NorthWest Indiana Bancorp, the parent company of Peoples Bank, reported a profit of $2.2 million in the first quarter, a 13.2% year-over-year decline the bank attributed to the cost of buying AJS Bancorp.
The Munster-based bank had one-time acquisition costs of $2.1 million. Without the costs of buying the Illinois bank to continue its expansion into the Chicagoland market, it would have made $4.1 million in profit in the first quarter, or $1.21 per share.
Instead, its net income decreased by $339,000 year-over-year while it made $0.66 per share.
“The first quarter of 2019 was a solid start to the year, driven by both organic and inorganic growth. We successfully closed our merger with AJS Bancorp, Inc. and its wholly owned subsidiary A.J. Smith Federal Saving Bank, and also saw the results of strong loan demand in our core markets of Northwest Indiana and south suburban Chicagoland,” Peoples Bank President and CEO Benjamin Bochnowski said.
“We have grown our balance sheet significantly over the past two years, and the company is seeing the benefits of economies of scale," he said. "When you adjust earnings for acquisition expenses, the bank shows very strong earnings. This is the result of years of planning and execution by a skilled and dedicated team.”
Peoples Bank now has assets of $1.3 billion, an increase of $172.2 million, or 15.7% over the previous quarter. Its acquisitions of AJS and First Personal Financial Corp. are expected to boost future earnings.
“Integration of operations with AJSB is underway, and is expected to be completed by the end of May 2019," Bochnowski said. "The majority of acquisition-related expenses were recognized in Q1 2019, and remaining expenses should be recognized by the end of Q2 2019. We have gained significant experience as an acquirer, and we have used that expertise to successfully execute our strategy. Our market area now reaches 65 miles end-to-end, and our growth allows us to deliver better banking to our customers."
Peoples Bank's net earnings would have increased by 58.3% in the first quarter year-over-year were it not for the one-time acquisition expenses, Chief Financial Officer Robert Lowry said.
“As a result of the management team’s recent strategic growth initiatives, the Bancorp’s primary earnings driver, net interest income, has increased by $2.8 million, or 35.3% for the first three months of 2019," Lowry said. "In addition, at March 31, 2019, the Bancorp’s tier 1 capital to adjusted average assets was 8.5% after the AJSB merger. The Bancorp is well positioned for continued growth."
Over the first three months of the year, Peoples Bank grew net interest income by 35.3% to $10.6 million, noninterest income by 4.9% to $2.6 million and its loan portfolio by 13.2% to $865 million. It grew its securities portfolio by 4% to $251.3 million and its core deposits in checking, savings and money market accounts by 18.5% to $795 million.