Indiana Business Bancorp Reports Second Quarter
Results of Operations
September 03, 2010 02:40 PM Eastern Daylight Time
INDIANAPOLIS--(EON: Enhanced Online News)--Indiana Business Bancorp (OTCBB:IBBI), the holding
company for Indiana Business Bank, announced results for the three months ended June 30, 2010.
The Company recorded a net loss of ($484,678), or ($.32) per share, for the quarter. This compares to a profit of
$37,907, or $.03 per share for the quarter ending June 30, 2009. The loss was primarily due to a provision expense
of $706,250 charged during the 2010 quarter. The increased provision primarily related to a single commercial real
estate borrowing relationship that was restructured. The underlying real estate was reappraised in June at a value
substantially less than the original appraised value obtained in 2006. As a result of this new information, the book
value of the restructured loan was written down to reflect the current appraised value of the real estate, underlying
cash flows, and general market conditions.
Net interest income for the second quarter of 2010 declined $70,823, or 9.7%, from the same quarter of 2009. The
decrease reflected the contraction of the loan portfolio at June 30, 2010 by almost $4.0 million compared to June
30, 2009. The contraction of the portfolio is in keeping with management’s decision to exit relationships with
customers with higher credit risk profiles. Also, many new relationships added during the year involved loans with
government guaranties which were immediately sold, while retaining only 10% of this new business in the loan
portfolio.
Non-interest income increased by $93,446, or 129%, in the second quarter of 2010, as compared to the quarter
ending June 30, 2009. Non-interest income consists primarily of gains on SBA loan sales, service charge income and
other fee income.
Non-interest expense (generally salaries and other operating expenses) in the second quarter of 2010 declined by
$121,042, or 15.2%, relative to the 2009 quarter. The lower non-interest expense reflected lower salaries and
benefits ($27,084) and lower FDIC insurance expense ($35,235) in the 2010 quarter.
Although loans, the largest earning asset category, decreased in 2010 from 2009, total assets moderately increased
by 1.4% from $88,752,860 at June 30, 2009, to $89,968,676 at June 30, 2010. The investment portfolio
decreased by 34% from $6,540,900 at June 30, 2009 to $4,318,600 at June 30, 2010 as higher yield bonds were
redeemed during the year. Given the current low interest rate environment in the bond market, management has
decided to invest the proceeds of these redemptions in highly liquid but low yielding interest bearing deposits.
The low interest rate environment has had some positive impact. As deposits have matured over the period, they
have been replaced with lower cost funding. Management expects to continue to take advantage of these market
conditions for the balance of the year.
The allowance for loan losses was $1,547,551 at June 30, 2010, which represents 2.2% of total loans. This ratio
compares favorably with other banks management considers to be peers. The bank’s regulatory capital ratios
exceeded the amounts needed to be considered “well capitalized” at June 30, 2010.
President and CEO, James S. Young, stated, “We are pleased with our ability to control non-interest expense,
lower our funding costs and generate non-interest income and asset growth from originating government guaranteed
commercial loans. We continue to manage our non-performing assets in order to return them to performing status, by
working with borrowers in restructuring or renegotiating debt, or some other satisfactory resolution. These
relationships, the majority of which were originated between 2005 and 2007, have been negatively impacted by the
depression of values in the real estate market. Problem loan management remains our team’s number one priority.”
About Indiana Business Bancorp and Indiana Business Bank
Indiana Business Bancorp is a bank holding company whose operations are conducted through its subsidiary,
Indiana Business Bank, a state-chartered, locally-owned and managed commercial bank formed for the purpose of
providing highly-personalized banking services for small to medium-sized businesses, their owners and professional
services firms in the Indianapolis, Indiana metropolitan area. The bank provides a full line of commercial banking
loan, deposit, and cash management services that are delivered in a highly personalized manner by experienced
banking professionals. The bank specializes in serving the commercial and consumer banking needs of small to
medium sized businesses and their owners, and professionals located primarily throughout Central Indiana.
We routinely post important information for investors on our website, http://www.indianabb.com in the “About”
section under “Investor Relations”. We intend to use this website as a means of providing financial and other
information to investors and other interested parties. Accordingly, investors should monitor our website, in addition
to following our press releases and other presentations. The information contained on, or that may be accessed
through, our website is not incorporated by reference into, and is not a part of, this document.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this
press release regarding Indiana Business Bank and Indiana Business Bancorp’s business which are not
historical facts are "forward-looking statements" that involve risks and uncertainties which may cause
actual results to differ materially from expected results, including: changes in general, regional and local
economic conditions, and their effect on interest rates; the impact of the downturn in housing and the
adverse conditions in the credit markets; competition among banks and other financial intermediaries within
the Indianapolis metropolitan market; risks that borrowers may default on their loans; and changes in
regulations and accounting policies affecting financial institutions.
UNAUDITED
As of and for the As of and for the
Three Months Ending June 30 Six Months Ending June 30
Operating Data 2010 2009 2010 2009
Net Interest Income 732,242 803,065 1,465,123 1,543,615
Provision for Loan Losses 706,250 40,000 1,266,250 60,000
Noninterest Income 166,001 72,555 196,020 108,290
Noninterest Expense 676,671 797,713 1,396,616 1,521,746
Net Income (Loss) (484,678) 37,907 (1,003,723) 70,159
Per Share Data
Net Earnings (Loss) per share (.32) .03 (.67) .05
Weighted Average Shares Outstanding 1,503,270 1,484,100 1,503,270 1,484,100
As of
Balance Sheet Data June 30, 2010 December 31, 2009 June 30, 2009
Total Assets 89,968,676 88,341,401 88,752,860
Total Loans 70,743,878 70,314,937 74,673,037
Allowance for Loan Losses 1,547,551 1,130,698 1,285,182
Investment Securities 4,318,600 6,535,600 6,540,900
Total Deposits 73,065,996 72,385,956 70,181,415
Total Shareholders’ Equity 8,814,852 9,774,803 9,831,133
Contacts
Indiana Business Bancorp
At the Company:
Gregory Gault, Executive Vice President, 317-218-2181
ggault@indianabb.com
or
At Executive Media:
Guy Johnson, 317-231-7000 Ext. 202
guy@executivemedia.com
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