Community Bankers Trust Corporation Reports Fourth Quarter and Annual Results for 2011

31 Jan, 2012, 07:30 ET from Community Bankers Trust Corporation

GLEN ALLEN, Va., Jan. 31, 2012 /PRNewswire/ -- Community Bankers Trust Corporation (the "Company") (NYSE Amex: BTC), the holding company for Essex Bank (the "Bank"), today reported net income of $695,000 in the fourth quarter of 2011. This compares with net income of $2.7 million in the fourth quarter of 2010 and net income of $1.4 million in the third quarter of 2011.  Net income available to common stockholders was $423,000 in the fourth quarter of 2011, compared with net income available to common stockholders of $2.4 million in the fourth quarter of 2010 and net income available to common stockholders of $1.2 million in the third quarter of 2011.  For the year ended December 31, 2011, the Company reported net income of $1.4 million and net income available to common stockholders of $354,000.  Net loss for the year ended December 31, 2010 was $21.0 million and net loss available to common stockholders for the same period was $22.1 million.

Rex L. Smith, III, President and Chief Executive Officer of the Company and the Bank, stated, "Our goals for 2011 were to make major improvements in our problem assets and to rebuild the fundamentals of the core bank, and I am pleased to report that we accomplished our goals.  Both nonaccrual loans and net charge-offs saw continual and substantial declines throughout the year.  At year-end our ratio of nonperforming assets to loans and other real estate was at its lowest level since the first quarter of 2010.  Additionally, the fourth quarter showed a strong increase in new loan production in our targeted growth areas.  All of this occurred while we lowered noninterest expense for the year by 21%.  While the profit we posted for the year is small, given the economy and the environment we were in, it is a clear success.  

"The positive momentum of 2011 gives us a strong start for 2012.  We will continue to aggressively reduce the level of nonperforming loans while enhancing the new loan production pipeline.  Our capital ratios remain very strong and give us a competitive advantage for the future.  We will build upon our successes, and I believe 2012 will be a year of real transformation for the bank.  While the rapidly changing regulatory world of banking and the economic factors for 2012 will inevitably bring other risks and opportunities not yet foreseeable, this management team remains focused on our core values.   We will focus on creating value for our shareholders in 2012."

Key highlights for the fourth quarter and for 2011 include the following:

  • Net interest income improved by $3.3 million, or 8.1%, year over year.
  • Loan growth was $39.6 million, or 7.8%, in the fourth quarter.
  • Noninterest expenses declined by $9.4 million year over year, or 20.8%.
  • Non-covered nonaccrual loans declined 21.1% during the quarter, or $7.6 million, ending the period at $28.5 million.
  • Non-covered nonperforming assets declined 9.6%, or $4.3 million, from $45.1 million to $40.8 million on a linked quarter basis.
  • Net charged-off loans continue to decline and were $929,000 for the fourth quarter of 2011, down from $1.0 million in the third quarter of 2011, $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.
  • Non-covered nonperforming assets to loans and other real estate owned declined from 8.78% to 7.35% on a linked quarter basis.  

RESULTS OF OPERATIONS

For the year ended December 31, 2011, net income available to common stockholders was $354,000, or $0.02 per common share on a diluted basis, compared with a net loss available to common stockholders of $22.1 million, or $1.03 per common share on a diluted basis, for the year ended December 31, 2010.  

Net income available to common stockholders was $423,000, or $0.02 per common share on a diluted basis, for the quarter ended December 31, 2011, compared with net income available to common stockholders of $2.4 million, or $0.11 per common share on a diluted basis, for the quarter ended December 31, 2010. Net income was driven by a decrease in noninterest income of $4.3 million. The change in noninterest income was through decreased securities gains of $3.7 million and an increase in FDIC indemnification asset amortization of $1.4 million when comparing the fourth quarter of 2011 to the same period in 2010.  Other comparison areas within noninterest income, such as loss on sale of OREO and service charges on deposit accounts, improved slightly in the fourth quarter of 2011 compared to the fourth quarter of 2010, resulting in the net decrease in noninterest income of $4.3 million.

The following table presents summary income statements for the three months ended December 31, 2011 and 2010, and the year ended December 31, 2011 and 2010.

 SUMMARY INCOME STATEMENT

 (Dollars in thousands)

For the three months ended

For the year ended

December 31, 2011

December 31, 2010

$

December 31, 2011

December 31, 2010

Interest income

$

13,877

$

13,594

56,035

$

58,926

Interest expense

2,864

3,897

12,228

18,389

Net interest income  

11,013

9,697

43,807

40,537

Provision for loan losses

-

(77)

1,498

27,363

Net interest income after provision for

 loan losses

11,013

9,774

42,309

13,174

Noninterest income

(1,452)

2,871

(4,951)

1,644

Noninterest expense

8,627

8,831

35,854

39,526

Impairment of goodwill

-

-

-

5,727

Net income/(loss) before income taxes

934

3,814

1,504

(30,435)

Income tax (expense) benefit

(239)

(1,128)

(60)

9,442

Net income (loss)

$

695

$

2,686

$

1,444

$

(20,993)

Dividends on preferred stock

-

-

-

442

Accretion of preferred stock discount

51

49

206

194

Preferred dividends not paid

221

221

884

442

Net income (loss) available to common

 stockholders

$

423

$

2,416

$

354

$

(22,071)

Net income (loss) per share available to

 common stockholders:

Basic

$

0.02

$

0.11

$

0.02

$

(1.03)

Diluted

$

0.02

$

0.11

$

0.02

$

(1.03)

Interest Income

Interest income was $13.9 million for the fourth quarter of 2011, a decrease of $395,000, or 2.8%, from interest income of $14.3 million in the third quarter of 2011.  Interest and fees on covered loans was the primary contributor to this decrease and was down $416,000 on a linked quarter basis to $4.3 million for the fourth 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 $97.6 million at December 31, 2011 and $100.0 million at September 30, 2011.  

Interest income was $56.0 million for year ended December 31, 2011, a decrease of $2.9 million from interest income of $58.9 million for the year ended December 31, 2010.  This was primarily the result of a decline of $90.1 million in average earning assets, or 8.8%, from $1.029 billion for 2010 to $938.9 million for 2011.

Interest Expense

Interest expense was $2.9 million for the fourth quarter of 2011, a decrease of $110,000 from interest expense of $3.0 million in the third quarter of 2011.  Although average interest bearing liabilities increased $12.2 million, or 1.4%, during the quarter, the cost of interest bearing liabilities declined from 1.34% in the third quarter of 2011 to 1.27% in the fourth quarter of 2011.

Interest expense declined $6.2 million from $18.4 million for the year ended December 31, 2010 to $12.2 million for the year ended December 31, 2011.  This decline of $6.2 million, or 33.5% was driven by a decline in average interest bearing liabilities, from $1.006 billion for 2010 to $901.2 million for 2011.  Time deposits renewed at lower rates and thus contributed to the decrease in the cost of interest bearing liabilities from 1.83% for 2010 to 1.36% for 2011.

Net Interest Income

Net interest income was $11.0 million for the quarter ended December 31, 2011, compared with $11.3 million for the quarter ended September 30, 2011.  This represents a decrease of $285,000, or 2.5%.  On a tax equivalent basis, net interest income was $11.1 million for the fourth quarter of 2011 compared with tax equivalent net interest income of $11.4 million for the third quarter of 2011.  The tax equivalent net interest margin decreased from 4.91% in the third quarter of 2011 to 4.69% in the fourth quarter of 2011. This was due to a decline in net interest spread, from 4.85% to 4.62%, on a linked quarter basis.

Net interest income was $43.8 million for the year ended December 31, 2011, compared with $40.5 million for the year ended December 31, 2010.  The increase in net interest income was primarily the result of decreases of $104.5 million, or 10.4%, in the average balances of interest bearing liabilities coupled with lower rates, which has reduced interest expense 33.5%, from $18.4 million in 2010 to $12.2 million in 2011.  The tax equivalent net interest margin increased to 4.72% for the year ended December 31, 2011 from 4.10% for the year ended December 31, 2010.  

The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended December 31, 2011 and 2010, and September 30, 2011, and for the year ended December 31, 2011 and 2010.  

NET INTEREST MARGIN

(Dollars in thousands)

For the three months ended

12/31/2011

9/30/2011

12/31/2010

Average interest earning assets

$           947,751

$           928,574

$                993,412

Interest income

$             13,877

$             14,272

$                  13,594

Interest income - tax equivalent

$             13,968

$             14,377

$                  13,847

Yield on interest earning assets

5.90%

6.19%

5.58%

Average interest bearing liabilities

$           900,610

$           888,366

$                969,824

Interest expense

$               2,864

$               2,974

$                    3,897

Cost of interest bearing liabilities

1.27%

1.34%

1.61%

Net interest income

$             11,013

$             11,298

$                    9,697

Net interest income - tax equivalent

$             11,104

$             11,403

$                    9,950

Interest spread

4.62%

4.85%

3.97%

Net interest margin

4.69%

4.91%

4.01%

For the year ended

12/31/2011

12/31/2010

Average interest earning assets

$               938,867

$            1,028,996

Interest income

$                 56,035

$                 58,926

Interest income - tax equivalent

$                 56,563

$                 60,538

Yield on interest earning assets

6.02%

5.88%

Average interest bearing liabilities

$               901,203

$            1,005,732

Interest expense

$                 12,228

$                 18,389

Cost of interest bearing liabilities

1.36%

1.83%

Net interest income

$                 43,807

$                 40,537

Net interest income - tax equivalent

$                 44,335

$                 42,149

Interest spread

4.67%

4.05%

Net interest margin

4.72%

4.10%

Provision for Loan Losses

In 2010, a number of factors influenced credit risk management practices, including the economy, the rising level of nonperforming assets, deterioration within the Company's loan portfolio and regulatory concerns.  As a result, the Company took provisions for loan losses totaling $27.4 million. In 2011, improved credit risk management, which resulted in a lower level of nonperforming assets, influenced the assessment the Company makes concerning the adequacy of its allowance for loan losses and the need for a provision.  There was no provision for loan losses for non-covered loans for the quarter ended December 31, 2011.  There was also no provision for loan losses for the third quarter of 2011, but there was a credit of $77,000 to the provision for the quarter ended December 31, 2010 after the recovery of a previously charged-off loan made by the holding company. 

The allowance for loan losses was 52.0% of non-covered nonaccrual loans at December 31, 2011, compared with 43.6% of non-covered nonaccrual loans at September 30, 2011. The ratio of allowance for loan losses to total non-covered loans was 2.72% at December 31, 2011, compared with 3.12% at September 30, 2011 and 4.86% at December 31, 2010. The decrease in this ratio from December 31, 2010 to December 31, 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. In addition, the Bank held $36.5 million in government-guaranteed loans of the United States Department of Agriculture (USDA) at December 31, 2011, with no allowance for loan losses required.  Net charged-off loans were $929,000 in the fourth quarter of 2011, and the amounts have decreased sequentially over the previous five 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, $4.7 million in the second quarter of 2011, $1.0 million in the third quarter of 2011 and were, as reported above, $929,000 in the fourth quarter of 2011.

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)

2011

2010

Fourth

Third

Second

First

Fourth

Quarter

Quarter

Quarter

Quarter

Quarter

Allowance for loan losses:

Beginning of period

$  15,764

$  16,803

$  21,542

$  25,543

$ 34,353

Provision for loan losses

-

-

-

1,498

(77)

Charge-offs

(969)

(1,366)

(4,825)

(5,634)

(8,898)

Recoveries

40

327

86

135

165

Net charge-offs

$     (929)

$  (1,039)

$   (4,739)

$   (5,499)

$   (8,733)

End of period

$ 14,835

$  15,764

$  16,803

$  21,542

$   25,543

Noninterest Income

Noninterest income was negative $1.5 million for the fourth quarter of 2011 compared with negative $662,000 for the third quarter of 2011. Noninterest income in both periods was 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 $2.6 million in the fourth quarter of 2011 and $2.4 million in the third quarter of 2011. Loss on OREO was $337,000 in the fourth quarter of 2011 and $1.7 million in the third quarter of 2011.

Noninterest income reflected $306,000 in gain on sale of securities in the fourth quarter of 2011 and $1.7 million in the third quarter of 2011.  Other noninterest income was $535,000 in the fourth quarter of 2011, compared with $1.0 million in the third quarter of 2011.  Service charges on deposit accounts were $647,000 and $643,000, respectively, in the fourth quarter and third quarters of 2011.

For the year ended December 31, 2011, noninterest income equaled negative $5.0 million, compared with $1.6 million for the year ended December 31, 2010. This change was due primarily to accelerated FDIC indemnification asset amortization of $7.2 million, from $3.2 million for 2010 to $10.4 million for 2011.  The increase in FDIC indemnification asset amortization correlates to 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.  Management continues to refine and enhance the methodology to amortize the indemnification asset based on the historical and projected cash flows of the FDIC covered loan portfolio.  These enhancements should result in amortization of the indemnification asset that more closely correlates to the accretable yield of the FDIC covered loan portfolio.   Other noninterest income declined $898,000 in 2011 compared with 2010.  Other noninterest income was $3.8 million for the year ended December 31, 2010 and $2.9 million for the year ended December 30, 2011.  This decrease reflects fewer reimbursable loss events in FDIC covered loans.

Gain on sales of securities decreased by $720,000, from $3.6 million in 2010, to $2.9 million for the same period in 2011.  Additionally, there was a reduction in loss on sale of OREO of $2.2 million, from $5.1 million for 2010 to $2.9 million in 2011.  Service charges increased $39,000 and were $2.5 million in both 2010 and 2011.

Noninterest Expense

On a linked quarter basis, noninterest expenses totaled $8.6 million for the three months ended December 31, 2011, compared with $8.7 million for the quarter ended September 30, 2011, a decrease of $55,000, or 0.7%.  The largest expense increases, on a linked quarter basis, were in salaries and employee benefits and professional fees.  Salaries and employee benefits increased by $128,000, or 3.2%, and were $4.2 million for the fourth quarter of 2011.  Professional fees were $126,000 for the fourth quarter of 2011 and increased $58,000 over the third quarter of 2011.

Legal fees were $63,000 in the fourth quarter of 2011, a decline of $178,000. Other noteworthy expense declines in the fourth quarter of 2011 compared with the third quarter of 2011 were $27,000 in occupancy expenses and $19,000 in other operating expenses.  

For the year ended December 31, 2011, noninterest expenses declined 20.8%, or $9.4 million.  Excluding an impairment of goodwill charge taken in 2010, noninterest expenses would have declined by $3.7 million, or 9.3%, as 12 of 15 expense categories exhibited declines during 2011 compared to 2010.  The largest decrease occurred in salaries and employee benefits, which declined 13.5%, or $2.6 million, from $19.2 million in 2010 to $16.6 million in 2011.  Professional fees declined 67.6%, or $1.2 million, from $1.8 million in 2010 to $583,000 in 2011.  Other decreases of $100,000 or more occurred in data processing, which declined $441,000 in 2011 and equipment expense, which declined $157,000.

Offsetting these decreases in noninterest interest expenses in 2011 compared with 2010 were increases in other operating expenses of $406,000, from $6.8 million in 2010 to $7.2 million in 2011 and FDIC assessment, which increased by $393,000, from $2.4 million to $2.8 million.  

Income Taxes

Income tax expense was $239,000 for the three months ended December 31, 2011, compared with income tax expense of $532,000 in the third quarter of 2011.  For the year ended December 31, 2011, income tax expense was $60,000, compared with an income tax benefit of $9.4 million for the year ended December 31, 2010.

FINANCIAL CONDITION

At December 31, 2011, the Company had total assets of $1.092 billion, a decrease of $23.1 million, or 2.1%, from total assets of $1.116 billion at December 31, 2010. Total loans, including $97.6 million in loans covered by the FDIC shared loss agreements, were $642.3 million at December 31, 2011, decreasing $1.2 million, or 0.2%, from $641.1 million at December 31, 2010.   The carrying value of covered loans declined $18.0 million, or 15.6%, from December 31, 2010 to December 31, 2011. Non-covered loans equaled $544.7 million at December 31, 2011, increasing $19.2 million, or 3.7%, since December 31, 2010.  Non-covered loans increased $39.6 million from September 30, 2011 to December 31, 2011.  

During the third quarter of 2011, the Bank began purchasing government-guaranteed loans under programs administered by the USDA. The Bank has purchased only the government guaranteed portion of any of the loans that have been originated by other financial institutions. At September 30, 2011, the Bank had $11.6 million in USDA loan balances.  During the fourth quarter of 2011, another $25.4 million in USDA loans were purchased and booked, bringing the total to $36.5 million.  USDA balances are reflected in the non-covered loan section. The "covered" loan section is classified as such due to the existence of FDIC shared-loss agreements pertaining to its balances, which are reflected at carrying value.

On a linked quarter basis, gross loans increased $39.6 million, or 7.8%.  Total real estate loans increased $22.7 million and were $462.7 million at December 31, 2011.  Commercial lending activity increased $18.1 million, or 33.6%, during the fourth quarter of 2011 and was $72.1 million at December 31, 2011.  Excluding USDA government-guaranteed loan balances, core loan growth totaled $14.3 million, or 2.9%, in the fourth quarter of 2011.  Real estate – commercial grew $12.2 million, commercial purpose loans increased $6.2 million and real estate – multifamily balances increased $6.0 million.  Real estate – construction and land development loans declined by $6.4 million in the fourth quarter of 2011.

Excluding USDA government-guaranteed loan balances, the allowance for loan losses to total loans would have been 2.92% at December 31, 2011 and 3.19% at September 30, 2011. USDA loans balances are classified according to collateral and purpose.  

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)

December 31, 2011

September 30, 2011

Amount

% of Non-Covered Loans

Amount

% of Non-Covered Loans

Mortgage loans on real estate:

Residential 1-4 family

$     127,200

23.34%

$     129,520

25.63%

Commercial

220,471

40.46%

198,872

39.36%

Construction and land development

75,691

13.89%

81,274

16.07%

Second mortgages

8,129

1.49%

8,319

1.65%

Multifamily

19,746

3.62%

13,782

2.73%

Agriculture

11,444

2.10%

8,232

1.63%

Total real estate loans

462,681

84.90%

439,999

87.07%

Commercial loans

72,149

13.24%

54,025

10.69%

Consumer installment loans

8,461

1.55%

9,609

1.90%

All other loans

1,659

0.30%

1,696

0.34%

Gross loans

544,950

100.00%

505,329

100.00%

Allowance for loan losses

(14,835)

(15,764)

Net unearned income on loans

(232)

(164)

Non-covered loans, net of unearned income

$    529,883

$    489,401

The Company's securities portfolio, excluding equity securities, decreased $3.1 million, or 1.0%, during the year ended December 31, 2011 to $297.2 million with realized gains of $2.9 million through sales activity. The Company had cash and cash equivalents of $21.8 million at December 31, 2011, compared with $33.4 million at December 31, 2010.  There were no Federal funds sold at December 31, 2011, compared with $2.0 million at December 31, 2010. 

On a linked quarter basis, the Company's securities portfolio, excluding equity securities, increased $12.3 million, from $284.9 million at September 30, 2011 to $297.2 million at December 31, 2011, and $306,000 in gains were realized during the fourth quarter.  In addition, management changed the mix of the securities portfolio during the quarter. Fair value of available for sale U.S. Treasury issue and other U.S. Government agencies declined $52.1 while mortgage backed securities balances increased from $91.7 million at September 30, 2011 to $157.6 million at December 31, 2011.

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)

December 31, 2011

September 30, 2011

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Securities Available for Sale

U.S. Treasury issue and other

     U.S. Government agencies

$

8,260

$

8,447

$

60,374

$

60,582

State, county and municipal

58,183

62,043

54,848

59,547

Corporate and other bonds

4,801

4,631

4,809

4,696

Mortgage backed securities

156,582

157,643

92,692

91,720

Total securities available for sale

$

227,826

$

232,764

$

212,723

$

216,545

December 31, 2011

September 30, 2011

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Securities Held to Maturity

State, county and municipal

$

12,168

$

13,479

$

12,174

$

13,381

Mortgage backed securities

52,254

55,106

56,168

59,321

Total securities held to maturity

$

64,422

$

68,585

$

68,342

$

72,702

Bank owned life insurance increased $7.6 million during the fourth quarter of 2011, as the Company made an additional investment on December 30, 2011. The income on this investment will be reflected in future periods in noninterest income.

Interest bearing deposits at December 31, 2011 were $868.5 million, a decrease of $30.8 million from December 31, 2010. Management kept rates low among all of the Bank's markets as loan demand remained weak and covered loans continued to decline in volume. Throughout 2011, the Company attempted to restructure the deposit mix away from higher priced deposits and more into lower cost transactional accounts. As a result, total time deposits as a percent of total interest bearing deposits, declined from 66.9% at December 31, 2010 to 63.8% at December 31, 2011.

On a linked quarter basis, interest bearing deposits increased $21.0 million.  The majority of this growth consisted of an increase of 16.5%, or $18.2 million in NOW accounts from $110.5 million at September 30, 2011 to $128.8 million at December 31, 2011.  This increase was concentrated primarily in the form of seasonal funds related to public deposits still in NOW balances at December 31, 2011.  

The following table details the mix of interest bearing deposits at December 31, 2011 and 2010, and September 30, 2011.

INTEREST BEARING DEPOSITS

(Dollars in thousands)

December 31, 2011

September 30, 2011

December 31, 2010

NOW

$        128,758

$            110,538

$                 106,248

MMDA

115,397

117,910

127,594

Savings

69,872

68,349

64,121

Time deposits less than $100,000

326,383

329,395

367,333

Time deposits $100,000 and over

228,128

221,395

234,070

   Total interest bearing deposits

$        868,538

$             847,587

$                  899,366

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

Asset Quality – non-covered assets

Nonaccrual loans were $28.5 million at December 31, 2011, compared with $36.2 million at September 30, 2011. This decrease of $7.7 million, or 21.1%, was comprised of $3.0 million in additions to nonaccrual loans, $8.7 million of loans removed from nonaccrual status and $2.0 million in paydowns and charge-offs. Total nonperforming assets decreased $4.3 million from $45.1 million at September 30, 2011 to $40.8 million at December 31, 2011. Total charge-offs for the fourth quarter of 2011 were $969,000 and recoveries were $40,000.  Non-covered other real estate owned increased $1.4 million, from $8.9 million at September 30, 2011 to $10.3 million at December 31, 2011. This  change  reflect additions of $2.4 million  and reductions by sales of $1.0 million. Write-downs  and transfers were $0 for the fourth quarter of 2011.

For the year ended December 31, 2011, net charge-offs were $12.2 million, compared with $19.1 million for the year ended December 31, 2010.  Total charge-offs were $12.8 million for 2011 and $20.1 million for 2010.  Recoveries were $588,000 in 2011 and $951,000 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 8.78% at September 30, 2011 to 7.35% at December 31, 2011. The ratio of the allowance for loan losses to nonperforming assets was 36.36% at December 31, 2011, compared with 34.94% at September 30, 2011 and 59.61% at December 31, 2010.

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

ASSET QUALITY (NON-COVERED)

2011

2010

(Dollars in thousands)

Fourth

Third

Second

First

Fourth

Quarter

Quarter

Quarter

Quarter

Quarter

Nonaccruing loans

$  28,542

$  36,177

$  37,736

$  42,029

$   36,532

Loans past due over 90 days and accruing interest

2,006

80

-

282

389

Total nonperforming non-covered loans

$  30,548

$  36,257

$  37,736

$  42,311

$   36,921

Other real estate owned non-covered

10,252

8,858

12,393

7,332

5,928

Total nonperforming non-covered assets

$   40,800

$  45,115

$  50,129

$  49,643

$   42,849

Allowance for loan losses

$   14,835

$  15,764

$  16,803

$  21,542

$   25,543

Average loans during quarter, net of unearned income

$  521,194

$  498,201

$  506,752

$  517,805

$  539,503

Loans, net of unearned income

$  544,718

$  505,165

$  501,056

$  514,276

$  525,548

Allowance for loan losses to loans

2.72%

3.12%

3.35%

4.19%

4.86%

Allowance for loan losses to nonperforming assets

36.36%

34.94%

33.52%

43.39%

59.61%

Allowance for loan losses to nonaccrual loans

51.97%

43.57%

44.53%

51.26%

69.92%

Nonperforming assets to loans and other real estate

7.35%

8.78%

9.76%

9.52%

8.06%

Net charge-offs for quarter to average loans, annualized

0.71%

0.83%

3.74%

4.25%

6.47%

 A further breakout of nonaccrual loans, excluding covered loans, at December 31, 2011 and September 30, 2011 is below:

NON-COVERED NONACCRUAL LOANS

(Dollars in thousands)

December 31, 2011

September 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

$5,320

0.98%

$6,759

1.34%

Commercial

9,187

1.69%

8,251

1.63%

Construction and land development

12,718

2.33%

19,314

3.82%

Second mortgages

189

0.04%

190

0.04%

Multifamily

Agriculture

53

0.01%

53

0.01%

 Total real estate loans

27,467

5.04%

34,567

6.84%

Commercial loans

1,003

0.18%

1,521

0.30%

Consumer installment loans

72

0.01%

89

0.02%

All other loans

-

Gross loans

$28,542

5.24%

$36,177

7.16%

Capital Requirements

Stockholders' equity at December 31, 2011 was $111.1 million, or 10.2% 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 10.3% of total assets, at September 30, 2011.

The Company's ratio of total risk-based capital was 16.2% at December 31, 2011 compared to 15.6% at December 31, 2010.  The tier 1 risk-based capital ratio was 15.0% at December 31, 2011 and 14.4% at December 31, 2010. The Company's tier 1 leverage ratio was 8.9% at December 31, 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. 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 Tuesday, January 31, 2012 at 11:00 a.m. Eastern Time to discuss the fourth quarter and 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 January 31, 2012 until 9:00 a.m. Eastern Time on February 7, 2012. 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

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, growth 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 ability of the Company to comply with regulatory actions, and the costs associated with doing so; 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 Company's compliance with, and the timing of future reimbursements from the FDIC to the Company under, the shared loss agreements; assumptions and estimates that underlie the accounting for loan pools under the shared loss agreements; consumer profiles and spending and savings habits; the securities and credit markets; costs associated with the integration of banking and other internal operations; management's evaluation of goodwill and other assets on a periodic basis, and any resulting impairment charges, under applicable accounting standards; 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, 2010 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 Statements of Financial Condition

Unaudited Condensed

(Dollars in thousands)

December 31, 2011

September 30, 2011

December 31, 2010

    Assets

Cash and due from banks

$     11,078

$     16,138

$     8,604

Interest bearing bank deposits

10,673

37,250

22,777

Federal funds sold

-

-

2,000

 Total cash and cash equivalents

21,751

53,388

33,381

Securities available for sale, at fair value

232,764

216,545

215,560

Securities held to maturity

64,422

68,342

84,771

Equity securities, restricted, at cost

6,872

6,954

7,170

 Total securities

304,058

291,841

307,501

Loans held for resale

580

-

-

Loans

544,718

505,165

525,548

Covered FDIC loans

97,561

100,044

115,537

Allowance for loan losses (non-covered)

(14,835)

(15,764)

(25,543)

Allowance for loan losses (covered)

(776)

(776)

(829)

 Net loans

626,668

588,669

614,713

Bank premises and equipment

35,084

35,436

35,587

Other real estate owned

10,252

8,858

5,928

Covered FDIC other real estate owned

5,764

7,235

9,889

Covered FDIC receivable

1,780

3,037

7,250

Bank owned life insurance

14,592

7,027

6,829

Core deposit intangibles, net

12,558

13,123

14,819

FDIC indemnification asset

42,641

46,962

58,369

Other assets

16,768

16,992

21,328

   Total assets

$  1,092,496

$   1,072,568

$  1,115,594

    Liabilities

Deposits:

 Demand:

   Noninterest bearing

64,953

68,029

62,359

   Interest bearing

868,538

847,587

899,366

     Total deposits

933,491

915,616

961,725

Federal funds purchased

-

-

-

Federal Home Loan Bank advances

37,000

37,000

37,000

Trust preferred capital notes

4,124

4,124

4,124

Other liabilities

6,763

5,102

5,618

   Total liabilities

981,378

961,842

1,008,467

    Stockholders' Equity

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

17,680

17,680

17,680

Discount on preferred stock

(454)

(505)

(660)

Warrants on preferred stock

1,037

1,037

1,037

Common stock (50,000,000 shares authorized $0.01 par value) issued and outstanding of 21,627,549 shares, 21,468,455 shares, and 21,468,455 shares, respectively

216

216

215

Additional paid in capital

144,181

144,181

143,999

Accumulated deficit

(53,763)

(54,406)

(54,999)

Accumulated other comprehensive income (loss)

2,221

2,523

(145)

   Total stockholders' equity

111,118

110,726

107,127

   Total liabilities and stockholders' equity

$ 1,092,496

$    1,072,568

$ 1,115,594

Income Statement Trend Analysis

Unaudited Condensed

(Dollars in thousands)

Three months ended

Three months ended

December 31,

September 30,

June 30,

March 31,

December 31,

2011

2011

2011

2011

2010

Interest and dividend income

Interest and fees on loans

$  7,396

$  7,314

$  7,328

$  7,234

$8,008

Interest and fees on FDIC covered  

  loans

4,251

4,667

4,838

3,820

3,088

Interest on federal funds sold

1

1

2

2

4

Interest on deposits in other banks

13

28

10

14

27

Investments (taxable)

2,036

2,058

2,085

1,912

1,979

Investments (nontaxable)

180

204

229

412

488

Total interest income

13,877

14,272

14,492

13,394

13,594

Interest expense

Interest on deposits

2,504

2,621

2,711

2,979

3,557

Interest on federal funds purchased

-

-

1

-

1

Interest on other borrowed funds

360

353

367

332

339

Total interest expense

2,864

2,974

3,079

3,311

3,897

Net interest income

11,013

11,298

11,413

10,083

9,697

Provision for loan losses

-

-

-

1,498

(77)

Net interest income after provision for loan losses

11,013

11,298

11,413

8,585

9,774

Noninterest income

Loss on sale of OREO

(337)

(1,671)

(249)

(612)

(723)

FDIC indemnification asset

  amortization

(2,603)

(2,359)

(2,657)

(2,745)

(1,174)

Gains/(loss) on sale of securities

306

1,725

176

661

3,982

Service charges on deposit accounts

647

643

637

576

618

Other

535

1,000

662

714

168

Total noninterest income

(1,452)

(662)

(1,431)

(1,406)

2,871

Noninterest expense

Salaries and employee benefits

4,178

4,050

4,171

4,204

3,999

Occupancy expenses

660

687

733

814

722

Equipment expenses

298

289

320

330

297

Legal fees

63

241

35

105

197

Professional fees

126

68

198

191

300

FDIC assessment

575

580

761

872

598

Data processing fees

459

478

476

452

493

Amortization of intangibles

565

565

565

565

565

Other operating expenses

1,703

1,724

2,075

1,678

1,660

Total noninterest expense

8,627

8,682

9,334

9,211

8,831

Net income/(loss) before income

  tax

934

1,954

648

(2,032)

3,814

Income tax (expense) benefit

(239)

(532)

(127)

838

(1,128)

Net income/(loss)

$695

$1,422

$521

$(1,194)

$2,686

 Dividends accrued on preferred stock

-

-

-

-

-

 Accretion of discount on preferred  

    stock

51

51

53

51

49

 Preferred dividends not paid

221

221

221

221

221

Net income/(loss) available to common stockholders

$423

$1,150

$247

$(1,466)

$2,416

Consolidated Statements of Operations

Unaudited Condensed

(Dollars in thousands)

Twelve months ended

December 31, 2011

December 31 , 2010

December 31, 2009

Interest and dividend income

Interest and fees on loans

$  29,272

$  33,444

$  36,019

Interest and fees on FDIC covered loans

17,576

13,759

15,139

Interest on federal funds sold

6

9

37

Interest on deposits in other banks

65

100

296

Investments (taxable)

8,091

8,486

9,635

Investments (nontaxable)

1,025

3,128

3,394

Total interest income

56,035

58,926

64,520

Interest expense

Interest on deposits

10,815

17,041

23,717

Interest on federal funds purchased

1

3

8

Interest on other borrowed funds

1,412

1,345

1,409

Total interest expense

12,228

18,389

25,134

Net interest income

43,807

40,537

39,386

Provision for loan losses

1,498

27,363

19,089

Net interest income after provision for loan losses

42,309

13,174

20,297

Noninterest income

Gain on bank acquisition transaction

-

-

20,255

Gain/(loss) on sale of OREO

(2,869)

(5,052)

656

FDIC indemnification asset amortization

(10,364)

(3,165)

662

Gain/(loss) on sale of securities

2,868

3,588

856

Service charges on deposit accounts

2,503

2,464

2,506

Other

2,911

3,809

1,305

Total noninterest income

(4,951)

1,644

26,240

Noninterest expense

Salaries and employee benefits

16,603

19,190

21,967

Occupancy expenses

2,894

2,948

2,662

Equipment expenses

1,237

1,394

1,595

Legal fees

444

456

1,002

Professional fees

583

1,802

2,012

FDIC assessment

2,788

2,395

2,904

Data processing fees

1,865

2,306

2,837

Amortization of intangibles

2,260

2,261

2,241

Impairment of goodwill

-

5,727

31,949

Other operating expenses

7,180

6,774

6,791

Total noninterest expense

35,854

45,253

75,960

Net income/(loss) before income taxes

1,504

(30,435)

(29,423)

Income tax (expense) benefit

(60)

9,442

(404)

Net income/(loss)

$1,444

$(20,993)

$(29,827)

 Dividends accrued on preferred stock

-

442

800

 Accretion of discount on preferred stock

206

194

177

 Preferred dividends not paid

884

442

-

Net income/(loss) available to common stockholders

$354

$(22,071)

$(30,804)

Net Interest Margin Analysis

Average Balance Sheet

(Dollars in thousands)

Three months ended December 31, 2011

Three months ended December 31, 2010

Average

Average

Average

Interest

Rates

Average

Interest

Rates

Balance

Income/

Earned/

Balance

Income/

Earned/

Sheet

Expense

Paid

Sheet

Expense

Paid

ASSETS:

Loans non-covered, including fees

$

521,194

$

7,396

5.68%

$

539,503

$

8,008

5.94%

FDIC covered loans, including fees

98,283

4,251

17.30%

118,384

3,088

10.43%

Total loans

619,477

11,647

7.52%

657,887

11,096

6.75%

Interest bearing bank balances

26,961

13

0.20%

25,981

27

0.42%

Federal funds sold

1,739

1

0.10%

7,543

4

0.21%

Investments (taxable)

280,771

2,036

2.90%

251,175

1,979

3.15%

Investments (tax exempt)

18,803

272

5.76%

50,826

741

5.83%

Total earning assets

947,751

13,968

5.90%

993,412

13,847

5.58%

Allowance for loan losses

(15,983)

(33,392)

Non-earning assets

151,277

192,768

Total assets

$

1,083,045

$

1,152,788

LIABILITIES AND

STOCKHOLDERS' EQUITY

Demand - interest bearing

$

235,291

$

284

0.48%

$

232,261

$

348

0.60%

Savings

69,480

82

0.47%

63,880

85

0.53%

Time deposits

554,713

2,138

1.54%

629,673

3,124

1.98%

Total deposits

859,484

2,504

1.17%

925,814

3,557

1.54%

Fed funds purchased

2

0

0.71%

1,495

1

0.54%

FHLB and other borrowings

41,124

360

3.51%

42,515

339

3.19%

Total interest bearing liabilities

900,610

2,864

1.27%

969,824

3,897

1.61%

Noninterest bearing deposits

66,111

65,668

Other liabilities

5,434

7,275

Total liabilities

972,155

1,042,767

Stockholders' equity

110,890

110,021

Total liabilities and

stockholders' equity

$

1,083,045

$

1,152,788

Net interest earnings

$

11,104

$

9,950

Interest spread

4.62%

3.97%

Net interest margin

4.69%

4.01%

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

Net Interest Margin Analysis

Average Balance Sheet

(Dollars in thousands)

Year ended December 31, 2011

Year ended December 31, 2010

Average

Average

Average

Interest

Rates

Average

Interest

Rates

Balance

Income/

Earned/

Balance

Income/

Earned/

Sheet

Expense

Paid

Sheet

Expense

Paid

ASSETS:

Loans non-covered, including fees

$

510,940

$

29,272

5.73%

$

562,381

$

33,444

5.95%

FDIC covered loans, including fees

104,558

17,576

16.81%

132,492

13,759

10.38%

Total loans

615,498

46,848

7.61%

694,873

47,203

6.79%

Interest bearing bank balances

25,678

65

0.26%

20,443

100

0.49%

Federal funds sold

4,036

6

0.14%

4,906

9

0.20%

Investments (taxable)

266,887

8,091

3.03%

227,560

8,486

3.73%

Investments (tax exempt)

26,768

1,553

5.80%

81,214

4,740

5.84%

Total earning assets

938,867

56,563

6.02%

1,028,996

60,538

5.88%

Allowance for loan losses

(19,614)

(28,345)

Non-earning assets

160,217

197,109

Total assets

$

1,079,470

$

1,197,760

LIABILITIES AND

STOCKHOLDERS' EQUITY

Demand - interest bearing

$

234,180

$

1,323

0.56%

$

226,235

$

1,525

0.67%

Savings

67,469

347

0.51%

62,513

356

0.57%

Time deposits

558,239

9,145

1.64%

674,961

15,160

2.25%

Total deposits

859,888

10,815

1.26%

963,709

17,041

1.77%

Fed funds purchased

191

1

0.63%

548

3

0.56%

FHLB and other borrowings

41,124

1,412

3.43%

41,475

1,345

3.24%

Total interest bearing liabilities

901,203

12,228

1.36%

1,005,732

18,389

1.83%

Noninterest bearing deposits

64,150

63,352

Other liabilities

4,998

8,902

Total liabilities

970,351

1,077,986

Stockholders' equity

109,119

119,774

Total liabilities and

stockholders' equity

$

1,079,470

$

1,197,760

Net interest earnings

$

44,335

$

42,149

Interest spread

4.67%

4.05%

Net interest margin

4.72%

4.10%

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

Non-GAAP Financial Measures

The information below presents certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). Common tangible book value equals total 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, 2011

September 30, 2011

December 31,2010

Common Tangible Book Value

Total Stockholder's Equity

111,118,000

110,726,000

107,127,000

Preferred Stock

18,263,000

18,212,000

18,057,000

Goodwill

-

-

-

Core deposit intangible

12,558,000

13,123,000

14,819,000

Common Tangible Book Value

80,297,000

79,391,000

74,251,000

Shares Outstanding

21,627,549

21,627,549

21,468,455

Common Tangible Book Value Per Share

$                         3.71

$                      3.67

$                  3.46

Stock Price

$                         1.15

$                      1.20

$                  1.05

Price/Common Tangible Book

31.0%

32.7%

30.4%

Common Tangible Book/Common Tangible Assets

Total Assets

$        1,092,496,000

$    1,072,568,000

$ 1,115,594,000

Preferred Stock (net)

18,263,000

18,212,000

18,057,000

Goodwill

-

-

-

Core deposit intangible

12,558,000

13,123,000

14,819,000

Common Tangible Assets

1,061,675,000

1,041,233,000

1,082,718,000

Common Tangible Book

$              80,297,000

$          79,391,000

$      74,251,000

Common Tangible Equity to Assets

7.56%

7.62%

6.86%

SOURCE Community Bankers Trust Corporation



RELATED LINKS

http://www.cbtrustcorp.com