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Community Bank Shares of Indiana, Inc. Reports 2nd Quarter Net Income Available to Common Shareholders of $1.9 Million, or $0.57

  Community Bank Shares of Indiana, Inc. Reports 2nd Quarter Net Income
  Available to Common Shareholders of $1.9 Million, or $0.57 Per Diluted
  Common Share

Business Wire

NEW ALBANY, Ind. -- August 15, 2013

Community Bank Shares of Indiana, Inc. reported second quarter net income
available to common shareholders of $1.9 million and earnings per diluted
common share of $0.57, an increase of 12.05% and 11.76% from the same periods
in 2012, respectively. Net income available to common shareholders for the
first half of 2013 was $3.6 million, an 8.53% increase from $3.3 million in
2012.

James Rickard, President and Chief Executive Officer, commented, “We are
excited to be entering the Lexington market through our acquisition of First
Federal Bank. Lexington has a strong economic base which should provide the
foundation for us to grow our footprint in the region. Long term, we believe
this expansion will further enhance our earnings and increase shareholder
value but currently we are focused on integrating our new branches and
welcoming our new employees and customers to Your Community Bank. The addition
of our Lexington branches added more than $60 million in loans to our
portfolio which helped to bolster our net interest margin for the second
quarter.

“Our earnings for the quarter continue the strong earnings trend we have had
over the past 3 years. Our margin improved both for the quarter and
year-to-date, while the gain we recorded on the Lexington acquisition offset
increases in operating expenses associated with our due diligence and
integration and higher provision for loan losses. Our continued focus is to
control non-interest expenses while improving our margin through smart,
profitable growth in our loan portfolio.”

The following points summarize significant financial information for the
second quarter of 2013:

  *Net income available to common shareholders was $1.9 million.
  *Tangible book value per common share of $16.10 as of June 30, 2013.
  *Net interest margin, on a tax equivalent basis, of 4.23%, an increase from
    4.09% for the same period in 2012 while net interest income also increased
    to $7.8 million from $7.3 million.
  *Provision for loan losses was $2.5 million, an increase of $1.5 million
    from the same quarter in 2012. Of the total provision for the quarter,
    $2.0 million was due to the downgrade of one commercial development
    relationship.
  *The Company recorded a bargain purchase gain of $1.9 million from its FDIC
    assisted acquisition of First Federal Bank in Lexington, Kentucky on April
    19, 2013. As a result of the transaction, the Company’s subsidiary, Your
    Community Bank, acquired assets of $93.6 million including loans of $63.6
    million. The Company also assumed deposits of $87.0 million and FHLB
    advances of $4.4 million. More information about the First Federal
    acquisition can be found in the Company’s 8-K/A filed on July 3, 2013 with
    the U.S. Securities and Exchange Commission.
  *Non-interest expense increased to $6.7 million, or 12.28%, from $6.0
    million in 2012.

The following points summarize significant financial information for the six
months ended June 30, 2013:

  *Net income available to common shareholders was $3.6 million, or $1.06 per
    diluted common share compared to $3.3 million and $0.99 for 2012.
  *Net interest margin, on a tax equivalent basis, of 4.14%, an increase from
    4.09% for 2012 while net interest income also increased to $14.9 million
    from $14.6 million.
  *Provision for loan losses of $2.7 million, an increase of $267,000
    compared to 2012. The provision for the first six months of 2013 was due
    to the same reason described in the quarterly results discussion.
  *Non-interest expenses increased 7.91% in 2013 to $12.8 million.

The Company’s unaudited consolidated condensed statements of income and credit
quality metrics are as follows:

                                        Three Months Ended
                                         June 30,                  March 31,
                                         2013         2012         2013
                                         (In thousands, except per share data)
Interest income                          $   8,375     $  8,370     $   7,724
Interest expense                            539         1,103        638
Net interest income                          7,836        7,267         7,086
Provision for loan losses                    2,470        944           247
Non-interest income                          3,969        1,979         1,424
Non-interest expense                        6,711       5,977        6,086
Income before income taxes                   2,624        2,325         2,177
Income tax expense                          420         371          270
Net income                               $   2,204     $  1,954     $   1,907
Preferred stock dividends                   (288)       (244)        (221)
Net income available to common           $   1,916     $  1,710     $   1,686
shareholders
Basic earnings per common share          $   0.57      $  0.51      $   0.50
Diluted earnings per common share        $   0.57      $  0.51      $   0.50
                                                                        

                                        Six Months Ended
                                         June 30,
                                         2013                  2012
                                         (In thousands, except per share data)
Interest income                          $     16,099           $    16,793
Interest expense                              1,177                2,209
Net interest income                            14,922                14,584
Provision for loan losses                      2,717                 2,450
Non-interest income                            5,393                 4,287
Non-interest expense                          12,797               11,859
Income before income taxes                     4,801                 4,562
Income tax expense                            690                  773
Net income                               $     4,111            $    3,789
Preferred stock dividends                     (509)                (470)
Net income available to common           $     3,602            $    3,319
shareholders
Basic earnings per common share          $     1.06             $    0.99
Diluted earnings per common share        $     1.06             $    0.99
                                                                     

Credit quality metrics are as follows (in thousands):

                              As of
                                June 30, 2013  March 31, 2013  June 30, 2012
                                                                 
Loans on non-accrual status     $    12,972     $    15,160      $    15,547
Loans past due 90 days or            -               -                -
more and still accruing
Foreclosed and repossessed          9,560          6,242           5,371
assets
Total non-performing assets     $    22,532     $    21,402      $    20,918
                                                                 
Non-performing assets to             2.69%           2.64%            2.53%
total assets
Allowance for Loan Losses to         1.76            1.63             2.23
Total Loans
                                                                      

The Company’s unaudited condensed consolidated balance sheets are as follows:

                                                      June 30,    December 31,
                                                               
                                                      2013        2012
                                                      (In thousands)
ASSETS
Cash and due from financial institutions              $ 12,479    $   19,039
Interest-bearing deposits in other financial            24,187        32,305
institutions
Securities available for sale                           199,523       251,205
Loans held for sale                                     488           1,225
Loans, net of allowance for loan losses of $9,722       541,249       456,827
and $8,762
Federal Home Loan Bank and Federal Reserve stock        5,990         5,998
Accrued interest receivable                             3,160         3,014
Premises and equipment, net                             13,682        14,094
Cash surrender value of life insurance                  21,047        20,709
Other intangible assets                                 1,174         638
Foreclosed and repossessed assets                       9,560         6,345
Other assets                                           5,832        8,101
Total Assets                                          $ 838,371   $   819,500
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non interest-bearing                                  $ 180,069   $   169,411
Interest-bearing                                       494,255      455,256
Total deposits                                          674,324       624,667
Other borrowings                                        38,162        45,500
Federal Home Loan Bank advances                         20,000        40,000
Subordinated debentures                                 17,000        17,000
Accrued interest payable                                97            177
Other liabilities                                      5,046        5,714
Total liabilities                                       754,629       733,058
                                                                  
STOCKHOLDERS’ EQUITY
Total stockholders’ equity                             83,742       86,442
Total Liabilities and Stockholders’ Equity            $ 838,371   $   819,500
                                                                      

About Community Bank Shares of Indiana, Inc.

Community Bank Shares of Indiana, Inc. was formed in 1991 as the nation’s
first ever mutual holding company. In 1995 the company went public under the
NASDAQ symbol CBIN. Today, Community Bank Shares of Indiana, Inc. is
Southeastern Indiana’s largest locally owned and headquartered bank holding
company and includes Your Community Bank and The Scott County State Bank. The
mission statement of Community Bank Shares of Indiana reflects its purpose:
“Achieving financial goals through exceptional people and exceptional
service.” Community Bank Shares of Indiana strives to help shareholders,
customers, employees, and our communities achieve their respective financial
goals by empowering talented individuals to provide a level of unmatched
customer service. To learn more about us, please visit
www.yourcommunitybank.com and www.scottcountystatebank.com.

Statements in this press release relating to the Company’s plans, objectives,
or future performance are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are based on
management's current expectations. The Company’s actual strategies and results
in future periods may differ materially from those currently expected due to
various risks and uncertainties, including those discussed in the Company’s
2012 Form 10-K and subsequent 10-Q filed with the Securities and Exchange
Commission.

Contact:

Community Bank Shares of Indiana, Inc.
Paul Chrisco, CFO, 812-981-7375