ESXB - Earnings call transcript Q2 2020 | Community Bankers Trust Corp

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Operator

Good day and welcome to the Community Bankers Trust Corporation Second Quarter 2020 Earnings Conference Call.

During today’s conference, all participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Rex Smith, President and Chief Executive Officer. Please go ahead.

Rex Smith

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

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

of all effects of our quarter we some the from access for quarter. website recovery first of COVID-XX XXXX can pandemic second the results The these experienced the that the You www.cbtrustcorp.com. show at through in documents

III, While Virginia of has opened remains the partially closed. Phase State Maryland

the XXX which are anticipate These our help expected and United and amounting of on their expenses. continue payroll a quarter. to over of They operate. many customers operating The use but the to and in to Treasury employees disruption, is the to final be We keep try $XX.X forgiven we to the fully for by loans still the participated the loans big the loans PPP borrowers Paycheck States originating communities or lending, cover to effect in after much were million bank question. in Protection Program

net district. of relief little have XX% than slightly This million level granted term $XX the the in total at payment resumed represented of biz customers quarter. the loans. loans amount Of a although a million, quarter at and shorter the to payments is the normal approximately specific over from and experience relief time. was much of this We those also $XXX reduced in nature second were grant previous lower to $XXX continue in our Total peers million the

in We has remains X.X% the build the addition expense annualized was we the very without not you are quarter since and some offering our still but loans work if and relationships, which in quality with provision first loan PPP as Overall relief remain stable. it coverage increased quarter $XXX,XXX significant expense closely with a customers year-to-date and loans, is X.XX% as strong allowances X.X% line been the The remained our complete strong of Credit to end. provision amount was growth PPP total classifications to for and the the loans. expectations. from low $X.X quarter, delinquencies exclude substandard the down year-over-year, million

increase in that increased loan by since since concentrations main basis. year-end million business Deposit quality Non-interest of focus million and positive of on in a areas. expense $XX was The income, to income and both identify non-interest-bearing year-end. $XXX.X deposits. $XXX,XXX and a and news or positive non-interest type period. was industries the securities areas by increased potential pandemic. over $XXX,XXX any the for over million by $XXX,XXX increase grew deposits segment the total in XX.X% was credit Our be manage to from and driver quarter or grew the deposits linked-quarter also or gains There over income which $XXX mortgage XX% growth loan non-interest working on are through portfolio XX.X% the being and problem Total as we total high-risk from non-interest-bearing led continues extremely

FASB There non-interest quarter-over-quarter were and in loans. from in or the with the and also and recognition decreased decreases was that were Additionally, decrease PPP of occupancy expenses. data costs associated component year-over-year. came expense both employee processing the of benefits expense A salaries XX big lower internal expenses that

XXXX to customers' upgrades continue banking, million including we income invest While increase software are first quarter which in $X.X the in was expenses million $X.X mobile The of hold ended in in gain XXXX for compared to of to an June our habits this quarter more we enhance ways second we in income, of the and income net XXXX. equipment and insight of web net for and access, XX digital $X.X was result quarter million environment. looking other as the into with changing net

call I would financial like discuss Bruce in more to turn over results the the to to Thomas Now, detail.

Bruce Thomas

and today. you, Rex to everyone good joining Thank morning us

XX over This and X.X% million. quarter a or basis rapidly $XXX,XXX Interest should to margin decline decreased that on we of the the income our income decrease months. XX $XX.X I thought insight This includes gain how a yield points. the earning curve, influenced and on was impacted given net a interest changing factors. to basis Interest landscape next several due lower-for-longer flat assets declined in maybe dividend yield linked-quarter in by some

X.XX%. reduction to there from XX effect on prime First, X.XX% full rate in a the was quarter's of March

of deferred fees SBA within caused across quarter, loan XXXX $XXX,XXX the in loan balance large has net of country. the entire during Other Additionally, income This a were the and commercial second in was by million that a short-term by sheets These low-cost as of by quarter $XX.X million decline of million fees, primarily of were in $XX.X that in excluding second loans. quarter. increase the PPP was in fees the estate payable in at Included quarter. loans the of decline will balance be a real SBA. commercial during added loans, the million $X.X addition recognized mitigated changes an nature were XX, of PPP larger in the June in loans, in loans funding second there was X%. rate at mix influx PPP $XX.X banks PPP offset was the

rate second was a loans quarter, weighted New loan during all booked volume average of for real X.XX%. the estate

loans loan a for rate The new second With rate. New X.XX%. PPP booked on Of loan $XXX floor. loans X.XX%. loan you will a rate booked are total loan at loans was with regards all get the average average loans, floor a of of volume for floor rate are of excluding mix XX% currently quarter yields. or at the adjustable average in With was XX% can X.XX%. to have of million rate weighted the of the have adjustable XX% affect that, adjustable volume quarter, a yield second weighted what sense all

by resulted expense treasury loans, XX% declined next linked-quarter the linked-quarter their or impact are rate certificates loan basis of over So $XXX rate on mature the in of largest on whether enabling sheet XX% With regards of an of largest the million variable mechanism are Interest rate-sensitive largest for certificates reprice total. XX the greater LIBOR recurring in of interest fixed certificates deposit, short-term X.XX%. Interest is declined for already our which X%. the three represent instead or loans we a at $XX,XXX adjustable opportunities. loans Therefore, X.X%. months. XX.X%. $XXX the to combination quarter estimate has side Interest in repricing these with yield million, account than XX% Management adjustable and with and amount is These loans. in rate re-pricing cost XX% of immediate next of or income on short-term of decreased of changes funds Prime-based borrowings XX, XX% at and an on One-month borrowed average adjustable category the the category loan income of In book The net June re-pricing XXXX. This categories a $XXX,XXX rate of in constant the increase of loans. on there $XXX,XXX not will the and re-pricing a represents date. $XXX,XXX of In all the all, deposits balance changes XXXX, maturity basis loan third liability the positioned XX% variable XX% of and when five-year loan or variable of total. our anniversary a floor is are on prime is dividend there. interest decline $XXX,XXX. an by or loans

approximately that This should next in over sizable million loans amount quarters. funds in off $XXX Over XXX or XX that re-price interest our rate-sensitive is a average of lower. on CDs X.XX% improve over CD will by million To balances upcoming XX will re-price. of X.XX%. the a summarize, of is The the CDs are with at floors. roll $XXX rate insulated months points yield yet cost next basis XX% anticipate the the total rate of these We average months, of

Additionally, asset the net will in But immediate as downward that cost more in had of re-price. on interest are we at although continued in dynamics CDs have side. a see, will you margin. $XXX experienced pressure certainly, be million there can decline a interest a rates X.XX% many There impact the

loans that declines some in degree further a have We insulate rates. against with fair amount floors of will to us

of side liability we deposit will repricing. a fair realize the level On

Our interest perspective. risk risk even an models from balance rate fairly have sheet as rate our interest

place. As protective a low will the some simply rate have to environment some pressure due margin experience we result our in yet, measures

well with very focused on to these experiencing non-interest contributors deposit we With non-interest quality expenses the been We have as will back and call the Rex continue areas very income, of I favorable over to trends. being Smith. that, income other turn to mix net be mind. In top loan some

Rex Smith

Bruce. you, Thank

much keep and quarter quarter first showed help relief than businesses The to second employed. programs begin progress the reopen people as

learned our our a associates, have of resiliency and customers, lot the communities. about our We

eye watchful business as and We are forward. we keeping quality credit by lines navigate a our trends on credit

investments pandemic our Our off very our technology associates remains paid past strong flexible. in certainly and and in the sheet and in balance has decisions also customers our as

channels, to continue creating while to ability multiple cost expand in serve better efficiencies. will our We customers

well banking expectations. in Our account exceeding openings rates are in and our growth mobile online usage

was star those compared of of out five rating best as total. mobile a banks Our recently larger product small-cap one ranked all stars the of X.X banking receiving when banks among to

you from and for us. effects open now We thank support the to the that each We and the for of of face we all ahead are questions. team but of of through remains challenges hope call our will with company. you I ongoing any your safe pandemic, remain any far this ready shareholders our

Operator

from question first comes Catherine Today's Please Mealor proceed. KBW. Instructions] with [Operator

Catherine Mealor

Hey, morning. good

Rex Smith

Hey, Catherine.

Bruce Thomas

Hey, Catherine.

Catherine Mealor

start I'd with reserve. thought, just I the

So little you a last. this build than quarter bit saw we of had a reserve less

Thanks. year? you build? reserve you're kind how you then thinking the of the if in of about could see should And think the give color And reserve us between quarters? differences back the look half to some the wanted two as Just how to the build

Rex Smith

of and into for can we Catherine talk payment pretty in first quarter, pretty details. moved much deferral, put you much the I a generally a to we can kind you But we it when mention – fill special category. did Bruce ask release if

So big nearly factors and half on not economic were of and mean, – we stable. number those. that make it that and relatively quarter sure metrics keep in changes provision. the what I were economic risk There was deferrals down factors past and a with on a the watch top as the dues weren't the And pretty were rating significant the we the of second were on drove the staying between could going

not we're CECL So a bank.

the of have sort backwards looking. we So

quarters are prior looking the at we we in where then So the where we're and in now. were delinquencies

so those better. a And looked numbers lot

we don't said, all know. Now -- a as still lot we forward, it's that go we

their some later back of third of coming rest are to of deferrals are quarter but payment in these going deferrals payments, start part million I those and on the I quarter. of think fourth the said about And talk $XX my making the those beginning of are due in

whether drive able able to are So or back will where mode be restructure folks how to are. or get we to at payment back they have it we in those to the or will continue whether look get

Catherine Mealor

sense. makes That

happens a the in build maybe, to of more reason risk weighting you if down then that would from to as mention reserve be more that moving classified And or so perhaps future, the criticize forward? see special

Rex Smith

Correct. reserves the That at will really point. that drive

Catherine Mealor

given harder Yes. could it's qualitative And I last can't, factors. it lateral -- you know the

Rex Smith

factors know in going going but drive knock delinquencies knows get to wood worse, are then don't general go any are that the it I up softer Yes, the economic that's who so. on factors too. that to

Catherine Mealor

sense. Yes. That makes

the on then got to And helps. want That sure Okay. just so I right. I it deferrals, make

back of are said, already or million that you was to So And it million $XX out peak. XX% $XXX $XXX million, at kind paying. of its

is kind gut And of... back is after So your you round one that a where kind number taking do goes I your it of on deferrals? are maybe of guess, kind step of think you today where

Rex Smith

Yes.

So many. since we've deferrals, yes we've end, more few granted not granted -- quarter although a

$XX places that there's are after that, $XXX where $XXX there got or but group. and the, And million C&I chunks CRE, a then that are down. $XXX of it would mean as stable there's say sort about probably in in $XXX range, in category. So by amount in million I some got begins of has biggest is so million the it's or just fairly relatively risk, we're September, sitting guessing. November. mid-August I'd that's come a the the we've $XX fair high And a granular million big comes to said to -- -- it's say those there's I October, loans million I lot of And what due million

we of you pretty things the dollars. terms situation in -- creates don't them the granular it officers through and the a go loan with but versus to are with It's stay So way, work. do amount time which lot these which a want can is by of number it's work -- has loans them. tremendous spending customers that also good We've got right tell a if of to of

Catherine Mealor

it what doing say modification? a what's typical Is months? you Or would you was were And more your -- six XX-day?

Rex Smith

Bruce So we're has -- yes it.

Bruce Thomas

back payment This months. But We I've $XX.X months out. million kind how as what due, and a you interest-only We bucket how $XX.X of for re-extend, it's I for feel we relief. many it's end talking really four million three three was very for many don't come in gives payments. has and got combination six full three yet month $XX.X hit this $XX.X Rex -- months. of it. million that months, did spread but -- fairly for million to and about for know the what three not of resume did that those is a do And months,

and in of re-extended million, $XX.X resumed So three $X.X month that million have have deferral million $XX.X payment.

categories So it's two that one in for kind of re-extend. basically

Catherine Mealor

it. Got

very Thank helpful. much. That's jump so Great. you off. I'll Okay.

Rex Smith

Thanks.

Operator

question Please with FIG next John Rodis from Partners. proceed. comes Our

John Rodis

guys. morning, Good

Rex Smith

John. Hi,

Bruce Thomas

John. Hi,

John Rodis

you are How guys doing?

Rex Smith

pretty good. Doing

John Rodis

if detail interest interest Maybe maybe think have just at lots you said net And you guess, was Bruce, the with income dollars margin. more there still you the of gave PPP, a I Do interest exclude a obviously I income there's I if roughly too? lot moving pressure impact some $XXX,XXX of think net in rate. on little you parts. think bottomed? understand look bit the we X% and the more quarter, dollars of Or do you

Bruce Thomas

I have would hope they bottomed. that

dollar. doing to We every deploy are we can all

occurred Of And as that a to course, can. hard quarter. of had sheet second the as on we in all quickly our get cash tremendous worked we've earning it balance influx we

I XX And interest which I when to sensitive. a I looking we're it policy net on discussed is is are perspective. think earlier, our XX% then was income say I mean, I'm of month asset from slightly, inside points. tolerance of that slightly one based XX% on what spot basis And to We tied I LIBOR, mentioned prime. loans it at our now tied But

figure two You can't that much those lower. go categories

repricing some Now to time year And those I loan largest treasury. floors over category the is the it. is going is cost has that of roll pressure. cause said largest maturity that as that in category five -- the amount the But

insulated, rate calling loan and the telephone from So borrower floor. aside and concession we up their lender the are not wanting we're somewhat although a picking insulated the from

rates XX of exception got months, at sheet, of like are modeling environment basically we CDs would you for non-maturity in side. next side deposits, But other we obviously, by is and the liability the So the be, this of we've should presents on in than But in stay out of that balance markets, it's time, the because large, on basis same but floor the are lift one-time money higher the in the a some now. to with coming they're challenges. that and beneficial XXX our points

hope, return think, decreased margin decreased uptick But, that was that interest a sheet, I in dollars out. in in make trying balance if growth then flat remain the assets. point dollars would on and in the the with Obviously, the yes, bottomed income looking on the an comments at I hope I you're based I sheet have balance net interest that see to growth from here So our that, income. the we'll net

for long-winded Sorry, the answer.

John Rodis

impact, when PPP understand, I of interest excluding be net No, income bottom Bruce, lots in And to the correct? parts. moving just clear, dollars you

Bruce Thomas

Right.

John Rodis

expenses. more one for And just then, Okay. on question just me,

You impact quarter. the in XX FASB obviously from -- you highlighted the

If expenses back, to think and you you bounce back I move up of sort said exclude forward. that you going some expected

the been last that million exclude the $X.X would you line, in sort year more first of, $X.X and of have expenses If quarter with end million? around

Bruce Thomas

Well, we to and relief I going to X.X% in large, little to are But, of in the our back forward. a the going level, if occupancy and were quarter expenses. and then, we're go by first that benefits X.X% be seeing to think salaries yes, equipment range bit

John Rodis

bit, ticked final rate. Okay. tax just maybe lower one just provision. And one, a Bruce, probably of that because then, it the but up little was the

XX% a you number sort good to still? of is So

Bruce Thomas

I John. Yes. would think so,

John Rodis

Okay.

Okay. Thanks, guys.

Bruce Thomas

Thank you.

Rex Smith

Thanks, John.

Operator

from Brody Stephens [Operator Preston Please proceed. Instructions] Our comes next question with Inc.

Bruce Thomas

Brody?

Brody Preston

can Hey, hear guys you me?

Rex Smith

Yes.

Bruce Thomas

Yes. How you’re doing?

Brody Preston

there. happened what right. know don't All I

the wanted next CD XX% XX the I to the like, repricing So, real to go the around over appreciate the think, months. Bruce, CD I commentary book I back guess, of I -- quick. here book

of CDs of XX not $XXX sort million months. all-in guess portion you like XX seems I when to to when I the reprice the months reprice? or get and points from at that It to so, guess, cost guess in up I is could range. set the it that next I look got I Are to over right? Does sound guess, implies that's there. cost those But XX rate the I average maybe So now? like And implies, guess, CDs I see book, a can XXX it of that guess, another those you basis the, pick X.XX% more, remaining we

Bruce Thomas

see. Let's

you. me. out I would have information that off. have I ALCO that with think, months provide it a and is I roll I what have get to to report my XX of Actually,

Brody Preston

Okay.

Bruce Thomas

right do new not X.XX%, But whopper the volume reasonable. you're quarter, like that that have the think loan for but I a certainly, is sounds that I right? here. now, asking what But that's

can get to I So you information you. provide it that and

Brody Preston

That's half it. great. first opportunities like was definite book, there's some Okay. guess, maybe continued that of just just I I longer seems duration into of second about the half beyond repricing thinking given on term. XXXX, of sort repricing thinking it rate of just XXXX or supporting given longer of XXXX XXXX, -- it higher this still a the point, at XX% It CD

Bruce Thomas

Well, during We -- the paid up this I call know call do to and purchased of month Right. -- of sizable. brokered return that, is had provision provision and our funds. July, we that CD the example, a for one those get to

highest X.XX%. June here as is am XX-month report I showing a at the volume in that, XX the of looking category to at million $XX.X So XX, existing with category,

months. we the within be would XX years beyond have piece little reprice next that see opportunity. the But a So largest two would very that

Brody Preston

Okay, okay.

wanted Rex you just what earlier. Catherine Thank that. Okay. told to reconfirm for you

new then heard current you're on kind to in that deferrals I on and some is of roll deferrals? So range, $XXX number million $XXX the between million that the

Bruce Thomas

on you are Rex, mute?

Rex Smith

where land into weekly, Obviously, fluid change was it's that's August. looking I it. going we're to a Yes, think, changes, sorry. going I I at for Yes, No, it think but about can it number.

Brody Preston

for have Okay. for balances you the XQ? Bruce, number happen average do to PPP

Bruce Thomas

have not number. that do I

Rex Smith

granular. It's pretty small. was very It

Brody Preston

Okay.

of So $XX of it's total small -- you looking guess, so, just a like it's that? I did million the at the or portion

Bruce Thomas

this get call. I able that you Yes. for be during may to

Rex Smith

what for? fee looking Is income price that you're is it

Brody Preston

No.

follow-up. TDRs on get wait OCC Regulators always balances of more, ask average life booked modified indicate if it loan PPP have balances balance guess the need the of average as And the least the the the the we their guidance for seemed Just can Well, of, end I were don't that. Okay. Bruce, while within of to seems to for in that's just one what be at loans year, average sheet? say. to the I can't you loan that I'll before sort

Just and flexibility wanted how XXXX? you this for gone is it? have your the to get weaker added give of if does this some your And I to modify have some your interpreted you auditors how, around through that? guess And, borrowers regulators sense all with conversations

Rex Smith

not? during the and was looking or think, as going not, TDR. far it's that the they're exams -- look correct much it to regulators forward. beginning I that we're It's conversations regulators current there's still XXXX until and flexibility. related to going as way of at as you're in not to year-end. But bit able is appears long are Yeah. multiple way it as -- be And up were and is, to I understand, And have about talking if gaps good I in internally, go things XX/XX/XXXX to at to and COVID-related they're flexibility the grey COVID it at can a are about we're having stop a at going it where going of and as going it at looking we they conversations our pre-COVID or and -- area. make and they they're you whether federal it a the But state and that going going we've their it be been about is to think, be mean be some with deferrals -- point those these look be, they there got some also of deferrals, and you forward have said it, we've to how

Brody Preston

that there result portfolio? of as is kind of Okay. the one you COVID? All me. a Or right, ones I is have on OREO that guess two any just delayed the Rex, loan in update big more for quick

Rex Smith

a Chesterfield There's news. news are that, the, The lot the sideline. that is Bad on of sitting and good news kind is would County not. is news of be bad interested people good

So different done plan. among master flexibility engineer parcels is already And the before a wanted road work. allowing which it And the under already of work. zoning some they've they're done the they've engineering the they

got So going to there know do sewer and flexibility. is the main of property of commercial have major project, the We And along line with of zoning multifamily zoning they're we some some to that the now, starting we've it. go, back roadway the to have we're put the best now, going intersections. And our some in plant. in as we've got

So -- a Chesterfield and in it's now. popular area very right

good this some value the resources has at point. county things -- certainly not just news down for now So in That's moving. it's to get going It's us. committed

Brody Preston

any then, one, criticized last Okay. Great, classified and balances you color around loan and at one quarter provide of just could end? look what sort like

Rex Smith

been now. right anything mean, mean hard. classified things working and I criticized have pretty in We've flat. unusual we're not seeing I fairly them Yeah. been

it's think -- now. we're strong. it -- I balance The right position sheet, is this in was credit And going the think, strong. I into remains quality a good

haven't gotten fixed. We seen yet. a of we've that lot over some We've seen leakage

fairly stable. fairly it's low. So And it's

Brody Preston

appreciate that guys. color. I Great, Okay. Thanks

Bruce Thomas

Thanks Brody?

Brody Preston

Thank Bruce. you. Yeah,

Bruce Thomas

you too. can hear of answers. can And happy the I'm that I give them rest world the

months, I then, XX so you to up. be PPP then, -- $XX.X the and categories in X.XX%. give The in under $XXX,XXX, you months beyond beyond XX is the months was million XX X.XX% months, an million it, $XX.X CD out we it's favorable. to X.XX% rate And aren't it over and average $XX at as going $X.X give to its looking an million for always extend million X%; is -- these I'm over of and go of over me million at rate $XXX,XXX average that, average would the between So to $XXX,XXX. million right was at bucket. helpful, give over million you, at XX at six and that's XX XX going I $XXX,XXX let million. rates more but XX-month here the And $XX.X to months of course X.XX% $XXX,XXX, quarter $X second $XX then to XX last, XX- $XX.X X.XX%. XX at XX at average Notice

Brody Preston

very Okay. And it. you appreciate I much thank guys.

Bruce Thomas

problem. No

Rex Smith

you if the we if total the $XX.X looked the just take in by at XXX PPPS average Brody, its And I balance million number $XXX,XXX loan. divided, loans just loans those the whatever. just of mean

average So, the that's size. about

Brody Preston

Thank Great, Okay. appreciate both, I taking for you my questions.

Rex Smith

you. Thank

Operator

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

Rex Smith

like doing We for staying all hope you're to everybody around. I participating this morning. be I'd thank and well. safe would

For any like via us further e-mail. suggest bthomas@essexbank.com. contact that you is would or would questions you'd to I e-mail have, My rsmith@essexbank.com

with anybody But would call remotely. together to any we we're that have that set we're of that. up So the it. request kind follow-up a since, can do working That's probably best welcome to way

very you support. much. your And thank So appreciate we

Operator

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

disconnect. You may now

Community Bankers Trust (ESXB) 2 Aug 202020 Q2 Earnings call transcript