ESXB - Earnings call transcript Q4 2017 | Community Bankers Trust Corp

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Community Bankers Trust Corporation’s Fourth Quarter and Year 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Rex Smith, President and CEO. ahead. go Please

Rex Smith

which thank review and the joining today Trust us year Essex company Good Bank. results you of we Corporation, Bankers Community the XXXX and the the as holding of for morning for for is fourth full quarter

to with I’ll reminder those additional number with to or included Bankers applicable in of goals. me included our the strategy everyone remarks with forward-looking the respect our the operations, actual uncertainties differ and that securities to and course furnishes Form performance, factors. results and statements in and Community meaning start and materially due other factors recent Let Corporation we within may earnings the during Exchange that that Commission. release, a our from of our future today, most remind make our Trust These files are Securities usual forward-looking our of statements may risks XX-K reports laws

of all one-time will charge our was reconciliation in included following in a event. $X.X of from prior review is charge before assets. earnings effect more this a recording access That our today one-time deferred website to the million and terms income of write-down in can our tax be in discussion My the release. earnings my these Bruce the and financials of to Thomas expense will full You tax www.cbtrustcorp.com. A performance is at detail through comments. after press the change documents

of not the rates remember the the I results growth was may with quarter. satisfied that You particularly third or

included quarter positive the of income that over and and grow three able fourth its additional X.X% going new an to XXXX million, offices fact Richmond year for significant report $XXX,XXX $XX.X quarter net Lynchburg, was for XXXX, The the over while for million, year. provision was pleased third expanding income very from in branch year. consistently Virginia. am Pretax Bank I X% we base the finished That in net $X.X expense. forward. previous to quarter including the market income in XXXX up increase the net one was two opening a the is the Pretax earnings for that and However, results branch with while

Our change continues cost branch overall deposit is and of particularly our growth us important XXXX. funds; this to forecasted the allow to our in environment control for rate mix

assets improvement new to expense by only were the held other year-over-year, December other reduce majority of X.X% deposits the $XX.X budgeted growth legal or from branches. Loans, XXXX, reduced excluding million $XXX.X million for $XX.X expenses noninterest above million million million grew or made growth as million was the year-end expenses related such or fund was operating asset A we grew the is which year. $XX.X nonperforming $XX.X For was This as bearing growth for XX.X%, the as quarter on nonperforming and for bearing credit rate quarter annualized fourth of means Interest loans, This million XXXX. of growth the $XX Total XXXX. in expenses loan deposit the at $XX.X core our double-digit XX.X%. an broker growth. for as decline also year. flat operating and helped year which deposits category well of for the noninterest growth rate adjustable majority at the This decreased Meaningful expenses for to reliance lower to increased which was XX.X% commercial the year-over-year. grew $X.X three loans XXXX for helped in PCI and our quarter. million the industrial XX,

of details call over the discuss and the Now, for fourth the turn year. the would like results I Bruce to the to financial to quarter Thomas

Bruce Thomas

everyone. of third quarter with in in and Thank for Earnings income XXXX. common and and million of fully Company share, net share were and $X.XX loss share $X.X basic XXXX morning XXXX, XXXX and of of diluted fourth $X.XX per the $X.X quarter of recorded XX, compared respectively. of DecemberXX, net $XXX,XXX million to linked September the $X.XX months three the per XX, XXXX the for The quarter year-over-year you, good fourth per quarter negative per share XXXX Rex ended net income December

million of $X.XX year affected diluted ended rate ended by from of $X.X the fourth of and income Cuts to tax in XXXX, the For quarter was net deferred of $X.XX tax share Jobs by Tax income XXXX. December the in tax year the established charge XXXX per remeasurement resulting income the XX% with million Act. $X.XX related expense $X.X December common or net compared to new common XX, or the XX, asset, XXXX Net per million and was fully the $X.X net basic the share for income

the million, quarter net been the as linked onetime would net interest increased X.X% income increase to by net [ph] for $XXX,XXX declined or X.X%. $X.X a of have related $XXX,XXX expenses Excluding of the Act, XXXX, interest and quarter non-interest charge $XXX,XXX income XX.X%, or fourth or

of for provision have XXXX, income. of share. $XXX,XXX $XX was onetime entry have in supported income growth fourth been Act of exercised by or by tax deferred prior $XX.X was with $XXX,XXX. basic the income the loan of asset the income declined XXXX to book decrease to XXXX. would or strong at Partially Act expense $XXX,XXX Net been associated tax million $X.XX in or excluding the would have the for return X.X%. with options and associated common recording net X.XX% fourth income This to would net the million during calculation tax loan accrued preliminary the reconcile stock affected by for offsetting Additionally, tax the which write-down and on the of the year-end the quarter Company’s quarter quarter an losses increases increase the per adjustment payable This an these

the year was compared XXXX year million. on $X.X million billion assets XXXX, The on net with interest for for XXXX. X.XX% was of ended income December net X.XX% XXXX tax tax increased margin in X.X% in fees for XX, The X.XX% X.XX% earning yield X.XX% and equivalent XX, XX.X% X.XX% loans million interest XXXX. was in December equivalent Interest the same million was in XX, with to compared December as $XX.X $X.XXX for was and Total million increased XX, XXXX increasing year loans XXXX. or XX, with portfolio XXXX. billion was spread $XXX at For with XXXX. $XX.X compared in December $X.XXX year-end XXXX for and $XXX.X XX% in net $XX.X X.X% versus at increase from tax X.XX% versus or $XXX,XXX increased XXXX period the XXXX million The or for at on $XX million Securities million the XXXX compared interest XXXX. XXXX, the an XXXX, December of XXXX. or $X.X yield Total income ended and equivalent the X.XX% were assets

December opened X.X% million XXXX. estate December total loans totaled million, or $XX.X of increased two XX.X%. increase Money and XX.X% XXXX In new increased at grew or increased $XX.X by from and the real million or commercial loans operations December million of XXXX, at new X the of $XX.X the to branch accounts family X.X%. deposits XX, secured During XXXX. were million accounts during X.X% that XX, all, totaled were $XXX million Interest accounts at were million grew million million December an at $XXX.X million million loans XXXX. NOW X or and Residential locations at time million XXXX. at $XXX.X XX, declined December year. Total and $XX.X million XX% $XX.X began $XX.X or or deposit bearing deposits market year-end during XX, XXXX. increased $XXX.X result at $XX $XX.X% or $XXX loans or Multifamily XX% XX, deposit primarily $XX XXXX, million $XX

retail While million by deposits were $XX.X $XX.X or deposits XX.X% X.X%, level XXXX. $XX.X time and brokered at year-end million at million declined of the or increased

million $X.X loans with million XXXX, at and $X.X million deposits million and of a were is compared at criticized was for classified deposits, The XX, fourth nonaccrual $X.X assets million at including December level other The at X.X% December the December criticized year-end XXXX XX, XXXX. this nonperforming consistently million. $XX.X and The total XX, of quarters. quarter noninterest December Nonaccrual bearing at retail loans net XX, September XX.X% year-end during assets of estate assets XXXX retail million September XXXX. X.X%. XXXX. nonperforming compared of comparison, in XXXX million, were during five at increased million XX, This and with XX.X% September or Excluding XX% December bearing to brokered assets real allowance Total of equaled ratio When has $XX.X $X.X classified decreasing $XX.X decreased Total X.X% of nonperforming million last assets XX, December $X.X $XX.X XXXX. Total at $X interest owned grew at at we million XX, from declined XXXX. with $XX.X total XXXX. a XXXX. XXXX by decline loans of by XXXX, compared and compared and X.X% XX.X% in year-end deposits at at deposits XXXX over million charge-offs year-end decline XX, with find to XXXX There XXXX, the XX.X%. or totaled since $XX.X loan losses XX, were XXXX

and at XX.X% XXXX tier tier ratio X XX.X% tax XX, the XX, XX.X% was Company’s a turn The Lastly, to at Company’s X ratio year-end the was write-down fact at XXXX. deferred ratio leverage capital December at risk-based of XX, X.X% point left was XXXX XXXX. assets XXXX. capital at With want XX.X% I’ll I our to that, X.X% The it to risk-based compared December total XXXX capital strong Rex. with year-end back that and in at position. that to year-end still December The

Rex Smith

Thank Bruce. you,

it remote perspective grew and To an income of branch in franchise, While going for XXXX, continue pretax we deposits important a to added the we almost we provision, upgraded by put earnings. new translates into our we grow digits, as improving well have still into that consistently momentum continue operating digital lot also and platform, positive double X%. net increased XXXX. additional on by opened know and $XXX,XXX This to is focus to that offices, loans three

sheet environment. We balance also a rate strong have structured that for is well-positioned patiently rising

rates coming product months. be pricing quite the Our past in discipline evident will and as increase

core For a getting XXXX, franchise to expanding our growth operations, our distinct enhance to digital identity. bank we a through balance sheet, level and branches our higher and commitment the performance of managing very with in our continue in platform, usable value will readily efficiencies

achievement accelerating performance and shareholders. top these of on the focused our priorities generating financial for intensely We’re tier

we’ll questions. believe open a and XXXX. I we call With potential With that highly in you call the the have the and rate participating support tax increases, of the of ongoing for now your any we’ll changes the rate for thank all successful Company. today for

Operator

We’ll with the session. begin first Instructions] now KBW. comes question-and-answer Mealor from ahead. Please go Catherine [Operator question Our

Catherine Mealor

like was looks the for morning. just outlook growth little strong front. really going Good this and Rex, a there it Thanks. It was strong give your XXXX? particularly you quarter. the growth Can in color C&I into

Rex Smith

when become of sidelines was very good has a they There’s full too. pipeline on that to business business. Maryland folks distribution I We we the We had that and dramatic a see going line Central lines changes be to the lot folks and And last wasn’t Virginia quite Virginia, we’re it of a and happen a -- going of ago; same in transactions. had law we’re into a had of to two very of sitting hit, geographic a year. pipeline. tax Washington. good And trigger. one relationships what effect between seasonable pulled that But still waiting as were the years kind It’s tend that that XXXX, the Northern is and just because not of had pleased pushing lot nice we’ve think

Catherine Mealor

about production? yields stable looks were quarter. your legacy And It then, loan like fairly the linked yield new the on what

move? level lower how So, your would new yields coming rate, think we a about into should the is legacy particularly year, production current you rates that, this move we on and XXX than loan how trend should as as say that at

Rex Smith

on bit the a Yes. we that -- -- doesn’t million, little is that’s of the of $X as a $X a legacy, million gets quickly. bit The It by lose those. loan great. that But, the down and adjustable performing the at of that’s running on off down stuff curve not fair there, little yield skewed amount the curve, a yield as in now coming and especially higher the than I But too it’s of some course been new year, stuff. PCI think stuff runs rate

competitive lot the real competitive. as the right Some year is very bumped did and And at that that last much up real has has estate small as of is same a we’re rate of the for stuff But, the now. rates. the booking because C&I or moved the we business as with not so estate

XX we year in another ago. stuff booked basis so, points say the than And getting new a what XX, we’re that off

Operator

Your next Nicholas Austin go Please question comes ahead. Stephens. from with

Austin Nicholas

be how on then, And I build Clearly the next I maturity maybe about this then deposit? guess, takes on beyond just are some that couple we there, May starting of to to kind branches how build of any those expense further know, that that, to this year. you branches, attract few expectations there would the up. you put describe build and their or branches. from time a should months? maybe last year think year the expenses more initial you ability

Rex Smith

a recall is great That on driving big in focusing those question. branches performance a us is And for XXXX. my item comments, in you’ll

that. I state. months three the had it’s and in a that back Richmond XX about And years, normally, But, profitable significantly; ones. we a through lot The of focused ones branches, there jumped has them -- it we’re a to relatively out basis. a that months but. is had ago, West before are couple opened outperformed especially last key, to look getting adding new we’ve to getting of in takes profitable We’ve somewhere that now, and you years done nine two Lynchburg get brought last first point new office Broad start our branch to is on business they a lot a a where right sitting at branches are we some driving the up those year, on newer three think If one XX are those same half, that there between a

is in it’s one on in filling us anchor done grocery XXXX, which have spot in that West Stonehenge store going complex the section We to And so well. a Richmond, South and the Midlothian of what the Short great with the a is we that’s Richmond, is a for for tap village, nice which that Broad neighborhood Wegmans at has is did Pump tenant. when marketplace be

presence horizon one. that any our always about can new we’re ones We eye excited don’t office yet. a we’re the always up take keep So, over, have our we on closed We de for and or think something ahead But, Maryland expanding this looking go and focus the up Northern Virginia. branches and we’ve catch is novo. with year to main I added that the in us for

Austin Nicholas

or status quite my a that few maybe just guess, a other went there just on a I of off dropped line? in NPA, Was maybe down bit. on kind large question, they credit that NPA is rolled what it or

Rex Smith

was have that And got to one through want of And for the want come been sewer roads, issue that books. kind the and parcel bond real that development up but to of roadways that’s for get what just parcel on still off we the the to accounting that large course, credit of we’re the estate referendum that proffer for the the around sewer. one to C&I we’ve is had that development now for to waiting or we another relatively and waiting we resolved loan. get have worked that with they and credit do because We we XXXX

goal and about that $X first is I this the to resolved. get take of half will think million. that my That’s place year in

significantly in moves too. So that

Austin Nicholas

that a before an of is investor, last it buyer, of need the So, is marketable, have -- potentially you the call sewer kind kind that’s to in to and property piece? place

Rex Smith

the going want bond for developer to that -- difficult put to or that to it’s as it to there, you that has number long Yes. it’s it. a whether a come sewer to that there be is. unknown, to anybody They’re that made it’s commitment the whether will be as get proffered price is on And how or going going a it’s how the is paid, as know of -- question county what

So, on get make we when I some think we clarity progress. can that,

Austin Nicholas

last XXXX, missed maybe but have And may I my may you it. have then, just question, this, for mentioned

Just what a your for expected XXXX, in or effective it tax call would that, XX% rate be higher? range is it it little is

Rex Smith

XX. a think lower little about -- I

Bruce Thomas

got XX I’ve Yes, pegged in.

had advantage the an XX% and rate, rate, to XX%. basis you tax effective same you XX%; been XX% we if running a point apply round take you to if that down So,

Austin Nicholas

the is margin your terms there related securities mix investments? in advantage will that to then, any changing in or that tax of changes And be

Bruce Thomas

Yes.

-- on going terms, which tax municipal is to We’re X margin, portfolio the basis-point effective if take tax about dollar qualified X% bank in running you’re a haircut exempt $XXX,XXX.

Austin Nicholas

happen will that in And the first quarter?

Rex Smith

Correct.

Operator

ahead. Whitman comes Casey Our Sandler question from Please next O’Neill. with go

Casey Whitman

Most rate questions write-down? opening of excluding drove were walk this through touched can this looking on remarks you us at but my the tax quarter, just lower, but your the in just that answered, what DTA you again

Bruce Thomas

Yes.

since Excluding on write-down, just and we our were adjustment made a payable were adjustment. the to some books, tax we’re from cleanup the to payable had but true we options an didn’t we ahead had tax need true-up up was and It there the DTA that to that doing and and we our schedule the tax we exercised, accrual. decided go

us one behind items quarter. And the and all in so get related that’s tax

Casey Whitman

rate expected XXXX? the be tax in taxable fully on then, do rate you have equivalent And a basis your what will what -- tax

Bruce Thomas

Yes, XX%.

Casey Whitman

on equivalent basis? taxable fully a That’s

Bruce Thomas

rate for Are you looking the tax effective or…?

Casey Whitman

Yes.

Bruce Thomas

XX%. Yes,

Casey Whitman

us the get hikes you outlook there? discussed you’re give idea you FTE [ph] what what for And of the -- and that excluding impact to right. assuming rate margin, can an All adjustment about the

Bruce Thomas

Yes.

our basis off to take We’re points X margins. going

fourth So, ran XXX we in the quarter.

X that hikes. points take any away of the So, that basis is excluding from rate impact

depend that happens So, hikes, to then rate the yield some curve, as is to of hikes. what assuming rate going on -- and obviously

if rate that’s project. the of that end, fashion loan in can form is a occurs adjustable all totally the that and some short But occurs So, you hike portfolio the prime. that rate in regard, activity dynamic but XX% we can’t or our is XX% on to of of tied I tell that

end get the from So, the short we we the of the from on pressure hikes lift more than curve on funding should rate side. do

Rex Smith

we’ve But think, the looking margin rate for going deposits. Casey, what the is some I key relatively be up, at. on for flat we go of deposit budgeted what are the competitiveness of looking because pricing right think high betas us, hikes a we’re at basically to as now we’re pretty

us, as that us change it’s hikes. for if to deposit -- you some run So, XXXX I rate what with imperative, branches these as into I can will that’s that that, And go upward. newer early, those margin through we crucial accomplish with think to said we begin see think strides these and it’s mix. make utilize I we really And for

of margin. on balance positioned, As to going we better significant to to can back the and fund can be get remain it. it’s Bruce CDs, sheet If it out mix we flat. said, we’re assets it’s going or have in well fund the rely how borrowings is fairly to jump the if the going a And with we

Operator

FIG Our John is question Partners. with Rodis from next

John Rodis

growth. Rex, back loan on question to the

XX.X% -- the up you you obviously year, this put was strong. loans So, quarter grew fourth

to to in ‘XX, think think year more last probably in You you you high single growth XX%. low likely grew you double-digit or Do do do continue it’s core digits? to mid ‘XX can XX loans

Rex Smith

from for think with and about talk digits, mentioned we discipline that And mid fact And on is to something XXXX. asset looking I pure discipline I for single shy is, in things for key. growth away growth pricing what are growth be high type imperative XXXX. how going to Casey, sake and structure transactional we I’m is fund which we that just at John, I think the

about if we’re could we I from X. talking it’s and significantly I we do we chase we’re what do So, more and to it we��re core with going think, back things. if for deposits better at, transactional I looking possible the looking And the and at it funding think, of growth. to way X% we’re XX% income we hit kind But like mix, better make just

John Rodis

Rex. sense, makes That lot a of

of So, down quarter growth should think fourth assume the provision level. right somewhere between assuming to of third about that loan probably and quarter pace, the sort fourth expense, comes from too? think Is about way I we sort it the

Rex Smith

is. it Yes,

John Rodis

And then, expenses. operating Okay. back to just

expenses mid XXXX you you the single for a to to of digit So, over of place sort that’s still do ‘XX? versus the low X% Is growth be? think in little versus bit XXXX, year, grew that right

Rex Smith

that at add on, It significant my considering three better were branches be. looking does and team. the I’m And added cost. that a

lines and -- not and data benefits lines and which then next branches the salaries are the new into is obviously data it and biggest costs are the running things. one, data and includes So, biggest phone line, the

up we little operating bit, get slowing you’ll think, as I see a flatten expense line So, into that out.

John Rodis

cut and planned just tax rate bottom guess you thinking with lower increasing to the for some for tax I so expenses versus the fall items line should before? so maybe that most hadn’t other say of that forth, So,

Rex Smith

Correct.

Operator

ahead. Capital. [Operator Brantley Brean question from Instructions] Our Blair comes Please next with go

Blair Brantley

you us feel compared quick. you And get be it Can flexibility costs on, margin give bit give higher? with on real of funding just on side, would branches does wanted think the I some a that a CD are some back beta’s for kind of I but to the with higher, about your that little may to peers? especially your coming where the comment new being

Rex Smith

newer peers the higher to bearing news on us really I’ve is than And And is for begin deposits grab be market deposit you more that to share get so. traction non-interest in a their branches the to those mix I and the total peer, too really are starting accounts than is little I because markets. per at think side. we take do. it the is that’s and bearing new to key that relatively non-interest able But, branches got nine look got for some the us where if that think good

Blair Brantley

your couple ratio, deposit going you loan Is go to hundred points to targeted kind a with level of of quarter. are like then, went up that it higher? And a a it this or basis looks

Rex Smith

We want to whole don’t higher. go lot

think but than I of loan a higher we’re as in the comfort that little go to of may growth be around we’re kind in the we’re us to can spot fund It key XX%. going XXXX. And going comfortable how I with sweet to said think range. I we earlier, try balance right that it and that’s for

Blair Brantley

could, fee the thoughts if opportunity I And that the on any guys income any the to there, fee side? do trying just updated income, on things mortgage are you other

Rex Smith

mortgage other we’ve category, well. constantly. XX% side at We keep small growth, added we’ve obviously traction, relatively the but that gaining it’s growth about on It’s some doing looking And to some still year. opportunities comparatively are working good loan a had are we that officers -- some and XX%,

Blair Brantley

just M&A, finally with any any capital there? updates tax And dividends, on updates lower then, just rate, plans, the

Rex Smith

looking Always at M&A opportunities.

As down time. ever also one of working takes can they’re think the do having with bad through million But, things comfortable tax in of front And estate you conservative the that a relatively right real of capital banking, the of and status. concentration of our we’re you the we’re sure because groups, that that and dollars a a couple we are regulatory M&A lived on worst we’re from big the XX with regulators, And risk-based capital that item now, is I to assets. want for both years our know sides us, to deferred of company. is write-down obviously make to it with

and this an our We is situation. a look basically be on we’re internally, regulatory if and So, can we’re we win. with to where uses what capital position, monthly at continually feel evident we at at M&A dividend our going point, we’re look would and don’t at the comfortable some just and look basis, be like Board with do should

Operator

conference to back Rex any to would our for session. I over the like remarks. Smith concludes question-and-answer This closing turn

Rex Smith

and any shareholders if give everybody appreciate morning. our are remind to I are where I and you Bruce as to and possible. that this would follow-up like that available clarity participating And have I today to enjoy talking and questions we here much as you always

you. So, thank

Operator

for conference Thank attending presentation. is The concluded. you now today’s

You may now disconnect.

Community Bankers Trust (ESXB) 30 Jan 182017 Q4 Earnings call transcript