Exhibit 99.1

 

Community Bankers Trust Corporation Reports Results for Second Quarter of 2016

 

Net income of $2.3 million for the second quarter of 2016 and $4.7 million for the first six months of 2016
are both substantial increases over the same periods in 2015

 

Conference Call on Friday, July 29, 2016, at 10:00 a.m. Eastern Time

 

Richmond, VA, July 29, 2016 - Community Bankers Trust Corporation (the “Company”) (NASDAQ: ESXB), the holding company for Essex Bank (the “Bank”), today reported results for the second quarter and first six months of 2016.

 

 

operating Highlights

 

	·	Loans, excluding purchased credit impaired (PCI) loans, grew $19.5 million, or 2.6%, during the second quarter of 2016 and $105.2 million, or 15.5%, since June 30, 2015.

	·	Demand deposit account balances of $115.7 million at June 30, 2016 grew $19.5 million, or 20.2%, during the first six months of 2016 and have increased $14.2 million year-over-year.

	·	Low cost NOW accounts of $133.4 million at June 30, 2016 have grown 7.4% year-over-year.

·

Net interest margin for each of the second quarter and first six months of 2016 was 3.82%, as compared with 4.07% and 3.98% for the same periods in 2015.

 

Financial HIGHLIGHTS

 

	·	Net income was $2.3 million for the quarter ended June 30, 2016, compared with $2.4 million and $1.7 million for the quarters ended March 31, 2016 and June 30, 2015, respectively.

	·	Fully diluted earnings per common share was $0.11 for the quarter ended June 30, 2016, compared with $0.11 and $0.08, for the quarters ended March 31, 2016 and June 30, 2015, respectively.

	·	Fully diluted earnings per common share was $0.22 for the six months ended June 30, 2016, compared with $0.14 for the six months ended June 30, 2015.

·

At June 30, 2016, tangible book value per share was $5.04, as compared with $4.65 at December 31, 2015, an increase of 8.4%.

 

MANAGEMENT COMMENTS

 

Rex L. Smith, III, President and Chief Executive Officer, stated, “The Company continues to experience robust growth consistent with our strategic plan for 2016. Non-PCI loan growth was $19.5 million for the quarter and over $36 million year to date. Despite constant variations in interest rates and a very competitive environment, net interest margin for the quarter was 3.82%, a decline of only five basis points year to date. Asset quality remains good, but due to the growth of loans, the Bank posted a provision for the first time in 13 quarters.”

 

Smith added, “On the funding side, noninterest bearing deposit growth remains strong. Demand deposits increased by $19.5 million, or over 20.2% year to date. Total deposits are over $957 million, an increase of $11.5 million year to date. Noninterest income also continues to increase, mainly from the growth in checking accounts and the fees associated with them. Noninterest expense remains relatively flat as salaries and benefits are slightly down on a linked quarter basis. The biggest change is the provision expense associated with overall loan growth.”

 

Smith concluded, “We are pleased by the results of the first half of 2016, as we have met or exceeded all of our strategic targets so far. We will continue to push for earnings growth by adding quality loans, holding the line on pricing and expenses and continuing to gain market share of low cost deposits.”

  

 

RESULTS OF OPERATIONS

 

Net income was $2.3 million for the second quarter of 2016, compared with $2.4 million in the first quarter of 2016 and $1.7 million in the second quarter of 2015. Earnings per common share, basic and fully diluted, were $0.11 per share, $0.11 per share and $0.08 per share for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

 

The decrease of $102,000 in net income during the second quarter of 2016 compared with the first quarter of 2016 was primarily due to a $200,000 provision for loan losses that was added in the current quarter to support robust loan growth of $19.5 million. Net interest income improved slightly, 1.2%, on a linked quarter basis, as did noninterest income, 5.6% on the same basis. Noninterest expenses were slightly higher, by 2.5%.

 

The increase of $625,000 in net income when comparing the second quarter of 2016 with the same period in 2015 was driven by a $1.2 million decline in total noninterest expense. In September 2015, the Company and the FDIC mutually terminated their shared-loss agreements, which resulted in the elimination of FDIC indemnification amortization expense in future periods, which was $1.2 million in the second quarter of 2015. Also improving in the second quarter of 2016 versus the same period in 2015 was noninterest income, which increased $189,000, or 15.7%. Offsetting this improvement was a decrease of $230,000 in net interest income, the result of margin pressure and lower securities balances. Also affecting net income was an increase in the effective tax rate, due to higher taxable income, from 23.9% to 27.5% year-over-year.

 

Net income was $4.7 million for the six months ended June 30, 2016 compared with $3.0 million for the first half of 2015. The increase in net income was the result of a decline of $2.7 million in noninterest expenses, driven by the elimination of the FDIC indemnification asset amortization, which was $0 for the first two quarters of 2016 and $2.4 million for the same period in 2015. Offsetting the increase in net income was an increase in the effective tax rate from 22.7% to 28.2%. Fully diluted earnings per common share for the six months ended June 30, 2016 were $0.22 compared with $0.14 for the same period in 2015. This represents an increase of 50.0%. Basic earnings per share were $0.22 for the six month period versus $0.14 for the same period in 2015, an increase of 57.1%.

 

The following table presents summary income statements for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 and six months ended June 30, 2016 and June 30, 2015.

 

SUMMARY INCOME STATEMENT
(Dollars in thousands)		For the three months ended												For the six months ended
		30-Jun-16				31-Mar-16				30-Jun-15				30-Jun-16				30-Jun-15
Interest income		$	12,133			$	12,038			$	12,333			$	24,171			$	23,983
Interest expense			1,900				1,925				1,870				3,825				3,735
Net interest income			10,233				10,113				10,463				20,346				20,248
Provision for loan losses			200				-				-				200				-
Net interest income after provision for loan losses			10,033				10,113				10,463				20,146				20,248
Noninterest income			1,395				1,321				1,206				2,716				2,603
Noninterest expense			8,229				8,031				9,443				16,260				18,962
Income before income taxes			3,199				3,403				2,226				6,602				3,889
Income tax expense			881				983				533				1,864				884
Net income		$	2,318			$	2,420			$	1,693			$	4,738			$	3,005
EPS Basic		$	0.11			$	0.11			$	0.08			$	0.22			$	0.14
EPS Diluted		$	0.11			$	0.11			$	0.08			$	0.22			$	0.14
Return on average assets			0.79	%			0.83	%			0.59	%			0.81	%			0.53	%
Return on average equity			8.36	%			9.02	%			6.12	%			8.68	%			5.47	%

 

Net Interest Income

 

Linked Quarter Basis

Net interest income was $10.2 million for the quarter ended June 30, 2016 compared with $10.1 million for the quarter ended March 31, 2016. This is an increase of 1.2%, or $120,000.

 

Interest income on a linked quarter basis increased $95,000, or 0.79%, to $12.1 million for the second quarter of 2016. This resulted in a yield on earning assets of 4.51%, a decline of only two basis points on a linked quarter basis. Interest income with respect to loans, excluding PCI loans, increased $320,000, or 3.7%, during the second quarter when compared with the first quarter of 2016. This increase was partially attributed to a full quarter of earnings from $16.8 million, or 2.2%, in loan growth, excluding PCI loans, generated in the first quarter of 2016 coupled with solid loan growth, excluding PCI loans, of $19.5 million, or 2.6%, in the second quarter of 2016. Interest income with respect to PCI loans declined $43,000, or 2.7%, during the second quarter, due to lower average balances in the loan portfolio precipitated by continued repayments.

 

 

Securities income equaled $1.7 million in the second quarter of 2016 compared with $1.9 million in the first quarter of 2016, a decrease of $184,000. On a tax equivalent basis, securities income was $2.0 million for the second quarter of 2016 versus $2.2 million for the linked quarter. The decline in income was created by declines in both volume and rate as average securities balances were down $10.6 million on a linked quarter basis. The Bank has sold securities over the last three quarters to fund higher yielding loans. Additionally, the tax equivalent yield on the securities portfolio was 3.03% for the second quarter of 2016 versus 3.21% for the first quarter of 2016.

 

Interest expense decreased $25,000, or 1.3%, on a linked quarter basis as average interest bearing liabilities balances decreased by $3.8 million. The Company’s cost of interest bearing liabilities decreased one basis point from 0.81% in the first quarter of 2016 to 0.80% in the second quarter. The cost of FHLB borrowings was 1.17% for the second quarter of 2016. During the second quarter of 2016, the average balance of FHLB borrowings was $103.9 million.

 

With the changes in net interest income noted above, the tax equivalent net interest margin held firm and was 3.82% in the second quarter of 2016 and 3.83% in the first quarter of 2016. Likewise, the interest spread was 3.71% and 3.72%, respectively, in the second and first quarters of 2016.

 

Year-Over-Year Six Months

For the first half of 2016, net interest income increased $98,000, or 0.48%, and was $20.3 million. The yield on earning assets of 4.52% compared with 4.70% for the first six months of 2015. Interest and fees on loans of $17.4 million in the first two quarters of 2016 was an increase of $1.7 million compared with $15.8 million for the same period in 2015. Interest and fees on PCI loans declined $1.3 million over this same time frame. Of that decline, $475,000 was related to cash payments on ADC loans related to pools, previously written down to a zero carrying value, received in the first half of 2015 versus no such payments in the first half of 2016. Securities income declined $146,000 for the first six months of 2016 compared with the same period in 2015. However, on a tax-equivalent basis, income on securities declined only $52,000 as a result of interest income on bank-qualified municipal securities.

 

Interest expense of $3.8 million represents an increase of $90,000 in the first six months of 2016 compared with the same period in 2015. Total average interest bearing liabilities increased only 1.3%, or $11.7 million, as loan growth has been fueled by an average balance increase of 20.7%, or $18.2 million, in noninterest bearing deposits and by a $22.1 million decline in securities.

 

The tax equivalent net interest margin was 3.82% for the first six months of 2016 versus 3.98% for the first six months of 2015. The net interest spread was 3.71% for the first six months of 2016 versus 3.90% for the first six months of 2015.

 

Year-Over-Year Quarter

Net interest income decreased $230,000, or 2.2%, from the second quarter of 2015 to the second quarter of 2016 and was $10.2 million. The yield on earning assets of 4.51% in the second quarter of 2016 declined from 4.78% for the second quarter of 2015. The yield for the second quarter of 2015 was positively influenced by cash payments on previously written down ADC pools in the PCI portfolio. Interest income decreased $200,000, or 1.6%, over this time period. The average balance of loans, excluding PCI loans, increased $92.7 million, or 13.6%, from $681.9 million in the second quarter of 2015 to $774.6 million in the second quarter of 2016. Interest income on securities on a tax equivalent basis decreased by $182,000, year-over-year, from $2.2 million in the second quarter of 2015 to $2.0 million in the second quarter of 2016. Interest and fees on PCI loans decreased by $862,000 year-over-year and was $1.6 million for the second quarter of 2016. The yield on the PCI portfolio was 11.2% in the second quarter of 2016, down from 15.0% in the second quarter of 2015. The average balance of the PCI portfolio declined $9.0 million during the year-over-year comparison period.

 

Interest expense increased $30,000, or 1.6%, when comparing the second quarter of 2015 and the second quarter of 2016. Interest expense on deposits increased $51,000, or 3.4%, as the average balance of interest bearing deposits increased $3.2 million, or 0.4%. Overall the Bank’s cost of interest bearing liabilities remained the same as the second quarter of 2015. While average interest bearing deposit costs increased from 0.71% in the second quarter of 2015 to 0.73% in the second quarter of 2016, there was a decline in the cost of FHLB and other borrowings from 1.26% to 1.17%, thus offsetting higher deposit costs.

 

The tax equivalent net interest margin declined 25 basis points from 4.07% in the second quarter of 2015 to 3.82% in the second quarter of 2016. Likewise, the interest spread decreased from 3.98% to 3.71% over the same time period.  The decline in the margin was precipitated by a reduction in earning asset yields of 27 basis points.

 

 

 The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 and six months ended June 30, 2016 and June 30, 2015.

 

NET INTEREST MARGIN

(Dollars in thousands)		For the three months ended												For the six months ended
		30-Jun-16				31-Mar-16				30-Jun-15				30-Jun-16				30-Jun-15
Average interest earning assets		$	1,103,791			$	1,092,204			$	1,058,471			$	1,097,997			$	1,050,013
Interest income		$	12,133			$	12,038			$	12,333			$	24,171			$	23,983
Interest income - tax-equivalent		$	12,420			$	12,344			$	12,603			$	24,764			$	24,482
Yield on interest earning assets			4.51	%			4.53	%			4.78	%			4.52	%			4.70	%
Average interest bearing liabilities		$	948,916			$	952,737			$	939,380			$	950,826			$	939,099
Interest expense		$	1,900			$	1,925			$	1,870			$	3,825			$	3,735
Cost of interest bearing liabilities			0.80	%			0.81	%			0.80	%			0.81	%			0.80	%
Net interest income		$	10,233			$	10,113			$	10,463			$	20,346			$	20,248
Net interest income - tax-equivalent		$	10,520			$	10,419			$	10,733			$	20,939			$	20,747
Interest spread			3.71	%			3.72	%			3.98	%			3.71	%			3.90	%
Net interest margin			3.82	%			3.83	%			4.07	%			3.82	%			3.98	%

 

Provision for Loan Losses

 

The Company records a separate provision for loan losses for its loan portfolio, excluding PCI loans, and the PCI loan portfolio. There was a $200,000 provision for loan losses recorded, excluding PCI loans, during the second quarter of 2016. There was no provision for loan losses in the first quarter of 2016. Also, there was no provision for loan losses in either the first or second quarter of 2015. Likewise, there was no provision for loan losses on the PCI loan portfolio during the first two quarters of 2016 or during the same periods of 2015. The provision for loan losses booked in the second quarter of 2016 supported general reserves following loan growth of $19.5 million. During the other periods, the absence of a provision was the direct result of nominal charge-offs and the ongoing stabilization of asset quality. Additional discussion of loan quality is presented below.

 

Noninterest Income

 

Linked Quarter Basis

Noninterest income was $1.4 million for the second quarter of 2016, compared with $1.3 million for the first quarter of 2016.  The $74,000, or 5.6%, increase in noninterest income on a linked quarter basis was the result of an increase of $30,000 in service charges on deposit accounts, an increase of $25,000 in other noninterest income and an increase of $16,000 on income on bank owned life insurance. Service charges on deposit accounts were $599,000 in the second quarter of 2016, gains on securities transactions were $261,000, income on bank owned life insurance was $204,000, mortgage loan income was $174,000 and other noninterest income was $157,000.

 

As of August 31, 2016, the Bank will cease operating its wholesale mortgage division. While mortgage loan income will decline starting in the fourth quarter of 2016, there will be a very similar decline in salaries and employee benefits.

 

Year-Over-Year Six Months

Noninterest income was $2.7 million for the first six months of 2016, an increase of $113,000, or 4.3%, over $2.6 million for the first six months of 2015. Securities gains of $520,000 in the first two quarters of 2016 compares with $289,000 for the same period in 2015. Likewise, service charges on deposit accounts increased by $83,000 and were $1.2 million for the first six months of 2016. Offsetting these increases for the first six months of 2016 compared with the same period in 2015 were declines of $87,000 in other noninterest income, which was $289,000, and $63,000 in mortgage loan income, which was $347,000.

 

Year-Over-Year Quarter

Noninterest income increased $189,000, or 15.7%, from the second quarter of 2015 to the second quarter of 2016. Gains on securities transactions were $261,000 in the second quarter of 2016 compared with losses of $8,000 in the second quarter of 2015. Securities were liquidated during the second quarter of 2016, with gains taken, and the proceeds were converted into higher yielding loans. Service charges on deposit accounts increased by $42,000, or 7.5%, on a higher level of demand deposit accounts. Income on bank owned life insurance increased by $16,000 over the comparison period. Offsetting these increases were a decline of $88,000 in mortgage loan income and a decline of $27,000 in other noninterest income.

 

 

Noninterest Expenses

 

Linked Quarter Basis

Noninterest expenses totaled $8.2 million for the second quarter of 2016, as compared with $8.0 million for the first quarter of 2016, an increase of $198,000, or 2.5%. Other operating expenses increased $157,000, or 10.5%, and other real estate expenses increased $87,000. Partially offsetting these increases was a decrease in salaries and employee benefits of $50,000, or 1.1%, on a linked quarter basis.

 

Year-Over-Year Six Months

Noninterest expenses were $16.3 million for the first six months of 2016, as compared with $19.0 million for the same period in 2015. This is a decrease of $2.7 million, or 14.3%. FDIC indemnification asset amortization was $0 for the period and $2.4 million for the 2015 comparative period as a result of the termination of the shared-loss agreement. Other real estate expenses declined $339,000 as there was expense of $222,000 for the first six months of 2015 compared with a credit, the result of gains on the sale of other real estate, of $117,000 for 2016. There was also a meaningful decline of $220,000 in other operating expenses, mainly the result of improved credit expenses. Offsetting these improvements was an increase of $271,000 in salaries and employee benefits.

 

Year-Over-Year Quarter

Noninterest expenses decreased $1.2 million, or 12.9%, when comparing the second quarter of 2016 to the same period in 2015. FDIC indemnification asset was $1.2 million in the second quarter of 2015 and $0 in the current quarter, and OREO expenses declined by $152,000. Other operating expenses decreased $103,000. Offsetting these improvements was an increase year-over-year in salaries and employee benefits of $155,000, or 3.5%, due to an increase in the number of full-time equivalent employees.

 

Income Taxes

 

Income tax expense was $881,000 for the three months ended June 30, 2016 compared with income tax expense of $983,000 and $533,000 for the first quarter of 2016 and second quarter of 2015, respectively. The effective tax rate for the second quarter of 2016 was 27.5% compared with 28.9% for the first quarter of 2016 and 23.9% for the second quarter of 2015. For 2016, the level of pre-tax income increased by 69.8% while the level of tax-exempt securities income increased only 18.8%, thus being the primary driver in the higher effective tax rate.

 

FINANCIAL CONDITION

 

Total assets increased $9.0 million, or 0.8%, to $1.190 billion at June 30, 2016 as compared with $1.181 billion at December 31, 2015. Total assets increased $30.4 million, or 2.6%, since June 30, 2015. Total loans, excluding PCI loans, were $785.0 million at June 30, 2016, increasing $36.3 million, or 4.8%, from year end 2015 and $105.2 million, or 15.5%, from June 30, 2015.  Total PCI loans were $54.8 million at June 30, 2016 versus $59.0 million and $63.3 million at year end 2015 and at June 30, 2015, respectively.

 

During the first six months of 2016, construction and land development loans grew $12.4 million, or 18.4%, residential 1-4 family loans grew $10.1 million, or 5.2%, commercial mortgage loans on real estate grew $7.4 million, or 2.3%, and commercial loans grew $5.4 million, or 5.3%. In comparing June 30, 2016 and June 30, 2015, commercial mortgage loans on real estate grew by $41.3 million, residential 1-4 family loans grew by $27.2 million, construction and land development loans grew by $22.8 million and commercial loans grew by $11.4 million.

 

The following table shows the composition of the Company's loan portfolio, excluding PCI loans, at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015.

 

LOANS (excluding PCI loans)

(Dollars in thousands)		30-Jun-16								31-Mar-16								31-Dec-15								30-Jun-15
		Amount				% of Loans				Amount				% of Loans				Amount				% of Loans				Amount				% of Loans
Mortgage loans on real estate:
Residential 1-4 family		$	204,639				26.07	%		$	197,337				25.78	%		$	194,576				25.99	%		$	177,413				26.10	%
Commercial			325,394				41.45				320,473				41.87				317,955				42.47				284,089				41.79
Construction and land development			79,826				10.17				72,882				9.52				67,408				9				57,008				8.39
Second mortgages			8,212				1.05				8,170				1.07				8,378				1.12				7,356				1.08
Multifamily			44,585				5.68				47,852				6.25				45,389				6.06				44,343				6.52
Agriculture			7,988				1.02				6,068				0.79				6,238				0.83				6,654				0.98
Total real estate loans			670,644				85.44				652,782				85.28				639,944				85.47				576,863				84.86
Commercial loans			107,953				13.75				106,354				13.89				102,507				13.69				96,510				14.20
Consumer installment loans			5,125				0.65				5,007				0.65				4,928				0.66				5,011				0.74
All other loans			1,294				0.16				1,342				0.18				1,345				0.18				1,396				0.20
Gross loans			785,016				100.00	%			765,485				100.00	%			748,724				100.00	%			679,780				100.00	%
Allowance for loan losses			(9,434	)							(9,594	)							(9,559	)							(9,864	)
Non-covered loans, net of unearned income		$	775,582							$	755,891							$	739,165							$	669,916

 

 

The Company’s securities portfolio, excluding equity securities, declined $26.7 million, or 9.5%, from $279.7 million at December 31, 2015 to $253.0 million at June 30, 2016. Net realized gains of $520,000 were recognized during the first six months of 2016 through sales and call activity, as compared with $289,000 recognized during the first six months of 2015. The decline in the volume of securities was a strategic decision by management to let brokered funding mature and fund strong loan growth with normal securities amortization, call activity, sales and maturities.

 

The Company had cash and cash equivalents of $18.2 million, $17.0 million, and $18.9 million at June 30, 2016, December 31, 2015, and June 30, 2015, respectively. There were federal funds purchased at June 30, 2016 of $12.3 million versus $18.9 million at December 31, 2015 and $5.0 million at June 30, 2015.

 

The following table shows the composition of the Company's securities portfolio, excluding equity securities, at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015.

 

SECURITIES PORTFOLIO
(Dollars in thousands)		30-Jun-16								31-Mar-16								31-Dec-15								30-Jun-15
		Amortized Cost				Fair Value				Amortized Cost				Fair Value				Amortized Cost				Fair Value				Amortized Cost				Fair Value
Securities Available for Sale
U.S. Treasury issue and other
U.S. Gov't agencies		$	37,898			$	37,518			$	40,067			$	39,705			$	50,590			$	49,941			$	62,479			$	61,786
U.S Gov't sponsored agencies			2,000				2,000				756				769				756				742				757				729
State, county, and municipal			122,840				129,108				126,623				131,551				138,965				141,498				141,240				141,969
Corporate and other bonds			14,199				13,523				15,734				15,052				14,997				14,296				20,644				20,541
Mortgage backed securities - U.S. Gov't agencies			5,210				5,240				6,652				6,657				8,654				8,496				4,375				4,276
Mortgage backed securities - U.S. Gov't sponsored agencies			16,345				16,452				12,807				12,870				28,637				28,297				33,608				33,512
Total securities available for sale		$	198,492			$	203,841			$	202,639			$	206,604			$	242,599			$	243,270			$	263,103			$	262,813

 

		30-Jun-16								31-Mar-16								31-Dec-15								30-Jun-15
		Amortized Cost				Fair Value				Amortized Cost				Fair Value				Amortized Cost				Fair Value				Amortized Cost				Fair Value
Securities Held to Maturity
U.S Gov't sponsored agencies		$	13,501			$	13,504			$	8,507			$	8,521			$	-			$	-			$	34,877			$	35,038
State, county, and municipal			34,806				36,898				34,868				36,409				35,456				36,557				3,588				3,781
Mortgage backed securities - U.S. Gov't agencies			885				904				923				944				1,022				1,054				-				-
Total securities held to maturity		$	49,192			$	51,306			$	44,298			$	45,874			$	36,478			$	37,611			$	38,465			$	38,819

 

Interest bearing deposits at June 30, 2016 were $841.3 million, a decline of $8.0 million, or 0.9%, from $849.3 million at December 31, 2015. Time deposits less than or equal to $250,000 decreased $6.7 million, time deposits $250,000 and over declined $5.2 million and MMDA balances declined $1.7 million during this period. Offsetting these decreases were increases in lower cost accounts. NOW account balances increased $4.6 million, or 3.6%, from December 31, 2015, while savings account balances increased $1.0 million.

 

FHLB advances were $94.3 million at June 30, 2016, compared with $95.7 million at December 31, 2015 and $81.0 million at June 30, 2015. Long term debt totaled $3.8 million at June 30, 2016, declining by $1.9 million, or 32.9%, since December 31, 2015. 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 has paid down this debt by $6.9 million, and the loan is scheduled to be fully paid on April 21, 2017.

 

 

The following table compares the mix of interest bearing deposits at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015.

  

INTEREST BEARING DEPOSITS
(Dollars in thousands)
		30-Jun-16				31-Mar-16				31-Dec-15				30-Jun-15
NOW		$	133,362			$	119,130			$	128,761			$	124,234
MMDA			107,067				105,044				108,810				110,577
Savings			85,063				82,793				84,047				86,114
Time deposits less than or equal to $250,000			402,434				404,578				409,085				414,015
Time deposits $250,000 and over			113,411				118,341				118,600				111,496
Total interest bearing deposits		$	841,337			$	829,886			$	849,303			$	846,436

  

Shareholders’ equity was $112.2 million at June 30, 2016, $104.5 million at December 31, 2015, and $109.2 million at June 30, 2015. In September 2015, equity was reduced by the net loss generated in the quarter from the pre-tax write-off of $13.1 million from the termination of the FDIC shared-loss agreements. Shareholders’ equity increased $7.7 million, or 7.4%, from year end 2015 due to an increase in other comprehensive income related to net gains in the investment portfolio of $2.6 million and net income of $4.7 million in the first six months of 2016.

 

Asset Quality – non-covered assets

 

Nonaccrual loans were $11.7 million at June 30, 2016, increasing $985,000 from December 31, 2015 and $1.1 million from June 30, 2015. The level of both internally classified substandard and special mention loans, as well as nonaccrual loans, has been stable over the last five quarters, and the $200,000 provision for loan losses recognized in the current quarter is the result of loan growth, and not a deterioration in asset quality.

 

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

 

ASSET QUALITY
(Dollars in thousands)
		30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Nonaccrual loans		$	11,655			$	10,932			$	10,670			$	10,795			$	10,530
Criticized (special mention) loans			21,032				16,641				21,476				17,977				21,271
Classified (substandard) loans			13,722				13,425				13,471				13,610				12,305
Other real estate owned *			4,898				5,095				5,490				5,858				6,506
Total classified and criticized assets		$	39,652			$	35,161			$	40,437			$	37,445			$	40,082

 

*

Other real estate owned has been restated for all dates presented to include other real estate owned previously covered by the FDIC shared-loss agreements.

 

Total nonperforming assets totaled $16.6 million at June 30, 2016 compared with $16.2 million at December 31, 2015. Total nonperforming assets decreased $483,000 since June 30, 2015. There were net charge-offs of $360,000 in the second quarter of 2016 compared with recoveries of $35,000 in the first quarter of 2016 and recoveries of $853,000 in the second quarter of 2015.

 

The allowance for loan losses equaled 80.9% of nonaccrual loans at June 30, 2016, compared with 89.6% at December 31, 2015 and 93.7% at June 30, 2015. The ratio of the allowance for loan losses to total nonperforming assets was 59.9% at June 30, 2016 compared with 62.2% at December 31, 2015 and 60.7% at June 30, 2015.  The ratio of nonperforming assets to loans and OREO was 2.1% at June 30, 2016 compared with 2.1% at December 31, 2015 and 2.5% at June 30, 2015.

 

  

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

 

ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)		2016								2015
		Second				First				Fourth				Third				Second
		Quarter				Quarter				Quarter				Quarter				Quarter
Allowance for loan losses:
Beginning of period		$	9,594			$	9,559			$	9,701			$	9,864			$	9,011
Provision for loan losses			200				-				-				-				-
Net (charge-offs) recoveries			(360	)			35				(142	)			(163	)			853
End of period		$	9,434			$	9,594			$	9,559			$	9,701			$	9,864

 

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

 

ASSET QUALITY (excluding PCI loans)
(Dollars in thousands)		2016								2015
		30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Nonaccrual loans		$	11,655			$	10,932			$	10,670			$	10,795			$	10,530
Loans past due over 90 days and accruing interest			-				-				-				-				-
Total nonperforming loans			11,655				10,932				10,670				10,795				10,530
Other real estate owned			4,898				5,095				5,490				5,858				6,506
Total nonperforming assets		$	16,553			$	16,027			$	16,160			$	16,653			$	17,036
Allowance for loan losses, excluding PCI loans, to loans			1.20	%			1.25	%			1.28	%			1.40	%			1.45	%
Allowances for loan losses to nonperforming assets			59.92				62.88				62.15				61.16				60.74
Allowance for loan losses, excluding PCI loans, to nonaccrual loans			80.94				87.76				89.59				89.87				93.68
Nonperforming assets to loans, excluding PCI loans, and other real estate			2.10				2.08				2.14				2.38				2.48
Net charge-offs/(recoveries) for quarter to average loans, annualized			0.19	%			(0.02	)%			0.08	%			0.09	%			(0.50	)%

 

A further breakout of nonaccrual loans, excluding PCI loans, at June 30, 2016, December 31, 2015 and June 30, 2015 is below.

 

NONACCRUAL LOANS (excluding PCI loans)          

(Dollars in thousands)		30-Jun-16				31-Dec-15				30-Jun-15
		Amount				Amount				Amount
Mortgage loans on real estate:
Residential 1-4 family		$	3,976			$	4,562			$	3,894
Commercial			1,702				1,508				1,737
Construction and land development			5,705				4,509				4,752
Second mortgages			135				13				61
Total real estate loans		$	11,518			$	10,592			$	10,444
Commercial loans			54				-				2
Consumer installment loans			83				78				84
Gross loans		$	11,655			$	10,670			$	10,530

  

 

Capital Requirements

 

The Company’s ratio of total risk-based capital was 13.3% at June 30, 2016 compared with 13.2% at December 31, 2015. The tier 1 risk-based capital ratio was 12.3% at June 30, 2016 and 12.1% at December 31, 2015. The Company’s tier 1 leverage ratio was 9.7% at June 30, 2016 and 9.4% at December 31, 2015.  All capital ratios exceed regulatory minimums to be considered well capitalized. BASEL III introduced the common equity tier 1 capital ratio, which was 11.8% at June 30, 2016 and 11.6% at December 31, 2015.

 

Earnings Conference Call and Webcast

 

The Company will host a conference call for interested parties on Friday, July 29, 2016, at 10:00 a.m. Eastern Time to discuss the financial results for the second quarter of 2016. The public is invited to listen to this conference call by dialing 866-374-8379 at least five minutes prior to the call.  Interested parties may also listen to this conference call through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site at www.cbtrustcorp.com.

 

A replay of the conference call will be available from 12:00 noon Eastern Time on July 29, 2016, until 9:00 a.m. Eastern Time on August 12, 2016. The replay will be available by dialing 877-344-7529 and entering access code 10089619 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 22 full-service offices, 16 of which are in Virginia and six of which are in Maryland.  The Bank also operates one loan production office in Virginia. 

 

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

 

Forward-Looking Statements

 

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to the Company’s operations, performance, future strategy and goals. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in the following: the quality or composition of the Company’s loan or investment portfolios, including collateral values and the repayment abilities of borrowers and issuers; assumptions that underlie the Company’s allowance for loan losses; general economic and market conditions, either nationally or in the Company’s market areas; the interest rate environment; competitive pressures among banks and financial institutions or from companies outside the banking industry; real estate values; the demand for deposit, loan and investment products and other financial services; the demand, development and acceptance of new products and services; the performance of vendors or other parties with which the Company does business; time and costs associated with de novo branching, acquisitions, dispositions and similar transactions; the realization of gains and expense savings from acquisitions, dispositions and similar transactions; consumer profiles and spending and savings habits; levels of fraud in the banking industry; the level of attempted cyber-attacks in the banking industry; the securities and credit markets; costs associated with the integration of banking and other internal operations; the soundness of other financial institutions with which the Company does business; inflation; technology; and legislative and regulatory requirements. Many of these factors and additional risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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 

 

 

COMMUNITY BANKERS TRUST CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED CONDENSED
(Dollars in thousands)
		30-Jun-16				31-Dec-15				30-Jun-15
Assets
Cash and due from banks		$	9,215			$	7,393			$	6,480
Interest bearing bank deposits			8,979				9,576				12,389
Total cash and cash equivalents			18,194				16,969				18,869
Securities available for sale, at fair value			203,841				243,270				262,813
Securities held to maturity, at cost			49,192				36,478				38,465
Equity securities, restricted, at cost			8,647				8,423				8,008
Total securities			261,680				288,171				309,286
Loans held for sale			1,763				2,101				6,503
Loans			785,016				748,724				679,780
Purchased credit impaired (PCI) loans			54,766				58,955				63,334
Allowance for loan losses			(9,434	)			(9,559	)			(9,864	)
Allowance for loan losses – PCI loans			(484	)			(484	)			(484	)
Net loans			829,864				797,636				732,766
Bank premises and equipment, net			27,654				27,378				29,775
Bank premises and equipment held for sale			-				110				411
Other real estate owned			4,898				5,490				6,506
FDIC receivable under shared-loss agreements			-				-				622
Bank owned life insurance			26,941				21,620				21,312
Core deposit intangibles, net			1,852				2,805				3,759
FDIC indemnification asset			-				-				16,182
Other assets			16,676				18,277				13,140
Total assets		$	1,189,522			$	1,180,557			$	1,159,131
Liabilities
Deposits:
Noninterest bearing		$	115,677			$	96,216			$	101,500
Interest bearing			841,337				849,303				846,436
Total deposits			957,014				945,519				947,936
Federal funds purchased			12,301				18,921				5,003
Federal Home Loan Bank advances			94,274				95,656				81,031
Long-term debt			3,806				5,675				7,277
Trust preferred capital notes			4,124				4,124				4,124
Other liabilities			5,772				6,175				4,581
Total liabilities			1,077,291				1,076,070				1,049,952
Shareholders' Equity
Common stock (200,000,000 shares authorized $0.01 par value; 21,911,300, 21,866,944, 21,828,267, shares issued and outstanding, respectively)			219				219				218
Additional paid in capital			146,273				145,907				145,596
Retained deficit			(36,312	)			(41,050	)			(35,548	)
Accumulated other comprehensive income (loss)			2,051				(589	)			(1,087	)
Total shareholders' equity			112,231				104,487				109,179
Total liabilities and shareholders' equity		$	1,189,522			$	1,180,557			$	1,159,131

 

 

COMMUNITY BANKERS TRUST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED CONDENSED
(Dollars in thousands)		YTD				Three months ended								YTD				Three months ended
		2016				30-Jun-16				31-Mar-16				2015				30-Jun-15				31-Mar-15
Interest and dividend income
Interest and fees on loans		$	17,426			$	8,873			$	8,553			$	15,764			$	8,017			$	7,747
Interest and fees on PCI loans			3,155				1,556				1,599				4,491				2,418				2,073
Interest on federal funds sold			-				-				-				2				1				1
Interest on deposits in other banks			44				23				21				34				17				17
Interest and dividends on securities
Taxable			2,395				1,124				1,271				2,723				1,355				1,368
Nontaxable			1,151				557				594				969				525				444
Total interest and dividend income			24,171				12,133				12,038				23,983				12,333				11,650
Interest expense
Interest on deposits			3,088				1,537				1,551				2,934				1,486				1,448
Interest on borrowed funds			737				363				374				801				384				417
Total interest expense			3,825				1,900				1,925				3,735				1,870				1,865
Net interest income			20,346				10,233				10,113				20,248				10,463				9,785
Provision for loan losses			200				200				-				-				-				-
Net interest income after provision for loan losses			20,146				10,033				10,113				20,248				10,463				9,785
Noninterest income
Service charges on deposit accounts			1,168				599				569				1,085				557				528
Gain/(loss) on securities transactions, net			520				261				259				289				(8	)			297
Gain on sale of loans, net			-				-				-				69				23				46
Income on bank owned life insurance			392				204				188				374				188				186
Mortgage loan income			347				174				173				410				262				148
Other			289				157				132				376				184				192
Total noninterest income			2,716				1,395				1,321				2,603				1,206				1,397
Noninterest expense
Salaries and employee benefits			9,172				4,561				4,611				8,901				4,406				4,495
Occupancy expenses			1,287				646				641				1,307				619				688
Equipment expenses			487				248				239				500				260				240
FDIC assessment			503				252				251				457				220				237
Data processing fees			820				405				415				854				412				442
FDIC indemnification asset amortization			-				-				-				2,392				1,153				1,239
Amortization of intangibles			953				476				477				954				477				477
Other real estate (income) expenses, net			(117	)			(15	)			(102	)			222				137				85
Other operating expenses			3,155				1,656				1,499				3,375				1,759				1,616
Total noninterest expense			16,260				8,229				8,031				18,962				9,443				9,519
Income before income taxes			6,602				3,199				3,403				3,889				2,226				1,663
Income tax expense			1,864				881				983				884				533				351
Net income		$	4,738			$	2,318			$	2,420			$	3,005			$	1,693			$	1,312

 

 

COMMUNITY BANKERS TRUST CORPORATION
INCOME TREND ANALYSIS
UNAUDITED
(Dollars in thousands)		Three months ended
		30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Interest and dividend income
Interest and fees on loans		$	8,873			$	8,553			$	8,240			$	7,986			$	8,017
Interest and fees on PCI loans			1,556				1,599				1,654				1,730				2,418
Interest on federal funds sold			-				-				-				-				1
Interest on deposits in other banks			23				21				13				12				17
Interest and dividends on securities
Taxable			1,124				1,271				1,350				1,396				1,355
Nontaxable			557				594				589				599				525
Total interest and dividend income			12,133				12,038				11,846				11,723				12,333
Interest expense
Interest on deposits			1,537				1,551				1,526				1,523				1,486
Interest on borrowed funds			363				374				358				355				384
Total interest expense			1,900				1,925				1,884				1,878				1,870
Net interest income			10,233				10,113				9,962				9,845				10,463
Provision for loan losses			200				-				-				-				-
Net interest income after provision for loan losses			10,033				10,113				9,962				9,845				10,463
Noninterest income
Service charges on deposit accounts			599				569				601				583				557
Gain/(loss) on securities transactions, net			261				259				109				74				(8	)
Gain on sale of loans, net			-				-				-				-				23
Income on bank owned life insurance			204				188				189				188				188
Mortgage loan income			174				173				144				230				262
Other			157				132				182				178				184
Total noninterest income			1,395				1,321				1,225				1,253				1,206
Noninterest expense
Salaries and employee benefits			4,561				4,611				4,437				4,803				4,406
Occupancy expenses			646				641				616				669				619
Equipment expenses			248				239				253				282				260
FDIC assessment			252				251				294				187				220
Data processing fees			405				415				454				401				412
FDIC indemnification asset amortization			-				-				-				13,803				1,153
Amortization of intangibles			476				477				477				477				477
Other real estate (income) expenses, net			(15	)			(102	)			195				858				137
Other operating expenses			1,656				1,499				1,543				1,549				1,759
Total noninterest expense			8,229				8,031				8,269				23,029				9,443
Income (loss) before income taxes			3,199				3,403				2,918				(11,931	)			2,226
Income tax expense (benefit)			881				983				704				(4,215	)			533
Net income (loss)		$	2,318			$	2,420			$	2,214			$	(7,716	)		$	1,693

 

  

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Dollars in thousands)                                  

		Three months ended June 30, 2016												Three months ended June 30, 2015
		Average Balance Sheet				Interest Income / Expense				Average Rates Earned / Paid				Average Balance Sheet				Interest Income / Expense				Average Rates Earned / Paid
ASSETS:
Loans, including fees		$	774,553			$	8,873				4.59	%		$	681,891			$	8,017				4.72	%
PCI loans,  including fees			55,780				1,556				11.19				64,790				2,418				14.97
Total loans			830,333				10,429				5.04				746,681				10,435				5.61
Interest bearing bank balances			13,338				23				0.71				20,874				17				0.33
Federal funds sold			-				-				-				3,473				1				0.10
Securities (taxable)			178,915				1,124				2.51				212,681				1,355				2.55
Securities (tax exempt)(1)			81,205				844				4.16				74,762				795				4.25
Total earning assets			1,103,791				12,420				4.51				1,058,471				12,603				4.78
Allowance for loan losses			(10,014	)											(9,732	)
Non-earning assets			84,859												99,028
Total assets		$	1,178,636											$	1,147,767
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Demand - interest bearing		$	234,051			$	152				0.26			$	225,643			$	169				0.30
Savings			84,508				55				0.26				84,576				66				0.31
Time deposits			520,207				1,330				1.02				525,372				1,251				0.96
Total interest bearing deposits			838,766				1,537				0.73				835,591				1,486				0.71
Short-term borrowings			1,405				3				0.92				283				-				0.62
FHLB and other borrowings			103,883				302				1.17				95,437				300				1.26
Long- term debt			4,862				58				4.75				8,069				84				4.11
Total interest bearing liabilities			948,916				1,900				0.80				939,380				1,870				0.80
Noninterest bearing deposits			113,777												93,623
Other liabilities			5,076												4,061
Total liabilities			1,067,769												1,037,064
Shareholders’ equity			110,867												110,703
Total liabilities and
shareholders’ equity		$	1,178,636											$	1,147,767
Net interest earnings						$	10,520											$	10,733
Interest spread											3.71	%											3.98	%
Net interest margin											3.82	%											4.07	%

 

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

 

 

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS                                  

(Dollars in thousands)
		Six months ended June 30, 2016												Six months ended June 30, 2015
		Average Balance Sheet				Interest Income / Expense				Average Rates Earned / Paid				Average Balance Sheet				Interest Income / Expense				Average Rates Earned / Paid
ASSETS:
Loans, including fees		$	764,093			$	17,426				4.57	%		$	674,719			$	15,764				4.71	%
PCI loans,  including fees			56,820				3,155				11.14				65,934				4,491				13.74
Total loans			820,913				20,581				5.03				740,653				20,255				5.51
Interest bearing bank balances			11,665				44				0.77				18,137				34				0.38
Federal funds sold			-				-				-				3,735				2				0.10
Securities (taxable)			181,788				2,395				2.63				219,311				2,723				2.48
Securities (tax exempt)(1)			83,631				1,744				4.17				68,177				1,468				4.31
Total earning assets			1,097,997				24,764				4.52				1,050,013				24,482				4.70
Allowance for loan losses			(10,046	)											(9,713	)
Non-earning assets			83,344												100,882
Total assets		$	1,171,295											$	1,141,182
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Demand - interest bearing		$	232,356			$	325				0.28			$	223,518				323				0.29
Savings			83,818				118				0.28				82,116				126				0.31
Time deposits			523,337				2,645				1.01				526,042				2,485				0.95
Total interest bearing deposits			839,511				3,088				0.74				831,676				2,934				0.71
Short-term borrowings			2,102				8				0.80				904				2				0.54
FHLB and other borrowings			103,949				608				1.17				97,959				623				1.28
Long- term debt			5,264				121				4.54				8,560				176				4.09
Total interest bearing liabilities			950,826				3,825				0.81				939,099				3,735				0.80
Noninterest bearing deposits			106,282												88,065
Other liabilities			5,067												4,152
Total liabilities			1,062,175												1,031,316
Shareholders’ equity			109,120												109,866
Total liabilities and
shareholders’ equity		$	1,171,295											$	1,141,182
Net interest earnings						$	20,939											$	20,747
Interest spread											3.71	%											3.90	%
Net interest margin											3.82	%											3.98	%

 

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

 

 

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 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 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
(Dollars in thousands)		30-Jun-16				31-Mar-16				31-Dec-15				30-Jun-15
Total shareholders’ equity		$	112,231			$	108,887			$	104,487			$	109,179
Core deposit intangible (net)			1,852				2,329				2,805				3,759
Common tangible book value		$	110,379			$	106,558			$	101,682			$	105,420
Shares outstanding			21,911				21,887				21,867				21,828
Common tangible book value per share		$	5.04			$	4.87			$	4.65			$	4.83
Stock price		$	5.18			$	5.00			$	5.37			$	4.97
Price/common tangible book			102.78	%			102.67	%			115.48	%			102.90	%
Common tangible equity/common tangible assets
Total assets		$	1,189,522			$	1,160,046			$	1,180,557			$	1,159,131
Core deposit intangible			1,852				2,329				2,805				3,759
Common tangible assets		$	1,187,670			$	1,157,717			$	1,177,752			$	1,155,372
Common tangible equity		$	110,379			$	106,558			$	101,681			$	105,420
Common tangible equity to common tangible assets			9.29	%			9.20	%			8.63	%			9.12	%