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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                

Commission File Number: 001-32590

COMMUNITY BANKERS TRUST CORPORATION

(Exact name of registrant as specified in its charter)

Virginia

20-2652949

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

9954 Mayland Drive, Suite 2100

Richmond, Virginia

23233

(Address of principal executive offices)

(Zip Code)

(804934-9999

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, $0.01 par value

ESXB

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit. such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

At September 30, 2020, there were 22,321,000 shares of the Company’s common stock outstanding.

Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

TABLE OF CONTENTS

FORM 10-Q

September 30, 2020

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

3

Unaudited Consolidated Balance Sheets

3

Unaudited Consolidated Statements of Income

4

Unaudited Consolidated Statements of Comprehensive Income

5

Unaudited Consolidated Statements of Changes in Shareholders’ Equity

6

Unaudited Consolidated Statements of Cash Flows

7

Notes to Unaudited Consolidated Financial Statements

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

Item 3. Quantitative and Qualitative Disclosures About Market Risk

47

Item 4. Controls and Procedures

48

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

48

Item 1A. Risk Factors

49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 3. Defaults upon Senior Securities

50

Item 4. Mine Safety Disclosures

50

Item 5. Other Information

50

Item 6. Exhibits

51

SIGNATURES

52

2

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COMMUNITY BANKERS TRUST CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

(dollars in thousands, except share data)

    

September 30, 2020

    

December 31, 2019 *

ASSETS

Cash and due from banks

$

18,689

$

16,976

Interest bearing bank deposits

 

56,795

 

11,708

Total cash and cash equivalents

 

75,484

 

28,684

Securities available for sale, at fair value

 

233,653

 

186,969

Securities held to maturity, at cost (fair value of $24,118 and $36,633, respectively)

 

23,026

 

35,733

Equity securities, restricted, at cost

 

8,875

 

8,855

Total securities

 

265,554

 

231,557

Loans held for sale

 

1,151

 

501

Loans

 

1,177,709

 

1,058,323

Purchased credit impaired (PCI) loans

 

27,146

 

32,528

Total loans

 

1,204,855

 

1,090,851

Allowance for loan losses (loans of $12,328 and $8,429, respectively; PCI loans of $156 and $156, respectively)

 

(12,484)

 

(8,585)

Net loans

 

1,192,371

 

1,082,266

Bank premises and equipment, net

 

28,197

 

29,472

Bank premises and equipment held for sale

 

1,589

 

1,589

Right-of-use lease assets

5,766

6,472

Other real estate owned

 

4,416

 

4,527

Bank owned life insurance

 

29,858

 

29,340

Other assets

 

17,851

 

16,432

Total assets

$

1,622,237

$

1,430,840

LIABILITIES

 

  

 

  

Deposits:

 

  

 

  

Noninterest bearing

$

281,679

$

178,584

Interest bearing

 

1,087,663

 

984,864

Total deposits

 

1,369,342

 

1,163,448

Federal funds purchased

 

940

 

24,437

Federal Home Loan Bank borrowings

 

68,000

 

68,500

Trust preferred capital notes

 

4,124

 

4,124

Lease liabilities

6,027

6,737

Other liabilities

 

8,014

 

8,115

Total liabilities

 

1,456,447

 

1,275,361

SHAREHOLDERS’ EQUITY

 

  

 

  

Common stock (200,000,000 shares authorized, $0.01 par value; 22,321,000 and 22,422,621 shares issued and outstanding, respectively)

 

223

 

224

Additional paid in capital

 

150,708

 

150,728

Retained earnings

 

9,300

 

2,562

Accumulated other comprehensive income

 

5,559

 

1,965

Total shareholders’ equity

 

165,790

 

155,479

Total liabilities and shareholders’ equity

$

1,622,237

$

1,430,840

*

Derived from audited consolidated financial statements

See accompanying notes to unaudited consolidated financial statements

3

Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(dollars and shares in thousands, except per share data)

    

Three months ended

Nine months ended

September 30, 2020

    

September 30, 2019

September 30, 2020

    

September 30, 2019

Interest and dividend income

 

  

 

  

  

 

  

Interest and fees on loans

$

12,760

$

13,187

$

38,858

$

38,246

Interest and fees on PCI loans

 

962

 

2,333

 

3,121

 

4,877

Interest on federal funds sold

 

 

9

 

 

14

Interest on deposits in other banks

 

121

 

87

 

231

 

300

Interest and dividends on securities

 

 

 

 

Taxable

 

1,362

 

1,489

 

4,000

 

4,483

Nontaxable

 

344

 

355

 

1,036

 

1,252

Total interest and dividend income

 

15,549

 

17,460

 

47,246

 

49,172

Interest expense

 

  

 

  

 

  

 

  

Interest on deposits

 

2,614

 

3,698

 

9,215

 

10,521

Interest on borrowed funds

 

222

 

343

 

720

 

1,107

Total interest expense

 

2,836

 

4,041

 

9,935

 

11,628

Net interest income

 

12,713

 

13,419

 

37,311

 

37,544

Provision for loan losses

 

 

 

4,200

 

125

Net interest income after provision for loan losses

 

12,713

 

13,419

 

33,111

 

37,419

Noninterest income

 

  

 

  

 

  

 

  

Service charges and fees

 

613

 

758

 

1,817

 

2,074

Gain on securities transactions, net

 

78

 

50

 

281

 

274

Gain on sale of other loans

 

 

 

11

 

Income on bank owned life insurance

 

171

 

181

 

518

 

546

Mortgage loan income

 

228

 

176

 

822

 

338

Other

 

382

 

346

 

974

 

744

Total noninterest income

 

1,472

 

1,511

 

4,423

 

3,976

Noninterest expense

 

  

 

  

 

  

 

  

Salaries and employee benefits

 

5,041

 

5,289

 

14,806

 

15,943

Occupancy expenses

 

815

 

813

 

2,420

 

2,662

Equipment expenses

 

330

 

377

 

1,047

 

1,152

FDIC assessment

 

174

 

4

 

455

 

316

Data processing fees

 

656

 

594

 

1,821

 

1,741

Other real estate expense, net

 

87

 

565

 

89

 

662

Other operating expenses

 

1,423

 

1,588

 

4,355

 

4,585

Total noninterest expense

 

8,526

 

9,230

 

24,993

 

27,061

Income before income taxes

 

5,659

 

5,700

 

12,541

 

14,334

Income tax expense

 

1,143

 

1,087

 

2,450

 

2,674

Net income

$

4,516

$

4,613

$

10,091

$

11,660

Net income per share — basic

$

0.20

$

0.21

$

0.45

$

0.52

Net income per share — diluted

$

0.20

$

0.20

$

0.45

$

0.52

Weighted average number of shares outstanding

 

  

 

  

 

  

 

  

Basic

 

22,312

 

22,303

 

22,339

 

22,224

Diluted

 

22,503

 

22,561

 

22,534

 

22,475

See accompanying notes to unaudited consolidated financial statements

4

Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(dollars in thousands)

Three months ended

Nine months ended

    

September 30, 2020

    

September 30, 2019

    

September 30, 2020

    

September 30, 2019

Net income

$

4,516

$

4,613

$

10,091

$

11,660

Other comprehensive income:

Unrealized gain on investment securities:

Change in unrealized gain on investment securities

 

1,735

 

1,215

 

5,527

 

5,818

Tax related to unrealized gain on investment securities

 

(382)

 

(267)

 

(1,215)

 

(1,279)

Reclassification adjustment for gain on securities sold

 

(78)

 

(50)

 

(281)

 

(274)

Tax related to realized gain on securities sold

 

17

 

11

 

62

 

60

Cash flow hedge:

Change in unrealized gain (loss) on cash flow hedge

 

47

 

(156)

 

(639)

 

(395)

Tax related to cash flow hedge

 

(10)

 

34

 

140

 

86

Total other comprehensive income

 

1,329

 

787

 

3,594

 

4,016

Total comprehensive income

$

5,845

$

5,400

$

13,685

$

15,676

See accompanying notes to unaudited consolidated financial statements

5

Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(dollars and shares in thousands, except per share amounts)

Accumulated

Additional

Retained

Other

Common Stock

Paid in

Earnings

Comprehensive

    

Shares

    

Amount

    

Capital

    

(Deficit)

    

Income (Loss)

    

Total

Balance June 30, 2019

 

22,258

$

223

$

149,752

$

(4,529)

$

1,950

$

147,396

Issuance of common stock

 

7

 

 

54

 

 

 

54

Exercise and issuance of employee stock options

 

70

 

 

458

 

 

 

458

Net income

 

 

 

 

4,613

 

 

4,613

Dividends of $0.03 per share paid on common stock

 

 

 

 

(670)

 

 

(670)

Other comprehensive income

 

787

787

Balance September 30, 2019

 

22,335

$

223

$

150,264

$

(586)

$

2,737

$

152,638

Balance December 31, 2018

22,132

$

221

$

148,763

$

(10,244)

$

(1,279)

$

137,461

Issuance of common stock

 

21

 

 

161

 

 

 

161

Exercise and issuance of employee stock options

 

182

 

2

 

1,340

 

 

 

1,342

Net income

 

 

 

 

11,660

 

 

11,660

Dividends of $0.09 per share paid on common stock

 

 

 

(2,002)

 

 

(2,002)

Other comprehensive income

 

 

 

 

 

4,016

 

4,016

Balance September 30, 2019

 

22,335

$

223

$

150,264

$

(586)

$

2,737

$

152,638

Balance June 30, 2020

 

22,311

$

223

$

150,428

$

5,900

$

4,230

$

160,781

Issuance of common stock

 

10

 

 

49

 

 

 

49

Exercise and issuance of employee stock options

 

 

 

231

 

 

 

231

Net income

 

 

 

 

4,516

 

 

4,516

Dividends of $0.05 per share paid on common stock

 

 

 

 

(1,116)

 

 

(1,116)

Other comprehensive income

 

1,329

1,329

Balance September 30, 2020

 

22,321

$

223

$

150,708

$

9,300

$

5,559

$

165,790

Balance December 31, 2019

22,423

$

224

$

150,728

$

2,562

$

1,965

$

155,479

Issuance of common stock

 

25

 

 

152

 

 

 

152

Exercise and issuance of employee stock options

 

4

 

 

705

 

 

 

705

Stock purchased under stock repurchase program

(131)

(1)

(877)

(878)

Net income

 

 

 

 

10,091

 

 

10,091

Dividends of $0.15 per share paid on common stock

 

 

 

(3,353)

 

 

(3,353)

Other comprehensive income

 

 

 

 

 

3,594

 

3,594

Balance September 30, 2020

 

22,321

$

223

$

150,708

$

9,300

$

5,559

$

165,790

See accompanying notes to unaudited consolidated financial statements

6

Table of Contents

COMMUNITY BANKERS TRUST CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(dollars in thousands)

    

September 30, 2020

    

September 30, 2019

Operating activities:

Net income

$

10,091

$

11,660

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

 

1,379

 

1,552

Right-of-use lease asset amortization

706

699

Stock-based compensation expense

 

846

 

804

Tax benefit of exercised stock options

 

(6)

 

(150)

Amortization of purchased loan premium

 

229

 

236

Provision for loan losses

 

4,200

 

125

Amortization of security premiums and accretion of discounts, net

 

574

 

905

Net gain on sale of securities

 

(281)

 

(274)

Net gain on sale and valuation of other real estate owned

 

(23)

 

(81)

Net gain on sale of loans

 

(11)

 

Originations of mortgages held for sale

 

(26,112)

 

(13,227)

Proceeds from sales of mortgages held for sale

 

25,462

 

13,373

Net loss on disposal of premises and equipment

82

Increase in bank owned life insurance investment

 

(518)

 

(327)

Changes in assets and liabilities:

 

 

Increase in other assets

 

(2,086)

 

(661)

Decrease in accrued expenses and other liabilities

 

(1,446)

 

(117)

Net cash provided by operating activities

 

13,086

 

14,517

Investing activities:

 

  

 

  

Proceeds from sales/calls/maturities/paydowns of available for sale securities

 

66,171

 

75,128

Proceeds from calls/maturities/paydowns of held to maturity securities

 

12,640

 

3,835

Proceeds from sales of restricted equity securities

 

1,700

 

866

Purchase of available for sale securities

 

(107,834)

 

(53,589)

Purchase of restricted equity securities

 

(1,720)

 

(1,995)

Proceeds from sale of other real estate owned

 

134

 

638

Net increase in loans

 

(115,608)

 

(42,707)

Principal recoveries of loans previously charged off

 

453

 

363

Purchase of premises and equipment, net

 

(186)

 

(121)

Purchase small business investment company fund investment

 

(345)

 

(875)

Proceeds from sale of loans

 

632

 

705

Net cash used in investing activities

 

(143,963)

 

(17,752)

Financing activities:

 

  

 

  

Net increase in deposits

 

205,894

 

12,267

Net decrease in federal funds purchased

 

(23,497)

 

(19,369)

Net increase in short-term Federal Home Loan Bank borrowings

 

 

5,000

Proceeds from long-term Federal Home Loan Bank borrowings