Community Bankers Trust Corporation: Community Bankers Trust Corporation Reports Results for Fourth Quarter and Year 2016

Tickers: ESXB
RICHMOND, Va., Jan. 26, 2017 /PRNewswire/ -- Community Bankers Trust Corporation (the 'Company') (NASDAQ: ESXB), the holding company for Essex Bank (the 'Bank'), today reported unaudited results for the fourth quarter and year ended December 31, 2016.

FINANCIAL HIGHLIGHTS

  • Fourth quarter 2016 net income of $2.7 million is a linked quarter increase of 10.9% and a year-over-year increase of 23.1%.
  • Earnings per common share (EPS) were $0.12 for the fourth quarter of 2016 compared with $0.10 for the fourth quarter of 2015.
  • For the year ended December 31, 2016, net income was $9.9 million, or $0.45 per common share, compared with a net loss of $2.5 million, or ($0.11) per common share, for 2015.
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OPERATING HIGHLIGHTS

  • Gross loans, excluding purchase credit impaired (PCI) loans, grew $24.5 million, or 3.0%, during the fourth quarter of 2016 and $87.6 million, or 11.7%, since year end 2015.
  • Commercial loans grew $10.5 million, or 8.9%, during the fourth quarter of 2016.
  • Noninterest bearing deposits grew $32.7 million, or 34.0%, during 2016.
  • Noninterest bearing deposits were 12.4% of total deposits at December 31, 2016 compared with 10.2% at December 31, 2015.
MANAGEMENT COMMENTS

Rex L. Smith, III, President and Chief Executive Officer, stated, 'We delivered solid earnings in the fourth quarter and continue to grow earnings while expanding the footprint of the franchise. The results demonstrate the progress we made in realizing our strategic initiatives. We continue to produce double digit loan growth, and it is distributed among the commercial, small business and real estate groups. Commercial loans in particular now account for 15.5% of the total loan portfolio.'

Smith added, 'Our branching strategy has been successful as we continue to grow the franchise while increasing earnings. In 2016, we opened two new branches in our Virginia market in Fairfax and Cumberland. For 2017, we have new offices committed in the Short Pump area of Richmond and one in Lynchburg. We also continue to look for growth and restructuring opportunities in Maryland as that part of the franchise has seen significant growth. This expansion helps our noninterest bearing deposit growth, which was 34.0% for the year.'

Smith concluded, 'Our strategy has allowed us to create significant value in the past several years through a combination of strategic branching, diversified loan growth and a substantial change in the core deposit mix. Because of the level of adjustable rate loans and our sources of funding, including the growth in noninterest bearing deposits, the Bank is well positioned for the rising rate environment we expect in the coming year. We are pleased with the results of 2016 and look forward to continuing our positive trends in 2017.'

RESULTS OF OPERATIONS

Net income was $2.7 million for the fourth quarter of 2016, compared with linked quarter net income of $2.5 million in the third quarter of 2016 and year-over-year net income of $2.2 million in the fourth quarter of 2015. Earnings per common share, basic and fully diluted, were $0.12 per share, $0.11 per share and $0.10 per share for the three months ended December 31, 2016, September 30, 2016, and December 31, 2015, respectively. For the year ended December 31, 2016, net income was $9.9 million, or $0.45 per common share, basic and fully diluted, compared with a net loss of $2.5 million, or ($0.11) per common share, for the year ended December 31, 2015.

Net income in 2015 was affected by the third quarter termination of the Bank's FDIC shared-loss agreements in order to improve profitability beginning in the fourth quarter of 2015. As part of the termination of the shared-loss agreements, the FDIC paid $3.1 million in cash to the Bank, and the remaining $13.1 million of the FDIC indemnification asset related to the agreements was charged off. This transaction eliminated future indemnification asset amortization expense, which had totaled $5.2 million for the 12 month period from July 1, 2014 through June 30, 2015.

Excluding the one-time charge of $13.1 million related to the termination of the FDIC shared-loss agreements, net income for 2015 would have been approximately $6.1 million, or $0.28 per common share. In addition to the shared-loss termination charge, the Company had write-downs totaling $1.1 million with respect to two bank buildings held for sale and one parcel in other real estate owned in the third quarter of 2015.

The following table presents summary income statements for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, and the years ended December 31, 2016 and December 31, 2015.

SUMMARY INCOME STATEMENT

(Dollars in thousands)

For the three months ended

For the year ended

31-Dec-16

30-Sep-16

31-Dec-15

31-Dec-16

31-Dec-15

Interest income

$

12,717

$

12,407

$

11,846

$

49,295

$

47,552

Interest expense

2,091

1,904

1,884

7,820

7,497

Net interest income

10,626

10,503

9,962

41,475

40,055

Provision (credit) for loan losses

(284)

250

-

166

-

Net interest income after provision for loan losses

10,910

10,253

9,962

41,309

40,055

Noninterest income

1,118

1,345

1,225

5,179

5,081

Noninterest expense

8,212

8,278

8,269

32,750

50,260

Net income (loss) before income taxes

3,816

3,320

2,918

13,738

(5,124)

Income tax expense (benefit)

1,090

862

704

3,816

(2,627)

Net income (loss)

2,726

2,458

2,214

9,922

(2,497)

EPS Basic

$

0.12

$

0.11

$

0.10

$

0.45

$

(0.11)

EPS Diluted

$

0.12

$

0.11

$

0.10

$

0.45

$

(0.11)

Return on average assets, annualized

0.87%

0.82%

0.77

0.83%

(0.22)%

Return on average equity, annualized

9.71%

8.60%

8.50

8.92%

(2.31)%

In this earnings release, the results reported for loans and loan growth do not include PCI loans, unless otherwise specifically stated.

Net Interest Income

Linked Quarter Basis

Net interest income was $10.6 million for the quarter ended December 31, 2016 compared with $10.5 million for the quarter ended September 30, 2016. This is an increase of 1.2%, or $123,000.

Interest income on a linked quarter basis increased $310,000, or 2.5%, to $12.7 million for the fourth quarter of 2016. This resulted in a yield on earning assets of 4.41%, a decline of nine basis points on a linked quarter basis. Interest income with respect to loans increased $260,000, or 2.8%, during the fourth quarter of 2016 when compared with the third quarter of 2016. This increase was attributable to a full quarter of earnings from $26.8 million in loan growth generated in the third quarter of 2016 coupled with loan growth of $24.5 million in the fourth quarter of 2016. Interest income with respect to PCI loans was $1.5 million in each of the third and fourth quarters of 2016.

Securities income equaled $1.7 million in each of the third and fourth quarters of 2016. On a tax equivalent basis, securities income was $2.0 million for each of the third and fourth quarters of 2016. The tax equivalent yield on the securities portfolio was 3.09% for each of the third and fourth quarters of 2016.

Interest expense was $2.1 million for the fourth quarter of 2016, an increase of $187,000, or 9.8%, over the third quarter of 2016 as interest bearing liabilities increased 4.9%, or $46.9 million, on average, in the fourth quarter. The Bank embarked upon a successful certificate of deposit campaign in the third and fourth quarters of 2016 ahead of the anticipated increase in the discount rate that occurred in December. The Company's cost of interest bearing liabilities increased from 0.79%, or $1.9 million, in the third quarter of 2016 to 0.83%, or $2.1 million, in the current quarter. The cost of FHLB borrowings was 1.20% in the fourth quarter of 2016 compared with 1.05% for the third quarter of 2016. During the fourth quarter of 2016, the average balance of FHLB borrowings was $102.1 million compared with $111.8 million in the third quarter of 2016. The increase in interest bearing liabilities in the fourth quarter, noted above, enabled the Bank to lower the level of FHLB borrowings.

With the changes in net interest income noted above, the tax equivalent net interest margin decreased and was 3.70% in the fourth quarter of 2016 compared with 3.82% in the third quarter of 2016. Likewise, the interest spread was 3.58% in the fourth quarter of 2016, down from 3.71% in the third quarter of 2016.

Yearly Comparison 2016 versus 2015

For the year 2016, net interest income increased $1.4 million, or 3.6%, and was $41.5 million. The tax equivalent yield on earning assets was 4.50% for 2016 compared with 4.57% for 2015. Interest and fees on loans of $36.0 million in 2016 was an increase of $4.0 million, or 12.5%, compared with $32.0 million for 2015. Interest and fees on PCI loans declined $1.6 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 2015 versus no such payments in 2016. Securities income declined $681,000 for 2016 compared with the same period in 2015 as securities balances have been liquidated to fund loan growth.

Interest expense of $7.8 million for 2016 represented an increase of $323,000, or 4.31%, compared with 2015. Total average interest bearing liabilities increased $21.4 million, as loan growth has been fueled by this increase and an average balance increase of 23.0%, or $21.7 million, in noninterest bearing deposits, coupled with a decline in the average balance of securities of $36.3 million during 2016.

The tax equivalent net interest margin was 3.80% for the year ended December 31, 2016 versus 3.87% for the year ended December 31, 2015. The net interest spread was 3.69% for 2016 versus 3.77% for 2015.

Year-Over-Year Quarter

Net interest income increased $664,000, or 6.7%, from the fourth quarter of 2015 to the fourth quarter of 2016 and was $10.6 million. The tax equivalent yield on earning assets of 4.41% in the fourth quarter of 2016 was a decrease from 4.45% for the fourth quarter of 2015. While the yield on loans decreased from 4.59% to 4.56%, loan volume increased the average balance by $107.5 million, or 15.1%, in the fourth quarter of 2016. Interest income on loans was $9.4 million, an increase of $1.2 million over fourth quarter 2015 interest income of $8.2 million. Interest on PCI loans was $1.5 million in the fourth quarter of 2016, a decrease of $128,000 year over year. The return on PCI loans increased over this time frame, from 10.97% to 11.46%. Income on securities of $2.0 million in the fourth quarter of 2016 represented a decline of $240,000 year over year as a result of a reduction in the average balances of securities of $43.9 million, or 14.5%. These securities, through sales, calls and maturities, have been used to fund loan growth since the fourth quarter of 2015. There was, however, an increase in the yield on securities from 2.96% to 3.09% year over year.

Interest expense increased $207,000, or 11.0%, when comparing the fourth quarter of 2016 and the fourth quarter of 2015. The increase in interest expense was a result of the aforementioned certificate of deposit campaign. Interest expense on deposits increased $218,000, or 14.3%, as the average balance of interest bearing deposits increased $55.6 million, or 6.6%. Overall, the Bank's cost of interest bearing deposits of 0.77% represented an increase from 0.72% in the fourth quarter of 2015. Average interest bearing liabilities costs increased from 0.79% in the fourth quarter of 2015 to 0.83% in the fourth quarter of 2016.

The tax equivalent net interest margin decreased 6 basis points from 3.76% in the fourth quarter of 2015 to 3.70% in the fourth quarter of 2016. Likewise, the interest spread decreased from 3.66% to 3.58% over the same time period. The decrease in the margin was precipitated by an increase in the level of the average balance of interest bearing liabilities from $949.4 million in the fourth quarter of 2015 to $1.0 billion in the fourth quarter of 2016 as a result of the certificate of deposit campaign noted above.

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

NET INTEREST MARGIN

(Dollars in thousands)

For the three months ended

31-Dec-16

30-Sep-16

31-Dec-15

Average interest earning assets

$

1,169,693

$

1,118,806

$

1,083,016

Interest income

$

12,717

$

12,407

$

11,846

Interest income - tax-equivalent

$

13,000

$

12,689

$

12,149

Yield on interest earning assets

4.41

%

4.50

%

4.45

%

Average interest bearing liabilities

$

1,000,665

$

953,750

$

949,359

Interest expense

$

2,091

$

1,904

$

1,884

Cost of interest bearing liabilities

0.83

%

0.79

%

0.79

%

Net interest income

$

10,626

$

10,503

$

9,962

Net interest income - tax-equivalent

$

10,909

$

10,785

$

10,265

Interest spread

3.58

%

3.71

%

3.66

%

Net interest margin

3.70

%

3.82

%

3.76

%

For the year ended

31-Dec-16

31-Dec-15

Average interest earning assets

$

1,121,250

$

1,064,587

Interest income

$

49,295

$

47,552

Interest income - tax-equivalent

$

50,453

$

48,663

Yield on interest earning assets

4.50

%

4.57

%

Average interest bearing liabilities

$

964,089

$

942,720

Interest expense

$

7,820

$

7,497

Cost of interest bearing liabilities

0.81

%

0.80

%

Net interest income

$

41,475

$

40,055

Net interest income - tax-equivalent

$

42,633

$

41,166

Interest spread

3.69

%

3.77

%

Net interest margin

3.80

%

3.87

%

Provision for Loan Losses

The Company records a provision for loan losses for its loan portfolio, excluding PCI loans, and a separate provision for the PCI loan portfolio. There was no provision for loan losses, excluding PCI loans, during the fourth quarter of 2016. Similarly, there was no provision for loan losses in either the fourth quarter or the year ended December 31, 2015. Due to continued improved performance in the PCI loan portfolio, there was a credit of $284,000 to its provision in the fourth quarter of 2016. There was no provision for loan losses on the PCI loan portfolio for any period during the year ended December 31, 2015. During the periods with no provision, 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 $1.1 million for the fourth quarter of 2016, compared with $1.3 million for the third quarter of 2016. The decrease of $227,000, or 16.9%, in noninterest income on a linked quarter basis was driven by a decline of $245,000 in mortgage loan income, which was $252,000 in the third quarter compared with $7,000 in the fourth quarter of 2016. In September 2016, the Bank discontinued its wholesale mortgage operations and refocused its efforts towards retail mortgage production. With the discontinued wholesale mortgage operations, there is a corresponding decrease in salaries and employee benefit expenses.

Yearly Comparison 2016 versus 2015

Noninterest income was $5.2 million for the year ended December 31, 2016, an increase of $98,000, or 1.9%, over $5.1 million for the year ended December 31, 2015. Securities gains of $634,000 in 2016 compared with $472,000 for 2015. Likewise, service charges on deposit accounts increased by $151,000 and were $2.4 million for 2016. Income on bank owned life insurance of $870,000 in 2016 is an increase of $119,000, or 15.9%. Offsetting these increases for 2016 compared with 2015 were decreases of $178,000 in mortgage loan income, which was $606,000 in 2016, $87,000 in other noninterest income, which was $649,000 in 2016, and $69,000 in gain on sale of loans in 2015, which was zero in 2016,

Year-Over-Year Quarter

Noninterest income decreased $107,000, or 8.7%, from $1.2 million in the fourth quarter of 2015 to $1.1 million in the fourth quarter of 2016. Mortgage loan income decreased by $137,000 year-over-year as a result of the discontinued mortgage operations noted above. Gains on securities transactions were $26,000 in the fourth quarter of 2016 compared with $109,000 in the fourth quarter of 2015. Offsetting these decreases were an increase of $51,000 in income on bank owned life insurance, an increase of $34,000 in service charges on deposit accounts and an increase of $28,000 in other noninterest income.

Noninterest Expense

Linked Quarter Basis

Noninterest expenses totaled $8.2 million for the fourth quarter of 2016, as compared with $8.3 million for the third quarter of 2016, a decrease of $66,000, or 0.8%. Notable differences between the third quarter of 2016 and the fourth quarter of 2016 included an increase of $236,000 in other real estate expenses, which were $264,000 in the fourth quarter of 2016. Offsetting this increase was a decrease of $186,000 in FDIC assessment reflecting lower assessment rates instituted by the FDIC, a decrease of $112,000 in salaries and employee benefits and a decline of $62,000 in occupancy expenses.

Yearly Comparison 2016 versus 2015

Noninterest expenses were $32.8 million for the year ended December 31, 2016, as compared with $50.3 million for the year ended December 31, 2015. This is a decrease of $17.5 million, or 34.8%. FDIC indemnification asset amortization was $0 for 2016 and $16.2 million for 2015 as a result of the termination of the shared-loss agreements and associated write-off. Other real estate expenses improved $1.1 million in 2016 and were $175,000. The expense in this category in 2015 was primarily from the write-down of $1.1 million in the two bank owned properties and other real estate owned noted previously. Other operating expenses declined $444,000 over the comparison period. Salaries and employee benefits increased $271,000, or 1.5%, in 2016 compared with 2015. FDIC assessment decreased $115,000 and occupancy expenses increased $145,000 in 2016, the result of the Bank's new branches in Fairfax and Cumberland, Virginia.

Year-Over-Year Quarter

Noninterest expenses decreased $57,000, or 0.7%, in the fourth quarter of 2016 compared with the same period in 2015. FDIC assessment decreased $227,000 due to lower assessment rates, and was $67,000 for the fourth quarter of 2016 compared with $294,000 for the same period in 2015. Additionally, other operating expenses decreased $111,000, or 7.2%, and were $1.4 million in 2016. Salaries and employee benefits represents the largest year-over-year increase in noninterest expenses, increasing by 2.9% and were $4.6 million for the fourth quarter of 2016. Occupancy expenses increased $78,000, or 12.7%, and other real estate expenses increased $69,000, or 35.4%.

Income Taxes

Income tax expense was $1.1 million for the three months ended December 31, 2016 compared with income tax expense of $862,000 in the third quarter of 2016 and $704,000 in the fourth quarter of 2015. The effective tax rate was 28.6% for the fourth quarter of 2016 compared with 26.0% for the third quarter of 2016 and 24.1% in the fourth quarter of 2015. For the year ended December 31 2016, income tax expense of $3.8 million represented an effective tax rate of 27.8% compared with an income tax benefit of $2.6 million for the year ended December 31, 2015. The credit for the year ended 2015 was the result of the net loss for the year generated by the accounting for the termination of the shared-loss agreements.

FINANCIAL CONDITION

Total assets increased $69.3 million, or 5.9%, to $1.250 billion at December 31, 2016 as compared with $1.181 billion at December 31, 2015. Total loans were $836.3 million at December 31, 2016, increasing $87.6 million, or 11.7%, from year end 2015. Total PCI loans were $52.0 million at December 31, 2016 versus $59.0 million at year end 2015.

During 2016, construction and land development loans grew by $30.9 million, or 45.8%, commercial loans grew $26.8 million, or 26.1%, commercial mortgage loans on real estate grew $21.8 million, or 6.9%, and residential 1-4 family loans grew $13.3 million, or 6.8%.

The following table shows the composition of the Company's loan portfolio at December 31, 2016, September 30, 2016 and December 31, 2015.

LOANS

(Dollars in thousands)

31-Dec-16

30-Sep-16

31-Dec-15

Amount

% of Loans

Amount

% of Loans

Amount

% of Loans

Mortgage loans on real estate:

Residential 1-4 family

$

207,863

24.86

% $

207,422

25.55

% $

194,576

25.99

%

Commercial

339,804

40.63

331,120

40.79

317,955

42.47

Construction and land development

98,282

11.75

88,543

10.91

67,408

9.00

Second mortgages

7,911

0.95

8,378

1.03

8,378

1.12

Multifamily

39,084

4.67

43,137

5.31

45,389

6.06

Agriculture

7,185

0.86

7,910

0.98

6,238

0.83

Total real estate loans

700,129

83.72

686,510

84.57

639,944

85.47

Commercial loans

129,300

15.46

118,770

14.63

102,507

13.69

Consumer installment loans

5,627

0.67

5,226

0.64

4,928

0.66

All other loans

1,243

0.15

1,292

0.16

1,345

0.18

Gross loans

836,299

100.00

%

811,798

100.00

%

748,724

100.00

%

Allowance for loan losses

(9,493)

(9,480)

(9,559)

Non-covered loans, net of unearned income

$

826,806

$

802,318

$

739,165

The Company's securities portfolio, excluding equity securities, declined $17.0 million, or 6.1%, from $279.7 million at December 31, 2015 to $262.7 million at December 31, 2016. Net realized gains of $634,000 were recognized during 2016 through sales and call activity, as compared with $472,000 recognized during 2015. The decline in the volume of securities was a strategic decision by management to fund strong loan growth with securities sales, normal securities amortization, call activity, sales and maturities.

The Company had cash and cash equivalents of $21.1 million at December 31, 2016 compared with $17.0 million at December 31, 2015. There were federal funds purchased of $4.7 million at December 31, 2016 compared with federal funds purchased of $18.9 million at December 31, 2015.

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

SECURITIES PORTFOLIO

(Dollars in thousands)

31-Dec-16

30-Sep-16

31-Dec-15

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

$

58,724

$

57,976

$

33,033

$

32,629

$

50,590

$

49,941

U.S Gov't sponsored agencies

3,452

3,336

-

-

756

742

State, county, and municipal

121,686

122,773

118,620

124,220

138,965

141,498

Corporate and other bonds

15,936

15,503

15,784

15,323

14,997

14,296

Mortgage backed securities - U.S.
Gov't agencies

3,614

3,495

3,623

3,618

8,654

8,496

Mortgage backed securities - U.S.
Gov't sponsored agencies

13,330

13,038

18,062

18,105

28,637

28,297

Total securities available for sale

$

216,742

$

216,121

$

189,122

$

193,895

$

242,599

$

243,270

31-Dec-16

30-Sep-16

31-Dec-15

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Securities Held to Maturity

U.S Gov't sponsored agencies

$

10,000

$

9,846

$

10,000

$

10,001

$

-

$

-

State, county, and municipal

35,847

36,230

34,770

36,496

35,456

36,557

Mortgage backed securities - U.S. Gov't agencies

761

782

846

865

1,022

1,054

Total securities held to maturity

$

46,608

$

46,858

$

45,616

$

47,362

$

36,478

$

37,611

Interest bearing deposits at December 31, 2016 were $908.4 million, an increase of $59.1 million, or 7.0%, from $849.3 million at December 31, 2015. Time deposits less than or equal to $250,000 increased $31.6 million while time deposits over $250,000 increased $10.1 million as a result of a successful retail certificate of deposit promotion in the fourth quarter of 2016 that brought in over $40 million in new money. NOW account balances increased by $8.6 million, savings accounts by $6.3 million and MMDAs by $2.5 million.

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

INTEREST BEARING DEPOSITS

(Dollars in thousands)

31-Dec-16

30-Sep-16

31-Dec-15

NOW

$

137,332

$

118,264

$

128,761

MMDA

111,346

109,842

108,810

Savings

90,340

89,336

84,047

Time deposits less than or equal to $250,000

440,699

398,295

409,085

Time deposits over $250,000

128,690

122,258

118,600

Total interest bearing deposits

$

908,407

$

837,995

$

849,303

FHLB advances were $81.9 million at December 31, 2016, compared with $95.7 million at December 31, 2015. The decrease in FHLB advances was offset by the decline in securities. Long term debt totaled $1.7 million at December 31, 2016, declining by $4.0 million, or 70.6%, 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 had paid down this debt by $9.0 million at December 31, 2016, and the loan, which was scheduled to be fully paid on April 21, 2017, was fully paid on January 9, 2017.

Shareholders' equity was $114.4 million at December 31, 2016 compared with $104.5 million at December 31, 2015. Shareholders' equity increased $9.9 million, or 9.5%, from year end 2015.

Asset Quality - non-PCI loans

Nonaccrual loans were $10.2 million at December 31, 2016, decreasing $1.0 million during the fourth quarter of 2016 and $427,000 from December 31, 2015. The level of total classified and criticized assets has been stable over the last five quarters and no provision for loan losses was recognized in the current quarter. The changes within the level of total classified and criticized assets on a linked quarter basis were primarily from two credits that were shifted from special mention status to substandard status during the third quarter of 2016. These credits were paid off as of December 31, 2016.

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

ASSET QUALITY

(Dollars in thousands)

31-Dec-16

30-Sep-16

30-Jun-16

31-Mar-16

31-Dec-15

Nonaccrual loans

$

10,243

$

11,213

$

11,655

$

10,932

$

10,670

Criticized (special mention) loans

14,468

15,362

21,032

16,641

21,476

Classified (substandard) loans

18,501

21,366

13,722

13,425

13,471

Other real estate owned

4,427

4,905

4,898

5,095

5,490

Total classified and criticized assets

$

37,396

$

41,633

$

39,652

$

35,161

$

40,437

Total nonperforming assets totaled $14.7 million at December 31, 2016 compared with $16.2 million at December 31, 2015. Total nonperforming assets decreased $1.4 million since September 30, 2016. There were net recoveries of $13,000 in the fourth quarter of 2016 compared with $204,000 in net charge-offs in the third quarter of 2016 and $142,000 in net charge-offs in the fourth quarter of 2015. Year-to-date 2016 net charge-offs equaled $516,000.

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

ALLOWANCE FOR LOAN LOSSES

(Dollars in thousands)

2016

2015

Fourth

Third

Second

First

Fourth

Quarter

Quarter

Quarter

Quarter

Quarter

Allowance for loan losses:

Beginning of period

$

9,480

$

9,434

$

9,594

$

9,559

$

9,701

Provision for loan losses

-

250

200

-

-

Net recoveries (charge-offs)

13

(204)

(360)

35

(142)

End of period

$

9,493

$

9,480

$

9,434

$

9,594

$

9,559

The allowance for loan losses equaled 92.7% of nonaccrual loans at December 31, 2016, compared with 84.5% at September 30, 2016 and 89.6% at December 31, 2015. The ratio of the allowance for loan losses to total nonperforming assets was 66.1% at December 31, 2016 compared with 61.8% at September 30, 2016 and 62.2% at December 31, 2015. The ratio of nonperforming assets to loans and OREO was 1.7% at December 31, 2016 compared with 2.0% at September 30, 2016 and 2.1% at December 31, 2015.

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

ASSET QUALITY

(Dollars in thousands)

31-Dec-16

30-Sep-16

30-Jun-16

31-Mar-16

31-Dec-15

Nonaccrual loans

$

10,243

$

11,213

$

11,655

$

10,932

$

10,670

Loans past due over 90 days and accruing interest

-

-

-

-

-

Total nonperforming loans

10,243

11,213

11,655

10,932

10,670

Other real estate owned

4,427

4,905

4,898

5,095

5,490

Total nonperforming assets

$

14,670

$

16,118

$

16,553

$

16,027

$

16,160

Allowance for loan losses to loans

1.14

%

1.17

%

1.20

%

1.25

%

1.28

%

Allowances for loan losses to nonperforming assets

66.07

61.82

59.92

62.88

62.15

Allowance for loan losses, excluding PCI loans, to nonaccrual loans

92.68

84.54

80.94

87.76

89.59

Nonperforming assets to loans and other real estate

1.74

1.97

2.10

2.08

2.14

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

(0.01)

%

0.10

%

0.19

%

(0.02)

%

0.08

%

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

NONACCRUAL LOANS

(Dollars in thousands)

31-Dec-16

30-Sep-16

31-Dec-15

Mortgage loans on real estate:

Residential 1-4 family

$

2,893

$

3,665

$

4,562

Commercial

1,758

1,599

1,508

Construction and land development

5,495

5,684

4,509

Second mortgages

-

135

13

Total real estate loans

$

10,146

$

11,083

$

10,592

Commercial loans

53

53

-

Consumer installment loans

44

77

78

Gross loans

$

10,243

$

11,213

$

10,670

Capital Requirements

The Company's ratio of total risk-based capital was 13.2% at September 30, 2016 compared with 13.2% at December 31, 2016. The tier 1 risk-based capital ratio was 12.2% at September 30, 2016 and 12.2% at December 31, 2016. The Company's tier 1 leverage ratio was 9.8% at September 30, 2016 and 10.0% at December 31, 2016. 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 September 30, 2016 and 11.8% at December 31, 2016.

Earnings Conference Call and Webcast

The Company will host a conference call for interested parties on Thursday, January 26, 2017, at 10:00 a.m. Eastern Time to discuss the financial results for the fourth quarter and the year 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 January 26, 2017, until 9:00 a.m. Eastern Time on February 9, 2017. The replay will be available by dialing 877-344-7529 and entering access code 10098962 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 23 full-service offices, 17 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.

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED BALANCE SHEETS

UNAUDITED CONDENSED

(Dollars in thousands)

31-Dec-16

30-Sep-16

31-Dec-15

Assets

Cash and due from banks

$

13,828

$

11,667

$

7,393

Interest bearing bank deposits

7,244

10,201

9,576

Federal funds sold

-

99

-

Total cash and cash equivalents

21,072

21,967

16,969

Securities available for sale, at fair value

216,121

193,895

243,270

Securities held to maturity, at cost

46,608

45,616

36,478

Equity securities, restricted, at cost

8,290

9,289

8,423

Total securities

271,019

248,800

288,171

Loans held for sale

-

-

2,101

Loans

836,299

811,798

748,724

Purchased credit impaired (PCI) loans

51,964

53,462

58,955

Allowance for loan losses

(9,493)

(9,480)

(9,559)

Allowance for loan losses - PCI loans

(200)

(484)

(484)

Net loans

878,570

855,296

797,636

Bank premises and equipment, net

28,357

27,805

27,378

Bank premises and equipment held for sale

-

-

110

Other real estate owned

4,427

4,905

5,490

Bank owned life insurance

27,339

27,140

21,620

Core deposit intangibles, net

898

1,375

2,805

Other assets

18,204

16,943

18,277

Total assets

$

1,249,886

$

1,204,231

$

1,180,557

Liabilities

Deposits

Noninterest bearing

128,887

129,329

96,216

Interest bearing

$

908,407

$

837,995

$

849,303

Total deposits

1,037,294

967,324

945,519

Federal funds purchased

4,714

-

18,921

Federal Home Loan Bank advances

81,887

109,082

95,656

Long-term debt

1,670

2,738

5,675

Trust preferred capital notes

4,124

4,124

4,124

Other liabilities

5,796

6,234

6,175

Total liabilities

$

1,135,485

$

1,089,502

$

1,076,070

Shareholders' Equity

Common stock (200,000,000 shares authorized $0.01 par value; 21,959,648, 21,947,466, and 21,866,944 shares issued and outstanding, respectively)

220

219

219

Additional paid in capital

146,667

146,504

145,907

Retained deficit

(31,128)

(33,854)

(41,050)

Accumulated other comprehensive (loss) income

(1,358)

1,860

(589)

Total shareholders' equity

114,401

114,729

104,487

Total liabilities and shareholders' equity

$

1,249,886

$

1,204,231

$

1,180,557

COMMUNITY BANKERS TRUST CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED CONDENSED

(Dollars in thousands)

2016

2015

2014

Interest and dividend income

Interest and fees on loans

$

35,998

$

31,990

$

29,635

Interest and fees on PCI loans

6,230

7,875

11,228

Interest on federal funds sold

-

2

-

Interest on deposits in other banks

122

59

61

Interest and dividends on securities

-

Taxable

4,696

5,469

6,835

Nontaxable

2,249

2,157

966

Total interest and dividend income

49,295

47,552

48,725

Interest expense

Interest on deposits

6,382

5,983

5,858

Interest on borrowed funds

1,438

1,514

1,075

Total interest expense

7,820

7,497

6,933

Net interest income

41,475

40,055

41,792

Provision for loan losses

166

-

-

Net interest income after provision for loan losses

41,309

40,055

41,792

Noninterest income

Service charges on deposit accounts

2,420

2,269

2,200

Gain on securities transactions, net

634

472

1,089

Gain on sale of loans, net

-

69

201

Income on bank owned life insurance

870

751

769

Mortgage loan income

606

784

211

Other

649

736

799

Total noninterest income

5,179

5,081

5,269

Noninterest expense

Salaries and employee benefits

18,412

18,141

16,136

Occupancy expenses

2,737

2,592

2,597

Equipment expenses

999

1,035

957

FDIC assessment

823

938

805

Data processing fees

1,674

1,709

1,732

FDIC indemnification asset amortization

-

16,195

5,795

Amortization of intangibles

1,907

1,908

1,908

Other real estate expenses, net

175

1,275

540

Other operating expenses

6,023

6,467

6,347

Total noninterest expense

32,750

50,260

36,817

Income (loss) before income taxes

13,738

(5,124)

10,244

Income tax expense (benefit)

3,816

(2,627)

2,728

Net income (loss)

9,922

(2,497)

7,516

Dividends paid on preferred stock

-

-

247

Net income (loss) available to common shareholders

9,922

(2,497)

7,269

COMMUNITY BANKERS TRUST CORPORATION

INCOME TREND ANALYSIS

UNAUDITED

(Dollars in thousands)

Three months ended

31-Dec-16

30-Sep-16

30-Jun-16

31-Mar-16

31-Dec-15

Interest and dividend income

Interest and fees on loans

$

9,416

$

9,156

$

8,873

$

8,553

$

8,240

Interest and fees on PCI loans

1,526

1,549

1,556

1,599

1,654

Interest on federal funds sold

-

-

-

-

-

Interest on deposits in other banks

56

22

23

21

13

Interest and dividends on securities

Taxable

1,168

1,133

1,124

1,271

1,350

Nontaxable

551

547

557

594

589

Total interest and dividend income

12,717

12,407

12,133

12,038

11,846

Interest expense

Interest on deposits

1,744

1,550

1,537

1,551

1,526

Interest on borrowed funds

347

354

363

374

358

Total interest expense

2,091

1,904

1,900

1,925

1,884

Net interest income

10,626

10,503

10,233

10,113

9,962

Provision (credit) for loan losses

(284)

250

200

-

-

Net interest income after provision for loan losses

10,910

10,253

10,033

10,113

9,962

Noninterest income

Service charges on deposit accounts

635

617

599

569

601

Gain on securities transactions, net

26

88

261

259

109

Income on bank owned life insurance

240

238

204

188

189

Mortgage loan income

7

252

174

173

144

Other

210

150

157

132

182

Total noninterest income

1,118

1,345

1,395

1,321

1,225

Noninterest expense

Salaries and employee benefits

4,564

4,676

4,561

4,611

4,437

Occupancy expenses

694

756

646

641

616

Equipment expenses

270

242

248

239

253

FDIC assessment

67

253

252

251

294

Data processing fees

444

410

405

415

454

FDIC indemnification asset amortization

-

-

-

-

-

Amortization of intangibles

477

477

476

477

477

Other real estate expenses (income), net

264

28

(15)

(102)

195

Other operating expenses

1,432

1,436

1,656

1,499

1,543

Total noninterest expense

8,212

8,278

8,229

8,031

8,269

Income before income taxes

3,816

3,320

3,199

3,403

2,918

Income tax expense

1,090

862

881

983

704

Net income

$

2,726

$

2,458

$

2,318

$

2,420

$

2,214

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Dollars in thousands)

Three months ended

Three months ended

December 31, 2016

December 31, 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

$

819,276

$

9,416

4.56

%

$

711,797

$

8,240

4.59

%

PCI loans, including fees

52,806

1,526

11.46

59,835

1,654

10.97

Total loans

872,082

10,942

4.98

771,632

9,894

5.09

Interest bearing bank balances

38,345

56

0.58

8,284

13

0.64

Federal funds sold

94

-

0.49

-

-

-

Securities (taxable)

179,228

1,168

2.61

218,957

1,350

2.47

Securities (tax exempt) (1)

79,944

834

4.17

84,143

892

4.24

Total earning assets

1,169,693

13,000

4.41

1,083,016

12,149

4.45

Allowance for loan losses

(9,912)

(10,182)

Non-earning assets

88,956

81,908

Total assets

$

1,248,737

$

1,154,742

LIABILITIES AND

SHAREHOLDERS' EQUITY

Demand - interest bearing

$

242,674

$

156

0.25

$

237,303

$

187

0.31

Savings

91,973

60

0.26

83,744

66

0.31

Time deposits

560,984

1,528

1.08

519,028

1,273

0.97

Total interest bearing deposits

895,631

1,744

0.77

840,075

1,526

0.72

Short-term borrowings

178

1

1.75

2,865

7

0.97

FHLB and other borrowings

102,130

309

1.2

99,952

281

1.11

Long- term debt

2,726

37

5.37

6,467

70

4.26

Total interest bearing liabilities

1,000,665

2,091

0.83

949,359

1,884

0.79

Noninterest bearing deposits

129,511

99,987

Other liabilities

6,274

1,147

Total liabilities

1,136,450

1,050,493

Shareholders' equity

112,287

104,249

Total liabilities and

shareholders' equity

$

1,248,737

$

1,154,742

Net interest earnings

$

10,909

$

10,265

Interest spread

3.58

%

3.66

%

Net interest margin

3.70

%

3.76

%

(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)

Year ended

Year ended

December 31, 2016

December 31, 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

$

787,245

$

35,998

4.57

%

$

687,463

$

31,990

4.65

%

PCI loans, including fees

55,178

6,230

11.29

63,552

7,875

12.39

Total loans

842,423

42,228

5.01

751,015

39,865

5.31

Interest bearing bank balances

17,922

122

0.68

14,551

59

0.41

Federal funds sold

27

0

0.49

1,852

2

0.10

Securities (taxable)

178,833

4,696

2.63

220,525

5,469

2.48

Securities (tax exempt) (1)

82,045

3,407

4.15

76,644

3,268

4.26

Total earning assets

1,121,250

50,453

4.50

1,064,587

48,663

4.57

Allowance for loan losses

(9,967)

(9,981)

Non-earning assets

85,779

95,190

Total assets

$

1,197,062

$

1,149,796

LIABILITIES AND

SHAREHOLDERS' EQUITY

Demand - interest bearing

$

235,571

$

636

0.27

$

229,220

$

698

0.30

Savings

86,499

236

0.27

83,614

260

0.31

Time deposits

530,531

5,510

1.04

523,726

5,025

0.96

Total interest bearing deposits

852,601

6,382

0.75

836,560

5,983

0.72

Short-term borrowings

1,776

16

0.88

1,516

12

0.76

FHLB and other borrowings

105,455

1,210

1.15

96,937

1,179

1.22

Long- term debt

4,257

212

4.97

7,707

323

4.20

Total interest bearing liabilities

964,089

7,820

0.81

942,720

7,497

0.80

Noninterest bearing deposits

116,215

94,476

Other liabilities

5,543

4,490

Total liabilities

1,085,847

1,041,686

Shareholders' equity

111,215

108,110

Total liabilities and

shareholders' equity

$

1,197,062

$

1,149,796

Net interest earnings

$

42,633

$

41,166

Interest spread

3.69

%

3.77

%

Net interest margin

3.80

%

3.87

%

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

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)

31-Dec-16

30-Sep-16

31-Dec-15

Total shareholders' equity

$

114,401

$

114,729

$

104,487

Core deposit intangible (net)

898

1,375

2,805

Common tangible book value

$

113,503

$

113,354

$

101,682

Shares outstanding

21,960

21,947

21,867

Common tangible book value per share

$

5.17

$

5.16

$

4.65

Stock price

$

7.25

$

5.42

$

5.37

Price/common tangible book

140.23%

105.04%

115.48%

Common tangible book/common tangible assets

Total assets

$

1,249,886

$

1,204,231

$

1,180,557

Core deposit intangible

898

1,375

2,805

Common tangible assets

$

1,248,988

$

1,202,856

$

1,177,752

Common tangible book

$

113,503

$

113,354

$

101,681

Common tangible equity to common tangible assets

9.09%

9.42%

8.63%

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/community-bankers-trust-corporation-reports-results-for-fourth-quarter-and-year-2016-300397303.html

SOURCE Community Bankers Trust Corporation

Community Bankers Trust Corporation published this content on 26 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 26 January 2017 13:06:32 UTC.