[AMERIANA BANCORP LETTERHEAD]
News Release
Contact: Jerome J. Gassen
President and Chief Executive Officer
(765) 529-2230
AMERIANA BANCORP REPORTS NET INCOME OF $383,000 OR $0.13 PER SHARE
FOR THE QUARTER ENDED JUNE 30, 2008
NEW CASTLE, Ind. (July 23, 2008) - Ameriana Bancorp (NASDAQ:ASBI) today
announced net income of $383,000 or $0.13 per basic and diluted share for the
quarter ended June 30, 2008, versus a net loss of $23,000 or $0.01 per basic and
diluted share in the year-earlier period. For the first six months of 2008,
Ameriana posted net income of $766,000 or $0.26 per basic and diluted share
compared with a net loss of $47,000 or $0.02 per basic and diluted share in the
same period last year.
Highlights of the quarter included continued growth in Ameriana's loan
portfolio and improvement in its net interest margin, each of which contributed
to higher net interest income for the quarter. Also, credit quality improved
versus the first quarter of the year, as indicated by a declining level of
non-performing loans both in dollars and as a percentage of the end-of-period
loans. Despite the progress with non-performing loans, the Company recorded a
higher provision for loan losses in the second quarter compared with the same
period last year (although lower than in the first quarter of 2008), primarily
to compensate for charge-offs needed to reflect the fair value of repossessed
property entering the final phase of the collection cycle, and due to continued
loan growth.
Commenting on the announcement, Jerome J. Gassen, President and Chief
Executive Officer, said, "The Company's second quarter results show the ongoing
positive impact of our growth strategies, which are driving improved business
fundamentals and consistent earnings growth - accomplishments that are
particularly gratifying considering the current competitive and economic
environment. These strategies have centered on transforming Ameriana from a
traditional thrift into a full-service financial institution with a strong
commercial focus. Our asset/liability efforts in response to declining interest
rates have continued to increase our net interest income and net interest
margin. This continuing progress, along with our accelerated expansion
activities, provides a solid operating platform for what we expect will be
improved performance in the second half of the year and over the longer term."
Ameriana's higher earnings for the first half of 2008 reflected growth
in the Company's loan portfolio and its increased focus on commercial lending.
Since June 30, 2007, the Company's loan portfolio has increased 14%, including a
26% increase in commercial loans. Notwithstanding that past loan growth, lending
has slowed somewhat in the face of current economic headwinds and more
conservative underwriting by the secondary market. However, the Company's loan
pipeline remains at a reasonable level.
ASBI Reports Second Quarter Results
Page 2
July 23, 2008
The Company remains on track to open new full-service banking centers
in Fishers and Carmel in October 2008 and January 2009, respectively. These new
banking centers, both located in Hamilton County, will enhance Ameriana's
presence and visibility in one of the fastest growing areas of Indiana and
increase its footprint in the Indianapolis area.
Ameriana's net interest income for the second quarter of 2008 increased
22% to $3,013,000 from $2,465,000 in the year-earlier period. This reflected
loan growth with Ameriana's increased emphasis on commercial lending and the
higher yields it provides, the Company's balance sheet restructuring strategies
that began in late 2006, and efforts to reduce funding costs quickly in a
declining-rate environment. Net interest income for the first half of 2008
increased 20% to $5,738,000 versus $4,798,000 in the comparable period last year
and, as for the quarter, reflected loan growth and an improved net interest
margin.
The Company's net interest margin on a fully tax-equivalent basis for
the second quarter increased to 3.19%, up 22 basis points from 2.97% in the
first quarter of 2008, and 44 basis points higher than 2.75% in the year-earlier
quarter. For the first half of 2008, the net interest margin rose 40 basis
points to 3.08% from 2.68% for the year-earlier period.
Non-performing loans at June 30, 2008 totaled $3,492,000, down
$1,065,000 from $4,557,000 at March 31, 2008, and up $172,000 from $3,320,000 at
June 30, 2007. As a percentage of the total end-of-period loans, non-performing
loans declined to 1.12% at June 30, 2008, versus 1.53% at March 31, 2008, and
1.21% at June 30, 2007. The decline in non-performing loans from the first
quarter of 2008 reflected primarily the migration of a single commercial credit
from non-performing to other real estate owned (OREO) as the Company assumed
control of the property. There were no significant additions to non-performing
loans during the second quarter. Ameriana has no direct exposure to sub-prime
loans in its loan portfolio.
OREO totaled $4,026,000 at June 30, 2008, up $1,320,000 from $2,706,000
at March 31, 2008, and up $3,320,000 from $806,000 at June 30, 2007. As a
percentage of the total end-of-period assets, OREO increased to 0.89% at June
30, 2008, versus 0.61% at March 31, 2008, and 0.19% at June 30, 2007. The
increase in OREO during the second quarter of 2008 was due primarily to the
transfer of the previously mentioned commercial credit, after reflecting a
charge-off to write-down the property to its current appraised value.
ASBI Reports Second Quarter Results
Page 3
July 23, 2008
Ameriana's provision for loan losses for the second quarter was
$221,000, down from $371,000 in the first quarter of 2008, but up from $90,000
in the year-earlier period to reflect growth in the loan portfolio and a recent
rise in the level of net charge-offs, particularly in the second quarter of 2008
associated with the transfer of property to OREO. The Company's allowance for
loan losses totaled 0.94% of total loans as of June 30, 2008, versus 0.97% at
March 31, 2008, and 1.00% at June 30, 2007. The allowance for loan losses
totaled 83.3% of non-performing loans as of June 30, 2008, up from 63.8% at
March 31, 2008, and 82.2% at June 30, 2007.
Other income for the second quarter of 2008 was $1,022,000, up 3% from
$993,000 in the same quarter in 2007. Other income for the first half of 2008
increased 6% to $2,164,000 from $2,033,000 in the year-earlier period, primarily
reflecting an $84,000 increase in brokerage and insurance commissions, a $35,000
increase in fees and service charges from deposit accounts, and a $50,000 larger
increase in cash surrender value of life insurance compared with the
year-earlier period. Additionally, in the first half of 2008, the Company
realized $60,000 in gains from the sale of certain municipal securities, and a
$49,000 gain from the partial redemption of the Company's equity interest in
Visa realized through Visa's recent initial public offering.
Other expense for the second quarter rose 3% to $3,473,000 from
$3,367,000 in the same quarter last year. Other expense for the first six months
of 2008 totaled $6,866,000, down 1% from $6,967,000 in the first half of 2007,
largely due to a $304,000 reduction in legal and professional fees this year
with the mid-2007 conclusion of the Company's litigation with RLI.
For the second quarter of 2008, the Company's earnings included a
$42,000 income tax benefit, due primarily to tax-exempt income from bank-owned
life insurance (BOLI) and tax-exempt income from municipal securities and loans.
For the first half of 2008, the income tax benefit was $322,000, reflecting a
$150,000 reversal of an income tax liability recorded in prior years that
resulted from a favorable tax court ruling regarding the application of the Tax
Equity and Fiscal Responsibility Act penalty to investment subsidiaries of
commercial banks, in addition to the significant amount of tax-exempt interest
on municipal securities and tax-exempt income from increases in the cash value
of BOLI.
Ameriana's total assets were $453,829,000 at June 30, 2008, up 6% from
$426,791,000 at December 31, 2007, and up 7% from $423,393,000 at June 30, 2007.
The Company's loan portfolio increased 5% to $311,067,000 at June 30, 2008, from
$296,950,000 at December 31, 2007, and was up 14% from $273,929,000 at June 30,
2007. Investment securities totaled $67,311,000 at June 30, 2008, up 1% from
$66,692,000 at December 31, 2007, but down 28% from $93,702,000 at June 30,
2007, as proceeds from the repositioning and reduction of the Company's
investment portfolio last year were used to support Ameriana's growing focus on
higher-yielding commercial loans.
ASBI Reports Second Quarter Results
Page 4
July 23, 2008
Total deposits of $314,544,000 at June 30, 2008, were virtually
unchanged from $314,746,000 at December 31, 2007, and were down 1% from
$318,805,000 at June 30, 2007. Although total deposits declined over those
periods, strategies employed by management resulted in a favorable change in the
mix of deposits with a reduction in the more rate-sensitive and higher-costing
certificates of deposit and an increase in the more-stable and lower-costing
checking and money market accounts.
Shareholders' equity totaled $32,909,000 at June 30, 2008, versus
$33,646,000 at December 31, 2007, and $31,571,000 at June 30, 2007. The decrease
in capital in the first half of 2008 was primarily a result of the Company
recording a liability of $1,141,000 effective January 1, 2008, for
post-retirement benefits as required under EITF Issues 06-04 and 06-10.
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 LPL Financial (Member
FINRA/SIPC).
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, 2007, on file with
the Securities and Exchange Commission, including the section 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.
ASBI Reports Second Quarter Results
Page 5
July 23, 2008
AMERIANA BANCORP
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
Interest income $ 5,858 $ 6,023 $ 11,793 $ 11,913
Interest expense 2,845 3,558 6,055 7,115
------------- ------------- ------------- -------------
Net interest income 3,013 2,465 5,738 4,798
Provision for loan losses 221 90 592 180
------------- ------------- ------------- -------------
Net interest income after provision for loan
losses 2,792 2,375 5,146 4,618
Other income 1,022 993 2,164 2,033
Other expense 3,473 3,367 6,866 6,967
------------- ------------- ------------- -------------
Income (loss) before income taxes 341 1 444 (316)
Income tax (benefit) (42) 24 (322) (269)
------------- ------------- ------------- -------------
Net income (loss) $ 383 $ (23) $ 766 $ (47)
============= ============= ============= =============
Net income (loss) per share:
Basic $ 0.13 $ (0.01) $ 0.26 $ (0.02)
============= ============= ============= =============
Diluted $ 0.13 $ (0.01) $ 0.26 $ (0.02)
============= ============= ============= =============
Weighted average shares outstanding:
Basic 2,989 2,989 2,989 3,010
============= ============= ============= =============
Diluted 2,989 2,989 2,989 3,010
============= ============= ============= =============
Dividends declared per share $ 0.04 $ 0.04 $ 0.08 $ 0.08
============= ============= ============= =============
JUNE 30, DEC. 31, JUNE 30,
2008 2007 2007
------------- ------------- -------------
Total assets $ 453,829 $ 426,791 $ 423,393
Cash and cash equivalents 22,683 17,172 11,486
Investment securities available for sale 67,311 66,692 93,702
Loans receivable 311,067 296,950 273,929
Allowance for loan losses 2,909 2,677 2,730
------------- ------------ -------------
Loans, net 308,158 294,273 271,199
Allowance for loan losses as a percentage of
loans receivable 0.94% 0.90% 1.00%
Non-performing loans $ 3,492 $ 2,638 $ 3,320
Allowance for loan losses as a percentage of
non-performing loans 83.3% 101.5% 82.2%
Deposits:
Non-interest-bearing $ 23,588 $ 20,429 $ 20,630
Interest-bearing 290,956 294,317 298,175
------------- ------------- -------------
314,544 314,746 318,805
Borrowed funds $ 98,735 $ 68,513 $ 66,094
Shareholders' equity 32,909 33,646 31,571
Loans accounted for on a non-accrual basis 2,543 2,638 3,320
Book value per share 11.01 11.26 10.56