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Section 1: 8-K (FORM 8-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 26, 2019

 

 

 

 

COMMUNITY BANKERS TRUST CORPORATION

(Exact name of registrant as specified in its charter)

 

Virginia

(State or other jurisdiction

of incorporation)

001-32590

(Commission

File Number)

20-2652949

(IRS Employer

Identification No.)

 

9954 Mayland Drive, Suite 2100

Richmond, Virginia

(Address of principal executive offices)

 

23233

(Zip Code)

 

Registrant’s telephone number, including area code: (804) 934-9999

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On April 26, 2019, Community Bankers Trust Corporation issued an earnings release reporting its financial results for the period ended March 31, 2019.  The earnings release is being furnished as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02.

 

 

Item 9.01Financial Statements and Exhibits.
   
(d) Exhibits. The following exhibit is being furnished pursuant to Item 2.02 above.

  

Exhibit No. Description
   
99.1 Earnings release issued April 26, 2019

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  COMMUNITY BANKERS TRUST CORPORATION
  (Registrant)
   
   
   
Date:  April 26, 2019 By: /s/ John M. Oakey, III
    John M. Oakey, III
    Executive Vice President, General Counsel and Secretary

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit No. Description
   
99.1 Earnings release issued April 26, 2019

 

 

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

Community Bankers Trust Corporation Reports Results for First Quarter of 2019

 

Net income of $3.5 million in the first quarter of 2019 is an increase of $909,000, or 35.0%, over the first quarter of 2018 and a linked quarter increase of $146,000, or 4.3%.

 

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

 

Richmond, VA, April 26, 2019 - Community Bankers Trust Corporation (the “Company”) (NASDAQ: ESXB), the holding company for Essex Bank (the “Bank”), today reported results for the first quarter of 2019.

 

operating Highlights

 

·Loans, excluding purchased credit impaired (PCI) loans, grew $33.7 million, or 3.5%, since March 31, 2018.
·Deposits grew $71.8 million, or 6.5%, from March 31, 2018 to March 31, 2019.
·Noninterest bearing deposits grew $15.7 million, or 10.4%, year-over-year.
·Net interest margin increased on both a linked quarter basis and year-over-year, to 3.81% in the first quarter of 2019 from 3.78% in the fourth quarter of 2018 and from 3.76% in the first quarter of 2018.
·Federal Home Loan Bank advances decreased $32.0 million, or 31.7%, from one year ago.
·The Company recommenced paying a common stock dividend, declaring a dividend of $0.03 per share that was paid on April 1, 2019.

 

Financial HIGHLIGHTS

 

·Net income was $3.5 million for the quarter ended March 31, 2019, compared with net income of $3.4 million in the fourth quarter of 2018 and net income of $2.6 million in the first quarter of 2018.
·Fully diluted earnings per common share was $0.16 for the quarter ended March 31, 2019, compared with $0.15 per share and $0.12 per share for the quarters ended December 31, 2018 and March 31, 2018, respectively.
·Interest and dividend income increased $1.7 million, or 12.3%, in the first quarter of 2019 compared with the first quarter of 2018.
·Interest and fees on loans were $12.4 million in the first quarter of 2019, an increase of $1.5 million, or 14.2%, over the first quarter of 2018.

  

MANAGEMENT COMMENTS

 

Rex L. Smith, III, President and Chief Executive Officer, stated, “The first quarter had many positive trends that helped create strong earnings growth both quarter over quarter and year over year. Net income was $3.5 million for the quarter ended March 31, 2019, compared with net income of $3.4 million in the fourth quarter of 2018 and net income of $2.6 million for the same period last year. I am also excited to report that fully diluted earnings per share was 16 cents, up from 12 cents per share for the first quarter of 2018.”

 

Smith added, “Loan growth was typical for the first quarter, and year over year growth was 3.4%. By being more selective on loans and continuing our focus on low cost deposit growth, we were able to increase our net interest margin from 3.78% in the fourth quarter of 2018 to 3.81% in the first quarter of 2019. We also continue to improve our efficiency, which resulted in a decrease in noninterest expenses quarter over quarter.”

 

Smith concluded, “I am very pleased with the results for the quarter and the trends we are seeing in all of our key metrics, which resulted in an annualized return on equity of 10.02% for the first quarter of 2019, an increase from 8.30% a year ago. I am also pleased that we paid our first quarterly dividend in over nine years as the Company continues to grow earnings to give our shareholders sound results.”

  

 

RESULTS OF OPERATIONS

 

Net income was $3.5 million for the first quarter of 2019, compared with net income of $3.4 million in the fourth quarter of 2018 and net income of $2.6 million in the first quarter of 2018. Earnings per common share, basic and fully diluted, were $0.16 per share, $0.15 per share and $0.12 per share for the three months ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively.

 

 1 

 

 

The increase of $909,000, or 35.0%, in net income, for the first quarter of 2019 compared with the first quarter of 2018 was primarily the result of a $1.7 million increase in interest income and a reduction of $526,000 in noninterest expenses. Offsetting these increases to net income was an increase of $1.1 million in interest expense, an increase of $256,000 in income tax expense and a decrease of $19,000 in noninterest income. Details on the drivers of these year-over-year changes are presented below.

 

The increase of $146,000 in net income on a linked quarter basis was driven by an increase of $298,000 in interest income and a decrease of $193,000 in noninterest expenses. Offsetting these increases to net income was an increase of $266,000 in interest expenses and a decrease in noninterest income of $70,000. Linked quarter details are also provided below.

 

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

 

SUMMARY INCOME STATEMENT            
(Dollars in thousands)  For the three months ended 
   31-Mar-19   31-Dec-18   31-Mar-18 
Interest income  $15,806   $15,508   $14,079 
Interest expense   3,681    3,415    2,612 
Net interest income   12,125    12,093    11,467 
Provision for loan losses   -    -    - 
Net interest income after provision for loan losses   12,125    12,093    11,467 
Noninterest income   1,014    1,084    1,033 
Noninterest expense   8,840    9,033    9,366 
Income before income taxes   4,299    4,144    3,134 
Income tax expense   796    787    540 
Net income  $3,503   $3,357   $2,594 
                
EPS Basic  $0.16   $0.15   $0.12 
EPS Diluted  $0.16   $0.15   $0.12 
                
Return on average assets, annualized   1.01%   0.98%   0.78%
Return on average equity, annualized   10.02%   10.01%   8.30%

  

Net Interest Income

 

Linked Quarter Basis

Net interest income was $12.1 million for each of the quarters ended March 31, 2019 and December 31, 2018. There was an increase across quarters of $32,000, or 0.3%.

 

Interest income on a linked quarter basis increased $298,000, or 1.9%, to $15.8 million for the first quarter of 2019. Interest income with respect to loans, excluding PCI loans, increased $250,000, or 2.1%, during the first quarter of 2019 when compared with the fourth quarter of 2018. This increase was partially attributed to continued loan growth, excluding PCI loans, coupled with higher average interest rates. The yield on loans increased from 4.95% in the fourth quarter of 2018 to 5.04% in the first quarter of 2019. The average balance of loans, excluding PCI loans, increased $23.6 million, or 2.4%, on a linked quarter basis. Interest income with respect to PCI loans was $1.3 million in each of the fourth quarter of 2018 and the first quarter of 2019.Interest income on securities increased $48,000 on a linked quarter basis.

 

Interest income on securities on a tax-equivalent basis equaled $2.1 million for the first quarter of 2019, which was an increase of $40,000 from the fourth quarter of 2018. The tax-equivalent yield on the securities portfolio was 3.35% in the first quarter of 2019 and 3.31% in the fourth quarter of 2018, both based on a 21.0% income tax rate.

 

Interest expense of $3.7 million in the first quarter of 2019 was an increase of $266,000, or 7.8%, on a linked quarter basis. Interest on deposits increased $174,000, or 5.7%. Interest on borrowed funds increased $92,000, or 25.9%. Average interest bearing balances of Federal Home Loan Bank and other borrowings increased $8.4 million from the fourth quarter of 2018 to the first quarter of 2019. The cost on these borrowings increased from 2.08% in the fourth quarter of 2018 to 2.20% in the first quarter of 2019. The Company’s cost of interest bearing deposits of 1.31% in the first quarter of 2019 was an increase of nine basis points from the prior quarter.

 

With the changes in interest income noted above, the tax-equivalent net interest margin improved from 3.78% in the fourth quarter of 2018 to 3.81% in the first quarter of 2019. The interest spread was 3.57% each quarter.

 

 2 

 

 

Year-Over-Year

Net interest income increased $658,000, or 5.7%, from the first quarter of 2018 to the first quarter of 2019. Net interest income was $12.1 million in the first quarter of 2019 compared with $11.5 million for the same period in 2018. Interest income increased $1.7 million, or 12.3%, over this time period. The increase in interest income was generated by an increase of $51.1 million, or 4.1%, in the level of average earning assets. The yield on earning assets increased from 4.60% in the first quarter of 2018 to 4.95% in the first quarter of 2019. The average balance of loans, excluding PCI loans, increased $55.6 million, or 5.9%, from $943.4 million in the first quarter of 2018 to $999.0 million in the first quarter of 2019. Interest and dividends on securities was $2.0 million in the first quarter of 2019, an increase of $233,000, or 13.2%, over interest and dividends on securities of $1.8 million in the first quarter of 2018. On a tax-equivalent basis, the yield on investment securities was 3.35% in the first quarter of 2019 and 2.98% in the first quarter of 2018, both of which are based on a 21.0% income tax rate.

 

Interest on PCI loans was $1.3 million in the first quarter of 2019 compared with $1.4 million in the first quarter of 2018. The average balance of the PCI portfolio declined $5.5 million during the year-over-year comparison period.

 

Interest expense increased $1.1 million, or 40.9%, when comparing the first quarter of 2018 and the first quarter of 2019. Interest expense on deposits increased $1.1 million, or 50.9%, as the average balance of interest bearing deposits increased $55.7 million, or 5.9%. Additionally, the average balance of lower cost savings and money market accounts decreased by $17.8 million while the average balance of higher cost time deposits increased by $71.4 million, or 12.9%. The shift in deposit balances increased the cost of interest bearing deposits from 0.92% in the first quarter of 2018 to 1.31% in the first quarter of 2019.

 

FHLB and other borrowings decreased, on average, $32.3 million year-over-year, and there was an increase in the rate paid, from 1.74% in the first quarter of 2018 to 2.20% in the first quarter of 2019. The impact of the lower average balances lowered borrowing costs but was partially mitigated by the increase in rates. The result was a decrease of $22,000 in short-term borrowing costs and interest expense on FHLB advances. Overall, the Bank’s cost of interest bearing liabilities increased 38 basis points, from 1.00% in the first quarter of 2018 to 1.38% in the first quarter of 2019.

 

The tax-equivalent net interest margin increased five basis points, from 3.76% in the first quarter of 2018 to 3.81% in the first quarter of 2019. Conversely, the interest spread decreased from 3.60% to 3.57% over the same time period.  The increase in the margin, despite a decrease in spread, was precipitated by increases of $12.1 million, or 8.2%, in the average balance of noninterest bearing deposits, and $14.9 million, or 11.9%, in the average balance in shareholders’ equity. Both of these categories carry no direct interest expense, but the increase was used to fund growth in earning assets.

 

The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018.

 

NET INTEREST MARGIN            
(Dollars in thousands)  For the three months ended 
   31-Mar-19   31-Dec-18   31-Mar-18 
Average interest earning assets  $1,304,842   $1,283,502   $1,253,752 
Interest income  $15,806   $15,508   $14,079 
Interest income - tax-equivalent  $15,933   $15,643   $14,233 
Yield on interest earning assets   4.95%   4.84%   4.60%
Average interest bearing liabilities  $1,082,186   $1,066,139   $1,054,282 
Interest expense  $3,681   $3,415   $2,612 
Cost of interest bearing liabilities   1.38%   1.27%   1.00%
Net interest income  $12,125   $12,093   $11,467 
Net interest income - tax-equivalent  $12,252   $12,228   $11,621 
Interest spread   3.57%   3.57%   3.60%
Net interest margin   3.81%   3.78%   3.76%

 

 

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 2019 or the first quarter of 2018. The absence of a provision in the first quarter of 2019 was a result of the level of loan growth coupled with stable asset quality and coverage ratios in the overall portfolio and its nonperforming components. There was no provision for loan losses in the fourth quarter of 2018. With respect to the PCI portfolio, due to the stable nature of its performance and its declining balances over time as the portfolio amortizes, no provision was taken during either of the first quarter of 2019, the fourth quarter of 2018 or the first quarter of 2018. Additional discussion of loan quality is presented below.

 

 3 

 

 

Noninterest Income

 

Linked Quarter Basis

Noninterest income was $1.0 million for the first quarter of 2019, a $70,000 decrease compared with $1.1 million for the fourth quarter of 2018.  Service charges and fees declined by $83,000 and were $609,000 in the first quarter of 2019 compared with $692,000 in the fourth quarter of 2018. The decrease in service charge income is the result of the increased volume of debit card transactions and overdraft fees that occur in the fourth quarter of a typical year, with the past two quarters following the normal pattern. Other noninterest income of $176,000 was a decrease of $13,000 from the fourth quarter of 2018, primarily due to a decrease in dividend income from investments in partnerships. Partially offsetting the decrease was an increase in mortgage loan income of $31,000, or 99.1%, which was $62,000 in the first quarter of 2019, compared with $31,000 in the fourth quarter of 2018.

 

Year-Over-Year

Noninterest income decreased $19,000, or 1.8%, and was $1.0 million in both the first quarter of 2019 and the first quarter of 2018. Mortgage loan income decreased $49,000, or 44.1%, from $111,000 in the first quarter of 2018 to $62,000 in the first quarter of 2019. Gain (loss) on securities transactions, net decreased $44,000 year-over-year as losses of $14,000 were realized in the first quarter of 2019 versus gains realized of $30,000 in the first quarter of 2018. Offsetting these declines in noninterest income year-over-year were increases of $48,000 in other noninterest income and $28,000 in service charges and fees. Other noninterest income of $176,000 in the first quarter of 2019 compared with $128,000 in the first quarter of 2018. The increase of $48,000 was the result of a $34,000 increase in brokerage fees and commissions combined with an increase of $13,000 in partnership dividend income. Service charges and fees were $609,000 in the first quarter of 2019 and increased from $581,000, or 4.82%, as a result of an increase in the volume of new accounts. There was an increase of $15.7 million, or 10.4%, year-over-year, in noninterest bearing account balances.

 

Noninterest Expenses

 

Linked Quarter Basis

Noninterest expenses totaled $8.8 million for the first quarter of 2019, as compared with $9.0 million for the fourth quarter of 2018, a decrease of $193,000, or 2.1%. Salaries and employee benefits in the first quarter of 2019 were $5.4 million compared with $5.6 million in the fourth quarter of 2018. This is a decrease of $199,000, or 3.6% on a linked quarter basis. The primary reasons for the decreases were reductions of $309,000 in salaries and $79,000 in group insurance expenses which were offset by a $140,000 increase in payroll taxes. Also declining on a linked quarter basis was data processing fees, which were $568,000 in the first quarter of 2019 compared with $655,000 in the fourth quarter of 2018. The decrease of $87,000 in the first quarter of 2019 was associated with increased costs for year-end processing during the fourth quarter. Other operating expenses decreased $27,000 on a linked quarter basis, from $1.5 million in the fourth quarter of 2018 to $1.4 million in the first quarter of 2019. FDIC assessment also decreased $27,000, from $177,000 in the fourth quarter of 2018 to $150,000 in the first quarter of 2019. Offsetting these decreases to noninterest expenses were increases of $103,000 in occupancy expenses and $37,000 in other real estate expenses. Occupancy expenses were $930,000 in the first quarter of 2019 and included higher expense recognized as a result of the opening of a new branch and a loan production office, in addition to the new lease accounting rules that took effect in the first quarter of 2019.

 

Year-Over-Year

Noninterest expenses decreased $526,000, or 5.6%, when comparing the first quarter of 2019 to the same period in 2018. The largest component of the change was a reduction of $468,000 in salaries and employee benefits. The decrease year-over-year was largely attributable to abnormally higher group benefit costs in the first quarter of 2018, which accounted for $446,000 of the $468,000 decrease. Other operating expenses of $1.4 million in the first quarter of 2019 was a decrease of $211,000 from the same period in 2018. Telephone and internet data declined $187,000 year-over-year as a telephone provider contract was terminated in the first quarter of 2018, with associated breakage fees, but resulted in a much lower quarterly expense thereafter. Offsetting these decreases was an increase in occupancy expenses, which increased $118,000 year-over-year, and were $930,000 in the first quarter of 2019 compared with $812,000 in the first quarter of 2018. The opening of new branches since the first quarter of 2018 and the new lease accounting rules were the drivers of the increase. These openings also resulted in an increase year-over-year in equipment expenses, which increased $67,000, from $314,000 to $381,000.

 

 4 

 

 

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

 

OTHER OPERATING EXPENSES            
(Dollars in thousands)  For the three months ended 
   31-Mar-19   31-Dec-18   31-Mar-18 
Bank franchise tax  $220   $179   $179 
Telephone and internet line   56    53    243 
Stationery, printing and supplies   167    163    178 
Marketing expense   170    146    178 
Credit expense   63    128    91 
Outside vendor fees   139    177    145 
Other expenses   623    619    635 
Total other operating expenses  $1,438   $1,465   $1,649 

 

 

Income Taxes

 

Income tax expense was $796,000 for the three months ended March 31, 2019, compared with income tax expense of $787,000 and $540,000 for the fourth and first quarters of 2018, respectively. The effective tax rate for the first quarter of 2019 was 18.5% compared with 19.0% in the fourth quarter of 2018 and 17.2% for the first quarter of 2018.

 

 

FINANCIAL CONDITION

 

Total assets increased $6.1 million, or 0.4%, to $1.399 billion at March 31, 2019 when compared to December 31, 2018. Total assets increased $46.0 million, or 3.4%, since March 31, 2018. Total loans, excluding PCI loans, were $998.0 million at March 31, 2019, increasing $4.3 million, or 0.4%, from year end 2018 and $33.7 million, or 3.5%, from March 31, 2018.  Total PCI loans were $36.8 million at March 31, 2019 versus $38.3 million at the prior quarter end and $42.2 million at March 31, 2018.

 

During the first quarter of 2019, construction and land development loans, totaling $123.5 million, grew by $3.1 million, or 2.5%. Agriculture loans secured by real estate grew by $2.4 million, or 28.8%, and totaled $10.8 million at March 31, 2019. Commercial loans grew $2.1 million and were $190.8 million at March 31, 2019. Offsetting this loan growth was a decline in multifamily loans, which declined $1.6 million as a result of payoff activity and ended the period at $57.9 million, 5.8% of the total portfolio. Also, residential 1 – 4 family loans declined by $920,000 and ended the period at $215.3 million, or 21.6% of the portfolio. Commercial real estate loans, the largest category of loans, at $379.1 million, or 38.0% of gross loans outstanding, declined $792,000. Other loan categories declined a nominal $155,000 during the first quarter of 2019.

 

The Company’s loan portfolio exhibited growth trends in a number of categories when comparing March 31, 2019 and March 31, 2018. Total loans grew $33.7 million, or 3.5%, over the time frame with commercial loans growing by $20.4 million, or 12.0%, followed by growth of $7.6 million, or 2.1%, in commercial mortgage loans on real estate, $13.9 million, or 12.7%, in construction and land development loans, $3.4 million in agriculture loans secured by real estate loans and $405,000 in all other loans. Offsetting these growth categories were decreases in residential 1-4 family loans of $7.4 million, multifamily loans of $2.0 million, consumer installment loans of $2.0 million and second mortgages of $723,000.

 

 5 

 

 

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

 

LOANS (excluding PCI loans)                        
(Dollars in thousands)  31-Mar-19   31-Dec-18   31-Mar-18 
   Amount   % of Loans   Amount   % of Loans   Amount   % of Loans 
Mortgage loans on real estate:                              
Residential 1-4 family  $215,348    21.58%  $216,268    21.77%  $222,717    23.10%
Commercial   379,112    37.99    379,904    38.23    371,494    38.52 
Construction and land development   123,475    12.37    120,413    12.12    109,534    11.36 
Second mortgages   6,966    0.70    6,778    0.68    7,689    0.80 
Multifamily   57,931    5.81    59,557    5.99    59,920    6.21 
Agriculture   10,780    1.08    8,370    0.84    7,424    0.77 
Total real estate loans   793,612    79.53    791,290    79.63    778,778    80.76 
Commercial loans   190,832    19.12    188,722    18.99    170,445    17.67 
Consumer installment loans   11,923    1.19    12,048    1.21    13,878    1.44 
All other loans   1,615    0.16    1,645    0.17    1,210    0.13 
Gross loans   997,982    100.00%   993,705    100.00%   964,311    100.00%
Allowance for loan losses   (8,661)        (8,983)        (8,968)     
Loans, net of unearned income  $989,321        $984,722        $955,353      

 

 

The Company’s securities portfolio, excluding restricted equity securities, declined $7.3 million since year end 2018 to $241.6 million at March 31, 2019. Securities balances declined $5.1 million since March 31, 2018. Net losses of $14,000 were recognized during the first quarter of 2019 compared with $12,000 in net losses in the fourth quarter of 2018. Net gains of $30,000 were recognized in the first quarter of 2018. 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 $35.8 million, $34.2 million and $21.3 million at March 31, 2019, December 31, 2018 and March 31, 2018, respectively. There were federal funds sold of $240,000 at March 31, 2019 and federal funds purchased of $19.4 million at December 31, 2018. At March 31, 2018, there were federal funds purchased of $20.0 million and federal funds sold of $152,000. Interest bearing bank balances were $18.8 million at March 31, 2019 compared with $15.9 million at December 31, 2018 and $9.1 million at March 31, 2018.

 

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

 

SECURITIES PORTFOLIO                        
(Dollars in thousands)  31-Mar-19   31-Dec-18   31-Mar-18 
   Amortized
Cost
   Fair
Value
   Amortized
Cost
   Fair
Value
   Amortized
Cost
   Fair
Value
 
Securities Available for Sale                        
U.S. Treasury issue  $11,982   $11,748   $13,460   $13,124   $14,967   $14,528 
U.S. Government agencies   23,949    23,848    24,689    24,609    32,179    32,300 
State, county, and municipal   110,171    111,932    112,465    112,542    123,949    123,574 
Mortgage backed securities   41,342    41,293    46,877    46,417    24,663    23,949 
Asset backed securities   5,222    5,270    5,342    5,411    6,954    7,100 
Corporate   6,002    6,003    4,685    4,623    748    714 
Total securities available for sale  $198,668   $200,094   $207,518   $206,726   $203,460   $202,165 

 

   31-Mar-19   31-Dec-18   31-Mar-18 
   Amortized
Cost
   Fair
Value
   Amortized
Cost
   Fair
Value
   Amortized
Cost
   Fair
Value
 
Securities Held to Maturity                              
U.S. Government agencies  $10,000   $9,859   $10,000   $9,790   $10,000   $9,745 
State, county, and municipal   31,458    32,186    32,108    32,463    34,111    34,405 
Mortgage backed securities   -    -    -    -    423    428 
Total securities held to maturity  $41,458   $42,045   $42,108   $42,253   $44,534   $44,578 

 

 

Interest bearing deposits at March 31, 2019 were $1.002 billion, an increase of $2.5 million from December 31, 2018 and $56.1 million, or 5.9%, greater than at March 31, 2018. Time deposits less than or equal to $250,000 increased by $14.5 million, or 3.0%, during the first quarter of 2019, followed by increases of $4.9 million in time deposits over $250,000 and $1.3 million in savings account balances. The increase in time deposit balances was the result of a shift during the quarter from NOW and MMDA balances as higher rates were an enhancement to consumers to obtain higher returns on their deposit balances. NOW accounts declined $14.3 million during the first quarter of 2019 while MMDA balances fell by $3.9 million.

 

 6 

 

 

When compared with March 31, 2018, interest bearing deposits grew by $56.1 million. Time deposits less than or equal to $250,000 grew by 14.7%, or $64.2 million, while time deposits over $250,000 grew by $19.4 million, or 16.9%. Offsetting these year-over-year increases was a decrease of $25.4 million in MMDA balances, the result of the expiration of new account promotional rates at new branches and the shifting of funds by customers into higher yielding time deposits.

 

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

 

INTEREST BEARING DEPOSITS            
(Dollars in thousands)            
   31-Mar-19   31-Dec-18   31-Mar-18 
NOW  $151,647   $165,946   $154,236 
MMDA   123,024    126,933    148,404 
Savings   94,229    92,910    93,724 
Time deposits less than or equal to $250,000   499,698    485,155    435,481 
Time deposits over $250,000   133,817    128,945    114,438 
Total interest bearing deposits  $1,002,415   $999,889   $946,283 

 

 

FHLB advances were $69.1 million at March 31, 2019, compared with $59.4 million at December 31, 2018 and $101.1 million at March 31, 2018. The increase of $9.7 million in FHLB advances in the first quarter of 2019 was used to reduce federal funds purchased levels of $19.4 million at year end 2018.

 

Shareholders’ equity was $142.3 million at March 31, 2019, $137.5 million at December 31, 2018 and $125.0 million at March 31, 2018. Shareholders equity to assets was 10.2% at March 31, 2019, 9.9% December 31, 2018 and 9.2% at March 31, 2018. The Board of Directors recommenced a quarterly dividend to shareholders in the first quarter of 2019, with a $0.03 per common share dividend that totaled $665,000 in the aggregate and was paid on April 1, 2019.

 

Asset Quality – excluding PCI loans

 

Nonperforming loans were $11.0 million at March 31, 2019, a $1.5 million increase from $9.5 million at December 31, 2018. The increase was the net result of $3.4 million in additions to nonperforming loans and $1.9 million in reductions. The increase related mainly to two commercial loans totaling $616,000 and one multifamily real estate loan of $2.6 million. With respect to the reductions in nonperforming loans, $97,000 were payments to existing credits, $542,000 were charge-offs, and $1.3 million were paid off.

 

Total non-performing assets totaled $12.2 million at March 31, 2019 compared with $10.6 million at December 31, 2018. Total nonperforming assets decreased $1.0 million, or 7.9%, since March 31, 2018. There were net charge-offs of $322,000 in the first quarter of 2019, $10,000 in the fourth quarter of 2018 and $1,000 in the first quarter of 2018.

The allowance for loan losses equaled 78.8% of nonaccrual loans at March 31, 2019, compared with 94.6% at December 31, 2018 and 88.9% at March 31, 2018. The ratio of nonperforming assets to loans and other real estate owned (OREO) was 1.22% at March 31, 2019 compared with 1.07% at December 31, 2018 and 1.37% at March 31, 2018.

 

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

 

ALLOWANCE FOR LOAN LOSSES                    
(Dollars in thousands)  2019   2018 
   First   Fourth   Third   Second   First 
   Quarter   Quarter   Quarter   Quarter   Quarter 
Allowance for loan losses:                         
Beginning of period  $8,983   $8,993   $9,089   $8,968   $8,969 
Provision for loan losses   -    -    -    -    - 
Net (charge-offs) recoveries   (322)   (10)   (96)   121    (1)
End of period  $8,661   $8,983   $8,993   $9,089   $8,968 

 

 7 

 

 

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

  

ASSET QUALITY

(Dollars in thousands)  2019   2018 
   31-Mar-19   31-Dec-18   30-Sep-18   30-Jun-18   31-Mar-18 
Nonaccrual loans  $10,990   $9,500   $8,894   $9,343   $10,090 
Total nonperforming loans   10,990    9,500    8,894    9,343    10,090 
Other real estate owned   1,225    1,099    1,732    3,147    3,166 
Total nonperforming assets  $12,215   $10,599   $10,626   $12,490   $13,256 
                          
Allowance for loan losses to loans   0.87%   0.90%   0.93%   0.94%   0.93%
Allowance for loan losses to nonaccrual loans   78.81    94.57    101.11    97.28    88.88 
Nonperforming assets to loans and other real estate   1.22    1.07    1.10    1.29    1.37 
Net charge-offs/(recoveries) for quarter to average loans, annualized   0.13%   -%   0.04%   (0.05)%   -%

 

 

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

 

NONACCRUAL LOANS        
(Dollars in thousands)  31-Mar-19   31-Dec-18   31-Mar-18 
   Amount   Amount   Amount 
Mortgage loans on real estate:               
Residential 1-4 family  $1,133   $1,257   $1,985 
Commercial   1,299    2,123    1,466 
Construction and land development   4,101    4,571    5,554 
Multifamily   2,552    -    - 
Agriculture   -    -    67 
Total real estate loans  $9,085   $7,951   $9,072 
Commercial loans   1,899    1,549    1,014 
Consumer installment loans   6    -    4 
Gross loans  $10,990   $9,500   $10,090 

 

 

Capital Requirements

 

The Bank’s ratio of total risk-based capital was 13.5% at March 31, 2019 compared with 13.3% at December 31, 2018. The tier 1 risk-based capital ratio was 12.7% at March 31, 2019 and 12.6% at December 31, 2018. The Bank’s tier 1 leverage ratio was 10.3% at March 31, 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 March 31, 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, April 26, 2019, at 10:00 a.m. Eastern Time to discuss the financial results for the first 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 April 26, 2019, until 9:00 a.m. Eastern Time on May 17, 2019. The replay will be available by dialing 877-344-7529 and entering access code 10130676 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 two loan production offices. The Bank will close its Fairfax branch office on May 31, 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.

 

 8 

 

 

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.

 

Contact: Bruce E. Thomas

Executive Vice President/Chief Financial Officer

Community Bankers Trust Corporation

804-934-9999 

 

 9 

 

 

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED BALANCE SHEETS

UNAUDITED

(Dollars in thousands)

   31-Mar-19   31-Dec-18   31-Mar-18 
Assets               
Cash and due from banks  $16,809   $18,292   $12,013 
Interest bearing bank deposits   18,757    15,927    9,141 
Federal funds sold   240    -    152 
Total cash and cash equivalents   35,806    34,219    21,306 
                
Securities available for sale, at fair value   200,094    206,726    202,165 
Securities held to maturity, at cost   41,458    42,108    44,534 
Equity securities, restricted, at cost   8,426    7,800    9,356 
Total securities   249,978    256,634    256,055 
                
Loans held for resale   396    146    - 
                
Loans   997,982    993,705    964,311 
Purchased credit impaired (PCI) loans   36,803    38,285    42,215 
Allowance for loan losses   (8,661)   (8,983)   (8,968)
Allowance for loan losses – PCI loans   (156)   (156)   (200)
Net loans   1,025,968    1,022,851    997,358 
                
Bank premises and equipment, net   31,142    31,488    29,761 
Bank premises and equipment held for sale   1,252    1,252    525 
Leased assets   7,177    -    - 
Other real estate owned   1,225    1,099    3,166 
Bank owned life insurance   29,015    28,834    28,282 
Other assets   17,311    16,627    16,779 
Total assets  $1,399,270   $1,393,150   $1,353,232 
                
Liabilities               
Deposits:               
Noninterest bearing  $165,708   $165,086   $150,037 
Interest bearing   1,002,415    999,889    946,283 
Total deposits   1,168,123    1,164,975    1,096,320 
                
Federal funds purchased   -    19,440    20,000 
Federal Home Loan Bank advances   69,072    59,447    101,061 
Trust preferred capital notes   4,124    4,124    4,124 
Lease liabilities   7,418    -    - 
Other liabilities   8,225    7,703    6,683 
Total liabilities   1,256,962   $1,255,689   $1,228,188 
                
Shareholders' Equity               
Common stock (200,000,000 shares authorized $0.01 par value; 22,168,979, 22,132,304, and 22,084,193  shares issued and outstanding, respectively)   222    221    221 
Additional paid in capital   149,115    148,763    147,935 
Retained deficit   (7,406)   (10,244)   (21,338)
Accumulated other comprehensive (loss) income   377    (1,279)   (1,774)
Total shareholders' equity   142,308    137,461    125,044 
Total liabilities and shareholders' equity  $1,399,270   $1,393,150   $1,353,232 
                
Shareholder equity to Assets   10.17%   9.87%   9.24%

 

 10 

 

 

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands)  Three months ended 
   31-Mar-19   31-Dec-18   30-Sep-18   30-Jun-18   31-Mar-18 
Interest and dividend income                         
Interest and fees on loans  $12,419   $12,169   $11,893   $11,353   $10,876 
Interest and fees on PCI loans   1,293    1,285    1,265    1,274    1,398 
Interest on federal funds sold   -    4    -    1    - 
Interest on deposits in other banks   96    100    94    69    40 
Interest and dividends on securities                         
  Taxable   1,522    1,442    1,364    1,266    1,186 
  Nontaxable   476    508    528    547    579 
Total interest and dividend income   15,806    15,508    15,144    14,510    14,079 
Interest expense                         
Interest on deposits   3,234    3,060    2,699    2,355    2,143 
Interest on borrowed funds   447    355    465    508    469 
Total interest expense   3,681    3,415    3,164    2,863    2,612 
                          
Net interest income   12,125    12,093    11,980    11,647    11,467 
                          
Provision for loan losses   -    -    -    -    - 
Net interest income after provision for loan losses   12,125    12,093    11,980    11,647    11,467 
                          
Noninterest income                         
Service charges and fees   609    692    626    611    581 
Gain (loss) on securities transactions, net   (14)   (12)   68    (16)   30 
Gain on sale of loans, net   -    -    65    53    - 
Income on bank owned life insurance   181    184    184    184    183 
Mortgage loan income   62    31    97    80    111 
Other   176    189    171    223    128 
Total noninterest income   1,014    1,084    1,211    1,135    1,033 
                          
Noninterest expense                         
Salaries and employee benefits   5,381    5,580    5,029    5,019    5,849 
Occupancy expenses   930    827    780    769    812 
Equipment expenses   381    374    366    344    314 
FDIC assessment   150    177    195    198    206 
Data processing fees   568    655    482    499    486 
Other real estate expenses, net   (8)   (45)   63    45    50 
Other operating expenses   1,438    1,465    1,376    1,313    1,649 
Total noninterest expense   8,840    9,033    8,291    8,187    9,366 
                          
Income before income taxes   4,299    4,144    4,900    4,595    3,134 
Income tax expense   796    787    945    813    540 
Net income  $3,503   $3,357   $3,955   $3,782   $2,594 

 

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COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Dollars in thousands)

 

   Three months ended March 31, 2019   Three months ended March 31, 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  $999,047   $12,419    5.04%  $943,398   $10,876    4.68%
PCI loans,  including fees   37,783    1,293    13.69    43,331    1,398    12.91 
   Total loans   1,036,830    13,712    5.36    986,729    12,274    5.05 
Interest bearing bank balances   14,376    96    2.70    9,060    40    1.80 
Federal funds sold   55    -    2.41    58    -    1.55 
Securities (taxable)   186,370    1,522    3.27    176,563    1,186    2.69 
Securities (tax exempt) (1)   67,211    603    3.59    81,342    733    3.60 
Total earning assets   1,304,842    15,933    4.95    1,253,752    14,233    4.60 
Allowance for loan losses   (9,084)             (9,177)          
Non-earning assets   96,770              88,610           
   Total assets  $1,392,528             $1,333,185           
                               
LIABILITIES AND                              
SHAREHOLDERS’ EQUITY                              
Demand - interest bearing  $157,773   $87    0.22   $155,682   $77    0.20 
Savings and money market   220,945    293    0.54    238,738    314    0.53 
Time deposits   623,417    2,854    1.86    551,987    1,752    1.29 
    Total interest bearing deposits   1,002,135    3,234    1.31    946,407    2,143    0.92 
Short-term borrowings   6,837    50    2.94    2,343    11    1.95 
FHLB and other borrowings   73,214    397    2.20    105,532    458    1.74 
Total interest bearing liabilities   1,082,186    3,681    1.38    1,054,282    2,612    1.00 
Noninterest bearing deposits   160,496              148,371           
Other liabilities   9,974              5,542           
Total liabilities   1,252,656              1,208,195           
Shareholders’ equity   139,872              124,990           
Total liabilities and                              
       shareholders’ equity  $1,392,528             $1,333,185           
Net interest earnings       $12,252             $11,621      
Interest spread             3.57%             3.60%
Net interest margin             3.81%             3.76%
                               
Tax-equivalent adjustment:                              
Securities       $127             $155      

 

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

 

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