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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

July 30, 2014

NEW ALBANY, Ind.--(BUSINESS WIRE)-- 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

      20132014

    (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 shareholders $2,039   $1,916   $2,002  
    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 shareholders $4,041   $3,602  
    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 assets   6,029     6,334     5,988  
    Total non-performing assets $15,618   $15,972   $13,775  
     
    Non-performing assets to total assets 1.78 % 1.89 % 1.62 %

    Allowance for Loan Losses to Total Loans

    1.44 1.46 1.43
     


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

           
    June 30,December 31,
    20142013
    (In thousands)

    ASSETS

    Cash and due from financial institutions $ 19,350 $ 15,393
    Interest-bearing deposits in other financial institutions 18,727 10,896
    Securities available for sale 199,071 195,327
    Loans held for sale 246 68
    Loans, net of allowance for loan losses of $8,480 and $8,009 579,679 552,926
    Federal Home Loan Bank and Federal Reserve stock 5,964 5,955
    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.



    Community Bank Shares of Indiana, Inc.

    Paul Chrisco, CFO, 812-981-7375

    Source: Community Bank Shares of Indiana, Inc.


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