White River Capital, Inc. Announces Results For Third Quarter 2012

White River Capital, Inc. (NYSE MKT: RVR) (“White River”) today announced net income for the third quarter 2012 of $2.5 million, or $0.71 per diluted share, compared to third quarter 2011 net income of $2.9 million, or $0.79 per diluted share. The net income results for the third quarter of 2012 are due to the following:

• $4.2 million of earnings from operations contributed by the Coastal Credit LLC (“Coastal Credit”) subsidiary, and
• $0.5 million of operating expenses at the holding company, and income tax expense of $1.2 million.

Martin Szumski, Chief Financial Officer, stated, “Coastal Credit’s 30+ day delinquency was 3.2% at September 30, 2012 compared to 2.0% at December 31, 2011. Coastal Credit’s allowance for loan losses as a percentage of finance receivables, net of unearned finance charges was 5.14% at September 30, 2012 compared to 5.68% at December 31, 2011. With the recent personnel reductions by the U.S. military, which are limiting reenlistments, individuals are being released into a civilian job market that, while improving, is still experiencing high unemployment. These reductions by the U.S. military had been anticipated and the results of the reductions are now contributing to the recent increase in charge-offs and delinquencies. Once the U.S. military reaches its personnel targets, we expect delinquency and charge-offs to return to normalized levels.”

Mr. Szumski continued, “During the challenging economic conditions of the past four years, we have worked diligently to operate at delinquency and charge-offs well below normal sub-prime lenders. We were successful in doing so while still generating strong growth. We have found that it is now increasingly difficult to meet both objectives as the economy improves and competition has intensified. As such, we have made the decision to allow charge-offs and delinquency to move toward levels consistent with this business sector. This action is expected to improve our ability to grow more in line with that which was achieved over the past several years. We have begun to reduce the allowance for loan losses to reflect the overall improvements in the U.S. economy as seen by the recent reductions in unemployment and the strengthening in the housing market. Even with the reduction in the allowance for loan losses, these reserves continue to exceed the annualized net charge-offs incurred reflecting a cautious outlook on the economy and the increased competition in this sector.”

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