|8-K - FORM 8-K - NORTHWEST INDIANA BANCORP||v332521_8-k.htm|
|FOR IMMEDIATE RELEASE||FOR FURTHER INFORMATION|
|January 18, 2013||CONTACT DAVID A. BOCHNOWSKI|
NORTHWEST INDIANA BANCORP
ANNOUNCES RECORD EARNINGS FOR 2012
Munster, Indiana - NorthWest Indiana Bancorp (the “Bancorp”), the holding company for Peoples Bank, reported an annual earnings increase of 27.3%, as net income totaled $6.9 million for 2012, compared to $5.4 million for 2011. The 2012 net income of $6.9 million exceeds the Bancorp’s prior annual earnings record of $6.7 million.
The 2012 net income of $6.9 million represents $2.41 earnings per basic and diluted share. For 2012, the return on average assets (ROA) was 1.02% and the return on equity (ROE) was 10.27%.
For the three months ended December 31, 2012, the Bancorp’s earnings increased by 15.6%. Net income totaled $1.6 million, compared to $1.4 million for the three months ended December 31, 2011, which represents $0.57 earnings per basic and diluted share. For the three months ended December 31, 2012, the ROA was 0.95% and the ROE was 9.31%.
“2012 proved to be our best year of performance ever at the Bank as our community banking effort provided record earnings of $6.9 million,” said David A. Bochnowski, Chairman and Chief Executive Officer.
“Our results reflect a 27.3% jump in earnings over last year and were driven by loan and core deposit growth, improved asset quality, increased income from banking operations, and stable operating expenses. At year end, our loan balances were up 8.9% over 2011, core deposits were up 12.8%, non-performing loans decreased 19.6%, income from banking operations increased 20.6%, and our operating costs rose only 1%,” Bochnowski noted.
“The entire Peoples Bank team met the challenges of the Great Recession, demonstrating our ability to stay on course and successfully engage traditional banking principles that deliver sustainable growth. As the national and local economies continue to show signs of recovery, our capital strength and core earnings position Peoples Bank to act on growth opportunities to expand our operations and better serve our customers and community,” Bochnowski concluded.
Net Interest Income
Net interest income, the difference between interest income from loans and investments and interest expense paid to funds providers, totaled $23.7 million for 2012, compared to $23.8 million for 2011, a decrease of $28 thousand or 0.1%. For the three months ended December 31, 2012, net interest income totaled $5.92 million, compared to $5.94 million for the three months ended December 31, 2011, a decrease of $19 thousand or 0.3%. The net interest income decreases for both the current year and the three month period are primarily a result of asset yields being negatively impacted by lower long-term interest rates. The Bancorp’s net interest margin on a tax adjusted basis was 3.96% for 2012, compared to 4.17% for 2011. For the three months ended December 31, 2012, the tax adjusted net interest margin was 3.86%, compared to 4.14% for the three months ended December 31, 2011. The Bancorp’s net interest margin has benefited from strong loan and core deposit growth, and a low cost of funds as a result of the Federal Reserve’s continued action in maintaining a low interest rate environment.
Noninterest income from banking activities totaled $7.5 million, for 2012, compared to $6.2 million for 2011, an increase of $1.3 million or 20.6%. For the three months ended December 31, 2012, noninterest income totaled $2.2 million, compared to $1.6 million for the three months ended December 31, 2011, an increase of $587 thousand or 37.6%. During 2012, the Bancorp’s noninterest income increased as a result of additional income from wealth management operations, the sale of fixed rate mortgage loans and securities, gains on foreclosed real estate, and a benefit from bank owned life insurance.
Noninterest expense related to operating activities totaled $20.1 million for 2012, compared to $19.9 million for 2011, an increase of $191 thousand or 1.0%. For the three months ended December 31, 2012, noninterest expense totaled $5.2 million, compared to $4.9 million for the three months ended December 31, 2011, an increase of $385 thousand or 7.9%. During 2012, the Bancorp’s noninterest expense increased primarily as a result of additional employee benefit accruals related to the Bancorp’s strong operating performance. Noninterest expense related to occupancy and equipment, FDIC insurance premiums, marketing and other expenses all decreased during 2012 compared to 2011.
At December 31, 2012, core deposits totaled $394.7 million, an increase of $44.8 million or 12.8%, compared to December 31, 2011. Core deposits include checking, savings, and money market accounts and represented 69.7% of the Bancorp’s total deposits at December 31, 2012. The increase in core deposits is a result of customer preferences for liquid investments in the current low interest rate environment. During 2012, certificate of deposit balances decreased by 3.0%, as management allowed higher cost deposits to mature while relying on lower cost core deposits. In addition, at December 31, 2012, borrowings and repurchase agreements totaled $49.5 million, a decrease of $2.5 million or 4.8%, compared to December 31, 2011. The decrease in borrowings was primarily the result of the Bancorp’s strong core deposit growth, which was a more attractive lower cost source of funding than borrowings during 2012.
The Bancorp’s loan portfolio totaled $437.0 million at December 31, 2012, an increase of $35.6 million or 8.9%, compared to December 31, 2011. Loan growth for 2012 was a result of increased loan origination activity. Residential mortgage loans, commercial, and government loans increased by $38.1 million in the aggregate during 2012, while consumer related loans decreased by $2.5 million in the aggregate. During 2012, $26.4 million of newly originated fixed rate mortgage loans were sold into the secondary market. Also, during the second quarter of 2012, the Bancorp conducted a $3.4 million one-time sale of portfolio fixed rate mortgage loans, which the Bancorp’s management considered an interest rate mitigation risk strategy to reduce loan prepayment risk.
The Bancorp’s securities portfolio totaled $187.5 million at December 31, 2012, compared to $187.0 million at December 31, 2011, an increase of $513 thousand or 0.3%. The securities portfolio represents 29.2% of earning assets and provides a consistent source of earnings to the Bancorp. Cash & cash equivalents totaled $33.8 million at December 31, 2012, compared to $26.4 million at December 31, 2011, an increase of $7.4 million or 28.0%. The increase resulted primarily from proceeds from security sales that were held in fed funds until reinvested in the securities portfolio.
At December 31, 2012, non-performing loans totaled $11.5 million, compared to $14.3 million at December 31, 2011, a decrease of $2.8 million or 19.6%. The current level of non-performing loans is concentrated with two geographically diverse commercial real estate participation loans that aggregate to $5.4 million. These participations were purchased from other originators during the period from 2005 through 2007, prior to the most recent recession. The Bancorp’s ratio of non-performing assets to total assets was 1.84% at December 31, 2012, compared to 2.68% at December 31, 2011. The improvement in the non-performing asset ratio was a result of lower nonaccrual loan and foreclosed real estate balances.
For the three months ended December 31, 2012, loan loss provisions totaled $725 thousand, while $875 thousand in provisions were recorded for the three months ended December 31, 2011. For 2012, loan loss provisions totaled $2.4 million, while $3.5 million in provisions were recorded for 2011. The 2012 loan loss provisions were primarily related to the current credit risk in the commercial real estate participation and commercial real estate loan portfolios. Loan charge-offs, net of recoveries, totaled $1.9 million for 2012, compared to $4.6 million for 2011. At December 31, 2012, the allowance for loan losses totaled $8.4 million and is considered adequate by management. The allowance for loan losses as a percentage of total loans was 1.93% at December 31, 2012, compared to 1.99% at December 31, 2011. The allowance for loan losses as a percentage of non-performing loans, or coverage ratio, was 73.3% at December 31, 2012, compared to 56.0% at December 31, 2011.
At December 31, 2012, shareholders’ equity stood at $67.7 million or 9.8% of total assets. The Bancorp’s regulatory capital ratios at December 31, 2012 were 14.6% for total capital to risk-weighted assets, 13.4% for tier 1 capital to risk-weighted assets and 9.4% for tier 1 capital to adjusted average assets. Under all regulatory capital requirements, the Bancorp is considered well capitalized. The book value of the Bancorp’s stock stood at $23.83 per share at December 31, 2012.
The NorthWest Indiana Bancorp’s common stock is traded on the OTC Bulletin Board under NWIN. The Bancorp’s subsidiary, Peoples Bank, has offices in Crown Point, Dyer, East Chicago, Gary, Hammond, Hobart, Merrillville, Munster, St. John, Schererville and Valparaiso, Indiana. The Bank’s website, ibankpeoples.com, provides information on the Bank’s products, services and investor relations.
“Forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 may be included in this release. A variety of factors could cause the Bancorp’s actual results to differ from those expected at the time of this release. These include, but are not limited to, changes in economic conditions in the Bancorp’s market area, changes in policies by regulatory agencies, fluctuation in interest rates, demand for loans in the Bancorp’s market area, economic conditions in the financial services industry, including the level of demand in the housing market, competition and other risks set forth in the Bancorp’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2011. Readers are urged to carefully review and consider the various disclosures made by the Bancorp in its periodic reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and the Bancorp undertakes no obligation to update them in light of new information or future events.
|NorthWest Indiana Bancorp|
|Key Ratios||Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|Return on equity||9.31%||8.86%||10.27%||8.90%|
|Return on assets||0.95%||0.87%||1.02%||0.84%|
|Basic earnings per share||$||0.57||$||0.50||$||2.41||$||1.90|
|Diluted earnings per share||$||0.57||$||0.50||$||2.41||$||1.90|
|Yield on loans||4.77%||5.08%||4.88%||5.10%|
|Yield on security investments||2.40%||2.94%||2.62%||3.20%|
|Total yield on earning assets||3.99%||4.38%||4.14%||4.49%|
|Cost of deposits||0.24%||0.39%||0.29%||0.47%|
|Cost of borrowings||1.25%||1.40%||1.32%||1.50%|
|Total cost of funds||0.34%||0.48%||0.39%||0.56%|
|Net interest margin - tax equivalent||3.86%||4.14%||3.96%||4.17%|
|Noninterest income / average assets||1.25%||0.97%||1.12%||0.97%|
|Noninterest expense / average assets||3.06%||3.00%||3.00%||3.10%|
|Net noninterest margin / average assets||-1.81%||-2.03%||-1.88%||-2.13%|
|Effective tax rate||22.71%||20.54%||22.07%||17.96%|
|Dividend declared per common share||$||0.19||$||0.15||$||0.72||$||0.60|
|Net worth / total assets||9.78%||9.66%|
|Book value per share||$||23.83||$||22.20|
|Non-performing assets to total assets||1.84%||2.68%|
|Non-performing loans to total loans||2.63%||3.56%|
|Allowance for loan losses to non-performing loans||73.34%||56.03%|
|Allowance for loan losses to loans outstanding||1.93%||1.99%|
|Foreclosed real estate to total assets||0.06%||0.38%|
|Consolidated Statements of Income||Three Months Ended||Twelve Months Ended|
|(Dollars in thousands)||December 31,||December 31,|
|Securities & short-term investments||1,278||1,448||5,410||6,093|
|Total interest income||6,431||6,631||26,075||26,986|
|Total interest expense||515||696||2,348||3,231|
|Net interest income||5,916||5,935||23,727||23,755|
|Provision for loan losses||725||875||2,350||3,510|
|Net interest income after provision for loan losses||5,191||5,060||21,377||20,245|
|Fees & service charges||762||636||2,677||2,501|
|Gain on sale of loans, net||322||119||987||256|
|Wealth management operations||313||300||1,264||1,177|
|Gain on sale of securities, net||385||283||1,120||966|
|Benefit from bank owned life insurance||-||-||587||-|
|Cash value increase from bank owned life insurance||91||99||381||398|
|Other-than-temporary impairment of securities||-||(1||)||(6||)||(1||)|
|Gain on foreclosed real estate||260||101||430||887|
|Total noninterest income||2,150||1,563||7,536||6,247|
|Compensation & benefits||2,976||2,523||10,783||9,953|
|Occupancy & equipment||709||764||3,064||3,333|
|Federal deposit insurance premiums||137||141||571||946|
|Total noninterest expense||5,241||4,856||20,119||19,928|
|Income before income taxes||2,100||1,767||8,794||6,564|
|Income tax expenses||477||363||1,941||1,179|
|NorthWest Indiana Bancorp|
|Balance Sheet Data|
|(Dollars in thousands)||December 31,|
|Cash & cash equivalents||33,751||26,367||28.0%|
|Securities - available for sale||187,475||186,962||0.3%|
|Construction and land development||23,984||21,143||13.4%||5.5%|
|1-4 first liens||135,143||132,231||2.2%||30.9%|
|Commercial real estate||148,156||146,402||1.2%||33.9%|
|1-4 Junior Liens||1,587||1,814||-12.5%||0.4%|
|Government and other||8,869||8,643||2.6%||2.0%|
|Noninterest bearing checking||75,228||55,577||35.4%||13.3%|
|Interest bearing checking||117,849||102,294||15.2%||20.8%|
|Total core deposits||394,748||349,959||12.8%||69.7%|
|Certificates of deposit||171,661||176,922||-3.0%||30.3%|
|Borrowings and repurchase agreements||49,505||52,013||-4.8%|
|Asset Quality||December 31,|
|(Dollars in thousands)||2012||December 31,||Change|
|Accruing loans delinquent more than 90 days||229||279||-17.9%|
|Securities in non-accrual||823||717||14.8%|
|Foreclosed real estate||425||2,457||-82.7%|
|Total nonperforming assets||12,730||17,463||-27.1%|
|Allowance for loan losses (ALL):|
|ALL specific allowances for impaired loans||2,001||1,609||24.4%|
|ALL general allowances for loan portfolio||6,420||6,396||0.4%|
|Troubled Debt Restructurings:|
|Nonaccruing troubled debt restructurings, non-compliant (1) (2)||4,846||5,794||-16.4%|
|Nonaccruing troubled debt restructurings, compliant (2)||546||463||17.9%|
|Accruing troubled debt restructurings||9,735||8,496||14.6%|
|Total troubled debt restructurings||15,127||14,753||2.5%|
|(1) "non-compliant" refers to not being within the guidelines of the restructuring agreement|
|(2) included in nonaccruing loan balances presented above|
|At December 31, 2012|
|Capital Adequacy||Actual||Required to be|
|Total capital to risk-weighted assets||14.6%||10.0%|
|Tier 1 capital to risk-weighted assets||13.4%||6.0%|
|Tier 1 capital to adjusted average assets||9.4%||5.0%|