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[AMERIANA BANCORP LETTERHEAD]
News Release
Contact: Jerome J. Gassen
President and Chief Executive Officer
(765) 529-2230
AMERIANA BANCORP REPORTS NET INCOME OF $393,000 OR $0.13 PER SHARE
FOR THE QUARTER ENDED SEPTEMBER 30, 2008
NEW CASTLE, Ind. (October 16, 2008) - Ameriana Bancorp (NASDAQ:ASBI) today
announced net income of $393,000 or $0.13 per basic and diluted share for the
quarter ended September 30, 2008, as the Company grew its loan portfolio in the
third quarter and achieved slightly higher earnings compared with $383,000 for
each of the first two quarters of the year. These improvements were realized in
a difficult economic environment with a global financial crisis that has
continued to expand sharply.
Net income in the year-earlier period totaled $1,390,000 or $0.47 per
basic and diluted share, but included a recovery of $2,750,000 in a settlement
of litigation related to purchases of pooled leases. This recovery increased
third quarter 2007 earnings by $1,815,000, or $0.61 per share on an after-tax
basis. For the first nine months of 2008, Ameriana posted net income of
$1,159,000 or $0.39 per basic and diluted share compared with net income of
$1,344,000 or $0.45 per basic and diluted share, in the same period last year,
which included the aforementioned recovery.
Jerome J. Gassen, President and Chief Executive Officer, said, "We are
pleased to report continued growth and improved core profitability for the third
quarter, extending the operating trends we have experienced throughout 2008.
This progress demonstrates the success of our strategies to expand in new
markets, reach new customers - especially with our increasing emphasis on
commercial lending - and provide a foundation that we believe can deliver
consistent earnings growth over the long term.
"Our improved operating results for the third quarter show the impact
of our efforts to expand Ameriana's business model as a full-service financial
institution with a strong commercial focus," Gassen continued. "Moreover,
confronting a declining-rate environment, our asset/liability management
strategies have continued to make a positive impact on net interest income and
net interest margin."
Ameriana's earnings for the first nine months of 2008 reflect growth in
the Company's loan portfolio and its increased focus on commercial lending.
Since December 31, 2007, the Company's loan portfolio has grown 7%, including an
11% increase in commercial loans. Current economic conditions and events, along
with more conservative underwriting standards in the secondary market, have
resulted in a slowing of lending activities in Ameriana's market area. However,
the Company's loan pipeline for the fourth quarter remains encouraging.
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2118 Bundy Avenue
PO Box H
New Castle, IN 47362-1048
765.529.2230
Fax 765.521.7628
www.ameriana.com
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ASBI Reports Third Quarter Results
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October 16, 2008
During the third quarter, Ameriana continued to pursue strategic
growth, receiving regulatory approval to open a new, full-service banking center
in Westfield, Indiana, which lies north of Indianapolis in Hamilton County. This
new center - Ameriana Bank's seventh in the greater Indianapolis area and its
fourteenth across central Indiana - along with a loan production office in
Carmel, will help build a greater presence for Ameriana across the northeast
corridor of Indianapolis. Expected to open in the second quarter of 2009,
Westfield will complement other new banking centers in Fishers, which opens this
month, and in West Carmel, which will open in November 2008.
Gassen added, "Clearly, the turmoil we have witnessed in the banking
industry since the summer months has been unsettling, and it is clear this
volatility may affect the near-term health of the economy. Against these
macro-economic and industry headwinds, Ameriana remains focused on safety,
security and stability. We continue to apply a disciplined approach to credit,
and we are well-funded by customer deposits that show year-over-year growth.
Most important, Ameriana is financially sound and exceeds all of the regulatory
capital levels required to be considered a 'well-capitalized' institution."
Ameriana's net interest income for the third quarter of 2008 increased
24% to $3,008,000 from $2,427,000 in the year-earlier period. The increase in
net interest income resulted from 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 increase core
deposits, allowing it to reduce funding costs quickly in a declining-rate
environment. Net interest income for the first nine months of 2008 increased 21%
to $8,746,000 versus $7,225,000 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 third quarter declined slightly to 3.15% from 3.19% in the second quarter of
2008, but was 41 basis points higher than 2.74% in the year-earlier quarter. The
decrease in the net interest margin compared with the trailing quarter was due
primarily to $54,000 of accrued interest not being recognized as income as a
result of the $1,691,000 non-performing loan discussed below being placed on
non-accrual status. Had that income been recognized, the net interest margin for
the third quarter would have been 3.21%. For the first nine months of 2008, the
net interest margin rose 40 basis points to 3.10% from 2.70% for the
year-earlier period.
Non-performing loans at September 30, 2008, totaled $4,515,000, up
$1,023,000 from $3,492,000 at June 30, 2008. This increase was due primarily to
the reclassification of a multi-family loan of $1,691,000 in Anderson, Indiana.
Accruing delinquent loans less than 90 days totaled $3,525,000 at September 30,
2008, down slightly from $3,649,000 at June 30, 2008. Ameriana has no direct
exposure to sub-prime loans in its loan portfolio.
Other real estate owned (OREO) totaled $4,044,000 at September 30,
2008, and represented 1.27% of outstanding loans. OREO was up only slightly from
a total of $4,026,000 at June 30, 2008.
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ASBI Reports Third Quarter Results
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October 16, 2008
Ameriana's provision for loan losses for the third quarter was
$205,000, reflecting loan growth, especially in commercial loans, and the
increase in non-performing loans. In the year-earlier quarter, Ameriana posted a
positive adjustment of $1,927,000 as a result of the aforementioned litigation
settlement proceeds. The Company's allowance for loan losses totaled 0.95% of
total loans as of September 30, 2008, versus 0.94% at June 30, 2008, and 0.90%
at December 31, 2007.
Other income for the third quarter of 2008 was $1,023,000, up 4% from
$985,000 in the same quarter in 2007. Other income for the first nine months of
2008 increased 7% to $3,184,000 from $2,963,000 in the year-earlier period,
primarily reflecting an increase of $84,000 in fees and service charges from
deposit accounts, and a $46,000 increase in cash surrender value of life
insurance compared with the year-earlier period. Additionally, in the first nine
months of 2008, the Company realized $54,000 in net gains from the sale of
investment portfolio 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. The sales of securities consisted almost entirely of municipal
bonds that were disposed of primarily for income tax and liquidity reasons.
Other expense for the third quarter declined 2% to $3,458,000 from
$3,544,000 in the same quarter last year. Other expense for the first nine
months of 2008 totaled $10,321,000, down 1% from $10,456,000 in the first nine
months of 2007. Both declines reflected reduced legal and professional fees this
year with the mid-2007 conclusion of the Company's litigation related to the
lease pools.
For the third quarter of 2008, the Company's earnings included a
$25,000 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 nine months of 2008, the income tax benefit was $347,000,
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, and 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 $467,802,000 at September 30, 2008, up 10%
from $426,791,000 at December 31, 2007. The Company's loan portfolio increased
7% to $317,739,000 at September 30, 2008, from $296,950,000 at December 31,
2007. Investment securities totaled $78,221,000 at September 30, 2008, up 17%
from $66,692,000 at December 31, 2007. The increase resulted from purchases of
U.S. government agency mortgage-backed securities.
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ASBI Reports Third Quarter Results
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October 16, 2008
Total deposits were $321,108,000 at September 30, 2008, which
represented a 2% increase from $314,746,000 at December 31, 2007. The Company
continues to focus on strategies to change the mix of deposits by reducing the
more rate-sensitive and higher-costing certificates of deposit and increasing
more stable and lower-costing checking and money market accounts. Borrowings
grew to $105,235,000 at September 30, 2008, from $68,513,000 at December 31,
2007, as these additional funds were needed to supplement earning asset growth.
Shareholders' equity totaled $32,982,000 at September 30, 2008, versus
$33,646,000 at December 31, 2007. The $664,000 decrease in capital in the first
nine months 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 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.
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ASBI Reports Third Quarter Results
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October 16, 2008
AMERIANA BANCORP
UNAUDITED FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
2008 2007 2008 2007
------------- ------------- ------------- -------------
Interest income $ 5,849 $ 5,941 $ 17,643 $ 17,854
Interest expense 2,841 3,514 8,897 10,629
------------- ------------- ------------- -------------
Net interest income 3,008 2,427 8,746 7,225
Provision (credit) for loan losses 205 (1,927) 797 (1,747)
------------- ------------- ------------- -------------
Net interest income after provision for loan
losses 2,803 4,354 7,949 8,972
Other income 1,023 985 3,184 2,963
Other expense 3,458 3,544 10,321 10,456
------------- ------------- ------------- -------------
Income before income taxes 368 1,795 812 1,479
Income (benefit) tax (25) 405 (347) 135
------------- ------------- ------------- -------------
Net income $ 393 $ 1,390 $ 1,159 $ 1,344
============= ============= ============= =============
Net income per share:
Basic $ 0.13 $ 0.47 $ 0.39 $ 0.45
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Diluted $ 0.13 $ 0.47 $ 0.39 $ 0.45
============= ============= ============= =============
Weighted average shares outstanding:
Basic 2,989 2,989 2,989 3,003
============= ============= ============= =============
Diluted 2,989 2,989 2,989 3,003
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Dividends declared per share $ 0.04 $ 0.04 $ 0.12 $ 0.12
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SEPT. 30, DEC. 31, SEPT. 30,
2008 2007 2007
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Total assets $ 467,802 $ 426,791 $ 422,113
Cash and cash equivalents 17,806 17,172 12,296
Investment securities available for sale 78,221 66,692 78,616
Loans receivable 317,739 296,950 285,086
Allowance for loan losses 3,014 2,677 2,739
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Loans, net 314,725 294,273 282,347
Allowance for loan losses as a percentage of
loans receivable 0.95% 0.90% 0.96%
Non-performing loans $ 4,515 $ 2,638 $ 2,440
Allowance for loan losses as a percentage of
non-performing loans 66.7% 101.5% 112.3%
Deposits:
Non-interest-bearing $ 22,988 $ 20,429 $ 20,251
Interest-bearing 298,120 294,317 299,517
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321,108 314,746 319,768
Borrowed funds $ 105,235 $ 68,513 $ 60,304
Shareholders' equity 32,982 33,646 33,528
Loans accounted for on a non-accrual basis 4,467 2,638 2,388
Book value per share 11.03 11.26 11.22