Community Bank Shares of Indiana, Inc. Reports 2nd Quarter Net Income Available to Common Shareholders of $2.0 Million, or $0.59

  Community Bank Shares of Indiana, Inc. Reports 2nd Quarter Net Income
  Available to Common Shareholders of $2.0 Million, or $0.59 Per Diluted
  Common Share

Business Wire

NEW ALBANY, Ind. -- July 30, 2014

Community Bank Shares of Indiana, Inc. reported second quarter net income
available to common shareholders of $2.0 million and earnings per diluted
common share of $0.59, an increase of 6.4% and 3.5% from the same periods in
2013, respectively. Net income available to common shareholders for the six
months ended June 30, 2014 was $4.0 million, a 12.2% increase from $3.6
million in 2013 while earnings per diluted common share increased to $1.17
from $1.06, a 10.4% increase.

“Our second quarter results reflect the strong core earnings of the Company,
as we generated an annualized return on average assets of 1.00% and an
annualized return on average equity of 9.25%. During the quarter, we were able
to increase our loan portfolio by $27 million from the end of 2013 which drove
the increase in our net interest income. While loan growth remains challenging
given the intense competition for quality loans, we are encouraged by our
success in cultivating new lending relationships,” stated James Rickard,
President and Chief Executive Officer.

The following points summarize significant financial information for the
second quarter of 2014:

  *Net income available to common shareholders was $2.0 million.
  *Tangible book value per common share of $18.99 as of June 30, 2014.
  *Fully tax equivalent net interest margin was 4.19%, a decrease from 4.23%
    for the same period in 2013; net interest income increased to $7.9 million
    from $7.8 million.
  *Provision for loan losses was $190,000, a decrease from $2.5 million for
    the same quarter in 2013. The decrease was due to a $2.0 provision
    recorded for one commercial land development relationship in 2013 that was
    not repeated in 2014. During the fourth quarter of 2013, the Company
    charged off the $2.0 million allocated allowance for the credit. As of
    June 30, 2014, the loan had a remaining balance of $814,000 and was
    included in the Company’s non-accrual loans as of the same date.
    Currently, the Company does not have an allowance allocated for this
    credit but continues to monitor the value of the underlying collateral
    while seeking a resolution.
  *Non-interest income decreased to $1.5 million for the second quarter of
    2014 compared to $4.0 million in 2013. 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. Also contributing to the
    decline in non-interest income was a reduction in net gains on sales of
    securities to $1,000 in 2014 from $509,000 in 2013.
  *Non-interest expense decreased to $6.5 million in the second quarter of
    2014 from $6.7 million in 2013. The reduction was due to a decline in
    expenses for foreclosed assets (including losses on disposition) of
    $189,000 from 2013. During the second quarter of 2014, the Company
    recognized $323,000 of expense associated with its pending acquisition of
    First Financial Service Corporation and its subsidiary bank, First Federal
    Savings Bank of Elizabethtown.

The following points summarize significant financial information for the six
months ended June 30, 2014:

  *Net income available to common shareholders was $4.0 million, or $1.17 per
    diluted common share, as compared to $3.6 million and $1.06 for 2013.
  *Fully tax equivalent net interest margin was 4.14% for both 2014 and 2013;
    net interest income increased to $15.5 million from $14.9 million over the
    same period.
  *Provision for loan losses was $472,000 as compared to $2.7 million in
    2013. As previously noted, the provision in 2013 was substantially
    impacted by a $2.0 million allocation for one relationship in the second
    quarter of 2013.
  *Non-interest income declined to $3.2 million for the first six months of
    2014 from $5.4 million in 2013. As previously discussed, the Company
    recorded a bargain purchase gain of $1.9 million in the second quarter of
    2013 that was not repeated in 2014. Additionally, net gains on sales of
    available for sale securities decreased to $296,000 in 2014 from $515,000
    in 2013.
  *Non-interest expenses increased in 2014 to $13.1 million from $12.8
    million primarily due to an increase in occupancy expenses of $165,000
    associated with three new branches from the Company’s acquisition of First
    Federal Bank of Lexington, Kentucky. For the six months ended June 30,
    2014, the Company incurred $370,000 of expense associated with its pending
    acquisition of First Financial Service Corporation.

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

                                      
                                         Three Months Ended
                                         June 30,                   March 31,
                                         2014           2013        2014
                                         (In thousands, except per share data)
Interest income                          $  8,410        $ 8,375     $ 8,001
Interest expense                           473          539       476   
Net interest income                         7,937          7,836       7,525
Provision for loan losses                   190            2,470       282
Non-interest income                         1,540          3,969       1,677
Non-interest expense                       6,529        6,711     6,551 
Income before income taxes                  2,758          2,624       2,369
Income tax expense                         610          420       257   
Net income                               $  2,148        $ 2,204     $ 2,112
Preferred stock dividends                  (109   )      (288  )    (110  )
Net income available to common           $  2,039       $ 1,916    $ 2,002 
shareholders
Basic earnings per common share          $  0.59         $ 0.57      $ 0.59
Diluted earnings per common share        $  0.59         $ 0.57      $ 0.58
                                                                     

                                      
                                         Six Months Ended
                                         June 30,
                                         2014                2013
                                         (In thousands, except per share data)
Interest income                          $   16,411           $   16,099
Interest expense                            949                1,177    
Net interest income                          15,462               14,922
Provision for loan losses                    472                  2,717
Non-interest income                          3,217                5,393
Non-interest expense                        13,080             12,797   
Income before income taxes                   5,127                4,801
Income tax expense                          867                690      
Net income                               $   4,260            $   4,111
Preferred stock dividends                   (219     )          (509     )
Net income available to common           $   4,041           $   3,602    
shareholders
Basic earnings per common share          $   1.18             $   1.06
Diluted earnings per common share        $   1.17             $   1.06
                                                              

Credit quality metrics are as follows (in thousands):

                            
                                As of
                                June 30, 2014  March 31, 2014  December 31,
                                                                 2013
                                                                 
Loans on non-accrual status     $  9,589        $   9,638        $  7,787
Loans past due 90 days or          -                -               -
more and still accruing
Foreclosed and repossessed        6,029          6,334         5,988   
assets
Total non-performing assets     $  15,618      $   15,972      $  13,775  
                                                                 
Non-performing assets to           1.78    %        1.89    %       1.62    %
total assets
Allowance for Loan Losses          1.44             1.46            1.43
to Total Loans
                                                                 

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

                                                             
                                                    June 30,      December 31,
                                                    2014          2013
                                                    (In thousands)
ASSETS
Cash and due from financial institutions            $ 19,350      $   15,393
Interest-bearing deposits in other financial          18,727          10,896
institutions
Securities available for sale                         199,071         195,327
Loans held for sale                                   246             68
Loans, net of allowance for loan losses of            579,679         552,926
$8,480 and $8,009
Federal Home Loan Bank and Federal Reserve            5,964           5,955
stock
Accrued interest receivable                           3,144           3,149
Premises and equipment, net                           18,204          18,557
Cash surrender value of life insurance                21,718          21,386
Other intangible assets                               839             1,004
Foreclosed and repossessed assets                     6,029           5,988
Other assets                                         2,946          16,086
Total Assets                                        $ 875,917     $   846,735
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non interest-bearing                                $ 201,259     $   187,207
Interest-bearing                                     482,356        456,418
Total deposits                                        683,615         643,625
Other borrowings                                      37,459          45,722
Federal Home Loan Bank advances                       40,000          50,000
Subordinated debentures                               17,000          17,000
Accrued interest payable                              87              106
Other liabilities                                    3,567          1,943
Total liabilities                                     781,728         758,396
                                                                  
STOCKHOLDERS’ EQUITY
Total stockholders’ equity                           94,189         88,339
Total Liabilities and Stockholders’ Equity          $ 875,917     $   846,735
                                                                  

About Community Bank Shares of Indiana, Inc.
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
2013 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
 
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