Community Bankers Trust Corporation Reports 3rd Quarter 2011 Results

GLEN ALLEN, Va., Oct. 28, 2011 /PRNewswire/ -- Community Bankers Trust Corporation (the "Company") (NYSE Amex: BTC), the holding company for Essex Bank (the "Bank"), today reported third quarter 2011 net income of $1.4 million. This compares with a net loss of $1.3 million in the third quarter of 2010 and net income of $521,000 in the second quarter of 2011.  Net income available to common stockholders was $1.2 million in the third quarter of 2011 compared with a net loss available to common stockholders of $1.6 million in the third quarter of 2010 and net income available to common stockholders of $247,000 in the second quarter of 2011.  For the nine months ended September 30, 2011, the Company reported net income of $748,000 and a net loss available to common stockholders of $70,000.  Net loss for the nine month period ended September 30, 2010 was $23.7 million and net loss available to common stockholders was $24.5 million.

Rex L. Smith, III, President and Chief Executive Officer of the Company and the Bank, stated: "The earnings for the quarter show marked improvement for the Company in numerous areas. Most important is the decrease in the level of nonperforming loans and the continued resolution of nonaccrual loans and other real estate owned. When I assumed the role as CEO last March, my goal was to rapidly remediate operational and credit problems, gain efficiencies through consolidation, and begin down a path to increase earnings through core banking operations. Through intense focus on our strategic objectives, the results are beginning to prove that we are well on the way to meeting that vision."

Mr. Smith added, "We will continue to improve our profitability by reducing our cost of funds, finding quality loans in market niches that are being ignored, and increasing our fee based lines of business, all of which are evident in the results of this quarter. Despite the slow economy, I believe each quarter going forward will show improvement in the level of nonperforming loans, the net interest margin and overall earnings. We are working closely with our regulators to show that the Company has successfully completed the first phase of its long term strategy to become a premier provider of financial products in our marketplace for many years to come. We look forward to what the future holds for our Company and for our shareholders."

Key highlights for the third quarter of 2011 include the following:

  • Non-covered nonperforming assets declined 10.0%, or $5.0 million, from $50.1 million to $45.1 million on a linked quartered basis.
  • Net charged-off loans continue to decline and were $1.0 million for the third quarter of 2011, down from $4.7 million in the second quarter of 2011, $5.5 million in the first quarter of 2011 and $8.7 million in the fourth quarter of 2010.
  • Noninterest expenses were $27.2 million for the nine months ended September 30, 2011, a decline of $9.2 million, or 25.2%, compared with noninterest expenses of $36.4 million for the first nine months of 2010. Excluding goodwill impairment charges of $5.7 million in the first nine months of 2010, noninterest expenses would have declined $3.5 million, or 11.3%.
  • Net interest income was $11.3 million for the third quarter of 2011, an increase of 5.9%, over the third quarter of 2010.
  • Non-covered nonaccrual loans declined 4.1% during the quarter, or $1.6 million, ending the period at $36.2 million.
  • Non-covered other real estate owned decreased $3.5 million, to $8.9 million, on a linked quarter basis.
  • Non-covered nonperforming assets to loans and other real estate owned declined from 9.76% to 8.78% on a linked quarter basis.  
  • Excluding FDIC covered assets, the ratio for the allowance for loan losses to total loans was 3.12% at September 30, 2011, compared with 3.35% at June 30, 2011.

RESULTS OF OPERATIONS

Net income available to common stockholders was $1.2 million, or $0.05 per common share on a diluted basis, for the quarter ended September 30, 2011 compared with a net loss available to common stockholders of $1.6 million, or $0.07 per common share on a diluted basis, for the quarter ended September 30, 2010. Net income was driven by a decrease in noninterest expenses of $1.7 million, an increase in noninterest income of $865,000 and an increase in net interest income of $629,000. Additionally, there was no provision for loan losses in the third quarter of 2011, compared with $1.1 million in the third quarter of 2010.

The following table presents summary income statements for the three months ended September 30, 2011 and 2010, and nine months ended September 30, 2011 and 2010.


SUMMARY INCOME STATEMENT









(Dollars in thousands)



For the three months ended


For the nine months ended



September 30, 2011


September 30, 2010

$

September 30, 2011


September 30, 2010

Interest income

$

14,272

$

15,153

42,159

$

45,332

Interest expense


2,974


4,484


9,364


14,492

Net interest income  


11,298


10,669


32,795


30,840

Provision for loan losses


-


1,116


1,498


27,440

Net interest income after provision for









 loan losses


11,298


9,553


31,297


3,400

Noninterest income


(662)


(1,527)


(3,498)


(1,227)

Noninterest expense


8,682


10,387


27,229


36,422

Net income/(loss) before income taxes


1,954


(2,361)


570


(34,249)

Income tax (expense) benefit


(532)


1,062


178


10,570

Net income (loss)

$

1,422

$

(1,299)

$

748

$

(23,679)

Dividends on preferred stock


-


-


-


442

Accretion of preferred stock discount


51


48


155


145

Preferred dividends not paid


221


221


663


221

Net income (loss) available to common









 stockholders

$

1,150

$

(1,568)

$

(70)

$

(24,487)










Net income (loss) per share available to









 common stockholders:









Basic

$

0.05

$

(0.07)

$

(0.00)

$

(1.14)

Diluted

$

0.05

$

(0.07)

$

(0.00)

$

(1.14)




Interest Income

Interest income was $14.3 million for the third quarter of 2011, a decrease of $220,000, or 1.5%, from interest income of $14.5 million in the second quarter of 2011.  Interest and fees on covered loans was the primary contributor to this decrease, down $171,000 on a linked quarter basis to $4.7 million for the third quarter of 2011.  Covered FDIC loans are a self-liquidating business line and will consistently exhibit declining balances as the carrying value of these loans is reduced.  The carrying value of FDIC covered loans was $104.3 million at June 30, 2011 and $100.0 million at September 30, 2011.  

Interest income declined $881,000, or 5.8%, when comparing the third quarter of 2010 and 2011.  Interest income was $15.2 million in the third quarter of 2010 and declined to $14.3 million in the third quarter of 2011.  Interest and fees on non-covered loans declined $921,000 when comparing the third quarter of 2011 to the third quarter of 2010.  This was due to both rate and volume decreases.  Total securities income decreased $944,000 when comparing the third quarter of 2011 to the third quarter of 2010.  This also was the result of rate and volume decreases.  Offsetting these decreases was improved performance on the FDIC covered loan portfolio, which increased $975,000, from $3.7 million in the third quarter of 2010 to $4.7 million in the third quarter of 2011.

Interest income was $42.2 million for the nine months ended September 30, 2011, a decrease of $3.2 million from interest income of $45.3 million for the nine months ended September 30, 2010.  Average earning assets declined from $1.041 billion for the first nine months of 2010 to $935.9 million for the first nine months in 2011.  

Interest Expense

Interest expense was $3.0 million for the third quarter of 2011, a decrease of $105,000 from interest expense of $3.1 million in the second quarter of 2011.  Average interest bearing liabilities declined $8.6 million, or 1.0%, during the quarter.  The cost of interest bearing liabilities declined from 1.37% in the second quarter of 2011 to 1.34% in the third quarter of 2011.

Interest expense declined $1.5 million from $4.5 million in the third quarter of 2010 to $3.0 million in the third quarter of 2011. The 33.7% decrease resulted from decreases in both the amount of interest bearing liabilities and their cost, as time deposits renewed at lower rates. First, the average balance of interest bearing liabilities declined $123.4 million, or 12.2% from the third quarter of 2010 to the third quarter of 2011.  Second, the cost of interest bearing liabilities declined from 1.77% for the third quarter of 2010 to 1.34% in the third quarter of 2011.

Interest expense declined $5.1 million from $14.5 million for the nine months ended September 30, 2010 to $9.4 million for the nine months ended September 30, 2011.  This decline of 35.4% was driven by a decline in average interest bearing liabilities, from $1.018 billion for the first nine months of 2010 to $901.4 million for the same period in 2011.  As previously mentioned, time deposits renewed at lower rates, and thus contributed to the decrease in the cost of interest bearing liabilities from 1.90% for the first nine months of 2010 to 1.39% for the first nine months in 2011.

Net Interest Income

Net interest income was $11.3 million for the quarter ended September 30, 2011, compared with $11.4 million for the quarter ended June 30, 2011.  This represents a decrease of $115,000 or 1.0%.  On a tax equivalent basis, net interest income was $11.4 million for the third quarter of 2011 compared with tax equivalent net interest income of $11.5 million for the second quarter of 2011.  The tax equivalent net interest margin decreased from 5.01% in the second quarter of 2011 to 4.91% in the third quarter of 2011. This was due to a decline in net interest spread, from 4.97% to 4.85%, on a linked quarter basis.

Net interest income increased $629,000 from $10.7 million in the third quarter of 2010 to $11.3 million in the third quarter of 2011.  This represents an increase of 5.9% and was primarily the result of an increase in the Company's interest spread, from 4.26% in the third quarter of 2010 to 4.85% in the third quarter of 2011.  This increased the Company's net interest margin from 4.30% in the third quarter of 2010 to 4.91% for the same period in 2011.  A decline in the cost of interest bearing liabilities, from 1.77% for the third quarter of 2010 to 1.34% for the third quarter of 2011, coupled with an increase of 16 basis points, from 6.03% to 6.19%, in the yield on earning assets were the drivers of this increase.

Net interest income was $32.8 million for the nine months ended September 30, 2011, compared with $30.8 million for the nine months ended September 30, 2010.  The increase in net interest income was primarily the result of decreases of $116.4 million, or 11.4%, in the average balances of interest-bearing liabilities coupled with lower rates, which has reduced interest expense 35.4%, from $14.5 million in the first nine months of 2010 to $9.4 million for the first nine months of 2011.  The tax equivalent net interest margin increased to 4.73% in the first nine months of 2011 from 4.12% in the first nine months of 2010.  

The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended September 30, 2011 and 2010, and June 30, 2011, and for the nine months ended September 30, 2011 and 2010.  

NET INTEREST MARGIN


(Dollars in thousands)








For the three months ended





9/30/2011


6/30/2011


9/30/2010











Average interest earning assets



$           928,574


$           921,089


$           1,034,289


Interest income



$             14,272


$             14,492


$                 15,153


Interest income - tax equivalent



$             14,377


$             14,610


$                 15,597


Yield on interest earning assets



6.19%


6.34%


6.03%


Average interest bearing liabilities



$           888,366


$           896,970


$           1,011,755


Interest expense



$               2,975


$               3,079


$                   4,484


Cost of interest bearing liabilities



1.34%


1.37%


1.77%


Net interest income



$             11,298


$             11,413


$                 10,669


Net interest income - tax equivalent



$             11,402


$             11,531


$                 11,113


Interest spread



4.85%


4.97%


4.26%


Net interest margin



4.91%


5.01%


4.30%













For the nine months ended




9/30/2011


9/30/2010







Average interest earning assets



$               935,873


$           1,040,937

Interest income



$                 42,159


$                 45,332

Interest income - tax equivalent



$                 42,593


$                 46,691

Yield on interest earning assets



6.07%


5.98%

Average interest bearing liabilities



$               901,404


$           1,017,833

Interest expense



$                   9,364


$                 14,492

Cost of interest bearing liabilities



1.39%


1.90%

Net interest income



$                 32,795


$                 30,840

Net interest income - tax equivalent



$                 33,229


$                 32,199

Interest spread



4.68%


4.08%

Net interest margin



4.73%


4.12%



Provision for Loan Losses

There was no provision for loan losses for non-covered loans for the quarter ended September 30, 2011.  There was also no provision for loan losses for the second quarter of 2011, but there was a provision for loan losses of $1.1 million for the quarter ended September 30, 2010. The allowance for loan losses equaled 43.6% of non-covered nonaccrual loans at September 30, 2011, compared with 44.5% of non-covered nonaccrual loans at June 30, 2011. The ratio of allowance for loan losses to total non-covered loans was 3.12% at September 30, 2011, compared with 3.35% at June 30, 2011 and 6.27% at September 30, 2010. The decrease in the allowance for loan losses to total non-covered loans from September 2010 to September 2011 is primarily the result of earlier recognition and resolution of problem credits and aggressive charge-offs, in addition to work-outs of nonperforming loans. Net charged-off loans have sequentially decreased over the previous four quarters.  Net charged-off loans have declined from $8.7 million in the fourth quarter of 2010, $5.5 million in the first quarter of 2011 and $4.7 million in the second quarter of 2011 and were $1.0 million in the third quarter of 2011.

The provision for loan losses on non-covered loans was $1.5 million for the nine months ended September 30, 2011 compared with $27.4 million for the nine months ended September 30, 2010.  Charged-off loans were $11.8 million for the nine months ended September 30, 2011 compared to $11.2 million for the nine months ended September 30, 2010.  Loan recoveries were $548,000 for the first nine months of 2011 compared with $786,000 for the same period in 2010.

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


CREDIT QUALITY









(Dollars in thousands)

2011


2010


Third

Second

First


Fourth

Third

Second



Quarter

Quarter

Quarter


Quarter

Quarter

Quarter


Allowance for loan losses:


















Beginning of period

$  16,803

$  21,542

$  25,543


$ 34,353

$  38,785

$  19,798


Provision for loan losses

-

-

1,498


(77)

1,116

20,402


Charge-offs

(1,366)

(4,825)

(5,634)


(8,898)

(5,647)

(2,029)


Recoveries

327

86

135


165

99

614


Net charge-offs

$  (1,039)

$  (4,739)

$  (5,499)


$   (8,733)

$(5,548)

$  (1,415)


End of period

$  15,764

$  16,803

$  21,542


$   25,543

$  34,353

$  38,785





Noninterest Income

Noninterest income was negative $662,000 for the third quarter of 2011 compared with negative $1.4 million for the second quarter of 2011.  Noninterest income in both periods is negative due to two factors -- FDIC indemnification asset amortization and loss on OREO.  The largest component of noninterest income was FDIC indemnification asset amortization, which reduces noninterest income, and was $2.4 million in the third quarter of 2011 and $2.7 million in the second quarter of 2011. By amortizing the FDIC indemnification asset, the Company is reducing the asset and recognizing interest income from borrowers of loans covered by FDIC shared loss agreements.  Loss on OREO was $1.7 million in the third quarter of 2011 and $249,000 in the second quarter of 2011. Management proactively assesses other real estate owned and as a result wrote down values by $1.1 million in the third quarter of 2011.

Noninterest income was positively affected by $1.7 million in gain on sale of securities recognized in the third quarter of 2011 and $176,000 in the second quarter of 2011.  Also positively affecting noninterest income on a linked quarter basis was an increase in other noninterest income of $338,000, from $662,000 in the second quarter of 2011 to $1.0 million in the third quarter of 2011.  Service charges on deposit accounts were $643,000 and $637,000, respectively, in the third quarter and second quarter of 2011.

Noninterest income increased $865,000, from negative $1.5 million in the third quarter of 2010, to negative $662,000 for the third quarter of 2011.  Gains on sale of securities were the largest contributor to this increase and were $1.7 million in the third quarter of 2011 compared with $296,000 of losses in the third quarter of 2010. Other income increased by $868,000 from the third quarter of 2010 to the third quarter of 2011.  These increases were reduced by an increase of $901,000 in loss on OREO, from $770,000 in the third quarter of 2010 to $1.7 million in the third quarter of 2011, and by an increase of $1.1 million in FDIC indemnification asset amortization, from $1.3 million in the third quarter of 2010 to $2.4 million in the third quarter of 2011.

For the nine months ended September 30, 2011, noninterest income equaled negative $3.5 million, compared with negative $1.2 million for the nine months ended September 30, 2010. This change was due primarily to accelerated FDIC indemnification asset amortization of $5.8 million, from $2.0 million for the first nine months of 2010 to $7.8 million for the same period in 2011.  The increase in FDIC indemnification asset amortization has resulted in the increased yield realized in interest and fees on FDIC covered loans over the same time frame, as projected losses carried within the FDIC indemnification asset have been realized instead, through payment performance of the associated borrowers.  Other noninterest income declined in the nine month period ended September 30, 2011 compared with the same period in 2010.  Other noninterest income was $3.6 million for the nine months ended September 30, 2010 and $2.4 million for the nine months ended September 30, 2011.  This decrease reflects fewer reimbursable loss events in FDIC covered loans.

Positively affecting noninterest income over the nine month comparison periods were gains/(losses) on sales of securities, which increased by $3.0 million, from a loss of $394,000 in the first nine months of 2010 to gains realized of $2.6 million for the same period in 2011.  Additionally, there was a reduction in losses on OREO properties of $1.8 million, from $4.3 million for the first nine months of 2010 to $2.5 million for the same period in 2011.  

Noninterest Expense

On a linked quarter basis, noninterest expenses totaled $8.7 million for the three months ended September 30, 2011 compared with $9.3 million for the quarter ended June 30, 2011, a decrease of $652,000, or 7.0%. All expense categories declined, on a linked quarter basis, with the exception of legal fees and data processing expense, which increased $206,000 and $2,000, respectively, in the third quarter of 2011 compared with the second quarter of 2011. Legal fees were $241,000 in the third quarter of 2011, compared with $35,000 in the second quarter of 2011. The increase reflects a $155,000 one time settlement relating to a put-back requirement in a note sale agreement from early 2008. Data processing expenses were $478,000 in the third quarter of 2011 and $476,000 in the second quarter of 2011.

Other operating expenses decreased $351,000, or 16.9%, from $2.1 million in the second quarter of 2011 to $1.7 million in the third quarter of 2011. Of this decrease, $183,000 was related to the issuance of annual stock retainers for Directors fully recognized in the second quarter of 2011. Additionally, direct expenses on other real estate owned decreased $104,000 on a linked quarter basis.

FDIC assessment expense was $580,000 in the third quarter of 2011 compared with $761,000 in the second quarter of 2011, a decrease of $181,000, or 23.8%.  A change in the methodology used to calculate this assessment lowered the expense in the third quarter of 2011 compared with the second quarter of 2011.  Professional fees were $68,000 and decreased 65.7%, or $130,000, in the third quarter of 2011 compared with $198,000 in the second quarter of 2011.  

Salaries and employee benefits were $4.1 million, a decline of $121,000, or 2.9%, in the third quarter of 2011, compared with $4.2 million in the second quarter of 2011.  Occupancy expenses were $687,000 in the third quarter of 2011, a decline of $46,000, or 6.3%, from the second quarter of 2011 total of $733,000.  Equipment expense declined $31,000, or 9.7%, and were $289,000 in the third quarter of 2011 compared with $320,000 in the second quarter of 2011.

Noninterest expenses declined $1.7 million when comparing the third quarter of 2011 to the same period in 2010.  Salaries and employee benefits were the largest category decrease and were $5.3 million in the third quarter of 2010 and $4.1 million in the third quarter of 2011, a decrease of $1.2 million, or 22.9%.  Also seeing significant declines were professional fees and data processing expenses. Professional fees declined 84.0%, or $357,000, when comparing the third quarter 2011 total of $68,000 to the third quarter 2010 total of $425,000.  Data processing expenses declined $257,000, or 35.0%, from $735,000 in the third quarter of 2010 to $478,000 in the third quarter of 2011. Partially offsetting these declines were increases of $124,000 in legal fees and $109,000 in other operating expenses when comparing the third quarter of 2011 to the same period in 2010.

For the nine months ended September 30, 2011, noninterest expense declined $9.2 million when compared with the same period in 2010.  Excluding goodwill impairment charges of $5.7 million in 2010, noninterest expenses would have declined $3.5 million, or 11.3%.  Noninterest expenses, excluding goodwill, were $30.7 million for the first nine months of 2010 and declined to $27.2 million for the first nine months in 2011.  The two major drivers of this decrease were salaries and employee benefits, which declined $2.8 million over the nine months comparison periods, and professional fees, which decreased $1.0 million.  Salaries and employee benefits were $15.2 million for the first nine months of 2010 and $12.4 million for the first nine months of 2011, a decrease of 18.2%.  Professional fees were $1.5 million for the first nine months of 2010 and $457,000 for the first nine months of 2011, a decrease of 69.6%.  Additionally, data processing expenses declined $406,000 when comparing the first nine months of 2010 to the same period in 2011.

Income Taxes

Income tax expense was $532,000 for the three months ended September 30, 2011, compared with income tax expense of $127,000 in the second quarter of 2011.  There was an income tax benefit recorded of $1.1 million in the third quarter of 2010. For the nine months ended September 30, 2011, income tax benefits were $178,000 compared with income tax benefit of $10.6 million for the nine months ended September 30, 2010.

FINANCIAL CONDITION

At September 30, 2011, the Company had total assets of $1.073 billion, a decrease of $43.0 million, or 3.9%, from total assets of $1.116 billion at December 31, 2010. Total loans, including $100.0 million in loans covered by the FDIC shared loss agreements, were $605.2 million at September 30, 2011, decreasing $35.9 million, or 5.6%, from $641.1 million at December 31, 2010.  The carrying value of covered loans declined $15.5 million, or 13.4%, from December 31, 2010. Non-covered loans equaled $505.2 million at September 30, 2011, declining $20.4 million, or 3.9%, since December 31, 2010.  Non-covered loans increased $4.1 million from June 30, 2011 to September 30, 2011.  

On a linked quarter basis, total real estate loans increased $1.6 million and were $440.0 million at September 30, 2011.  Commercial lending activity increased $2.5 million, or 4.9%, during the third quarter of 2011 and was $54.0 million at September 30, 2011.  

The following table shows the composition of the Company's non-covered loan portfolio on a linked quarter basis.

NON-COVERED LOANS

(Dollars in thousands)








September 30, 2011


June 30, 2011







Amount

% of Non-
Covered Loans


Amount

% of Non-
Covered Loans

Mortgage loans on real estate:








Residential 1-4 family


$     129,520

25.63%


$     131,205

26.18%


Commercial



198,872

39.36%


197,897

39.49%


Construction and land development

81,274

16.07%


85,002

16.96%


Second mortgages


8,319

1.65%


8,306

1.66%


Multifamily



13,782

2.73%


13,397

2.67%


Agriculture



8,232

1.63%


2,566

0.51%



Total real estate loans


439,999

87.07%


438,373

87.47%

Commercial loans



54,025

10.69%


51,511

10.28%

Consumer installment loans


9,609

1.90%


9,600

1.92%

All other loans



1,696

0.34%


1,710

0.33%




Gross loans


505,329

100.00%


501,194

100.00%

Allowance for loan losses


(15,764)



(16,803)


Net unearned income on loans


(164)



(138)


Non-covered loans, net of unearned income

$    489,401



$    484,253





The Company's securities portfolio decreased $15.7 million, or 5.1%, during the first nine months of 2011 to $291.8 million with realized gains of $2.6 million through sales activity. The Company had cash and cash equivalents of $53.4 million at September 30, 2011, compared with $33.4 million at December 31, 2010.  There were no Federal funds sold at September 30, 2011, compared with $2.0 million at December 31, 2010. 

On a linked quarter basis, the Company's securities portfolio, excluding equity securities, decreased $19.8 million, from $304.7 million at June 30, 2011 to $284.9 million at September 30, 2011, and $1.7 million in gains were realized during the third quarter.  U.S. Government agency mortgage backed securities declined by $75.2 million and balances in U.S. Treasury issues increased by $50.6 million.

The following table shows the composition of the Company's securities portfolio, excluding equity securities, on a linked quarter basis.


SECURITIES PORTFOLIO

(Dollars in thousands)


September 30, 2011


June 30, 2011



Amortized Cost


Fair Value


Amortized Cost

Fair Value

Securities Available for Sale









U.S. Treasury issue and other









     U.S. Government agencies

$

60,374

$

60,582

$

9,820

$

10,018

State, county and municipal


54,848


59,547


48,748


50,308

Corporate and other bonds


4,809


4,696


5,067


5,075

Mortgage backed securities


92,692


91,720


165,163


166,877

Total securities available for sale

$

212,723

$

216,545

$

228,798

$

232,278












September 30, 2011


June 30, 2011



Amortized Cost


Fair Value


Amortized Cost

Fair Value

Securities Held to Maturity









State, county and municipal

$

12,174

$

13,381

$

12,181

$

13,097

Mortgage backed securities


56,168


59,321


60,207


63,592

Total securities held to maturity

$

68,342

$

72,702

$

72,388

$

76,689






















Interest bearing deposits at September 30, 2011 were $847.6 million, a decrease of $51.8 million from December 31, 2010. Time deposits declined $50.6 million during the first nine months of 2011 as management kept rates low among all regions as loan demand remained weak and covered loans continued to decline in volume. The Company is attempting to restructure the deposit mix away from higher priced deposits and more into lower cost transactional accounts. Money market deposit accounts were $117.9 million at September 30, 2011, a decline of $9.7 million, or 7.6% from money market deposit account balances of $127.6 million at December 31, 2010.

During the first nine months of 2011, NOW accounts increased $4.3 million, or 4.0%, from $106.2 million at December 31, 2010 to $110.5 million at September 30, 2011.  Additionally, savings accounts increased $4.2 million, or 6.6%, during the first nine months of 2011.   The Company's total loan-to-deposit ratio was 66.1% at September 30, 2011 compared with 66.7% at December 31, 2010.

On a linked quarter basis, interest bearing deposits increased $1.6 million.  This change consisted of an increase in time deposits $100,000 and over by $8.4 million, partially offset by a decrease in time deposits less than $100,000 of $3.5 million and a decrease in money market deposit accounts of $3.3 million.  

The following table details the change in the mix of interest bearing deposits from December 31, 2010 to September 30, 2011.

INTEREST BEARING DEPOSITS

(Dollars in thousands)




September 30, 2011


June 30, 2011


March 31, 2011


December 31, 2010


NOW


$      110,538


$        111,268


$            105,870


$                 106,248


MMDA


117,910


121,210


127,284


127,594


Savings


68,349


67,564


66,733


64,121


Time deposits less than $100,000

329,395


332,895


346,018


367,333


Time deposits $100,000 and over

221,395


213,043


219,508


234,070


   Total interest bearing deposits

$     847,587


$        845,980


$             865,413


$                  899,366





The Company had Federal Home Loan Bank (FHLB) advances of $37.0 million at each of September 30, 2011 and December 31, 2010.

Stockholders' equity at September 30, 2011 was $110.7 million, or 10.3% of total assets, and increased from stockholders' equity of $107.1 million, or 9.6% of total assets, at December 31, 2010.   Stockholders' equity was $110.7 million, or 9.4% of total assets, at September 30, 2010.

Since September 30, 2010, the Company, through its balance sheet management strategy, has increased its common tangible equity to common tangible asset ratio from 6.74% at September 30, 2010 to 7.62% at September 30, 2011.  Additionally, the common tangible book value increased from $3.59 at September 30, 2010 to $3.67 at September 30, 2011.  See the "Non-GAAP Financial Measures" table for additional information.

Asset Quality – non-covered assets

Nonaccrual loans were $36.2 million at September 30, 2011, compared with $37.7 million at June 30, 2011. This $1.5 million decrease was comprised of $7.3 million in additions to nonaccrual loans and $8.8 million of loans removed from nonaccrual status. Total nonperforming assets decreased $5.0 million from $50.1 million at June 30, 2011 to $45.1 million at September 30, 2011. Total charge-offs for the third quarter of 2011 were $1.4 million and recoveries were $327,000.  Non-covered other real estate owned decreased $3.5 million, from $12.4 million at June 30, 2011 to $8.9 million at September 30, 2011. The change in non-covered other real estate owned during the third quarter of 2011 was reflected in additions of $673,000 and reductions by sales of $2.4 million, write-downs of $1.1 million and transfers of $700,000.

For the nine months ended September 30, 2011, net charge-offs were $11.3 million compared to $10.4 million for the same period in 2010.  Total charge-offs were $11.8 million for the first nine months of 2011 and $11.2 million for the same period in 2010.  Recoveries for the nine month comparison period were $548,000 in 2011 and $786,000 in 2010. Management's aggressive strategy to work nonperforming loans and other real estate owned is evidenced in the volume of charge-offs as well as the level of the loan loss reserve.

Nonperforming assets to loans and other real estate declined from 9.76% at June 30, 2011 to 8.78% at September 30, 2011. The ratio of the allowance for loan losses to nonperforming assets was 34.94% at September 30, 2011, compared with 33.52% at June 30, 2011 and 72.09% at September 30, 2010.

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

ASSET QUALITY (NON-COVERED)





(Dollars in thousands)

2011


2010

Third

Second

First

Fourth

Third

Second


Quarter

Quarter

Quarter


Quarter

Quarter

Quarter









Nonaccruing loans

$  36,177

$  37,736

$  42,029


$   36,532

$   43,298

$   41,690

Loans past due over 90 days and accruing interest

80

-

282


389

35

-

Total nonperforming non-covered loans

$  36,257

$  37,736

$  42,311


$   36,921

$   43,333

$   41,690

Other real estate owned non-covered

8,858

12,393

7,332


5,928

4,320

4,333

Total nonperforming non-covered assets

$  45,115

$  50,129

$  49,643


$   42,849

$   47,653

$   46,023









Allowance for loan losses

$  15,764

$  16,803

$  21,542


$   25,543

$    34,353

$     38,785

Average loans during quarter, net of unearned income

$  498,201

$  506,752

$  517,805


$  539,503

$  557,324

$  575,457

Loans, net of unearned income

$  505,165

$  501,056

$  514,276


$  525,548

$  547,509

$  562,539









Allowance for loan losses to loans

3.12%

3.35%

4.19%


4.86%

6.27%

6.89%

Allowance for loan losses to








 nonperforming assets

34.94%

33.52%

43.39%


59.61%

72.09%

84.27%

Allowance for loan losses to nonaccrual loans








43.57%

44.53%

51.26%


69.92%

79.34%

93.03%

Nonperforming assets to loans and other real estate








8.78%

9.76%

9.52%


8.06%

8.64%

8.12%

Net charge-offs for quarter to average loans, annualized

0.83%

3.74%

4.25%


6.47%

3.98%

0.98%












A further breakout of nonaccrual loans, excluding covered loans, at September 30, 2011 and June 30, 2011 is below:

NON-COVERED NONACCRUAL LOANS

(Dollars in thousands)


September 30, 2011


June 30, 2011



Amount of
Nonaccrual
Loans


% of
Non-covered
Loans


Amount of
Nonaccrual
Loans


% of
Non-covered
Loans


Mortgage loans on real estate:









Residential 1-4 family

$6,759


1.34%


$7,041


1.41%


Commercial

8,251


1.63%


8,352


1.67%


Construction and land development

19,314


3.82%


20,700


4.13%


Second mortgages

190


0.04%


199


0.04%


Multifamily

-


-


-


-


Agriculture

53


0.01%


53


0.01%


 Total real estate loans

34,567


6.84%


36,345


7.26%


Commercial loans

1,521


0.30%


1,330


0.27%


Consumer installment loans

89


0.02%


61


0.01%


All other loans

-


-


-


-


Gross loans

$36,177


7.16%


$37,736


7.54%





Capital Requirements

Total Stockholders' equity was $110.7 million at September 30, 2011.  The Company's ratio of total risk-based capital was 16.8% at September 30, 2011 compared to 15.6% at December 31, 2010.  The tier 1 risk-based capital ratio was 15.6% at September 30, 2011 and 14.4% at December 31, 2010. The Company's tier 1 leverage ratio was 9.0% at September 30, 2011 and 8.1% at December 31, 2010.  All capital ratios exceed regulatory minimums.

About Community Bankers Trust Corporation

The Company is the holding company for Essex Bank, a Virginia state bank with 24 full-service offices, 13 of which are in Virginia, seven of which are in Maryland and four of which are in Georgia. The Company also operates one loan production office. Additional information is available on the Company's website at www.cbtrustcorp.com.

Earnings Conference Call and Webcast

The Company will host a conference call for the financial community on Friday, October 28, 2011, at 11:00 a.m. Eastern Time to discuss the third quarter 2011 financial results. The public is invited to listen to this conference call by dialing 800-860-2442 at least 10 minutes prior to the call.  Interested parties may also listen to this conference call through the internet by accessing the "Investor Information" page of the Company's internet site at www.cbtrustcorp.com.

A replay of the conference call will be available from 2:00 p.m. Eastern Time on October 28, 2011 until 9:00 a.m. Eastern Time on November 4, 2011. The replay will be available by dialing 877-344-7529 and entering access code 10006029 or through the internet by accessing the "Investor Information" page of the Company's internet site at www.cbtrustcorp.com.

Forward-Looking Statements