UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of event reported) May 6,1998
Commission File No. 0-25766
Community Bank Shares of Indiana, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1938254
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
202 East Spring St., PO Box 939, New Albany, Indiana 47150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 1-812-944-2224
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Item 2. Acquisition or Disposition of Assets
As discussed in the following press releases (see Exhibit 99.1), the
shareholders of Community Bank Shares of Indiana, Inc. (the "Company") approved
the merger with NCF Financial Corporation ("NCF") at the annual meeting of
shareholders on April 28, 1998. The merger closing date was May 6, 1998, at
which time the assets of NCF Financial Corporation were officially recorded on
the books of the Company. As of April 30, 1998 NCF Financial Corporation had
assets of $38.5 million, operating a single office in Bardstown, Kentucky under
the name of NCF Bank and Trust Co. (the "Bank"). The bank will continue to
operate at this location under the same name.
Under the terms of the merger agreement, NCF Financial Corporation
shareholders received 0.935 shares of the Company's common stock for each of the
792,609 shares of NCF common stock outstanding. This resulted in a tax-free
exchange that was accounted for under pooling-of-interests accounting. Based
upon the market price of the Company's stock on May 6, 1998, the transaction had
a value of approximately $18.3 million.
The Agreement and Plan of Reorganization, including a related Agreement
of Merger, dated December 17, 1997 between Community Bank Shares of Indiana,
Inc. and NCF Financial Corporation was previously filed as Appendix A to the
Registrant's Joint Proxy Statement/Prospectus on Form S-4 originally dated
February 20, 1998 and amended on March 25, 1998.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Unaudited financial statements for December 31, 1997 and for
the six months ended December 31, 1997 and 1996 of NCF Financial
Corporation, as well as audited financial statements as of June 30,
1997 and 1996 and for the years ended June 30, 1997, 1996, and 1995,
were previously included with the relevant independent auditors'
reports on Pages F-1 through F-23 of the Registrant's Joint Proxy
Statement/Prospectus on Form S-4 originally dated February 20, 1998 and
amended on March 25, 1998.
(b) Pro Forma Disclosures
(1) Unaudited pro forma combined financial information as of
December 31, 1997 and for the year ended December 31, 1997 were
previously included on pages 38-41 of the Registrant's Joint Proxy
Statement/Prospectus filed on Form S-4 originally dated February 20,
1998 and amended on March 25, 1998.
(2) Unaudited pro forma combined financial information as of
March 31, 1998 and for the three months ended March 31, 1998, including
explanatory notes to that information, giving effect to the merger of
NCF Financial Corporation into Community Bank Shares of Indiana, Inc.,
are filed herewith as Exhibit 99.2.
(c) Exhibits
(99.1) Press Release Pertaining to the Event Reported
(99.2) Unaudited Pro Forma Combined Financial Information
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COMMUNITY BANK SHARES OF INDIANA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized
COMMUNITY BANK SHARES
OF INDIANA, INC.
(Registrant)
Dated May 15, 1998 BY: /S/ Robert E. Yates
------------------------- --------------------
Robert E. Yates
President and CEO
Dated May 15, 1998 BY: /S/ James M. Stutsman
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James M. Stutsman
Chief Financial Officer
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Exhibit 99.1
PRESS RELEASE
CONTACT: TRACEY MOSS
MARKETING DIRECTOR
COMMUNITY BANK SHARES OF INDIANA, INC.
(812)949-6885
Pictures Available Upon Request
Local Bank Stock Up 60%
The area's largest locally owned bank holding company, Community Bank Shares of
Indiana, Inc. reported that its stock price increased 63.5% from December 31,
1996 to December 31, 1997 at its annual shareholder meeting held earlier this
month. The stock price at year end 1997 was $21.25 as compared to $13.00 at year
end 1996.
In addition, a quarterly cash dividend increase of 14% from 10.5 cents per share
to 12 cents per share was also announced. Community bank Shares posted a 5.5%
increase in first quarter 1998 net after-tax profits compared to the first
quarter 1997. Consolidated net income was up from $577,000 for the first quarter
of 1997 to $609,000 for the first quarter of 1998.
The locally owned bank holding company also reported that its consolidated
assets rose to $254,083,000 for year end 1997, an increase of 7.0% form the
previous year end.
Community Bank Shares Chairman, C. Thomas Young, updated shareholders on the
company's new five story corporate headquarters and office complex which is
currently under construction in downtown New Albany. The 4.5 million dollar
project, designed to house both Community Bank Shares corporate headquarters and
the Main Office of Community Bank, an affiliate of the holding company, will
include approximately 20,000 plus square feet of Class A commercial space will
be for lease on the third, fourth and fifth floors of the new building, which
will be located immediately adjacent to the new, three story, 260 plus parking
space, city owned parking garage now under construction. Young commented, that
he expects the building to be fully operational in early 1999.
For a term of three years, Robert J. Koetter Sr., Gary L. Libs and Kerry M.
Stemler were re-elected as directors to the board for Community Bank Shares.
Also re-elected was Gordon Huncilman for a term of 2 years and Dale L. Orem and
Steven Stemler for one year terms.
Mr. Young announced that Robert E. Yates, who had served as President/CEO of
both Community Bank and Heritage Bank, the company's two local bank affiliates,
as well as President of the holding company, would be officially retiring as of
May 20 of this year. Young noted, "Bob has lead an outstanding team of
individuals, not only through new charters and our public conversion, but most
recently through our newest association with NCF Financial Corporation in
Bardstown, KY, to be voted on later in this meeting." Young closed by thanking
Yates for ten years of dedication and growth. Young added that Yates will
continue to serve on the board of directors for Community Bank Shares.
During the Presidents report to the shareholders Yates later thanked many of the
members of senior management. He stated, "It has been a decade of superb
performance levels for the holding company and its affiliates. I am proud to
report that our shareholders have enjoyed a 320% growth in dividends, total
assets growth of 73% , and capital growth exceeding 400%. Without everyone's
support and knowledge,
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what we have accomplished, wouldn't have been possible." Yates continued, "As a
shareholder myself, I have great confidence in the people and programs we have
put in place in order to continue to grow the company."
Immediately following the presidents report shareholders voted to approve, the
holding's company's newest affiliation with NCF Financial Corporation of
Bardstown, KY, rising consolidated assets close to 300 million.
Before closing the meeting Young introduced Michael L. Douglas who
would be elected President/CEO at a later organizational meeting for the holding
company. Douglas stated, "After enjoying a brief retirement, what drove me to
Community Bank Shares, is the close tie of my values and the values of this
company. As more and more mega-mergers come into our community, localized
financial decisions are leaving the areas that are effected by them, namely our
hometowns. I have great confidence in the abilities of our affiliates this trend
around." He later added, "Although it is certain I have big shoes to fill in Bob
(Yates), the tremendous opportunities made this position one I couldn't refuse.
I am truly looking forward to the opportunities that lay ahead."
At its annual organizational meeting, which immediately followed the bank's
annual shareholders meeting, C. Thomas Young was re-elected Chairman of the
Community Bank Shares. Michael L. Douglas, whose experience also includes a
local banking background as well as Vice-Chairman of Electronic Payment
Services, the nations largest ATM processor, was elected President/CEO of the
holding company beginning as of May 20, 1998.
Elected at a separate organizational meetings of the respective board of
directors, Tom Jones was promoted to President and CEO of Community Bank and
Patrick Daily was promoted to President and CEO of Heritage Bank, to also
account for the retirement of Bob Yates. Jones and Daily both have served as
Senior Officers for the respective affiliates before their promotions.
Community Bank Shares of Indiana, Inc., is the largest locally owned bank
holding company headquartered in Southern Indiana. The company is listed in the
NASDAQ small cap market and trades under the symbol, CBIN.
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Exhibit 99.2
<TABLE>
<CAPTION>
COMMUNITY BANK SHARES OF INDIANA, INC.
Pro Forma Condensed Balance Sheet (Unaudited)
As of March 31, 1998
---------------------------------------------------------------------
Pro Forma Pro Forma
Community NCF Adjustments Combined
-------------- ------------- --------------- --------------
(In Thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and due from banks $ 5,916 $ 1,178 $ (100) (2) $ 6,994
Interest bearing deposits with banks 16,432 6,525 22,957
Securities available for sale, at market:
Mortgage-backed securities 797 - 797
Securities held to maturity
Mortgage-backed securities 22,445 99 22,544
Other debt securities 56,162 - 56,162
Mortgage loans held for sale
Loans receivable, net 146,627 27,265 173,892
Federal Home Loan Bank stock, at cost 1,650 466 2,116
Foreclosed real estate - 286 286
Premises and equipment, net 4,311 574 4,885
Accrued interest receivable 1,895 281 2,176
Other assets 345 250 595
============== ============= =============== ==============
Total Assets $ 256,580 $ 36,924 $ (100) $ 293,404
============== ============= =============== ==============
LIABILITIES
Deposits $ 182,098 $ 23,910 $ 206,008
Advances from Federal Home Loan Bank 31,000 - 31,000
Borrowings - repurchase agreements 13,745 - 13,745
Other borrowings 82 - 82
Other liabilities 1,632 561 183 (3) 2,376
-------------- ------------- --------------- --------------
Total Liabilities $ 228,557 $ 24,471 $ 183 $ 253,211
-------------- ------------- --------------- --------------
STOCKHOLDERS' EQUITY
Common stock of $.10 par value per share 198 79 (5) (1) 272
Additional paid in capital 11,793 7,607 5 (1) 19,405
Retained earnings - substantially restricted 16,092 5,315 (470) (2)(3) 20,937
Net unrealized gain/(loss) on assets
available for sale, net of tax - - -
Unearned stock-based compensation (60) (548) 187 (3) (421)
-------------- ------------- --------------- --------------
Total Stockholders' Equity $ 28,023 $ 12,453 $ (283) $ 40,193
-------------- ------------- --------------- --------------
============== ============= =============== ==============
Total Liabilities and Stockholders' Equity $ 256,580 $ 36,924 $ (100) $ 293,604
============== ============= =============== ==============
</TABLE>
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<TABLE>
<CAPTION>
COMMUNITY BANK SHARES OF INDIANA, INC.
Pro Forma Condensed Combined Income Statement (Unaudited)
For the Year Ended December 31, 1997
---------------------------------------------------------------------------
Community NCF Financial Pro Forma
Bank Shares Corporation Pro Forma Combined
(unaudited) (unaudited) Adjustments (unaudited)
---------------- ---------------- ----------------- ---------------
INTEREST INCOME:
<S> <C> <C> <C> <C> <C>
Loans receivable $ 3,049 $ 584 $ - $ 3,633
Securities:
Mortgage-backed securities 383 3 - 386
Other debt securities 1,021 - - 1,021
Federal Home Loan Bank stock 32 - - 32
Interest bearing deposits with banks 171 88 - 259
---------------- ---------------- ----------------- ---------------
TOTAL INTEREST INCOME 4,656 675 - 5,331
---------------- ---------------- ----------------- ---------------
INTEREST EXPENSE:
Deposits 2,108 273 - 2,381
Advances from Federal Home Loan Bank
and other borrowings 576 - - 576
---------------- ---------------- ----------------- ---------------
TOTAL INTEREST EXPENSE 2,684 273 - 2,957
---------------- ---------------- ----------------- ---------------
NET INTEREST INCOME 1,972 402 - 2,374
Provision for loan losses 84 4 - 88
---------------- ---------------- ----------------- ---------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,888 398 - 2,286
---------------- ---------------- ----------------- ---------------
NON-INTEREST INCOME:
Loan fees and service charges 161 8 - 169
Net gain on sale of loans 51 - - 51
Deposit account service charges 91 - - 91
Commission income 114 - - 114
Other income 22 - - 22
---------------- ---------------- ----------------- ---------------
TOTAL NON-INTEREST INCOME 439 8 - 447
---------------- ---------------- ----------------- ---------------
NON-INTEREST EXPENSE
Compensation and benefits 847 154 579 (3) 1,580
Occupancy and equipment 148 16 - 164
Deposit insurance premiums 26 3 - 29
Data processing service 107 17 - 124
Other 194 59 100 (2) 353
---------------- ---------------- ----------------- ---------------
TOTAL NON-INTEREST EXPENSE 1,322 249 679 2,250
---------------- ---------------- ----------------- ---------------
Income before income taxes 1,005 157 (679) 483
Income tax expense 396 42 (209) (3) 229
================ ================ ================= ===============
NET INCOME $ 609 $ 115 $ (470) $ 254
================ ================ ================= ===============
Earnings per share:
Basic $ 0.31 $ 0.15 $ (0.37) $ 0.09
Fully diluted $ 0.31 $ 0.15 $ (0.37) $ 0.09
Weighted average number of
shares outstanding:
Basic 1,983,722 753,234 (48,858) 2,688,098
Fully diluted 1,983,722 760,369 (48,949) 2,695,142
</TABLE>
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Notes to Unaudited Pro Forma Condensed Combined Financial Information
(1) Community Bank Shares of Indiana, Inc. (CBIN) shareholders voted to
exchange 741,080 shares of its common stock for all 792, 609 shares of NCF
Financial Corporation's common stock, an exchange ratio of 0.935 CBS shares for
each 1 NCF share.
$23.625 Per Price Share CBS Stock at 3/31/98
0.935 Exchange Ratio
$22.089 Effective market value per share after exchange ratio applied
792,609 Number of NCF shares outstanding
$17,507,940 Effective price of Transaction at 3/31/98
741,077 Number of CBS Shares exchanged in transaction
($17,507,940 divided by $23.625)
$74,108 Par value of common stock exchanged in transaction
(2) The cost of the transaction is approximately $100,000 through the date
of the reported event, with approximately $70,000 applicable to attorney's fees,
$10,000 for printing of the Joint Proxy/Prospectus, $5,000 for accountant's
fees, $7,000 for filing fees, and $8,000 for miscellaneous merger expenses. The
estimated expenses are deducted in determining net income of the combined
entity in the month of closing (May 1998).
(3) Upon consummation of the Merger, A.E. Bowling, President of NCF,
retired under a retirement agreement dated December 17, 1997. Mr. Bowling will
receive $250,000 in thirty-six equal monthly installments beginning on June 1,
1998 business day of the month following the effective date of the Merger.
Community recorded the present value of the retirement benefit on the effective
date of the Merger with a charge to income in the amount of $221,000. Under the
Management Stock Bonus Plan of NCF, participants become fully vested in plan
shares awarded in the event of a change in control. Upon consummation of the
Merger, NCF recognized compensation expense in the amount of the unearned
compensation included in stockholder's equity of $187,000. Under the Directors
Consultation and Retirement Plan of NCF, participants become fully vested in
their benefits regardless of age or years of service following a change in
control. Upon consummation of the Merger, NCF accrued additional compensation
expense to recognize the unvested portion of these benefits in the amount of
$171,000. The total compensation cost recognized upon consummation of the Merger
related to the above benefit plans amounts to $579,000, with a related tax
benefit of $209,000.
