Your Community Bankshares, Inc. Reports 2nd Quarter Net Income Available to Common Shareholders of $3.8 Million, or $0.68 Per...

Share Name	Share Symbol	Market	Type
Your Community Bankshares, Inc.	NASDAQ:YCB	NASDAQ	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	39.37	39.00	39.75				0	00:00:00

Your Community Bankshares, Inc. (NASDAQ:YCB)
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Your Community Bankshares, Inc. (NASDAQ: YCB) reported the results of operations for the three and six months ended June 30, 2016. The Company also announced that on July 19, 2016 its Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.12 per share payable on August 25, 2016 to shareholders of record on August 8, 2016.

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

Net income available to common shareholders for the second quarter of 2016 was $3.8 million, or $0.68 per diluted share, as compared $3.5 million, or $0.64 per diluted share, for the same quarter in 2015.
Non-performing assets to total assets declined to 0.45% at June 30, 2016 from 0.57% at March 31, 2016. Foreclosed and repossessed assets declined from $6.2 million to $4.2 million over the same period.
Tangible book value per common share was $23.54 as of June 30, 2016 as compared to $21.57 at December 31, 2015 and $19.72 at June 30, 2015.
Net interest income declined to $13.0 million from $13.9 million in the second quarter of 2015 due to both a decline in earning assets of $20.5 million and an increase in the cost of interest-bearing liabilities from 0.41% to 0.60%. The increase in the cost of interest-bearing liabilities was primarily attributable to the issuance of $25.0 million in subordinated debentures in the fourth quarter of 2015 at a rate of 6.25% to redeem $28.0 million in preferred stock issued under the U.S. Treasury’s Small Business Lending Fund program.
Fully tax equivalent net interest margin was 3.90%, a decrease from 4.04% for the second quarter of 2015. The decline in the margin was attributable to the same factors that drove the decline in net interest income.
Provision for loan losses was $405,000, a decrease from $2.2 million for the same quarter in 2015.
Non-interest income increased to $3.6 million from $2.7 million for the same quarter in 2015. The increase was mostly attributable a gain on life insurance benefit of $621,000 and gain on branch divestiture of $422,000 during the second quarter of 2016.
Non-interest expense was $12.1 million as compared to $10.5 million for the second quarter of 2015, which was primarily caused by increases in incentive and stock-based compensation between periods.
The Company’s effective tax rate was 7.7% during the quarter as compared to 14.5% for the first quarter of 2016 due to the gain on life insurance benefit of $621,000 which is tax exempt.
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 June 30, 2016.

Selected performance ratios for the company are set out in the following table.

Three Months Ended Six Months Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2016 2016 2015 2015 2015 2016 2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Return on average assets 0.98 % 0.95 % 0.98 % 0.99 % 0.89 % 0.97 % 0.33 % Return on average assets, excluding merger and integration expenses, gain on recognition of life insurance benefit, net gain (loss) on sales of available-for-sale securities, gain on branch divestiture, and net loss on sale of loans, net of income taxes 0.78 % 0.95 % 1.05 % 1.01 % 0.92 % 0.91 % 0.64 % Return on average equity 11.17 % 11.34 % 10.30 % 10.44 % 9.75 % 11.26 % 3.60 % Return on average equity, excluding merger and integration expenses, gain on recognition of life insurance benefit, net gain (loss) on sales of available-for-sale securities, gain on branch divestiture, and net loss on sale of loans, net of income taxes 8.93 % 11.34 % 11.07 % 10.65 % 10.02 % 10.62 % 7.10 % Net interest margin, fully tax equivalent 3.90 % 3.91 % 4.08 % 3.94 % 4.04 % 3.90 % 3.95 % Net interest margin excluding accretion 3.67 % 3.66 % 3.67 % 3.61 % 3.60 % 3.65 % 3.56 % Efficiency ratio (1) 69.63 % 68.76 % 64.63 % 64.56 % 58.85 % 68.36 % 70.18 %

(1) Net interest income on a fully taxable equivalent basis. Excludes gains or losses on sales of securities, foreclosed asset expenses, amortization of intangibles, gain on branch divestiture, gain on recognition of life insurance benefit, and merger and integration expenses.

Your Community Bankshares, Inc.

Consolidated Balance Sheets

June 30,2016

March 31,2016

December 31,2015

September 30,2015 (1)

June 30,2015 (1)

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (As Recast) (As Recast) (In thousands) ASSETS Cash and due from financial institutions $ 44,417 $ 24,439 $ 30,425 $ 29,618 $ 28,947 Interest-bearing deposits in other financial institutions 9,676 20,726 13,365 10,814 32,383 Securities available for sale 287,436 348,068 378,978 403,486 398,292 Loans held for sale 851 234 1,015 19,386 390 Loans 1,076,576 1,047,508 1,016,314 992,622 1,008,724 Allowance for loan losses (6,561 ) (6,188 ) (6,851 ) (6,416 ) (8,045 ) Federal Home Loan Bank and Federal Reserve stock 4,233 3,882 3,890 3,891 3,807 Accrued interest receivable 5,359 5,124 5,328 5,151 5,083 Premises and equipment, net 31,916 32,576 33,270 30,314 31,462 Premises and equipment held for sale - - - 3,898 5,954 Company owned life insurance 32,931 33,381 33,127 32,828 33,348 Goodwill 4,945 4,945 4,945 4,945 4,945 Core deposit intangible 4,430 4,716 5,015 5,321 5,634 Foreclosed and repossessed assets 4,166 6,228 9,952 9,261 8,337 Other assets 23,953 24,828 27,242 27,568 29,804 Total Assets $ 1,524,328 $ 1,550,467 $ 1,556,015 $ 1,572,687 $ 1,589,065 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits Non-interest bearing $ 303,039 $ 283,518 $ 286,739 $ 275,350 $ 292,179 Interest-bearing 921,502 954,446 975,325 968,620 1,014,357 Total deposits 1,224,541 1,237,964 1,262,064 1,243,970 1,306,536 Short-term borrowings 44,507 73,410 48,785 74,034 42,989 Other borrowings 106,927 97,551 108,347 93,974 84,737 Accrued interest payable 437 840 451 375 703 Other liabilities 9,223 7,785 9,282 8,832 8,741 Total liabilities 1,385,635 1,417,550 1,428,929 1,421,185 1,443,706 SHAREHOLDERS’ EQUITY Preferred stock - - - 28,000 28,000 Common stock 578 578 578 578 578 Additional paid-in capital 91,773 91,159 90,869 90,459 89,791 Retained earnings 45,667 42,554 39,512 36,336 33,228 Accumulated other comprehensive income (loss) 5,555 4,183 2,089 2,489 150 Treasury stock (4,880 ) (5,557 ) (5,962 ) (6,360 ) (6,388 ) Total shareholders’ equity 138,693 132,917 127,086 151,502 145,359 Total Liabilities and Shareholders’ Equity $ 1,524,328 $ 1,550,467 $ 1,556,015 $ 1,572,687 $ 1,589,065 Book value per common share $ 25.25 $ 24.36 $ 23.41 $ 22.84 $ 21.53 Tangible book value per common share $ 23.54 $ 22.60 $ 21.57 $ 21.10 $ 19.72

(1) Management obtained information subsequent to the issuance of the September 30, 2015 and June 30, 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 and June 30, 2015 consolidated balance sheet; there were no adjustments to the consolidated statement of operations for the periods ending September 30, 2015 and June 30, 2015.

September 30, 2015 June 30, 2015

As PreviouslyReported

RecastAdjustments

As Recast

As PreviouslyReported

RecastAdjustments

As Recast

(In thousands) Loans $ 992,662 $ - $ 992,662 $ 1,005,016 $ 3,708 $ 1,008,724 Loans held for sale 20,896 (1,510 ) 19,386 390 - 390 Premises and equipment held for sale 3,898 - 3,898 5,635 319 5,954 Foreclosed and repossessed assets 9,028 233 9,261 8,354 (17 ) 8,337 Other assets (deferred tax asset) 27,121 447 27,568 30,647 (843 ) 29,804 Goodwill 4,115 830 4,945 6,375 (1,430 ) 4,945 Other borrowings (subordinated debt) 93,974 - 93,974 83,000 1,737 84,737

Your Community Bankshares, Inc.

Consolidated Statements of Operations

Three Months Ended Six Months Ended June March December September June June June 30, 31, 31, 30, 30, 30, 30, 2016 2016 2015 2015 2015 2016 2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest and dividend income Loans, including fees $ 12,639 $ 12,373 $ 12,956 $ 12,361 $ 12,787 $ 25,012 $ 25,310 Investment securities and other 2,001 2,268 2,307 2,334 2,319 4,269 4,552 Interest and dividend income 14,640 14,641 15,263 14,695 15,106 29,281 29,862 Interest expense Deposits 551 560 575 570 580 1,111 1,154 Borrowed funds 1,110 1,085 795 731 612 2,195 1,310 Total interest expense 1,661 1,645 1,370 1,301 1,192 3,306 2,464 Net interest income 12,979 12,996 13,893 13,394 13,914 25,975 27,398 Provision for loan losses 405 - 330 - 2,155 405 2,261 Net interest income after provision for loan losses 12,574 12,996 13,563 13,394 11,759 25,570 25,137 Non-interest income Service charges on deposit accounts 1,471 1,478 1,634 1,655 1,669 2,949 3,060 Interchange income 710 572 700 575 476 1,282 920 Earnings on company owned life insurance 253 254 298 226 253 507 505 Net gain (loss) on sales of available for sale

securities

89 297 204 (1 ) - 386 51 Net loss on sale of loans - - (316 ) - - - - Mortgage banking income 121 78 104 70 74 199 191 Commission income 45 46 46 48 50 91 97 Gain on recognition of life insurance benefit 621 - - 835 - 621 - Amortization of tax credit investments (350 ) (350 ) (63 ) (119 ) (92 ) (700 ) (178 ) Gain on branch divestiture 422 - - - - 422 - Other income 238 189 136 220 222 427 240 Non-interest income 3,620 2,564 2,806 3,509 2,652 6,184 5,064 Non-interest expense Salaries and employee benefits 6,281 6,026 6,065 5,619 5,086 12,307 14,205 Occupancy & equipment 1,562 1,752 1,681 2,640 1,672 3,314 3,880 Data processing 1,105 1,089 1,152 1,567 921 2,194 2,735 Amortization of intangible assets 285 299 307 312 318 584 715 Foreclosed assets, net 210 (110 ) 90 119 (95 ) 100 249 Other expense 2,664 2,180 2,589 2,395 2,573 4,844 6,615 Total non-interest expense 12,107 11,236 11,884 12,652 10,475 23,343 28,399

Income (loss) before income taxes

4,087 4,324 4,485 4,251 3,936 8,411 1,802 Income tax expense (benefit) 318 629 627 334 371 947 (827 ) Net income (loss) 3,769 3,695 3,858 3,917 3,565 7,464 2,629 Preferred stock dividend - - (91 ) (110 ) (109 ) - (219 ) Net income available to common shareholders $ 3,769 $ 3,695 $ 3,767 $ 3,807 $ 3,456 $ 7,464 $ 2,410 Earnings per basic share $ 0.69 $ 0.68 $ 0.70 $ 0.70 $ 0.64 $ 1.37 $ 0.45 Earnings per diluted share $ 0.68 $ 0.67 $ 0.68 $ 0.70 $ 0.64 $ 1.34 $ 0.44 Dividend per common share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.24 $ 0.24 Average number of basic shares 5,467,982 5,449,364 5,413,914 5,405,691 5,383,887 5,458,672 5,379,379 Average number of dilutive shares 5,566,364 5,548,210 5,505,757 5,470,557 5,437,602 5,551,944 5,426,509 Merger and integration expenses contained in: Salaries and employee benefits $ - $ - $ - $ - $ 60 $ - $ 2,165 Occupancy & equipment - - 21 972 - - 310 Data processing - - 59 413 27 - 746 Other expense 302 - 44 20 69 302 702 Total merger and integration expenses 302 - 124 1,405 156 302 3,923 Total merger and integration expenses, net of income taxes 196 - 81 913 101 196 2,550

Your Community Bankshares, Inc.

Average Balances, Interest Yields and Costs

Three Months Ending,

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

AverageBalance

AverageYield/Cost

AverageBalance

AverageYield/Cost

AverageBalance

AverageYield/Cost

AverageBalance

AverageYield/Cost

AverageBalance

AverageYield/Cost

ASSETS Earning assets: Interest-bearing deposits with banks $ 28,946 0.35 % $ 12,327 1.24 % $ 24,233 0.36 % $ 17,489 0.73 % $ 48,008 0.41 % Taxable securities 200,447 1.83 244,685 1.90 261,870 1.86 283,885 1.78 288,420 1.84 Tax-exempt securities 118,342 5.33 118,927 5.34 117,447 5.27 112,408 5.35 98,423 5.52 Total loans and fees 1,068,274 4.84 1,037,140 4.89 1,019,794 5.13 1,001,041 4.96 1,000,865 5.17 FHLB and Federal Reserve stock 4,048 4.67 3,886 5.07 3,890 4.18 3,837 4.65 4,860 5.69 Total earning assets 1,420,057 4.37 1,416,965 4.38 1,427,234 4.46 1,418,660 4.30 1,440,576 4.37 Less: Allowance for loan losses (6,166 ) (6,318 ) (7,301 ) (7,757 ) (7,532 ) Non-earning assets: Cash and due from banks 16,799 27,396 28,007 32,263 35,902 Bank premises and equipment, net 32,253 33,078 33,712 36,869 37,778 Other assets 87,094 90,794 87,095 92,150 96,967 Total assets $ 1,550,037 $ 1,561,915 $ 1,568,747 $ 1,572,185 $ 1,603,691 LIABILITIES AND SHAREHOLDERS’ EQUITY Interest-bearing liabilities: Savings and other $ 651,192 0.17 % $ 653,364 0.16 % $ 656,227 0.16 % $ 652,860 0.15 % $ 688,831 0.15 % Time deposits 286,858 0.39 307,936 0.38 324,026 0.38 339,480 0.37 352,394 0.36 Short-term borrowings 62,256 0.43 62,788 0.43 59,004 0.34 50,067 0.32 39,033 0.24 Other borrowings 117,783 3.56 111,685 3.67 92,274 3.20 86,752 3.16 83,170 2.84 Total interest-bearing liabilities 1,118,089 0.60 1,135,773 0.58 1,131,531 0.48 1,129,159 0.46 1,163,428 0.41 Non-interest bearing liabilities: Non-interest demand deposits 287,720 283,859 277,333 285,743 283,101 Accrued interest payable and other liabilities 8,524 11,288 11,366 8,478 10,453 Shareholders’ equity 135,704 130,995 148,517 148,805 146,709 Total liabilities and shareholders’ equity $ 1,550,037 $ 1,561,915 $ 1,568,747 $ 1,572,185 $ 1,603,691 Net interest spread 3.77 % 3.80 % 3.98 % 3.84 % 3.96 % Net interest margin 3.90 3.91 4.08 3.94 4.04

Accretion and Amortization of Fair Value Adjustments

Three Months Ending,

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Fair ValueAccretion

Impact onNetInterestMargin

Fair ValueAccretion

Impact onNetInterestMargin

Fair ValueAccretion

Impact onNetInterestMargin

Fair ValueAccretion

Impact onNetInterestMargin

Fair ValueAccretion

Impact onNetInterestMargin

Loans $ 432 0.11 % $ 417 0.12 % $ 984 0.27 % $ 648 0.18 % $ 1,016 0.28 % Interest-bearing deposits 340 0.09 359 0.10 397 0.11 432 0.12 475 0.13 FHLB advances 64 0.02 63 0.02 63 0.02 63 0.02 62 0.02 Subordinated debentures 39 0.01 38 0.01 38 0.01 40 0.01 36 0.01 Total fair value accretion $ 875 0.23 % $ 877 0.25 % $ 1,482 0.41 % $ 1,183 0.33 % $ 1,589 0.44 %

Your Community Bankshares, Inc.

Selected Loan Information

June 30,2016

March 31,2016

December 31,2015

September 30,2015

June 30,2015

(Unaudited) (Unaudited) (Unaudited) (As recast) (As recast) (In thousands) ACQUIRED LOANS Loans on non-accrual status $ 1,117 $ 963 $ 1,323 $ 2,257 $ 5,922 Loans past due 90 days or more and still accruing 53 - 68 - - Foreclosed and repossessed assets 2,265 3,867 7,825 6,023 4,849 Total non-performing assets 3,435 4,830 9,216 8,047 10,771 Allowance for loan losses 79 72 59 205 - Non-accretable yield on acquired loans 4,845 5,063 5,293 10,949 16,246 LEGACY LOANS Loans on non-accrual status 1,535 1,609 2,694 2,229 6,016 Loans past due 90 days or more and still accruing - - - - 220 Foreclosed and repossessed assets 1,901 2,361 2,127 3,238 3,505 Total non-performing assets 3,436 3,969 4,821 5,467 9,741 Total Legacy Loans 795,699 751,202 704,549 667,281 625,624 Allowance for loan losses 6,482 6,116 6,792 6,211 8,045 Allowance for loan losses to legacy loans 0.82 % 0.81 % 0.96 % 0.93 % 1.29 % TOTAL LOANS Loans on non-accrual status $ 2,652 $ 2,572 $ 4,017 $ 4,486 $ 11,938 Loans past due 90 days or more and still accruing 53 - 68 - 220 Foreclosed and repossessed assets 4,166 6,228 9,952 9,261 8,354 Total non-performing assets $ 6,871 $ 8,800 $ 14,037 $ 13,747 $ 20,512 Non-performing assets to total assets 0.45 % 0.57 % 0.90 % 0.87 % 1.29 % Allowance for loan losses to total loans 0.61 % 0.59 % 0.65 % 0.80 % 0.71 %

Reconciliation of Fully Tax Equivalent Adjustments to GAAP Net Interest Income

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

NetInterestIncome

Yield

NetInterestIncome

Yield

NetInterestIncome

Yield

NetInterestIncome

Yield

NetInterestIncome

Yield

GAAP net interest income $ 12,979 3.68 % $ 12,996 3.69 % $ 13,893 3.86 % $ 13,394 3.75 % $ 13,914 3.87 % Tax equivalent adjustment Investment securities 548 0.16 552 0.16 546 0.15 530 0.15 474 0.14 Loans 227 0.06 226 0.06 225 0.07 154 0.04 115 0.03 Total tax equivalent adjustment 775 0.22 778 0.22 771 0.21 684 0.19 589 0.17 Tax equivalent net interest income $ 13,754 3.90 % $ 13,774 3.91 % $ 14,664 4.08 % $ 14,078 3.94 % $ 14,503 4.04 %

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160725006369/en/

Your Community Bankshares, Inc.Paul Chrisco, 812-981-7375CFO

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YCB Your Community Bankshares, Inc.