Community Bankers Trust Corporation (NASDAQ: ESXB), the holding company for Essex Bank, today reported results for the fourth quarter and year ended December 31, 2020.

FINANCIAL HIGHLIGHTS

• Net income was $5.5 million for the quarter ended December 31, 2020, compared with net income of $4.5 million in the third quarter of 2020 and net income of $4.0 million in the fourth quarter of 2019.
• Net income for the year ended December 31, 2020 was $15.5 million, a decrease of $157,000 from $15.7 million for the year ended December 31, 2019, as the provision for loan losses of $4.2 million in 2020 was $3.9 million higher than in 2019 due to the economic uncertainties created by the coronavirus (COVID-19) pandemic.
• Net interest income was $14.0 million for the fourth quarter of 2020, a linked quarter increase of $1.3 million, or 10.1%.
• Interest on deposits declined $463,000 on a linked quarter basis and the associated cost declined from 0.96% to 0.77%.
• Diluted earnings per share were $0.24 for the fourth quarter of 2020 and $0.69 for the year ended December 31, 2020 compared with diluted earnings per share of $0.18 for the fourth quarter of 2019 and $0.70 for the year ended December 31, 2019.
• Return on average assets was 1.32% for the fourth quarter of 2020 and 0.99% for the year ended December 31, 2020 compared with return on average assets of 1.14% for the fourth quarter of 2019 and 1.11% for the year ended December 31, 2019.
• Return on average equity was 12.64% for the fourth quarter of 2020 and 9.58% for the year ended December 31, 2020 compared with 10.42% for the fourth quarter of 2019 and 10.63% for the year ended December 31, 2019.

OPERATING HIGHLIGHTS

• Loans, excluding purchased credit impaired (PCI) loans, grew $4.7 million, or 0.4%, during the fourth quarter of 2020 and $124.0 million, or 11.7%, since year end 2019.
• Loan growth would have been $40.5 million, or 3.7%, during the fourth quarter of 2020 and $74.8 million, or 7.1%, for the year ended December 31, 2020 when excluding loans originated during 2020 under the Paycheck Protection Program ("PPP") of the Small Business Administration ("SBA").
• Nonperforming loans were $3.5 million at December 31, 2020, $2.7 million lower than one year earlier. The ratio of nonperforming assets to loans and other real estate was 0.67% at December 31, 2020 compared with 1.01% one year earlier.
• Deposits grew $29.4 million during the fourth quarter of 2020 as total checking balances and savings accounts grew by $62.1 million while more costly certificates of deposit accounts declined by $28.7 million.
• Total deposits grew $235.3 million, or 20.2%, during 2020. Total checking, money market and savings accounts grew $250.9 million during 2020 while certificates of deposit declined $15.6 million.
• Net interest margin was 3.61% in the fourth quarter of 2020 compared with 3.35% in the third quarter of 2020 and 3.74% in the fourth quarter of 2019. For the year ended December 31, 2020, the net interest margin was 3.52% compared with 3.82% one year earlier.
• PPP loan balances, net of fees, declined from $85.1 million at September 30, 2020 to $49.3 million at December 31, 2020.

MANAGEMENT COMMENTS

Rex L. Smith, III, President and Chief Executive Officer, stated, "Given the volatile economic environment resulting from the COVID-19 pandemic, we are pleased with the Company's results for the fourth quarter and the year 2020. After taking a prudent and cautious approach to the loan loss provision during the first and second quarters of 2020 that reflected the heightened risks associated with the pandemic, our net income has rebounded meaningfully as we have seen improving economic conditions in our markets. Our team has delivered robust year-over-year growth and improvement in several key areas including loan production, deposit mix, asset quality, and noninterest income. With regards to asset quality, while we have seen marked improvements from our forecasts earlier in 2020, we continue to vigilantly monitor credit quality given the risk of continued stress in certain sectors. On the interest expense front, we are currently benefitting from the impact of lower rates driving a reduction in our deposit expenses."

Smith concluded, "Our Associates worked hard in difficult circumstances, to help our customers and build strong, lasting relationships that not only enhance our franchise but also the communities that we serve. We are optimistic about 2021, and we will continue to look at ways to enhance shareholder value, including stock repurchases and our common stock dividend."

RESULTS OF OPERATIONS

Overview

Linked Quarter BasisNet income was $5.5 million for the fourth quarter of 2020, compared with net income of $4.5 million in the third quarter of 2020. Earnings per common share were $0.24 basic and fully diluted for the fourth quarter of 2020 and $0.20 basic and fully diluted for the third quarter of 2020. Net interest income increased by $1.3 million in the fourth quarter compared with the third quarter of 2020. Net interest income was positively affected by both interest income and interest expense. Interest income increased $822,000 on a linked quarter basis and interest expense decreased $464,000. Additionally, noninterest income increased $53,000 on a linked quarter basis, led by service charge income, which increased $164,000, and mortgage loan income, which increased $66,000. Offsetting these improvements to net income were an increase of $213,000 in noninterest expenses, which were impacted in the fourth quarter of 2020 by an increase of $291,000 in salaries and employee benefits, and an increase of $185,000 in income tax expense. Details of the linked quarter financial performance of the Company are presented below.

Year-over-Year Twelve MonthsNet income for the year ended December 31, 2020 was $15.5 million, or $0.70 per common share, basic and $0.69 per common share, fully diluted. This is a decrease of $157,000, or 1.0%, when compared with net income of $15.7 million, or $0.71 basic and $0.70 fully diluted earnings per share, for the year ended December 31, 2019. The slight decrease was driven by the provision for loan losses recorded to reflect the business and market disruptions arising from the COVID-19 pandemic. The provision was $4.2 million for 2020 compared with $325,000 for 2019. The decrease in net income on a year-over-year basis was the result of an increase of $1.4 million, or 2.7%, in net interest income, an increase of $594,000, or 11.1%, in noninterest income and a decrease of $2.0 million in noninterest expenses. There was an increase of $226,000 in income tax expense in 2020 compared with 2019. Details on the drivers of these year-over-year changes are presented below.

Year-over-Year Fourth QuarterNet income in the fourth quarter of 2020 increased $1.4 million when compared to the same period in 2019. Net income was $5.5 million in the fourth quarter of 2020, with earnings per share of $0.24 basic and fully diluted. Net income for the fourth quarter of 2019 was $4.0 million, with earnings per share of $0.18 basic and fully diluted. The increase in net income was driven by an increase of $1.6 million in net interest income, primarily from a decline in interest expense of $1.5 million in the fourth quarter of 2020 compared with the same period one year earlier. Additionally, noninterest income increased $147,000 year over year, driven by an increase of $146,000 in mortgage loan income. Noninterest expense increased by $71,000 and income tax expense increased by $450,000. Offsetting these increases to net income was a decrease of $200,000 in provision for loan losses, which was $200,000 in the fourth quarter of 2019. Details of the year-over-year financial performance of the Company are presented below.

The following table presents summary income statements for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019 and for the years ended December 31, 2020 and December 31, 2019.

The Bank's ratio of total risk-based capital was 13.6% at December 31, 2020 compared with 13.9% at December 31, 2019. The tier 1 risk-based capital ratio was 12.7% at December 31, 2020 and 13.2% at December 31, 2019. The Bank's tier 1 leverage ratio was 10.1% at December 31, 2020 and 11.0% at December 31, 2019. All capital ratios exceed regulatory minimums to be considered well capitalized. BASEL III introduced the common equity tier 1 capital ratio, which was 12.7% at December 31, 2020 and 13.2% at December 31, 2019.

About Community Bankers Trust Corporation and Essex Bank

Community Bankers Trust Corporation is the holding company for Essex Bank, a Virginia state bank with 24 full-service offices, 18 of which are in Virginia and six of which are in Maryland. The Bank also operates two loan production offices.

Additional information on the Bank is available on the Bank's website at www.essexbank.com. For information on Community Bankers Trust Corporation, please visit its website at www.cbtrustcorp.com.