for the third quarter of 2006 was largely unchanged at
$959,000 versus $949,000 in the year-earlier period. For the first nine months
of 2006, other income declined to $2,895,000 from $3,065,000, primarily because
of a gain on the sale of land in the first quarter of 2005. Other expense for
the third quarter increased to $3,399,000 from $3,073,000 in the same quarter
last year, reflecting primarily the write-down on real estate owned and higher
salaries and employee benefits. For the first nine months of 2006, other expense
declined to $9,751,000 from $11,311,000 in the first nine months of 2005,
reflecting lower pension expense due to a $1,100,000 voluntary pension plan
contribution in 2005 and lower legal and professional fees.
Ameriana Bancorp is a bank holding company. Through its wholly owned
subsidiary, Ameriana Bank, 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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ASBI Reports Third Quarter Results
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October 31, 2006
AMERIANA BANCORP
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
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2006 2005 2006 2005
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Interest income $ 5,718 $ 5,056 $ 16,525 $ 14,550
Interest expense 3,561 2,530 9,920 7,121
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Net interest income 2,157 2,526 6,605 7,429
Provision (adjustment) for loan losses 75 35 225 (2,997)
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Net interest income after provision for loan losses 2,082 2,491 6,380 10,426
Other income 959 949 2,895 3,065
Other expense 3,399 3,073 9,751 11,311
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Income (loss) before income taxes (358) 367 (476) 2,180
Income tax expense (benefit) (266) (29) (607) 294
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Net income (loss) $ (92) $ 396 $ 131 $ 1,886
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Earnings (loss) per share:
Basic $ (0.03) $ 0.13 $ 0.04 $ 0.60
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Diluted $ (0.03) $ 0.12 $ 0.04 $ 0.59
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Weighted average shares outstanding:
Basic 3,149 3,161 3,183 3,156
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Diluted 3,153 3,173 3,188 3,170
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Dividends declared per share $ 0.16 $ 0.16 $ 0.48 $ 0.48
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SEPT. 30 DEC. 31 SEPT. 30
2006 2005 2005
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Total assets $ 478,717 $ 449,369 $ 442,216
Cash and cash equivalents 12,022 14,270 13,552
Investment securities available for sale 170,995 168,686 172,358
Loans, net 247,744 218,291 209,057
Deposits 330,592 339,351 323,926
Borrowed funds 101,724 66,889 74,029
Shareholders' equity 34,186 35,657 36,748
Loans accounted for on a non-accrual basis 4,648 2,468 2,839
Book value per share 10.93 11.23 11.62