United Bankshares, Inc.UBSINASDAQ
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Operator: Good morning, and welcome to Community Bankers Trust Corporation Third Quarter 2021 Earnings Call. All participants will be in 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, please go ahead, President and Chief Executive Officer.
Rex Smith: I want to thank you for joining us today as we review the results of the third 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 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 and uncertainties are included in our earnings release, 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 of these documents through our website at www.cbtrustcorp.com. This should be our final earnings call for the corporation, as we expect to be merged into United Bank subject to appropriate approvals and the satisfaction of other closing conditions before the end of the fourth quarter of 2021. We remain extremely excited about the merger and look forward to what the additional resources and products and services will give us in terms of market share growth and value-added to our customers. In the meantime, we continue to improve the quality of our balance sheet and the overall financial metrics of the company. At this point, I will turn the call over to Bruce to cover some of the highlights for the quarter.
Bruce Thomas: Thank you, Rex. And thank you to all of you that have listened to these conference calls over the years. The results I will be presenting to you today are, in my opinion, the best we have issued over the years. Net income was $6.5 million for the quarter ended September 30, 2021, compared with net income of $5.4 million in the second quarter of 2021 and net income of $4.5 million in the third quarter of 2020. On a linked quarter basis, earnings were positively affected by the following. Provision for loan losses reflected a credit of $1.25 million for the third quarter of 2021, compared with no provision in the second quarter of 2021. Continued improvement in credit quality was the driver behind the recapture in the third quarter of previous provision for loan losses. Net interest income increased by $298,000 or 2.1% in the third quarter, compared with the second quarter of 2021. Net interest income was positively affected by a continuation of decreasing costs in interest expense, which declined $81,000 on a linked quarter basis. We continue to see stability in the tax equivalent net interest margin, which was 3.52% in the third quarter of 2021, compared with 3.58% in the second quarter of 2021. The company also examined the net interest margin without the effects of PPP, net fees, interest income, and average balances. Excluding these PPP related items from the net interest margin calculation would have resulted in a margin of 3.39% in the third quarter of 2021, compared with the actual margin of 3.52%. The same exclusion of PPP related items would have resulted in a margin of 3.54% in the second quarter of 2021, compared with the actual margin of 3.58%. For the nine-month comparison period between 2021 and 2020 earnings were positively affected by the following: provision for loan losses reflected a reserve recovery of $2.65 million for the first nine months of 2021, compared with a provision of $4.2 million during the early stage of the COVID-19 pandemic for the first nine months of 2020; interest expense declined $5.1 million and was $4.8 million for the first nine months of 2021, compared with $9.9 million for the first nine months of 2020; smaller increases were in interest and dividend income which increased $959,000. The net interest margin increased from 3.48% for the first nine months of 2020 to 3.58% for the same period in 2021. The interest spread also increased over this timeframe from 3.21% in 2020 to 3.44% in 2021. Excluding PPP related items from the net interest margin calculation would have resulted in a margin of 3.50% for the first nine months of 2021, compared with the actual margin of 3.58%. Excluding PPP related items from the net interest margin calculation for the first nine months of 2020, would have resulted in a margin of 3.49% for the first nine months of 2020, compared with the actual margin of 3.48%. Therefore, margin increased by one basis point year-over-year when excluding the effects of PPP. Many banks will not report similar results with regard to the margin. Also, of note, at September 30, 2021, loans excluding purchase credit impaired loans grew $39.1 million or 3.3% during the third quarter of 2021. Loans grew $53.3 million or 4.5% year-over-year. Nonperforming assets were $4 million at September 30, 2021, $4.6 million lower than one year earlier. The ratio of non-performing assets to loans and other real estate was 0.33% at September 30, 2021, compared with 0.73% one year earlier. Deposits grew, $10 million or seven tenths of 1% during the third quarter of 2021 and grew $129.5 million or 9.5% year-over-year. Noninterest bearing deposits grew $64 million or 22.7% year-over-year. Total securities, $402.9 million at September 30, 2021, increased $53.3 million during the third quarter and cash and equivalents declined $74.6 million as excess liquidity was invested into higher yielding assets. These results are the culmination of years of asset liability management, planning, and execution, strong credit and risk management practices and great guidance from our board of directors. I am very happy that we saved our best for last, so to speak. And I’m happy to turn the call back over to Rex for closing comments.
Rex Smith: Thank you, Bruce. As we close out what we expect to be our last quarter as Essex Bank, I am overcome with many memories. A few, especially early on were not so good. But overall, it has been an extremely positive experience. I want to thank the management team and the Board of Directors for their commitment, knowledge and guidance through the years. It has been a great pleasure to work with them for the past 12 years. When we changed the management team to its current structure, the bank was trading at less than $1 per share and had so many problems there is not enough time today to begin to cover them. Since that time, we have built an incredibly strong franchise with very solid and steady returns for our shareholders. That was only accomplished because of the hard work, experience and dedication throughout the entire company. As we move closer to our merger with United bank, we continue to enhance value through our guiding principles of honesty, responsiveness, trust, respect, and diversity. All of our associates have worked hard to provide safe and secure banking and financial support for all of our customers. And I know they will continue to do so until the effective date of the merger and beyond. That hard work has produced the best balance sheet in the history of the company, which is also producing superior returns. We are very pleased by the core results of the quarter and very optimistic for the future as we've become a part of one of the largest and most successful banks headquartered in Virginia. 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.
Operator: We will now begin the question-and-answer session. [Operator Instructions]
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Operator: There's no questions at this time. We'll go back to Mr. Rex Smith for closing remarks. Please go ahead sir.
Rex Smith: Okay. I'd like to thank everybody for their ongoing support. It has been a real pleasure and Bruce and I will be available all day if anybody has any follow-up questions,
Operator: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.