Community Bankers Trust Corporation Reports 2013 Fourth Quarter and Year-End Financial Results

Company to Hold Conference Call on January 29, 2014 at 10 a.m. ET

29 Jan, 2014, 08:00 ET from Community Bankers Trust Corporation

GLEN ALLEN, Va., Jan. 29, 2014 /PRNewswire/ -- 

Financial Highlights for the fourth quarter and year ended December 31, 2013

  • Net income increased 5.8%, or $324,000, to $5.9 million for the year ended December 31, 2013 as compared with $5.6 million for the year ended December 31, 2012.
  • Net income for the fourth quarter of 2013 was $1.2 million compared with net income of $1.8 million for the third quarter of 2013 and net income of $1.6 million for the fourth quarter of 2012.
  • Non-accrual loans decreased 7.2%, or $939,000, to $12.1 million at December 31, 2013, as compared with the previous quarter end.
  • The level of non-accrual loans decreased $8.9 million, or 42.5%, from December 31, 2012 to December 31, 2013.
  • The ratio of the allowance for loan losses to non-accrual loans increased to 86.28% at December 31, 2013 compared with 61.38% at December 31, 2012.

Operational Highlights for the fourth quarter and year ended December 31, 2013

  • During the fourth quarter, the Company completed the sale of its four Georgia branches and $193.2 million in related deposits to Community & Southern Bank.
  • Additionally, the Company sold $24.3 million of loans related to the Georgia franchise to another financial institution.
  • Total non-covered loans increased $27.2 million, or 4.8%, from September 30, 2013 to December 31, 2013.
  • During 2013, the Company redeemed $7.0 million of the principal on its TARP preferred stock investment from the United States Treasury. With these redemptions, the original investment was reduced by 39.6% from $17.680 million to $10.680 million. These payments are part of a plan to extinguish TARP funds by early 2015 without compromising the Company's capital position. The Company plans to continue to make principal payments quarterly, subject to required approvals.

Community Bankers Trust Corporation (NASDAQ: ESXB) (the "Company"), the holding company for Essex Bank (the "Bank"), today reported financial results for its fourth quarter and year ended December 31, 2013. 

(Logo:  http://photos.prnewswire.com/prnh/20140129/PH54398LOGO)

Rex L. Smith, III, President and Chief Executive Officer of the Company and the Bank, stated, "We are pleased and energized by our progress during 2013, and specifically the considerable progress we achieved in the fourth quarter.  Throughout the year, we remained focused on expanding our core operations, improving our loan ratios, and increasing profits.  Our nonperforming loans are the lowest level in over three years, demonstrating our successful efforts to resolve our past credit issues. The sale of the Georgia branches accelerates the progress of the strategic focus of the Company, which is growth in our core markets.  Our strategy all along has been to consolidate the Company into the markets where we can gain a competitive advantage and pursue robust loan and deposit growth.  Our new branch locations in Annapolis and at our Richmond headquarters are the initial steps in that strategy."

Mr. Smith continued, "We are also delighted to have decreased our TARP principal by 19% in the fourth quarter and have done so in a shareholder friendly, non-dilutive manner. We expect to continue paying this principle down throughout 2014, and believe this is evidence of our positive operating performance and strong capital position.  

"We feel that the progressive actions taken by our management throughout 2013 has now positioned the Company for greater upside in the coming year.  We are solely focused on markets around our core franchise where we can gain a competitive advantage. We expect to accomplish this through a combination of de novo branching, expansion of loan production offices and possible acquisitions that are immediately accretive in value.  This is a key objective that we have worked hard to reach, and it is one that will build significant value for the Company and our shareholders." 

RESULTS OF OPERATIONS Net income was $1.2 million for the fourth quarter of 2013. This compares with net income of $1.6 million in the fourth quarter of 2012 and net income of $1.8 million in the third quarter of 2013.  The decline in net income on a linked-quarter basis was primarily the result of OREO write-downs taken in the fourth quarter of 2013.  The decline in net income from the fourth quarter of 2012 to the fourth quarter of 2013 was the result of increased advertising expenses and the final tax payment to the state of Delaware as the Company reincorporated into the state of Virginia to save on corporate taxes and fees.

Net income available to common stockholders was $914,000 in the fourth quarter of 2013 compared with net income available to common stockholders of $1.3 million in the fourth quarter of 2012 and net income available to common stockholders of $1.5 million in the third quarter of 2013.  Earnings per common share, basic and fully diluted, were $0.04 per share for the fourth quarter of 2013 compared with $0.06 per share for the fourth quarter of 2012 and $0.07 per share for the third quarter of 2013.

For the year ended December 31, 2013, net income was $5.9 million compared with $5.6 million in 2012.  Earnings per common share, basic and fully diluted, were $0.22 and $0.21 for the years ended December 31, 2013 and 2012, respectively.   While the net interest margin and net interest earnings were squeezed, as has been typical in the industry, the Company benefitted from no provision for loan losses during 2013 as asset quality continues to improve. 

The following table presents summary income statements for the three months and the years ended December 31, 2013 and December 31, 2012 and the three months ended September 30, 2013.

SUMMARY INCOME STATEMENT

(Dollars in thousands)

For the three months ended

For the year ended

December  31,  2013

September 30,  2013

December  31, 2012

December  31,  2013

December 31, 2012

Interest income

$      12,217

$      13,171

$    12,919

$       50,045

$       53,719

Interest expense

1,644

1,749

2,054

7,078

9,692

Net interest income 

10,573

11,422

10,865

42,967

44,027

Provision for loan losses

-

-

450

-

1,200

Net interest income after provision

  for loan losses

10,573

11,422

10,415

42,967

42,827

Noninterest income

1,467

593

1,299

4,724

6,206

Noninterest expense

10,386

9,433

9,693

39,288

41,303

Net income before income taxes

1,654

2,582

2,021

8,403

7,730

Income tax expense

461

800

448

2,497

2,148

Net income

1,193

1,782

1,573

5,906

5,582

Dividends on preferred stock

235

208

221

885

884

Accretion of preferred stock discount

44

73

55

234

220

Net income available

  to common stockholders

$           914

$         1,501

$       1,297

$         4,787

$         4,478

EPS Basic

$          0.04

$           0.07

$         0.06

$           0.22

$           0.21

EPS Diluted

$          0.04

$           0.07

$         0.06

$           0.22

$           0.21

Interest Income Interest income was $12.2 million for the fourth quarter of 2013, a decrease of $954,000, or 7.2%, from $13.2 million in the third quarter of 2013. The reason for the decline in interest income on a linked quarter basis is two-fold.  The pay offs on commercial acquisition and development (A&D) loans in the FDIC covered loan portfolio resulted in a net change of $557,000 in interest and secondly, the Company sold its Georgia loan portfolio in late October.  These loans were subsequently replaced with robust loan growth in the Virginia and Maryland markets, yet most of the growth came in the month of December.

Interest income decreased $702,000, or 5.4%, when comparing the fourth quarters of 2013 and 2012. Interest and fees on loans decreased $637,000, or 8.3%, when comparing the fourth quarter of 2013 to the fourth quarter of 2012.  Despite an overall increase in loan volume for the year, the majority of the growth was in December 2013.  Meanwhile, loan yields on non-covered loans declined from 5.44% in the fourth quarter of 2012 to 4.78% in the fourth quarter of 2013.  Interest income on securities declined slightly, by $175,000, to $2.1 million for the fourth quarter of 2013 when compared with the fourth quarter of 2012.   The yield on securities, on a tax-equivalent basis, decreased from 3.00% in the fourth quarter of 2012 to 2.93% in the fourth quarter of 2013.

For the year ended December 31, 2013, interest income of $50.0 million represented a decrease of $3.7 million, or 6.8%, from interest income of $53.7 million for the same period in 2012.  Interest and fees on FDIC covered loans declined $2.2 million when comparing the year ended December 31, 2013 to the same period in 2012.  Interest and fees on non-covered loans was $29.7 million for the year ended December 31, 2013 compared with $30.7 million for the same period in 2012.  The rate earned on these balances declined from 5.51% for the year ended December 31, 2012, to 5.07% for the year ended December 31, 2013.  This rate decline was mitigated, in large part, by an increase of $29.2 million, or 5.3%, in the average balance of non-covered loans when comparing the years 2013 and 2012.  Interest and dividends on securities decreased $545,000 when comparing the years 2012 and 2013, and was $8.4 million for the 2013 year compared with $8.9 million for the 2012 year.  The yield on securities, on a tax-equivalent basis, was 2.78% for the twelve months of 2013, a decline from 3.02% for the twelve months of 2012.  The lower yield is the result of reinvesting maturing securities in a lower yielding market, coupled with the purchase of shorter durations.

Interest Expense Interest expense was $1.6 million for the fourth quarter of 2013 compared with interest expense of $1.7 million in the third quarter of 2013, an improvement of $105,000, or 6.0%.  While average interest bearing liabilities increased $3.3 million during the fourth quarter, the cost of interest bearing liabilities declined from 0.75% in the third quarter of 2013 to 0.70% in the fourth quarter of 2013. 

Year-over-year, interest expense declined $410,000, from $2.0 million in the fourth quarter of 2012 to $1.6 million in the fourth quarter of 2013. This expense decline of 20.0% resulted from an 18 basis point decline in the cost of interest bearing funds while average balances decreased $1.4 million over the same period. The cost of deposits declined similarly from 0.85% in the fourth quarter of 2012 to 0.69% for the fourth quarter of 2013.  The cost of Federal Home Loan Bank advances and other borrowings also exhibited improvement, from 1.39% in the fourth quarter of 2012 to 0.92% in the fourth quarter of 2013.

For the twelve months ended December 31, 2013, total interest expense declined $2.6 million, or 27.0%, and was $7.1 million compared with $9.7 million for the same period in 2012.  The cost of interest bearing deposits decreased from $8.5 million to $6.4 million when comparing the twelve months ended 2012 and 2013, respectively.  The rate paid on average total interest bearing deposits declined from 0.98% to 0.73%.  The cost of Federal Home Loan Bank advances and other borrowings declined to 1.25% for the twelve months ended 2013, compared with 2.59% for the same period in 2012.  The cost of total interest bearing liabilities decreased from 1.06% for the year ended December 31, 2012 to 0.77% for the same period in 2013.

Net Interest Income Net interest income was $10.6 million for the quarter ended December 31, 2013, compared with $11.4 million for the quarter ended September 30, 2013.  This represents a decrease of $849,000, or 7.4%.  On a tax equivalent basis, net interest income was $10.7 million for the fourth quarter of 2013 compared with $11.5 million for the third quarter of 2013.   The decline in net interest income on a linked quarter basis is the direct result of the factors noted above in the Interest Income section of this press release.  The tax equivalent net interest margin decreased from 4.55% in the third quarter of 2013 to 4.22% in the fourth quarter of 2013. The interest spread decreased from 4.49% to 4.17% on a linked quarter basis. 

Year-over-year, net interest income decreased $292,000, or 2.7%, from $10.9 million in the fourth quarter of 2012 to $10.6 million in the fourth quarter of 2013.  The Company's net interest margin declined 17 basis points from 4.39% in the fourth quarter of 2012 to 4.22% for the same period in 2013. 

For the year ended December 31, 2013, net interest income of $42.9 million decreased $1.1 million, or 2.4%, from net interest income of $44.0 million for the year ended December 31, 2012.  The Company's net interest spread declined from 4.46% for the year ended December 31, 2012 to 4.25% for the same period in 2013.  While the cost of interest bearing liabilities declined from 1.06% to 0.77% during the comparison period, the yield on earning assets declined by 50 basis points to 5.02% for the 2013 year. The result was a net interest margin of 4.32% for the year ended December 31, 2013, compared with 4.53% for the 2012 year.

The following tables compare the Company's net interest margin, on a tax-equivalent basis, for the three months ended December 31, 2013, December 31, 2012 and September 30, 2013 and twelve months ended December 31, 2013 and December 31, 2012.

NET INTEREST MARGIN

(Dollars in thousands)

For the three months ended

December  31, 2013

September 30, 2013

December  31, 2012

Average interest earning assets

$

1,001,665

$

1,004,053

$

996,023

Interest income

$

12,217

$

13,171

$

12,919

Interest income - tax equivalent

$

12,305

$

13,261

$

12,988

Yield on interest earning assets

4.87%

5.24%

5.22%

Average interest bearing liabilities

$

926,476

$

923,193

$

927,856

Interest expense

$

1,644

$

1,749

$

2,054

Cost of interest bearing liabilities

0.70%

0.75%

0.88%

Net interest income

$

10,573

$

11,422

$

10,865

Net interest income - tax equivalent

$

10,661

$

11,512

$

10,934

Interest spread

4.17%

4.49%

4.34%

Net interest margin

4.22%

4.55%

4.39%

For the year ended

December 31,  2013

December 31, 2012

Average interest earning assets

$

1,003,271

$

977,066

Interest income

$

50,045

$

53,719

Interest income - tax equivalent

$

50,384

$

53,971

Yield on interest earning assets

5.02%

5.52%

Average interest bearing liabilities

$

923,528

$

916,038

Interest expense

$

7,078

$

9,692

Cost of interest bearing liabilities

0.77%

1.06%

Net interest income

$

42,967

$

44,027

Net interest income - tax equivalent

$

43,306

$

44,279

Interest spread

4.25%

4.46%

Net interest margin

4.32%

4.53%

Provision for Loan Losses The Company did not record a provision for loan losses in 2013.  The Company records a separate provision for loan losses for its non-covered loan portfolio and its FDIC covered loan portfolio.  There was no provision for loan losses on the FDIC covered loan portfolio during 2013.  Likewise, there was no provision for loan losses on the non-covered loan portfolio during 2013.  For the non-covered loan portfolio, this was the direct result of continued improvement in loan quality as evidenced by the decreasing amount of  non-accrual loans as well a much lower volume of net charge-offs taken during the year versus the prior two years.  A decrease in the level of nonperforming assets to loans and other real estate owned and the level of net charge-offs for the periods has resulted in the increased coverage levels.  These items will be presented in greater detail in the Asset Quality section of this press release.

The Company recorded a provision for loan losses of $450,000 for the fourth quarter of 2012 and $1.2 million for the year ended December 31, 2012.  The provision for loan losses on non-covered loans was $1.5 million for the year ended December 31, 2012.  The provision for loan losses on the FDIC covered loan portfolio was $0 for the fourth quarter and a $250,000 credit for the year ended December 31, 2012.  Improvement in expected losses on the Company's FDIC covered portfolio resulted in the $250,000 provision benefit during the first quarter of 2012.

Noninterest Income Noninterest income was $1.5 million for the fourth quarter of 2013 compared with $593,000 for the third quarter of 2013.  This is a linked quarter increase of $874,000, or 147.4%.  Noninterest Income improved quarter-over-quarter as the Company took a $614,000 loss on the sale of a loan in the third quarter and had a gain of $255,000 on the sale of the Georgia operations in the fourth quarter of 2013, a linked quarter difference of $869,000.  Other noninterest income increased $78,000 on a linked quarter basis, and gain on sale of securities increased $34,000.  Offsetting these linked quarter increases was a decline in service charges on deposit accounts of $107,000.

Year-over-year, noninterest income increased $168,000, or 12.9%, from $1.3 million in the fourth quarter of 2012 to $1.5 million in the fourth quarter of 2013.  Gain/(loss) on sale of other loans exhibited the largest increase year-over-year at $255,000.  Also increasing year-over-year was other noninterest income, which was $432,000 in the fourth quarter of 2012 compared with $506,000 in the fourth quarter of 2013, an increase of $74,000.  Offsetting these increases were year-over-year declines in service charges on deposit accounts of $95,000 and gains on sales of securities of $66,000.

Noninterest income declined $1.5 million, or 23.9%, when comparing the years ended December 31, 2013 and December 31, 2012.  Noninterest income of $4.7 million for 2013 compares with $6.2 million for 2012.  A decrease of $974,000 in gains on sales of securities represented the largest decrease.  Realized gains were $1.5 million in 2012 compared with $518,000 for the same period in 2013.   Gain/(loss) on sale of other loans declined $359,000 and other noninterest income declined $152,000, the result of fewer billable losses under shared-loss agreements reimbursed by the FDIC.

Noninterest Expense On a linked quarter basis, noninterest expenses totaled $10.4 million for the three months ended December 31, 2013 and $9.4 million for the quarter ended September 30, 2013, an increase of $953,000, or 10.1%.  Other real estate expense increased $861,000 to $828,000 in the fourth quarter of 2013.  The majority of this increase was the result of management's continued conservative valuation of OREO properties which were curtailed approximately $630,000 during the fourth quarter.  Other operating expenses increased $387,000 to $1.7 million in the fourth quarter of 2013. The majority of this increase, $200,000, was attributable to final Delaware franchise fee payments due to the change of the Company's state of incorporation to Virginia.  Partially offsetting this linked quarter increase was a decrease in salaries and employee benefits of $105,000 and lower FDIC indemnification asset amortization of $76,000, or 4.4%. 

Noninterest expenses increased $693,000 when comparing the fourth quarter of 2013 to the same period in 2012.  Other operating expenses increased $402,000, from $1.3 million in the fourth quarter of 2012 to $1.7 million in the fourth quarter of 2013.  The majority of this increase was the result of final tax payments referenced above to the State of Delaware.  FDIC assessment charges increased $191,000 over these time frames due to an accrual adjustment in the fourth quarter of 2012. Data processing fees increased $170,000 year-over-year, the result of a credit from our third party core processor in the fourth quarter of 2012 related to Hurricane Sandy.  FDIC indemnification asset amortization increased $148,000, or 9.9%. 

For the year ended December 31, 2013, noninterest expenses were $39.3 million, a decrease of $2.0 million from noninterest expenses of $41.3 million for the year ended December 31, 2012.  FDIC assessment declined $642,000, or 43.2%, from $1.5 million for the year ended December 31, 2012 to $843,000 for the year ended December 31, 2013.  Salaries and employee benefits were down $530,000, or 3.2%, for the same time frame. Indemnification asset amortization of $6.4 million for the year ended December 31, 2013 represented a decrease of $487,000, or 7.0%, from $6.9 million during 2012. 

Income Taxes Income tax expense was $461,000 for the three months ended December 31, 2013, compared with income tax expense of $800,000 in the third quarter of 2013.  Income tax expense was $448,000 in the fourth quarter of 2012.  For the year ended December 31, 2013, income tax expense was $2.5 million compared with $2.1 million for 2012.

FINANCIAL CONDITION At December 31, 2013, the Company had total assets of $1.090 billion, a decrease of $63.8 million, or 5.5%, from total assets of $1.153 billion at December 31, 2012.  Total loans were $669.4 million at December 31, 2013, increasing $9.3 million from $660.1 million at December 31, 2012 and $23.2 million since September 30, 2013.  Loan growth was steady for the year and strong during the fourth quarter.  The Company more than offset the sale of $24.3 million in loans from Georgia with new loans generation of $27.2 million.  The Georgia loans were classified as loans held for sale at September 30, 2013.  As anticipated, the carrying value of FDIC covered loans declined $11.4 million, or 13.4%, from December 31, 2012 and were $73.3 million at December 31, 2013. Non-covered loans equaled $596.2 million at December 31, 2013, compared with $575.5 million at December 31, 2012.  

The following table shows the composition of the Company's non-covered loan portfolio at December 31, 2013, September 30, 2013 and December 31, 2012.

NONCOVERED LOANS

(Dollars in thousands)

December 31, 2013

September 30, 2013

December 31, 2012

Amount

% of Non-Covered Loans

Amount

% of Non-Covered Loans

Amount

% of Non-Covered Loans

Mortgage loans on real estate:

Residential 1-4 family

$

141,974

23.81%

$

140,137

24.63%

$

135,420

23.52%

Commercial

239,389

40.14%

233,699

41.07%

246,521

42.83%

Construction and land development

54,745

9.18%

53,117

9.33%

61,127

10.62%

Second mortgages

6,369

1.07%

6,577

1.16%

7,230

1.26%

Multifamily

35,774

6.00%

34,640

6.09%

28,683

4.98%

Agriculture

9,267

1.55%

8,369

1.47%

10,359

1.80%

   Total real estate loans

487,518

81.75%

476,539

83.75%

489,340

85.01%

Commercial loans

101,761

17.07%

85,440

15.01%

77,835

13.52%

Consumer installment loans

5,623

0.94%

5,563

0.98%

6,929

1.20%

All other loans

1,435

0.24%

1,480

0.26%

1,526

0.27%

   Gross loans

596,337

100.00%

569,022

100.00%

575,630

100.00%

Allowance for loan losses

(10,444)

(10,653)

(12,920)

Net unearned income/unamortized premium

on loans

(164)

(62)

(148)

Non-covered loans, net of unearned income

$

585,729

$

558,307

$

562,562

The Company's securities portfolio, excluding equity securities, decreased $57.0 million, or 16.2%, from $351.4 million at December 31, 2012 to $294.3 million at December 31, 2013. Realized gains were $518,000 during 2013 through sales and call activity.  This is a decrease of $974,000 from $1.5 million in securities gains realized in 2012.  The Company took a short-term position in a $40 million U.S. Treasury issue at December 31, 2012 to fully invest short-term excess cash balances on deposit by local municipal governments.  The issue matured in the first quarter of 2013 and is the primary factor for the decrease in securities balances from December 31, 2012.  The maturity of these funds was not reinvested but was offset by a decline in public funds.

The Company had cash and cash equivalents of $23.8 million at December 31, 2013, decreasing $302,000 from $24.1 million at December 31, 2012.  There were $6.0 million in Federal funds purchased and securities sold under agreements to repurchase at December 31, 2013 compared with $5.4 million at December 31, 2012. 

The following table shows the composition of the Company's securities portfolio, excluding equity securities, at December 31, 2013, September 30, 2013 and December 31, 2012.

SECURITIES PORTFOLIO

(Dollars in thousands)

December 31, 2013

September 30, 2013

December 31, 2012

Amortized Cost

 Fair   Value

Amortized Cost

 Fair   Value

Amortized Cost

 Fair    Value

Securities Available for Sale

U.S. Treasury issue and other

      U.S. Government agencies

$

99,789

$

98,987

$

100,518

$

99,829

$

153,480

$

153,277

U.S. Government sponsored agencies

487

486

487

489

500

503

State, county and municipal

138,884

134,096

137,396

134,144

112,110

117,596

Corporate and other bonds

6,369

6,349

7,398

7,408

7,530

7,618

Mortgage backed securities - U.S.      Government agencies

3,608

3,439

7,777

7,693

15,192

15,560

Mortgage backed securities - U.S.     Government sponsored agencies

22,631

22,420

21,156

21,074

14,349

14,524

  Total securities available for sale

$

271,768

$

265,777

$

274,732

$

270,637

$

303,161

$

309,078

December 31, 2013

September 30, 2013

December 31, 2012

Amortized Cost

 Fair Value

Amortized Cost

 Fair Value

Amortized Cost

 Fair      Value

Securities Held to Maturity

State, county and municipal

$

9,385

$

10,103

$

11,455

$

12,219

$

11,825

$

12,967

Mortgage backed securities - U.S.     Government  agencies

6,604

7,002

7,244

7,644

9,112

9,727

Mortgage backed securities - U.S.     Government  sponsored agencies

12,574

13,200

14,211

14,899

21,346

22,534

  Total securities held to maturity

$

28,563

$

30,305

$

32,910

$

34,762

$

42,283

$

45,228

Interest bearing deposits at December 31, 2013 were $822.2 million, an increase of $126.7 million, or 18.2%, from September 30, 2013. During the fourth quarter, the Company added $64.9 million in short-term brokered certificates of deposit to fund the sale of the Georgia operations, which closed on November 8, 2013.  The $192.2 million in deposits related to the Georgia divestiture were classified as deposits held for sale at September 30, 2013.  For the year ended December 31, 2013 interest bearing deposits declined $74.1 million as the Company was deleveraged $63.8 million as a result of the sale.

The following table compares the mix of interest bearing deposits at December 31, 2013, September 30, 2013, and December 31, 2012.

INTEREST BEARING DEPOSITS

(Dollars in thousands)

December 31, 2013

September 30, 2013

December 31, 2012

NOW

$

102,111

$

93,026

$

142,923

MMDA

94,170

92,814

113,171

Savings

75,159

73,996

77,506

Time deposits less than $100,000

235,482

222,657

287,422

Time deposits $100,000 and over

315,287

213,011

275,318

   Total interest bearing deposits

$

822,209

$

695,504

$

896,340

The Company had Federal Home Loan Bank advances of $77.1 million at December 31, 2013 compared with $31.5 million at September 30, 2013 and $49.8 million at December 31, 2012.  The blended rate on the average balance of these borrowings was 0.92% for the fourth quarter of 2013 and 1.25% for the year ended December 31, 2013.  This is a decline from the fourth quarter 2012 cost of 1.39% and year end 2012 cost of 2.59%.  The Company used a combination of retail deposit growth, brokered deposits and Federal Home Loan Bank advances to fund the sale of the Georgia operations, which resulted in the growth of $45.6 million in advances in the fourth quarter of 2013.

Stockholders' equity was $106.7 million at December 31, 2013 and $115.3 million at December 31, 2012. During 2013, the Company retired $7.0 million of its outstanding TARP preferred stock, which lowered its equity base.  However, the equity-to-asset ratios remained solid at 9.8%, and 10.0%, respectively, at December 31, 2013 and December 31, 2012.

Asset Quality – non-covered assets Nonaccrual loans were $12.1 million at December 31, 2013, down 42.5%, or $8.9 million, from $21.0 million at December 31, 2012.  Nonaccrual loans were $13.0 million at September 30, 2013.  The decrease from December 31, 2012 was the net result of $2.6 million in additions to nonaccrual loans and $11.5 million in reductions.  With respect to the reductions to nonaccrual loans, $3.5 million were paid out by the borrower or another lending institution, $1.7 million were moved to foreclosure, $2.7 million were charged-off, $2.3 million were returned to accrual status and $1.3 million were the result of payments to existing credits. 

Total nonperforming assets of $18.3 million at December 31, 2013 represented a decrease of $3.2 million, or 14.8%, during the fourth quarter of 2013 and declined $14.0 million, or 43.3%, during the 2013 year. 

There were net charge-offs of $209,000 in the fourth quarter of 2013 compared with $870,000 in the third quarter of 2013 and $1.8 million in the fourth quarter of 2012.  For the year ended December 31, 2013, there were charge-offs of $3.5 million and recoveries of $1.0 million.  This resulted in net charge-offs for 2013 that totaled $2.5 million.  Net charge-offs were $3.4 million for the year ended December 31, 2012.  

Non-covered other real estate owned decreased $2.3 million during the fourth quarter of 2013 and $4.5 million during the 2013 year.  Non-covered other real estate owned balances were $6.2 million at December 31, 2013 compared with $8.5 million at September 30, 2013 and $10.8 million at December 31, 2012.  Management continues to work other real estate owned aggressively and has taken prudent periodic write-downs to effectively move properties out of the portfolio and continue to improve the quality of the balance sheet.

 The allowance for loan losses equaled 86.28% of non-covered nonaccrual loans at December 31, 2013 compared with 81.67% at September 30, 2013 and 61.38% at December 31, 2012. The ratio of the allowance for loan losses to total nonperforming assets was 56.92% at December 31, 2013 compared with 49.45% at September 30, 2013 and 39.94% at December 31, 2012.  The ratio of nonperforming assets to loans and other real estate owned has declined sequentially each quarter of 2013 and was 5.52% at December 31, 2012 and 3.05% at December 31, 2013.

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

CREDIT QUALITY

(Dollars in thousands)

2013

2012

Fourth

Third

Second

First

Fourth

Quarter

Quarter

Quarter

Quarter

Quarter

Allowance for loan losses:

Beginning of period

$

10,653

$

11,523

$

12,258

$

12,920

$

14,303

Provision for loan losses

-

-

-

-

450

Charge-offs

(263)

(1,018)

(1,302)

(908)

(1,974)

Recoveries

54

148

567

246

141

Net (charge-offs) recovery

(209)

(870)

(735)

(662)

(1,833)

End of period

$

10,444

$

10,653

$

11,523

$

12,258

$

12,920

The following table sets forth selected asset quality data, excluding FDIC covered assets, and ratios for the dates indicated:

 

ASSET QUALITY (NON-COVERED)

(Dollars in thousands)

2013

2012

December

September

June

March

December

31

30

30

31

31

Non-accruing loans

$

12,105

$

13,044

$

15,644

$

18,963

$

21,048

Loans past due over 90 days and accruing interest

-

-

-

465

509

Total nonperforming non-covered loans

12,105

13,044

15,644

19,428

21,557

Other real estate owned non-covered

6,244

8,496

7,593

9,712

10,793

Total nonperforming non-covered assets

$

18,349

$

21,540

$

23,237

$

29,140

$

32,350

Allowance for loan losses to loans

1.75%

1.87%

1.96%

2.11%

2.25%

Allowance for loan losses to nonperforming assets

56.92%

49.45%

49.59%

42.07%

39.94%

Allowance for loan losses to nonaccrual loans

86.28%

81.67%

73.66%

64.64%

61.38%

Nonperforming assets to loans and other real estate

3.05%

3.73%

3.90%

4.94%

5.52%

Net charge-offs for quarter to average loans,

   annualized

0.14%

0.59%

0.50%

0.46%

1.30%

A further breakout of nonaccrual loans, excluding covered loans, at December 31, 2013, September 30, 2013 and December 31, 2012 is below:

NON-COVERED NONACCRUAL LOANS

(Dollars in thousands)

December 31, 2013

September 30, 2013

December 31, 2012

Amount

% of Non-Covered Loans

Amount

% of Non-Covered Loans

Amount

% of Non-Covered Loans

Mortgage loans on real estate:

Residential 1-4 family

$

4,229

0.71%

$

4,492

0.79%

$

5,562

0.97%

Commercial

1,382

0.23%

1,530

0.27%

5,818

1.01%

Construction and land development

5,882

0.99%

6,500

1.14%

8,815

1.53%

Second mortgages

225

0.04%

135

0.02%

141

0.03%

Multifamily

-

-

-

-

-

-

Agriculture

205

0.03%

208

0.04%

250

0.04%

   Total real estate loans

11,923

2.00%

12,865

2.26%

20,586

3.58%

Commercial loans

127

0.02%

127

0.02%

385

0.07%

Consumer installment loans

55

0.01%

52

0.01%

77

0.01%

All other loans

-

-

-

-

-

-

   Gross loans

$

12,105

2.03%

$

13,044

2.29%

$

21,048

3.66%

Capital Requirements Total stockholders' equity declined $1.8 million during the fourth quarter of 2013 due to a TARP principal payment of $2.5 million in November.   Future payments will depend on regulatory approval of repurchases, as well as continuing an adequate level of the Company's earnings to support the payments and satisfactory financial condition.

The Company's ratio of total risk-based capital was 16.8% at December 31, 2013 compared with 17.0% at December 31, 2012.  The tier 1 risk-based capital ratio was 15.6% at December 31, 2013 and 15.8% at December 31, 2012. The Company's tier 1 leverage ratio was 9.5% at December 31, 2013 and 9.4% at December 31, 2012.  All capital ratios exceed regulatory minimums.

Earnings Conference Call and Webcast

The Company will host a conference call for the financial community on Wednesday, January 29, 2014, at 10:00 a.m. Eastern Time to discuss the fourth quarter and 2013 financial results. The public is invited to listen to this conference call by dialing 877-870-4263 at least five minutes prior to the call.  Interested parties may also listen to this conference call through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site at www.cbtrustcorp.com.

A replay of the conference call will be available from 12:00 noon Eastern Time on January 29, 2014, until 9:00 a.m. Eastern Time on February 6, 2014. The replay will be available by dialing 877-344-7529 and entering access code 10039343 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 19 full-service offices, 13 of which are in Virginia and six of which are in Maryland.  The Bank also operates two loan production offices in Virginia.  The Bank plans to open a new branch office in Annapolis, Maryland in the first quarter of 2014.

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

Forward-Looking Statements This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to the Company's operations, performance, future strategy and goals. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in the following: the quality or composition of the Company's loan or investment portfolios, including collateral values and the repayment abilities of borrowers and issuers; assumptions that underlie the Company's allowance for loan losses; general economic and market conditions, either nationally or in the Company's  market areas; the interest rate environment; competitive pressures among banks and financial institutions or from companies outside the banking industry; real estate values; the demand for deposit, loan, and investment products and other financial services; the demand, development and acceptance of new products and services; the performance of vendors or other parties with which the Company does business; time and costs associated with de novo branching, acquisitions and similar transactions and the related integration of operations; the realization of gains and expense savings from acquisitions, dispositions and similar transactions; assumptions and estimates that underlie the accounting for loan pools under the shared loss agreements; consumer profiles and spending and savings habits; levels of fraud in the banking industry; the level of attempted cyber attacks in the banking industry; the securities and credit markets; costs associated with the integration of banking and other internal operations; the soundness of other financial institutions with which the Company does business; inflation; technology; and legislative and regulatory requirements. Many of these factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 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.

Consolidated Balance Sheets

Unaudited Condensed

(Dollars in thousands)

December 31, 2013

September 30, 2013

December 31, 2012

     Assets

Cash and due from banks

$

10,857

$

11,585

$

12,502

Interest bearing bank deposits

12,978

18,531

11,635

Federal funds sold

-

-

-

  Total cash and cash equivalents

23,835

30,116

24,137

Securities available for sale, at fair value

265,777

270,637

309,078

Securities held to maturity

28,563

32,910

42,283

Equity securities, restricted, at cost

8,358

6,403

7,405

  Total securities

302,698

309,950

358,766

Loans held for sale

100

25,396

1,266

Loans not covered by FDIC shared-loss agreements

596,173

568,960

575,482

Loans covered by FDIC shared-loss agreements

73,275

77,270

84,637

Allowance for loan losses (non-covered)

(10,444)

(10,653)

(12,920)

Allowance for loan losses (covered)

(484)

(484)

(484)

  Net loans

658,520

635,093

646,715

Bank premises and equipment

27,872

28,078

33,638

Bank premises and equipment held for sale

-

5,177

-

Other real estate owned, non-covered

6,244

8,496

10,793

Other real estate owned, covered by FDIC

2,692

2,145

3,370

FDIC receivable

368

330

895

Bank owned life insurance

20,795

20,622

15,146

Core deposit intangibles, net

6,621

8,600

10,297

FDIC indemnification asset

25,409

27,115

33,837

Other assets

14,378

13,858

14,428

    Total assets

$

1,089,532

$

1,114,976

$

1,153,288

     Liabilities

Deposits:

    Noninterest bearing

70,132

72,795

77,978

    Interest bearing

822,209

695,504

896,340

      Total deposits

892,341

768,299

974,318

Deposits held for sale

-

192,199

-

Federal funds purchased and securities sold under      agreements to repurchase

6,000

7,000

5,412

Federal Home Loan Bank advances

77,125

31,503

49,828

Trust preferred capital notes

4,124

4,124

4,124

Other liabilities

3,283

3,381

4,289

    Total liabilities

982,873

1,006,506

1,037,971

     Stockholders' Equity

Preferred stock (5,000,000 shares authorized $0.01 par value, 10,680, 13,180 and 17,680 shares issued and outstanding, respectively)

10,680

13,180

17,680

Discount on preferred stock

-

(44)

(234)

Warrants on preferred stock

1,037

1,037

1,037

Common stock (200,000,000 shares authorized $0.01 par value; 21,709,096 shares issued and outstanding  at December 31, 2013)

217

217

217

Additional paid in capital

144,656

144,595

144,398

Accumulated deficit

(45,822)

(46,736)

(50,609)

Accumulated other comprehensive income

(4,109)

(3,779)

2,828

   Total stockholders' equity

$

106,659

$

108,470

$

115,317

   Total liabilities and stockholders' equity

$

1,089,532

$

1,114,976

$

1,153,288

 

Consolidated Statements of Operations

Unaudited Condensed

(Dollars in thousands)

Three months ended

Three months ended

December 31, 2013

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

 Interest and dividend income

 Interest and fees on loans

$

7,050

$

7,513

$

7,622

$

7,511

$

7,687

 Interest and fees on FDIC covered loans

2,994

3,538

2,745

2,659

2,894

 Interest on federal funds sold

-

-

1

2

1

 Interest on deposits in other banks

25

11

14

8

14

 Investments (taxable)

1,976

1,934

1,945

1,838

2,189

 Investments (nontaxable)

172

175

164

148

134

 Total interest income

12,217

13,171

12,491

12,166

12,919

 Interest expense

 Interest on deposits

1,501

1,568

1,600

1,701

1,858

 Interest on federal funds purchased

-

1

2

1

3

 Interest on other borrowed funds

143

180

189

192

193

 Total interest expense

1,644

1,749

1,791

1,894

2,054

 Net interest income

10,573

11,422

10,700

10,272

10,865

 Provision for loan losses

-

-

-

-

450

 Net interest income after provision for loan losses

10,573

11,422

10,700

10,272

10,415

 Noninterest income

 Gain/(loss) on sale of securities, net

72

38

130

278

138

 Service charges on deposit accounts

634

741

701

663

729

 Gain/(loss) on sale of other loans, net

255

(614)

-

-

-

 Other 

506

428

507

385

432

                 Total noninterest income

1,467

593

1,338

1,326

1,299

 Noninterest expense

 Salaries and employee benefits

3,991

4,096

3,901

3,993

4,068

 Occupancy expenses

647

690

717

663

691

 Equipment expenses

248

276

247

267

256

 Legal fees

20

24

38

13

9

 Professional fees

49

52

139

50

84

 FDIC assessment

228

225

223

167

37

 Data processing fees

505

485

551

537

335

 FDIC indemnification asset amortization

1,640

1,716

1,592

1,501

1,492

 Amortization of intangibles

506

565

566

565

566

 Other real estate expense

828

(33)

502

737

833

 Other operating expenses

1,724

1,337

1,282

1,218

1,322

 Total noninterest expense

10,386

9,433

9,758

9,711

9,693

 Net income before income taxes

1,654

2,582

2,280

1,887

2,021

 Income tax expense

461

800

673

563

448

 Net income

1,193

1,782

1,607

1,324

1,573

 Dividends on preferred stock

235

208

221

221

221

 Accretion of discount on preferred stock

44

73

59

58

55

 Net income available to common

    stockholders

$

914

$

1,501

$

1,327

$

1,045

$

1,297

 

Income Statement Trend Analysis

Unaudited

(Dollars in thousands)

Year Ended

December 31,

December 31,

December 31,

2013

2012

2011

Interest and dividend income

Interest and fees on loans

$

29,696

$

30,658

$

29,272

Interest and fees on FDIC covered loans

11,936

14,105

17,576

Interest on federal funds sold

3

5

6

Interest on deposits in other banks

58

54

65

Investments (taxable)

7,693

8,408

8,091

Investments (nontaxable)

659

489

1,025

Total interest income

50,045

53,719

56,035

Interest expense

Interest on deposits

6,370

8,508

10,815

Interest on federal funds purchased

4

9

1

Interest on other borrowed funds

704

1,175

1,412

Total interest expense

7,078

9,692

12,228

Net interest income

42,967

44,027

43,807

Provision for loan losses

-

1,200

1,498

Net interest income after provision for loan losses

42,967

42,827

42,309

Noninterest income

Gains on sale of securities, net

518

1,492

2,868

Service charges on deposit accounts

2,739

2,736

2,503

Gain/(loss) on sale of other loans, net

(359)

-

-

Other

1,826

1,978

2,862

Total noninterest income

4,724

6,206

8,233

Noninterest expense

Salaries and employee benefits

15,981

16,511

16,603

Occupancy expenses

2,717

2,715

2,894

Equipment expenses

1,038

1,087

1,237

Legal fees

95

51

444

Professional fees

290

391

583

FDIC assessment

843

1,485

2,788

Data processing fees

2,078

1,824

1,864

FDIC indemnification asset amortization

6,449

6,936

10,364

Amortization of intangibles

2,202

2,261

2,261

Other real estate expense

2,034

2,493

3,788

Other operating expenses

5,561

5,549

6,212

Total noninterest expense

39,288

41,303

49,038

Net income before income tax

8,403

7,730

1,504

Income tax expense

2,497

2,148

60

Net income

5,906

5,582

1,444

  Dividends on preferred stock

885

884

884

  Accretion of discount on preferred  stock

234

220

206

Net income available to common stockholders

$

4,787

$

4,478

$

354

 

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Dollars in thousands)

Three months ended December 31, 2013

Three months ended December 31, 2012

Average

Average

Average

Interest

Rates

Average

Interest

Rates

Balance

Income/

Earned/

Balance

Income/

Earned/

Sheet

Expense

Paid

Sheet

Expense

Paid

ASSETS:

Loans, including fees

$

585,461

$

7,050

4.78%

$

564,926

$

7,687

5.44%

Loans covered by FDIC loss share

75,252

2,994

15.79%

86,415

2,894

13.40%

     Total loans

660,713

10,044

6.03%

651,341

10,581

6.50%

Interest bearing bank balances

35,304

25

0.28%

23,636

14

0.25%

Federal funds sold

783

-

0.10%

2,641

1

0.11%

Investments (taxable)

283,516

1,976

2.79%

302,949

2,189

2.89%

Investments (tax exempt)

21,349

260

4.88%

15,455

203

5.25%

     Total earning assets

1,001,665

12,305

4.87%

996,023

12,988

5.22%

Allowance for loan losses

(11,133)

(14,323)

Non-earning assets

128,596

141,492

     Total assets

$

1,119,128

$

1,123,192

LIABILITIES AND

STOCKHOLDERS' EQUITY

Demand - interest bearing

$

220,656

$

168

0.30%

$

240,391

$

189

0.31%

Savings

79,572

70

0.35%

77,484

58

0.30%

Time deposits

564,191

1,263

0.89%

552,926

1,611

1.17%

     Total interest-bearing deposits

864,419

1,501

0.69%

870,801

1,858

0.85%

Fed funds purchased

107

-

0.00%

1,833

3

0.51%

FHLB and other borrowings

61,950

143

0.92%

55,222

193

1.39%

     Total interest-bearing liabilities

926,476

1,644

0.70%

927,856

2,054

0.88%

Non-interest bearing deposits

80,172

76,154

Other liabilities

3,874

4,216

     Total liabilities

1,010,522

1,008,226

Stockholders' equity

108,606

114,966

     Total liabilities and

     stockholders' equity

$

1,119,128

$

1,123,192

Net interest earnings

$

10,661

$

10,934

Interest spread

4.17%

4.34%

Net interest margin

4.22%

4.39%

 

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Dollars in thousands)

Year ended December 31, 2013

Year ended December 31, 2012

Average Balance   Sheet

Interest Income / Expense

Average Rates Earned / Paid

Average Balance   Sheet

Interest Income / Expense

Average Rates Earned / Paid

ASSETS:

Loans, including fees

$

585,343

$

29,696

5.07%

$

556,113

$

30,658

5.51%

Loans covered by FDIC loss share

79,140

11,936

15.08%

91,489

14,105

15.42%

   Total loans

664,483

41,632

6.27%

647,602

44,763

6.91%

Interest bearing bank balances

22,423

58

0.26%

22,425

54

0.24%

Federal funds sold

3,453

3

0.10%

4,254

5

0.11%

Investments (taxable)

292,618

7,693

2.63%

289,617

8,408

2.90%

Investments (tax exempt)

20,294

998

4.92%

13,168

741

5.63%

   Total earning assets

1,003,271

50,384

5.02%

977,066

53,971

5.52%

Allowance for loan losses

(12,352)

(14,601)

Non-earning assets

130,033

145,507

   Total assets

$

1,120,952

$

1,107,972

LIABILITIES AND

STOCKHOLDERS' EQUITY

Demand - interest bearing

$

238,545

$

742

0.31%

$

238,418

$

859

0.36%

Savings

81,368

277

0.34%

74,129

256

0.35%

Time deposits

546,788

5,351

0.98%

556,784

7,393

1.33%

   Total interest-bearing deposits

866,701

6,370

0.73%

869,331

8,508

0.98%

Fed funds purchased

558

4

0.73%

1,348

9

0.64%

FHLB and other borrowings

56,269

704

1.25%

45,359

1,175

2.59%

   Total interest-bearing liabilities

923,528

7,078

0.77%

916,038

9,692

1.06%

Non-interest bearing deposits

80,326

72,391

Other liabilities

3,933

4,532

   Total liabilities

1,007,787

992,961

Stockholders' equity

113,165

115,011

   Total liabilities and

   stockholders' equity

$

1,120,952

$

1,107,972

Net interest earnings

$

43,306

$

44,279

Interest spread

4.25%

4.46%

Net interest margin

4.32%

4.53%

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 stockholders' equity less preferred stock, goodwill and identifiable intangible assets, and common tangible book value per share is computed by dividing common tangible book value by the number of common shares outstanding. Common tangible assets equal total assets less preferred stock, goodwill and identifiable intangible assets.

Management believes that common tangible book value and the ratio of common tangible book value to common tangible assets are meaningful because they are some of the measures that the Company and investors use to assess capital adequacy. Management believes that presenting the change in common tangible book value per share, the change in stock price to common tangible book value per share, and the change in the ratio of common tangible book value to common tangible assets provide meaningful period-to-period comparisons of these measures.

These measures are a supplement to GAAP used to prepare the Company's financial statements and should not be viewed as a substitute for GAAP measures. In addition, the Company's non-GAAP measures may not be comparable to non-GAAP measures of other companies. The following table reconciles these non-GAAP measures from their respective GAAP basis measures

December 31,  2013

September 30, 2013

December 31, 2012

Common Tangible Book Value

Total stockholder's equity

106,659,000

108,470,000

115,317,000

Preferred stock (net)

11,717,000

14,173,000

18,483,000

Core deposit intangible (net)

6,621,000

8,600,000

10,297,000

Common tangible book value

88,321,000

85,697,000

86,537,000

Shares outstanding

21,709,096

21,701,131

21,670,212

Common tangible book value per share

$                  4.07

$                  3.95

$                  3.99

Stock Price

$                  3.76

$                  3.68

$                  2.65

Price/common tangible book

92.4%

93.2%

66.4%

Common tangible book/common tangible assets

     Total assets

1,089,532,000

1,114,976,000

1,153,288,000

     Preferred stock (net)

11,717,000

14,173,000

18,483,000

     Core deposit intangible

6,621,000

8,600,000

10,297,000

Common tangible assets

1,071,194,000

1,092,203,000

1,124,508,000

Common tangible book 

88,321,000

85,697,000

86,537,000

Common tangible equity to assets

8.25%

7.85%

7.70%

 

SOURCE Community Bankers Trust Corporation



RELATED LINKS

http://www.cbtrustcorp.com