Your Community Bankshares, Inc. Reports 1st Quarter Net Income of $3.7 Million, or $0.67 Per Diluted Common Share

NEW ALBANY, Ind.--(BUSINESS WIRE)--Your Community Bankshares, Inc. (NASDAQ: YCB) reported the results of operations for the three months ended March 31, 2016.

The following points summarize significant financial information for the first quarter of 2016:

• Net income for the first quarter of 2016 was $3.7 million or $0.67 per diluted common share.
• Non-performing assets to total assets decreased to 0.57% at March 31, 2016 from 0.90% at December 31, 2015. Non-accrual loans declined from $4.0 million at December 31, 2015 to $2.6 million at March 31, 2016. Foreclosed and repossessed assets declined from $10.0 million to $6.2 million over the same period.
• Tangible book value per common share was $22.60 as of March 31, 2016 as compared to $21.57 at December 31, 2015.
• Net interest income declined to $13.0 million from $13.9 million in the fourth quarter of 2015 due to the fourth quarter reclassification of $466,000 from non-accretable yield into accretion income from one loan relationship and an increase in borrowing costs.
• Fully tax equivalent net interest margin was 3.91%, a decrease from 4.08% for the fourth quarter of 2015. The decrease in the margin was attributable to the same factors that drove the decrease in net interest income.
• The Company did not record a provision for loan losses during the quarter, a decrease from $330,000 for the fourth quarter in 2015, primarily because of generally improving credit quality metrics, including net charge-offs.
• Non-interest income declined to $2.6 million compared to $2.8 million for the fourth quarter of 2015 primarily because of an increase in the impairment on tax credit investments.
• Non-interest expense was $11.2 million as compared to $11.9 million for the fourth quarter of 2015, primarily because of a reduction in expenses related to foreclosed assets and problem credit relationships.
• Beginning March 31, 2015, the Company and its subsidiaries were subject to the new Basel III capital standards and met the definition of well-capitalized under the revised rules as of March 31, 2016.
• Selected performance ratios for the company are set out in the following table.

	Three Months Ended					Twelve Months Ended
	March	December	September	June	March	December	December
	31,	31,	30,	30,	31,	31,	31,
	2016	2015	2015	2015	2015	2015	2014
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Return on average assets	0.95%	0.98%	0.99%	0.89%	(0.23)%	0.65%	1.04%
Return on average assets, excluding merger and integration expenses and net loss on sale of loans, net of income taxes	0.95%	1.05%	1.01%	0.92%	0.37%	0.83%	1.10%
Return on average equity	11.34%	10.30%	10.44%	9.75%	(2.57)%	7.03%	9.54%
Return on average equity, excluding merger and integration expenses and net loss on sale of loans, net of income taxes and gain on recognition of life insurance benefit	11.34%	11.07%	10.65%	10.02%	4.16%	9.00%	10.03%
Net interest margin, fully tax equivalent	3.91%	4.08%	3.94%	4.04%	3.87%	3.98%	4.29%
Net interest margin excluding accretion	3.66%	3.67%	3.61%	3.60%	3.53%	3.60%	4.17%
Efficiency ratio (1)	68.76%	64.63%	64.56%	58.85%	82.07%	67.35%	63.75%
(1)  Net interest income on a fully taxable equivalent basis.  Excludes gains or losses on sales of securities, foreclosed asset expenses, amortization of intangible assets, and merger and integration expenses.

Your Community Bankshares, Inc. Consolidated Balance Sheets
	March 31, 2016			December 31, 2015			September 30, 2015 (1)			June 30, 2015 (1)			March 31, 2015 (1)
	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)
							(As Recast)			(As Recast)			(As Recast)
	(In thousands)
ASSETS
Cash and due from financial institutions	$	24,439		$	30,425		$	29,618		$	28,947		$	45,784
Interest-bearing deposits in other financial institutions		20,726			13,365			10,814			32,383			56,290
Securities available for sale		348,068			378,978			403,486			398,292			385,498
Loans held for sale		234			1,015			19,386			390			221
Loans		1,047,508			1,016,314			992,622			1,008,724			1,005,416
Allowance for loan losses		(6,188	)		(6,851	)		(6,416	)		(8,045	)		(7,120	)
Federal Home Loan Bank and Federal Reserve stock		3,882			3,890			3,891			3,807			5,451
Accrued interest receivable		5,124			5,328			5,151			5,083			4,802
Premises and equipment, net		32,576			33,270			30,314			31,462			31,793
Premises and equipment held for sale		-			-			3,898			5,954			5,974
Company owned life insurance		33,381			33,127			32,828			33,348			33,095
Goodwill		4,945			4,945			4,945			4,945			4,945
Core deposit intangible		4,716			5,015			5,321			5,634			5,951
Foreclosed and repossessed assets		6,228			9,952			9,261			8,337			15,927
Other assets		24,828			27,242			27,568			29,804			28,328
Total Assets	$	1,550,467		$	1,556,015		$	1,572,687		$	1,589,065		$	1,622,355
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest bearing	$	283,518		$	286,739		$	275,350		$	292,179		$	285,634
Interest-bearing		954,446			975,325			968,620			1,014,357			1,052,089
Total deposits		1,237,964			1,262,064			1,243,970			1,306,536			1,337,723
Short-term borrowings		73,410			48,785			74,034			42,989			39,228
Other borrowings		97,551			108,347			93,974			84,737			85,611
Accrued interest payable		840			451			375			703			462
Other liabilities		7,785			9,282			8,832			8,741			14,059
Total liabilities		1,417,550			1,428,929			1,421,185			1,443,706			1,477,083
SHAREHOLDERS’ EQUITY
Preferred stock		-			-			28,000			28,000			28,000
Common stock		578			578			578			578			578
Additional paid-in capital		91,159			90,869			90,459			89,791			89,342
Retained earnings		42,554			39,512			36,336			33,228			30,419
Accumulated other comprehensive income (loss)		4,183			2,089			2,489			150			3,788
Treasury stock		(5,557	)		(5,962	)		(6,360	)		(6,388	)		(6,855	)
Total shareholders’ equity		132,917			127,086			151,502			145,359			145,272
Total Liabilities and Shareholders’ Equity	$	1,550,467		$	1,556,015		$	1,572,687		$	1,589,065		$	1,622,355
Book value per common share	$	24.36		$	23.41		$	22.84		$	21.53		$	21.81
Tangible book value per common share	$	22.60		$	21.57		$	21.10		$	19.72		$	19.93
(1)  Management obtained information subsequent to the issuance of the September 30, 2015, June 30, 2015 and March 31, 2015 financial statements about the fair value of assets acquired and liabilities assumed from First Financial Service Corporation which resulted in an adjustment to the initial fair values established.  The table below details the adjustments to the September 30, 2015, June 30, 2015 and March 31, 2015 consolidated balance sheet; there were no adjustments to the consolidated statement of operations for the periods ending September 30, 2015, June 30, 2015 and March 31, 2015.

	September 30, 2015							June 30, 2015							March 31, 2015
	As Previously Reported		Recast Adjustments			As Recast		As Previously Reported		Recast Adjustments			As Recast		As Previously Reported		Recast Adjustments			As Recast
	(In thousands)
Loans	$	992,662	$	-		$	992,662	$	1,005,016	$	3,708		$	1,008,724	$	999,906	$	5,510		$	1,005,416
Loans held for sale		20,896		(1,510	)		19,386		390		-			390		221		-			221
Premises and equipment held for sale		3,898		-			3,898		5,635		319			5,954		6,155		(181	)		5,974
Foreclosed and repossessed assets		9,028		233			9,261		8,354		(17	)		8,337		15,818		109			15,927
Other assets (deferred tax asset)		27,121		447			27,568		30,647		(843	)		29,804		29,430		(1,102	)		28,328
Goodwill		4,115		830			4,945		6,375		(1,430	)		4,945		7,544		(2,599	)		4,945
Other borrowings (subordinated debt)		93,974		-			93,974		83,000		1,737			84,737		83,874		1,737			85,611

Your Community Bankshares, Inc. Consolidated Statements of Operations
	Three Months Ended															Twelve Months Ended
	March			December			September			June			March			December			December
		31,			31,			30,			30,			31,			31,			31,
		2016			2015			2015			2015			2015			2015			2014
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(In Thousands)
Interest and dividend income
Loans, including fees	$	12,373		$	12,956		$	12,361		$	12,787		$	12,523		$	50,627		$	28,950
Investment securities and other		2,268			2,307			2,334			2,319			2,233			9,193			5,324
Interest and dividend income		14,641			15,263			14,695			15,106			14,756			59,820			34,274
Interest expense
Deposits		560			575			570			580			574			2,299			1,020
Borrowed funds		1,085			795			731			612			698			2,836			921
Total interest expense		1,645			1,370			1,301			1,192			1,272			5,135			1,941
Net interest income		12,996			13,893			13,394			13,914			13,484			54,685			32,333
Provision for loan losses		-			330			-			2,155			106			2,591			1,275
Net interest income after provision for loan losses		12,996			13,563			13,394			11,759			13,378			52,094			31,058
Non-interest income
Service charges on deposit accounts		1,478			1,634			1,655			1,669			1,391			6,349			3,355
Interchange income		572			700			575			476			444			2,195			1,168
Earnings on company owned life insurance		254			298			226			253			252			1,029			672
Net gain (loss) on sales of available for sale securities		297			204			(1	)		-			51			254			468
Net loss on sale of loans		-			(316	)		-			-			-			(316	)		-
Mortgage banking income		78			104			70			74			117			365			126
Commission income		46			46			48			50			47			191			194
Gain on recognition of life insurance benefit		-			-			835			-			-			835			-
Impairment on tax credit investments		(350	)		(63	)		(119	)		(92	)		(86	)		(360	)		(72	)
Other income		189			136			220			222			196			837			534
Non-interest income		2,564			2,806			3,509			2,652			2,412			11,379			6,445
Non-interest expense
Salaries and employee benefits		6,026			6,065			5,619			5,086			9,119			25,889			13,878
Occupancy & equipment		1,752			1,681			2,640			1,672			2,208			8,201			3,814
Data processing		1,089			1,152			1,567			921			1,814			5,454			2,617
Amortization of intangible assets		299			307			312			318			397			1,334			322
Foreclosed assets, net		(110	)		90			119			(95	)		344			458			162
Other expense		2,180			2,589			2,395			2,573			4,042			11,599			5,696
Total non-interest expense		11,236			11,884			12,652			10,475			17,924			52,935			26,489
Income (loss) before income taxes		4,324			4,485			4,251			3,936			(2,134	)		10,538			11,014
Income tax expense (benefit)		629			627			334			371			(1,198	)		134			2,001
Net income (loss)		3,695			3,858			3,917			3,565			(936	)		10,404			9,013
Preferred stock dividend		-			(91	)		(110	)		(109	)		(110	)		(420	)		(439	)
Net income (loss) available (attributable) to common shareholders	$	3,695		$	3,767		$	3,807		$	3,456		$	(1,046	)	$	9,984		$	8,574
Earnings (loss) per basic common share	$	0.68		$	0.70		$	0.70		$	0.64		$	(0.19	)	$	1.85		$	2.49
Earnings (loss) per diluted common share	$	0.67		$	0.68		$	0.70		$	0.64		$	(0.19	)	$	1.82		$	2.46
Dividend per common share	$	0.12		$	0.12		$	0.12		$	0.12		$	0.12		$	0.48		$	0.48
Average number of basic common shares		5,449,364			5,413,914			5,405,691			5,383,887			5,374,819			5,394,712			3,437,643
Average number of dilutive common shares		5,548,210			5,505,757			5,470,557			5,437,602			5,374,819			5,492,405			3,487,117
Merger and integration expenses contained in:
Salaries and employee benefits	$	-		$	-		$	-		$	60		$	2,105		$	2,165		$	-
Occupancy & equipment		-			21			972			-			310			1,303			-
Data processing		-			59			413			27			719			1,218			-
Other expense		-			44			20			69			633			766			697
Total merger and integration expenses		-			124			1,405			156			3,767			5,452			697
Total merger and integration expenses, net of income taxes		-			81			913			101			2,449			3,544			460

Your Community Bankshares, Inc. Average Balances, Interest Yields and Costs
	Three Months Ending,
	3/31/2016					12/31/2015					9/30/2015					6/30/2015					3/31/2015
	Average Balance			Average Yield/ Cost		Average Balance			Average Yield/ Cost		Average Balance			Average Yield/ Cost		Average Balance			Average Yield/ Cost		Average Balance			Average Yield/ Cost
ASSETS
Earning assets:
Interest-bearing deposits with banks	$	12,327		1.24	%	$	24,233		0.36	%	$	17,489		0.73	%	$	48,008		0.41	%	$	63,092		0.36	%
Taxable securities		244,685		1.90			261,870		1.86			283,885		1.78			288,420		1.84			318,695		1.70
Tax-exempt securities		118,927		5.34			117,447		5.27			112,408		5.35			98,423		5.52			83,217		5.49
Total loans and fees		1,037,140		4.89			1,019,794		5.13			1,001,041		4.96			1,000,865		5.17			993,536		5.15
FHLB and Federal Reserve stock		3,886		5.07			3,890		4.18			3,837		4.65			4,860		5.69			6,484		5.94
Total earning assets		1,416,965		4.38			1,427,234		4.46			1,418,660		4.30			1,440,576		4.37			1,465,024		4.22
Less: Allowance for loan losses		(6,318	)				(7,301	)				(7,757	)				(7,532	)				(6,838	)
Non-earning assets:
Cash and due from banks		27,396					28,007					32,263					35,902					38,987
Bank premises and equipment, net		33,078					33,712					36,869					37,778					38,136
Other assets		90,794					87,095					92,150					96,967					124,855
Total assets	$	1,561,915				$	1,568,747				$	1,572,185				$	1,603,691				$	1,660,164
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and other	$	653,364		0.16	%	$	656,227		0.16	%	$	652,860		0.15	%	$	688,831		0.15	%	$	697,094		0.15	%
Time deposits		307,936		0.38			324,026		0.38			339,480		0.37			352,394		0.36			377,230		0.33
Short-term borrowings		62,788		0.43			59,004		0.34			50,067		0.32			39,033		0.24			38,253		0.23
Other borrowings		111,685		3.67			92,274		3.20			86,752		3.16			83,170		2.84			87,999		3.12
Total interest-bearing liabilities		1,135,773		0.58			1,131,531		0.48			1,129,159		0.46			1,163,428		0.41			1,200,576		0.43
Non-interest bearing liabilities:
Non-interest demand deposits		283,859					277,333					285,743					283,101					279,879
Accrued interest payable and other liabilities		11,288					11,366					8,478					10,453					32,251
Shareholders’ equity		130,995					148,517					148,805					146,709					147,457
Total liabilities and shareholders’ equity	$	1,561,915				$	1,568,747				$	1,572,185				$	1,603,691				$	1,660,164
Net interest spread				3.80	%				3.98	%				3.84	%				3.96	%				3.79	%
Net interest margin				3.91					4.08					3.94					4.04					3.87

Accretion and Amortization of Fair Value Adjustments
	Three Months Ending,
	3/31/2016				12/31/2015				9/30/2015				6/30/2015				3/31/2015
	Fair Value Accretion		Impact on Net Interest Margin		Fair Value Accretion		Impact on Net Interest Margin		Fair Value Accretion		Impact on Net Interest Margin		Fair Value Accretion		Impact on Net Interest Margin		Fair Value Accretion		Impact on Net Interest Margin
Loans	$	417	0.12	%	$	984	0.27	%	$	648	0.18	%	$	1,016	0.28	%	$	601	0.17	%
Interest-bearing deposits		359	0.10			397	0.11			432	0.12			475	0.13			542	0.15
FHLB advances		63	0.02			63	0.02			63	0.02			62	0.02			62	0.02
Subordinated debentures		38	0.01			38	0.01			40	0.01			36	0.01			33	0.01
Total fair value accretion	$	877	0.25	%	$	1,482	0.41	%	$	1,183	0.33	%	$	1,589	0.44	%	$	1,238	0.34	%

Your Community Bankshares, Inc. Selected Loan Information
	March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)
							(As recast)			(As recast)			(As recast)
	(In thousands)
ACQUIRED LOANS
Loans on non-accrual status	$	963		$	1,323		$	2,257		$	5,922		$	10,122
Loans past due 90 days or more and still accruing		-			68			-			-			-
Foreclosed and repossessed assets		3,867			7,825			6,023			4,849			12,409
Total non-performing assets		4,830			9,216			8,047			10,771			22,531
Allowance for loan losses		72			59			205			-			-
Non-accretable yield on acquired loans		5,063			5,293			10,949			16,246			16,752
LEGACY LOANS
Loans on non-accrual status		1,609			2,694			2,229			6,016			7,354
Loans past due 90 days or more and still accruing		-			-			-			220			803
Foreclosed and repossessed assets		2,361			2,127			3,238			3,505			3,535
Total non-performing assets		3,969			4,821			5,467			9,741			11,692
Total Legacy Loans		751,202			704,549			667,281			625,624			588,076
Allowance for loan losses		6,116			6,792			6,211			8,045			7,120
Allowance for loan losses to legacy loans		0.81	%		0.96	%		0.93	%		1.29	%		1.21	%
TOTAL LOANS
Loans on non-accrual status	$	2,572		$	4,017		$	4,486		$	11,938		$	17,476
Loans past due 90 days or more and still accruing		-			68			-			220			803
Foreclosed and repossessed assets		6,228			9,952			9,261			8,354			15,944
Total non-performing assets	$	8,800		$	14,037		$	13,747		$	20,512		$	34,223
Non-performing assets to total assets		0.57	%		0.90	%		0.87	%		1.29	%		2.11	%
Allowance for loan losses to total loans		0.59	%		0.65	%		0.80	%		0.71	%		0.71	%

Reconciliation of Fully Tax Equivalent Adjustments to GAAP Net Interest Income
	3/31/2016				12/31/2015				9/30/2015				6/30/2015				3/31/2015
	Net Interest Income		Yield		Net Interest Income		Yield		Net Interest Income		Yield		Net Interest Income		Yield		Net Interest Income		Yield
GAAP net interest income	$	12,996	3.69	%	$	13,893	3.86	%	$	13,394	3.75	%	$	13,914	3.87	%	$	13,484	3.73	%
Tax equivalent adjustment
Investment securities		552	0.16			546	0.15			530	0.15			474	0.14			400	0.11
Loans		226	0.06			225	0.07			154	0.04			115	0.03			102	0.03
Total tax equivalent adjustment		778	0.22			771	0.21			684	0.19			589	0.17			502	0.14
Tax equivalent net interest income	$	13,774	3.91	%	$	14,664	4.08	%	$	14,078	3.94	%	$	14,503	4.04	%	$	13,986	3.87	%

About Your Community Bankshares, Inc.

Your Community Bankshares, Inc. is a bank holding company headquartered in New Albany, Indiana and includes its wholly owned, state-chartered subsidiary bank, Your Community Bank. The Company operates 36 financial centers in Indiana and Kentucky. The Bank is engaged primarily in the business of attracting deposits from the general public and using such funds for the origination of commercial business and real estate loans and secured consumer loans such as home equity lines of credit and automobile loans. Additionally, the Bank originates and sells into the secondary market mortgage loans for the purchase of single-family homes. For more information visit www.yourcommunitybank.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 2015 Form 10-K and subsequent 10-Q filed with the Securities and Exchange Commission.