Community Bank Shares of Indiana, Inc. Reports 3rd Quarter Net Income Available to Common Shareholders of $2.0 Million, or $0.60

  Community Bank Shares of Indiana, Inc. Reports 3rd Quarter Net Income
  Available to Common Shareholders of $2.0 Million, or $0.60 Per Diluted
  Common Share and 4th Quarter Dividend

Business Wire

NEW ALBANY, Ind. -- October 21, 2013

Community Bank Shares of Indiana, Inc. reported third quarter net income
available to common shareholders of $2.0 million and earnings per diluted
common share of $0.60, an increase of 14.68% and 13.21% from the same periods
in 2012, respectively. Net income available to common shareholders for the
first nine months of 2013 was $5.6 million, a 10.67% increase from $5.1
million in 2012. The Company also announced today that on October 15, its
board of directors declared a quarterly cash dividend on the Company’s common
stock of $0.11 per share payable on November 22, 2013 to shareholders of
record at the close of business on November 4, 2013.

“We are proud to once again announce strong quarterly net income, which is the
direct result of a lower provision for loan losses for the quarter and an
increase in net interest income. During the quarter we also completed the
integration of First Federal, which has had a positive impact on our earnings.
We are now focusing our efforts on growing our market share in Lexington and
all the areas we serve,” stated James Rickard, President and Chief Executive
Officer.

“We also continue to place emphasis on reducing our non-performing assets,
which declined by almost $2 million during the third quarter. We have made
substantial progress in this area since 2011, but will remain focused on
reducing this number until we are back at pre-recession levels.”

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

  *Net income available to common shareholders was $2.0 million.
  *Tangible book value per common share of $16.55 as of September 30, 2013.
  *Net interest margin, on a tax equivalent basis, of 4.47%, an increase from
    3.96% for the same period in 2012 while net interest income also increased
    to $8.2 million from $7.1 million.
  *Provision for loan losses was $75,000, a decrease of $776,000 from the
    same quarter in 2012. The decrease was due to reduction in allocation for
    non-impaired loans.
  *Non-interest expense increased to $7.0 million from $5.7 million in 2012
    due to additional expenses associated with the acquisition and integration
    of First Federal including new personnel and operational expense of
    operating three new branches.

The following points summarize significant financial information for the nine
months ended September 30, 2013:

  *Net income available to common shareholders was $5.6 million, or $1.67 per
    diluted common share compared to $5.1 million and $1.52 for 2012.
  *Net interest margin, on a tax equivalent basis, of 4.26%, an increase from
    4.10% for 2012 while net interest income also increased to $23.2 million
    from $21.7 million.
  *The Company recorded a bargain purchase gain of $1.9 million in the second
    quarter of 2013 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.
  *Provision for loan losses of $2.8 million as compared to $3.3 million in
    2012. The provision for the first nine months of 2013 was mostly due to
    the downgrade of one commercial land development relationship which added
    $2.0 million to the allowance for loan losses during the second quarter.
  *Non-interest expenses increased in 2013 to $19.8 million due to
    integration and acquisition costs associated with First Federal.

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

                                        Three Months Ended
                                         September 30,              June 30,
                                         2013           2012        2013
                                         (In thousands, except per share data)
Interest income                          $  8,732        $ 8,144     $ 8,375
Interest expense                           504          1,000     539   
Net interest income                         8,228          7,144       7,836
Provision for loan losses                   75             851         2,470
Non-interest income                         1,580          1,779       3,969
Non-interest expense                       7,034        5,677     6,711 
Income before income taxes                  2,699          2,395       2,624
Income tax expense                         439          454       420   
Net income                               $  2,260        $ 1,941     $ 2,204
Preferred stock dividends                  (221   )      (163  )    (288  )
Net income available to common           $  2,039       $ 1,778    $ 1,916 
shareholders
Basic earnings per common share          $  0.60         $ 0.53      $ 0.57
Diluted earnings per common share        $  0.60         $ 0.53      $ 0.57
                                                                             

                                        Nine Months Ended
                                         September 30,
                                         2013                2012
                                         (In thousands, except per share data)
Interest income                          $   24,831           $   24,937
Interest expense                            1,681              3,209    
Net interest income                          23,150               21,728
Provision for loan losses                    2,792                3,301
Non-interest income                          6,973                6,066
Non-interest expense                        19,831             17,536   
Income before income taxes                   7,500                6,957
Income tax expense                          1,129              1,227    
Net income                               $   6,371            $   5,730
Preferred stock dividends                   (730     )          (633     )
Net income available to common           $   5,641           $   5,097    
shareholders
Basic earnings per common share          $   1.67             $   1.52
Diluted earnings per common share        $   1.67             $   1.52
                                                                           

Credit quality metrics are as follows (in thousands):

                               As of
                                 September 30,  June 30, 2013  September 30,
                                 2013                            2012
                                                                 
Loans on non-accrual status      $  11,208       $  12,972       $  14,509
Loans past due 90 days or more      -               -               -
and still accruing
Foreclosed and repossessed         9,557         9,560         11,055  
assets
Total non-performing assets      $  20,765      $  22,532      $  25,564  
                                                                 
Non-performing assets to total      2.50    %       2.69    %       3.15    %
assets
Allowance for Loan Losses to        1.73            1.76            3.07
Total Loans
                                                                            

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

                                                  September 30,   December 31,
                                                               
                                                  2013            2012
                                                  (In thousands)
ASSETS
Cash and due from financial institutions          $   20,941      $   19,039
Interest-bearing deposits in other financial          10,087          32,305
institutions
Securities available for sale                         194,839         251,205
Loans held for sale                                   363             1,225
Loans, net of allowance for loan losses of            538,604         456,827
$9,509 and $8,762
Federal Home Loan Bank and Federal Reserve            5,990           5,998
stock
Accrued interest receivable                           3,160           3,014
Premises and equipment, net                           18,674          14,094
Cash surrender value of life insurance                21,220          20,709
Other intangible assets                               1,088           638
Foreclosed and repossessed assets                     9,557           6,345
Other assets                                         6,662          8,101
Total Assets                                      $   831,185     $   819,500
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non interest-bearing                              $   177,766     $   169,411
Interest-bearing                                     466,613        455,256
Total deposits                                        644,379         624,667
Other borrowings                                      39,063          45,500
Federal Home Loan Bank advances                       40,000          40,000
Subordinated debentures                               17,000          17,000
Accrued interest payable                              103             177
Other liabilities                                    5,400          5,714
Total liabilities                                     745,945         733,058
                                                                  
STOCKHOLDERS’ EQUITY
Total stockholders’ equity                           85,240         86,442
Total Liabilities and Stockholders’ Equity        $   831,185     $   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’s filed with the Securities and Exchange
Commission.

Contact:

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