ESXB - Earnings call transcript Q1 2018 | Community Bankers Trust Corp

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Operator

Good day and welcome to the Community Bankers Trust Corporation First Quarter 2018 Earnings Conference Call and Webcast. All participants are 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 Chief Executive Officer. ahead. go Please

Rex Smith

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

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

www.cbtrustcorp.com. our Officer will the You can the on will Financial thoughts Thomas Chief access financial at overview our quick give quarter. of all call, through the share Bruce of cover year. these website will a rest I and On I then highlights documents selected today’s

start due know XXXX. quarter that respectable most timeframe. As you of weather can to be and an cold to winter company winter a the had difficult unusually the Despite shorter the and spring,

excluding the quarter impaired to continue credit or power build of We purchased the Loans, core grew company. for X.X%. $XX.X the portfolio million the earnings

XX, grew million XXXX, XX.X%. a loans total the $XXX.X For or months ended of March XX

therefore of the high-quality The not quarter. of consumer contribute among income geographically the and types the a $X and at quarter We to pool. did our was our the purchase continue loan in diversify major auto occurred end Part markets. growth was quarter for spread that purchase end-market million growth to

X.XX% in see continue a remains from our the was XXXX. of quarter the rate pricing to Competition accomplished with and deals. irrational X.XX% and in first the strong new slight to fourth we loans of some on in structure from quarter XXXX growth on increase in Our yield peers markets

said organically The larger Lynchburg core opened we serve expand annually offices. base in pricing, in we to customer both offices offices risk undue increases enough opened branch are or numbers. Virginia. deposits as continues get growth just the large we As will not three before, its markets to XXXX, credit, in as Richmond showing and full-service bank I In in existing have take well term, that demand

new area Non-interest-bearing we in XX.X% Unfortunately, had office share earnings area is expense share emphasis Earnings $X.XX committed due the we was XXXX, This a $XX Richmond, the in quarter of per under have one of benefits were showed For Virginia. move number a forward. as differences or us Midlothian we per deposit main quarter growth year-over-year. to the the left for first which jump timing million budgeted. XXXX.

have self-insured This our fourth experienced health the first a means our is the this provide year we plan efficient first being most cost. size has benefits. time to For claims larger quarter in and been

possible $X.X was Net XXXX. period million same Nonetheless, that annual been to period the whatever the quarter make the the will prudent comparative in for has earnings and total so remainder Management more $X.X shareholders where is million our for $X.X capped ensure for of normal the year. benefits increased are for reach on the XXXX basis. and in XXXX. we benefits making necessary the line income We scenario should a on always with to expenses this productive to necessary in for compared million we adjustments the for same be do expense attuned best still gains earnings and

the turn over to on call to the the Now of Bruce I quarter. the Thomas to financial like details results discuss would

Bruce Thomas

this us $X.XX first And joining per I compared Net like with all $X.X common common in morning’s share you $X.X the of was Rex. you, million thank $X.XX for to would Thank income quarter XXXX call. the quarter XXXX in or of first share. on of million per

I group to our identify abnormally First will costs. higher specifics usual than benefit

the over $XXX,XXX increase Our not first total first coincidentally presented during of and an XXXX expense higher an quarter $XXX,XXX quarter cost is group with were the of with going this anomaly XXXX each normal of first fourth as insurance was in claims XXXX. unusually $XX,XXX We of forward. the of view compared the than each bank of quarter This the in period. runrate quarter and The XXXX. an

a analysts positive we right the we costs. total we would be In up There at was X.X front-end allowable anticipate cents normalized were for is our have believe the charges future on a cost, have basis in to group category absorbed the expense comparison should capped hit is of already through for earnings. by those total make quarter quarter The our estimated is impact basis our simply This quarter. developments the this of lower the and what some XX% for very quarters expense We share. in budgeted. viewed on the we the expense we XXXX. then had one-time and you benefit come year-over-year loading linked not in consider and periods this year to as in and Should about fact, per

competitive has in and yield increase by than to First, increased yields. in become increased of X.XX% in fourth the quarter cost as our our X.XX% quarter earning lesser on Meanwhile, degree well a but from first the XXXX of interest very assets the XXXX. funding

of X% resulted a in quarter first X.XX% and in on in points spread quarter XXXX. basis from interest basis quarter XXXX. increased the increase to the net funds X.XX% of linked margin of cost each respectively and by an Our interest which This the first of X X.XX% the in were

has million the the in as growth, in that funded growth years market in speaking more our to from to market and we XXXX choosing to XX. are demographics XXXX. March March. salaries new well in growth Rex March grown our basis. driven decreased March of bode decline of mix, and about new came quarter costing and XX% came brokered linked-quarter in or million quarter month came the as pool and have December the XX.X% in successful even result $XX.X CDs first footprint. $X of component benefits the million March with or come of enter by added well With for office over or future very the million or on mentioned salaries loan Next, Meanwhile, late mainly a the about higher as in will was opening That money branches of million accounts XX, actually XXXX. Money organic last accounts late a the a This This declined the includes XX.X%. growth been grown loan has $XX.X of Also, $XX.X to quarters. specifically $XX.X several of a $XX.X certificate million deposit have regards employee million now markets XX, on of X.X% the XXXX. accounts our deposit now for growth of $XX have

or million have $XX deposits year-over-year. grown XX.X% non-interest-bearing Lastly,

a mix. the was we present, also assets XX.X%. back where at With to securities more of that at holding continue to With We portfolio the will future. backdrop, but favorable to in to deposit desire for higher rates of to the in in we over future, it new close in it loan to our the the firm percentage of of our growth Rex. be XXXX will potential to Looking I the to turn work rates anticipate that, transform end first our will fund interest which view total favorable quarter landed mix a

Rex Smith

Bruce. you, Thank

Our always been goal shareholder main continue to and will to value. has be increase

focus we the is that the on funding sheet rate Given loan solely of focus side to to on environment, balance predicted than the more it believe growth. prudent

we achieve We our for not on effective the implications the believe we structure, will of and diversify Ultimately, and better we geography sake focus ways to focused of pricing. earnings to structure efficient the most are of this growth Additionally, balance the in working are it. asset terms and but growth, growth. loan lead growth types, and on sheet portfolio the of long-term to

self-insured But as benefits. in not While concerned forward. timing was size benefits spike health those way a issue, am said, was cost being our is at this the disappointing, the we provide most about going to I so it cost-effective

the from us three Mid-Atlantic, We gives markets strategies. earnings controlled grow in are opportunity which in the to the of best the growth

earnings are We value average remain to undue future franchise of and company. per without excited the the about share a We enhancing to risk. taking than committed better level grow at

the for and rest your support for I earnings of participated company. the open that, of to growth the we you continue scale call balance questions. forward franchise the will all for We to and the of increased efficiencies now gain today With of call the with will in the look XXXX. thank who ongoing We company.

Operator

ahead Instructions] comes Please [Operator Austin go of sir. question Nicholas Stephens. The first from

Austin Nicholas

Good guys. Hey morning.

Rex Smith

Austin. morning, Good

Bruce Thomas

Hey, Austin.

Austin Nicholas

generally you from auto of the FICO terms that and non-prime of give on on are maybe was book? of Maybe us coming nature loan prime, yields scores pool maybe and on background that could maybe it, the purchased, in kind what that then some just

Rex Smith

and that our nature. and So, FICO XXX around geographically it’s in a scores with from before and short-term we’ve pretty are… very yields familiar some the with group are work plus done was much it It’s marketplace.

Bruce Thomas

XXX

Rex Smith

XXX, correct, us. they and are for it servicing

Bruce Thomas

going short go So if rates cash amortization a of that’s – throwing to to us. in up, lot terms period, flow a back be

the pool $XX.X It as a total – portfolio earlier, early looking concentrations going we got $X through the million will of started we while a because growth And million loan and ended Additionally, it’s having lending profile at were I rates puts that everything up of quarter and return on in it had booked just for banks February. consumer are dilutes now. million, this growth, good and on but loan through of mentioned aware that of March up. and we weather some great and this all February which and at the $X looking CRE was been only in

So, was average to weighted at asset given life in and time, everything good when the the of you that is compare direction, point this more the much deals securities. this out than were a attractive there security

Austin Nicholas

sense. Makes

core to versus, of bring there think are and loans? those Okay, value making deposits, side in of you changes core the you that’s about helpful. deposits maybe any more Rex, that, incentive it on mentioned of the you call And try are as things

Rex Smith

demand we Yes, always a is and next street get the that to part out to start incentives. on the go we’ve campaign in as incentive which those comp had marketplaces going officer increase of in door all our deposits a feet that and loan

executive total the that. that and is include got incentive are the comp we top the in everybody’s of house, growth at and there getting So, deposits built even to the demand

Austin Nicholas

Got it.

Okay, and last then maybe one. just one

you kind M&A, your On then, would company maybe to there? the to, outlook of what ideally optimize its get the profitability? have what’s And scale

Rex Smith

Every click – easily difference a scalable at for little because scale right that makes a it’s built become this as point. now, we’ve good every us,

you starts $X and As billion really number some optimization. good get putting a close that’s good that to

the try on do are so, And pushing that. quiet the to very quarter first front. it we And quiet, to M&A has was been

of the nature small I on were – I as that changes announced this Maryland, of got few show the out of we environment – go to I you been you some of to XXXX, things some working community But some opportunity. the an Northern think, I some and regulation But with there Virginia have really in regulatory going a think cost there. and aggressive think feel Southern in banks the think relief still folks deals rate absorption mid-size and are to competition cost XXXX. into in we that of and the are beginning interest might the going

Austin Nicholas

the questions guys. for Thanks sense. Makes

Operator

The comes sir. go Rodis Partners. FIG John next of from question ahead Please

John Rodis

Good morning guys.

Rex Smith

Hi, John.

Bruce Thomas

Hey, John.

John Rodis

second, loans Let’s see. year? plans more for auto you later back purchase do the to I guys loans to any guess, this any a have

Rex Smith

it that in not friends from definitive home we see things point, we come front. sort but pool opportunity. equity we footprint We was and underwritten at business and that anything about we we look may our in wasn’t would have deal. opportunities in that on see front, some and a both talk geographic don’t the prime to We always do the don’t of – time-to-time our the this that not auto But anything do for

John Rodis

Okay.

highlighted the obviously On side, the you expense cost. benefits

way this So, going expenses if forward modest $X.X sort normalize roughly of the benefits were that $X.X sort think base that So, – million? what, that you this growth off right year. to Is million is of quarter, it? just some about

Rex Smith

think quarter. the a as cost, a – that, about share so, the think penny increase at was I for look benefits I we the

that it’s down normalized. if take So,

Bruce Thomas

cents. X.X

Rex Smith

Year-over-year.

Bruce Thomas

linked-quarter. and Year-over-year

Rex Smith

expenses on based But are what going our forward…

Bruce Thomas

Right, right.

Rex Smith

a a About share. penny

Bruce Thomas

we are to have because Right, a higher going

Rex Smith

Premium price.

Bruce Thomas

forward. going Price

John Rodis

on said you the… So,

Bruce Thomas

Not that degree. to

John Rodis

it – I $XXX,XXX here heard? you’ve said if this that what reached, So, already was capped if and were you you you is the what, quarter, said benefits XX%,

Bruce Thomas

We our be. what expected to total we are cap of close XX% would

John Rodis

So Am that imply million $X.X that for right? would year? what, I about thinking the

Bruce Thomas

what is will be. That we that think it

Rex Smith

Yes.

John Rodis

Okay, okay.

over difference three quarters. the next the So,

Bruce Thomas

Correct.

John Rodis

Bruce, then, given XXX-ish, And campaigns XXX competition, the just to various Okay. maybe the margins, do XXX can margin you pricing level? on deposit you and around think your the keep

Bruce Thomas

guess, I to every answer is, it the depends. question Well,

of keen I of asset lot I tell to Competition it I going the the on should then over half So, hikes Home for than be balance Rex, a deposits market. if projected rate points on pressure right think XX month side Bank the beta basis was advance. side. side. it catch-up is retail ago. can swap on But we are I That’s sheet that lagging the But Loan one get the just and the there higher pretty than month It’s bottom this in one you, is on Federal anticipated told higher is curve, morning the the the liability now. rolled wholesale advance,

see swap higher hoping see the to So, But, a But the that for was on then rate curve the is we change a change, side. if the the quarter from increase we greater given did we the the right and am on asset beta that increases liability fourth the side. first I rate rates. be the in going bottom that, to quarter and half on is see don’t

John Rodis

sense. Okay. That makes

Bruce, final forward one then, going one still tax maybe good and Okay, number? a to rate. on the XX% XX% just Is

Bruce Thomas

Yes.

for our projecting are XX% purposes. We budgeting

John Rodis

okay. Thanks guys. Okay,

Bruce Thomas

sir. Yes,

Operator

comes go from Stuart Lotz sir. next ahead Please KBW. The question of

Stuart Lotz

Good guys. Hey morning.

Rex Smith

Good morning.

Stuart Lotz

saw uptick quick question Just little as a this of the as quarter. NPAs bit a the on an know criticized OREO. I well we and

that just forward I on from color a get is be color So if that little want some to to the that’s due – seasonality going quarter? issue could your or bit more an

Rex Smith

was one door accounts concern of hard as not going a could we group it being number had particular It’s going the a to gave corporation receivables It’s I’d was and Stuart. issue some inventory that a any this it. we forward, stuff – as liquidate make of nothing a and there tick answer hold are bit. get deal In liquidation case, it little on that the an up pushed was has a we out that – concern. real is part and But that within us it

Stuart Lotz

only else Okay. question. pretty much it’s Yes, Everything been my and asked. has

Rex Smith

Okay.

Operator

sir. question from next Capital. comes The go Blair Instructions] of ahead Brantley [Operator Brean Please

Blair Brantley

morning, Good everyone.

Rex Smith

Hey, Blair.

Blair Brantley

the asset or lines, that quality to about, increased Just showing that on special back question, mentioned was go the NPLs? was credit that in that talk you that is so in where that is

Rex Smith

other as officers migrate work look there. – where was be going credit as put special we The – to one me NPLs. a or said, there is is we – are loan a it the real any will it category. little special that any where issue mention to going anything credit. becomes be providing that’s nothing really on the with encouraged the And a it I in to We in mention situation. it’s become and I where we those under make in that have quarter us out to it’s category in That’s concern saw our this was we up that’s special ahead gave going is and to And there That for in the was starts workout short-term one Go the for. put there funny. back microscope put that’s some it

Blair Brantley

that was that credit And then, a $XX credit? million one

Rex Smith

No.

Blair Brantley

jump. because went Okay, $X.X million you mean, in big mentioned of a from to special That’s the because kind $XX.X loan. I million about

Rex Smith

get we - I to were be a was total. we – way that there larger one two – in to that Blair, right were about further that on we particularly it, deals. and as said anything cured one million particularly to into in – through the is deal and wasn’t $X It have working I was have don’t little but now or

Blair Brantley

expenses, this back Circling the you not right. was thing. a Bruce on so, All said one-time

a but it just timing, of of higher to you more you So a how was that are Is working are trying it? off base. explain

Bruce Thomas

last that year. premium the Yes, it was higher anticipate is than we

higher benefit last they were the year. be than So, cost will

not hit is what runrate. year, the anticipated XX%. for the mean, I that we’ve total and that quarter it’s this of around anticipate However, could we lower XX% the be than

Blair Brantley

Okay.

look we is be an as it out elevated into a of just or be just off that’d situation more So, because summer XXXX, base?

Rex Smith

into our process our as vendors to September and we Well, negotiation up get can employees. the benefits we the starting best on much beat go package as and in for cost

for increase than it’s and to a have was But, it. of cheaper years, eat are the about look part last what employees So, year, point I This holds X%. we’ve fourth automatic. couple the This the been year we know, back also, years, self-insured, to increases, for the increase, up does an that’s of we’ve a part it, been down stomaching been to this just XXXX of the able – don’t hold company for – go you and as know other last like, as associates the at it when us. eats it’s healthcare lot But it are cost had percentage X%, of to Blair, same. that we the number lot we’ve X%, the of increase X% of for is companies four

Bruce Thomas

expensive is paying on large cost, that enough so be mitigate the the quarterly we that but would smoother a more large them and some out are of in of timing were than not numbers can law forth. better premiums, self-insuring lower the basis, come are quite but premiums in, claims of and here, And of we thought

So, definitely bit a route. the it’s better of self-insured a XXXX, we are catch but overall off to with

Blair Brantley

there? growth growth rate updated you terms pretty I just – was quarter, stuff raw with give a strong. you obviously are what variable rate out versus sort in loan what loan I around the seeing fixed are on and you the this treads, Okay. some of see pricing comments of in seeing know, of Can just view us

Rex Smith

at always, starting to real XXXX, to They added be just and years, that – seen term just guys fix off are going stuff they variable that that’s that that’s rate me are there there town been amortizations. of we’ve to to are are We’ve going the and the it’s that years. they rates, five trying estate that There XX we out is some more some some tends extending and – XXXX the said our forward, as line and of in to go some pricing is to have what lot saw share, quarter. in there. fixed linked to but, on drop Central guarantors that are concentrating make doing some starting short-term. There sheets stood mix things I out people because, get sense where are buy trying loans to banks rate is rate were there year nine, is commercial is starting and new the in specifically seven, market reminds curve community smaller Fixed a to players it’s and of in Virginia eight, ten not they out irrational like

I around growth a we budget X% the build rate. As said,

have him it. – So, I let not am added I’ll

Blair Brantley

quarter growth, that Okay. just a Is guys slower. of you in little And seasonal terms for deposit bit then finally, this or? was

Rex Smith

because quarter, tax the of times these, worst December will is lift it for the year that that with again two a in specifically. it’s their got have usually That’s yes. because receipts in I – they’ve mean, receipts. tax we are happen above Oh, municipalities us have a most

being a again - the government, got bills It’s paid. a year where to So went are is out and month. time – it it’s to holiday up winter a to sort tax everybody they are just starting pick payments of the

a in a is lower our first But balances from balance quarter. huge we standpoint, it So is us. tend to a have that emphasis – it’s it for

get we laying think now a said, we’ve built three in the step branches that we’ve really we of. about they and on to and up year are those growth are branches As rates capable

Blair Brantley

to growth? the is So, match loan goal

Rex Smith

Absolutely.

Bruce Thomas

Yes.

Blair Brantley

All right. guys. Thanks

Rex Smith

Yes, sir.

Operator

at more any I concludes This session. are this and remarks. conference our questions There time. for turn would the question to over answer like back Smith no to Rex closing

Rex Smith

for we Bruce them available this are to any questions, I like happy would with have you are if discuss thank participating remind follow-up today, to morning and that you I and you. everybody

So, thank you all.

Operator

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

may You disconnect. now

Community Bankers Trust (ESXB) 26 Apr 182018 Q1 Earnings call transcript