Account Access
June 30, 2012
Munster, Indiana - NorthWest Indiana Bancorp (the “Bancorp”), the holding company for Peoples Bank, reported a six month increase in earnings of 4.3%, as net income totaled $3.0 million for the six months ended June 30, 2012, compared to $2.9 million for the six months ended June 30, 2011.
The earnings of $3.0 million for the six months ended June 30, 2012, represent $1.05 per basic and diluted share. For the current six month period, the return on average assets (ROA) was 0.90% and the return on equity (ROE) was 9.16%.
For the three months ended June 30, 2012, the Bancorp’s earnings totaled $1.6 million, compared to $1.7 million for the three months ended June 30, 2011, a decrease of 3.5%. The earnings for the current three months represent $0.57 per basic and diluted share. For the three months ended June 30, 2012, the ROA was 0.97% and the ROE was 9.91%.
The change in the Bancorp’s earnings for the six and three months ended June 30, 2012, compared to June 30, 2011 was impacted by a one-time income benefit recognized from a favorable lawsuit settlement during the second quarter of 2011. Excluding the one-time 2011 income benefit, the Bancorp’s earnings increase for the six months ended June 30, 2012 is 33.0%, while the earnings increase for the three months ended June 30, 2012 is 49.4%.
“Peoples Bank continues to show improved earnings and a stronger balance sheet through the first half of the year. Income was up over last year as our loan balances increased $30.0 million, a hopeful sign that our local economy is continuing to recover as consumers and small business customers have begun to borrow at historically favorable rates,” said David A. Bochnowski, Chairman and Chief Executive Officer. Bochnowski also noted that loan originations for the first six months of 2012 totaled $113.4 million, an increase of 105.4% compared to the first six months of 2011.
“The fundamentals of the Bank’s performance remain consistent with sound bank management. Asset quality improved, core deposits increased, non-performing loans declined, operating costs held steady, and the Bank continues to be well capitalized under all regulatory requirements,” said Bochnowski.
Net Interest Income
Net interest income, the difference between interest income from loans and investments and interest expense paid to funds providers, totaled $11.8 million for the six months ended June 30, 2012, compared to $11.9 million for the six months ended June 30, 2011, a decrease of $111 thousand or 0.9%. The decrease in net interest income for the six month period is a result of lower loan and investment yields. For the three months ended June 30, 2012, net interest income totaled $5.94 million, compared to $5.93 million for the three months ended June 30, 2011, an increase of $8 thousand or 0.1%. The Bancorp’s net interest margin on a tax adjusted basis was 3.99% for the six months ended June 30, 2012, compared to 4.22% for the six months ended June 30, 2011. For the three months ended June 30, 2012, the tax adjusted net interest margin was 3.97%, compared to 4.21% for the three months ended June 30, 2011. The Bancorp’s strong net interest margin continues to benefit from 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 short-term interest rate environment. However, the Bancorp’s yield on interest earnings assets is being negatively impacted by lower long-term interest rates.
Noninterest Income
Noninterest income from banking activities totaled $3.0 million for the six months ended June 30, 2012, compared to $3.4 million for the six months ended June 30, 2011, a decrease of $413 thousand or 12.0%. For the three months ended June 30, 2012, noninterest income totaled $1.4 million, compared to $2.1 million for the three months ended June 30, 2011, a decrease of $627 thousand or 30.6%. The decrease in noninterest income for the current six and three month periods are related to the one-time income benefit recognized from a favorable lawsuit settlement during the second quarter of 2011.
Noninterest Expense
Noninterest expense related to operating activities totaled $9.9 million for the six months ended June 30, 2012, compared to $9.8 million for the six months ended June 30, 2011, an increase of $90 thousand or 0.9%. The increase in noninterest expense for the current six months is primarily associated with non-recurring legal costs. For the three months ended June 30, 2012, noninterest expense totaled $4.7 million, compared to $4.9 million for the three months ended June 30, 2011, a decrease of $231 thousand or 4.7%. The decrease in noninterest expense for the current quarter is related to lower FDIC insurance premiums, reduced compensation expense as a result of effectively managing staffing levels, and reduced occupancy expense as a result of lower required building repair and maintenance expenses.
Funding
At June 30, 2012, core deposits totaled $368.3 million, an increase of $18.3 million or 5.2%, compared to December 31, 2011. Core deposits include checking, savings, and money market accounts and represented 67.3% of the Bancorp’s total deposits at June 30, 2012. During the first six months of 2012, certificate of deposit balances increased by $2.3 million or 1.3%. In addition, at June 30, 2012, borrowings and repurchase agreements totaled $59.1 million, an increase of $7.1 million or 13.6%, compared to December 31, 2011. The increase in borrowings is primarily related to growth in the Bancorp’s business sweep repurchase accounts.
Lending
The Bancorp’s loan portfolio totaled $431.4 million at June 30, 2012, an increase of $30.0 million or 7.5%, compared to December 31, 2011. Loan growth for the first six months of 2012 is primarily a result of increased loan origination activity. Residential mortgage loans and commercial related loans increased by $32.5 million during the first six months of 2012, while consumer and government loans decreased by $2.5 million. During the first six months of 2012, $5.9 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.
Investing
The Bancorp’s securities portfolio totaled $192.7 million at June 30, 2012, compared to $187.0 million at December 31, 2011. The increase in securities is a result of investing excess liquidity in the securities portfolio. The securities portfolio represents 30% of earning assets and provides a consistent source of earnings to the Bancorp.
Asset Quality
At June 30, 2012, non-performing loans totaled $11.8 million, compared to $14.0 million at December 31, 2011, a decrease of $2.2 million or 15.7%. The current level of non-performing loans is concentrated with three geographically diverse commercial real estate participation loans that aggregate to $6.6 million. These participations were purchased from other originators during the period from 2005 through 2007, prior to the most recent recession, and have been written down to current estimated fair values. The Bancorp’s ratio of non-performing assets to total assets was 2.19% at June 30, 2012, compared to 2.68% at December 31, 2011.
For the six months ended June 30, 2012, loan loss provisions totaled $1.1 million, while $2.1 million in provisions were recorded for the six months ended June 30, 2011. For the three months ended June 30, 2012, loan loss provisions totaled $550 thousand, while $955 thousand in provisions were recorded for the three months ended June 30, 2011. Loan charge-offs, net of recoveries, totaled $1.0 million for the six months ended June 30, 2012, compared to $3.0 million for the six months ended June 30, 2011. At June 30, 2012, the allowance for loan losses totaled $8.0 million and is considered adequate by management. The allowance for loan losses as a percentage of total loans was 1.86% at June 30, 2012, compared to 1.99% at December 31, 2011. The allowance for loan losses as a percentage of non-performing loans, or coverage ratio, increased to 68.0% at June 30, 2012, compared to 56.0% at December 31, 2011.
Capital Adequacy
At June 30, 2012, shareholders’ equity stood at $64.9 million or 9.5% of total assets. The Bancorp’s regulatory capital ratios at June 30, 2012 were 14.0% for total capital to risk-weighted assets, 12.8% for tier 1 capital to risk-weighted assets and 9.2% 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 $22.87 per share at June 30, 2012.
Other Items
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.
For Further Information
Contact David A. Bochnowski at 219-853-7575
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