FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996
COMMISSION FILE NUMBER 0-12422
INDIANA UNITED BANCORP
(Exact name of registrant as specified in its charter)
INDIANA 35-1562245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 NORTH BROADWAY GREENSBURG, INDIANA 47240
(Address of principal executive offices) (Zip Code)
(812) 663-4711
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
As of March 31, 1996 there were outstanding 1,250,897 shares,
without par value of the registrant.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet............. 3
Consolidated Condensed Statement of Income....... 4
Consolidated Condensed Statement of Changes in
Shareholders' Equity............................. 5
Consolidated Condensed Statement of Cash Flows... 6
Notes to Consolidated Condensed Financial
Statements....................................... 7-8
Item 2. Managment's Discussion and Analysis of Financial
Condition and Results of Operations.............. 9-20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................. 21
Signatures....................................... 22
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Mar. 31 Dec. 31
1996 1995
<S> <C> <C>
ASSETS
Cash and Due From Banks................. 12,449 11,707
Interest-bearing Demand Deposits........ 55 72
Federal Funds Sold...................... 0 7,150
Cash and Cash Equivalents............. 12,504 18,929
Interest-bearing Time Deposits.......... 100 5,100
Securities:
Available for Sale.................... 83,875 80,651
Held to Maturity...................... 0 0
Total Securities.................... 83,875 80,651
Loans:
Loans................................. 199,787 201,354
Less: Allowance for Loan Losses...... 2,760 2,754
Net Loans........................... 197,027 198,600
Premises & Equipment.................... 5,966 6,025
Federal Home Loan Bank Stock............ 1,138 1,138
Core Deposit Intangibles................ 133 142
Accrued Interest Receivable............. 1,969 1,974
Other Real Estate....................... 45 45
Other Assets............................ 528 463
Total Assets........................ 303,285 313,067
LIABILITIES
Deposits:
Non-Interest Bearing.................. 23,753 30,335
Interest Bearing...................... 232,066 232,011
Total Deposits...................... 255,819 262,346
Short-Term Borrowings................... 11,351 13,240
Long-Term Debt.......................... 5,500 6,000
Accrued Interest Payable................ 1,333 1,389
Other Liabilities....................... 1,878 1,847
Total Liabilities................... 275,881 284,822
SHAREHOLDERS' EQUITY
Preferred Stock, No Par Value:
Authorized--400,000 Shares
Issued and Outstanding-10,000 and
20,000 Shares........................ 1,000 2,000
Common Stock $1 Stated Value:
Authorized--3,000,000 Shares
Issued and Outstanding--1,250,897
Shares............................... 1,251 1,251
Paid-In Surplus......................... 10,677 10,677
Valuation Adj-Securities AFS............ (67) 195
Retained Earnings....................... 14,543 14,122
Total Shareholders' Equity.......... 27,404 28,245
Total Liabilities and
Shareholders' Equity.............. 303,285 313,067
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
INDIANA UNITED BANCORP
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Interest Income:
Loans, Including Fees 4,359 3,975
Securities:
Taxable 1,228 1,448
Tax-Exempt 49 59
Federal Funds Sold 93 2
Interest-Bearing Deposits 8 1
Total Interest Income 5,737 5,485
Interest Expense:
Deposits 2,590 2,322
Short-Term Borrowings 167 271
Long-Term Debt 122 165
Total Interest Expense 2,879 2,758
Net Interest Income 2,858 2,727
Provision for Loan Losses 27 3
Net Interest Income After
Provision for Loan Losses 2,831 2,724
Noninterest Income:
Securities Gains (Losses) 0 1
Other Operating Income 321 349
Total Noninterest Income 321 350
Noninterest Expense 2,001 2,163
Income Before Income Tax 1,151 911
Less Income Tax Expense 454 357
Net Income 697 554
Per Common Share:
Net Income 0.54 0.41
Cash Dividends Declared 0.20 0.16
Average Common Shares
Outstanding 1,250,897 1,250,897
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CHANGES TO SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Balance, January 1............................. 28,245 24,282
Net income..................................... 697 554
Net change in unrealized loss on securities
available for sale........................... (262) 1,691
Redemption of preferred stock.................. (1,000) (200)
Cash Dividends:
Preferred stock.............................. (26) (38)
Common stock................................. (250) (200)
Balance, March 31.............................. 27,404 26,089
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities:
Net income................................... 697 554
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses.................. 27 3
Depreciation and amortization.............. 165 158
Premiums and discounts amortization
on investment securities................. 27 24
Accretion of loan and deposit fair
value adjustments........................ 25 29
Amortization of core deposit intangibles... 9 10
Securities gains......................... 0 (1)
Decrease in interest receivable............ 5 (61)
Decrease in interest payable............... (56) 52
Other adjustments.......................... (383) 1,741
Net cash provided by operating activities 516 2,509
Cash Flows From Investing Activities:
Proceeds from interest-bearing time deposits
maturities................................. 5,017 100
Purchases of securities available for sale... (7,836) (7,060)
Proceeds from maturities of securities
available for sale......................... 4,612 1,557
Proceeds from sales of securities available
for sale................................... 0 4,770
Proceeds from maturities of securities held
to maturity................................ 0 25
Net change in loans.......................... 1,566 0
Purchases of premises and equipment.......... (106) (338)
Other investment activities.................. (33) 1,166
Net cash provided by
investing activities 3,220 220
Cash Flows From Financing Activities:
Net change in:
Non-interest bearing,NOW, money market and
savings deposits......................... (7,052) (13,078)
Certificates of deposit.................... 557 (1,274)
Short-term borrowings...................... (1,889) 8,471
Payments on long-term debt................. (500) 0
Redemption of preferred stock.............. (1,000) (200)
Cash dividends............................. (277) (238)
Net cash used by financing
activities........................... (10,161) (6,319)
Net decrease in Cash and
Cash Equivalents............................. (6,425) (3,590)
Cash and Cash Equivalents, Beginning of Period. 18,929 11,580
Cash and Cash Equivalents, End of Period....... 12,504 7,990
</TABLE>
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)
NOTE 1.
The significant accounting policies followed by Indiana United Bancorp
("Company") and its subsidiaries, Union Bank and Trust Company of Indiana
("Union Bank") and Regional Federal Savings Bank ("Regional Bank") for
interim financial reporting are consistent with the accounting policies
followed for annual financial reporting. All adjustments, consisting only of
normal recurring adjustments, which in the opinion of management are
necessary for a fair presentation of the results for the periods reported,
have been included in the accompanying consolidated financial statements.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of those expected for the remainder of the year.
<TABLE>
<CAPTION>
NOTE 2.
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale
at March 31, 1996
U.S. Treasury................... $ 2,014 $ 8 $ 13 $ 2,009
Federal Agencies................ 19,644 199 185 19,658
State and Municipal............. 3,923 39 18 3,944
Corporate and other securities.. 427 -- 16 411
Mortgage-backed securities...... 57,968 540 655 57,853
Totals..................... $ 83,976 $ 786 $ 887 $ 83,875
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Approximate
Amortized Unrelaized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale
at December 31, 1995
U.S. Treasury................... $ 3,016 $ 12 $ 10 $ 3,018
Federal Agencies................ 12,257 259 104 12,412
State and Municipal............. 3,955 80 1 4,034
Corporate and other securities.. 480 -- 60 420
Mortgage-backed securities...... 60,610 582 425 60,767
Totals..................... $80,318 $ 933 $ 600 $ 80,651
</TABLE>
<TABLE>
<CAPTION>
Beyond
Within 1-5 5-10 10
Maturity Distributions at 1 Year Years Years Years Totals
March 31, 1996
<S> <C> <C> <C> <C> <C>
U.S. Treasury.................... $ 2,009 $ 2,009
Federal Agencies................. $ 4,983 8,103 $ 6,572 19,658
State and Municipal.............. 362 1,889 1,368 $ 325 3,944
Corporate and other securities... 411 411
Mortgage-backed securities....... 94 5,254 2,860 49,645 57,853
Totals......................... $ 5,439 $17,255 $ 10,800 $50,381 $ 83,875
Weighted average yields.......... 4.89% 5.34% 6.98% 6.51% 6.28%
</TABLE>
*Amounts in the tables above are based on scheduled maturity or call dates.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
NOTE 3.
<TABLE>
<CAPTION>
Mar. 31 December 31
1996 1995
<S> <C> <C>
Loans:
Commercial.............................. $ 11,140 $ 7,796
Agricultural production financing
and other loans to farmers............ 10,212 9,996
Farm real estate........................ 26,401 28,910
Commercial real estate mortgage......... 21,401 24,129
Residential real estate mortgage........ 103,089 103,238
Construction and development............ 6,494 6,863
Consumer................................ 19,046 18,342
Government guaranteed loans purchased... 2,004 2,080
Total loans........................... $ 199,787 $ 201,354
Underperforming loans:
Nonaccruing loans $ 1,300 $ 1,569
Accruing loans contractually past
due 90 days or more as to principal
or interest payments 43 34
Restructured loans -- --
NOTE 4.
Deposits:
Noninterest bearing $ 23,753 $ 30,335
NOW accounts 27,520 30,837
Money market deposit accounts 36,066 33,811
Savings 29,176 28,616
Certificates of deposit $100,000 or more 19,309 20,385
Other certificates and time deposits 119,995 118,362
Total deposits $ 255,819 $ 262,346
NOTE 5.
Short-Term Borrowings:
Federal funds purchased $ 100 $ --
Securities sold under
repurchase agreements 9,707 10,735
U.S. Treasury demand notes 1,544 505
Federal Home Loan Bank Advances -- 2,000
Total short-term borrowings $ 11,351 $ 13,240
</TABLE>
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Indiana United Bancorp ("Company) is a registered bank holding company
incorporated under the laws of Indiana in 1983, commensurate with its
acquisition of Union Bank and Trust Company of Greensburg, Indiana. The
Company acquired The Peoples Bank, Portland, Indiana in 1987, and Regional
Federal Savings Bank, New Albany, Indiana ("Regional Bank") at the end of
1991. With the latter, Indiana United Bancorp became one of a small group of
holding companies throughout the nation to operate both commercial banking
and thrift subsidiaries. Union Bank and Trust Company of Indiana ("Union
Bank") was created by the consolidation of the Greensburg and Portland
operations in 1994. It's history traces back to 1873, and it holds Indiana
state banking charter #1. At March 31, 1996, Union Bank held assets totaling
$204 million and through its nine banking offices, ranked first in market
share in Decatur County and second in Jay County. Regional Bank's assets
totaled $99 million held by three banking offices in Floyd and Clark
counties. Both subsidiaries offer competitive commercial and consumer loan
deposit related services. Union Bank also operates a general line insurance
agency and offers a broad range of personal and business trust services.
Overview
Indiana United Bancorp ("Company") operates under the broad tenets of a
long-term strategic plan ("Plan") designed to improve the Company's financial
performance, expand its competitive ability and enhance long-term shareholder
value. The Plan is premised on the belief of the Company's board of
directors that the Company can best promote long-term shareholder interests
by continuing as an independently owned community banking organization.
In conformance with the plan, during 1994, the Company consolidated the
operations of its two commercial banking subsidiaries to form Union Bank and
Trust Company of Indiana ("Union Bank"), and sold three underperforming
branches of Regional Federal Savings Bank ("Regional Bank"). The Company
believes each of those actions increased its operating efficiency and the
latter improved its net interest margin. The plan also focused on improving
net interest margin by reducing the Company's dependence on expensive,
non-core deposits.
During 1995, the Company initiated actions which are expected to build a
stronger customer base in its primary markets. The Company invested
approximately $500,000 to renovate Regional Bank's main office and $500,000
to open two new branch offices. The renovation allows for direct lobby access
of all customer service and loan personnel, and greatly improves drive-up and
electronic banking service.
The Allison Lane branch in Jeffersonville was opened by Regional Bank to
provide greater access to present and prospective customers in Clark County.
Due to the recent completion of ongoing road improvements near this branch,
management considers 1996 to be the appropriate period to measure the success
of this branch. Union Bank opened the IGA supermarket branch in Greensburg,
exclusively providing seven-day banking and extended hours to the community.
Entry into new markets will be pursued through exploration of acquisition
opportunities.
A continuing tenet of the plan is to establish and cultivate more pro-active
relationships with financial analysts and market makers in the Company's
stock. Management has met with prominent financial analysts to share
Indiana United Bancorp's success story in 1995, and continued contacts with
potential market makers and other financial analysts are planned in the
current year.
The Company initiated a sales philosophy in 1995, supported by a performance-
based employee incentive program. The initial phase of this program included
sales-oriented training for all customer service personnel. During 1996,
many technological improvements are being initiated.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Certain of these improvements, such as upgrading communication lines, will
provide faster response time for customer transactions. Others represent
capital investments which will allow the Company to continue to effectively
compete in the financial services industry. The dynamics of the plan assure
continually evolving objectives, and the extent of the Company's success will
depend upon how well it anticipates and responds to competitive changes
within its markets, the interest rate environment and other external forces.
Results of Operations
Earnings for the first quarter of 1996 increased 26% to $697,000 as compared
to the same quarter of 1995.
Non-interest income in 1995 reflects approximately $15,000 of nonrecurring
income. Only minimal changes have occurred in noninterest income in the
first quarter of 1996 compared to the same period last year. Noninterest
expense reflects reduced Federal Deposit Insurance Corporation ("FDIC")
assessments due to a lower deposit insurance assessment rate. Professional
fees also decreased in the first quarter of 1996 as compared to the prior
year.
Net income per common share for the first quarter equaled $.54 in 1996,
compared to $.41 in 1995.
The Company's return on average total assets for the first quarter was .92%
in 1996 and .74% in 1995. First quarter return on average common
shareholders' equity was 10.31% in 1996 and 9.19% in 1995.
Net Interest Income
Net interest income is influenced by the volume and yield of earning assets
and the cost of interest-bearing liabilities. Net interest margin reflects
the mix of interest-bearing and noninterest-bearing liabilities that fund
earning assets, as well as interest spreads between the rates earned on these
assets and the rates paid on interest-bearing liabilities. First quarter net
interest income of $2,858,000 in 1996 increased 5% from $2,727,000 in 1995.
Throughout much of 1995, many of the Company's local competitors offered
interest rates on long-term certificates of deposit significantly above
national market averages. The Company believed this strategy would depress
future years earnings of these competitors and elected not to engage in such
activity. The Company instead employed a deposit pricing strategy focused on
retaining and attracting shorter-term funds in anticipation of a lower
interest rate environment in 1995 and 1996. The Company believes its ability
to reprice these deposits in the near term will continue to improve its net
interest margin relative to average peer performance. As expected, by mid 1995,
many of these competitors had reduced or eliminated rate premiums on long-
term deposits and, by year end 1995, the Company's competitive disadvantage
in attracting these funds was minimal.
Although many of the Company's peer group competitors reported flat or
marginally changed net interest margins for the full year 1995, the Company
increased its net interest margin by 20 basis points. In the first quarter
of 1996, the Company increased its net interest margin to 3.96%, or 18 basis
points over the same period last year.
Provision for Loan Losses
This topic is discussed under the heading "Loans, Credit Risk and the
Allowance and Provision for Possible Loan Losses".
Noninterest Income
First quarter 1996 noninterest income has changed only slightly in all
categories from the same period last year. Securities transactions in the
first three months of 1995 resulted in a gain of $1,000 compared to no gain
or loss in the same 1996 period.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Insurance commissions continue to represent the largest component of
recurring first quarter noninterest income, equaling 31% in 1996 and 29% in
1995. Insurance income is expected to increase in 1996 over 1995 levels.
Service charges on deposit accounts increased in the first quarter of 1996 by
$7,000, primarily reflecting increased regular service charge income and NSF
fees. Deposit growth and interest rate variables are also expected to
generate greater service charge income in 1996.
<TABLE>
<CAPTION>
(Dollars in Thousands)
1996 1995
1st Qtr. 1st Qtr.
<S> <C> <C>
Insurance commissions $ 98 $ 102
Trust fees 50 50
Service charges on deposit
accounts 116 109
Gains on sales of securities 1
Other income 57 88
$ 321 $ 350
</TABLE>
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
(Taxable Equivalent Basis)* Three Months Ended
March 31, 1996 March 31, 1995
Avg. Yield/ Avg. Yield/
Bal. Interest Rate Bal. Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits 590 8 5.45% 147 1 2.76%
Federal funds sold 6,974 93 5.42% 122 2 6.65%
Securities:
Taxable 79,037 1,228 6.21% 92,932 1,448 6.23%
Tax-exempt 3,950 74 7.49% 4,701 89 7.57%
Total securities 82,987 1,302 6.28% 97,633 1,537 6.30%
Loans:**
Commercial 62,229 1,466 9.48% 63,305 1,438 9.21%
Real estate mortgage 117,954 2,349 7.97% 115,188 2,085 7.24%
Installment 18,199 503 11.12% 14,031 396 11.45%
Government guaranteed
loans purchased 2,045 41 8.06% 2,779 56 8.17%
Total loans 200,427 4,359 8.72% 195,303 3,975 8.19%
Total earning assets 290,978 5,762 7.94% 293,205 5,515 7.64%
Allowance for loan losses (2,758) (2,766)
Unrealized losses on
securities 279 (3,100)
Cash and due from banks 9,107 7,231
Premises and equipment 5,966 5,552
Other assets 2,737 3,900
Total assets 306,309 304,022
LIABILITIES
Interest bearing deposits:
NOW and Super NOW
accounts 29,183 175 2.41% 32,003 212 2.69%
Money market investment
accounts 34,545 309 3.60% 37,649 321 3.46%
Savings 28,797 233 3.25% 23,617 173 2.97%
Certificates of deposit
and other time
deposits 139,123 1,873 5.41% 133,267 1,616 4.92%
Total interest bearing
deposits 231,648 2,590 4.50% 226,536 2,322 4.16%
Short-term borrowings 12,785 167 5.25% 18,445 271 5.96%
Long-term debt 5,934 122 8.27% 7,500 165 8.92%
Total interest bearing
liabilities 250,367 2,879 4.62% 252,481 2,758 4.43%
Noninterest bearing demand
deposits 23,980 23,487
Other liabilities 3,784 2,894
Total liabilities 78,131 278,862
Shareholders' equity 28,178 25,160
Total liabilities and
shareholders' equity 306,309 2,879 3.98%*** 304,022 2,758 3.86%***
Net interest income 2,883 3.96% 2,757 3.78%
Adjustment to convert tax exempt
securities and loans to a fully
taxable equivalent basis using
a marginal rate of 34% 25 30
</TABLE>
* Adjusted to reflect income related to securities and loans exempt from
Federal income taxes reduced by nondeductible portion on interest expenses.
** Nonaccruing loans have deen included in the average balances.
*** Total interest expense divided by total earning assets.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Noninterest Expense
The largest component of noninterest expense is personnel expense. Personnel
expenses in the first quarter of 1996 declined by $14,000, or 1%, as compared
to the prior year period. Normal staff salary adjustments and increased
benefit costs have been incurred in both 1996 and 1995, including amounts
earned by employees in connection with the performance incentive compensation
plan. Personnel expenses in 1996 are not expected to change materially from
1995.
Effective January 1, 1995, the Company adopted SFAS No.106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, which focuses
principally on postretirement health care benefits. SFAS No.106 requires the
accrual of these benefits over the period the employee performs the service
to earn the benefits rather than the prior practice of accounting for these
benefits on the cash basis. The adoption of SFAS No.106 has not had any
material effect on operations or financial condition in 1995 and 1996.
Expenses related to premises and equipment expense increased minimally in
1996 as compared to the first quarter of 1995. Professional fees in 1995
were elevated by expenses incurred to an investment advisor. The investment
advisory service was discontinued in early 1995.
Deposit insurance was $98,000 less in the first quarter of 1996 than the
prior year, due to a lower rate and lower volume of deposits on which the
insurance premium is calculated. In mid 1995, the FDIC reduced deposit
insurance premiums paid by soundly managed banks, including Union Bank, by
83%. Since the bank insurance fund reached a mandated funding level in 1995,
the assessment rate for the Company's commercial bank has been further
reduced to the $2,000 minimum level permissable in 1996. The FDIC has also
decided to retain the current premium rates paid by thrift institutions, and
is currently evaluating several proposals for the recapitalization of the
Savings Association Insurance Fund ("SAIF"). It is possible Congress will
pass legislation to merge the bank and thrift components of the FDIC
insurance fund, ultimately mandating the conversion of thrifts to commercial
bank charters. Such legislation is likely to result in a one-time
assessment of all thrift institutions, which, if based upon deposit balances
as of March 31, 1995 as now proposed, would result in a nonrecurring pre-tax
charge of approximately $700,000 for Regional Bank. Subsequent to the one-
time charge, Regional Bank's assessment rate should decrease to the current
level of commercial banks. Other operating expenses decreased 11% in the first
quarter of 1996 with no significant dollar change in any individual expense
item.
<TABLE>
<CAPTION>
(Dollars in Thousands)
1996 1995
1st Qtr. 1st Qtr.
<S> <C> <C>
Salaries and employee benefits $1,115 $1,129
Premises and equipment expenses 382 381
Professional fees 51 63
Amortization of core deposit
intangibles 9 10
Deposit insurance/supervisory
assessment 63 161
Stationary, printing, supplies 67 72
Insurance 29 35
Postage 52 50
Other operating expenses 233 262
$2,001 $2,163
</TABLE>
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Income Taxes
Income tax expense for the first quarter of 1996 was $454,000 compared to
$357,000 for the same period in 1995, and the effective rate was 39% for both
periods. The Company and its subsidiaries will file a consolidated federal
income tax return for 1996.
Financial Condition
March 31, 1996 total assets decreased to $303,285,000 from $313,067,000 at
December 31, 1995, and increased from $302,745,000 on March 31, 1995. Cash,
cash equivalents and short-term investments were used to provide funding for
loans scheduled to close shortly after December 31, 1995 and for the
customary January withdrawals of public funds.
Total average assets increased to $306,309,000 at March 31, 1996 compared to
$304,022,000 at March 31, 1995. Average earning assets represent 95% of
average total assets for the first quarter of 1996 and 96% for the first
quarter of 1995. Average loans represent approximately 65% of average assets
in both quarters. Management intends to continue its emphasis on loan growth
in 1996.
Although average interest-bearing deposits increased in the first quarter of
1996 as compared to 1995, total deposits have decreased since year end 1995.
Noninterest-bearing deposits have decreased approximately $6,582,000.
Interest-bearing deposits have increased approximately $55,000 since year end
1995.
Long-term debt is the Company's loan for the purchase of Regional Bank and
Union Bank and is secured by the capital stock of the Company's subsidiaries.
Interest adjusts quarterly to the lender's prime rate, less 25 basis points.
The Company successfully renegotiated the rate with the lender in mid 1995
and the new rate became effective July 1, 1995. The Company believes it has
complied with all terms and covenants of the loan agreement. The Company
prepaid its scheduled payment of $375,000 due June 30, 1996 plus an
additional $125,000 in March 1996. The Company intends to make an additional
prepayment later this year.
Shareholders' equity was $27,404,000 on March 31, 1996 compared to
$28,245,000 on December 31, 1995 and $26,089,000 on March 31, 1995. Book
value per common share increased to $21.11 or 11% from $19.10 at March 31,
1995 and $20.98 at year end 1995. The unrealized loss on securities
available for sale, net of taxes, totaled $67,000 or $.05 per share at March 31,
1996 compared to an unrealized loss of $950,000 or $.76 per share at
March 31, 1995 and an unrealized gain of $195,000 or $.15 at December 31,
1995. Excluding the net unrealized gains or losses on securities available
for sale, book value per share was $21.16 or an increase of 7% over the
comparable book value at March 31, 1995. The Company redeemed $1,000,000 of
its preferred stock in March 1996 and $200,000 in March 1995.
Loans, Credit Risk and the Allowance and Provision for Possible Loan Losses
Loans remain the Company's largest concentration of assets and continue to
represent the greatest risk. The loan underwriting standards observed by
each of the Company's subsidiaries are viewed by management as a deterrent to
the emergence of an abnormal level of problem loans and a subsequent increase
in net chargeoffs. The Company's conservative loan underwriting standards
have historically resulted in higher loan quality and lower levels of net
chargeoffs than peer bank averages. The Company also believes credit risks are
elevated by undue concentrations of loans in specific industry segments and
loans to out of area borrowers. Accordingly, the Company's board of
directors regularly monitors such concentrations to determine compliance with
its restrictive loan allocation policy.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Total loans increased 3% over March 31, 1995 loan totals, primarily
reflecting the expansion of the consumer loan portfolio and management's
emphasis on indirect automobile financing in late 1995. Consumer loans
increased 30% at March 31, 1996 compared to the same period in 1995. The
Company intends to continue this emphasis on increasing consumer loans in
1996 to provide greater diversification within the portfolio and to generate
higher yields than residential real estate loans. Although the Company
limits its exposure to long-term fixed rate residential mortgage loans and
generally observes 20% downpayment guidelines, it is originating both fixed
rate loans and loans with little or no downpayment for a noncompeting
mortgage lender during 1996. This program will assist the Company in serving
all segments of the community without incurring unacceptable levels of credit
exposure or interest rate risk. The origination of these loans will also
provide additional fee income.
The Company regards its ability to identify and correct loan quality problems
as one of its greatest strengths. Loans are placed in a nonaccruing status
when in management's judgement the collateral value and/or the borrower's
financial condition does not justify accruing interest. As a general rule,
commercial and real estate loans are reclassified to nonaccruing status at
or before becoming 90 days past due. Interest previously recorded but
not deemed collectible is reversed and charged against current income.
Subsequent interest income on nonaccrual loans is thereafter recognized only
when collected. Non-real estate secured consumer loans are not placed in
nonaccruing status, but are chargedoff when policy-determined delinquent
status is reached.
Net chargeoffs were $21,000 at March 31, 1996 compared to $44,000 at
March 31, 1995. As a percentage of average loans, net chargeoffs equaled
.01% and .02% respectively for March 31, 1996 and 1995. In prior periods the
Company has historically outperformed its peer group's net loan loss average,
and although peer data has yet to be released for the current period,
that trend should continue.
The determination of the provision in any period is based on management's
continuing review and evaluation of loan loss experience, changes in the
composition of the loan portfolio, current economic conditions and the amount
of loans outstanding
Management maintains a listing of loans warranting either the assignment of a
specific reserve amount or other special administrative attention. This
listing, together with a listing of all classified loans, nonaccrual loans
and loans delinquent 30 days or more, is reviewed monthly by the board of
directors of each subsidiary.
The ability to absorb loan losses promptly when problems are identified is
invaluable to a banking organization. Most often, losses incurred as a
result of quick collection action are much lower than losses incurred after
prolonged legal proceedings. Accordingly, the Company observes the practice
of quickly initiating stringent collection efforts in the early stages of
loan delinquency.
The adequacy of the allowance for loan losses in each subsidiary is reviewed
at least monthly. The determination of the provision amount in any period is
based on management's continuing review and evaluation of loan loss
experience, changes in the composition of the loan portfolio, current
economic conditions, the amount of loans presently outstanding, and the
amount and composition of growth expectations. The allowance for loan losses
as of March 31, 1996, is considered adequate by management.
The Company adopted SFAS No.114 and No.118, Accounting by Creditors for
Impairment of a Loan and Accounting by Creditors for Impairment of a Loan-
Income Recognition and Disclosures, on January 1, 1995. Impaired loans are
measured by the present value of expected future cash flows, or the fair
value of the collateral of the loan, if collateral dependent. The amount
of impaired loans at March 31, 1995 and 1996 was not material.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
<TABLE>
<CAPTION>
Summary of Allowance for Loan Losses
(Dollars in Thousands)
1996 Year Ended
thru December 31,
Mar. 31 1995
<S> <C> <C>
Balance at beginning of period $2,754 $2,784
Chargeoffs:
Commercial 16 91
Real-estate mortgage -- 38
Installment 16 31
Total chargeoffs 32 160
Recoveries:
Commercial -- 61
Real-estate mortgage -- 27
Installment 11 12
Total recoveries 11 100
Net chargeoffs 21 60
Provision for loan losses 27 30
Balance at end of period $2,760 $2,754
Ratio of net chargeoffs to average
loans outstanding during the period .01% .03%
Ratio of provision for loan losses to average
loans outstanding during the period .01% .02%
Ratio of allowance to total loans at
end of period 1.38% 1.37%
</TABLE>
<TABLE>
<CAPTION>
Allocation of the Allowance for Loan Losses
(Dollars in Thousands)
Mar. 31, 1996 December 31, 1995
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Real estate:
Residential $ 135 5% $ 134 5%
Agricultural 13 14
Commercial 710 26 575 21
Construction and development 71 3 75 3
Total real estate 929 34 798 29
Commercial:
Agribusiness 123 4 117 4
Other commercial 350 13 445 16
Total commercial 473 17 562 20
Consumer 137 5 131 5
Unallocated 1,221 44 1,263 46
Total $2,760 100% $2,754 100%
</TABLE>
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Investment Securities
Investment securities offer flexibility in the Company's management of
interest rate risk, and is the primary means by which the Company provides
liquidity and responds to changing maturity characteristics of assets and
liabilities. The Company's investment policy prohibits trading activities
and does not allow investment in high risk derivative products or junk bonds.
Effective January 1, 1994, the Company adopted new accounting rules for
securities. The rules require that each security must be individually
designated as a "held to maturity" (HTM) security or as an "available for
sale" (AFS) security.
Late in 1995, the Financial Accounting Standards Board allowed an
unprecedented "one time" transition reclassification. While the vast
majority of the Company's investments were already designated AFS, the
Company took this opportunity to reclassify all remaining HTM securities to
AFS to provide even greater management flexibility in responding to changes
within financial markets.
As of March 31, 1996, all investment securities are classified as AFS and are
carried at fair value with unrealized gains and losses, net of taxes,
excluded from earnings and reported as a separate component of shareholders'
equity. A net unrealized loss of $67,000 was recorded to adjust the AFS
portfolio to current market value at March 31, 1996, compared to a net
unrealized loss of $950,000 at March 31, 1995.
At March 31, 1996, the yield of the investment securities portfolio was
6.28%, representing a slight decrease from 6.32% at March 31, 1995 and 6.33%
at year end 1995.
Variable rate securities comprised 52% of the total portfolio on March 31,
1996 compared to 54% on March 31, 1995. The weighted average life of the
portfolio was 1.50 years on March 31, 1996 as compared to 1.31 years on
March 31, 1995.
SFAS No.119, Disclosure about Derivative Financial Instruments and Fair Value
of Financial Instruments, requires disclosures about derivative financial
instruments - futures, forward swap and option contracts, and other financial
instruments with similar characteristics, was effective for 1995 for the
Company. The Company does not have any derivative financial instruments as
defined in SFAS No.119.
Sources of Funds
The Company relies primarily on customer deposits and securities sold under
repurchase agreements, along with shareholders' equity to fund earning
assets. On an infrequent basis, Federal Home Loan Bank ("FHLB") advances are
used to provide additional funds. The Company is not aware of any
recommendations by regulatory authorities which would materially affect
liquidity, capital resources or operations.
Deposits generated within local markets provide the major source of funding
for earning assets. Average total deposits were 88% and 85% of total earning
assets at March 31, 1996 and 1995. Total interest-bearing deposits averaged
91% of average total deposits at March 31, 1996 and 1995. Management intends
to continue trying to increase the percentage of transaction-related deposits
to total deposits due to the positive effect on earnings.
Securities sold under repurchase agreements ("repos") are high denomination
investments utilized by public entities and commercial customers as an
element of their cash management responsibilities. Repos are not subject to
FDIC assessment so they are less costly than large certificates of deposit.
With the reduction in the FDIC assessment, repos will not have the cost
advantage previously held. Management expects large denomination certificates
of deposit to become more widely used in 1996 to replace a portion of the
funds previously invested in repos.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Short-term borrowings decreased 41% at March 31, 1996 compared to the same
period last year. FHLB advances represented most of this decrease. FHLB
advances were used to fund loans and other earning assets. Depending upon
the level of loan demand, management may elect to use FHLB advances in 1996.
The Company decreased average repos and other short-term borrowings at
March 31, 1996 to $12,785,000 or 31% below the $18,445,000 at March 31, 1995.
The Company has continued to prepay long-term debt in 1996. Long-term debt
decreased $500,000 at March 31, 1996, of which $125,000 represented
reductions in excess of scheduled payments. Management expects to continue
its history of accelerated payments yet again in late 1996.
Capital Resources
Total shareholders' equity was $27,404,000 at March 31, 1996, and includes
$1,000,000 of preferred stock. The Company redeemed $1,000,000 of preferred
stock in March 1996, and $200,000 in March 1995.
The Federal Reserve Board has adopted risk-based capital guidelines which
assign risk weightings to assets and off-balance sheet items. The Company's
core capital (Tier 1) consists of shareholders' equity less goodwill, while
total capital consists of core capital, certain debt instruments and a
portion of the allowance for credit losses. At March 31, 1996, Tier 1
capital to total assets was 8.93%. Total capital to risk-adjusted assets was
16.41%. Both ratios substantially exceed all regulatory definitions of a
well-capitalized institution.
Shareholders' equity was impacted by the Company's initial decision to
categorize a large portion of its securities portfolio as AFS under
accounting rules adopted January 1, 1994. Securities in this category are
carried at fair value, and shareholders' equity is adjusted to reflect
unrealized gains and losses, net of taxes. On November 29, 1995, in accordance
with the transition reclassification allowed by the Financial Accounting
Standards Board, securities previously classified at HTM were transferred to
AFS. As of March 31, 1996, 100% of the investment portfolio is designated as
AFS.
The Company declared and paid common dividends of $.20 per share in the first
quarter of 1996 and $.16 for the same quarter last year. Book value per
common share increased 11% to $21.11 from $19.10 on March 31, 1995. The net
adjustment for AFS securities decreased book value by $.05 and $.76 at March
31, 1996 and 1995. Depending on market conditions, the adjustment for AFS
securities can cause significant fluctuations in equity. The dividend
payment rate on preferred stock was 6.34% during each of the past two years.
Liquidity
Liquidity management involves maintaining sufficient cash levels to fund
operations and to meet the requirements of borrowers, depositors, and
creditors. Higher levels of liquidity bear higher corresponding costs,
measured in terms of lower yields on short-term, more liquid earning assets,
and higher interest expense involved in extending liability maturities.
Liquid assets include cash and cash equivalents, money market instruments,
and securities maturing within one year. In addition, the Company holds
$78,436,000 of AFS securities maturing after one year which can be sold to
meet liquidity needs.
Liquidity is reinforced by maintaining a relatively stable funding base,
which is achieved by diversifying funding sources, extending the contractual
maturity of liabilities, and limiting reliance on volatile short-term
purchased funds. The Company's strategy is to fund assets to the maximum
extent possible with core deposits, which provide a sizable source of
relatively stable and low-cost funds.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Average core deposits funded approximately 88% of total earning assets at
March 31, 1996. Short-term funding needs can arise from declines in deposits
or other funding sources, drawdowns of loan commitments, and requests for new
loans.
Shareholders' equity and long-term debt also contribute to liquidity by
reducing the need to continually rely on short-term purchased funds. At the
end of March 1996, long-term debt totaled 2% of total assets and 20% of total
shareholders' equity versus 2% of total assets and 29% of total shareholders'
equity at March 31, 1995.
Management believes the Company has sufficient liquidity to meet all
reasonable borrower, depositor, and creditor needs in the present economic
environment.
<TABLE>
<CAPTION>
Rate Sensitivity Analysis at March 31, 1996
Maturing and Repricing
Over 3-
3 Months 1 Year 3 Years 5 Years
<S> <C> <C> <C> <C>
Rate-sensitive assets $86,399 $84,172 $46,132 $25,736
Rate-sensitive liabilities 85,704 87,998 50,010 24,540
Rate sensitivity gap (assets
less liabilities) 695 (3,826) (3,878) 1,196
Rate sensitivity gap (cum.) 695 (3,131) (7,009) (5,813)
Percent of total assets (cum.) .2% (1.0%) (2.3%) (1.9%)
Rate-sensitive assets/
liabilites (cum.) 100.8% 98.2% 96.9% 97.7%
</TABLE>
Interest-bearing transactions and savings accounts are not presented as
immediately repriceable in the above table.
Interest Rate Risk
At March 31, 1996 the Company held approximately $170,571,000 in assets,
comprised of securities, loans, short-term investments, and federal funds
sold, which were interest sensitive in one year or less time horizons. The
Company's interest rate sensitivity analysis for the period ended March 31,
1996 is presented above. Core deposits are distributed or spread among the
various repricing categories based upon historical patterns of repricing
which are reviewed periodically by management. The assumptions regarding these
repricing characteristics greatly influence conclusions regarding interest
sensitivity. Management believes its assumptions regarding these liabilities
are reasonable.
Effective asset/liability management requires the maintenance of a proper
ratio between maturing or repriceable interest-earning assets and interest-
bearing liabilities. It is the policy of the Company that rate-sensitive
assets less rate-sensitive liabilities to total assets be kept within a range
of 80% to 130%. The Company's strategy is to maintain near neutral when
rates are likely to remain stable and shifting slightly toward a negative gap
when rate are expected to decline and a positive gap when rates are expected
to rise.
The Company is continuing to pursue a strategy to attain a neutral to a
slightly negative gap position in the belief that the current interest rate
cycle has peaked. In any event, the Company does not anticipate that its
earnings will be materially impacted in 1996 regardless of the direction
interest rates may trend.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
Effects of Changing Prices
The Company's asset and liability structure is substantially different from
that of an industrial company in that most of its assets and liabilities are
monetary in nature. Management believes the impact of inflation on financial
results depends upon the Company's ability to react to changes in interest
rate and, by such reaction, reduce the inflationary impact on performance.
Interest rates do not necessarily move in the same direction at the same
time, or at the same magnitude, as the prices of other goods and services.
As discussed previously, management relies on its ability to manage the
relationship between interest- sensitive assets and liabilities to protect
against wide interest rate fluctuations, including those resulting from
inflation.
Future Accounting Changes
The FASB has issued SFAS No.121, Accounting for the Impairment of Long-Lived
Assets to be Disposed Of. This Statement establishes guidance for
recognizing and measuring impairment losses and requires that the carrying
amount of impaired assets be reduced to fair value. Long-lived assets and
certain identifiable intangibles must be reviewed for impairment whenever
events indicate that the carrying amount of the assets may not be recoverable.
SFAS No.121 is effective in 1996 for the Company. Management does not
believe the adoption of SFAS No.121 will have any material effect on results
of operation or financial condition in 1996.
SFAS No.122, Accounting for Mortgage Servicing Rights, pertains to mortgage
banking and financial institutions that conduct operations that are
substantially similar to the primary operations of a mortgage banking
enterprise. The Statement eliminates the accounting distinction between
mortgage servicing rights that are acquired through loan origination
activities and those acquired through purchase transactions. Under this
Statement, if the Company enters into mortgage banking activities and sells
or securitizes loans and retains the mortgage servicing rights, the Company
must allocate the total cost of the mortgage loans to the mortgage servicing
rights and the loans (without the rights) based on their relative fair values.
SFAS No.122 is effective for the Company in 1996. Since the Company does not
currently engage in mortgage banking activities, it does not expect adoption
of this Statement to have any material effect on 1996 operations or financial
position.
SFAS No.123, Stock Based Compensation, is effective for the Company in 1996.
This Statement requires expanded disclosures rather than recognition of
compensation cost as was originally required by the exposure draft of this
Statement for fixed, at the money, options. However, employers are
encouraged to recognize the cost of stock-based compensation plans in their
financial statements. Currently, the Company has no stock-based compensation
plans and adoption of SFAS No.123 is not expected to have any effect on 1996
financial statements.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are furnished in accordance with the provisions
of Item 601 of Regulation S-K.
20: The Financial Report dated March 31, 1996 and furnished to
Registrant's shareholders is attached to this Form 10-Q.
(b) No report on Form 8-K was filed during the quarter for which this
Quarterly Report is filed.
No other information is required to be filed under Part II of this form.
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDIANA UNITED BANCORP
May 14, 1996 By:/s/Robert E. Hoptry
Robert E. Hoptry
Chairman and President
May 14, 1996 By:/s/Jay B. Fager
Jay B. Fager
Chief Financial Officer,
Treasurer and Principal
Accounting Officer
<PAGE>
INDIANA UNITED BANCORP
FORM 10-Q
EXHIBIT INDEX
Page
20 The Financial Report dated MArch 31, 1996 and 24-29
furnished to Registrant's shareholders is attached
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Condensed
Balance Sheet and Statement of Income and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
<CASH> 12,449 0
<INT-BEARING-DEPOSITS> 155 0
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 83,875 0
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 199,787 0
<ALLOWANCE> 2,760 0
<TOTAL-ASSETS> 303,285 0
<DEPOSITS> 255,819 0
<SHORT-TERM> 11,351 0
<LIABILITIES-OTHER> 3,211 0
<LONG-TERM> 5,500 0
0 0
1,000 0
<COMMON> 1,251 0
<OTHER-SE> 25,153 0
<TOTAL-LIABILITIES-AND-EQUITY> 303,285 0
<INTEREST-LOAN> 4,359 4,359
<INTEREST-INVEST> 1,277 1,277
<INTEREST-OTHER> 101 101
<INTEREST-TOTAL> 5,737 5,737
<INTEREST-DEPOSIT> 2,590 2,590
<INTEREST-EXPENSE> 2,879 2,879
<INTEREST-INCOME-NET> 2,858 2,858
<LOAN-LOSSES> 27 27
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 2,001 2,001
<INCOME-PRETAX> 1,151 1,151
<INCOME-PRE-EXTRAORDINARY> 1,151 1,151
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 697 697
<EPS-PRIMARY> 0.54 0.54
<EPS-DILUTED> 0.54 0.54
<YIELD-ACTUAL> 7.94 0
<LOANS-NON> 1,300 0
<LOANS-PAST> 43 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 2,754 0
<CHARGE-OFFS> 32 0
<RECOVERIES> 11 0
<ALLOWANCE-CLOSE> 2,760 0
<ALLOWANCE-DOMESTIC> 1,539 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1,221 0
</TABLE>
Growing
Relationships
Indiana United Bancorp
Financial Report
March 31, 1996
<PAGE>
Dear Shareholders and Friends:
Net income in the first quarter totaled $696,884, exceeding the prior year
period by 26%. This strong earnings gain reflects continued improvement in
our net interest margin and tight rein over non-interest expenses. Nearly
every significant non-interest expense category declined compared to first
quarter, 1995 levels, and personnel expense was the lowest of any similar
period since 1991. Our net interest margin climbed 18 basis points,
extending gains achieved throughout 1995.
In March, $1,000,000 of preferred stock was redeemed, and $500,000 was
prepaid on long-term debt. During the last twelve months, long-term debt has
been reduced by $2,000,000.
First quarter earnings equaled $.54 per share, representing a 32% gain over
the quarter ending March 31, 1995. The common dividend of $.20 per share
paid on March 21 was 25% higher than the $.16 per share paid a year ago.
Our first quarter performance sustained our expectations that 1996 operating
results will outpace 1995 results in every major performance measurement
category. Recent Indiana United Bancorp stock transactions have included
trades priced as low as $24.25 per share. This price level equates to a
price/earnings ratio of only 11.2% and a current dividend yield of 3.3%.
These ratios suggest a favorable opportunity may now exist to accumulate
additional holdings, especially if our performance continues to validate our
financial assumptions.
Sincerely,
Robert E. Hoptry
Chairman and President
April 12, 1996
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet
(Dollar amount in thousands, except per share amounts)
(Unaudited)
March 31
1996 1995
<S> <C> <C>
Assets
Cash and due from banks $ 12,449 $ 7,873
Interest-bearing deposits 155 147
Securities held to maturity 7,840
Securities available for sale 83,875 84,822
Loans 199,787 194,736
Less: Allowance for laon losses (2,760) (2,743)
Net loans 197,027 191,993
Premises and equipment 5,966 5,640
Federal Home Loan Bank stock 1,138 1,138
Othre assets 2,675 3,322
Total assets $303,285 $302,745
Liabilities
Deposits
Noninterest bearing $ 23,753 $ 22,701
Interest bearing 232,066 224,317
Total deposits 255,819 247,018
Short-term borrowings 11,351 19,272
Long-term debt 5,500 7,500
Other liabilities 3,211 2,866
Total liabilities 275,881 276,656
Shareholders' equity
Preferred stock 1,000 2,200
Common stock 1,251 1,251
Surplus 10,677 10,677
Unrealized loss on securities
available for sale (67) (950)
Retained earnings 14,543 12,911
Total shareholsers' equity 27,404 26,089
Total liabilities and shareholders' equity $303,285 $302,745
Return on average assets .92% .74%
Return on average common equity 10.31 9.19
Tier I capital to total assets 8.93 8.80
Total capital to risk-adjusted assets 16.41 17.00
</TABLE>
<PAGE>
Shareholder Information
Transfer Agent
Securities Transfer Department
Mid-America Bank of Louisville
500 West Broadway, P. O. Box 1497
Louisville, Kentucky 40202
Indiana United Bancorp is a community-focused bank and savings and loan
holding company serving eastern and southern Indiana through its
subsidiaries, Union Bank and Trust Company of Indiana, and Regional Federal
Savings Bank, New Albany.
<TABLE>
<CAPTION>
Consolidated Statement of Income
(Dollar amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Interest income
Loans, including fees $ 4,359 $ 3,975
Investment securities 1,277 1,507
Other 101 3
Total interest income 5,737 5,485
Interest expense
Deposits 2,590 2,322
Other 289 436
Total interest expense 2,879 2,758
Net interest income 2,858 2,727
Provision for loan losses 27 3
Net interest income after provision
for loan losses 2,831 2,724
Noninterest income
Securities gains 1
Other operating income 321 349
Total noninterest income 321 350
Noninterest expense
Salaries and employee benefits 1,115 1,129
Premises and equipment expense 382 381
Other expenses 504 653
Total noninterest expense 2,001 2,163
Income before income tax 1,151 911
Income tax expense 454 357
Net Income $ 697 $ 554
Net income per common share $ .54 $ .41
Dividends per common share $ .20 $ .16
Average common shares outstanding 1,250,897 1,250,897
Preferred stock dividends $ 26 $ 38
</TABLE>
<PAGE>
Common Stock
Indiana United Bancorp's common stock is traded on the over-the-counter
market and is listed on the NASDAQ exchange under the symbol "IUBC". Indiana
United Bancorp is also listed on the National Market System tables in many
daily papers under the symbol Ind Utd. Primary market makers are J.J.B.
Hilliard/W.L. Lyons, Inc.; and NatCity Investments, Inc.
<TABLE>
<CAPTION>
Market Value Range and Dividends
for Latest Four Quarters
1996 1995 1995 1995
Q1 Q4 Q3 Q2
<S> <C> <C> <C> <C>
High $ 26 1/4 $ 28 $ 27 1/2 $ 23
Low 24 1/4 25 19 1/2 20
Last Sale 24 1/4 25 27 20 1/2
Dividends .20 .20 .17 .16
</TABLE>
<PAGE>
Organization
Indiana United Bancorp
201 N. Broadway, P. O. Box 87
Greensburg, IN 47240
(812)663-0157
Officers
Robert E. Hoptry
Chairman and Presidnet
Daryl R. Tressler
Vice President
Michael K. Bauer
Vice President
Jay B. Fager
Treasurer and Chief Financial Officer
Sue Fawbush
Vice President & Secretary
Dennis M. Flack
Vice President, Director of Marketing and Training
Dawn M. Schwering
Marketing Coordinator
Suzanne Kendall
Staff Auditor
Directors
William G. Barron
Chairman and President Wm. G. Barron Enterprises
Philip A. Frantz
Attorney, Partner, Coldren and Frantz
Glenn D. Higdon
President, Marlin Enterprises, Inc.
Robert E. Hoptry
Chairman and President, Indiana United Bancorp
Martin G. Wilson
Farmer
Edward J. Zoeller
President, E.M. Cummings Veneer
Subsidiaries
Regional Federal Savings Bank
Offices in New Albany, Jeffersonville
Union Bank and Trust Company of Indiana
Offices in Greensburg, Portland, Westport,
Clarksburg, Redkey
