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)
(804) 934-9999 (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

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

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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

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

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

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