ESXB - Earnings call transcript Q2 2018 | Community Bankers Trust Corp

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Operator

Good day and welcome to the Community Bankers Trust Corporation Conference Call and Webcast. All participants will be in a 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'd now like to turn the conference over to Mr. Smith. Rex sir. ahead, go Please

Rex Smith

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

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

the of numerous months for cooperating increase XXXX is attributable $X.X You thoughts call, an million I'll increase of were documents the in company can selected And will today's per positive company. quarter, period quick cover of overview Chief or has the This Officer www.cbtrustcorp.com. of a year. and pleased posted our rest factors will then through the a the site significant report the at am same that is highlights. Financial access share increase to of The details our Thomas, give on On for first or our in earnings Web XX.X% to the financial all Bruce the I year-over-year. these metrics I X XXXX. Earnings share. over $X.XX $XXX,XXX

loans, than expected $XXX just over increased or PCI loan half slower excluding XX% XXXX, in year-over-year. million While growth of first the

was Money or to $XX.X X.X% grew million and broker Market funds also hold total strong. of on or helps economic now or in the building and growth, time but allowing $XX.X to There high it competitive months, equivalent betas deposits increased [ph] our focused X.XX% first its for XX.X%. our the approximately increased XX.X% am on pricing X% XXXX. we're lower-than-expected for range confident, into than credit third risk The and rather million in than moved rates. which the taking with The net growth For This half these deposits. was for continued the also down the cost the demand pipeline the million deposits between looks will quarter months, reasons comprise heading X first into $XX the period over year-over-year tax deposits or of decrease slightly X.X%. growth. Non-interest bearing rate are of sake us long-term And NOW the a bank rapidly lower interest X% growth increases XXXX. and in loans margin short-term accounts for have value settle I XXXX. by were X both as for extremely was annual and first deposits same The of for

fees. charges increases in to a financial million continue increases service increases on $X.X income Noninterest grow increased the loan deposit or the as to basis down broker accounts, higher betas loan as X.X% a deposit pay yields year-over-year. result rate linked deposits While cost the from quarter in and X.X% in and improve out in further. also the continue increased, coming of interest interest increases. increase I funding flatten on we mortgage deposit rose costs, to deposits core expect income Despite a net with services non-interest quarters, bearing income our

for details Officer, Financial the would to discuss like the quarter. call Bruce over to Chief I our Thomas, turn the Now to

Bruce Thomas

per quarter quarter employee increase decline quarter $XXX,XXX a Rex, of Thank loan $X.X of and call. a increases first interest million and income thank per linked compared Net million XXXX. in quarter share for XXXX. tax $X.XX income XX, when XX, of an were and the in $XXX,XXX a Interest Earnings on Also share an the for the $XXX,XXX these to primarily second X.XX% I $XXX,XXX second which income in basis X.X% quarter first was was of compared excluding the higher quarter XXXX equivalent quarter tax deposits of income the basis the in to diluted XXXX, $X.XX this rates. lines, Interest to was of the common second XX result yield quarter $XXX,XXX. The million on fully respectively. in and the XX.X% with of the respect partially $X.X paid growth interest XXXX loans was million or on XXXX. expense basic of of quarter first March quarter. in after decrease compared Interest second XXXX with second in increased quarter balance The $X.X PCI net average first equivalent or loans improving XX basis. a $XXX,XXX of on to or quarter equivalent of salaries was securities in joining the wholesale the quarter attributed increased XXXX resulted expense XXXX compared increased million XXXX of liabilities The of PCI $X.X of income deposits and first provision loan $XX.X increased would yield income excluding increased driven resulting to on on and first X.XX% increase a X% of for quarter million of for in of in morning's of quarter you loans income for the noninterest with Net $XXX,XXX increase the expense. by for Interest you, the tax funding, increased X.X% was of portfolio, The of XXXX. of million basis in in quarter a rates second in was cost months second Tax the or points XXXX in or with cost XXXX. for net yield This benefit. deposits in X.X%. all X linked increase total $X $X.X $XXX,XXX X.XX% noninterest on quarter second second X.XX% us quarter a to Offsetting of with increased during X.X% was or first continued X.X% with income like second income XXXX, points from of loans share increased in the a from XXXX. interest-bearing and losses securities in the X.XX% X.X% XXXX quarter interest-bearing $XX.X XXXX the increase per loans increase June an million ended quarter excluding linked increased the The to of in the in second of expense. the coupled basis. from quarter on of the PCI

compared million at increasing sheet X.X% year-end quarter The of The by changes, XXXX. million first group with bank's $XXX,XXX Salaries was or commercial of vast XX, XX% $X.X Noninterest quarter $XX,XXX the $XXX.X providing the were million mortgage change for benefit to $XX.X million loans, an of year-over-year or terminate from $XX,XXX the or quarter total of XX.X% million in The income. on linked of One-time million first $XX of Other quarter and and quarter XXXX. decreased a and the for XXXX. an the and to commission consumer XXXX expenses a decreased in of noted installment and PCI $X,XXX growth $X.X land quarter of basis. first X-X on in a XXXX linked lower $XXX,XXX in began USDA interest in XX.X%. second XXXX of or a with X.XX% was X.X% balance or were primarily in million to dividend the decrease of loans was expense XXXX. portfolio quarter $X.X relationship second $X to the quarter absorbed million loans. $XX.X $XXX,XXX compared of company loans, the by totaled quarter million and $XXX.X quarter benefits the There declined on followed Salaries in from $X.X second quarter expenses to $X.X loans, sale attributable With increase the quarter quarter system million million changes income $X.X quarter employee in also cost, basis $X.X in increase related in first with beginning of with gain was previous quarter $XX.X the zero $X.X in multifamily within which XX, or or linked in the a $XXX,XXX. a XXXX. XXXX, on of of decrease With June second benefits XXXX. XX.X% or decrease growing second $X.X as in majority of this tax excluding employee loans million vendor an linked quarter first in XXXX in cost This versus loans, of loans, quarter quarter $X first declined XXXX, for from XXXX was XX.X% the a first margin second June income million by million or $XXX,XXX. $X.X the net interest income the in The operating XX.X% million regards construction in development first XXXX. XXXX. of Noninterest X.XX% the residential much phone family commercial million of of million the equivalent lower of X.X% quarter above, loans, XXXX million basis the the to changes from increase second of for the in converted compared XXXX

XX.X% XXXX, primarily result, grew a June XXXX. three promotions money accounts from opened at XX, XXXX million market As $XXX.X $XX.X branches June the or deposit XX, million during at to account million at of $XXX.X new

$XX.X million balances to at with or the year over XX, These only XX, those XX.X% by the June since $X.X broker Now XXXX. allowed million accounts have and were XXXX. June last balances $XX.X grew deposits million bank time increases decrease

of losses bank X will and nonperforming that, level first remains recoveries of stable our appropriate turn net quality through assets. given realized I the over Rex. the has it months With loan to and Asset our allowance for remains back XXXX

Rex Smith

core as banking of the and we’ve by you, helps continue grow value. seen market long-lasting our to that Maryland approach franchise full pleased in the with Virginia Central us are I’m share. improvement believe competitive very We that trying pricing disciplined markets growth entrants and Thank to metrics Bruce. Eastern relationships consistent new company. the develop

enhance the and we approach and These continue time. rate, irrationally viable our have no While as can growth for therefore pricing any to earnings. growth franchise temporary to are length our institution price slowed funding necessary conditions of to they sufficient competitive stay if has

We market third quarter, also most continue The geographic strong types effective to efficient the the pipeline between is going which on not approach. share, through and to gain locations. is and into personal profitable a ways loans loan professional and only for but diverse focus

We working continue and to newer in maximize profits momentum are offices gain to in ones. our branch older our

very level balance about coming level our mix marketplace. for I us sheet a earnings on profitability us in lower scenario just The is grow profitability and has responsibility believe that to year. focus Our this account show possible per allowed well-positioned earnings future quarter's the our customer and in rate help remains strong. cost every and competitive

of We I thank been continue support forward hope participated and all pleased the you the three we markets that today for who and are look share in to the in of the to of as company. our of our growth XXXX. mid-Atlantic. as have investors, you, your with ongoing results rest market best gain call I the we in

We will for the questions. open now call

Operator

Catherine Our Instructions] [Operator with from KBW. you. comes Thank Mealor first question

Catherine Mealor

morning. Good Thanks.

Rex Smith

Good morning.

Bruce Thomas

Catherine. Hi.

Catherine Mealor

kind about Can Rex, this, growth have help if the rate that think you appropriate said so appreciate pricing I I missed I is an what us may you it, the dynamics. truly growth slowing but apologize given in get just of back then is high pricing can rate year? now you’ve maybe single back to historically? once half the and returns, enjoyed that you Are mid single-digit the for double-digit of growth the we the

Rex Smith

Yes.

look rate total. we we when when you’re XX/XX, to range. X% think year, like a to I hit the going X% growth So at

will back it the some. to half the start up pick think I year of So towards

Catherine Mealor

how -- the -- Okay. grow will hikes. -- you I and continuing deposit as further appreciate but in down, you the the to from year. that that’s will you on the mentioned assume And some And does brokered coming do better then I of half to of the think how guess, rate data mix be just DDAs back one,

the that in that rate you core year, that for get half outlook will would about So true? hold margin thinking think of then, if your guidance Thanks. the secondly, are And you another your how back I under assumption? hike

Rex Smith

Yes.

I It all branches, opening some is on one in of Stonehenge And in mix The that head. the out and think getting -- the think growth. nail of traction hit I’m Midlothian because we’re we’ve new out. going got, of is the the I talking betas to flattening two deposit to that -- those end good in getting And a of at DDA Lynchburg, we’re non-interest continuing at month. Village lot the the push in over of they’re the brokered. that about you and growth that beta branches bearing we’re change

brokered us going in through that just out I on million the rate we think floors like flatten the are $X It's the all margin, about with most NOW. of increase. help we’ve to loans. the done And

the see bit when a be speak little think can We to going it but to pretty be change, dramatic. I So think close of we might going is. where little it's it's to, get don’t I I more a to think increase, but Bruce detail

Bruce Thomas

see I fourth going think an in not in quarter. do changes to that or costs, third the funding whether and prime we’re increase

of being margin just if anticipate asset periods we that rate. X is that comparisons increase said, basis going the we quarter, get all on rate comparison year-over-year definitely that because versus and -- prime in increases would some with a see would to So higher months December, of you side in months is points September with see X you hope on in the our do beta that, couple this and and those side linked I we pinching quarter, in as the for are and continued and than both don't if liability

So we hope for the increases in prime.

Catherine Mealor

it. Got

Okay.

so increase total even So quarter. -- you saw costs bps interest-bearing you’re about X this saying that deposit in your

you saying you back are quarter year? move to So change right you linked as improve that think -- the of the will half

Bruce Thomas

That is mix. our the about it because is goal all

to up it's change, going So, in DDAs, can if strong that’s the keep we growth going continued beta much. Catherine, accomplish mix as that -- from

Rex Smith

have the we greater And seen of growth deposit in the back historically year. non-maturity half

Catherine Mealor

nice are so then the back in growth of you wins [indiscernible] that’s we’re this That’s guide quarter the pre-elevated this within the the course, expense side. rest begin expense year? the expense Okay. But your in could kind pretty the quarter. great. actually the helpful. seeing And I us how on outlook half? to about So you What’s quarter, of just first a would some [indiscernible] for that think reduction -- high with, about other saw market also of for help

Rex Smith

flat. Yes, be relatively it should

the the there. phone said, call in were we’ve system, branch to got of opening personal I that’s and of got in reduction end month, the the those second As going we a expenses be some a new already of little bit at in, quarter but the

a considered, things maybe dramatic all in nothing should relatively be increase, slight it So future. but the flat,

Catherine Mealor

Thank Right. so Great. you much.

Rex Smith

Catherine. Thanks,

Operator

Partners. question next John Our from Rodis FIG comes with

John Rodis

Good morning, guys.

Rex Smith

John. Hey,

Bruce Thomas

Hey, John.

John Rodis

guys you are How doing?

Rex Smith

Good.

John Rodis

Rex, your growth outlook is The to for of the -- that is year impact? the that or the impact loan X% of with for PCI excluding loans X%,

Rex Smith

That’s John. excluding PCI,

John Rodis

Okay.

obviously modeling be pick Just then, should this growth does second zero it of And assuming half because the some okay. we year, Excluding, expense? provision up in loan the quarter. modest was

Rex Smith

would. that. Yes, thinking guess, I I we’re

John Rodis

Okay.

that yield level Okay. was does of we flat guess, the guess to think slightly securities quarter? of curve down, down should sort a securities? given the of question how Bruce, I you, the is sort linked for I current portfolio

Bruce Thomas

for is have tax total a that ratio that going keep that frankly to quarter monitoring I'm keep total to in And of try percentage X.XX our of but range. of that And with level to assets. certainly it's securities second going palatable. kind terms of rather keep conjunction the the keep to equivalent try and loans, regulators at I'm that I assets. a liquidity would to our yield off trying We'd and make keep now balance and assets portfolio, earnings happy. it XX.X% want to the total I’m it in follow

John Rodis

then, declined. mortgage Rex, general for the saw current you you industry, for for or maybe think there's to on you the some And business. Okay. linked question Do challenges Obviously, for the improvement other guys? there in just and probably there's one quarter trends expected you room its continue

Rex Smith

quarter, of processors might It do XX a have pretty It's operation. down have XX, be up a back-office and grant a going go we fairly low-cost we pass-through We and in a to operation consistent. mortgage. closers but don't or

the the -- with expense base So consistent base. stayed pretty profit

So think. I be consistent, will fairly it

picks bit business things quarter in trying too mortgage as to little up to in the Although timeframe. get is fourth that everybody closed

John Rodis

Okay.

guys. good. Sounds Thanks,

Rex Smith

sir. Thank you. Yes,

Operator

from [Operator comes Blett question with Community -- Brantley Instructions] Bank. next sorry, Our Blair

Blair Brantley

Hey, guys.

Rex Smith

Blair. Hey,

Bruce Thomas

Blair. Hey,

Blair Brantley

-- that you little about great. Can are will ask a of what in credits, loan [ph] you’re growth pricing mean, structure, the be Is pressure? where what more seeing you the most competition. kind the little I of types in bit that environment, color more hinter all seeing

Rex Smith

lot but of presumably not pressure we C&I commercial fixed great estate. real although is structure, the in quite side, its rates. A There extend real estate on in as in some

of stay XX sides some start some again. some X, into in with everybody rate to sheet really it. and Both a watching we some little couple lot offers. getting seen -- peer and of do a own year structure [indiscernible] cleaner in are to they’re balance a to We’ve the said, and of and our lot risk, report these risk of interest that cheap We we crazy people getting coming just loans on side we pretty lot pretty fixed as is jump rate. money seen going markets not the are people seeing get And do are acquisition risk -- where more And never them that XXX% peers we’re strong. we’re else I greener, groups CD our a development on we’ve going

Blair Brantley

kind what’s they …? mid or competitors kind or the cap they’re of Are of guys smaller

Rex Smith

of most smaller in have most are are it's guys. them -- They’re cap of the may person, smaller there, guys. but the them We mid one

Blair Brantley

is or it? where Richmond between Maryland mix [indiscernible] mean, or that is Is geographically a I that

Rex Smith

Central It's have mostly seen we haven't there Central as much Virginia. Maryland competitive, always irrational in pricing but Virginia. up is as we

Blair Brantley

to kind or update And [ph] anything intern that? opportunities, just Okay. flipping of the change or any external like then level conversations of on any growth

Rex Smith

It's before, lines in -- me Blair, efficiently and keep just conversations conversations water like I reminds know. put open you said some and it you going, never but the

Blair Brantley

being Has this these of say corporate confidence the tax to guys you think. lower -- rate changed of independent,

Rex Smith

is cyber do to I'll is continue gets certainly everybody where a I to smaller comply able big starts to lifted of in in life, becoming -- It's And common guys do some the risk market. the it to and that digital factor feel things lot afford because huge a is players world and little in need think becoming are the that the to part can think some of be a competitive a got in still eventually think -- pressure to trying of breathe to I to [indiscernible] going do that and think risk a stay matters pressure that tends smaller I world conversations. of they

Blair Brantley

question And expense operating just on more the one great. Okay, side. then

flat? saying on of Based commentary will year-over-year half kind of kind be your operating your for that 'XX? you are second of So expenses

Bruce Thomas

No.

ramped million the I of [indiscernible] have all if Or I pretty keep can saying is $XX operating be of kind is year of the which flat, 'XX. we the expenses that [indiscernible]. of quarter. similar rate to That’s we’re half run think for what the at second that’s off second

Blair Brantley

case, guys this you to flat, [indiscernible] infrastructure flat. If how investments other out do in place there, growing? build the a that’s you So good about pretty need that’s involved? guys feel those holding or be Are

Bruce Thomas

[Indiscernible] go ahead.

Rex Smith

starting new one Stonehenge. got we’ve So office at

do rationalization basis. always on branch we regular -- a are We

side and look can things of in money -- the continually to markets sure said spending stay competitive digital we're to I as need we in we're side digital there. where we So make at that we the expand some

that product account both openings some have upgrades online deposits do to will We in now there and and us allow loans.

So things … will be those

Blair Brantley

you. Thank I appreciate Okay. it.

Operator

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

Rex Smith

from has Bruce that most the everybody and we thank then follow-up to and if you support. of appreciate remind participating questions, anybody available will day your we like I’d and today would I any welcome today, be

Operator

The conference you now Thank has concluded. for today's presentation. attending

disconnect. now may You

Community Bankers Trust (ESXB) 28 Jul 182018 Q2 Earnings call transcript