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| 8-K - FORM 8-K - Community Bankers Trust Corp | v392511_8k.htm |
Exhibit 99.1
Community Bankers Trust Corporation Reports Results for Third Quarter 2014
Non-covered loans increased $11.9 million for the quarter; up $43.2 million or 7.2% since year-end
Net income available to common shareholders increased 17.9% for the third quarter; up 29.4% for the nine-month period
Conference Call on Thursday, October 30, 2014, at 10:00 a.m. Eastern Time
Richmond, VA, October 30, 2014 - Community Bankers Trust Corporation (the “Company”) (NASDAQ: ESXB), the holding company for Essex Bank (the “Bank”), today reported results for the third quarter and first nine months of 2014.
operating Highlights
| · | Non-covered loans grew $11.9 million during the third quarter, and total non-covered loan growth during the first nine months of 2014 has equaled $43.2 million, or 7.2%. |
| · | Asset quality remained sound with no provision for loan losses. The ratio of the allowance for loan losses to total non-covered loans was 1.55% at September 30, 2014. In addition, the ratio of the valuation reserve to non-accrual loans increased to 102.98% at September 30, 2014. |
| · | Non-accrual loans declined $1.7 million, or 15.2%, during the third quarter. Nonaccrual loans have declined $2.6 million, or 21.7%, since year end 2013. |
Financial HIGHLIGHTS
| · | Net income available to common shareholders increased 29.4% to $5.0 million for the first nine months of 2014, as compared with $3.9 million for the first nine months of 2013. |
| · | Net income available to common shareholders was $1.8 million for the third quarter, increasing 17.9% from the second quarter of this year. |
| · | Fully diluted earnings per common share were $0.23 for the nine months ended September 30, 2014 compared with $0.18 for the same period in 2013. |
| · | Fully diluted earnings per common share were $0.08 for the third quarter of 2014 compared with $0.07 for the third quarter of 2013. |
MANAGEMENT COMMENTS
Rex L. Smith, III, President and Chief Executive Officer, stated, “As our results show, we consistently continue to improve our financial performance. We are especially pleased with the more than 20% reduction in our nonaccrual loans over the past year. In addition, we have also experienced strong growth in our non-covered loan portfolio. Since September 30, 2013, we have increased these loans by $75.3 million, which includes, in addition to organic growth, $4.9 million in loans that moved from the FDIC covered loan portfolio earlier this year. Our loan pipeline remains strong for the rest of 2014 as we gain share from the central Virginia market up and into the Baltimore market.”
Smith added, “We are excited about the growth in our branch network in 2014 and into 2015. Our new branches in Annapolis, Maryland and Richmond, Virginia have contributed to a meaningful increase in our noninterest bearing deposits. We continue to be active and strategic with our plans for new branch locations and relocations of existing ones.”
Smith concluded, “All of our operational results, coupled with the savings from moving to interest payments from dividend payments following the repayment of our TARP investment with a third-party loan, have resulted in significant increases in our net income available to common shareholders when comparing all periods. We continue to be bullish about where we are and what we can accomplish in the future.”
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RESULTS OF OPERATIONS
Net income was $1.8 million for the third quarter of 2014, compared with $1.7 million in the second quarter of 2014 and $1.8 million in the third quarter of 2013. Net income available to common shareholders was $1.8 million in the third quarter of 2014 compared with $1.5 million in the second quarter of 2014 and $1.5 million in the third quarter of 2013. The improvement in net income during the third quarter of 2014 versus the second quarter of 2014 was due to increases in net interest and noninterest income of $124,000 and $196,000, respectively, which more than offset the $179,000 increase in noninterest expenses. Net income for the third quarter of 2014 versus the third quarter of 2013 reflected an increase of $31,000, or 1.7%.
Earnings per common share, basic and fully diluted, were $0.08 per share for the third quarter of 2014 compared with $0.07 per share for the second quarter of 2014 and $0.07 per share for the third quarter of 2013.
Net income was $5.3 million for the nine months ended September 30, 2014 compared with $4.7 million for the first nine months of 2013. The $544,000, or 11.5%, improvement year over year was primarily driven by an $828,000 reduction in noninterest expenses. Net income available to common shareholders was $5.0 million in the first nine months of 2014 compared with $3.9 million in the first nine months of 2013, an increase of 29.4%. Earnings per common share, basic and fully diluted, were $0.23 per share and $0.18 per share for the respective time frames.
Note: The income statement impact of the Company’s repayment of its outstanding TARP preferred stock investment in April 2014, in the amount of $10,680,000, through a term loan with a correspondent bank is reflected in the Company’s net income available to common shareholders. The dividends paid on the TARP investment up to the date of repayment were at a rate of 5% until February 2014 (and 9% thereafter) and were included in net income available to common shareholders, but not in net income. The interest on the term loan, which was 3.73% at September 30, 2014, is interest expense and is reflected in both net income and net income available to common shareholders.
The following table presents summary income statements for the three and nine months ended September 30, 2014 and September 30, 2013, respectively.
SUMMARY INCOME STATEMENT
| (Dollars in thousands) | For the three months ended | For the nine months ended | ||||||||||||||
| 30-Sep-14 | 30-Sep-13 | 30-Sep-14 | 30-Sep-13 | |||||||||||||
| Interest income | $ | 12,665 | $ | 13,171 | $ | 36,999 | $ | 37,828 | ||||||||
| Interest expense | 1,783 | 1,749 | 5,050 | 5,434 | ||||||||||||
| Net interest income | 10,882 | 11,422 | 31,949 | 32,394 | ||||||||||||
| Provision for loan losses | - | - | - | - | ||||||||||||
| Net interest income after provision | ||||||||||||||||
| for loan losses | 10,882 | 11,422 | 31,949 | 32,394 | ||||||||||||
| Noninterest income | 1,166 | 593 | 3,437 | 3,257 | ||||||||||||
| Noninterest expense | 9,538 | 9,433 | 28,074 | 28,902 | ||||||||||||
| Net income before income taxes | 2,510 | 2,582 | 7,312 | 6,749 | ||||||||||||
| Income tax expense | 697 | 800 | 2,055 | 2,036 | ||||||||||||
| Net income | 1,813 | 1,782 | 5,257 | 4,713 | ||||||||||||
| Dividends on preferred stock | - | 208 | 247 | 650 | ||||||||||||
| Accretion of preferred stock discount | - | 73 | - | 190 | ||||||||||||
| Net income available | ||||||||||||||||
| to common shareholders | $ | 1,813 | $ | 1,501 | $ | 5,010 | $ | 3,873 | ||||||||
| EPS Basic | $ | 0.08 | $ | 0.07 | $ | 0.23 | $ | 0.18 | ||||||||
| EPS Diluted | $ | 0.08 | $ | 0.07 | $ | 0.23 | $ | 0.18 | ||||||||
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Net Interest Income
Linked Quarter Basis
Net interest income was $10.9 million for the quarter ended September 30, 2014, compared with $10.8 million for the quarter ended June 30, 2014. This represents an increase of $124,000, or 1.2%. Interest income on a linked quarter basis increased $210,000, or 1.7%, to equal $12.7 million. While FDIC covered loan interest income declined $819,000, non-covered loan interest income increased $834,000, or 11.4%, during the third quarter. The decline in FDIC covered interest income was a direct result of lower cash payments on ADC loans, which had been previously written down to a zero carrying value. These cash payments totaled $706,000 in the second quarter of 2014 and $221,000 in the third quarter. Non-covered loan interest income growth was the direct result of higher average loan balances in the third quarter influenced by a full quarter’s effect of the significant loan growth noted in the second quarter and continued solid loan growth in the third quarter. Average non-covered loan balances increased $29.5 million, or 4.8%, on a linked quarter basis. Furthermore, the yield on the non-covered portfolio increased 24 basis points during the quarter. This increase was influenced by $286,000 in cash basis interest received on a non-accrual loan, as well as $110,000 less in premium amortization on the USDA portfolio in the third quarter versus the second quarter. Absent of these two changes, the adjusted yield would have been flat when compared to the prior quarter.
Interest expense increased $86,000, or 5.1%, on a linked quarter basis and was primarily driven by higher average balances on all interest bearing liabilities. The Company’s cost of interest bearing liabilities remained relatively flat at 0.75% versus 0.74% in the prior quarter. Despite the change in covered loan interest income noted above, the tax equivalent net interest margin declined only 7 basis points from 4.35% in the second quarter of 2014 to 4.28% in the third quarter of 2014. Likewise, the interest spread decreased from 4.29% to 4.22% on a linked quarter basis.
Year-Over-Year
Net interest income declined $540,000, or 4.7%, from the third quarter of 2013 to the third quarter of 2014. Interest income declined $506,000, or 3.8%, over this time period. The most significant decline was evidenced in the FDIC covered portfolio. Cash payments on loans related to pools that had previously been written down to a zero carrying value equaled $887,000 in the third quarter of 2013. Cash payments in the third quarter of 2014 were $221,000, representing a $666,000, or 75.1%, swing from the second quarter. Correspondingly, the yield on the covered loan portfolio fell from 18.11% for the third quarter of 2013 to 15.00% in the third quarter of 2014. While this loss in cash income was noteworthy and resulted in a decline in loan yields and the net interest margin, it was partially offset by the increase in non-covered loan income. Non-covered loan interest income increased $612,000, or 8.1%, when comparing the third quarter of 2014 with the third quarter of 2013. This increase was the direct result of robust loan growth noted during the second and third quarters of 2014.
Interest expense increased a modest $34,000, or 2.0%, when comparing the third quarter of 2014 and the third quarter of 2013. Interest expense on deposits declined $64,000, or 4.1%, while interest expense on other borrowings increased $97,000. The average balances on deposits declined $26.7 million year over year, which was primarily the result of the sale of four branches in Georgia. Meanwhile, the Company increased its level of FHLB borrowings to fund the sale. Over the same time frame, average FHLB advances increased $30.2 million, yet the expense associated with the borrowings declined $10,000. Lower advance rates more than offset the increased volume as the cost of these borrowings improved 49 basis points over this time frame. This increase is solely due to the interest related to the loan that the Company closed in the second quarter of 2014 for which the proceeds were used to pay off TARP. The interest on the loan equaled $107,000 for the third quarter of 2014, which approximates 56% of the expense of a TARP dividend, on an after tax basis.
The tax equivalent net interest margin declined 27 basis points from 4.55% in the third quarter of 2013 to 4.28% in the third quarter of 2014. Likewise, the interest spread decreased from 4.49% to 4.22% over the same time period. The decline in the margin was precipitated by the reduction in cash basis covered income which drove overall loan yields down 60 basis points.
Nine Month Period
Net interest income declined $445,000, or 1.4%, from the nine months ended September 30, 2013 to the first nine months of 2014. An $829,000 decline in interest income more than offset a decline of $384,000 in interest expense over this time period. Interest and fees on non-covered loans were $22.5 million compared with $22.6 million for the first nine months of 2014 and 2013, respectively. Despite a $30.6 million increase in average non-covered loan balances, the yield earned on these balances declined 29 basis points to 4.88% at September 30, 2014. Interest and fees on FDIC covered loans declined $272,000 when comparing the nine months ended September 30, 2014 to the same period in 2013. Cash payments on loans related to pools that were written down to a zero carrying value equaled $1.3 million during the first nine months of 2014 compared to cash payments of $991,000 for the same period in 2013. Interest income on securities was $5.8 million for the first nine months of 2014 compared with $6.2 million for the same period in 2013, a decrease of $388,000. Average balances on securities were $17.6 million lower in the third quarter of 2014 compared with the third quarter of 2013 as loan growth was robust, and the tax equivalent yield on the portfolio remained relatively unchanged at 2.74%.
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The net interest margin declined only 5 basis points to 4.30% for the nine months ended September 30, 2014 versus the same period ended September 30, 2013. Despite the decline, lower average interest bearing deposits coupled with a 5 basis point improvement in the Company’s overall cost of funds positively impacted the margin.
The following table compares the Company’s net interest margin, on a tax-equivalent basis, for the three months ended September 30, 2014, September 30, 2013 and June 30, 2014 and for the nine months ended September 30, 2014 and September 30, 2013.
NET INTEREST MARGIN
| (Dollars in thousands) | For the three months ended | |||||||||||
| 30-Sep-14 | 30-Sep-13 | 30-Jun-14 | ||||||||||
| Average interest earning assets | $ | 1,022,220 | $ | 1,004,053 | $ | 999,963 | ||||||
| Interest income | $ | 12,665 | $ | 13,171 | $ | 12,455 | ||||||
| Interest income - tax-equivalent | $ | 12,804 | $ | 13,261 | $ | 12,542 | ||||||
| Yield on interest earning assets | 4.97 | % | 5.24 | % | 5.03 | % | ||||||
| Average interest bearing liabilities | $ | 938,127 | $ | 923,193 | $ | 924,910 | ||||||
| Interest expense | $ | 1,783 | $ | 1,749 | $ | 1,697 | ||||||
| Cost of interest bearing liabilities | 0.75 | % | 0.75 | % | 0.74 | % | ||||||
| Net interest income | $ | 10,882 | $ | 11,422 | $ | 10,758 | ||||||
| Net interest income - tax-equivalent | $ | 11,021 | $ | 11,512 | $ | 10,845 | ||||||
| Interest spread | 4.22 | % | 4.49 | % | 4.29 | % | ||||||
| Net interest margin | 4.28 | % | 4.55 | % | 4.35 | % | ||||||
| For the nine months ended | ||||||||||||
| 30-Sep-14 | 30-Sep-13 | |||||||||||
| Average interest earning assets | $ | 1,002,210 | $ | 1,003,813 | ||||||||
| Interest income | $ | 36,999 | $ | 37,828 | ||||||||
| Interest income - tax-equivalent | $ | 37,305 | $ | 38,079 | ||||||||
| Yield on interest earning assets | 4.98 | % | 5.07 | % | ||||||||
| Average interest bearing liabilities | $ | 922,681 | $ | 922,534 | ||||||||
| Interest expense | $ | 5,050 | $ | 5,434 | ||||||||
| Cost of interest bearing liabilities | 0.74 | % | 0.79 | % | ||||||||
| Net interest income | $ | 31,949 | $ | 32,394 | ||||||||
| Net interest income - tax-equivalent | $ | 32,255 | $ | 32,645 | ||||||||
| Interest spread | 4.24 | % | 4.28 | % | ||||||||
| Net interest margin | 4.30 | % | 4.35 | % | ||||||||
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Provision for Loan Losses
The Company did not have a provision for loan losses in 2013 or during the first nine months of 2014 with respect to either its non-covered loan portfolio or its FDIC covered loan portfolio. For the non-covered loan portfolio, this was the direct result of continued improvement in loan quality. The Company’s level of nonperforming assets and nonaccrual loans continues to improve, as discussed below.
Noninterest Income
Linked Quarter Basis
Noninterest income was $1.2 million for the third quarter of 2014 compared with $970,000 for the second quarter of 2014. The $196,000 increase in noninterest income on a linked quarter basis is primarily the result of higher securities gains coupled with gains on the sale of USDA loans during the third quarter of 2014. Securities gains equaled $115,000 for the third quarter of 2014 increasing $91,000. Management actively monitors the investment portfolio and looks for opportunities that provide a better mix, enhance yield, and support overall balance sheet management. Gains on the sales of USDA loans totaled $78,000 during the third quarter, increasing $51,000 from the prior quarter. Other noninterest income increased by $31,000, or 18.8%, on a linked quarter basis, the result of $55,000 in insurance commission received during the quarter. Service charges on deposit accounts increased $23,000, or 4.1%.
Year-Over-Year
Noninterest income increased $573,000, or 96.6%, from the third quarter of 2013 to the third quarter of 2014. The primary reason for the increase in noninterest income during the third quarter of 2014 versus the prior year was the loss of $614,000 on the sale of a loan in the third quarter of 2013. Otherwise, service charge income declined $157,000, or 21.2%, over the same time frame to equal $584,000 for the third quarter of 2014. This decline was driven by the reduction of service charge income from the former Georgia branches. Securities gains in the third quarter of 2013 were $38,000 versus $115,000 for the third quarter of 2014, an increase of 202.6%. Other operating income declined slightly by $33,000, or 14.4%, from the quarter ended September 30, 2013 to September 30, 2014. The major reason for this decline was a one-time $60,000 insurance benefit received in the third quarter of 2013.
Nine Month Period
For the nine months ended September 30, 2014, noninterest income totaled $3.4 million, an $180,000, or 5.5%, increase from the first nine months of 2013. Gains on the sales of loans were the single largest impetus for the increase. Loan sale gains increased $767,000 from the first nine months of 2013 to the first nine months of 2014. As noted earlier, management has selectively sold USDA loans to mitigate accelerated premium amortization, due to early payoff of loans held above par value. The Company also incurred a $614,000 loss on the sale of a non-USDA loan in the third quarter of 2013. This change year over year, more than offset a $471,000 reduction in service charge income as well as a $195,000 reduction in other operating income. The loss of service fee income was due to the sale of the Georgia branches. The reduction in other income was evidenced in a decline in mortgage income coupled with the one-time insurance benefit in the third quarter of 2013.
Noninterest Expenses
Linked Quarter Basis
Noninterest expenses totaled $9.5 million for the three months ended September 30, 2014 and $9.4 million for the second quarter of 2014, an increase of $179,000, or 1.9%. OREO expenses were $392,000 for the third quarter and $100,000 for the second quarter of 2014. The increase was the direct result of a $444,000 write-down on one OREO property during the third quarter, which was partially offset by rental income and gains on other properties sold. Other operating expenses increased $103,000, or 6.8%, on a linked quarter basis. The largest components driving this were increases of $61,000 and $40,000 in advertising expenses and credit expenses, respectively, from the second quarter to the third quarter of 2014. The single largest reduction in noninterest expenses noted on a linked quarter basis was in data processing fees. Data processing fees declined $108,000, or 23.3%, to $355,000 during the third quarter of 2014.
Year-Over-Year
Noninterest expenses increased a modest $105,000, or 1.1%, when comparing the third quarter of 2013 to the same period in 2014. The two largest increases in noninterest expenses noted during this time frame were evidenced in OREO expenses and other operating expenses. OREO expenses equaled $392,000 for the third quarter of 2014, increasing $425,000 from the same quarter in the prior year. This was solely due to the aforementioned write-down in the third quarter of 2014. Other operating expenses increased $274,000, or 20.5%, over the same time frame. Advertising expense and bank franchise tax increased $103,000 and $71,000, respectively. These expenses collectively resulted in the majority of the increase in other operating expenses and were partially mitigated by improvement in FDIC indemnification asset amortization, data processing fees, and intangible amortization. The Company benefitted from a $277,000, or 16.1%, decline in the indemnification asset amortization from the third quarter of 2013 to the third quarter of 2014. Data processing fees declined $130,000, or 26.8%, and intangible amortization improved $88,000, or 15.6%, over this time frame. The latter two savings were influenced heavily by the sale of the Georgia branches in the last quarter of 2013.
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Nine Month Period
Noninterest expenses declined $828,000, or 2.9%, when comparing the first nine months of 2013 and 2014. The majority of the decline was evidenced in four categories: OREO expenses, data processing fees, amortization of intangibles, and FDIC indemnification asset amortization. OREO expenses declined $431,000, or 35.7%, during the first nine months of 2014 when compared to the same period in 2013 despite the large write-down in the third quarter of this year. Data processing fees were $261,000 lower in the first nine months of 2014 compared with the same period in 2013, and intangible amortization was $265,000, or 15.6%, lower over the same time frame. These expense reductions were due in part to the sale of the Georgia branches. Lastly, the Company benefitted from a decrease of $394,000, or 8.2%, in indemnification asset amortization for the first nine months of 2014 versus the first nine months of 2013. Other operating expenses offset these expense improvements and were $4.4 million for the first nine months of 2014 compared with $3.8 million for the same period in 2013.
Income Taxes
Income tax expense was $697,000 for the three months ended September 30, 2014, compared with income tax expense of $649,000 and $800,000 for the second quarter of 2014 and third quarter of 2013, respectively. Income tax expense was $2.1 million and $2.0 million for the first nine months of 2014 and 2013, respectively.
FINANCIAL CONDITION
During the first nine months of 2014, total assets increased $39.3 million, or 3.6%, to $1.129 billion at September 30, 2014. Total assets increased $13.8 million, or 1.2%, over the past year from $1.115 billion at September 30, 2013. Total loans were $708.6 million at September 30, 2014, increasing $39.1 million since December 31, 2013. Total loans grew $62.3 million, or 9.6%, since September 30, 2013. Total non-covered loans were $644.2 million at September 30, 2014 and $596.2 million at December 31, 2013, increasing $48.1 million, or 8.1%. Total non-covered loans increased $75.3 million, or 13.2%, since September 30, 2013.
The September 30, 2014 total includes $4.9 million of loans formerly categorized under the FDIC loss share arrangement, which are now categorized as non-covered loans (the “PCI loans”). While these loans no longer have FDIC loss guaranties, they are subject to SOP 03-3 accounting rules; thus, they will not receive consideration under the allowance for loan losses under the normal non-covered portfolio. Excluding the $4.9 million mentioned above, non-covered loans would have increased $43.2 million, or 7.2%, and $70.3 million, or 12.4%, since December 31, 2013 and September 30, 2013, respectively.
The majority of the loan growth as evidenced by the chart below has been in the commercial real estate and residential real estate categories. Commercial real estate loans grew $35.0 million, or 14.2%, while residential real estate loans grew $18.2 million, or 12.6%, since year end.
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The following table shows the composition of the Company’s non-covered loan portfolio at September 30, 2014, December 31, 2013, and September 30, 2013.
NON-COVERED LOANS
| (Dollars in thousands) | 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | |||||||||||||||||||||
| Amount | % of Non- Covered Loans | Amount | % of Non- Covered Loans | Amount | % of Non- Covered Loans | |||||||||||||||||||
| Mortgage loans on real estate: | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 162,572 | 25.23 | % | $ | 144,382 | 24.21 | % | $ | 140,137 | 24.63 | % | ||||||||||||
| Commercial | 282,281 | 43.80 | % | 247,284 | 41.47 | % | 233,699 | 41.07 | % | |||||||||||||||
| Construction and land development | 53,529 | 8.31 | % | 55,278 | 9.27 | % | 53,117 | 9.33 | % | |||||||||||||||
| Second mortgages | 6,576 | 1.02 | % | 6,854 | 1.15 | % | 6,577 | 1.16 | % | |||||||||||||||
| Multifamily | 34,108 | 5.29 | % | 35,774 | 6.00 | % | 34,640 | 6.09 | % | |||||||||||||||
| Agriculture | 7,500 | 1.16 | % | 9,565 | 1.60 | % | 8,369 | 1.47 | % | |||||||||||||||
| Total real estate loans | 546,566 | 84.81 | % | 499,137 | 83.70 | % | 476,539 | 83.75 | % | |||||||||||||||
| Commercial loans | 90,707 | 14.08 | % | 90,142 | 15.12 | % | 85,440 | 15.01 | % | |||||||||||||||
| Consumer installment loans | 5,667 | 0.88 | % | 5,623 | 0.94 | % | 5,563 | 0.98 | % | |||||||||||||||
| All other loans | 1,489 | 0.23 | % | 1,435 | 0.24 | % | 1,480 | 0.26 | % | |||||||||||||||
| Gross loans | 644,429 | 100.00 | % | 596,337 | 100.00 | % | 569,022 | 100.00 | % | |||||||||||||||
| Allowance for loan losses | (9,862 | ) | (10,444 | ) | (10,653 | ) | ||||||||||||||||||
| Net unearned income/unamortized premium on loans | (188 | ) | (164 | ) | (62 | ) | ||||||||||||||||||
| Non-covered loans, net of unearned income | $ | 634,379 | $ | 585,729 | $ | 558,307 | ||||||||||||||||||
The Company’s securities portfolio, excluding equity securities, increased $10.3 million, or 3.5%, from $294.3 million at December 31, 2013 to $304.7 million at September 30, 2014. Realized gains of $494,000 occurred during the first nine months of 2014 through sales and call activity. During the third quarter of 2014, management purchased longer term, high quality tax-exempt municipal securities, which resulted in the growth noted above.
The Company had cash and cash equivalents of $18.5 million and $23.8 million at September 30, 2014 and December 31, 2013, respectively. Cash and cash equivalents were $30.1 million at September 30, 2013. Federal funds purchased at September 30, 2014 aggregated $3.3 million compared with $0 at December 31, 2013 and there were no securities sold under agreements to repurchase (repos) at September 30, 2014, versus $6.0 million in repos at December 31, 2013.
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The following table shows the composition of the Company’s securities portfolio, excluding equity securities, at September 30, 2014, December 31, 2013 and September 30, 2013.
SECURITIES PORTFOLIO
| (Dollars in thousands) | 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | |||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
| Securities Available for Sale | ||||||||||||||||||||||||
| U.S. Treasury issue and other | ||||||||||||||||||||||||
| U.S. Government agencies | $ | 82,019 | $ | 80,931 | $ | 99,789 | $ | 98,987 | $ | 100,518 | $ | 99,829 | ||||||||||||
| U.S. Government sponsored agencies | - | - | 487 | 486 | 487 | 489 | ||||||||||||||||||
| State, county and municipal | 135,469 | 136,928 | 138,884 | 134,096 | 137,396 | 134,144 | ||||||||||||||||||
| Corporate and other bonds | 12,011 | 11,942 | 6,369 | 6,349 | 7,398 | 7,408 | ||||||||||||||||||
| Mortgage backed securities - U.S. Government agencies | 2,507 | 2,402 | 3,608 | 3,439 | 7,777 | 7,693 | ||||||||||||||||||
| Mortgage backed securities - U.S. Government sponsored agencies | 26,113 | 26,008 | 22,631 | 22,420 | 21,156 | 21,074 | ||||||||||||||||||
| Total securities available for sale | $ | 258,119 | $ | 258,211 | $ | 271,768 | $ | 265,777 | $ | 274,732 | $ | 270,637 | ||||||||||||
| 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||
| Securities Held to Maturity | ||||||||||||||||||||||||
| State, county and municipal | $ | 32,040 | $ | 32,855 | $ | 9,385 | $ | 10,103 | $ | 11,455 | $ | 12,219 | ||||||||||||
| Mortgage backed securities - U.S. Government agencies | 5,186 | 5,478 | 6,604 | 7,002 | 7,244 | 7,644 | ||||||||||||||||||
| Mortgage backed securities - U.S. Government agencies | 9,250 | 9,729 | 12,574 | 13,200 | 14,211 | 14,899 | ||||||||||||||||||
| Total securities held to maturity | $ | 46,476 | $ | 48,062 | $ | 28,563 | $ | 30,305 | $ | 32,910 | $ | 34,762 | ||||||||||||
Interest bearing deposits at September 30, 2014 were $840.2 million, an increase of $18.0 million from December 31, 2013. NOW, MMDA and Savings account balances increased $2.7 million, $3.5 million, and $2.5 million, respectively, since December 31, 2013. Time deposit account balances increased $9.2 million, or 1.7%, during the first nine months of 2014. Brokered time deposits declined $18.6 million, or 17.7%, since year end as management allowed brokered time deposits to mature as needed. Brokered funding was used, in part, to fund the sale of the Georgia branches, and the corresponding generation of retail deposits was precipitated by several promotions management ran during the first nine months 2014. This was a strategic initiative to retain core retail funding while not increasing interest expense substantively.
FHLB advances were $81.6 million at September 30, 2014, compared with $77.1 million at December 31, 2013. The Company increased the level of FHLB advances due to the low cost nature of this funding source and to assist with funding the sale of the Georgia franchise in the fourth quarter of 2013. Long term debt totaled $9.7 million at September 30, 2014. This borrowing, initially in the amount of $10.7 million, was obtained in April 2014, and the proceeds were used to redeem the Company’s remaining outstanding TARP preferred stock. The Company made a $1.0 million principal payment during the third quarter.
| 8 |
The following table compares the mix of interest bearing deposits for September 30, 2014, December 31, 2013 and September 30, 2013.
INTEREST BEARING DEPOSITS
(Dollars in thousands)
| 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | ||||||||||
| NOW | $ | 104,788 | $ | 102,111 | $ | 93,026 | ||||||
| MMDA | 97,718 | 94,170 | 92,814 | |||||||||
| Savings | 77,664 | 75,159 | 73,996 | |||||||||
| Time deposits less than $100,000 | 240,045 | 235,482 | 222,657 | |||||||||
| Time deposits $100,000 and over | 319,971 | 315,287 | 213,011 | |||||||||
| Total interest bearing deposits | $ | 840,186 | $ | 822,209 | $ | 695,504 | ||||||
Shareholders’ equity was $104.5 million at September 30, 2014 and $106.7 million at December 31, 2013. While $11.5 million in equity was redeemed in connection with the repurchase of the TARP preferred stock and the associated warrant, shareholders’ equity declined only $2.1 million, or 2.0%. The offset was solid earnings retention as well as a $4.0 million improvement in other comprehensive income related to the unrealized gains and losses in the investment portfolio.
Asset Quality – non-covered assets
Nonaccrual loans were $9.5 million at September 30, 2014, declining $2.6 million from December 31, 2013 and $3.6 million from September 30, 2013. The $2.6 reduction in nonaccrual loans since December 31, 2013 was the net result of $2.8 million in additions to nonaccrual loans and $5.4 million in reductions. With respect to the reductions to nonaccrual loans, $1.2 million were returned to accruing status, $1.1 million were charged-off, $1.1 million were moved to OREO, and $2.0 million were the result of payments or payoffs to existing credits.
Total non-performing assets totaled $15.9 million at September 30, 2014, declining $2.4 million since December 31, 2013. The decline in non-performing assets was virtually all due to a reduction in nonaccrual loans as OREO balances increased slightly since year end 2013. There were net charge-offs of $392,000 in the third quarter of 2014 compared with $254,000 in the second quarter of 2014 and $870,000 in the third quarter of 2013.
The allowance for loan losses equaled 102.98% of non-covered nonaccrual loans at September 30, 2014 compared with 90.82% at June 30, 2014 and 81.67% at September 30, 2013. The ratio of the allowance for loan losses to total nonperforming assets was 62.03% at September 30, 2014 compared with 57.79% at June 30, 2014 and 49.45% at September 30, 2013. The ratio of nonperforming assets to loans and other real estate owned continued to decline. The ratio was 2.46% at September 30, 2014 compared with 2.77% at June 30, 2014 and 3.73% at September 30, 2013.
| 9 |
The following table reconciles the activity in the Company’s non-covered allowance for loan losses excluding PCI loans, by quarter, for the past five quarters.
CREDIT QUALITY
| (Dollars in thousands) | 2014 | 2013 | ||||||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||
| Allowance for loan losses: | ||||||||||||||||||||
| Beginning of period | $ | 10,156 | $ | 10,410 | $ | 10,444 | $ | 10,653 | $ | 11,523 | ||||||||||
| Provision for loan losses | - | - | - | - | - | |||||||||||||||
| Charge-offs | (603 | ) | (446 | ) | (152 | ) | (263 | ) | (1,018 | ) | ||||||||||
| Recoveries | 211 | 192 | 118 | 54 | 148 | |||||||||||||||
| Net charge-offs | (392 | ) | (254 | ) | (34 | ) | (209 | ) | (870 | ) | ||||||||||
| End of period | $ | 9,764 | $ | 10,156 | $ | 10,410 | $ | 10,444 | $ | 10,653 | ||||||||||
The following table sets forth selected asset quality data, excluding FDIC covered assets and PCI loans, and ratios for the dates indicated:
ASSET QUALITY (NON-COVERED)
| (Dollars in thousands) | 2014 | 2013 | ||||||||||||||||||
| 30-Sep | 30-Jun | 31-Mar | 31-Dec | 30-Sep | ||||||||||||||||
| Non-accruing loans | $ | 9,481 | $ | 11,183 | $ | 12,645 | $ | 12,105 | $ | 13,044 | ||||||||||
| Loans past due over 90 days and accruing interest | 178 | - | - | - | - | |||||||||||||||
| Total nonperforming non-covered loans | 9,659 | 11,183 | 12,645 | 12,105 | 13,044 | |||||||||||||||
| Other real estate owned non-covered | 6,261 | 6,390 | 5,439 | 6,244 | 8,496 | |||||||||||||||
| Total nonperforming non-covered assets | $ | 15,920 | $ | 17,573 | $ | 18,084 | $ | 18,349 | $ | 21,540 | ||||||||||
| Allowance for loan losses to loans | 1.55 | % | 1.62 | % | 1.75 | % | 1.75 | % | 1.87 | % | ||||||||||
| Allowance for loan losses to nonperforming assets | 62.03 | % | 57.79 | % | 57.56 | % | 56.92 | % | 49.45 | % | ||||||||||
| Allowance for loan losses to nonaccrual loans | 102.98 | % | 90.82 | % | 82.33 | % | 86.28 | % | 81.67 | % | ||||||||||
| Nonperforming assets to loans and other real estate | 2.46 | % | 2.77 | % | 3.02 | % | 3.05 | % | 3.73 | % | ||||||||||
| Net charge-offs for quarter to average loans, annualized | 0.25 | % | 0.17 | % | 0.02 | % | 0.14 | % | 0.59 | % | ||||||||||
A further breakout of nonaccrual loans, excluding PCI and covered loans, at September 30, 2014, December 31, 2013 and September 30, 2013 is below:
NON-COVERED NONACCRUAL LOANS
| (Dollars in thousands) | 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | |||||||||||||||||||||
| Amount | % of Non- Covered Loans | Amount | % of Non- Covered Loans | Amount | % of Non- Covered Loans | |||||||||||||||||||
| Mortgage loans on real estate: | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 3,748 | 0.58 | % | $ | 4,229 | 0.71 | % | $ | 4,492 | 0.79 | % | ||||||||||||
| Commercial | 624 | 0.10 | % | 1,382 | 0.23 | % | 1,530 | 0.27 | % | |||||||||||||||
| Construction and land development | 4,950 | 0.77 | % | 5,882 | 0.99 | % | 6,500 | 1.14 | % | |||||||||||||||
| Second mortgages | 61 | 0.01 | % | 225 | 0.04 | % | 135 | 0.02 | % | |||||||||||||||
| Agriculture | - | - | 205 | 0.03 | % | 208 | 0.04 | % | ||||||||||||||||
| Total real estate loans | $ | 9,383 | 1.46 | % | $ | 11,923 | 2.00 | % | $ | 12,865 | 2.26 | % | ||||||||||||
| Commercial loans | 8 | 0.00 | % | 127 | 0.02 | % | 127 | 0.02 | % | |||||||||||||||
| Consumer installment loans | 90 | 0.01 | % | 55 | 0.01 | % | 52 | 0.01 | % | |||||||||||||||
| All other loans | - | - | - | - | - | - | ||||||||||||||||||
| Gross loans | $ | 9,481 | 1.47 | % | $ | 12,105 | 2.03 | % | $ | 13,044 | 2.29 | % | ||||||||||||
| 10 |
Capital Requirements
The Company’s ratio of total risk-based capital was 14.7% at September 30, 2014 compared with 16.8% at December 31, 2013. The tier 1 risk-based capital ratio was 13.5% at September 30, 2014 and 15.6% at December 31, 2013. The Company’s tier 1 leverage ratio was 9.3% at September 30, 2014 and 9.5% at December 31, 2013. All capital ratios exceed regulatory minimums to be considered well capitalized. The decline in the ratios is primarily from the repayment of the TARP.
Earnings Conference Call and Webcast
The Company will host a conference call for the financial community on Thursday, October 30, 2014, at 10:00 a.m. Eastern Time to discuss the third quarter and year-to-date 2014 financial results. The public is invited to listen to this conference call by dialing 877-870-4263 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 October 30, 2014, until 9:00 a.m. Eastern Time on November 7, 2014. The replay will be available by dialing 877-344-7529 and entering access code 10054157 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 20 full-service offices, 14 of which are in Virginia and six of which are in Maryland. The Bank also operates two loan production offices in Virginia. The Bank closed its branch office in Landover Hills, Maryland on October 24, 2014.
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; assumptions and estimates that underlie the accounting for loan pools under the shared-loss agreements; 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, 2013 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
| 11 |
Consolidated Balance Sheets
Unaudited Condensed
(Dollars in thousands)
| 30-Sep-14 | 31-Dec-13 | 30-Sep-13 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 8,335 | $ | 10,857 | $ | 11,585 | ||||||
| Interest bearing bank deposits | 10,160 | 12,978 | 18,531 | |||||||||
| Total cash and cash equivalents | 18,495 | 23,835 | 30,116 | |||||||||
| Securities available for sale, at fair value | 258,211 | 265,777 | 270,637 | |||||||||
| Securities held to maturity | 46,476 | 28,563 | 32,910 | |||||||||
| Equity securities, restricted, at cost | 8,149 | 8,358 | 6,403 | |||||||||
| Total securities | 312,836 | 302,698 | 309,950 | |||||||||
| Loans held for sale | 239 | 100 | 25,396 | |||||||||
| Loans not covered by FDIC shared-loss agreements | 644,241 | 596,173 | 568,960 | |||||||||
| Loans covered by FDIC shared-loss agreements | 64,338 | 73,275 | 77,270 | |||||||||
| Allowance for loan losses (non-covered) | (9,862 | ) | (10,444 | ) | (10,653 | ) | ||||||
| Allowance for loan losses (covered) | (386 | ) | (484 | ) | (484 | ) | ||||||
| Net loans | 698,331 | 658,520 | 635,093 | |||||||||
| Bank premises and equipment | 26,255 | 27,872 | 28,078 | |||||||||
| Bank premises and equipment held for sale | 3,237 | - | 5,177 | |||||||||
| Other real estate owned, non-covered | 6,261 | 6,244 | 8,496 | |||||||||
| Other real estate owned, covered by FDIC | 1,752 | 2,692 | 2,145 | |||||||||
| FDIC receivable | 978 | 368 | 330 | |||||||||
| Bank owned life insurance | 21,278 | 20,795 | 20,622 | |||||||||
| Core deposit intangibles, net | 5,190 | 6,621 | 8,600 | |||||||||
| FDIC indemnification asset | 20,315 | 25,409 | 27,115 | |||||||||
| Other assets | 13,631 | 14,378 | 13,858 | |||||||||
| Total assets | $ | 1,128,798 | $ | 1,089,532 | $ | 1,114,976 | ||||||
| Liabilities | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest bearing | 81,526 | 70,132 | 72,795 | |||||||||
| Interest bearing | 840,186 | 822,209 | 695,504 | |||||||||
| Total deposits | 921,712 | 892,341 | 768,299 | |||||||||
| Deposits held for sale | - | - | 192,199 | |||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 3,287 | 6,000 | 7,000 | |||||||||
| Federal Home Loan Bank advances | 81,584 | 77,125 | 31,503 | |||||||||
| Long term debt | 9,680 | - | - | |||||||||
| Trust preferred capital notes | 4,124 | 4,124 | 4,124 | |||||||||
| Other liabilities | 3,863 | 3,283 | 3,381 | |||||||||
| Total liabilities | $ | 1,024,250 | $ | 982,873 | $ | 1,006,506 | ||||||
| Shareholders' Equity | ||||||||||||
| Preferred stock (5,000,000 shares authorized $0.01 par value; 0, 10,680 and 13,180 shares issued and outstanding, respectively) | - | 10,680 | 13,180 | |||||||||
| Discount on preferred stock | - | - | (44 | ) | ||||||||
| Warrants on preferred stock | - | 1,037 | 1,037 | |||||||||
| Common stock (200,000,000 shares authorized $0.01 par value; 21,782,826, 21,709,096, 21,701,131, shares issued and outstanding , respectively) | 218 | 217 | 217 | |||||||||
| Additional paid in capital | 145,238 | 144,656 | 144,595 | |||||||||
| Accumulated deficit | (40,812 | ) | (45,822 | ) | (46,736 | ) | ||||||
| Accumulated other comprehensive loss | (96 | ) | (4,109 | ) | (3,779 | ) | ||||||
| Total shareholders' equity | $ | 104,548 | $ | 106,659 | $ | 108,470 | ||||||
| Total liabilities and shareholders' equity | $ | 1,128,798 | $ | 1,089,532 | $ | 1,114,976 | ||||||
| 12 |
Consolidated Statements of Operations
Unaudited Condensed
| (Dollars in thousands) | Three months ended | Three months ended | ||||||||||||||||||
| YTD 2014 | 30-Sep-14 | 30-Jun-14 | YTD 2013 | 30-Sep-13 | ||||||||||||||||
| Interest and dividend income | ||||||||||||||||||||
| Interest and fees on loans | $ | 22,467 | $ | 8,125 | $ | 7,291 | $ | 22,646 | $ | 7,513 | ||||||||||
| Interest and fees on FDIC covered loans | 8,670 | 2,445 | 3,264 | 8,942 | 3,538 | |||||||||||||||
| Interest on federal funds sold | - | - | - | 3 | - | |||||||||||||||
| Interest on deposits in other banks | 46 | 11 | 22 | 33 | 11 | |||||||||||||||
| Investments (taxable) | 5,221 | 1,813 | 1,710 | 5,717 | 1,934 | |||||||||||||||
| Investments (nontaxable) | 595 | 271 | 168 | 487 | 175 | |||||||||||||||
| Total interest income | 36,999 | 12,665 | 12,455 | 37,828 | 13,171 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Interest on deposits | 4,365 | 1,504 | 1,453 | 4,869 | 1,568 | |||||||||||||||
| Interest on short-term borrowings | 4 | 2 | 1 | 4 | 1 | |||||||||||||||
| Interest on other borrowed funds | 681 | 277 | 243 | 561 | 180 | |||||||||||||||
| Total interest expense | 5,050 | 1,783 | 1,697 | 5,434 | 1,749 | |||||||||||||||
| Net interest income | 31,949 | 10,882 | 10,758 | 32,394 | 11,422 | |||||||||||||||
| Provision for loan losses | - | - | - | - | - | |||||||||||||||
| Net interest income after provision for loan losses | 31,949 | 10,882 | 10,758 | 32,394 | 11,422 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Service charges on deposit accounts | 1,634 | 584 | 561 | 2,105 | 741 | |||||||||||||||
| Gain on sale of securities, net | 494 | 115 | 24 | 446 | 38 | |||||||||||||||
| Gain/(loss) on sale of other loans, net | 153 | 78 | 27 | (614 | ) | (614 | ) | |||||||||||||
| Income on bank owned life insurance | 578 | 193 | 193 | 547 | 199 | |||||||||||||||
| Other | 578 | 196 | 165 | 773 | 229 | |||||||||||||||
| Total noninterest income | 3,437 | 1,166 | 970 | 3,257 | 593 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | 12,023 | 4,072 | 4,028 | 11,990 | 4,096 | |||||||||||||||
| Occupancy expenses | 1,966 | 631 | 687 | 2,070 | 690 | |||||||||||||||
| Equipment expenses | 734 | 255 | 260 | 790 | 276 | |||||||||||||||
| Legal fees | 67 | 10 | 29 | 75 | 24 | |||||||||||||||
| Professional fees | 328 | 86 | 135 | 241 | 52 | |||||||||||||||
| FDIC assessment | 611 | 210 | 194 | 615 | 225 | |||||||||||||||
| Data processing fees | 1,312 | 355 | 463 | 1,573 | 485 | |||||||||||||||
| FDIC indemnification asset amortization | 4,415 | 1,439 | 1,478 | 4,809 | 1,716 | |||||||||||||||
| Amortization of intangibles | 1,431 | 477 | 477 | 1,696 | 565 | |||||||||||||||
| Other real estate expenses | 775 | 392 | 100 | 1,206 | (33 | ) | ||||||||||||||
| Other operating expenses | 4,412 | 1,611 | 1,508 | 3,837 | 1,337 | |||||||||||||||
| Total noninterest expense | 28,074 | 9,538 | 9,359 | 28,902 | 9,433 | |||||||||||||||
| Net income before income taxes | 7,312 | 2,510 | 2,369 | 6,749 | 2,582 | |||||||||||||||
| Income tax expense | 2,055 | 697 | 649 | 2,036 | 800 | |||||||||||||||
| Net income | 5,257 | 1,813 | 1,720 | 4,713 | 1,782 | |||||||||||||||
| Dividends on preferred stock | 247 | - | 182 | 650 | 208 | |||||||||||||||
| Accretion of discount on preferred stock | - | - | - | 190 | 73 | |||||||||||||||
| Net income available to common | ||||||||||||||||||||
| shareholders | $ | 5,010 | $ | 1,813 | $ | 1,538 | $ | 3,873 | $ | 1,501 | ||||||||||
| 13 |
Income Statement Trend Analysis
Unaudited
| (Dollars in thousands) | Three months ended | |||||||||||||||||||
| 30-Sep-14 | 30-Jun-14 | 31-Mar-14 | 31-Dec-13 | 30-Sep-13 | ||||||||||||||||
| Interest and dividend income | ||||||||||||||||||||
| Interest and fees on loans | $ | 8,125 | $ | 7,291 | $ | 7,051 | $ | 7,050 | $ | 7,513 | ||||||||||
| Interest and fees on FDIC covered loans | 2,445 | 3,264 | 2,961 | 2,994 | 3,538 | |||||||||||||||
| Interest on federal funds sold | - | - | - | - | - | |||||||||||||||
| Interest on deposits in other banks | 11 | 22 | 13 | 25 | 11 | |||||||||||||||
| Investments (taxable) | 1,813 | 1,710 | 1,698 | 1,976 | 1,934 | |||||||||||||||
| Investments (nontaxable) | 271 | 168 | 156 | 172 | 175 | |||||||||||||||
| Total interest income | 12,665 | 12,455 | 11,879 | 12,217 | 13,171 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Interest on deposits | 1,504 | 1,453 | 1,408 | 1,501 | 1,568 | |||||||||||||||
| Interest on short-term borrowings | 2 | 1 | 1 | - | 1 | |||||||||||||||
| Interest on other borrowed funds | 277 | 243 | 161 | 143 | 180 | |||||||||||||||
| Total interest expense | 1,783 | 1,697 | 1,570 | 1,644 | 1,749 | |||||||||||||||
| Net interest income | 10,882 | 10,758 | 10,309 | 10,573 | 11,422 | |||||||||||||||
| Provision for loan losses | - | - | - | - | - | |||||||||||||||
| Net interest income after provision for loan losses | 10,882 | 10,758 | 10,309 | 10,573 | 11,422 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||
| Service charges on deposit accounts | 584 | 561 | 489 | 634 | 741 | |||||||||||||||
| Gain on sale of securities, net | 115 | 24 | 355 | 72 | 38 | |||||||||||||||
| Gain/(loss) on sale of other loans, net | 78 | 27 | 48 | 255 | (614 | ) | ||||||||||||||
| Income on bank owned life insurance | 193 | 193 | 192 | 200 | 199 | |||||||||||||||
| Other | 196 | 165 | 217 | 306 | 229 | |||||||||||||||
| Total noninterest income | 1,166 | 970 | 1,301 | 1,467 | 593 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | 4,072 | 4,028 | 3,923 | 3,991 | 4,096 | |||||||||||||||
| Occupancy expenses | 631 | 687 | 648 | 647 | 690 | |||||||||||||||
| Equipment expenses | 255 | 260 | 219 | 248 | 276 | |||||||||||||||
| Legal fees | 10 | 29 | 28 | 20 | 24 | |||||||||||||||
| Professional fees | 86 | 135 | 107 | 49 | 52 | |||||||||||||||
| FDIC assessment | 210 | 194 | 207 | 228 | 225 | |||||||||||||||
| Data processing fees | 355 | 463 | 494 | 505 | 485 | |||||||||||||||
| FDIC indemnification asset amortization | 1,439 | 1,478 | 1,498 | 1,640 | 1,716 | |||||||||||||||
| Amortization of intangibles | 477 | 477 | 477 | 506 | 565 | |||||||||||||||
| Other real estate expenses | 392 | 100 | 283 | 828 | (33 | ) | ||||||||||||||
| Other operating expenses | 1,611 | 1,508 | 1,293 | 1,724 | 1,337 | |||||||||||||||
| Total noninterest expense | 9,538 | 9,359 | 9,177 | 10,386 | 9,433 | |||||||||||||||
| Net income before income taxes | 2,510 | 2,369 | 2,433 | 1,654 | 2,582 | |||||||||||||||
| Income tax expense | 697 | 649 | 709 | 461 | 800 | |||||||||||||||
| Net income | 1,813 | 1,720 | 1,724 | 1,193 | 1,782 | |||||||||||||||
| Dividends on preferred stock | - | 182 | 65 | 235 | 208 | |||||||||||||||
| Accretion of discount on preferred stock | - | - | - | 44 | 73 | |||||||||||||||
| Net income available to common shareholders | $ | 1,813 | $ | 1,538 | $ | 1,659 | $ | 914 | $ | 1,501 | ||||||||||
| 14 |
COMMUNITY BANKERS TRUST CORPORATION
NET INTEREST MARGIN
ANALYSIS
AVERAGE BALANCE SHEETS
(Dollars in thousands)
| Three months ended September 30, 2014 | Three months ended September 30, 2013 | |||||||||||||||||||||||
| Average Balance Sheet | Interest Income / Expense | Average Rates Earned / Paid | Average Balance Sheet | Interest Income / Expense | Average Rates Earned / Paid | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Loans non-covered, including fees | $ | 640,592 | $ | 8,125 | 5.03 | % | $ | 592,172 | $ | 7,513 | 5.03 | % | ||||||||||||
| FDIC covered loans, including fees | 64,626 | 2,445 | 15.00 | % | 77,497 | 3,538 | 18.11 | % | ||||||||||||||||
| Total loans | 705,218 | 10,570 | 5.95 | % | 669,669 | 11,051 | 6.55 | % | ||||||||||||||||
| Interest bearing bank balances | 14,191 | 11 | 0.32 | % | 17,416 | 11 | 0.27 | % | ||||||||||||||||
| Federal funds sold | 179 | - | 0.10 | % | 1,391 | - | 0.10 | % | ||||||||||||||||
| Securities (taxable) | 266,321 | 1,813 | 2.72 | % | 293,941 | 1,934 | 2.63 | % | ||||||||||||||||
| Securities (tax exempt)(1) | 36,311 | 410 | 4.53 | % | 21,636 | 265 | 4.89 | % | ||||||||||||||||
| Total earning assets | 1,022,220 | 12,804 | 4.97 | % | 1,004,053 | 13,261 | 5.24 | % | ||||||||||||||||
| Allowance for loan losses | (10,670 | ) | (11,932 | ) | ||||||||||||||||||||
| Non-earning assets | 113,927 | 129,392 | ||||||||||||||||||||||
| Total assets | $ | 1,125,477 | $ | 1,121,513 | ||||||||||||||||||||
| LIABILITIES AND | ||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Demand - interest bearing | $ | 207,080 | $ | 151 | 0.29 | % | $ | 245,660 | $ | 194 | 0.31 | % | ||||||||||||
| Savings | 77,287 | 60 | 0.31 | % | 85,836 | 75 | 0.35 | % | ||||||||||||||||
| Time deposits | 556,079 | 1,293 | 0.92 | % | 535,699 | 1,299 | 0.96 | % | ||||||||||||||||
| Total interest bearing deposits | 840,446 | 1,504 | 0.71 | % | 867,195 | 1,568 | 0.72 | % | ||||||||||||||||
| Short-term borrowings | 1,744 | 2 | 0.61 | % | 654 | 1 | 0.68 | % | ||||||||||||||||
| FHLB and other borrowings | 85,550 | 170 | 0.79 | % | 55,344 | 180 | 1.28 | % | ||||||||||||||||
| Long- term debt | 10,387 | 107 | 4.02 | % | - | - | - | |||||||||||||||||
| Total interest bearing liabilities | 938,127 | 1,783 | 0.75 | % | 923,193 | 1,749 | 0.75 | % | ||||||||||||||||
| Noninterest bearing deposits | 79,434 | 84,428 | ||||||||||||||||||||||
| Other liabilities | 4,109 | 3,808 | ||||||||||||||||||||||
| Total liabilities | 1,021,670 | 1,011,429 | ||||||||||||||||||||||
| Shareholders’ equity | 103,807 | 110,084 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| Shareholders’ equity | $ | 1,125,477 | $ | 1,121,513 | ||||||||||||||||||||
| Net interest earnings | $ | 11,021 | $ | 11,512 | ||||||||||||||||||||
| Interest spread | 4.22 | % | 4.49 | % | ||||||||||||||||||||
| Net interest margin | 4.28 | % | 4.55 | % | ||||||||||||||||||||
(1) Income and yields are reported on a tax-equivalent basis assuming a federal tax rate of 34%.
| 15 |
COMMUNITY BANKERS TRUST CORPORATION
NET INTEREST MARGIN
ANALYSIS
AVERAGE BALANCE SHEETS
(Dollars in thousands)
| Nine months ended September 30, 2014 | Nine months ended September 30, 2013 | |||||||||||||||||||||||
| Average Balance Sheet | Interest Income / Expense | Average Rates Earned / Paid | Average Balance Sheet | Interest Income / Expense | Average Rates Earned / Paid | |||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||
| Loans non-covered, including fees | $ | 615,921 | $ | 22,467 | 4.88 | % | $ | 585,304 | $ | 22,646 | 5.17 | % | ||||||||||||
| FDIC covered loans, including fees | 68,010 | 8,670 | 17.04 | % | 80,450 | 8,942 | 14.86 | % | ||||||||||||||||
| Total loans | 683,931 | 31,137 | 6.09 | % | 665,754 | 31,588 | 6.34 | % | ||||||||||||||||
| Interest bearing bank balances | 19,757 | 46 | 0.31 | % | 18,079 | 33 | 0.25 | % | ||||||||||||||||
| Federal funds sold | 520 | - | 0.10 | % | 4,353 | 3 | 0.10 | % | ||||||||||||||||
| Securities (taxable) | 271,680 | 5,221 | 2.56 | % | 295,689 | 5,717 | 2.58 | % | ||||||||||||||||
| Securities (tax exempt)(1) | 26,322 | 901 | 4.56 | % | 19,938 | 738 | 4.93 | % | ||||||||||||||||
| Total earning assets | 1,002,210 | 37,305 | 4.98 | % | $ | 1,003,813 | $ | 38,079 | 5.07 | % | ||||||||||||||
| Allowance for loan losses | (10,808 | ) | (12,763 | ) | ||||||||||||||||||||
| Non-earning assets | 115,194 | 130,516 | ||||||||||||||||||||||
| Total assets | $ | 1,106,596 | $ | 1,121,566 | ||||||||||||||||||||
| LIABILITIES AND | ||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Demand - interest bearing | $ | 199,297 | $ | 441 | 0.30 | % | $ | 244,573 | $ | 574 | 0.31 | % | ||||||||||||
| Savings | 76,654 | 192 | 0.34 | % | 81,974 | 207 | 0.34 | % | ||||||||||||||||
| Time deposits | 556,915 | 3,732 | 0.90 | % | 540,923 | 4,088 | 1.01 | % | ||||||||||||||||
| Total interest bearing deposits | 832,866 | 4,365 | 0.70 | % | 867,470 | 4,869 | 0.75 | % | ||||||||||||||||
| Short-term borrowings | 986 | 4 | 0.57 | % | 710 | 4 | 0.73 | % | ||||||||||||||||
| FHLB and other borrowings | 82,629 | 493 | 0.80 | % | 54,354 | 561 | 1.38 | % | ||||||||||||||||
| Long- term debt | 6,200 | 188 | 4.00 | % | - | - | - | |||||||||||||||||
| Total interest bearing liabilities | 922,681 | 5,050 | 0.74 | % | 922,534 | 5,434 | 0.79 | % | ||||||||||||||||
| Noninterest bearing deposits | 73,962 | 80,377 | ||||||||||||||||||||||
| Other liabilities | 4,186 | 3,954 | ||||||||||||||||||||||
| Total liabilities | 1,000,829 | 1,006,865 | ||||||||||||||||||||||
| Shareholders’ equity | 105,767 | 114,701 | ||||||||||||||||||||||
| Total liabilities and | ||||||||||||||||||||||||
| Shareholders’ equity | $ | 1,106,596 | $ | 1,121,566 | ||||||||||||||||||||
| Net interest earnings | $ | 32,255 | $ | 32,645 | ||||||||||||||||||||
| Interest spread | 4.24 | % | 4.28 | % | ||||||||||||||||||||
| Net interest margin | 4.30 | % | 4.35 | % | ||||||||||||||||||||
(1) Income and yields are reported on a tax-equivalent basis assuming a federal tax rate of 34%.
| 16 |
Non-GAAP Financial Measures
The information below presents certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). Common tangible book value equals total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets, and common tangible book value per share is computed by dividing common tangible book value by the number of common shares outstanding. Common tangible assets equal total assets less preferred stock, goodwill and identifiable intangible assets.
Management believes that common tangible book value and the ratio of common tangible book value to common tangible assets are meaningful because they are some of the measures that the Company and investors use to assess capital adequacy. Management believes that presenting the change in common tangible book value per share, the change in stock price to common tangible book value per share, and the change in the ratio of common tangible book value to common tangible assets provide meaningful period-to-period comparisons of these measures.
These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be viewed as a substitute for GAAP measures. In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies. The following table reconciles these non-GAAP measures from their respective GAAP basis measures.
| Common Tangible Book Value | 30-Sep-14 | 30-Jun-14 | 31-Dec-13 | 30-Sep-13 | ||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Total shareholders’ equity | $ | 104,548 | $ | 102,089 | $ | 106,659 | $ | 108,470 | ||||||||
| Preferred stock (net) | - | - | 11,717 | 14,173 | ||||||||||||
| Core deposit intangible (net) | 5,190 | 5,667 | 6,621 | 8,600 | ||||||||||||
| Common tangible book value | 99,358 | 96,422 | 88,321 | 85,697 | ||||||||||||
| Shares outstanding | 21,783 | 21,751 | 21,709 | 21,701 | ||||||||||||
| Common tangible book value per share | $ | 4.56 | $ | 4.43 | $ | 4.07 | $ | 3.95 | ||||||||
| Stock Price | $ | 4.37 | $ | 4.38 | $ | 3.76 | $ | 3.68 | ||||||||
| Price/common tangible book | 95.8 | % | 98.9 | % | 92.4 | % | 93.2 | % | ||||||||
| Common tangible book/common tangible assets | ||||||||||||||||
| Total assets | $ | 1,128,798 | $ | 1,114,819 | $ | 1,089,532 | $ | 1,114,976 | ||||||||
| Preferred stock (net) | - | - | 11,717 | 14,173 | ||||||||||||
| Core deposit intangible | 5,190 | 5,667 | 6,621 | 8,600 | ||||||||||||
| Common tangible assets | 1,123,608 | 1,109,152 | 1,071,194 | 1,092,203 | ||||||||||||
| Common tangible book | 99,358 | 96,422 | 88,321 | 85,697 | ||||||||||||
| Common tangible equity to common tangible assets | 8.84 | % | 8.69 | % | 8.25 | % | 7.85 | % | ||||||||
| 17 |