ESXB - Earnings call transcript Q4 2020 | Community Bankers Trust Corp

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Operator

Good morning, and welcome to the Community Bankers Trust Corporation Fourth Quarter and Year 2020 Results Conference Call. All participants will be in the 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

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 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 have year and thoughts my banking. all the year, of many was progress. turmoil concern our we give Chief of would challenges by would a forward us will XX highlights, with and the quarter access Certainly that much the of and bring. call, detailed as website the any end cover the XXXX. this a in Bruce I think look XXXX first our quick unprecedented lastly, election, can at Thomas, of what will thought years the quarter, year as and don’t will to today’s as remotely there On these last time share to Financial had then our seen I Add of You as the year financial www.cbtrustcorp.com. fear we how overview at through Officer, to I documents I have would

to the Paycheck we able communities a knowledge only that in serve. COVID other make and and Maryland. through the to plan team Through measures, Virginia experience preserving strong but Fortunately, were devoted response integral jobs the turmoil throughout Program get relief Protection on customers impact and an had part the we play participation not in to a and management selective a and pandemic positive businesses with the and our we

We providing Consolidated are round today continuing Act efforts applications to taken through $XX and with million the over our have two, Appropriations relief so amounting PPP for far. XXXX XXX

million. Given fourth income. the in for the of of slight XXXX, a all driven the credit of general net quarter of $X.X net $X.X quarter of in did compared with million XXXX. $XX.X in This decrease for million fourth fourth are a increase uncertainties XXXX the prior and XXXX, by increases strong. noninterest year the million the expectations year, quality X.X% Loan loans credit growth and Loans, or and for in income growth. remained $XX.X for exceeded Paycheck both the net of third income million quarter was of interest were program, under This $X income reflect Net only year, our Protection during million the created XXXX excluding the driven loan income lower the for we million, income provision pandemic. quarter $XX.X the the was net net Net amount from allowance loss with the income income for large the challenges, of the pleased year. of over results year and was $X.XXX by

XXXX. our manage nonperforming while asset the the worked Total giving $X.X million relief or customers XX% quality also diligently measures. for decreased to by We assets appropriate

deposits our driven million. XX.X% that of Total by certificates which the also while costs compared improved, good Noninterest-bearing core of quarter focus represent XXXX, income market year-end investment of through deposits fees deposit at on to specifically during deposit reduce shift we a pleased now demand to from significantly deposits, income overall year. mix, the growth to Noninterest transaction-based continue demand I in our million the $XXX.X group. growing am deposits we declined mainly report management cost fourth XX.X% funds. Additionally, of deposits, XXXX. to grew had in checking, $XX.X growth money accounts savings in total and origination and mortgage lowered

related for In PPP loan benefits origination due addition, the the in noninterest and expenses of to decreased a internal loans. decrease year salaries and the costs to

categories the in have equipment of positively occupancy as and as other closure XXXX branch offices affected in expenses. XXXX, two Additionally, salaries, well namely expense

these factors assets on fourth X.XX% X.XX% of XXXX. XX.XX% the on Return and the return quarter the for average X.XX% XXXX year. equity the of was and year contributed average All for of for to for a fourth quarter

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

Bruce Thomas

you, and for XX, December XXXX. Good and thank Thank Rex. as fourth joining review the you morning, ended year we quarter

million, Pretax was of factors. and was basic or share net both XXXX. diluted share, This was reported, and Common several greater in pre-provision pretax Rex and influenced $X.X diluted, the pre-provision pre-provision million XXXX less it of fully were by XXXX As XXXX. than $XX.X down in slightly per an for income $XXX,XXX was and per is were million $XX.X year earnings XX.X% for year for income at only for million per increase only earnings that income $X.XX pretax $X.XX resulted $X.XX income the $XX.X in increase per share. for share XXXX than fully

in the $XX.X a timeframe net $X.X decline expense declined in from on XXXX in in interest million over decrease driven to expense totaling X.XX% interest there interest-bearing changes X.X% XXXX. interest XXXX to in by an compared -- in net was or over interest income paid XXXX. to recognized of fees, interest XXXX. PPP XX.X% the million, interest XXXX. in from decrease for This was were XXXX. Interest The First, X.XX% of liabilities with should XXXX. net The offset million X.XX% in million for from I in margin was result and X.X% XXXX rate in or $X.X million $X.X also a in than X.XX% X.XX% in of spread in to the The in interest income more income decline XXXX This $X.X increase this XXXX. say, X.XX% in led declined interest XXXX. of XXXX income to expense XXXX, from a

PPP the loans loan yield Excluding have margin the XXXX loans. the versus actual X.XX%. yield from without of yield from loans on X.XX% the with the The with And PPP not the a PPP PPP that margin X.XX% assets in of excluding interest margin change would X.XX%, X.XX% loans of did compared earning yield loans. of would on have actual PP portfolio been included resulted net calculation, for actual

in an forward first XXX million of Looking will is quarter rate of deposit at lower, If an average points in $X.X will these decrease at million. be XXXX, there approximately basis to which they reduction or retained, CDs reprice about a of reprice as annual mature X.XX%. $XXX.X should expense the certificate

On the income PPP carry $XX.X continued XX, XXXX, an December side, in which interest at we a and reduction loans, million rate anticipate were of X%.

million swap are capitalized fees December versus interest $X.X income, XXXX. of recognized This noninterest increase improvement loans XXXX of forgiven which income. or fee in the be was XX, XXXX. Also and the year that Noninterest $XXX,XXX loan in over in we with fees income improved yield. million XXXX showed benefits loans income December increase enhances which of X.X% these improved a and amount XXXX, $XXX,XXX will reflected At XX.X% million an year-over-year. totaled associated XXX.X% in by of Salaries expenses million these compared Noninterest As is was of employee increase in XXXX. and income XXXX declined for income, the XX, an SBA, of over $XXX,XXX. on XXXX expense X% million $X.X mortgage million also ended turn a improved see X%. improving $XX.X an from Noninterest in XXXX, totaled the in When with year-over-year noninterest basis, primarily XXXX $X decrease XXXX noninterest $X.X for in comparing or XXXX. income by were the $X.X

and PPP XXXX. as due categories in XXXX, XXXX. occupancy internal were by expenses to lower. XXXX, and the increase real were were XXXX which $XXX,XXX $X.X branch in Occupancy as same Equipment lower, Other versus XXXX. FDIC decreased for compared $XXX,XXX operating addition fees $XXX,XXX to $XXX,XXX, $XXX,XXX affected were expense of credit Data with relating over origination an and XXXX well two by closure for XXXX, were in XXXX, $XXX,XXX in expenses assessment the other expenses $XXX,XXX was when and increased in for estate received to a FDIC of offices loans period million the namely positively $XXX,XXX net XXXX assessment costs expenses. processing the $XXX,XXX mainly expenses equipment $XXX,XXX. salaries of other In the loan decreased

$X.X million in XXXX $X.X the and both, income fourth fully Looking compared and affected XXXX. the Net $XXX,XXX and net Interest Earnings at diluted of quarter expense share a of income were the income XXXX. were third third $XXX,XXX quarter of period, positively basis, per of the the fully of interest interest was XXXX. reporting and Net fees the for income net interest quarter for $XXX,XXX. quarter million increased interest $X.XX of fourth most decreased increased of and was million. $X.X $X.X basic fourth and by third in common income increased by PPP on XXXX fourth for expense. in interest XXXX diluted with quarter linked-quarter basic recent compared quarter the $X.XX with the million quarter income

in increased fees. swap in charge quarter reflects the on taken of benefits, This $X.X loan a to to result a quarter Data led of fees the quarter. XXXX which offset a $X improvements noninterest XXXX in benefits Offsetting and XXXX. previous were of the a tax by of with million in compared $XXX,XXX increase of of the income during turn reflects fees $XXX,XXX by of noninterest the quarter fourth interchange estate increased the decrease salaries by fourth of employee decline which mortgage XXXX. expenses, were of basis, as I the in million the these of increased $XXX,XXX Additionally, lower quarter $XXX,XXX These of third in was XXXX vacation was which which employees service to with which $XX,XXX payment quarter $XXX,XXX and does in account and expenses, increases other by this an vacation the Salaries by XXXX a and boosted were the $XXX,XXX quarter, impacted the a $XXX,XXX a of fourth an look charges increase increases reflecting service due and mainly in amount. back income $XX,XXX. decrease income noninterest of income were quarter XXXX of partially over occupancy for fourth in quarter of fourth received $XX,XXX $XX,XXX $XXX,XXX employee net at expense. in in quarter of a linked-quarter COVID-XX. onetime declined XXXX $XX,XXX. decrease by increase linked-quarter these fourth in $XXX,XXX detailed increase $XXX,XXX income processing accrued were With as a an call fee at net, linked brief to fourth were income, income, compared Offsetting Fourth of XXXX, time Smith. complete, Equipment now same real quarter and Rex expenses expenses look of

Rex Smith

of we in The Bruce. recognition in XXXX. have of the past shown that trends this for industry. some the year in the and cases, experienced relationships community had of The lasting well impact on that the The two Essex, have value a you, communities we of quarters of events a XXXX bank like and serve. the the was strong banking significant seen a support growth we bode Thank

tendencies overall move forward, eye credit team balance multiple and relief for growing proud loans customers, XX% what interest for our associates small at cautious payment XXXX. round rate while our for we quality risk. may scenarios, in quality in PPP XXX to or management and As manage was the affect keeping one, continue credit of am that in feat. no sheet granting Originating we flexibility loans XXX I a they the accomplished will enhancing have on

relationships stronger has We to created What opportunities company to creating greater have value us we have learned of new many future. as solutions, efficiency. the for and a add adapted new ways customer enhanced helped grow with

over last stock common the the program common height halting our and increased XX XXX,XXX the also despite the stock we We months. repurchased at of of dividend, shares pandemic, in

are common We working our reaffirm currently for with XXXX. program stock to the regulators buyback

new and to were management accomplish but We and for able balance these build trying a of through are flexible year all We’ve are the far times. we the from excited both and worked are challenges hard sheet. the the uncertain by in to with Board pandemic, encouraged

support matter and have our to no believe today would they all team what that I prevail. call management way, So, proven participated I like you. the who ongoing and and you of with comes that And speaking we you to associates Company our follow up your of the forward have. Thank may thank in with can adapt the Bruce questions with you any again myself or for you ask that soon. look

Operator

of will [Operator ahead. begin Sandler. now session. Please Instructions] question Casey We comes go Piper the Whitman question-and-answer first The from

Casey Whitman

us that Good a at correctly. any assume the can you on do sure Bruce, year-end. kind color give deferrals there? lot do make remaining can hotels, maybe disclosures color Can that, just that morning. around of remain? I of I’m a us And with to the wanted deferrals little deferral your you on I give understanding have you balance just

Bruce Thomas

$X.X $XXX.X total exists $XX.X in of $XXX.X And think million. and year-end. We, payments on at payment PCI the portfolio. those loans that million, Rex $XX.X are the that are of I But, that credits on payment on Okay. within regular in of XX/XX, million, still at some million have million color We types extended probably did are relief offer relief. a XX.X% on resumed can

Rex Smith

COVID. a couple million. over hotel Andrews it’s there’s been When $X $X in it’s little -- million. just upscale to down Yes. couple a is Baltimore And a several And the Casey, There loans, really that’s million are $X.X skating, of office -- entertainment We’ve of the steak is fairly Maryland under beltway again. got food spread supplier, an Force hard they larger around We’ve of million kind did Air on couple City they group there’s got cares two hotels, for it’s of being over has a We’ve about side, But There diverse. about shut the that non-PCI bowling, do a of franchise. has one right high-end take got child about whatever. Baltimore. well out We’ve most each. diverse. -- businesses. then, $X There’s an near company. reopened, place, another It’s with $XX stores that’s restaurant a one things. a And it’s type couple million. small got fairly supply of that It’s

we are it’s diverse. principal kind interest. making or -- of and And making fairly them, So, it’s of they’re payments, some of them of most interest-only whether reduced whether all it’s of And work but on cash to there is really one only was one. that kind an of group collateral Fredericksburg. It had we got really entertainment outside that additional on restructuring,

in of Maryland up, good vaccines, it. pretty comfortable what should fairly ahead I now. with feel be bit hopefully, inXa, I into us. But, going be on should Virginia’s we’ve things I extended the fairly got Xb, hope, quickly. So, open right we as a And think little is shape

very, a it. eye on keeping very close We’re

Casey Whitman

of recall, if move things to Got were a quick category. you lot classified pretty the into these it. guys, And I

So, that any about? guess, should within the were I risk ratings we quarter notable know migrations there, this

Rex Smith

Nothing going nothing of into south. either special migration substandard up mention but the back -- special grade, the going pass categories. mention through the big into Most other or a way, is going going was

Casey Whitman

drive I topic. you’re guess, on and I’ll at to viewing different maybe might Rex, expense on just one fill you point higher? a it. footprint the the in ask this on us efficiencies opportunities have how you more branch Got can side the

Rex Smith

like seen I’ve and competitors a are lot. Atlantic a closed lot my noticed Union what doing, So, of I

in good really expansive we any a for of the never one had marketplaces. news us I franchise our was branch think,

like up lot share we’ve it expense a got. had market the of we So, wasn’t for tied

and we’ve the accounts probably at. through just in I Casey, is been the I handling think, seeing or got has online we’ll our we’re that importantly, which growth be their does roof. looking service the customer helps more new But, online all one all center, calls, two what outliers handles XXX is think

expand looking is going really So, on at business and effort bricks the I and that. and time term, and think mortar, tech versus think spending is off. paying to long the we’re some I mobile that our side we’re just how And the

So, expect I may but there some reduction, whole to expense don’t tweaks life. small be a

footprint said, don’t franchise I the cover. As expansive we considering we have an

Operator

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

Stuart Lotz

repricing Well, doing of couple first a And as the are you’ve CDs the guided we I guys off, great see on think, last you job deposit side. lower. quarters

core really that are your thinking backing how expect -- PCI to drop we kind XXXX, going through fees to You’re nice the guys of total into quarter? Maybe that how Bruce, about in out NIM costs. you the PPP in deposit and first flow Rex, and looking

Bruce Thomas

Certainly would up. anticipated come that question

So, about about I third CDs in at reprice in look back. the million second X.XX%, in had at the quarter, million, around X.XX%. $XXX in X%, $XXX million we at quarter fourth And the quarter $XXX

the of Now, are at CDs rate larger. $XXX number is but mature that going and the It’s is to first the and million. quarter, reprice course, in dropping, $XXX of much it’s million

at fourth expense, looking in third deposits, it was reduction $XXX,XXX; in $XXX,XXX. in quarter, then, is $XXX,XXX; quarter on second quarter, interest and it the was in the this So, the -- the

the in matured would the anticipate quarter. but Now, what is declining, fourth of course, you rate

first $XXX,XXX. XXX quarter. get to the advantage around going And assume pickup middle of a of another that average in that’s reprices, a we’re Now, quarter’s if full repricing that the the in weighted you of

down. $XXX points a fourth $XX decrease basis quarter. in points balances million thereafter again, basis go deposit first in XX at the second interest meaningful the third quarter. XX in at points mature in on at the quarter, basis and quarter, XX once right million do It’s at should $XXX in at million The the we that see right So, It’s expense. interest

see X.XX%. basis-point through XXX million is show huge is to the and is at number last we’re this $XXX is quarter that all decline point So, of The to that that that the going going exercise bigger. the

in over cost probably So, going up at the then, house some when our unless will to the is of And change that’s to quarter juice that regard the into PPP fairly income that top if million you $XX.X the show then, number second million can point spill second looking quarter. exercise to $XX.X with XXXX, mix. fourth bottom and and back the going million we’re to was see interest And out $XX.X the quarter. third of income, is fees in the funds deposit that that of the stabilize, interest quarter, we And in stable. in the out of is

So is pressure from regard. that there in a -- the in but pipeline

have is quarter. in then, would second do fourth first expense going pressure, decrease to stabilize interest -- some I third the in in net income. That going interest larger we’re the with regard interest think, than quarter leak So, to we’re I to over and in in the quarter, a income dollars the expense. income. to that going in think, may And larger see interest decrease the And pure in interest than

Stuart Lotz

helpful color. very That’s

your first right you’ll room or the How now, some kind Do off. run you it -- CDs of mean, sounds anticipation you have liver those kind I to quarter? So, the like an of much to, in ratio. you’re pricing XX% of loan-to-deposit of think were down what, retain

the loan-to-deposit about curious ratio you’re year? through your if just get thinking how I’m that So,

Bruce Thomas

And XX% to indifference CD go the somewhere a they -- of I I’m that retention rate XX. on those closely. that XX a so mature there this monitor rate depositors. and points anticipate will do on they the basis of certain in fairly XX% that would from of at point mean, bit part so, CD CDs be in cycle to and We ambivalence retained. is the rate I not that Right. that shop

So, much and high closely I are clustered payer think is between that Deposit higher, are rates rates difference now. the much payer low when a a greater. fairly

start at of and parked that retain those. migrating out. going I point, going received balance a to sheet, high We So, that’s this fairly been is do some some on anticipate, we’re majority influx think cash of our to of

higher So, given the of we year, loan-to-deposit ratio can being throughout pipeline with keep course we for said, do replenished. the that a that look that

Rex Smith

there a we’re Bruce million are are. And where folks Bruce will we Stuart, of the can the somewhere $XX at anywhere more looking Yes. to to some as X said, in short months. million said. And run, that fairly we’re of maturities month retain more. as between XX been CDs. a from most And keep spread out $XX back And throttle month-to-month trying evenly we the little bit, And months sort But, we’ve to that runoff in so running obviously, be going off now.

Stuart Lotz

Got it. Awesome.

for more one mind. So, don’t me, you if

XXX,XXX my guys It like capital. there? you does shares. It quarter. Is you this to look reengaged the Turning buyback bought like correct math looks about

you are how -- thinking we TCE, and XXXX curious environment the to in deployment with credit if continues about XX.X% Just guys as improve? capital

Rex Smith

much how to so the do And have very work in, regulators our back approach opposite with to we we XXXX. on now with rebuy start in announcement about and that of or obviously, should pull closely on And But, utilize we our that management said, with working we better. we more talk engaging we’re in capital. right an need Yes. that to because exact the as is take folks capital, month regulators to because, and next issue hopefully want investors

dividend a going look there’s any the good in that utilize to to at we investors. us, to on M&A return -- the or has we zone. But buyback for need it’s -- for we we’re equity get at at that sure been now capital we to we dead rate. the around. can look our be, going everybody that paper look going we -- everybody’s ways return at because activity look of so we’re look if so where knocked make right course, to to We We’re up all And and constantly small keep

Stuart Lotz

Great.

how XXXX? authorization, you that can authorization at large Sorry, in remind anticipate how you of announcing just you’ve do remaining us or exhausted have point, an if this you in much

Rex Smith

exhausted now we days say to talking We about couple we the first regulators we’re what in XXXX, for up because we still the have But January. announced how that it. of burnt much originally can’t right of

at round right for number looking And -- that. back, working going on with of So, the we’re regulators it. what’s we’re our the second that’s just

Operator

John question Rodis of Janney. next Please The ahead. comes go from

John Rodis

maybe little talk Bruce, your you’ve you just bit ended outlook know fourth a could Rex, And Obviously, maybe talked just some about for -- strong what growth mid-single-digit if or pretty you quarters. I’m sort this about loan year year. quarter, the of with growth. I sorry, the growth in prior

update If you us give could just an there.

Rex Smith

Yes.

I think, we’re X% around be X%, certainly. looking X% growth, to for XXXX to

given I we’re are We’ve looking that lenders. very going group think, in. We’ve again. pipeline. got, a possible, opening things to what at happen it’s markets we where good of very got good got and obviously, possibly We’ve is good a up with

what that’s So, at. aiming we’re

to I to that number. X% it’s think very get achievable

So, X% X%. somewhere certainly to

John Rodis

just Rex, clear, that to impact be And excludes of any PPP, correct?

Rex Smith

That’s Yes. core PPP. just That’s portfolio. the out taking Correct.

John Rodis

the for fee Bruce, line item. And question you on income maybe a Okay.

sort unusual a in or quarter back of it a increase Was to normal of just You anything rebounding nice level? is charges. saw there, there linked service more kind

Bruce Thomas

was in visa-related $XXX,XXX fee. and There we that on press that interchange release, it’s a -- there was were we fee of onetime fee the paid received, noted a

So, charges that service for fourth the did boost quarter. the

of looking you’re a to similar quarter a back wanted usually at would service to out third take something fees but of bit and that you if is I But, the So, think to the then increase, still going quarter the fourth of million higher going that, quarter, to the an highest charges is level during forward. the the go course income year. $XXX

John Rodis

guys just maybe question Bruce, you. more that. one then, The And portfolio, Okay. increased for you securities

going about securities should you the can talk model So, portfolio forward? we how

Bruce Thomas

a quarter. the and somewhat challenge. our what cash that have balances we’re experienced Right. to. those Well, were and balances those industry-wide deposits in of throughout the bit to due the once partly in surprise form than sticking, to deploy higher accustomed and deposits much it endeavoring saw XXXX we which been fourth a you securities of is But, we’re And

curve. up, see you municipal will hard on some be X% growth have go and and rate we hard SBA now But, that probably a we’re that in levels nature is deploy around XX% us the student it’s government securities would some in going yield believe, be some give out So, will securities unless loan although as in going of floating guarantee. wrapper XXXX, way find, risk-weighted assets, type a those X% to will conservative. or in give them, to that’s with be There to the pools such to

John Rodis

Is there to portfolio far I’m of -- too. target maybe you anything any securities of deposit dependent on percent it’s as as to, sure growth to sort assets or get want or

Bruce Thomas

Yes.

Bank securities. it’s anything, less level or although I more in points. I basis below think that of over the been speak, cash It’s mainly case, know we’ve than that And cash, have XX in at earning total not so Federal than it’s what’s a don’t trying money in assets Bankers to it’s target. and of assets, we our due. XX% or Because have Community you if do ever Reserve, to efficiently utilize

earning if large XX a that’s X%, So, off even pickup better amount if you basis-point certainly only that’s points, a on can take X assets. $XX you’re you of get million, basis

Operator

The go Instructions] ahead. Please of question from comes next Stephens Preston Inc. [Operator Brody

Brody Preston

answered. of might Most questions expect in year. this like have just that million I It left, we if a PCI to though, the I pace runoff had looks runoff I did in of on just $XX was million XXXX. the been similar one wondering $X portfolio. have

Bruce Thomas

a $X.X year. Yes. million about That down amps typically

that over modeling But of we would would that. you’ll So, come payoffs in some of be here. what be that top have course,

Brody Preston

Okay.

XXXX, this like by And so, millions, it be get sounds of you single pay like thinking I’m did gone -- it the to extra end if year, sounds low the have portfolio like guess, about will time correctly. it if I some downs you to we that

Bruce Thomas

very you much Thank taking… Yes. for

Rex Smith

year-end, will think sit [ph] as It -- I down, amps at $XX million around it

Operator

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

Rex Smith

there I’d and that everybody any feel are so everyone. us. available for your remind contact trying a out and their to much please year thank what thank if was support obviously like Bruce I And during to just And questions, you free you for support. follow-up for reach very are ongoing

Operator

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

You may now disconnect.

Community Bankers Trust (ESXB) 29 Jan 212020 Q4 Earnings call transcript