Q2 2021 Community Bankers Trust Corp Earnings Call

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Good day and welcome to the community Bankers Trust Corporation second quarter, 2021 earnings conference call.

All participants will be in a listen only mode.

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After today's presentation.

There will be an opportunity to ask questions.

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Please note this event is being recorded.

I would now like to turn the conference call for it to Mr. Rex Smith, President and CEO.

It's the Smith the floor is your share.

I want to thank you for joining us today as we review the results of the second quarter of 2021 for community Bankers Trust Corporation, which is the holding company for Essex Bank.

Let me start with our usual reminder, that during the course of our remarks today we.

We may make forward looking statements within the meaning of applicable securities laws with respect to our 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.

Certainties are included in our earnings release, and our most recent form 10-K, and other reports that community Bankers Trust Corporation files with or furnishes to the Securities and Exchange Commission.

You can access all these documents through our website at Www C. B Trust Corp.

And I'm not comp.

We will follow our normal format on today's call by starting with a brief overview for me and then Bruce Thomas Our Chief Financial Officer will cover detailed financial highlights and lastly, I will share our thoughts as we look forward to the rest of 2021.

This is our first.

First earnings call since the announcement of our pending merger with United Bank. We're extremely excited about the merger and strongly believe that it is the best partner, we could have chosen given our similar cultures.

It also was the best time and course of action for our shareholders.

In the meantime, we continue.

Intended to improve the quality of our balance sheet and the overall financial metrics of the company.

Most of our markets has have had significant recovery from COVID-19, but we are still working closely with some of our customers who were hit particularly hard to provide continued support where it's needed.

Overall low.

It was not as strong as we would've liked for the quarter, but the portfolio is showing signs of a strong second half for the year.

Total loans, excluding PCI loans were $1.192 billion at June 32021, increasing $9.5 million or 8%.

1 growth year in 2020.

The average balance of the loan portfolio, excluding PCI loans increased by $92.3 million year over year and average $1.198 billion for the second quarter of 2021.

Our focus continues to be on maintaining.

From a quality and holding our pricing by focusing on building full relationships.

Credit quality continues to improve and nonperforming assets decreased by $4.8 million from 1 year ago.

Nonperforming assets for $3.9 million at June 32021.

1 and the ratio of non performing assets to loans and other real estate was 0.33% at June 32021, compared with <unk> 6.5% at March 31, 2021, and <unk> 75 per cent at December 31.2020.

Deposit growth continues.

Credit strong and the growth in non interest bearing deposits continues to help lower our cost of funds.

Deposits grew $49.5 million or 3.4% during the second quarter of 2021, and $125.2 million or 9.2% year over year.

Non interest bearing deposits grew $69 million or 21, 9% year over year.

The continued change in deposit mix and repricing of certificates of deposits coupled with our disciplined approach to loan pricing increase to net interest margin from 3.53 per cent for the first.

To be 2 months of 2020 to $3.62 per cent for the same period 2021.

Net interest income was $14.5 million for the quarter ended June 32021.

This was a linked quarter increase of $419000 or 3.

First cigarette.

Interest and dividend income on a linked quarter basis increased $204000 or 1.3 per cent to $16.1 million for the second quarter of 2021.

Non interest income was $1.5 million for the second quarter of 2021.

The repurchase of $167000 decrease compared with the first quarter of 2021.

The main causes of the decrease was the mortgage loan income decreased $85000 on a linked quarter basis.

Noninterest expenses totaled $9.2 million for the second quarter of 2021.

As compared with $8.8 million for the second quarter of 2020.

An increase of $437000 or 5 per cent.

Other operating expenses increased $752000 from $1.6 million in the first quarter of 2021 to 2.3.

1 in dollars in the second quarter of 2021.

The increase includes $570000 in merger related expenses from legal professional and director fees during the second quarter of this year.

Net income was $5.4 million for the second quarter compared with net income.

$6.6 million in the first quarter of 2021.

Earnings per common share was <unk> 24, basic and fully diluted for the second quarter of 2021, and 30 basic and fully diluted for the first quarter of 2021.

Provision for loan losses reflected a credit.

Most of $1.4 million for the first quarter of 2021 compared with no provision in the second quarter.

For the year over year comparison net income in the second quarter of 2021 increased $1.3 million when compared to the same period in 2020.

I will now turn.

Credit over to Bruce Thomas for more details on the positive financial results of the quarter.

Thank you Rex and good morning to everyone joining us for our second quarter 2021conference call.

This morning, I will take a brief look at our year to date 6 month net interest margin in comparison.

Call. It the same period from 2020 without the effects of PPP loans.

Yield on loans, excluding the effects of P. P. P was for 4 zero percent for them.

First 6 months of 2021 that is a decline of 38 basis points from yield on loans excluding.

P. P P for 7.8% for the first 6 months of 2020.

That was an increase in the average balance of loans of $92.5 million or 8.4% over this time frame.

Excluding PPP from the average balance calculation yeah.

Average.

<unk> blows would've increased by $63.6 million or 5.9% from the second quarter of 2020 to the second quarter of 2021day.

Yield on Securities was $2.64 per cent for the first 6 months of 2021, a decline of 34 basis.

Points from the same period in 2020.

The average balance of securities grew $67.7 million or 28, 7% over this timeframe.

Excluding the effects of the PPP the yield on earning assets was 4% for the first 6 months of 2020.

And compared with for 58 for the first 6 months of 2020.

That is a decline of 58 basis points on average, earning asset growth of $165.9 million or 12, 1% when excluding PPP loans.

Cost of interest bearing deposits.

1 and from 1 point to 7% for the first 6 months of 2020% to 0.53% for the same period in 2021.

The average balance of interest bearing deposits increased by $65.4 million or 6.3% over this timeframe.

The cost of interest bearing liabilities declined from 1 point to 8% for the first 6 months of 2020% to 0.57% for the same period in 2021, and the average balance increased by $64.7 million or 5.8%.

Decline.

Also positively affecting net interest margin year over year was an increase in the average balance of non interest bearing deposits, which increased by $111.5 million or 51.8 per cent for the first 6 months of 2020 to the.

Sent period in 2021.

This enabled the ratio of average interest, earning assets over average interest bearing liabilities to increase from 126% for the first 6 months of 2020 to 135, 6% for the first 6 months of 2000.

Same day 1.

Stated another way the strong increase in non interest bearing deposits enabled us to increase our leverage over interest bearing liabilities year over year.

The activity just noted resulted in an increase in the net interest margin without the effects of P.

<unk> 20 from 354% for the first 6 months of 2020 to $3.5 7% for the same period in 2021.

We are proud of this comparison at a time when most banks are reporting margins that have already begun to reflect the squeeze of lower rates.

All comparison periods.

On the balance sheet date of June 30, the ratio of time deposits to interest bearing deposits declined from 58, 3% at June 32020.

To 46, 9% at June 32021.

As a percentage of all deposits.

Average time deposits declined from 46, 4% at June 32020 to 36, 2% at June 32021.

Also of note on the balance sheet at June 30th is an increase of commercial real estate loans for the first 6 months.

<unk>.

For 2021 of $32.1 million or 6.8%.

This category increased by $63 million or 14, 2% year over year.

Securities balances increased $49.1 million or 16.8 per.

<unk> during the first 6 months of 2021 and $95 million or 36, 1% year over year low.

A large increase for each comparison period with an effort by management to invest the influx of liquidity into safe, but higher yielding asset.

Lastly, our bank capital levels remain strong at June 32021, with a total risk based capital ratio of 14, 1%.

Our leverage ratio was 10, 4% with these strong capital levels, we were able to once again increase the dividend paid to azure.

Per holders with an upcoming dividend of <unk> <unk> per share with that I turn the call back over to Rex Smith.

Thank you Bruce as we close out the quarter I think about the quote from Jamba piece car the more things change the more they are the same.

While we.

Our share towards our merger with United Bank, We remain true to our mission of continuing to enhance shareholder value through the remainder of our time in 2021.

Is there a culture of providing the highest level of customer service matches that of United Bank. It is easy for us to continue with our strategic plan as we begin.

We moved integration process.

We continue to work diligently to reduce problem assets to the best level in the history of the company, while expanding the net interest margin through disciplined pricing on both sides of the balance sheet.

I believe our continued strong performance and balance sheet quality and net interest income.

Began the reports that we continue our attention to expanding value.

Did that and as Bruce just mentioned, we increased our quarterly dividend from 6 cents to 7 cents a share payable September 1.

In addition, our associates continue to work tirelessly to provide safe and secure banking.

Some financial support during this time and I know they will continue to do so until the effective date of the merger and beyond.

We are pleased by the core results for the quarter and very optimistic for the future as we become part of 1 of the strongest and most community focused bank franchises in the United States.

And we hope that you our shareholders are also pleased with our direction and we thank each of you for your ongoing support of the company.

I will now open the call for any questions.

Thank you Sir.

We will now begin the question and answer session.

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At this time, we will just pause momentarily to assemble our roster.

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Star then 1.

Yeah.

At this time, we're showing no questions. We'll go ahead and conclude todays conference.

I would like to hand, the conference back over to Mr. Smith for any closing remarks, Sir.

I'd like to thank all our shareholders for their ongoing support and remind everybody that Bruce and I are available for follow up questions. If anybody wants to give us a call directly we appreciate.

That and are happy.

For any questions that come up down the road. So thank you all again.

And we thank you also to the rest of the management team for your time again. The conference call has now concluded at this time you may disconnect. Your lines. Thank you everyone take care and have a great day.

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P to Ann.

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