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Press Release

Community Bankers Trust Corporation Reports Results for Second Quarter of 2019

Net income was $3.5 million for the second quarter and $7.0 million for the first six months of 2019.

Conference Call on Friday, July 26, 2019, at 10:00 a.m. Eastern Time

Company Release - 7/26/2019 6:00 AM ET

RICHMOND, Va., July 26, 2019 /PRNewswire/ -- Community Bankers Trust Corporation (the "Company") (NASDAQ: ESXB), the holding company for Essex Bank (the "Bank"), today reported results for the second quarter and first six months of 2019.

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

Income Statement- Three Months ended June 30, 2019 compared with Three Months ended March 31, 2019

  • Net income of $3.5 million for the second quarter of 2019 is an increase of $41,000, or 1.2%, on a linked quarter basis.
  • Interest and fees on loans increased $221,000, or 1.8%.
  • Interest expense increased $225,000, or 6.1%.
  • Noninterest income increased $437,000, or 43.1%.
  • There was a provision for loan losses of $125,000 in the second quarter of 2019.
  • Basic and diluted earnings per common share were $0.16 in each of the first and second quarters of 2019.
  • Return on average assets, annualized, was 1.01% and return on average equity, annualized, was 9.79% in the second quarter.

Income Statement- Six Months ended June 30, 2019 compared with Six Months ended June 30, 2018

  • Net income of $7.0 million is an increase of $671,000, or 10.5%.
  • Interest income of $31.7 million is an increase of $3.1 million, or 10.9%.
  • Interest and fees on loans increased $2.8 million, or 12.7%.
  • Net interest income increased $1.0 million, or 4.4%.
  • Return on average assets, annualized, was 1.01% and return on average equity, annualized, was 9.90% for the first six months of 2019.

Income Statement- Three Months ended June 30, 2019 compared with Three Months ended June 30, 2018

  • Net income of $3.5 million for the second quarter of 2019 is a decrease year-over-year of $238,000, or 6.3%.
  • Interest and dividend income increased $1.4 million, or 9.6%, in the second quarter of 2019 over the same period in 2018, led by interest and fees on loans, which increased $1.3 million, or 11.3%.
  • Net interest income increased $353,000, or 3.0%, year-over-year.
  • Noninterest income increased by $316,000, or 27.8%.
  • One-time costs were $254,000 in the second quarter of 2019 and included $210,000 associated with the closing of an underperforming branch and $44,000 in one-time pension costs from a senior officer retirement.
  • Net interest margin has remained stable at 3.69% in the second quarter compared with 3.73% the same period one year ago.

Balance Sheet- Year-over-Year June 30, 2019 compared with June 30, 2018

  • Loans grew $56.9 million, or 5.9%, from $967.4 million at June 30, 2018 to $1.024 billion at June 30, 2019.
  • Noninterest bearing deposits grew $28.4 million, or 18.7%, year-over-year and totaled $180.4 million, representing 14.8% of total deposits, an increase from 13.5% one year ago.
  • Deposits increased $92.3 million, or 8.2%.
  • Federal Home Loan Bank borrowings declined $42.0 million, in part, due to growth in noninterest bearing accounts.
  • Other real estate owned was $983,000 at June 30, 2019, down from $3.1 million at June 30, 2018.

MANAGEMENT COMMENTS 

Rex L. Smith, III, President and Chief Executive Officer, stated, "The Company experienced better than expected balance sheet growth as total assets were $31.9 million higher than the prior quarter end and $77.3 million higher year over year. The second quarter was characterized by sound loan growth in terms of both size and quality, strong demand deposit growth, and increased noninterest income. Total loans grew $56.9 million since June 30, 2018, and the yield on loans increased by 26 basis points from the second quarter of 2018. Additionally, noninterest bearing deposit growth exceeded expectations, ending the quarter at $180.4 million, up over 18% year over year."

Mr. Smith added, "The increase in demand deposit accounts also helped to increase our noninterest income. Unfortunately, our noninterest expenses were slightly elevated for the quarter from some one-time termination expenses associated with a branch closure, but this will help lower overall operating costs going forward."

Commenting on credit quality Mr. Smith noted, "During the current quarter, the Company recorded a slight provision driven by the growth in loans, and coupled with a recovery, the allowance is 80% of nonaccrual loans. Total nonperforming assets have remained stable, ending the quarter at $12.0 million."

Smith concluded, "We continue to experience meaningful franchise growth and believe that our opportunities for both internal and external growth remain consistently strong. We will continue to emphasize core demand deposits, and we will remain diligent in monitoring the interest rate environment to protect our earnings no matter what comes of the future interest rate environment. We plan to continue in a steady and measured approach to achieve our objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value."

RESULTS OF OPERATIONS

Overview

Linked Quarter Basis
Net income increased $41,000 and was $3.5 million for each of the second quarter of 2019 and the first quarter of 2019.   Earnings per common share, basic and fully diluted, were $0.16 per share in each of the three months ended June 30, 2019 and March 31, 2019. Net income was affected on a linked quarter basis by an increase in noninterest income of $437,000, fueled by an increase of $252,000 in securities gains and offset by an increase of $151,000 in noninterest expense, $125,000 in provision for loan losses and a decline of $125,000 in net interest income. Noninterest expenses in the second quarter were impacted by one-time charges of $254,000 related to a branch closing and pension expense. The decline in net interest income was driven by an increase of $225,000 in interest expense.

Year-Over-Year Six Months
Net income increased $671,000 and was $7.0 million for the first six months of 2019 compared with $6.4 million for the same period in 2018. This is an increase of 10.5%. Increases were in interest and dividend income, which increased by $3.1 million, or 10.9%, and noninterest income, which increased by $297,000, or 13.7%. Offsetting these increases to net income were increases of $2.1 million in interest expense, $278,000 in noninterest expense and $234,000 in income tax expense.

Year-Over-Year Quarter
Net income of $3.5 million for the second quarter of 2019 was a decrease of $238,000, or 6.3%, compared with second quarter 2018 net income of $3.8 million. Interest and dividend income increased by $1.4 million in the second quarter of 2019 compared with the same period in 2018, driven by interest and fees on loans, which increased $1.3 million. Noninterest income increased by $316,000 year-over-year. Offsetting these increases was an increase of $804,000 in noninterest expenses, of which $254,000 was in salaries and employee benefits, $246,000 in other operating expenses and $150,000 in occupancy expenses. One-time expenses of $254,000 related to a branch closure and pension expense were recorded in the second quarter of 2019.

The following table presents summary income statements for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 and the six months ended June 30, 2019 and June 30, 2018.

SUMMARY INCOME STATEMENT












(Dollars in thousands)














For the three months ended

For the six months ended



30-Jun-19


31-Mar-19


30-Jun-18


30-Jun-19


30-Jun-18

Interest income

$

15,906

$

15,806

$

14,510

$

31,712

$

28,589

Interest expense


3,906


3,681


2,863


7,587


5,475

Net interest income


12,000


12,125


11,647


24,125


23,114

Provision for loan losses


125


-


-


125


-

Net interest income after provision for loan losses

11,875


12,125


11,647


24,000


23,114

Noninterest income


1,451


1,014


1,135


2,465


2,168

Noninterest expense


8,991


8,840


8,187


17,831


17,553

Income before income taxes


4,335


4,299


4,595


8,634


7,729

Income tax expense


791


796


813


1,587


1,353

Net income

$

3,544

$

3,503

$

3,782

$

7,047

$

6,376












EPS Basic

$

0.16

$

0.16

$

0.17

$

0.32

$

0.29

EPS Diluted

$

0.16

$

0.16

$

0.17

$

0.31

$

0.28

Fully diluted, weighted average shares


22,433


22,430


22,580


22,432


22,551












Return on average assets, annualized


1.01%


1.01%


1.12%


1.01%


0.95%

Return on average equity, annualized


9.79%


10.02%


11.92%


9.90%


10.13%















 

Net Interest Income

Linked Quarter Basis
Net interest income was $12.0 million for the quarter ended June 30, 2019 compared with $12.1 million for the quarter ended March 31, 2019.  This is a decrease of $125,000, or 1.0%.

Interest and dividend income on a linked quarter basis increased $100,000, or 0.6%, to $15.9 million for the second quarter of 2019.  Interest income with respect to loans, excluding PCI loans, increased $221,000, or 1.8%, during the second quarter when compared with the first quarter of 2019.  This increase was attributed to continued loan growth on a linked quarter basis. The average balance of loans, excluding PCI loans, increased $12.4 million, or 5.0%, on an annualized basis. The yield on loans decreased slightly, from 5.04% in the first quarter of 2019 to 5.01% in the second quarter of 2019. Interest income with respect to PCI loans was $1.3 million in each of the first and second quarters of 2019. Interest income on securities decreased $105,000 on a linked quarter basis and was negatively impacted by prepayments during the second quarter.

Securities income equaled $2.0 million on a tax-equivalent basis for the second quarter of 2019, which was a decrease of $120,000 from the first quarter of 2019.  The tax-equivalent yield on the securities portfolio was 3.23% in the second quarter of 2019 compared with a tax-equivalent yield of 3.35% in the first quarter of 2019. Second quarter securities income was negatively impacted by the write-off of premiums resulting from accelerated payments on securities recorded at book values above par value.

The combination of tax equivalent yields within the asset mix resulted in a yield on earning assets of 4.88% for the second quarter of 2019, down from 4.95% in the first quarter of 2019.

Interest expense of $3.9 million in the second quarter of 2019 was an increase of $225,000, or 6.1%, on a linked quarter basis.  Interest on deposits increased $355,000, or 11.0%.  Interest on borrowed funds decreased by $130,000, or 29.1%.  Average interest bearing on deposits increased by $18.3 million, or 1.8%. The cost of these deposits increased from 1.31% in the first quarter of 2019 to 1.41% in the second quarter of 2019, resulting in an 11.0% increase in interest expense. The increased rates paid on interest bearing deposits resulted in an increase in the cost of interest bearing liabilities from 1.38% in the first quarter of 2019 to 1.45% in the second quarter of 2019.

With the changes in interest income noted above, the tax-equivalent net interest margin declined from 3.81% in the first quarter of 2019 to 3.69% in the second quarter of 2019. Likewise, the interest spread decreased from 3.57% to 3.43% on a linked quarter basis.

Year-Over-Year Six Months
Net interest income was $24.1 million for the first six months of 2019, or an increase of $1.0 million, or 4.4%, when comparing the first six months of 2018 and 2019.  The yield on earning assets was 4.92% for the first six months of 2019 compared with 4.62% for the first six months of 2018. Interest and fees on loans of $25.1 million in the first half of 2019 was an increase of $2.8 million compared with $22.2 million for the same period in 2018.  Interest and fees on PCI loans declined $128,000 over this same time frame.  Securities income increased $313,000 for the first six months of 2019 compared with the same period in 2018.  On a tax-equivalent basis, income on securities increased $253,000. The tax-equivalent yield on the portfolio increased and was 3.29% for the first half of 2019 compared with 3.04% for the same period in 2018.

Interest expense of $7.6 million represented an increase of $2.1 million in the first six months of 2019 compared with the same period in 2018. Average interest bearing liabilities increased $21.8 million, or 2.1%.  The cost of interest bearing liabilities increased from 1.04% for the first six months of 2018 to 1.41% for the first six months of 2019. Driving the increase was growth of $78.8 million, or 14.2%, in the average balance of time deposits, from $556.5 million for the first half of 2018 to $635.4 million for the same period in 2019. This growth in time deposits, as a result of higher rates, came partly from a shift away from savings and money market accounts, which experienced a decline of $19.6 million in average balances between the comparison periods.

The tax equivalent net interest margin was 3.75% for each of the first six months of 2018 and 2019. While the yield on earning assets increased by 30 basis points over this time frame, the competition for funding pushed the cost of interest bearing liabilities up 37 basis points, from 1.04% to 1.41%.  The net interest spread declined by seven basis points, -from 3.58% for the first six months of 2018 to 3.51% for the first six months of 2019. The margin remained stable as a result of growth of $16.4 million, or 13.1%, in the average balance in shareholders' equity and growth of $15.2 million, or 10.1%, in the average balance of noninterest bearing deposits.

Year-Over-Year Quarter
Net interest income increased $353,000, or 3.0%, from the second quarter of 2018 to the second quarter of 2019. Net interest income was $12.0 million in the second quarter of 2019 compared with $11.6 million for the same period in 2018.  Interest and dividend income increased $1.4 million, or 9.6%, over this time period.  The increase in interest income was generated by an increase of $49.8 million, or 3.9%, in the level of average earning assets coupled with an increase in the yield on earning assets.  The yield on earning assets increased from 4.64% in the second quarter of 2018 to 4.88% in the second quarter of 2019. The average balance of loans, excluding PCI loans, increased $52.5 million, or 5.5%, from $959.0 million in the second quarter of 2018 to $1.011 billion in the second quarter of 2019.  Interest income on securities was $1.9 million in the second quarter of 2019, which was an increase of $80,000 over the second quarter of 2018. On a tax-equivalent basis, the yield on investment securities increased 12 basis points and was 3.23% in the second quarter of 2019 and 3.11% in the second quarter of 2018. 

Interest on PCI loans was $1.3 million in each of the second quarters of 2019 and 2018.  The average balance of the PCI portfolio declined $4.9 million during the year-over-year comparison period.

Interest expense increased $1.0 million, or 36.4%, when comparing the second quarter of 2019 and the second quarter of 2018. Interest expense on deposits increased $1.2 million, or 52.4%, as the average balance of interest bearing deposits increased $63.8 million, or 6.7%.  The increase in deposit cost was driven by an increase in time deposit average balances, which increased $86.1 million, or 15.3%, year-over-year. Likewise, the cost of these balances increased $1.2 million, from 1.41% to 1.98%, over the same time frame. FHLB and other borrowings decreased, on average, $44.3 million year-over-year, and there was an increase in the rate paid, from 1.87% in the second quarter of 2018 to 2.08% in the second quarter of 2019. The decrease in balance more than offset the increase in rate and resulted in a decrease in the expense of this wholesale funding source of $172,000, to $310,000 in the second quarter of 2019.  The average balance of FHLB and other borrowings was $58.9 million in the second quarter of 2019. Overall, the Bank's cost of interest bearing liabilities increased 37 basis points, from 1.08% in the second quarter of 2018 to 1.45% in the second quarter of 2019.

The tax-equivalent net interest margin decreased four basis points, from 3.73% in the second quarter of 2018 to 3.69% in the second quarter of 2019.  Likewise, the interest spread decreased from 3.56% to 3.43% 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 June 30, 2019, March 31, 2019 and June 30, 2018 and the six months ended June 30, 2019 and June 30, 2018.

NET INTEREST MARGIN










(Dollars in thousands)












For the three months ended




30-Jun-19



31-Mar-19



30-Jun-18


Average interest earning assets

$

1,316,422


$

1,304,842


$

1,266,663


Interest income

$

15,906


$

15,806


$

14,510


Interest income - tax-equivalent

$

16,018


$

15,933


$

14,656


Yield on interest earning assets


4.88

%


4.95

%


4.64

%

Average interest bearing liabilities

$

1,080,315


$

1,082,186


$

1,064,626


Interest expense

$

3,906


$

3,681


$

2,863


Cost of interest bearing liabilities


1.45

%


1.38

%


1.08

%

Net interest income

$

12,000


$

12,125


$

11,647


Net interest income - tax-equivalent

$

12,112


$

12,252


$

11,793


Interest spread


3.43

%


3.57

%


3.56

%

Net interest margin


3.69

%


3.81

%


3.73

%






















For the six months ended






30-Jun-19



30-Jun-18





Average interest earning assets

$

1,310,550


$

1,260,243





Interest income

$

31,712


$

28,589





Interest income - tax-equivalent

$

31,951


$

28,887





Yield on interest earning assets


4.92

%


4.62

%




Average interest bearing liabilities

$

1,081,245


$

1,059,482





Interest expense

$

7,587


$

5,475





Cost of interest bearing liabilities


1.41

%


1.04

%




Net interest income

$

24,125


$

23,114





Net interest income - tax-equivalent

$

24,363


$

23,412





Interest spread


3.51

%


3.58

%




Net interest margin


3.75

%


3.75

%




 

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 a provision for loan losses of $125,000 on the loan portfolio, excluding PCI loans, during the second quarter of 2019 compared with no provision for loan losses in the first quarter of 2019 and in the second quarter of 2018. The provision recognized in the second quarter of 2019 was due to loan growth of $26.3 million, or 2.6%, during the quarter and an uptick in delinquencies less than 90 days past due and still accruing interest. There was no provision for loan losses on the PCI loan portfolio during the first and second quarters of 2019 or during the first and second quarters of 2018.  Additional discussion of loan quality is presented below.

Noninterest Income

Linked Quarter Basis
Noninterest income was $1.5 million for the second quarter of 2019, an increase of $437,000 compared with $1.0 million for the first quarter of 2019. Securities gains of $238,000 in the second quarter of 2019 compared with securities losses of $14,000 in the first quarter of 2019 represents an increase of $252,000 on a linked quarter basis. Also increasing were service charges and fees, which increased by $98,000 over the linked quarters. Other noninterest income of $222,000 was an increase of $46,000 from the first quarter of 2019. Mortgage loan income increased by $38,000 and was $100,000 in the second quarter of 2019.

Year-Over-Year Six Months
Noninterest income was $2.5 million for the first six months of 2019, an increase of $297,000, or 13.7%, compared with $2.2 million for the first six months of 2018. Gain on securities transactions increased $210,000 and was $224,000 for the first six months of 2019 compared with $14,000 for the same period in 2018. Service charges and fees were $1.3 million for the first six months of 2019, an increase of $124,000 compared with the same period in 2018. Other noninterest income was $398,000 for the first half of 2019, an increase of $47,000 versus the first half of 2018. Partially offsetting these increases was a decline of $29,000 in mortgage loan income, which was $162,000 for the first six months of 2019.

Year-Over-Year Quarter
Noninterest income increased $316,000, or 27.8%, and was $1.5 million in the second quarter of 2019 compared with $1.1 million for the second quarter of 2018. Securities gains increased $254,000 year-over-year and were $238,000 in the second quarter of 2019. Service charges on deposit accounts were $707,000 in the second quarter of 2019 and increased $96,000 year-over-year. Mortgage loan income of $100,000 in the second quarter of 2019 was an increase of $20,000 over the same period in 2018.

Noninterest Expenses

One-time costs of $254,000 in the second quarter of 2019 included $210,000 associated with the closing of an underperforming branch (occupancy expense, $103,000; other real estate expense, $62,000; salaries, $45,000) and $44,000 in one-time pension costs, which are included in salary expenses, from a senior officer retirement. These expenses affect each of the comparison periods.

Linked Quarter Basis
Noninterest expenses totaled $9.0 million for the second quarter of 2019, as compared with $8.8 million for the first quarter of 2019, an increase of $151,000, or 1.7%. Other operating expenses exhibited the largest increase, $121,000.  This increase was driven by $239,000 in credit expenses versus $63,000 the prior quarter. The next largest increase on a linked quarter basis was other real estate expenses, which increased $113,000. Salaries and employee benefits decreased $108,000, or 2.0% on a linked quarter basis. Equipment expenses increased $13,000, FDIC assessment increased $12,000, data processing fees increased $11,000 and occupancy expenses decreased $11,000.

Year-Over-Year Six Months
Noninterest expenses were $17.8 million for the first six months of 2019, as compared with $17.6 million for the same period in 2018.  This is an increase of $278,000, or 1.6%. Occupancy expenses increased $268,000, or 17.0%. Data processing fees increased $162,000, or 16.4% and were $1.1 million for the first six months of 2019. Equipment expenses increased by $117,000 and were $775,000 for the first six months of 2019. Offsetting these increases, salaries and employee benefits decreased $214,000 for the first six months of 2019 compared with the same period in 2018. Also impacting noninterest expenses for the first six months of 2018 compared with the same period in 2017 was a decrease in FDIC assessment of $92,000.

Year-Over-Year Quarter
Noninterest expenses were $9.0 million in the second quarter of 2019 and increased $804,000, or 9.8%, compared with the same period in 2018. Salaries and employee benefits of $5.3 million increased $254,000, or 5.1% year-over-year. Other operating expenses of $1.6 million increased $246,000 year-over-year. This increase was primarily the result of increased credit expense in the second quarter of 2019 of $138,000, an increase in stationery, printing and supplies of $66,000 and an increase in bank franchise tax of $41,000. Occupancy expenses of $919,000 show an increase of $150,000 over the same period in 2018. Other real estate expenses of $105,000 in the second quarter of 2019 were $60,000 greater than the same period in 2018.  Data processing fees of $579,000 in the second quarter of 2019 were $80,000 greater than one year earlier.  FDIC assessment of $162,000 in the second quarter of 2019 decreased $36,000 from one year earlier.

The following table compares the Company's other operating expenses included in noninterest expenses for the three months ended June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

 

OTHER OPERATING EXPENSES









(Dollars in thousands)


For the three months ended



30-Jun-19


31-Mar-19


31-Dec-18


30-Jun-18

Bank franchise tax

$

220

$

220

$

179

$

179

Telephone and internet line


50


56


53


51

Stationery, printing and supplies


151


167


163


85

Marketing expense


151


170


146


133

Credit expense


239


63


128


101

Outside vendor fees


159


139


177


154

Other expenses


589


623


619


610

Total other operating expenses

$

1,559

$

1,438

$

1,465

$

1,313

 

Income Taxes

Income tax expense was $791,000 for the three months ended June 30, 2019, compared with income tax expense of $796,000 for the first quarter of 2019 and $813,000 for the second quarter of 2018.  For the six months ended June 30, 2019, income tax expense was $1.6 million compared with $1.4 million for the first six months of 2018. The effective tax rate for the second quarter of 2019 was 18.2% versus 18.5% for the first quarter of 2019 and 17.7% in the second quarter of 2018. For the first six months of 2019, the effective tax rate was 18.4% and for the same period in 2018 it was 17.5%. The increase in the effective tax rate was primarily from lower tax-exempt income from municipalities.     

FINANCIAL CONDITION

Total assets increased $38.0 million, or 2.7%, during the first six months of 2019 to $1.431 billion at June 30, 2019.  Total assets increased $77.3 million, or 5.7%, since June 30, 2018.  Total loans, excluding PCI loans, were $1.024 billion at June 30, 2019, increasing $30.5 million, or 3.1%, from year end 2018 and $56.9 million, or 5.9%, from June 30, 2018.   Total PCI loans were $35.9 million at June 30, 2019 versus $38.3 million at year end 2018 and $39.9 million at June 30, 2018.

During the second quarter of 2019, total loan growth was $26.3 million, or 2.6%. Construction and land development loans grew by $13.5 million, or 10.9%, and totaled $137.0 million at June 30, 2019. Commercial mortgage loans, the largest category of loans, grew by $9.6 million, or 2.5%, and were $388.8 million at June 30, 2019.  Residential 1 – 4 family loans grew by $4.3 million, or 2.0%.

During the first six months of 2019, loans grew by $30.5 million, or 3.1%. Construction and land development loans grew by $16.5 million, or 13.7%, commercial mortgage loans grew by $8.8 million, or 2.3%, and residential 1 – 4 family mortgages grew by $3.4 million.

The Company's loan portfolio exhibited balanced growth when comparing June 30, 2019 and June 30, 2018.  Total loans grew $56.9 million, or 5.9%, over the time frame with commercial loans growing by $21.0 million, or 12.3%, followed by growth of $17.8 million, or 15.0%, in construction and land development loans, and $12.6 million in commercial mortgage loans.

The following table shows the composition of the Company's loan portfolio, excluding PCI loans, at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

LOANS (excluding PCI loans)

















(Dollars in thousands)

30-Jun-19


31-Mar-19


31-Dec-18


30-Jun-18





Amount

% of Loans



Amount

% of Loans



Amount

% of Loans



Amount

% of Loans


Mortgage loans on real estate:


















Residential 1-4 family

$

219,690

21.45

%

$

215,348

21.58

%

$

216,268

21.77

%

$

217,610

22.50

%


Commercial


388,750

37.95



379,112

37.99



379,904

38.23



376,134

38.88



Construction and land development


136,951

13.37



123,475

12.37



120,413

12.12



119,110

12.31



Second mortgages


6,803

0.66



6,966

0.70



6,778

0.68



7,387

0.76



Multifamily


57,251

5.59



57,931

5.81



59,557

5.99



54,329

5.62



Agriculture


10,617

1.04



10,780

1.08



8,370

0.84



7,467

0.77



Total real estate loans


820,062

80.06



793,612

79.53



791,290

79.63



782,037

80.84


Commercial loans


191,032

18.66



190,832

19.12



188,722

18.99



170,065

17.58


Consumer installment loans


11,603

1.13



11,923

1.19



12,048

1.21



13,717

1.42


All other loans


1,553

0.15



1,615

0.16



1,645

0.17



1,542

0.16



Gross loans


1,024,250

100.00

%


997,982

100.00

%


993,705

100.00

%


967,361

100.00

%

Allowance for loan losses


(8,819)




(8,661)




(8,983)




(9,089)



Loans, net of unearned income

$

1,015,431



$

989,321



$

984,722



$

958,272



 

The Company's securities portfolio, excluding restricted equity securities, increased $3.4 million since year end 2018 to total $252.3 million at June 30, 2019. Securities balances increased $9.1 million since June 30, 2018.  Net gains of $238,000 were realized during the second quarter of 2019 through sales and call activity.  For the first six months of 2019, there have been net gains of $224,000 realized through sales and call activity. 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 $32.8 million, $34.2 million and $23.8 million at June 30, 2019, December 31, 2018 and June 30, 2018, respectively.  There were federal funds sold of $228,000 at June 30, 2019 and $180,000 at June 30, 2018.  This compares with federal funds purchased of $19.4 million at December 31, 2018. Interest bearing bank deposits were $14.7 million at June 30, 2019 compared with $15.9 million at December 31, 2018 and $12.0 million at June 30, 2018.

The following table shows the composition of the Company's securities portfolio, excluding restricted equity securities, at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

SECURITIES PORTFOLIO













(Dollars in thousands)


30-Jun-19


31-Dec-18


30-Jun-18



Amortized
Cost


Fair  
Value


Amortized
Cost


Fair
Value


Amortized
Cost


Fair
Value

Securities Available for Sale


























U.S. Treasury issue

$

22,972

$

22,898

$

13,460

$

13,124

$

25,021

$

24,520

U.S. Government agencies


24,375


24,222


24,689


24,609


9,077


9,124

State, county, and municipal


94,175


97,290


112,465


112,542


120,935


120,079

Mortgage backed securities


50,025


50,635


46,877


46,417


22,479


21,828

Asset backed securities


10,763


10,790


5,342


5,411


15,057


14,954

Corporate


6,007


6,069


4,685


4,623


8,539


8,658

Total securities available for sale

$

208,317

$

211,904

$

207,518

$

206,726

$

201,108

$

199,163























30-Jun-19


31-Dec-18


30-Jun-18



Amortized
Cost


Fair
Value


Amortized
Cost


Fair
Value


Amortized
Cost


Fair
Value

Securities Held to Maturity













U.S. Government agencies

$

10,000

$

9,941

$

10,000

$

9,790

$

10,000

$

9,713

State, county, and municipal


30,368


31,267


32,108


32,463


33,585


33,792

Mortgage backed securities


-


-


-


-


404


409

Total securities held to maturity

$

40,368


41,208

$

42,108

$

42,253

$

43,989

$

43,914

 

Interest bearing deposits at June 30, 2019 were $1.036 billion, an increase of $35.9 million from December 31, 2018 and $63.9 million greater than at June 30, 2018. Time deposits less than or equal to $250,000 have shown the largest dollar volume growth during 2019 with $23.4 million in additional balances and now totaling $508.6 million. Time deposits over $250,000 grew by $9.8 million and were $138.8 million at June 30, 2019. Money market deposit accounts grew $3.8 million, or 3.0%.

The following table compares the mix of interest bearing deposits at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

INTEREST BEARING DEPOSITS









(Dollars in thousands)











30-Jun-19


31-Mar-19


31-Dec-18


30-Jun-18

NOW

$

163,224

$

151,647

$

165,946

$

162,984

MMDA


130,720


123,024


126,933


145,071

Savings


94,508


94,229


92,910


94,498

Time deposits less than or equal to $250,000


508,598


499,698


485,155


452,734

Time deposits over $250,000


138,759


133,817


128,945


116,657

Total interest bearing deposits

$

1,035,809

$

1,002,415

$

999,889

$

971,944

 

FHLB advances were $48.7 million at June 30, 2019, compared with $59.4 million at December 31, 2018 and $90.7 million at June 30, 2018.   

Shareholders' equity was $147.4 million at June 30, 2019, $137.5 million at December 31, 2018 and $128.6 million at June 30, 2018.  Shareholders' equity to assets was 10.3% at June 30, 2019, 9.9% at December 31, 2018 and 9.5% at June 30, 2018. 

Asset Quality – non-covered assets

The allowance for loan losses equaled 79.9% of nonaccrual loans at June 30, 2019, compared with 78.8% at March 31, 2019, 94.6% at December 31, 2018 and 97.3% at June 30, 2018. The ratio of nonperforming assets to loans and OREO was 1.17% at June 30, 2019, 1.22% at March 31, 2019, 1.07% at December 31, 2018 and 1.29% at June 30, 2018.

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)


2019



2018



Second


First



Fourth


Third


Second



Quarter


Quarter



Quarter


Quarter


Quarter

Allowance for loan losses:












Beginning of period

$

8,661

$

8,983


$

8,993

$

9,089

$

8,968

Provision for loan losses


125


-



-


-


-

Net recoveries (charge-offs)


33


(322)



(10)


(96)


121

End of period

$

8,819

$

8,661


$

8,983

$

8,993

$

9,089

 

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)


2019


2018



30-Jun-19



31-Mar-19



31-Dec-18


30-Sep-18

30-Jun-18


Nonaccrual loans

$

11,045


$

10,990


$

9,500

$

8,894

$

9,343


Total nonperforming loans


11,045



10,990



9,500


8,894


9,343


Other real estate owned


983



1,225



1,099


1,732


3,147


Total nonperforming assets

$

12,028


$

12,215


$

10,599

$

10,626

$

12,490
















Allowance for loan losses to loans


0.86

%


0.87

%


0.90

%

0.93

%

0.94


Allowance for loan losses to nonaccrual loans


79.85



78.81



94.57


101.11


97.28


Nonperforming assets to loans and other real estate


1.17



1.22



1.07


1.10


1.29


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


(0.01)

%


0.13

%


0.00

%

0.04

%

(0.05)


















 

A further breakout of nonaccrual loans, excluding PCI loans, at June 30, 2019, December 31, 2018 and June 30, 2018 is below.

NONACCRUAL LOANS (excluding PCI loans)






(Dollars in thousands)


30-Jun-19


31-Dec-18


30-Jun-18




Amount


Amount


Amount

Mortgage loans on real estate:











Residential 1-4 family


$

2,148


$

1,257


$

1,578


Commercial



1,388



2,123



2,274


Construction and land development



4,091



4,571



5,184


Multifamily



2,526



-



-













Total real estate loans


$

10,153


$

7,951


$

9,036

Commercial loans



886



1,549



307

Consumer installment loans



6



-



-


Gross loans


$

11,045


$

9,500


$

9,343

 

Capital Requirements

The Bank's ratio of total risk-based capital was 13.5% at June 30, 2019 compared with 13.3% at December 31, 2018.  The tier 1 risk-based capital ratio was 12.7% at June 30, 2019 and 12.6% at December 31, 2018. The Company's tier 1 leverage ratio was 10.5% at June 30, 2019 and 10.2% at December 31, 2018.  All capital ratios exceed regulatory minimums to be considered well capitalized.  BASEL III introduced the common equity tier 1 capital ratio, which was 12.7% at June 30, 2019 and 12.6% at December 31, 2018.

Earnings Conference Call and Webcast

The Company will host a conference call for interested parties on Friday, July 26, 2019, at 10:00 a.m. Eastern Time to discuss the financial results for the second quarter of 2019. 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 July 26, 2019, until 9:00 a.m. Eastern Time on August 16, 2019. The replay will be available by dialing 877-344-7529 and entering access code 10133022 or  through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site 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 25 full-service offices, 19 of which are in Virginia and six of which are in Maryland.  The Bank also operates two loan production offices. The Bank's Cumberland office in Virginia will close on August 2, 2019.  

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, 2018 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







(Dollars in thousands, except per share data)









30-Jun-19


31-Dec-18


30-Jun-18

Assets







Cash and due from banks

$

17,858

$

18,292

$

11,607

Interest bearing bank deposits


14,696


15,927


12,020

Federal funds sold


228


-


180

Total cash and cash equivalents


32,782


34,219


23,807








Securities available for sale, at fair value


211,904


206,726


199,163

Securities held to maturity, at cost


40,368


42,108


43,989

Equity securities, restricted, at cost


7,718


7,800


8,935

Total securities


259,990


256,634


252,087








Loans held for resale


639


146


-








Loans


1,024,250


993,705


967,361

Purchased credit impaired (PCI) loans


35,898


38,285


39,911

Allowance for loan losses


(8,819)


(8,983)


(9,089)

Allowance for loan losses – PCI loans


(156)


(156)


(200)

Net loans


1,051,173


1,022,851


997,983








Bank premises and equipment, net


30,635


31,488


30,423

Bank premises and equipment held for sale


1,252


1,252


552

Leased assets


6,944


-


-

Other real estate owned


983


1,099


3,147

Bank owned life insurance


29,199


28,834


28,466

Other assets


17,534


16,627


17,403

Total assets

$

1,431,131

$

1,393,150

$

1,353,868








Liabilities







Deposits:







Noninterest bearing

$

180,399

$

165,086

$

151,956

Interest bearing


1,035,809


999,889


971,944

Total deposits


1,216,208


1,164,975


1,123,900








Federal funds purchased


-


19,440


-

Federal Home Loan Bank borrowings


48,696


59,447


90,691

Trust preferred capital notes


4,124


4,124


4,124

Lease liabilities


7,192


-


-

Other liabilities


7,515


7,703


6,509

Total liabilities


1,283,735


1,255,689


1,225,224








Shareholders' Equity







Common stock (200,000,000 shares authorized $0.01 par value;
22,258,456, 22,132,304, and 22,111,495 shares issued and
outstanding, respectively)


223


221


221

Additional paid in capital


149,752


148,763


148,242

Retained deficit


(4,529)


(10,244)


(17,556)

Accumulated other comprehensive income (loss)


1,950


(1,279)


(2,263)

Total shareholders' equity


147,396


137,461


128,644

Total liabilities and shareholders' equity

$

1,431,131

$

1,393,150

$

1,353,868


 

 

COMMUNITY BANKERS TRUST CORPORATION









CONSOLIDATED STATEMENTS OF INCOME









UNAUDITED
















(Dollars in thousands)

YTD


Three months ended


YTD


Three months ended


2019


30-Jun-19

31-Mar-19


2018


30-Jun-18

31-Mar-18

Interest and dividend income
















Interest and fees on loans

$

25,059


$

12,640

$

12,419


$

22,229


$

11,353

$

10,876

Interest and fees on PCI loans


2,544



1,251


1,293



2,672



1,274


1,398

Interest on federal funds sold


5



5


-



1



1


-

Interest on deposits in other banks


213



117


96



109



69


40

Interest and dividends on securities
















  Taxable


2,994



1,472


1,522



2,452



1,266


1,186

  Nontaxable


897



421


476



1,126



547


579

Total interest and dividend income


31,712



15,906


15,806



28,589



14,510


14,079

Interest expense
















Interest on deposits


6,823



3,589


3,234



4,498



2,355


2,143

Interest on borrowed funds


764



317


447



977



508


469

Total interest expense


7,587



3,906


3,681



5,475



2,863


2,612

















Net interest income


24,125



12,000


12,125



23,114



11,647


11,467

Provision for loan losses


125



125


-



-



-


-

Net interest income after provision for loan losses


24,000



11,875


12,125



23,114



11,647


11,467

















Noninterest income
















Service charges and fees


1,316



707


609



1,192



611


581

Gain (loss) on securities transactions, net


224



238


(14)



14



(16)


30

Gain on sale of loans


-



-


-



53



53


-

Income on bank owned life insurance


365



184


181



367



184


183

Mortgage loan income


162



100


62



191



80


111

Other


398



222


176



351



223


128

Total noninterest income


2,465



1,451


1,014



2,168



1,135


1,033

















Noninterest expense
















Salaries and employee benefits


10,654



5,273


5,381



10,868



5,019


5,849

Occupancy expenses


1,849



919


930



1,581



769


812

Equipment expenses


775



394


381



658



344


314

FDIC assessment


312



162


150



404



198


206

Data processing fees


1,147



579


568



985



499


486

Other real estate expenses, net


97



105


(8)



95



45


50

Other operating expenses


2,997



1,559


1,438



2,962



1,313


1,649

Total noninterest expense


17,831



8,991


8,840



17,553



8,187


9,366

















Income before income taxes


8,634



4,335


4,299



7,729



4,595


3,134

Income tax expense


1,587



791


796



1,353



813


540

Net income

$

7,047


$

3,544

$

3,503


$

6,376


$

3,782

$

2,594

 

 

COMMUNITY BANKERS TRUST CORPORATION







CONSOLIDATED STATEMENTS OF INCOME







UNAUDITED











(Dollars in thousands)

Three months ended


30-Jun-19

31-Mar-19


31-Dec-18


30-Sep-18


30-Jun-18

Interest and dividend income











Interest and fees on loans

$

12,640

$

12,419

$

12,169

$

11,893

$

11,353

Interest and fees on PCI loans


1,251


1,293


1,285


1,265


1,274

Interest on federal funds sold


5


-


4


-


1

Interest on deposits in other banks


117


96


100


94


69

Interest and dividends on securities











  Taxable


1,472


1,522


1,442


1,364


1,266

  Nontaxable


421


476


508


528


547

Total interest and dividend income


15,906


15,806


15,508


15,144


14,510

Interest expense











Interest on deposits


3,589


3,234


3,060


2,699


2,355

Interest on borrowed funds


317


447


355


465


508

Total interest expense


3,906


3,681


3,415


3,164


2,863












Net interest income


12,000


12,125


12,093


11,980


11,647

Provision for loan losses


125


-


-


-


-

Net interest income after provision for loan losses


11,875


12,125


12,093


11,980


11,647












Noninterest income











Service charges and fees


707


609


692


626


611

Gain (loss) on securities transactions, net


238


(14)


(12)


68


(16)

Gain on sale of loans


-


-


-


65


53

Income on bank owned life insurance


184


181


184


184


184

Mortgage loan income


100


62


31


97


80

Other


222


176


189


171


223

Total noninterest income


1,451


1,014


1,084


1,211


1,135












Noninterest expense











Salaries and employee benefits


5,273


5,381


5,580


5,029


5,019

Occupancy expenses


919


930


827


780


769

Equipment expenses


394


381


374


366


344

FDIC assessment


162


150


177


195


198

Data processing fees


579


568


655


482


499

Other real estate expenses, net


105


(8)


(45)


63


45

Other operating expenses


1,559


1,438


1,465


1,376


1,313

Total noninterest expense


8,991


8,840


9,033


8,291


8,187












Income before income taxes


4,335


4,299


4,144


4,900


4,595

Income tax expense


791


796


787


945


813

Net income

$

3,544

$

3,503

$

3,357

$

3,955

$

3,782

 

 

COMMUNITY BANKERS TRUST CORPORATION
















NET INTEREST MARGIN ANALYSIS

















AVERAGE BALANCE SHEETS



















(Unaudited)



















(Dollars in thousands)





















Three months ended June 30, 2019



Three months ended June 30, 2018





Average Balance
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid



Average Balance
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid



ASSETS:




















Loans, including fees

$

1,011,448


$

12,640


5.01

%


$

958,955


$

11,353


4.75

%



PCI loans,  including fees


36,212



1,251


13.67




41,157



1,274


12.24




   Total loans


1,047,660



13,891


5.32




1,000,112



12,627


5.06




Interest bearing bank balances


19,436



117


2.41




14,819



69


1.85




Federal funds sold


799



5


2.36




87



1


1.82




Securities (taxable)


189,429



1,472


3.11




174,781



1,266


2.90




Securities (tax exempt)(1)


59,098



533


3.60




76,864



693


3.61




Total earning assets


1,316,422



16,018


4.88




1,266,663



14,656


4.64




Allowance for loan losses


(8,820)









(9,271)









Non-earning assets


102,513









92,502









   Total assets

$

1,410,115








$

1,349,894




























LIABILITIES AND




















SHAREHOLDERS' EQUITY




















Demand - interest bearing

$

156,053


$

86


0.22



$

157,028


$

80


0.20




Savings and money market


217,219



307


0.57




238,583



309


0.52




Time deposits


647,159



3,196


1.98




561,056



1,966


1.41




Total interest bearing deposits


1,020,431



3,589


1.41




956,667



2,355


0.99




Short-term borrowings


996



7


2.70




4,771



26


2.20




FHLB and other borrowings


58,888



310


2.08




103,188



482


1.87




Total interest bearing liabilities


1,080,315



3,906


1.45




1,064,626



2,863


1.08




Noninterest bearing deposits


170,783









152,498









Other liabilities


14,183









5,909









Total liabilities


1,265,281









1,223,033









Shareholders' equity


144,834









126,861









Total liabilities and




















   shareholders' equity

$

1,410,115








$

1,349,894









Net interest earnings




$

12,112








$

11,793






Interest spread







3.43

%








3.56

%



Net interest margin







3.69

%








3.73

%























Tax-equivalent adjustment:




















Securities




$

111








$

146

























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









































 

 

COMMUNITY BANKERS TRUST CORPORATION
















NET INTEREST MARGIN ANALYSIS


















AVERAGE BALANCE SHEETS



















(Unaudited)



















(Dollars in thousands)





















Six months ended June 30, 2019



Six months ended June 30, 2018




Average Balance
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid



Average Balance 
Sheet


Interest
Income /
Expense


Average
Rates
Earned /
Paid



ASSETS:




















Loans, including fees

$

1,005,168


$

25,059


5.03

%


$

951,201


$

22,229


4.71

%



PCI loans,  including fees


36,993



2,544


13.68




42,257



2,672


12.58




   Total loans


1,042,161



27,603


5.34




993,458



24,901


5.05




Interest bearing bank balances


16,920



213


2.53




11,955



109


1.83




Federal funds sold


429



5


2.36




72



1


1.71




Securities (taxable)


187,908



2,994


3.19




175,667



2,452


2.79




Securities (tax exempt)(1)


63,132



1,135


3.60




79,091



1,424


3.60




Total earning assets


1,310,550



31,950


4.92




1,260,243



28,887


4.62




Allowance for loan losses


(8,951)









(9,224)









Non-earning assets


99,758









90,567









   Total assets

$

1,401,357








$

1,341,586




























LIABILITIES AND




















SHAREHOLDERS' EQUITY




















Demand - interest bearing

$

156,908


$

173


0.22



$

156,359


$

156


0.20




Savings and money market


219,071



600


0.55




238,660



624


0.53




Time deposits


635,354



6,050


1.92




556,546



3,718


1.35




   Total interest bearing deposits


1,011,333



6,823


1.36




951,565



4,498


0.95




Short-term borrowings


3,900



56


2.91




3,563



37


2.12




FHLB and other borrowings


66,012



708


2.13




104,354



940


1.79




Total interest bearing liabilities


1,081,245



7,587


1.41




1,059,482



5,475


1.04




Noninterest bearing deposits


165,668









150,446









Other liabilities


12,078









5,731









Total liabilities


1,258,991









1,215,659









Shareholders' equity


142,366









125,927









Total liabilities and




















   shareholders' equity

$

1,401,357








$

1,341,586









Net interest earnings




$

24,363








$

23,412






Interest spread







3.51

%








3.58

%



Net interest margin







3.75

%








3.75

%























Tax-equivalent adjustment:




















Securities




$

238








$

299

























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



































 

 

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SOURCE Community Bankers Trust Corporation

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