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Press Release

Community Bankers Trust Corporation Reports Results for First Quarter of 2018

Net income of $2.6 million in the first quarter of 2018 is an increase of $101,000, or 4.1%, over the first quarter of 2017.

Conference Call on Thursday, April 26, 2018, at 10:00 a.m. Eastern Time

Company Release - 4/26/2018 6:00 AM ET

RICHMOND, Va., April 26, 2018 /PRNewswire/ -- Community Bankers Trust Corporation (the "Company") (NASDAQ: ESXB), the holding company for Essex Bank (the "Bank"), today reported results for the first quarter of 2018.

Community Bankers Trust Corporation logo. (PRNewsFoto/Community Bankers Trust Corporation) (PRNewsfoto/COMMUNITY BANKERS TRUST CORP.)

OPERATING HIGHLIGHTS

  • Loans, excluding purchased credit impaired (PCI) loans, grew $22.3 million, or 2.4%, during the first quarter of 2018 and grew $112.1 million, or 13.2%, since March 31, 2017.
  • Noninterest bearing deposits grew $21.0 million, or 16.3%, year-over-year.
  • There was no provision for loan losses in the first quarter of 2018 compared with a provision of $400,000 in the fourth quarter of 2017.
  • Net interest margin increased from 3.72% in the fourth quarter of 2017 to 3.76% in the first quarter of 2018, the result of higher yields and volumes on earning assets.

FINANCIAL HIGHLIGHTS

  • Net income was $2.6 million for the quarter ended March 31, 2018, compared with a loss of $640,000 in the fourth quarter of 2017 and net income of $2.5 million in the first quarter of 2017.
  • Fully diluted earnings per common share was $0.12 for the quarter ended March 31, 2018, compared with ($0.03) per share and $0.11 per share for the quarters ended December 31, 2017 and March 31, 2017, respectively. 
  • Interest and fees on loans was $10.9 million in the first quarter of 2018, an increase of $1.3 million, or 13.3%, over the first quarter of 2017.

MANAGEMENT COMMENTS 

Rex L. Smith, III, President and Chief Executive Officer, stated, "The core operating metrics of the Company continue to show positive growth.  We have structured the balance sheet to be risk averse for interest rate changes, as well as other economic factors.  To that end, I am pleased with the diversity of the loan types in the portfolio and the continued growth rate of our variable rate loans, which increased our net interest margin for the quarter. Net interest income increased over $200,000 on a linked quarter basis."

Smith added, "As we move forward, I believe it is important for us to resist the temptation of growth for growth's sake, especially if it means irrational pricing on either side of the balance sheet, or relaxing our credit standards in any way.  We can and will sustain an appropriate growth rate for the balance sheet that will translate to the earnings that we want to achieve for our shareholders."

Smith concluded, "Noninterest expense was up for the quarter, mainly due to a timing issue on our benefits cost. While this cost reduced earnings per share by two and a half cents on both a linked quarter and year-over-year basis, it will not be an on-going concern.  Management is confident that we can continue to produce appropriate returns for the Company."

RESULTS OF OPERATIONS

Net income was $2.6 million for the first quarter of 2018, compared with a net loss of $640,000 in the fourth quarter of 2017 and net income of $2.5 million in the first quarter of 2017.  Earnings per common share, basic and fully diluted, were $0.12 per share, ($0.03) per share and $0.11 per share for the three months ended March 31, 2018, December 31, 2017, and March 31, 2017, respectively.

The increase of $101,000, or 4.1%, in net income, for the first quarter of 2018 compared with the first quarter of 2017 was primarily the result of a $1.1 million increase in interest income and a reduction of $536,000 in income tax expense. Offsetting these increases was an increase of $531,000 in interest expense and an increase of $1.1 million in noninterest expenses, including an increase of $703,000 in group benefit costs. Details on the drivers of these year-over-year changes are presented below.

The increase of $3.2 million in net income on a linked quarter basis was driven by a decrease of $3.7 million in income tax expense. In the fourth quarter of 2017, the Company recorded a one-time charge of $3.5 million to income tax expense due to the re-measurement of its net deferred tax asset resulting from the new 21% tax rate established by the Tax Cuts and Jobs Act of 2017 enacted in December.  Provision for loan losses improved net income on a linked quarter basis as no provision was recorded in the current quarter compared with $400,000 in the fourth quarter of 2017. Also, positively affecting net income was an increase in net interest income, which increased $218,000 on a linked quarter basis. Offsetting these increases to net income was an increase of $1.0 million, or 12.5%, in noninterest expenses, including an increase of $703,000 in group benefit costs. Linked quarter details are also provided below.

The following table presents summary income statements for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017.

 

SUMMARY INCOME STATEMENT







(Dollars in thousands)


For the three months ended



31-Mar-18


31-Dec-17


31-Mar-17

Interest income

$

14,079

$

13,758

$

12,948

Interest expense


2,612


2,509


2,081

Net interest income


11,467


11,249


10,867

Provision for loan losses


-


400


-

Net interest income after provision for loan losses

11,467


10,849


10,867

Noninterest income


1,082


1,093


1,035

Noninterest expense


9,415


8,366


8,333

Income before income taxes


3,134


3,576


3,569

Income tax expense


540


4,216


1,076

Net income (loss)

$

2,594

$

(640)

$

2,493








EPS Basic

$

0.12

$

(0.03)

$

0.11

EPS Diluted

$

0.12

$

(0.03)

$

0.11








Return on average assets, annualized


0.78%


(0.19%)


0.80%

Return on average equity, annualized


8.30%


(2.02%)


8.56%

 

Net Interest Income

Linked Quarter Basis
Net interest income was $11.5 million for the quarter ended March 31, 2018 compared with $11.2 million for the quarter ended December 31, 2017.  This is an increase of $218,000, or 1.9%.

Interest income on a linked quarter basis increased $321,000, or 2.3%, to $14.1 million for the first quarter of 2018.  Interest income with respect to loans, excluding PCI loans, increased $251,000, or 2.4%, during the first quarter when compared with the fourth quarter of 2017.  This increase was partially attributed to continued loan growth, excluding PCI loans, coupled with higher rates.  The yield on loans increased from 4.63% in the fourth quarter of 2017 to 4.68% in the first quarter of 2018. The average balance of loans, excluding PCI loans, increased $32.2 million, or 3.5%, on a linked quarter basis. Interest income with respect to PCI loans was $1.4 million in each of the fourth quarter of 2017 and the first quarter of 2018.  Interest income on securities increased $62,000 on a linked quarter basis.

Securities income equaled $1.9 million on a tax-equivalent basis for the first quarter of 2018, which was a decrease of $90,000 from the fourth quarter of 2017.  Actual income increased $62,000 while tax-equivalent income decreased $90,000 as a result of the decreased tax benefit derived from bank-qualified tax-exempt municipal securities from the implementation of the Tax Cut and Jobs Act. The overall tax-equivalent yield on the securities portfolio was 2.98% in the first quarter of 2018, based on a 21% tax rate, and 3.07% in the fourth quarter of 2017, based on a 34% tax rate.

Interest expense of $2.6 million in the first quarter of 2018 was an increase of $103,000 on a linked quarter basis.  Interest on deposits only increased $22,000, or 1.0%.  However, interest on borrowed funds increased by $81,000, or 20.9%.  Average interest bearing balances of Federal Home Loan Bank and other borrowings increased by $17.3 million from the fourth quarter of 2017 to the first quarter of 2018.  The cost on these borrowings increased from 1.68% in the fourth quarter of 2017 to 1.74% in the first quarter of 2018. The Company's cost of interest bearing liabilities of 1.00% in the first quarter of 2018 was an increase of four basis points from the prior quarter. 

With the changes in interest income noted above, the tax-equivalent net interest margin improved from 3.72% in the fourth quarter of 2017 to 3.76% in the first quarter of 2018. Likewise, the interest spread increased from 3.56% to 3.60% on a linked quarter basis.

Year-Over-Year
Net interest income increased $600,000, or 5.5%, from the first quarter of 2017 to the first quarter of 2018. Net interest income was $11.5 million in the first quarter of 2018 compared with $10.9 million for the same period in 2017.  Interest income increased $1.1 million, or 8.7%, over this time period.  The increase in interest income was generated by an increase of $86.7 million, or 7.4%, in the level of earning assets.  The yield on earning assets decreased from 4.61% in the first quarter of 2017 to 4.60% in the first quarter of 2018. The average balance of loans, excluding PCI loans, increased $104.2 million, or 12.4%, from $839.2 million in the first quarter of 2017 to $943.4 million in the first quarter of 2018.  Interest income on securities was $1.8 million in each of the first quarter of 2018 and first quarter of 2017. On a tax-equivalent basis, the yield on investment securities was 2.98% in the first quarter of 2018, based on a 21% tax rate, and 3.22% in the first quarter of 2017, based on a 34% tax rate. 

Interest on PCI loans was $1.4 million in the first quarter of 2018 compared with $1.5 million in the first quarter of 2017.  The average balance of the PCI portfolio declined $7.4 million during the year-over-year comparison period.

Interest expense increased $531,000, or 25.5%, when comparing the first quarter of 2017 and the first quarter of 2018. Interest expense on deposits increased $364,000, or 20.5%, as the average balance of interest bearing deposits increased $41.3 million, or 4.6%.  The increase in deposit cost was driven by an increase in NOW and MMDA average balances, which increased a combined $62.5 million year-over-year. Likewise, the cost of these balances increased $189,000, from 0.24% to 0.45%, over the same time frame. Higher cost time deposit balances declined over the comparison period by $22.4 million; however, expense on this category increased by $176,000, resulting in an increase in cost from 1.11% to 1.29%. FHLB and other borrowings increased, on average, $15.6 million year-over-year, and there was an increase in the rate paid, from 1.33% in the first quarter of 2017 to 1.74% in the first quarter of 2018. This resulted in an increase in the expense of $162,000, to $458,000 in the first quarter of 2018.  The average balance of FHLB and other borrowings was $105.5 million in the first quarter of 2018. Overall, the Bank's cost of interest bearing liabilities increased 15 basis points, from 0.85% in the first quarter of 2017 to 1.00% in the first quarter of 2018.

The tax-equivalent net interest margin decreased 12 basis points, from 3.88% in the first quarter of 2017 to 3.76% in the first quarter of 2018.  Likewise, the interest spread decreased from 3.76% to 3.60% over the same time period.  The decrease in the margin was precipitated by the increase in the cost of interest bearing liabilities without a corresponding increase in the yield on earning assets.

The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017.

 

NET INTEREST MARGIN










(Dollars in thousands)


For the three months ended




31-Mar-18



31-Dec-17



31-Mar-17


Average interest earning assets

$

1,253,752


$

1,233,754


$

1,167,100


Interest income

$

14,079


$

13,758


$

12,948


Interest income - tax-equivalent

$

14,233


$

14,065


$

13,256


Yield on interest earning assets


4.60

%

4.52

%


4.61

%

Average interest bearing liabilities

$

1,054,282


$

1,036,542


$

997,188


Interest expense

$

2,612


$

2,509


$

2,081


Cost of interest bearing liabilities


1.00

%

0.96

%

0.85

%

Net interest income

$

11,467


$

11,249


$

10,867


Net interest income - tax-equivalent

$

11,621


$

11,556


$

11,175


Interest spread


3.60

%

3.56

%

3.76

%

Net interest margin


3.76

%

3.72

%

3.88

%












 

Provision for Loan Losses

The Company records a separate provision for loan losses for its loan portfolio, excluding PCI loans, and the PCI loan portfolio.  There was no provision for loan losses on the loan portfolio, excluding PCI loans, during either of the first quarter of 2018 or the first quarter of 2017. The absence of a provision in the first quarter of 2018 was the direct result of nominal charge-offs and stable asset quality. There was a provision for loan losses of $400,000 in the fourth quarter of 2017. The fourth quarter 2017 provision was recorded to support loan growth of $52.0 million during the quarter. There was no provision for loan losses on the PCI loan portfolio during the first quarter of 2018, the fourth quarter of 2017 or the first quarter of 2017.  Additional discussion of loan quality is presented below.

Noninterest Income

Linked Quarter Basis
Noninterest income was $1.1 million for the first quarter of 2018, an $11,000 decrease compared with $1.1 million for the fourth quarter of 2017.  Other noninterest income of $128,000 was a decrease of $49,000 from the fourth quarter of 2017. The linked quarter change was primarily attributable to a decrease of $28,000 in commission income and a decrease of $23,000 in dividend income. Partially offsetting the decrease in other noninterest income was an increase of $32,000, or 40.5%, in mortgage loan income, which was $111,000 in the first quarter of 2018, compared with $79,000 in the fourth quarter of 2017. Nominal changes on a linked quarter basis were an increase of $9,000 in service charges and fees, which were $581,000 in the first quarter of 2018, and a decline of $3,000 in income on bank owned life insurance, which was $232,000 for the period.

Year-Over-Year
Noninterest income increased $47,000, or 4.5%, from $1.0 million in the first quarter of 2017 to $1.1 million in the first quarter of 2018. Mortgage loan income increased $78,000, or 236.4%, from $33,000 in the first quarter of 2017 to $111,000 in the first quarter of 2018.  The increase in mortgage loan income reflects continued momentum from a shift that began in the fourth quarter of 2016 to a less expensive platform program. Service charges and fees increased $56,000, or 10.7%, and were $581,000 in the first quarter of 2018 compared with $525,000 in the first quarter of 2017. Gains on securities transactions declined $65,000 over this time frame and were $30,000 in the first quarter of 2018 versus $95,000 in the first quarter of 2017. There has been less activity in the securities portfolio in 2018 as the Company maintains the level of securities to total assets near a target close to the 18.9% reflected at March 31, 2018. Other noninterest income decreased from $148,000 in the first quarter of 2017 to $128,000 in the first quarter of 2018. Within other noninterest income, brokerage fees and commissions declined by $18,000 year-over-year.

Noninterest Expenses

Linked Quarter Basis
Noninterest expenses totaled $9.4 million for the first quarter of 2018, as compared with $8.4 million for the fourth quarter of 2017, an increase of $1.0 million, or 12.54%.  Salaries and employee benefits increased $860,000, or 17.1% on a linked quarter basis. The vast majority of this increase was related to higher group benefit costs, which increased by $703,000. Salaries and employee benefits in the first quarter of 2018 were $5.9 million and also include employee costs from a new branch opened in Lynchburg, Virginia in December 2017. Other operating expenses increased $134,000 on a linked quarter basis, from $1.5 million in the fourth quarter of 2017 to $1.6 million in the first quarter of 2018. FDIC assessment increased $30,000, from $176,000 in the fourth quarter of 2017 to $206,000 in the first quarter of 2018. Data processing fees of $486,000 in the first quarter of 2018 represented an increase of $29,000 over the linked quarter. Equipment and occupancy expenses increased $19,000 and $11,000, respectively, on a linked quarter basis and were driven by the new branch opened in December 2017 Other real estate expenses, net, declined $14,000 on a linked quarter basis and were $50,000 in the first quarter of 2018. 

Year-Over-Year
Noninterest expenses increased $1.1 million, or 13.0%, when comparing the first quarter of 2018 to the same period in 2017. Again, the increase year-over-year was largely attributable to abnormally higher than usual group benefit costs, which increased by $703,000 in the first quarter of 2018 over the same period in 2017. Salaries and employee benefits increased $1.2 million, or 26.0%, from $4.7 million in the first quarter of 2017 to $5.9 million in the first quarter of 2018. Other operating expenses increased $207,000, or 14.4%, and were $1.6 million in the first quarter of 2018 compared with $1.4 million for the same period in 2017. Occupancy expenses increased $80,000 year-over-year and were $812,000 in the first quarter of 2018 compared with $732,000 in the first quarter of 2017. Since the beginning of 2017, the Bank has opened three full service banking facilities, West Broad Marketplace in the Short Pump area of Richmond and two offices in Lynchburg.  These openings also resulted in an increase year-over-year in equipment expenses, which increased $30,000, from $284,000 to $314,000. Other real estate expenses, net, of $50,000 in the first quarter of 2018 represents a year-over-year increase of $23,000. FDIC assessment was $206,000 in the first quarter of 2018 compared with $201,000 for the same period in 2017. Data processing fees of $486,000 in the first quarter of 2018 compared with $488,000 for the same period in 2017. Offsetting these increases was a decline of $477,000 in amortization of intangibles, which expired during 2017 and was $0 in the first quarter of 2018.

The following table compares the Company's other operating expenses included in noninterest expenses for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017.

 

OTHER OPERATING EXPENSES






(Dollars in thousands)


For the three months ended



31-Mar-18


31-Dec-17


31-Mar-17

Bank franchise tax

$

179

$

158

$

158

Telephone and internet line


243


172


175

Stationery, printing and supplies


178


153


198

Marketing expense


178


155


151

Credit expense


91


75


105

Outside vendor fees


145


200


113

Other expenses


635


602


542

Total other operating expenses

$

1,649

$

1,515

$

1,442

 

Income Taxes

Income tax expense was $540,000 for the three months ended March 31, 2018, compared with income tax expense of $4.2 million and $1.1 million for the fourth and first quarters of 2017, respectively.  The large expense in the fourth quarter of 2017 was attributable to recording a $3.5 million charge related to the re-measurement of net deferred tax assets from the passage of the Tax Cuts and Jobs Act. The effective tax rate for the first quarter of 2018 was 17.2% versus 30.1% for the first quarter of 2017. The decrease in the Company's effective tax rate results principally from the decrease in its applicable federal corporate tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act.    

FINANCIAL CONDITION

Total assets increased $17.0 million, or 1.3%, to $1.353 billion at March 31, 2018 when compared to December 31, 2017.  Total assets have increased $90.5 million, or 7.2%, since March 31, 2017.  Total loans, excluding PCI loans, were $964.3 million at March 31, 2018, increasing $22.3 million, or 2.4%, from year end 2017 and $112.1 million, or 13.2%, from March 31, 2017.   Total PCI loans were $42.2 million at March 31, 2018 versus $44.3 million at the prior quarter end and $49.7 million at March 31, 2017.

During the first quarter of 2018, commercial loans grew $11.4 million, or 7.2%, and were $170.4 million at March 31, 2018. Consumer installment loans grew $8.7 million and were $13.9 million at March 31, 2018.  On March 30, 2018, the Company purchased an in-market, high quality consumer auto loan pool totaling $9.0 million.  The addition of these loans will bring an increase in diversification to the portfolio. Commercial mortgage loans on real estate grew by $5.2 million, or 1.4%, and were $371.5 million at March 31, 2018.  Residential 1-4 family loans declined $4.8 million, or 2.1%, during the first quarter of 2018 and were $222.7 million at March 31, 2018. 

The Company's loan portfolio exhibits balanced growth when comparing March 31, 2018 and March 31, 2017.  Total loans grew $112.1 million or 13.2%, over the time frame with commercial loans growing by $39.7 million, or 30.4%, followed by growth of $27.9 million, or 8.1%, in commercial mortgage loans on real estate, $13.4 million, or 13.9%, in construction and land development loans, $12.2 million, or 5.8%, in residential 1-4 family loans, $10.5 million, or 21.1%, in multifamily loans and $8.6 million, or 160.8%, in consumer installment loans.

The following table shows the composition of the Company's loan portfolio, excluding PCI loans, at March 31, 2018, December 31, 2017 and March 31, 2017.

 

LOANS (excluding PCI loans)













(Dollars in thousands)

31-Mar-18


31-Dec-17


31-Mar-17




Amount

% of
Loans


Amount

% of
Loans


Amount

% of
Loans


Mortgage loans on real estate:














Residential 1-4 family

$

222,717

231.0

%

$

227,542

24.16

%

$

210,517

24.71

%


Commercial


371,494

38.52



366,331

38.89



343,604

40.32



Construction and land development


109,534

11.36



107,814

11.44



96,152

11.28



Second mortgages


7,689

0.80



8,410

0.89



7,724

0.91



Multifamily


59,920

6.21



59,024

6.27



49,469

5.80



Agriculture


7,424

0.77



7,483

0.79



7,449

0.87



Total real estate loans


778,778

80.76



776,604

82.44



714,915

83.89


Commercial loans


170,445

17.67



159,024

16.88



130,729

15.34


Consumer installment loans


13,878

1.44



5,169

0.55



5,321

0.62


All other loans


1,210

0.13



1,221

0.13



1,261

0.15



Gross loans


964,311

100.00

%


942,018

100.00

%


852,226

100.00

%

Allowance for loan losses


(8,968)




(8,969)




(9,513)



Loans, net of unearned income

$

955,343



$

933,049



$

842,713



 

The Company's securities portfolio, excluding restricted equity securities, declined $4.3 million since year end 2017 to total $246.7 million at March 31, 2018. Securities balances declined $13.5 million since March 31, 2017.  Net gains of $30,000 were recognized during each of the first quarter of 2018 and the fourth quarter of 2017 through sales and call activity, and $95,000 was recognized during the first quarter of 2017.  The Company actively manages the portfolio to improve its liquidity and maximize the return within the desired risk profile.

The Company had cash and cash equivalents of $21.3 million, $22.0 million and $23.9 million at March 31, 2018, December 31, 2017 and March 31, 2017, respectively.  There were federal funds purchased of $20.0 million and federal funds sold of $152,000 at March 31, 2018 compared with federal funds purchased of $4.8 million at December 31, 2017 and federal funds sold of $132,000 at March 31, 2017. The increase in federal funds purchased at March 31, 2018 was used to fund loan growth in the first quarter of 2018 and is anticipated to be short-term in nature. Interest bearing bank balances were $9.1 million at March 31, 2018 compared with $7.3 million at December 31, 2017 and $12.0 million at March 31, 2017.

The following table shows the composition of the Company's securities portfolio, excluding equity securities, at March 31, 2018, December 31, 2017 and March 31, 2017.

 

SECURITIES PORTFOLIO













(Dollars in thousands)


31-Mar-18


31-Dec-17


31-Mar-17



Amortized
Cost


Fair  
Value


Amortized
Cost


Fair  
Value


Amortized
Cost


Fair  
Value

Securities Available for Sale













U.S. Treasury issue and other













U.S. Government agencies

$

37,978

$

37,601

$

40,473

$

40,256

$

49,637

$

48,954

U.S Government sponsored agencies


9,168


9,227


9,247


9,278


2,921


2,862

State, county, and municipal


123,949


123,574


124,032


125,760


125,731


127,087

Corporate and other bonds


7,702


7,814


7,323


7,460


16,246


16,061

Mortgage backed securities - U.S. Government agencies


5,456


5,272


5,551


5,442


3,606


3,476

Mortgage backed securities - U.S. Government sponsored agencies


19,207


18,677


16,985


16,638


15,519


15,273

Total securities available for sale

$

203,460

$

202,165

$

203,611

$

204,834

$

213,660

$

213,713






























31-Mar-18


31-Dec-17


31-Mar-17



Amortized
Cost


Fair
Value


Amortized
Cost


Fair
Value


Amortized
Cost


Fair
Value

Securities Held to Maturity













U.S Government sponsored agencies

$

10,000

$

9,745

$

10,000

$

9,845

$

10,000

$

9,876

State, county, and municipal


34,111


34,405


35,678


36,567


35,831


36,321

Mortgage backed securities - U.S. Government agencies


423


428


468


476


669


684

Total securities held to maturity

$

44,534

$

44,578

$

46,146

$

46,888

$

46,500

$

46,881

 

Interest bearing deposits at March 31, 2018 were $946.3 million, an increase of $3.5 million from December 31, 2017 and $22.7 million greater than at March 31, 2017. As a result primarily of new account promotions at the three offices opened during 2017, money market deposit accounts grew $45.4 million, or 44.0%, from $103.0 million at March 31, 2017 to $148.4 million at March 31, 2018.  Money market balances grew $5.0 million since December 31, 2017.  NOW accounts, although decreasing $2.8 million during the first quarter of 2018, grew $23.3 million, or 17.8%, since March 31, 2017. Time deposits $250,000 and over increased $3.9 million during the first quarter of 2018 but declined $30.4 million since March 31, 2017. Driving the changes for both quarters were brokered deposits, which increased $2.4 million during the first quarter of 2018 but declined $31.7 million since March 31, 2017.  The increase in money market and NOW account balances has allowed the Bank to replace wholesale funding with core retail deposits. Time deposits less than or equal to $250,000 declined $2.3 million during the first quarter of 2018 and declined $16.6 million since March 31, 2017.

The following table compares the mix of interest bearing deposits at March 31, 2018, December 31, 2017 and March 31, 2017.

 

INTEREST BEARING DEPOSITS







(Dollars in thousands)









31-Mar-18


31-Dec-17


31-Mar-17

NOW

$

154,236

$

157,037

$

130,971

MMDA


148,404


143,363


103,042

Savings


93,724


93,980


92,683

Time deposits less than or equal to $250,000


435,481


437,810


452,075

Time deposits $250,000 and over


114,438


110,546


144,859

Total interest bearing deposits

$

946,283

$

942,736

$

923,630

 

FHLB advances were $101.1 million at March 31, 2018, compared with $101.4 million at December 31, 2017 and $81.7 million at March 31, 2017.    

Shareholders' equity was $125.0 million at March 31, 2018, $124.0 million at December 31, 2017 and $117.7 million at March 31, 2017.  Shareholder's equity to assets was 9.2% at March 31, 2018 and 9.3% at each of December 31, 2017 and March 31, 2017.  Total shareholders' equity increased through retained earnings from net income but was negatively impacted by the fourth quarter write-down of the deferred tax asset and by the rise in interest rates, which impacted accumulated other comprehensive (loss) income  due to the effect on the fair value of available-for-sale securities.

Asset Quality – non-covered assets

Nonaccrual loans were $10.1 million at March 31, 2018, increasing $1.1 million from December 31, 2017 and increasing $1.0 million from March 31, 2017.  The increase from March 31, 2017 to March 31, 2018 was 11.0%. 

The following chart shows the level of nonaccrual loans, classified loans and criticized loans over the last five quarters.

 

ASSET QUALITY






(Dollars in thousands)


2018


2017



31-Mar-18


31-Dec-17


30-Sep-17


30-Jun-17


31-Mar-17

Nonaccrual loans

$

10,090

$

9,026

$

12,677

$

11,514

$

9,091

Criticized (special mention) loans


19,526


9,555


8,200


10,523


13,416

Classified (substandard) loans


14,243


13,264


16,885


17,191


18,500

Other real estate owned


3,166


2,791


2,710


2,387


3,569

Total classified and criticized assets

$

36,935

$

25,610

$

27,795

$

30,101

$

35,485

 

Total non-performing assets totaled $13.3 million at March 31, 2018 compared with $11.8 million at December 31, 2017. Total nonperforming assets increased $484,000, or 3.8%, since March 31, 2017.  There were net charge-offs of $1,000 in the first quarter of 2018 and $98,000 in the fourth quarter of 2017 and net recoveries of $20,000 in the first quarter of 2017.

The allowance for loan losses equaled 88.9% of nonaccrual loans at March 31, 2018, compared with 99.4% at December 31, 2017 and 104.6% at March 31, 2017. The ratio of nonperforming assets to loans and OREO was 1.37% at March 31, 2018 compared with 1.25% at December 31, 2017 and 1.49% at March 31, 2017.

The following table reconciles the activity in the Company's non-covered allowance for loan losses, by quarter, for the past five quarters.

 

ALLOWANCE FOR LOAN LOSSES












(Dollars in thousands)


2018


2017



First



Fourth


Third


Second


First



Quarter



Quarter


Quarter


Quarter


Quarter

Allowance for loan losses:












Beginning of period

$

8,969


$

8,667

$

9,489

$

9,513

$

9,493

Provision for loan losses


-



400


150


-


-

Net recoveries (charge-offs)


(1)



(98)


(972)


(24)


20

End of period

$

8,968


$

8,969

$

8,667

$

9,489

$

9,513

 

The following table sets forth selected asset quality data, excluding PCI loans, and ratios for the dates indicated.

 

ASSET QUALITY (excluding PCI loans)

















(Dollars in thousands)


2018


2017




31-Mar-18



31-Dec-17


30-Sep-17

30-Jun-17

31-Mar-17


Nonaccrual loans

$

10,090


$

9,026


$

12,677


$

11,514


$

9,091



Loans past due over 90 days and accruing interest


-



-



-



-



112



Total nonperforming loans


10,090



9,026



12,677



11,514



9,203



Other real estate owned


3,166



2,791



2,710



2,387



3,569



Total nonperforming assets

$

13,256


$

11,817


$

15,387


$

13,901


$

12,772




















Allowance for loan losses to loans


0.93

%


0.95

%

0.97

%


1.10

%


1.12

%


Allowance for loan losses to nonaccrual loans


88.88



99.37



68.37



82.41



104.64



Nonperforming assets to loans and other real estate


1.37



1.25



1.72



1.60



1.49



Net charge-offs/(recoveries) for quarter to average loans, annualized


-

%


0.04

%

0.45

%


0.01

%


(0.01)

%


 

A further breakout of nonaccrual loans, excluding PCI loans, at March 31, 2018, December 31, 2017, and March 31, 2017 is below.

 

NONACCRUAL LOANS (excluding PCI loans)









(Dollars in thousands)


31-Mar-18


31-Dec-17


31-Mar-17




Amount


Amount


Amount

Mortgage loans on real estate:











Residential 1-4 family


$

1,985


$

1,962


$

3,104


Commercial



1,466



1,498



1,588


Construction and land development



5,554



4,277



4,304


Second mortgages



-



-



-


Agriculture



67



68



-


Total real estate loans


$

9,072


$

7,805


$

8,996

Commercial loans



1,014



1,214



53

Consumer installment loans



4



7



42


Gross loans


$

10,090


$

9,026


$

9,091

 

Capital Requirements

The Company's ratio of total risk-based capital was 12.6% at March 31, 2018 compared with 12.7% at December 31, 2017.  The tier 1 risk-based capital ratio was 11.8% at March 31, 2018 and 11.9% at December 31, 2017. The Company's tier 1 leverage ratio was 9.8% at March 31, 2018 and 9.7% at December 31, 2017.  All capital ratios exceed regulatory minimums to be considered well capitalized.  BASEL III introduced the common equity tier 1 capital ratio, which was 11.4% at March 31, 2018 and 11.5% at December 31, 2017.

Earnings Conference Call and Webcast

The Company will host a conference call for interested parties on Thursday, April 26, 2018, at 10:00 a.m. Eastern Time to discuss the financial results for the first quarter of 2018. The public is invited to listen to this conference call by dialing 866-374-8379 at least five minutes prior to the call.  Interested parties may also listen to this conference call through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site at www.cbtrustcorp.com.

A replay of the conference call will be available from 12:00 noon Eastern Time on April 26, 2018, until 9:00 a.m. Eastern Time on May 9, 2018. The replay will be available by dialing 877-344-7529 and entering access code 10119079 or  through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site at www.cbtrustcorp.com.

About Community Bankers Trust Corporation and Essex Bank

Community Bankers Trust Corporation is the holding company for Essex Bank, a Virginia state bank with 26 full-service offices, 20 of which are in Virginia and six of which are in Maryland.  The Bank also operates one loan production office in Virginia. 

Additional information on the Bank is available on the Bank's website at www.essexbank.com.  For information on Community Bankers Trust Corporation, please visit its website at www.cbtrustcorp.com.

Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to the Company's operations, performance, future strategy and goals. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in the following: the quality or composition of the Company's loan or investment portfolios, including collateral values and the repayment abilities of  borrowers and issuers; assumptions that underlie the Company's allowance for loan losses; general economic and market conditions, either nationally or in the Company's market areas; the interest rate environment; competitive pressures among banks and financial institutions or from companies outside the banking industry; real estate values; the demand for deposit, loan and investment products and other financial services; the demand, development and acceptance of new products and services; the performance of vendors or other parties with which the Company does business; time and costs associated with de novo branching, acquisitions, dispositions and similar transactions; the realization of gains and expense savings from acquisitions, dispositions and similar transactions; consumer profiles and spending and savings habits; levels of fraud in the banking industry; the level of attempted cyber-attacks in the banking industry; the securities and credit markets; costs associated with the integration of banking and other internal operations; the soundness of other financial institutions with which the Company does business; inflation; technology; and legislative and regulatory requirements.  Many of these factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and other reports filed from time to time by the Company with the Securities and Exchange Commission. This press release speaks only as of its date, and the Company disclaims any duty to update the information in it.

 

 

COMMUNITY BANKERS TRUST CORPORATION








CONSOLIDATED BALANCE SHEETS








UNAUDITED CONDENSED








(Dollars in thousands)










31-Mar-18


31-Dec-17


31-Mar-17


Assets








Cash and due from banks

$

12,013

$

14,642

$

11,720


Interest bearing bank deposits


9,141


7,316


12,002


Federal funds sold


152


-


132


Total cash and cash equivalents


21,306


21,958


23,854










Securities available for sale, at fair value


202,165


204,834


213,713


Securities held to maturity, at cost


44,534


46,146


46,500


Equity securities, restricted, at cost


9,356


9,295


8,177


Total securities


256,055


260,275


268,390










Loans


964,311


942,018


852,226


Purchased credit impaired (PCI) loans


42,215


44,333


49,738


Allowance for loan losses


(8,968)


(8,969)


(9,513)


Allowance for loan losses – PCI loans


(200)


(200)


(200)


Net loans


997,358


977,182


892,251










Bank premises and equipment, net


29,761


30,198


28,588


Bank premises and equipment held for sale


525


-


-


Other real estate owned


3,166


2,791


3,569


Bank owned life insurance


28,282


28,099


27,531


Core deposit intangibles, net


-


-


421


Other assets


16,779


15,687


18,117


Total assets

$

1,353,232

$

1,336,190

$

1,262,721










Liabilities








Deposits:








Noninterest bearing

$

150,037

$

153,028

$

129,042


Interest bearing


946,283


942,736


923,630


Total deposits


1,096,320


1,095,764


1,052,672










Federal funds purchased


20,000


4,849


-


Federal Home Loan Bank advances


101,061


101,429


81,692


Trust preferred capital notes


4,124


4,124


4,124


Other liabilities


6,683


6,021


6,520


Total liabilities

$

1,228,188

$

1,212,187

$

1,145,008










Shareholders' Equity








Common stock (200,000,000 shares authorized $0.01 par value; 22,084,193, 22,072,523, 21,970,773, shares issued and outstanding, respectively)


221


221


220


Additional paid in capital


147,935


147,671


146,852


Retained deficit


(21,338)


(23,932)


(28,635)


Accumulated other comprehensive (loss) income


(1,774)


43


(724)


Total shareholders' equity


125,044


124,003


117,713


Total liabilities and shareholders' equity

$

1,353,232

$

1,336,190

$

1,262,721


 

 

COMMUNITY BANKERS TRUST CORPORATION















CONSOLIDATED STATEMENTS OF OPERATIONS















UNAUDITED CONDENSED











(Dollars in thousands)

Three months ended


31-Mar-18


31-Dec-17


30-Sep-17


30-Jun-17


31-Mar-17

Interest and dividend income











Interest and fees on loans

$

10,876

$

10,625

$

10,127

$

9,952

$

9,597

Interest and fees on PCI loans


1,398


1,378


1,423


1,453


1,479

Interest on federal funds sold


-


-


1


-


-

Interest on deposits in other banks


40


53


65


52


26

Interest and dividends on securities











  Taxable


1,186


1,105


1,171


1,157


1,249

  Nontaxable


579


597


602


606


597

Total interest and dividend income


14,079


13,758


13,389


13,220


12,948

Interest expense











Interest on deposits


2,143


2,121


2,053


1,944


1,779

Interest on borrowed funds


469


388


310


302


302

Total interest expense


2,612


2,509


2,363


2,246


2,081












Net interest income


11,467


11,249


11,026


10,974


10,867












Provision for loan losses


-


400


150


-


-

Net interest income after provision for loan losses


11,467


10,849


10,876


10,974


10,867












Noninterest income











Service charges and fees


581


572


559


582


525

Gain on securities transactions, net


30


30


48


37


95

Income on bank owned life insurance


232


235


235


235


234

Mortgage loan income


111


79


58


71


33

Other


128


177


145


155


148

Total noninterest income


1,082


1,093


1,045


1,080


1,035












Noninterest expense











Salaries and employee benefits


5,898


5,038


4,998


4,886


4,682

Occupancy expenses


812


801


857


740


732

Equipment expenses


314


295


305


260


284

FDIC assessment


206


176


185


164


201

Data processing fees


486


457


501


477


488

Amortization of intangibles


-


20


62


339


477

Other real estate expenses, net


50


64


37


34


27

Other operating expenses


1,649


1,515


1,641


1,528


1,442

Total noninterest expense


9,415


8,366


8,586


8,428


8,333












Income before income taxes


3,134


3,576


3,335


3,626


3,569

Income tax expense


540


4,216


919


692


1,076

Net income (loss)

$

2,594

$

(640)

$

2,416

$

2,934

$

2,493



















 

 

COMMUNITY BANKERS TRUST CORPORATION















NET INTEREST MARGIN ANALYSIS















AVERAGE BALANCE SHEETS















(Dollars in thousands)




















Three months ended March 31, 2018



Three months ended March 31, 2017




Average
Balance
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid



Average
Balance
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid


ASSETS:



















Loans, including fees

$

943,398


$

10,876


4.68

%


$

839,167


$

9,597


4.64

%


PCI loans,  including fees


43,331



1,398


12.91




50,777



1,479


11.65



   Total loans


986,729



12,274


5.05




889,944



11,076


5.05



Interest bearing bank balances


9,060



40


1.80




9,134



26


1.13



Federal funds sold


58



-


1.55




49



-


0.88



Securities (taxable)


176,563



1,186


2.69




183,247



1,249


2.73



Securities (tax exempt)(1)


81,342



733


3.60




84,726



905


4.27



Total earning assets


1,253,752



14,233


4.60




1,167,100



13,256


4.61



Allowance for loan losses


(9,177)









(9,722)








Non-earning assets


88,610









88,613








   Total assets

$

1,333,185








$

1,245,991


























LIABILITIES AND



















SHAREHOLDERS' EQUITY



















Demand - interest bearing

$

301,313


$

331


0.45



$

238,829


$

142


0.24



Savings


93,107



60


0.26




91,936



61


0.27



Time deposits


551,987



1,752


1.29




574,344



1,576


1.11



Total interest bearing deposits


946,407



2,143


0.92




905,109



1,779


0.80



Short-term borrowings


2,343



11


1.95




2,104



6


1.08



FHLB and other borrowings


105,532



458


1.74




89,975



296


1.33



Total interest bearing liabilities


1,054,282



2,612


1.00




997,188



2,081


0.85



Noninterest bearing deposits


148,371









126,827








Other liabilities


5,542









5,414








Total liabilities


1,208,195









1,129,429








Shareholders' equity


124,990









116,562








Total liabilities and



















   Shareholders' equity

$

1,333,185








$

1,245,991








Net interest earnings




$

11,621








$

11,175





Interest spread







3.60

%








3.76

%


Net interest margin







3.76

%








3.88

%





















Tax-equivalent adjustment:



















Securities




$

155








$

308























(1)  Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 21% for 2018 and 34% for 2017.




 

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SOURCE Community Bankers Trust Corporation

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