Q4 2019 Earnings Call

Good morning, and thank you for joining us today. As we review the results of the fourth quarter and the full year of 2019 for Community Bankers Trust corporation, which is the holding company took Bank. Let me start with our usual reminder that during the course of our remarks today. We may make forward-looking statements within the meaning of applicable Securities laws with respect to age operations performance future strategy and goals. I remind everyone that our actual results May differ materially from those included in the forward-looking statements due to a number of factors these factors and additional risks and uncertainties are included in our earnings release and most recent Form 10-K and other reports that Community Bankers Trust Corporation files with or furnished to the Securities and Exchange Commission.

You can access.

all these documents through our website at www.cbre.com

Today's call I will give a quick overview of the quarter and the year and then Bruce Thomas our Chief Financial Officer will cover detailed selected financial highlights. And lastly. I will share our thoughts. Look forward to 2020 overall. We are pleased with the results of the fourth quarter and for the year, we continually work to manage the growth and structure of the balance sheet to maximize earnings without undue risk. We still believe they credit quality and pricing structure are more important than the overall growth rate of lungs when we review the asset and liability model for the company. This belief is reinforced.

Additionally we continue to focus on growing core deposits specifically transaction-based demand deposits to reduce. Our overall cost of funds to that end. I am pleased to report that we finished a year hitting our Target growth in loans and deposits loan growth for the fourth quarter was 2.3% which is 9.2% annualized wage. And the pipeline for the first quarter for 2020 is very strong the growth rate for the year 2019 was as expected and was a direct result of a deliberate approach to life being in this interest rate environment.

deposit

Significantly as non-interest-bearing demand deposits increased 8.2% for the year, which allowed the company to reduce higher costs time deposits by over $17.

Non-interest income also improved for numerous reasons including growth and deposit account fees of $321,000 growth and mortgage origination fees and wage and income from the Investment Management Group, non-interest expenses remained relatively flat with the exception of the large tax payment made in the third quarter to bring our oldest non-performing Loan in to Oreo.

All of these factors contributed to a 14.7% increase in net income for the year two fifteen point seven million dollars a two million dollar increase over 2018. Now I will turn the call over to Bruce Thomas to discuss the details of the financial results of the quarter and the year. Thank you Ranks. Net income for the fourth quarter of 2019 was four million dollars or eighteen cents per share basic and fully diluted. This is an increase year-over-year of $688,000 or 20.5% The return on average assets annualized for the fourth quarter of 2019 was 1.14% compared with 0.58% for the fourth quarter of 2018.

return on

Zachary annualized for the fourth quarter of 2019 was 10.42% compared with 10.01% for the same period in 2018.

Driving the fourth quarter year-over-year increase was interest and dividend income which increased $769,000 or 5% specific interest in fees on loans increased one point 1 million dollars or 9.3% and fueled the growth in interest and dividend income additionally off interest income increased $294,000 or 27.1% within non-interest income performance was lifted by dividends on Equity investment and swap the income. Also mortgage loan income increased $117,000 a year over a year.

Due to strong growth service charges on deposit accounts increased $65,000 or 9.4% year-over-year.

On interest expenses decreased $365,000 or 4% year-over-year FDIC assessment benefited from the small Bank assessment Credit in the fourth quarter of 2019 and was a $20,000 credit. However examining other lines in non-interest expense provides insight into our own the level of overhead from one year earlier salaries and employee benefits who are $100,000 lower year-over-year occupancy and Equipment expenses. Combined were $78,000 lower than 1 year ago data processing fees were $67,000 lower year-over-year and they stabilized in 2019 and are currently projected to remain stable in 2020.

For the year ended December 31st, 2019. Net income was fifteen point seven million dollars or 71 cents per share basic and seventy cents per diluted. The increase was two million dollars or 14.7% for 2019 compared with 2018. The return on average wage is was 1.11% for 2019 compared with 1.01% in 2018. And the return on average Equity was 10.63% compared with 10.59%

interest in dividend

Income of 65.4 million dollars was an increase of 6.2 million dollars or 10.5% and was fueled by growth of 5.3 million dollars or 11.4% in interest and fees on loans despite an increase of 28.5% or three point four million dollars in interest expense net interest income increased in 2019, / 2018 by 2.8 million dollars or 5.9%

Additionally a provision of $325,000 was recognized in 2019 compared with no provision for loan losses in 2018 off as a result of the 2019 provisioning. The allowance for loan losses to non-accrual loans is 1.5 159.28% at December 31st, June 2019. Non-interest income increased $891,000 or 20% in 2019 / 2018 service charges and fees up 2.8 million dollars in 2019 grew by 12.8% and we're $321,000 greater than 2018 mortgage loan income in 2019 was $486,000 and exhibited strong growth of $167,000 or 52.4% off.

over 2018

Lastly non-interest expense growth was $852,000 or 2.4% in 2019 or 2018 excluding a $624,000 in taxes paid as a result of taking possession of a non-accrual loan the increase for 2019 or 2018 would not have been less than 1% net interest margin was 3.74% for the fourth quarter of 2019 compared with 3.78% for the same period in 2018.

Despite a decline in the interest spread of ten basis points the net interest margin declined only four basis points and was benefited from growth in the average balance of earning assets of forty two point seven million dollars a year over year and only three point six million dollars in growth in the average balance of interest bearing liabilities, perhaps more importantly when analyzing the net interest margin is the linked quarter inspection. Of course, the third quarter of 2019 was the beneficiary of a 1.1 million dollar payment wage income in the PCI portfolio.

analyzing

Large and excluding this payment reveals that yield on loans remain stable at 5.04% in both the third and fourth quarters of 2019 off security Fields were 3.15% for the fourth quarter compared with 3.17% the previous quarter and thus are stable interest expense reflects a decrease of $177,000 or 4.4% in the linked quarter comparison, and the cost of interest bearing liabilities dropped from 1.49% off in the third quarter to 1.43% in the fourth quarter.

With regard to the company's balance sheet total loans increased twenty three point eight million dollars or 2.3% for the link quarters and sixty four point, six million dollars or 6.5% comparing year end 2019 year end 2018 the growth in 2019 reflects growth in a divorce distribution with construction and Land Development drawing by twenty six point two million dollars commercial mortgage loans by $17 multifamily loans by Thirteen point four million dollars residential one to four family loans by seven point three million dollars and Commercial loans by two point five million dollars.

on the funding

Non-interest bearing deposits grew by 13.5 million dollars or 8.2% year-over-year and at one hundred seventy eight point five million dollars representing 15.3% of total deposits this strong growth enables the bank to lower time deposits by 17.2 million dollars and increase our loan-to-deposit ratio from 88.6% to 93.8% from year-end 2018 to year-end 2019.

Lastly our Equity position increased $18 or 13.1% during 2019 and the strong position of risk-based capital allowed to resume the payment of dividends in 2019.

Examining year-end 2019 shows a strong balance sheet improving efficiencies and a stable net interest margin and we look forward to 2028.

Thank you.

We continue to manage the balance sheet for flexibility in multiple scenarios, which allows us to focus on consistently improving earnings the fourth quarter and the year 2019 demonstrated the success of this strategy.

Those results coupled with our recent announcements of the dividend increase and the common stock buyback program should better leverage our capital and improve earnings per share. I believe we had a successful 2019 but have room to continue on our path to drive favorable results. We have a lot of positive operating momentum currently internally month as well as with external factors such as the SunTrust BB&T merger that will help our cause both management and the board are excited for the challenges of the New Year song.

I am sure many of you are aware of the recent statements from an activist shareholder. I'm not going to comment directly on those statements. However, I do believe it is important for all to understand the approach that management and the board continue to take with your company first and foremost. We run your company to produce the best results in terms of earnings growth dividend growth and stock price appreciation while conservatively managing credit interest rates and a variety of other risk the board and mayonnaise have worked extremely close to the years on all strategic initiatives and will continue to do so in the future.

further

The board discusses value-creation internally at every monthly board meeting information regarding any m&a activity is never withheld from the board of directors, and the the board discussions are augmented through the engagement of a variety of well-respected investment bankers. I would like to thank all of you who participate in the call today and for your ongoing support of the company and ask that you follow up with Bruce or myself with any questions that you may have. Thank you, and we look forward to speaking with you again soon.

The conference has now concluded thank you for attending today's presentation. You may now disconnect.