Community Bank Shares of Indiana, Inc. Reports 4th Quarter Net Income Available to Common Shareholders of $2.2 Million, or $0.66

  Community Bank Shares of Indiana, Inc. Reports 4th Quarter Net Income
  Available to Common Shareholders of $2.2 Million, or $0.66 Per Diluted
  Common Share

Business Wire

NEW ALBANY, Ind. -- February 5, 2014

Community Bank Shares of Indiana, Inc. reported fourth quarter net income
available to common shareholders of $2.2 million and earnings per diluted
common share of $0.66, an increase of 9.07% and 10.0% from the same periods in
2012, respectively. Net income available to common shareholders for the year
ended December 31, 2013 was $7.9 million, a 13.64% increase from $6.9 million
in 2012 while earnings per diluted common share increased to $2.32 from $2.06,
a 12.6% increase.

“2013 was an outstanding year for the Company. We expanded our footprint into
the Lexington, Kentucky market, improved our credit quality, and reported the
highest net income in our history. For 2014, we will continue to focus on
profitably growing the Company and serving our customers,” stated James
Rickard, President and Chief Executive Officer.

“Our previously announced first quarter dividend increase to $0.12 per share
is the result of our continued earnings improvement and strong capital
position. Our goal is to prudently leverage our capital while providing value
to our shareholders. We will continue to pursue sensible organic growth but
will also be open to acquisitions that make sense strategically.”

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

  *Net income available to common shareholders was $2.2 million.
  *Tangible book value per common share of $17.48 as of December, 2013.
  *Fully tax equivalent net interest margin was 4.20%, an increase from 4.01%
    for the same period in 2012; net interest income increased to $7.9 million
    from $7.1 million.
  *Provision for loan losses was $618,000, a decrease from $800,000 for the
    same quarter in 2012. The decrease was due to reduction in the allocation
    for non-impaired loans.
  *Non-interest income decreased to $1.7 million for the fourth quarter of
    2013 compared to $2.4 million in 2012. The decrease was from a reduction
    in net gains on sales of securities which declined to $199,000 in the
    fourth quarter of 2013 from $767,000 in 2012.
  *Non-interest expense remained flat compared to the fourth quarter of 2012
    at $6.2 million.

The following points summarize significant financial information for the year
ended December 31, 2013:

  *Net income available to common shareholders was $7.9 million, or $2.32 per
    diluted common share, as compared to $6.9 million and $2.06 for 2012.
  *Fully tax equivalent net interest margin was 4.24%, an increase from 4.08%
    for 2012; net interest income increased to $31.0 million from $28.8
    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 $3.4 million as compared to $4.1 million in
    2012. Overall, the Company experienced an improvement in its credit
    quality trends with non-accrual loans declining to $7.8 million as of
    December 31, 2013 from $8.7 million as of December 31, 2012. Of the total
    provision for the year, $2.0 million was attributable to the downgrade of
    one commercial land development relationship during the second quarter.
  *Non-interest expenses increased in 2013 to $26.1 million due to
    integration and acquisition, personnel, and occupancy costs associated
    with the former First Federal branches.

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

                        Three Months Ended
                         December 31,                           September 30,
                         2013                2012               2013
                         (In thousands, except per share data)
Interest income          $   8,422            $   7,889          $   8,732
Interest expense            546                821              504    
Net interest income          7,876                7,068              8,228
Provision for loan           618                  800                75
losses
Non-interest income          1,711                2,358              1,580
Non-interest expense        6,240              6,213            7,034  
Income before income         2,729                2,413              2,699
taxes
Income tax expense          433                458              439    
Net income               $   2,296            $   1,955          $   2,260
Preferred stock             (72      )          (131     )        (221   )
dividends
Net income available     $   2,224           $   1,824         $   2,039  
to common shareholders
Basic earnings per       $   0.66             $   0.54           $   0.60
common share
Diluted earnings per     $   0.66             $   0.54           $   0.60
common share
                                                                 
                                                                 
                         Twelve Months Ended
                         December 31,
                         2013                 2012
                         (In thousands, except per share data)
Interest income          $   33,253           $   32,826
Interest expense            2,227              4,030    
Net interest income          31,026               28,796
Provision for loan           3,410                4,101
losses
Non-interest income          8,684                8,423
Non-interest expense        26,071             23,748   
Income before income         10,229               9,370
taxes
Income tax expense          1,562              1,685    
Net income               $   8,667            $   7,685
Preferred stock             (802     )          (764     )
dividends
Net income available     $   7,865           $   6,921    
to common shareholders
Basic earnings per       $   2.32             $   2.06
common share
Diluted earnings per     $   2.32             $   2.06
common share
                                                                 

Credit quality metrics are as follows (in thousands):

                       As of
                         December 31,     September 30,    December 31,
                         2013                2013                2012
                                                                 
Loans on non-accrual     $  7,787            $  11,208           $  8,718
status
Loans past due 90 days
or more and still           -                   -                   -
accruing
Foreclosed and             5,988             9,557             6,345   
repossessed assets
Total non-performing     $  13,775          $  20,765          $  15,063  
assets
                                                                 
Non-performing assets       1.62    %           2.50    %           1.84    %
to total assets
Allowance for Loan          1.43                1.73                1.88
Losses to Total Loans
                                                                            

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

                                                  December 31,  December 31,
                                                   2013           2012
                                                   (In thousands)
ASSETS
Cash and due from financial institutions           $   15,393     $   19,039
Interest-bearing deposits in other financial           10,896         32,305
institutions
Securities available for sale                          195,327        251,205
Loans held for sale                                    68             1,225
Loans, net of allowance for loan losses of             552,926        456,827
$8,009 and $8,762
Federal Home Loan Bank and Federal Reserve stock       5,955          5,998
Accrued interest receivable                            3,149          3,014
Premises and equipment, net                            18,557         14,094
Cash surrender value of life insurance                 21,386         20,709
Other intangible assets                                1,004          638
Foreclosed and repossessed assets                      5,988          6,345
Other assets                                          17,687        8,101
Total Assets                                       $   848,336    $   819,500
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non interest-bearing                               $   187,207    $   169,411
Interest-bearing                                      456,418       455,256
Total deposits                                         643,625        624,667
Other borrowings                                       45,722         45,500
Federal Home Loan Bank advances                        50,000         40,000
Subordinated debentures                                17,000         17,000
Accrued interest payable                               106            177
Other liabilities                                     3,544         5,714
Total liabilities                                      759,997        733,058
                                                                  
STOCKHOLDERS’ EQUITY
Total stockholders’ equity                            88,339        86,442
Total Liabilities and Stockholders’ Equity         $   848,336    $   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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