8-K

United States

Securities And Exchange Commission

Washington, DC 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  January 27, 2009
Indiana Community Bancorp
(Exact Name of Registrant as Specified in Its Charter)
Indiana	000-18847	35-1807839
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
501 Washington Street, Columbus, Indiana		47201
(Address of Principal Executive Offices)		(Zip Code)
(812) 522-1592
(Registrant’s Telephone Number, Including Area Code)
Indiana Community Bancorp
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.     Results of Operations and Financial Condition

On January 27, 2009, Indiana Community Bancorp (the “Registrant”) issued a press release reporting its results of operations and financial condition for the fourth fiscal quarter and twelve months ended December 31, 2008.

A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference. The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.0.     Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release dated January 27, 2009

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

Date: January 27, 2009	Indiana Community Bancorp
	By:	/s/Mark T. Gorski Mark T. Gorski Executive Vice President and Chief Financial Officer

EX-99.1

Indiana Community BANCORP

NEWS RELEASE

For Immediate Release January 27, 2009

Contacts:	John K. Keach, Jr.	Mark T. Gorski
	Chairman	Executive Vice President
	Chief Executive Officer	Chief Financial Officer
	(812) 373-7816	(812) 373-7379

INDIANA COMMUNITY BANCORP ANNOUNCES

2008 EARNINGS

(Columbus, In) – Indiana Community Bancorp (the “Company”) (NASDAQ: INCB), the holding company of Indiana Bank and Trust Company of Columbus, Indiana (the “Bank”), today announced 2008 annual earnings of $5,003,000 or $1.47 diluted earnings per common share compared to $6,123,000 or $1.72 diluted earnings per common share a year earlier.  The reduction in year to date net income was primarily due to an increase in the provision for loan losses which totaled $4.3 million for 2008 compared to $1.4 million for 2007.  During the year, non-performing assets increased $15.9 million to $27.7 million; non-performing assets increased $12.0 million during the fourth quarter.  The Company had fourth quarter earnings of $1,509,000 or $0.43 diluted earnings per common share compared to $1,642,000 or $.47 diluted earnings per common share a year earlier.  Total loans increased $50.9 million for the year while total deposits increased $3.1 million.  In December 2008, the Company bolstered its capital position by issuing $21.5 million in preferred stock and warrants to the United States Treasury Department.  As a result, total shareholders’ equity increased $24.6 million for the year to $92.0 million at December 31, 2008 representing a total risk based capital ratio of 13.2%.  Chairman and CEO John Keach, Jr. stated, “Concerns regarding national and local economic issues have resulted in a very difficult operating environment.  We are pleased that we have remained profitable during this challenging cycle.  We will continue to focus on core commercial and retail banking activities in the communities we serve.”  Executive Vice President and CFO Mark Gorski added, “We have implemented several cost cutting strategies which are important to the success of our Company during these difficult times.”

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Indiana Community Bancorp

2008 Earnings

Page 2

Balance Sheet

Total assets were $969.4 million as of December 31, 2008, an increase of $60.6 million from December 31, 2007.  Total loans increased $5.7 million for the quarter and $50.9 million for the year.  The growth in the loan portfolio was primarily the result of an increase in commercial and commercial mortgage loans.  During the year, commercial loans increased $14.2 million and commercial mortgage loans increased $65.3 million for a total increase in commercial loans of $79.5 million.  Growth during the fourth quarter slowed significantly when compared to the first three quarters as total commercial and commercial mortgage loans increased $8.5 million during the fourth quarter.  The growth in commercial loans slowed due to increasingly negative local economic factors.  Residential mortgage loans have decreased $22.3 million for the year as substantially all new mortgage loan originations are being sold in the secondary market.  Other consumer loans have decreased $6.8 million for the year due primarily to a reduction in indirect automobile loans as the Bank discontinued the origination of indirect automobile loans during 2006.

Total retail deposits increased $5.5 million for the quarter and decreased $3.4 million for the year. During 2008, commercial checking accounts increased $3.2 million while retail certificates of deposit increased $13.3 million.  These increases were offset by a decrease in retail money market account balances totaling $24.6 million for the year.

Total FHLB borrowings increased $35.3 million for the year and public fund certificates of deposit increased $10.2 million for the year.  The increases in FHLB borrowings and public fund certificates of deposit were necessary to provide funding for loan growth during the year.

As of December 31, 2008, shareholders’ equity was $92.0 million.  The increase in shareholders’ equity of $24.6 million for the year was primarily due to the issuance of $21.5 million in preferred stock and warrants to the United States Treasury Department.  The Company also increased retained earnings by reducing its quarterly dividend to $.12 per share beginning in the third quarter thus increasing retained earnings by approximately $250,000 per quarter when compared to previous dividend levels. The return on average assets for the year was 0.54% while the return on average equity for the year was 7.11%.

Asset Quality

Provision for loan losses increased $449,000 to $1.0 million for the fourth quarter and increased $2.9 million to $4.3 million for the year.  The increase in provision for loan losses was primarily due to increases in non-performing loans and increased charge offs.  Net charge offs were $2.7 million for 2008 compared to $986,000 for 2007.  The net charge off ratio for 2008 was 0.35% compared to 0.14% for 2007.  Non-performing assets totaled $27.7 million at December 31, 2008, an increase of $15.9 million during the year.   The increase in the non-performing assets during the year was primarily the result of four commercial loan relationships totaling approximately $13.9 million that were placed on non-accrual status during the year along with an increase in consumer loan delinquencies.  The ratio of the allowance for loan losses to total loans was 1.07% at December 31, 2008 compared to 0.92% at December 31, 2007.

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Indiana Community Bancorp

2008 Earnings

Page 3

Net Interest Income

Net interest income increased $328,000 or 4.7% to $7.2 million for the fourth quarter while annual net interest income increased $1.2 million or 4.5% to $28.8 million.  Net interest margin for the fourth quarter of 2008 was 3.28%, which represented a decrease of 23 basis points compared to the third quarter of 2008.  Net interest margin for 2008 was 3.35% compared to 3.45% for 2007 - a 10 basis point decrease.  Net interest margin has been fluctuating significantly from quarter to quarter due to rapid changes in interest rates.  Beginning in September 2007, the Federal Reserve cut interest rates 10 times for a total reduction in the target federal funds rate of 5.0% to the current level of 0.25% at the end of 2008.

Non Interest Income

Non interest income decreased $693,000 to $2.7 million for the fourth quarter and decreased $914,000 to $11.9 million year-to-date.  The primary reason for the decrease during the fourth quarter related to a reduction in brokerage fees of $491,000.  During the third quarter, the Company chose to discontinue offering brokerage services through Raymond James and the brokerage business was sold to the brokers who had been serving these customers.  In addition to reductions due to the sale of the brokerage business, the year-to-date non interest income total was negatively impacted by the Bank’s recognition of an impairment charge of $437,000 related to an investment in the AMF Ultra Short Mortgage Fund.  The Bank redeemed its shares in the Fund for cash and securities during the third quarter.

Non Interest Expenses

Non interest expenses decreased $729,000 or 10.0% to $6.6 million for the fourth quarter while year-to-date non interest expenses decreased $940,000 to $28.8 million. Excluding the impact of the one-time employee related expense and the write-down of the Bank’s former operations building incurred in 2007, expenses increased $48,000 year-to-date.  Compensation and employee benefits expense decreased $718,000 or 17.4% for the fourth quarter and $583,000 or 3.6% year-to-date.  Over the past three quarters, the Company has decreased the expense related to the defined benefit pension plan, reduced the Company’s overall workforce by approximately 10% and sold the brokerage business. The Company froze its defined benefit pension plan effective April 1, 2008 which decreased expense by approximately $700,000 annually.  During the third quarter, the Company announced a workforce reduction of 26 positions or approximately 10% of the Company’s workforce.  This workforce reduction was completed during the third quarter.  Severance costs associated with the workforce reduction were included in expense for the third quarter.  Management anticipates a cost savings of approximately $750,000 annually related to the workforce reduction beginning in the fourth quarter.  As a result of the sale of the brokerage business, management estimates a cost savings of approximately $1.1 million annually in commission and salary expense.  The efficiency ratio decreased to 70.1% for 2008 as compared to 71.3% for 2007 and the ratio was 66.3% for the fourth quarter of 2008.

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Indiana Community Bancorp

2008 Earnings

Page 4

Stock Repurchase Program

In January 2008, the Board of Directors approved the thirteenth repurchase, from time to time, on the open market of up to 5% of the Company’s outstanding shares of common stock, without par value (“Common Stock”), or 168,498 such shares.  Such purchases were to be made subject to market conditions in open market or block transactions.  The Company repurchased 11,886 shares under this plan during the first quarter.  There were no shares repurchased since the first quarter as the Company has suspended its stock repurchase thereby retaining capital based on the current economic environment.  Because of the Company’s receipt of TARP capital, future repurchases will require approval of the Treasury Department while it continues to hold preferred stock, warrants or common stock of the Company.

Indiana Community Bancorp is a bank holding company registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”), which has been authorized by the Federal Reserve to engage in activities permissible for a financial holding company.  Indiana Bank and Trust Company, its principal subsidiary, is an FDIC insured state chartered commercial bank.  Indiana Bank and Trust Company was founded in 1908 and offers a wide range of consumer and commercial financial services through 20 branch offices in central and southeastern Indiana.

Forward-Looking Statement

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include expressions such as “expects,” “intends,” “believes,” and “should,” which are necessarily statements of belief as to the expected outcomes of future events.  Actual results could materially differ from those presented.  Indiana Community Bancorp undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. The Company’s ability to predict future results involves a number of risks and uncertainties, some of which have been set forth in the Company’s most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q which disclosures are incorporated by reference herein.

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INDIANA COMMUNITY BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars in thousands except share data)

(unaudited)

	December 31, 2008			December 31, 2007
Assets:
Cash and due from banks	$	22,352		$	20,082
Interest bearing demand deposits		234			20,470
Cash and cash equivalents		22,586			40,552
Securities available for sale at fair value (amortized cost $90,957 and $62,551)		91,096			62,306
Securities held to maturity at amortized cost (fair value $3,884 and $1,558)		4,467			1,557
Loans held for sale (fair value $2,907 and $7,250)		2,856			7,112
Portfolio loans:
Commercial loans		221,766			207,590
Commercial mortgage loans		334,367			269,035
Residential mortgage loans		120,227			142,481
Second & home equity loans		104,084			103,560
Other consumer loans		20,532			27,345
Unearned income		(241	)		(165	)
Total portfolio loans		800,735			749,846
Allowance for loan losses		(8,589	)		(6,972	)
Portfolio loans, net		792,146			742,874
Premises and equipment		15,323			15,599
Accrued interest receivable		3,777			4,670
Goodwill		1,394			1,875
Other assets		35,728			32,261
Total Assets	$	969,373		$	908,806
Liabilities and Shareholders’ Equity:
Liabilities:
Deposits:
Demand	$	71,726		$	69,728
Interest checking		110,944			103,624
Savings		40,862			37,513
Money market		156,500			185,803
Certificates of deposit		314,425			301,146
Retail deposits		694,457			697,814
Brokered deposits		5,420			9,174
Public fund certificates		10,762			563
Wholesale deposits		16,182			9,737
Total deposits		710,639			707,551
FHLB borrowings		134,639			99,349
Short term borrowings		0			20
Junior subordinated debt		15,464			15,464
Other liabilities		16,619			18,968
Total liabilities		877,361			841,352
Commitments and Contingencies
Shareholders' equity:
No par preferred stock; Authorized:  2,000,000 shares
Issued and outstanding:  21,500 and none		20,962			0
No par common stock; Authorized:  15,000,000 shares
Issued and outstanding:  3,358,079 and 3,369,965 shares		20,985			20,305
Retained earnings, restricted		50,670			48,089
Accumulated other comprehensive loss, net		(605	)		(940	)
Total shareholders' equity		92,012			67,454
Total Liabilities and Shareholders' Equity	$	969,373		$	908,806

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INDIANA COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(unaudited)	Three Months Ended				Year to Date
	December 31,				December 31,
	2008		2007		2008			2007
Interest Income:
Short term investments	$	12	$	199	$	462		$	1,116
Securities		815		693		2,878			2,688
Commercial loans		2,923		3,791		12,670			14,538
Commercial mortgage loans		4,960		4,503		18,736			16,766
Residential mortgage loans		1,897		2,478		8,516			10,471
Second and home equity loans		1,454		1,836		6,186			7,342
Other consumer loans		437		544		1,890			2,280
Total interest income		12,498		14,044		51,338			55,201
Interest Expense:
Checking and savings accounts		308		463		981			1,761
Money market accounts		611		1,611		2,867			5,869
Certificates of deposit		2,760		3,592		12,265			14,317
Total interest on retail deposits		3,679		5,666		16,113			21,947
Brokered deposits		91		113		426			665
Public funds		76		6		185			47
Total interest on wholesale deposits		167		119		611			712
Total interest on deposits		3,846		5,785		16,724			22,659
FHLB borrowings		1,234		1,054		5,059			3,884
Other borrowings		0		0		1			8
Junior subordinated debt		171		286		765			1,110
Total interest expense		5,251		7,125		22,549			27,661
Net interest income		7,247		6,919		28,789			27,540
Provision for loan losses		1,021		572		4,292			1,361
Net interest income after provision for loan losses		6,226		6,347		24,497			26,179
Non Interest Income:
Gain on sale of loans		288		390		1,446			1,497
Loss on securities		0		0		(437	)		0
Investment advisory services		0		491		1,371			1,874
Service fees on deposit accounts		1,740		1,692		6,791			6,574
Loan servicing income, net of impairment		138		145		551			571
Miscellaneous		528		669		2,218			2,338
Total non interest income		2,694		3,387		11,940			12,854
Non Interest Expenses:
Compensation and employee benefits		3,411		4,129		15,843			16,426
Occupancy and equipment		1,012		1,070		4,159			4,086
Service bureau expense		483		414		1,917			1,637
Marketing		180		268		1,241			1,141
Miscellaneous		1,501		1,435		5,674			6,484
Total non interest expenses		6,587		7,316		28,834			29,774
Income before income taxes		2,333		2,418		7,603			9,259
Income tax provision		824		776		2,600			3,136
Net Income	$	1,509	$	1,642	$	5,003		$	6,123
Basic earnings per common share	$	0.43	$	0.48	$	1.47		$	1.75
Diluted earnings per common share	$	0.43	$	0.47	$	1.47		$	1.72
Basic weighted average number of shares		3,358,079		3,433,670		3,359,666			3,492,615
Dilutive weighted average number of shares		3,358,079		3,473,101		3,365,131			3,560,603
Dividends per share	$	0.120	$	0.200	$	0.640		$	0.800

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Supplemental Data:	Three Months Ended						Year to Date
(unaudited)	December 31,						December 31,
	2008			2007			2008			2007
Weighted average interest rate earned
on total interest-earning assets		5.65	%		6.86	%		5.97	%		6.91	%
Weighted average cost of total
interest-bearing liabilities		2.42	%		3.52	%		2.68	%		3.53	%
Interest rate spread during period		3.24	%		3.34	%		3.29	%		3.38	%
Net interest margin
(net interest income divided by average
interest-earning assets on annualized basis)		3.28	%		3.38	%		3.35	%		3.45	%
Total interest income divided by average
total assets (on annualized basis)		5.22	%		6.33	%		5.51	%		6.31	%
Total interest expense divided by
average total assets (on annualized basis)		2.18	%		3.18	%		2.42	%		3.16	%
Net interest income divided by average
total assets (on annualized basis)		3.03	%		3.12	%		3.09	%		3.15	%
Return on assets (net income divided by
average total assets on annualized basis)		0.63	%		0.74	%		0.54	%		0.70	%
Return on equity (net income divided by
average total equity on annualized basis)		8.03	%		9.58	%		7.11	%		8.88	%

	December 31,			December 31,
	2008			2007
Book value per common share outstanding	$	20.98		$	20.02
Nonperforming Assets:
Loans: Non-accrual	$	22,534		$	10,516
Past due 90 days or more		518			64
Restructured		1,282			874
Total nonperforming loans		24,334			11,454
Real estate owned, net		3,335			286
Other repossessed assets, net		44			25
Total Nonperforming Assets	$	27,713		$	11,765
Nonperforming assets divided by total assets		2.86	%		1.29	%
Nonperforming loans divided by total loans		3.03	%		1.51	%
Balance in Allowance for Loan Losses	$	8,589		$	6,972

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