ESXB - Earnings call transcript Q1 2021 | Community Bankers Trust Corp

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Operator

Good day, and welcome to the Community Bankers Trust Corporation First Quarter 2021 Earnings Conference Call. All participants will be in the listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Rex Smith, President and CEO. Please go ahead.

Rex Smith

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

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

at through You can access website all documents of our www.cbtrustcorp.com. these

We overview of format will I brief our And And Bruce then the will cover financial with well quarter. on Chief highlights. has on we share as forward by of the company we look move year Thomas, and our The XXXX. starting prepared past detailed been to follow but thoughts lastly, challenging, today's Officer the a will call press our very rest Financial were to normal forward.

million the very though changes point distributed, either work local seeing affected customers Even recovery, widely most As indirectly still communities. our more the of in and positive we signs to or the some are in directly and we vaccine COVID-XX for are signs of Payroll live. by not loans Unfortunately, we're economic how most our becomes growth, pandemic, customers for being customers. our $XX we Program as support help loans Protection relief participated than anticipated with round the in and PPP for was relief other closely the as for Overall continued processing over two, loan where of XXX our quarter. needed. We some working provide strong still to

two by a large ARMS positive refinancing portfolio months but were the The negative March market. consumer showed growth as the first in very from off secondary CRE paid and in growth and payoff was HELOCs affected

said and loan As may X% or million first to growth quarter X.X% be year-over-year. for the earlier the expect the expect purchase X% year, we see PPP I for in $X grew to bit growth choppy $XX.X we excluding million loans but impaired year. our loans, a and quarter, credit, Loans to still quarter overall

our assets The ago. million was XXXX bearing led December to at continues or positive of first credit estate to focus on maintaining by in our quarter in to March building The million to improve during by assets $XX.X ratio pricing compared earlier. XX, million continues continues real lower loans noninterest demand continues X.XX% Deposits nonperforming of Our and year and decreased on and grew other quality of help funds. to full from deposits at one XX, X.X% be $X.X non-performing growth growth cost Credit holding XXXX and XXXX, by strong, to bearing X.XX% relationships. deposits. focusing one growth the quality year and the X.XX% noninterest of $XX be

income, insurance the charges in securities mortgage deposits. service increase the was commissions, noninterest noninterest also positive This increase to approach our expense $XX.X driver loan in gains change by certificates stable interest loan continue with pricing X.XX% at for was the net disciplined deposit which increased of income in million We There areas. both year-over-year. income the The main and Noninterest $XXX,XXX and XX% on declined coupled reduce margin accounts, quarter-over-quarter. deposit to mix from of amount on news kept or an in quarter. of the

Additionally, noninterest by deposits. from of stable increase in increase FDIC with assessment year-over-year, in mostly expenses the increase only $XXX,XXX an remained the total driven an

the increase in the we PPP increase the future first driver. and quarter. provision While the normalize now is is net financial the if controlled noninterest above the to significant results call growth $X.X earnings million a obviously net But the is negative still The help the have and of details income, will you in over and income all of previous income in for and build negative the interest fees, income positive impressive Thomas net turn I story will Bruce truly earnings. a expenses number with for the of big provision estimates. it

Bruce Thomas

you And thank regarding listen morning. to first Good quarter to time results. that you XXXX discussion of taken to have all the

the diluted XXXX pre-tax net basis. in quarter $X.XXX share PPP first fully or analyzing the fourth or per fully assist fully million per $X.XXX diluted is earnings quarter million of income will per of $X.XXX that results and million, diluted income increase was the pre-provision analysis, of will excluded. an earnings XXXX a income $X.XX in on after the fees increase $X.XX income of million I net is To progress be the Year-over-year net $X.XX earnings quarter million recognized review And First the company, share. of $X.XXX over $X.XXX or share. XXXX impact

on would XXXX. first or Pre-tax for quarter in the XXXX COVID-XX compared PPP have quarter quarter quarter before been the fee The of $X.XXX fourth linked PPP million or X.X%. was been XX.X% quarter increased of quarter was income of quarter million negative pandemic. $X.XXX compared and provision the income million $X.XXX first none year-over-year XXXX. in the $X.X income, PPP first first of XX.X%. the million or XXXX XX.X% and with at quarter $XXX,XXX onset million the of impact increase income million of the provision the $X.XXX the is quarter. quarter a $XXX,XXX and million in taxes, or pre-provision $X.XXX previous fee XXXX increase first Pre-tax in of of with an As of $X.X $X.XXX XXXX, over and was the excluding XXXX have for in the $XXX,XXX a Income million in a loan of backdrop, the pre-provision of fourth basis in increase income fourth would losses XXXX, fee the provision of

aiding of the were earnings This XX.X% with in of stable million liabilities March total $XXX.X The We deposits deposits. million total year-over-year XXXX, direction million increase of in deposits as is funding, deposits rate interest over a margin. the March reprice quarter of bearing XX.X% deposits. the XXXX. were declined our XX, noninterest of interest Noninterest $XXX.X a earning weighted at growth second and million. a of XXXX million certificates $XXX.X or is are deposit core and XXXX from bearing are March March $XXX.X at in XX In of dollar X.XX%. of pleased bearing XX, XX.X% XX, away At all bearing net XX.X% Time at of CDs assets average an deposits, or increase shift at XXXX. year-over-year to mature or XX.X% from deposits noninterest meanwhile will declined level $XX.X

on see we in will the roughly be in basis impact of a repricing points meaningful that quarters, expect we will CD bucket. While be amount the the less previous XX than left will

indifferent non-majority of has not the quarter change quarter non-maturity and the bearing over CDs assets as depositors of bulk deposit as mix from but an deposit interest have earning quarter from an bank, as CD percentage first the categories. to become in beneficial decrease been net other first from the well rates in many has between the exodus into has for first This our increased categories resulted on liabilities X.XX% based XXXX in interest increase been in averages a interest of the the XXXX. quarterly fourth XXX% in the deposit rates of Additionally, XXXX. quarter margin other the move to in to XXX% in of XXXX This increase in X.XX% margin of

Excluding without X.XX% X.XX%. fourth PPP actually in increased margin. quarter the spread margin interest margin was spread the calculation, of from X.XX% to excluding increased PPP first would fees XXXX. X.XX% the net interest The in the would net have quarter in PPP of from from the The and interest have XXXX to increase both there

call PPP have assets, in X.XX%. quarter of first have both the liabilities spread fees, increased of X.XX% While margin interest-bearing X.XX%, from X.XX% to been I periods, excluding remarks. cost turn in for for over earning from the Year-over-year, while Rex the excluding would back will would interest fourth X.XX% quarter slightly the the PPP declined X.XX% fees on XXXX. X.XX% would the of With that, declined the to from yield to closing XXXX to have

Rex Smith

Thank you, Bruce.

and values storm them the our We together customers During of and our brunt remained true the and ways we help quite pandemic, communities. to core focused stayed to weathered successfully. our the on

a to enhance we pandemic, strategic not continue we with that value XXXX and have are we beyond. While through the believe yet will in done place plan

lobbies on in lead business that over branch ROAE $X.X two an million the have to of will XX.XX% are the posting the close Xth $XX usual. Our and million in first quarter, scheduled to hopefully X.X% loans, as and remainder recognition the something ROAA May fee we an of to resume of PPP should reopen Besides round for originated in year.

significantly assets. oldest earnings in a OREO second nonperforming will quarter add sold for we to property our that gain Additionally, April early and will the largest and lower

and tirelessly financial will have fully during associates its to Our safe support effect. do this continue banking beyond turmoil until and to we secure so worked we are and provide

the for also for of will of the by questions. are hope your core ongoing the of I are We support for pleased company. results We open and optimistic we call XXXX. very the the now our and thank remainder that each shareholders any you, you pleased quarter for

Operator

comes question ahead. Piper [Operator from Our Please Whitman go Instructions] Casey with first Sandler.

Casey Whitman

Rex Bruce. are you? Hey, and good How morning,

Rex Smith

you Good doing? Casey. How are

Bruce Thomas

morning. Good

Casey Whitman

Good. Good morning.

down you there. nice quarter bring expansion to the some So discussed guys core opportunities some and just deposit just costs - really margin through we of this

quarter there So it liquidity there's to go more also come - some like room to on closer but there's seems we end. saw

those see trending margin up of flat, given down are ex-PPP, of thoughts? kind sort So the kind you and wondering your the takes, just in core what quarter, second of how all puts

Bruce Thomas

It it and experiencing is - we're be now. would - very unusual well, it experiencing

on For because the that speaking loans rate and of. you're the liquidity down. that's season of goes spread the securities to the And And but structure opposed book. as that to increase margin current the

So the the side on of it's liability CDs, of that, and as CDs, on by think rebutted demand being I asset going put growth some out the is in to of side. shift a deposits. That repricing result the somewhat pressure the

increase little relief liabilities to bearing there. us the margin with increase earning to year-over-year, had, on unusual spread XXX% us very in it that would indicate So assets experiencing, be level even XXX% margin to But a the keep as from in to typically But yes, fact, stable such for helped basis, giving interest currently also quarter of the that's is that that and liquidity, we've would relation a access expansion. in grow. that link we're

there margin. our net are in of currently what So is I'm lot are I dynamics. guess, in going pointing on to, - that our a interest

Rex Smith

I rate that I at be which we're the get mean, and loan at get side, - see if on the come they be stuff C&I things - we think is if are the growth, going the some I to been the more the to to least of too. loan variable pricing lower and we on we're the very be what trying feel think had to. we to use the do But at rate, that's are some it I depending to, on but discipline to related case stable we like of we'll can margin it, to time. get get the tends mix we've going up liquidity of CRE a able think, in good going

Casey Whitman

from we cost bottoming rolling Got you of XX just really point level, off the sort basis see and it. of CDs. ballpark how with where the low go? deposit And do guys combination kind can We're the just of

Bruce Thomas

Well…

Rex Smith

dramatic repricing are correct But that think think, I of in Bruce, stops. June, still CDs sort repricing, some the I you We're got but me.

CDs to basis as effect and XX is points. basis XX be And of days to get points XX of opposed the repricing like XX it then basis of the later going course, so beyond. And more to XX points you or

bit. So, correct little you timeframe, maybe July He's think up out me. and Bruce, a would probably, the I more can bottoming

Bruce Thomas

and you're to linked cost I looking until down the is would XX less going then level. then Well, had less third be to and second third say funds a bottom quarter. XX. I and in the quarter, in would the decrease from And would basis say quarter that the XX again, quarter it a decrease go of that points in quarter, we out will it for linked

the followed that's I kind third by maturity point of goes point think quarter. feel. So what depends what maybe basis an second in a And basis mix the X in decline would stays but that of decline, and on XX categories, gut into my in and - quarter, non-maturity course

Casey Whitman

Got there's round of the related clarification, gave you to Okay. for XXXX include think a around that round Helpful. might it. two what what three, in And from just originations? or that X.X fees latest left want call to million just I Rex, the does the maybe around have PPP. Is you round it XX or you

Rex Smith

done just - the round that latest is prefer that that's those to - Jeff. The year. No, someones just that's cases, we've that do XXX the for that round

Casey Whitman

from that? on is rounds the And remaining original you Okay. have of do top what

Rex Smith

I you touch want - to Bruce Yes. it. It's think

Bruce Thomas

that searching so My the here. here $XXX,XXX. numbers And new Controller I many I've had to just And We've anticipated She that coming. and started you, we Laureen. was e-mailed are that me Thank unusual. rescue. question go.

Casey Whitman

for you questions. my Thank Great. taking

Rex Smith

right Take Casey. All care.

Casey Whitman

too. You

Operator

KBW. ahead. next go Stuart Please Lotz comes Our question from with

Stuart Lotz

morning. Good guys. Hi,

Rex Smith

Good morning, Stuart.

Stuart Lotz

just But Well, We first off, this ALL? we few of year can kind a expect you great to reserves, the see, further and release on Can Or kind provision zero surprised your this on large of of provision your a outlook in quarter. do a stable the anticipate or build. quarters? if for next decreases kind start year's provision were congrats we last after quarter.

Rex Smith

like our that I quality in up we is on It credit we're a better seeing stay credit stable. quality that looks than fairly really lot ended based economies, anticipate. what think local that will

us the - a affected the provisions what's I on going going in leak there's small taking drive depending it the is to category. probably still I provision might don't third quarter, into that any But that, into we by particular might go, provision the things substandard just industries any see some if loans, COVID, where So few but there and I wouldn't next maybe, invasion think - the growth a be, growth fourth. and leak to or maybe

Stuart Lotz

Got it.

that you in moving OREO the what off the Can us second quarter You large and basis mentioned that property sheet of how balance you the in dollar gain April. the of remind for from sale? expect

Rex Smith

on still - We've it's at was it's a again, the have a $X.X legal still but Nothing on crazy, some and in that And, thing of It Yes. it. books million. - done. got we'll going to we're gain associated with bills pushing decent getting trickling be closed kind around. numbers few

have But the as that thing into is, that because be a main was - we'll on that OREO quarter. balance, the we more to get drop the significant going clarity it's big So one. down in it's

Stuart Lotz

Right. OREO? the your was the I think say, about total just entirety of that's I - almost

Rex Smith

That's right.

Stuart Lotz

coming over anticipate given do around up. being to on quarter And from Russell? your And Russell reconstitution buyback obviously levels? announcement and And the one the active March, maybe shares we if How next front pressure shares. the the more see the some million back buyback capital with the in just you

Rex Smith

period, we've bit on at We've Xth shares, the from get look happen buying Yes, window analysis we're reworks us when May I to going our a powder you'll and towards, going held probably that for June think see we're we're where been on, looking Russell was itself. opens the Russell working with analysis to especially working window timeframe the when back a now. Xth closed some what to our on but right little in and active,

Stuart Lotz

Got Cool. it.

we there this any one anything, related originations costs year, this PPP the out And and came Bruce, - for to maybe was rate? outlook sorry, just that the deferred and expenses of If quarter, more. maybe run

Bruce Thomas

we're internal It Yes. of I last I quarter stable. all believe. XXXX, the quarter for quarter detail costs comments. of those The was first year first this in XXX,XXX, and pretty year, in my and the amount the between fourth of

were actually total. include stability given in XXX was XXXX. not to in yes, but PPP. XXX quarter of quarter contemplating the That was that, internal analysis of those, XXX,XXX, and costs in the I an the did first XXX the without So That fourth doing

costs. those So internal the were

Now on the expense aside. those front,

[ph] things net XXX,XXX. grew created by industry PPP, noise A the expenses out if our income to non-interest of the you that's One income, year-over-year, been grew back our $XXX,XXX

non-interest non-interest due processing primarily and said, being our expenses. So income uptick increase see leftover, an quarter. paid an the the in has increase with your which will in can Basically, we for good increase in non-interest is data $XXX,XXX expenses due pretty expenses the to in you third - costs. to in fourth cover our non-interest That when

we see contain salaries of Other costs, forth, range. have and don't of than and benefits. contract, you and, little for accounts phase always new that expense. in But kick-in from a aside single-digit will DP to all so expansion that that, our that increases number get a uptake, look a But into employee non-interest major of we As a I try course, it. we reasonable

Stuart Lotz

Okay.

So you half run million the anticipate year. that you'll kind the back rate $X.X of into of hold

Bruce Thomas

correct. That's

Stuart Lotz

And expect debts some - some would you okay, higher [ph]. higher

Great. Got questions. my Okay. for it. taking Thanks

Bruce Thomas

Sure.

Rex Smith

Thank you.

Operator

comes question next with John ahead. Janney. go Rodis Our Please from

John Rodis

Good morning, guys.

Bruce Thomas

John. Hi

Rex Smith

tell if I say how better than I to feel going a Hi are ask feel was John. lot I you How neutral. to I you me doing? got you,

John Rodis

X.X doing I'm hard the on to well. just million, I believe Bruce. it's almost remaining, piece, No, clear, the me. roughly be it. get I PPP - It's to It's guess

going to from correct? through - flow interest net income, that's Just that's million - [indiscernible]? what all $X.X The

Bruce Thomas

correct. That's

John Rodis

Okay.

to Rex, for growth year. or off? that PPP the include loan X% mentioned Okay. exclude you the And Does then X% run

Rex Smith

year-end pegging with where be the we loan. PPP was That's sans PPP. loans to were at going new That and going sans just with

John Rodis

Okay.

essence core in this loans PPP? just So

Rex Smith

Yes. Correct.

John Rodis

Okay.

in acquisition your thoughts, any there's of sort been market. Just activity some

guys how on from and the benefit thoughts new you can so hires, any potential forth? market disruption Just

Rex Smith

Yes.

as We We've feelers and have good COVID we keep - we've large Maryland, from community larger publicity we're - helped banker during the a in out two the out out obviously, gotten picking organization. folks really some us. the of our merger, we the crisis up has is and years of a second a truest good gotten up bank got in quarter

has So, been think it'll I it's that keep it - way. And going beneficial.

John Rodis

Okay.

Thank you, guys. good. Sounds

Rex Smith

John. Thanks,

Bruce Thomas

you. Thank

Operator

Our Instructions] a Investor. Private ahead. question from Eric Girdwood [Operator [ph] next Please go comes

Unidentified Analyst

Hi, good morning, Rex.

follow-up earlier. wanted the on to Just question buyback

your mistaken, ratio to pressure XX%. back not a So, What's year on or comfortable if earnings capital level happened may of what a your and and Russell in your then the is feel around given thought as on now capital ratio do buying percentage I'm maybe tangible you Notwithstanding price? have stock Where right the a that? now. between of with

Rex Smith

with spending read comfortable we to - analysis reconstitution. based doing beat go going upon back we were about we then into we're number buyback. on group into did, And quarter $X at look we Well, our million last on the Russell And the working we first that were which some the going because obviously, it that budget, we're were we we'd a significantly. forward, as

Unidentified Analyst

Okay.

a level I we there? that more much you're capital, this got on too it too is looking number and we've take keep down mean, based it at So can or at away, take earnings just what your trajectory much

Rex Smith

concerned where's back your from earnings It's about screen. Fed into going which it, obviously, the what is go day? capital a the then And what's is, to is

did got we the the balance more And shareholders' we do we one. significant we can and And it buyback in trying much it to to best being to obviously, think are buyback, places like like with too dividend two at the something help we we're the do I feel feel have value. the the So gap.

I heightened So sense you. - we're a have that now. tell right of can we

Unidentified Analyst

your from and Could the Richmond, condition the estate of commercial of any houses in just residential provide And crazy curious on then more just thoughts general markets, You hear a these buying on of What during about concern the the the XX,XXX kind market? And Okay. valuations? foot both sort in of you bit of terms there? side? just there development local a color COVID little people the view. a stories Greater real on maybe are the about opportunities Is suburbs, going pandemic?

Rex Smith

increases of Maryland They're some seen I great. the as have commuting, may still more great. some markets with Virginia, contract Yes, still and price about pricing. the the on increases We of a from residential still homes, Even home do local guys. builder good keep lines which costs, working lines, I getting phenomenal builders I mean, have mean, been both doing And terms go people there's of also? and group do talked have marketplace. good high more managed and these builders the that sales. and we in of the supply despite And are significant know, we we've They're mostly significant level, by in in a do space. trends margins from post-COVID, based doing flex and the they're getting home. where we've had

tenants done type large I seen malls. the of and larger deals anything, haven't is big shopping for too. the the concerned accounted a large of and quarter lot We in space or about Nordstrom some here that, about some think, regional center centers Richmond which [ph] of one closed, but a I'm We've of

XXXX, blowing lot been back when the of bubble started I there's forth. and first since a in and think this up business course, So rates I've and housing things of with

that go that bubble So situation. I being about think fast, worried fast, you when it got that prices a high

they're going exposure COVID to to Because do I do bit list of we're think little happen looking we're of I keeping industries of are going what on our we're that. advanced to a faster. eyes good concentration continue senses anyway. that our we're to looking So think and that we a and a some We've trends at view COVID But happen it. just kept now think keeping going tight at to

Unidentified Analyst

that. for very Thanks it. much appreciate great. your on I color Okay,

Rex Smith

Yes.

Operator

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

Rex Smith

hope for support that appreciate all this We like healthy. stay certainly have are everybody available follow-up to thank I'd you I you any success and and and morning your remind and participated future questions. Bruce who

Operator

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

You may not disconnect.

Community Bankers Trust (ESXB) 2 May 212021 Q1 Earnings call transcript