River Valley Bancorp (NASDAQ:RIVR), an Indiana corporation (the “Corporation”) and holding company for River Valley Financial Bank, based in Madison, Indiana announced unaudited earnings for the fourth quarter and fiscal year ended December 31, 2012.
For the year ended December 31, 2012, the Corporation reported net income of $4,012,000 or $2.40 per basic share. This is the highest dollar value recorded in the Corporation’s history. This compares to net income of $1,772,000 for the year ended December 31, 2011, or $0.93 per basic share. In comparing like year periods, the culmination of the acquisition/merger with Dupont State Bank in the fourth quarter of 2012 provided certain purchase accounting adjustments as well as an opportunity to restructure elements of the balance sheet for ongoing benefits. The most compelling variation in the like period comparison is the 2012 gain of approximately $988,000 from the “bargain purchase price” associated with the acquisition. Likewise, with the infusion of additional cash investments and the sale of certain low yielding investment securities available for sale, the Corporation prepaid $12.5 million in Federal Home Loan Bank (FHLB) advances. Gains on the sale of investment securities available for sale were approximately $997,000 for the year ended December 31, 2012 which more than offset the $392,000 in penalties associated with the prepayment of FHLB advances. The combination of prepaying those advances and selling particular investment securities available for sale provided a positive net interest yield adjustment that will provide benefit for what would have been the duration of those instruments.
In fiscal period comparisons, the Corporation expensed $1,389,000 less for the provision for loan losses in 2012 than in 2011. Noninterest expense increased by $1,775,000, of which $170,000 of the increase was associated with one-time expenses associated with the acquisition. Other noninterest expense increases included approximately $644,000 for increases in salaries and benefit expenses in 2012 and the prepayment penalties mentioned above. Other noninterest income increased by $2,761,000, primarily due to the aforementioned bargain purchase gain on the Dupont State Bank acquisition, gains on sale of loans to the secondary market and other fee income. Income taxes in 2012 were $756,000 higher than in 2011, reflecting the tax effect of the above mentioned transactions.