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[AMERIANA BANCORP LOGO]
NEWS RELEASE
Contact: Jerome J. Gassen
President and Chief Executive Officer
(765) 529-2230
AMERIANA BANCORP REPORTS THIRD QUARTER EARNINGS
NEW CASTLE, Ind. (October 31, 2007) - Ameriana Bancorp (NASDAQ:ASBI) today
announced net income of $1,390,000 or $0.47 per basic and diluted share for the
quarter ended September 30, 2007, compared with a net loss of $92,000 or $0.03
per basic and diluted share in the year-earlier period. For the first nine
months of 2007, Ameriana reported net income of $1,344,000 or $0.45 per basic
and diluted share compared with net income of $131,000 or $0.04 per basic and
diluted share in the same period last year.
As previously announced, the Company's results for the third quarter and
first nine months of 2007 included the recovery of $2,750,000 in a settlement of
certain litigation. This recovery, equivalent to $1,815,000 or $0.61 per share
on an after-tax basis, was credited against the Company's provision for loan
losses for the quarter and more than offset the provision of $823,000 that
included amounts related to two commercial credits that recently were either
charged off or specifically reserved. Also, year-to-date 2007 results included
second quarter income tax expense of $219,000 or $0.07 per share related to the
restructuring of the Company's bank-owned life insurance program.
Highlights of the third quarter also included continued growth in the
Company's loan portfolio, which has increased 14% to $285,624,000 in the past
year as a result of the additional focus Ameriana has placed on expanding its
commercial lending business. This focus resulted in commercial loan growth of
$8,061,000 or 6% for the third quarter and $19,315,000 or 16% for the nine
months ended September 30, 2007, with ending commercial loans totaling
$141,893,000. Additionally, the Company has improved its net interest margin
significantly in 2007 compared with 2006, and in the third quarter of 2007,
Ameriana was successful in sustaining this higher margin level.
Commenting on the results, Jerome J. Gassen, President and Chief Executive
Officer, said, "We are pleased to report continued momentum in our banking
operations, highlighted by ongoing growth in net interest income. This, in turn,
reflects both the progress we are making with our commercial lending activities
as well as the benefit we are seeing from efforts to structure our balance sheet
to achieve a higher, more stable net interest margin. During the quarter, we
also made headway in resolving several longstanding credit quality issues,
including the significant recovery of funds in certain long-running litigation.
This settlement not only resulted in a positive adjustment to our provision for
loan losses, it also eliminated the distraction this litigation caused and the
substantial legal and professional expenses associated with it.
"We recognize that recent changes in the real estate and credit markets
likely will exert pressures on consumers and asset values in the near term,"
Gassen added. "However, considering our progress on several fronts, including
the inroads we are making to reach new customers and expand our product
capabilities, we are cautiously optimistic that Ameriana can sustain its
momentum in the current economic climate."
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ASBI Reports Third Quarter Results
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October 31, 2007
Ameriana's net interest income for the quarter increased 13% to $2,428,000
compared with $2,157,000 in the year-earlier period. Net interest income for the
first nine months of 2007 increased 9% to $7,226,000 versus $6,605,000 in the
comparable period last year. Higher net interest income for the quarter and
year-to-date period reflected growth in the Company's loan portfolio and
improvement in its net interest margin. Net interest margin for the third
quarter was 2.74%, stable with the net interest margin of 2.75% in the second
quarter of 2007, but 50 basis points ahead of the 2.24% net interest margin in
the year-earlier quarter. For the first nine months of 2007, net interest margin
improved 40 basis points to 2.70% versus 2.30% in the same period last year. The
Company expects this year-over-year trend to continue in the fourth quarter of
2007 due to the portfolio restructuring that was completed in late 2006, when
the proceeds from lower-yielding maturing investments were invested in loan
growth, especially higher-yielding commercial loans.
With no exposure to sub-prime lending products, management believes the
Company's overall credit quality remained relatively stable in the third
quarter. Non-performing loans at September 30, 2007, totaled $2.4 million, down
28% from $3.4 million at December 31, 2006, and 48% below $4.7 million at
September 30, 2006. These declines primarily reflected the resolution of two
large credits, with the remaining value of one equaling $352,000 being charged
off and the other being conservatively revalued at $1,650,000 with a write down
of $427,000 and being reclassified as Other Real Estate Owned. Other Real Estate
Owned totaled $3.0 million at September 30, 2007, compared with $801,000 at June
30, 2007, and $610,000 at December 31, 2006. Ameriana's provision for loan
losses reflected a credit of $1,927,000 in the third quarter versus a provision
of $75,000 in the year-earlier period, primarily due to a $2,750,000 recovery in
a settlement of certain litigation. The provision for loan losses for the first
nine months of 2007 reflected a credit of $1,747,000 versus a provision of
$225,000 in the year-earlier period, again due to the impact of the recovery
made during the third quarter.
Other income for the third quarter of 2007 was $990,000, up 26% from
$784,000 in the same quarter in 2006, primarily reflecting a $72,000 increase in
brokerage and insurance commissions, and a reduction of $120,000 in net losses
from other real estate owned. The improvement in brokerage and insurance
commissions was mainly due to higher commission income from the investment
center that resulted from increased sales. Other income for the first nine
months of 2007 increased 9% to $2,968,000 from $2,718,000 in the year-earlier
period, resulting mostly from the same factors.
Other expense for the third quarter increased 10% to $3,550,000 from
$3,224,000 in the same quarter last year, primarily reflecting higher salaries
and employee benefits related to normal annual increases and the expansion of
the Company's commercial lending operations over the past year. Additionally,
other expense for the third quarter included major maintenance to office
properties and increased marketing activities. Other expense for the first nine
months of 2007 totaled $10,462,000, up 9% from $9,574,000 in the first nine
months of 2006, again reflecting higher salaries and employee benefits, as well
as $203,000 in legal fees related to collection activities in the RLI Insurance
Co. matter.
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ASBI Reports Third Quarter Results
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October 31, 2007
The Company's loans (net) increased 13% to $282.9 million at September 30,
2007, from $249.3 at December 31, 2006, and were up 14% from $247.7 million at
September 30, 2006. Total investment securities declined to $78.6 million at
September 30, 2007, from $129.8 million at December 31, 2006, and from $171.0
million at September 30, 2006, as cash flows from the investment portfolio were
used to fund originations of higher-yielding commercial loans. The
year-over-year decline in investment securities also reflected the sale of $34.0
million in available-for-sale government agency securities in the fourth quarter
of 2006. Total deposits declined $2.6 million to $319.8 million at September 30,
2007, from $322.4 million at the end of 2006, with higher-costing certificates
of deposit accounts declining $5.2 million. The combined total for checking,
savings, and money market accounts was up $2.5 million for the period. The
Bank's markets remain very competitive for deposit products and the Bank
continues to utilize pricing strategies designed to produce an acceptable
marginal cost for both existing and new deposits. The Company reduced borrowings
$14.4 million to $60.3 million at September 30, 2007, from $74.7 million at
December 31, 2006, using cash flows from the investment securities portfolio.
With stockholders' equity of $33.5 million at September 30, 2007, Ameriana's
capital position continues to exceed all of the regulatory minimum capital
levels required to be considered a "well-capitalized" institution.
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. For discussion of these and other risks that
may cause actual results to differ from expectations, refer to the Company's
Annual Report on Form 10-K for the year ended December 31, 2006, and our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007, June 30,
2007, and September 30, 2006, on file with the Securities and Exchange
Commission, including the sections entitled "Risk Factors." 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
Page 4
October 31, 2007
AMERIANA BANCORP
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------- ---------------------
2007 2006 2007 2006
-------- -------- -------- --------
Interest income $ 5,942 $ 5,718 $ 17,855 $ 16,525
Interest expense 3,514 3,561 10,629 9,920
-------- -------- -------- --------
Net interest income 2,428 2,157 7,226 6,605
Provision (adjustment) for loan losses (1,927) 75 (1,747) 225
-------- -------- -------- --------
Net interest income after provision for loan losses 4,355 2,082 8,973 6,380
Other income 990 784 2,968 2,718
Other expense 3,550 3,224 10,462 9,574
-------- -------- -------- --------
Income (loss) before income taxes 1,795 (358) 1,479 (476)
Income tax expense (benefit) 405 (266) 135 (607)
-------- -------- -------- --------
Net income $ 1,390 $ (92) $ 1,344 $ 131
======== ======== ======== ========
Basic and diluted earnings per share $ 0.47 $ (0.03) $ 0.45 $ 0.04
======== ======== ======== ========
Weighted average shares outstanding:
Basic 2,989 3,149 3,003 3,183
======== ======== ======== ========
Diluted 2,989 3,153 3,003 3,188
======== ======== ======== ========
Dividends declared per share $ 0.04 $ 0.16 $ 0.12 $ 0.48
======== ======== ======== ========
</Table>
<Table>
<Caption>
SEPT. 30 DEC. 31 SEPT. 30
2007 2006 2006
-------- ------- --------
Total assets $421,963 $437,246 $478,717
Cash and cash equivalents 12,296 12,070 12,022
Investment securities available for sale 78,616 129,776 170,995
Loans receivable 285,624 251,888 250,816
Allowance for loan losses 2,739 2,616 3,073
-------- ------- --------
Loans, net 282,885 249,272 247,744
Allowance for loan losses as a percentage of
loans receivable 0.96% 1.04% 1.23%
Non-performing loans $ 2,440 $ 3,409 $ 4,666
Allowance for loan losses as a percentage of
non-performing loans 112.3% 76.7% 65.9%
Deposits:
Non-interest bearing 20,131 19,905 16,878
Interest bearing 299,637 302,529 313,714
-------- ------- --------
319,768 322,434 330,592
Borrowed funds 60,304 74,683 101,724
Shareholders' equity 33,528 33,124 34,186
Loans accounted for on a non-accrual basis 2,388 3,326 4,648
Book value per share 11.22 10.85 10.64
</Table>
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