EX-99.1 2 tv525937_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Community Bankers Trust Corporation Reports Results for Second Quarter of 2019

Net income was $3.5 million for the second quarter and $7.0 million for the first six months of 2019.

Conference Call on Friday, July 26, 2019, at 10:00 a.m. Eastern Time

Richmond, VA, July 26, 2019 - Community Bankers Trust Corporation (the “Company”) (NASDAQ: ESXB), the holding company for Essex Bank (the “Bank”), today reported results for the second quarter and first six months of 2019.

Income Statement- Three Months ended June 30, 2019 compared with Three Months ended March 31, 2019

Net income of $3.5 million for the second quarter of 2019 is an increase of $41,000, or 1.2%, on a linked quarter basis.

Interest and fees on loans increased $221,000, or 1.8%.

Interest expense increased $225,000, or 6.1%.

Noninterest income increased $437,000, or 43.1%.

There was a provision for loan losses of $125,000 in the second quarter of 2019.

Basic and diluted earnings per common share were $0.16 in each of the first and second quarters of 2019.

Return on average assets, annualized, was 1.01% and return on average equity, annualized, was 9.79% in the second quarter.

Income Statement- Six Months ended June 30, 2019 compared with Six Months ended June 30, 2018

Net income of $7.0 million is an increase of $671,000, or 10.5%.

Interest income of $31.7 million is an increase of $3.1 million, or 10.9%.

Interest and fees on loans increased $2.8 million, or 12.7%.

Net interest income increased $1.0 million, or 4.4%.

Return on average assets, annualized, was 1.01% and return on average equity, annualized, was 9.90% for the first six months of 2019.

Income Statement- Three Months ended June 30, 2019 compared with Three Months ended June 30, 2018

Net income of $3.5 million for the second quarter of 2019 is a decrease year-over-year of $238,000, or 6.3%.

Interest and dividend income increased $1.4 million, or 9.6%, in the second quarter of 2019 over the same period in 2018, led by interest and fees on loans, which increased $1.3 million, or 11.3%.

Net interest income increased $353,000, or 3.0%, year-over-year.

Noninterest income increased by $316,000, or 27.8%.

One-time costs were $254,000 in the second quarter of 2019 and included $210,000 associated with the closing of an underperforming branch and $44,000 in one-time pension costs from a senior officer retirement.

Net interest margin has remained stable at 3.69% in the second quarter compared with 3.73% the same period one year ago.

Balance Sheet- Year-over-Year June 30, 2019 compared with June 30, 2018

Loans grew $56.9 million, or 5.9%, from $967.4 million at June 30, 2018 to $1.024 billion at June 30, 2019.

Noninterest bearing deposits grew $28.4 million, or 18.7%, year-over-year and totaled $180.4 million, representing 14.8% of total deposits, an increase from 13.5% one year ago.

Deposits increased $92.3 million, or 8.2%.

Federal Home Loan Bank borrowings declined $42.0 million, in part, due to growth in noninterest bearing accounts.

Other real estate owned was $983,000 at June 30, 2019, down from $3.1 million at June 30, 2018.

MANAGEMENT COMMENTS

Rex L. Smith, III, President and Chief Executive Officer, stated, “The Company experienced better than expected balance sheet growth as total assets were $31.9 million higher than the prior quarter end and $77.3 million higher year over year. The second quarter was characterized by sound loan growth in terms of both size and quality, strong demand deposit growth, and increased noninterest income. Total loans grew $56.9 million since June 30, 2018, and the yield on loans increased by 26 basis points from the second quarter of 2018. Additionally, noninterest bearing deposit growth exceeded expectations, ending the quarter at $180.4 million, up over 18% year over year.”

Mr. Smith added, “The increase in demand deposit accounts also helped to increase our noninterest income. Unfortunately, our noninterest expenses were slightly elevated for the quarter from some one-time termination expenses associated with a branch closure, but this will help lower overall operating costs going forward.”

Commenting on credit quality Mr. Smith noted, “During the current quarter, the Company recorded a slight provision driven by the growth in loans, and coupled with a recovery, the allowance is 80% of nonaccrual loans. Total nonperforming assets have remained stable, ending the quarter at $12.0 million.”

Smith concluded, “We continue to experience meaningful franchise growth and believe that our opportunities for both internal and external growth remain consistently strong. We will continue to emphasize core demand deposits, and we will remain diligent in monitoring the interest rate environment to protect our earnings no matter what comes of the future interest rate environment. We plan to continue in a steady and measured approach to achieve our objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value.”

RESULTS OF OPERATIONS

Overview

Linked Quarter Basis

Net income increased $41,000 and was $3.5 million for each of the second quarter of 2019 and the first quarter of 2019. Earnings per common share, basic and fully diluted, were $0.16 per share in each of the three months ended June 30, 2019 and March 31, 2019. Net income was affected on a linked quarter basis by an increase in noninterest income of $437,000, fueled by an increase of $252,000 in securities gains and offset by an increase of $151,000 in noninterest expense, $125,000 in provision for loan losses and a decline of $125,000 in net interest income. Noninterest expenses in the second quarter were impacted by one-time charges of $254,000 related to a branch closing and pension expense. The decline in net interest income was driven by an increase of $225,000 in interest expense.

Year-Over-Year Six Months

Net income increased $671,000 and was $7.0 million for the first six months of 2019 compared with $6.4 million for the same period in 2018. This is an increase of 10.5%. Increases were in interest and dividend income, which increased by $3.1 million, or 10.9%, and noninterest income, which increased by $297,000, or 13.7%. Offsetting these increases to net income were increases of $2.1 million in interest expense, $278,000 in noninterest expense and $234,000 in income tax expense.

Year-Over-Year Quarter

Net income of $3.5 million for the second quarter of 2019 was a decrease of $238,000, or 6.3%, compared with second quarter 2018 net income of $3.8 million. Interest and dividend income increased by $1.4 million in the second quarter of 2019 compared with the same period in 2018, driven by interest and fees on loans, which increased $1.3 million. Noninterest income increased by $316,000 year-over-year. Offsetting these increases was an increase of $804,000 in noninterest expenses, of which $254,000 was in salaries and employee benefits, $246,000 in other operating expenses and $150,000 in occupancy expenses. One-time expenses of $254,000 related to a branch closure and pension expense were recorded in the second quarter of 2019.

The following table presents summary income statements for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 and the six months ended June 30, 2019 and June 30, 2018.

SUMMARY INCOME STATEMENT

(Dollars in thousands)

	For the three months ended									For the six months ended
	30-Jun-19			31-Mar-19			30-Jun-18			30-Jun-19			30-Jun-18
Interest income	$	15,906		$	15,806		$	14,510		$	31,712		$	28,589
Interest expense		3,906			3,681			2,863			7,587			5,475
Net interest income		12,000			12,125			11,647			24,125			23,114
Provision for loan losses		125			-			-			125			-
Net interest income after provision for loan losses		11,875			12,125			11,647			24,000			23,114
Noninterest income		1,451			1,014			1,135			2,465			2,168
Noninterest expense		8,991			8,840			8,187			17,831			17,553
Income before income taxes		4,335			4,299			4,595			8,634			7,729
Income tax expense		791			796			813			1,587			1,353
Net income	$	3,544		$	3,503		$	3,782		$	7,047		$	6,376

EPS Basic	$	0.16		$	0.16		$	0.17		$	0.32		$	0.29
EPS Diluted	$	0.16		$	0.16		$	0.17		$	0.31		$	0.28
Fully diluted, weighted average shares		22,433			22,430			22,580			22,432			22,551

Return on average assets, annualized		1.01	%		1.01	%		1.12	%		1.01	%		0.95	%
Return on average equity, annualized		9.79	%		10.02	%		11.92	%		9.90	%		10.13	%

Net Interest Income

Linked Quarter Basis

Net interest income was $12.0 million for the quarter ended June 30, 2019 compared with $12.1 million for the quarter ended March 31, 2019. This is a decrease of $125,000, or 1.0%.

Interest and dividend income on a linked quarter basis increased $100,000, or 0.6%, to $15.9 million for the second quarter of 2019. Interest income with respect to loans, excluding PCI loans, increased $221,000, or 1.8%, during the second quarter when compared with the first quarter of 2019. This increase was attributed to continued loan growth on a linked quarter basis. The average balance of loans, excluding PCI loans, increased $12.4 million, or 5.0%, on an annualized basis. The yield on loans decreased slightly, from 5.04% in the first quarter of 2019 to 5.01% in the second quarter of 2019. Interest income with respect to PCI loans was $1.3 million in each of the first and second quarters of 2019. Interest income on securities decreased $105,000 on a linked quarter basis and was negatively impacted by prepayments during the second quarter.

Securities income equaled $2.0 million on a tax-equivalent basis for the second quarter of 2019, which was a decrease of $120,000 from the first quarter of 2019. The tax-equivalent yield on the securities portfolio was 3.23% in the second quarter of 2019 compared with a tax-equivalent yield of 3.35% in the first quarter of 2019. Second quarter securities income was negatively impacted by the write-off of premiums resulting from accelerated payments on securities recorded at book values above par value.

The combination of tax equivalent yields within the asset mix resulted in a yield on earning assets of 4.88% for the second quarter of 2019, down from 4.95% in the first quarter of 2019.

Interest expense of $3.9 million in the second quarter of 2019 was an increase of $225,000, or 6.1%, on a linked quarter basis. Interest on deposits increased $355,000, or 11.0%. Interest on borrowed funds decreased by $130,000, or 29.1%. Average interest bearing on deposits increased by $18.3 million, or 1.8%. The cost of these deposits increased from 1.31% in the first quarter of 2019 to 1.41% in the second quarter of 2019, resulting in an 11.0% increase in interest expense. The increased rates paid on interest bearing deposits resulted in an increase in the cost of interest bearing liabilities from 1.38% in the first quarter of 2019 to 1.45% in the second quarter of 2019.

With the changes in interest income noted above, the tax-equivalent net interest margin declined from 3.81% in the first quarter of 2019 to 3.69% in the second quarter of 2019. Likewise, the interest spread decreased from 3.57% to 3.43% on a linked quarter basis.

Year-Over-Year Six Months

Net interest income was $24.1 million for the first six months of 2019, or an increase of $1.0 million, or 4.4%, when comparing the first six months of 2018 and 2019. The yield on earning assets was 4.92% for the first six months of 2019 compared with 4.62% for the first six months of 2018. Interest and fees on loans of $25.1 million in the first half of 2019 was an increase of $2.8 million compared with $22.2 million for the same period in 2018. Interest and fees on PCI loans declined $128,000 over this same time frame. Securities income increased $313,000 for the first six months of 2019 compared with the same period in 2018. On a tax-equivalent basis, income on securities increased $253,000. The tax-equivalent yield on the portfolio increased and was 3.29% for the first half of 2019 compared with 3.04% for the same period in 2018.

Interest expense of $7.6 million represented an increase of $2.1 million in the first six months of 2019 compared with the same period in 2018. Average interest bearing liabilities increased $21.8 million, or 2.1%. The cost of interest bearing liabilities increased from 1.04% for the first six months of 2018 to 1.41% for the first six months of 2019. Driving the increase was growth of $78.8 million, or 14.2%, in the average balance of time deposits, from $556.5 million for the first half of 2018 to $635.4 million for the same period in 2019. This growth in time deposits, as a result of higher rates, came partly from a shift away from savings and money market accounts, which experienced a decline of $19.6 million in average balances between the comparison periods.

The tax equivalent net interest margin was 3.75% for each of the first six months of 2018 and 2019. While the yield on earning assets increased by 30 basis points over this time frame, the competition for funding pushed the cost of interest bearing liabilities up 37 basis points, from 1.04% to 1.41%. The net interest spread declined by seven basis points, -from 3.58% for the first six months of 2018 to 3.51% for the first six months of 2019. The margin remained stable as a result of growth of $16.4 million, or 13.1%, in the average balance in shareholders’ equity and growth of $15.2 million, or 10.1%, in the average balance of noninterest bearing deposits.

Year-Over-Year Quarter

Net interest income increased $353,000, or 3.0%, from the second quarter of 2018 to the second quarter of 2019. Net interest income was $12.0 million in the second quarter of 2019 compared with $11.6 million for the same period in 2018. Interest and dividend income increased $1.4 million, or 9.6%, over this time period. The increase in interest income was generated by an increase of $49.8 million, or 3.9%, in the level of average earning assets coupled with an increase in the yield on earning assets. The yield on earning assets increased from 4.64% in the second quarter of 2018 to 4.88% in the second quarter of 2019. The average balance of loans, excluding PCI loans, increased $52.5 million, or 5.5%, from $959.0 million in the second quarter of 2018 to $1.011 billion in the second quarter of 2019. Interest income on securities was $1.9 million in the second quarter of 2019, which was an increase of $80,000 over the second quarter of 2018. On a tax-equivalent basis, the yield on investment securities increased 12 basis points and was 3.23% in the second quarter of 2019 and 3.11% in the second quarter of 2018.

Interest on PCI loans was $1.3 million in each of the second quarters of 2019 and 2018. The average balance of the PCI portfolio declined $4.9 million during the year-over-year comparison period.

Interest expense increased $1.0 million, or 36.4%, when comparing the second quarter of 2019 and the second quarter of 2018. Interest expense on deposits increased $1.2 million, or 52.4%, as the average balance of interest bearing deposits increased $63.8 million, or 6.7%. The increase in deposit cost was driven by an increase in time deposit average balances, which increased $86.1 million, or 15.3%, year-over-year. Likewise, the cost of these balances increased $1.2 million, from 1.41% to 1.98%, over the same time frame. FHLB and other borrowings decreased, on average, $44.3 million year-over-year, and there was an increase in the rate paid, from 1.87% in the second quarter of 2018 to 2.08% in the second quarter of 2019. The decrease in balance more than offset the increase in rate and resulted in a decrease in the expense of this wholesale funding source of $172,000, to $310,000 in the second quarter of 2019. The average balance of FHLB and other borrowings was $58.9 million in the second quarter of 2019. Overall, the Bank’s cost of interest bearing liabilities increased 37 basis points, from 1.08% in the second quarter of 2018 to 1.45% in the second quarter of 2019.

The tax-equivalent net interest margin decreased four basis points, from 3.73% in the second quarter of 2018 to 3.69% in the second quarter of 2019. Likewise, the interest spread decreased from 3.56% to 3.43% over the same time period. The decrease in the margin was precipitated by the increase in the cost of interest bearing liabilities without a corresponding increase in the yield on earning assets.

The following table compares the Company's net interest margin, on a tax-equivalent basis, for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 and the six months ended June 30, 2019 and June 30, 2018.

NET INTEREST MARGIN

(Dollars in thousands)

	For the three months ended
	30-Jun-19			31-Mar-19			30-Jun-18
Average interest earning assets	$	1,316,422		$	1,304,842		$	1,266,663
Interest income	$	15,906		$	15,806		$	14,510
Interest income - tax-equivalent	$	16,018		$	15,933		$	14,656
Yield on interest earning assets		4.88	%		4.95	%		4.64	%
Average interest bearing liabilities	$	1,080,315		$	1,082,186		$	1,064,626
Interest expense	$	3,906		$	3,681		$	2,863
Cost of interest bearing liabilities		1.45	%		1.38	%		1.08	%
Net interest income	$	12,000		$	12,125		$	11,647
Net interest income - tax-equivalent	$	12,112		$	12,252		$	11,793
Interest spread		3.43	%		3.57	%		3.56	%
Net interest margin		3.69	%		3.81	%		3.73	%

	For the six months ended
	30-Jun-19			30-Jun-18
Average interest earning assets	$	1,310,550		$	1,260,243
Interest income	$	31,712		$	28,589
Interest income - tax-equivalent	$	31,951		$	28,887
Yield on interest earning assets		4.92	%		4.62	%
Average interest bearing liabilities	$	1,081,245		$	1,059,482
Interest expense	$	7,587		$	5,475
Cost of interest bearing liabilities		1.41	%		1.04	%
Net interest income	$	24,125		$	23,114
Net interest income - tax-equivalent	$	24,363		$	23,412
Interest spread		3.51	%		3.58	%
Net interest margin		3.75	%		3.75	%

Provision for Loan Losses

The Company records a separate provision for loan losses for its loan portfolio, excluding PCI loans, and the PCI loan portfolio. There was a provision for loan losses of $125,000 on the loan portfolio, excluding PCI loans, during the second quarter of 2019 compared with no provision for loan losses in the first quarter of 2019 and in the second quarter of 2018. The provision recognized in the second quarter of 2019 was due to loan growth of $26.3 million, or 2.6%, during the quarter and an uptick in delinquencies less than 90 days past due and still accruing interest. There was no provision for loan losses on the PCI loan portfolio during the first and second quarters of 2019 or during the first and second quarters of 2018. Additional discussion of loan quality is presented below.

Noninterest Income

Linked Quarter Basis

Noninterest income was $1.5 million for the second quarter of 2019, an increase of $437,000 compared with $1.0 million for the first quarter of 2019. Securities gains of $238,000 in the second quarter of 2019 compared with securities losses of $14,000 in the first quarter of 2019 represents an increase of $252,000 on a linked quarter basis. Also increasing were service charges and fees, which increased by $98,000 over the linked quarters. Other noninterest income of $222,000 was an increase of $46,000 from the first quarter of 2019. Mortgage loan income increased by $38,000 and was $100,000 in the second quarter of 2019.

Year-Over-Year Six Months

Noninterest income was $2.5 million for the first six months of 2019, an increase of $297,000, or 13.7%, compared with $2.2 million for the first six months of 2018. Gain on securities transactions increased $210,000 and was $224,000 for the first six months of 2019 compared with $14,000 for the same period in 2018. Service charges and fees were $1.3 million for the first six months of 2019, an increase of $124,000 compared with the same period in 2018. Other noninterest income was $398,000 for the first half of 2019, an increase of $47,000 versus the first half of 2018. Partially offsetting these increases was a decline of $29,000 in mortgage loan income, which was $162,000 for the first six months of 2019.

Year-Over-Year Quarter

Noninterest income increased $316,000, or 27.8%, and was $1.5 million in the second quarter of 2019 compared with $1.1 million for the second quarter of 2018. Securities gains increased $254,000 year-over-year and were $238,000 in the second quarter of 2019. Service charges on deposit accounts were $707,000 in the second quarter of 2019 and increased $96,000 year-over-year. Mortgage loan income of $100,000 in the second quarter of 2019 was an increase of $20,000 over the same period in 2018.

Noninterest Expenses

One-time costs of $254,000 in the second quarter of 2019 included $210,000 associated with the closing of an underperforming branch (occupancy expense, $103,000; other real estate expense, $62,000; salaries, $45,000) and $44,000 in one-time pension costs, which are included in salary expenses, from a senior officer retirement. These expenses affect each of the comparison periods.

Linked Quarter Basis

Noninterest expenses totaled $9.0 million for the second quarter of 2019, as compared with $8.8 million for the first quarter of 2019, an increase of $151,000, or 1.7%. Other operating expenses exhibited the largest increase, $121,000. This increase was driven by $239,000 in credit expenses versus $63,000 the prior quarter. The next largest increase on a linked quarter basis was other real estate expenses, which increased $113,000. Salaries and employee benefits decreased $108,000, or 2.0% on a linked quarter basis. Equipment expenses increased $13,000, FDIC assessment increased $12,000, data processing fees increased $11,000 and occupancy expenses decreased $11,000.

Year-Over-Year Six Months

Noninterest expenses were $17.8 million for the first six months of 2019, as compared with $17.6 million for the same period in 2018. This is an increase of $278,000, or 1.6%. Occupancy expenses increased $268,000, or 17.0%. Data processing fees increased $162,000, or 16.4% and were $1.1 million for the first six months of 2019. Equipment expenses increased by $117,000 and were $775,000 for the first six months of 2019. Offsetting these increases, salaries and employee benefits decreased $214,000 for the first six months of 2019 compared with the same period in 2018. Also impacting noninterest expenses for the first six months of 2018 compared with the same period in 2017 was a decrease in FDIC assessment of $92,000.

Year-Over-Year Quarter

Noninterest expenses were $9.0 million in the second quarter of 2019 and increased $804,000, or 9.8%, compared with the same period in 2018. Salaries and employee benefits of $5.3 million increased $254,000, or 5.1% year-over-year. Other operating expenses of $1.6 million increased $246,000 year-over-year. This increase was primarily the result of increased credit expense in the second quarter of 2019 of $138,000, an increase in stationery, printing and supplies of $66,000 and an increase in bank franchise tax of $41,000. Occupancy expenses of $919,000 show an increase of $150,000 over the same period in 2018. Other real estate expenses of $105,000 in the second quarter of 2019 were $60,000 greater than the same period in 2018. Data processing fees of $579,000 in the second quarter of 2019 were $80,000 greater than one year earlier. FDIC assessment of $162,000 in the second quarter of 2019 decreased $36,000 from one year earlier.

The following table compares the Company's other operating expenses included in noninterest expenses for the three months ended June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

OTHER OPERATING EXPENSES
(Dollars in thousands)	For the three months ended
	30-Jun-19		31-Mar-19		31-Dec-18		30-Jun-18
Bank franchise tax	$	220	$	220	$	179	$	179
Telephone and internet line		50		56		53		51
Stationery, printing and supplies		151		167		163		85
Marketing expense		151		170		146		133
Credit expense		239		63		128		101
Outside vendor fees		159		139		177		154
Other expenses		589		623		619		610
Total other operating expenses	$	1,559	$	1,438	$	1,465	$	1,313

Income Taxes

Income tax expense was $791,000 for the three months ended June 30, 2019, compared with income tax expense of $796,000 for the first quarter of 2019 and $813,000 for the second quarter of 2018. For the six months ended June 30, 2019, income tax expense was $1.6 million compared with $1.4 million for the first six months of 2018. The effective tax rate for the second quarter of 2019 was 18.2% versus 18.5% for the first quarter of 2019 and 17.7% in the second quarter of 2018. For the first six months of 2019, the effective tax rate was 18.4% and for the same period in 2018 it was 17.5%. The increase in the effective tax rate was primarily from lower tax-exempt income from municipalities.

FINANCIAL CONDITION

Total assets increased $38.0 million, or 2.7%, during the first six months of 2019 to $1.431 billion at June 30, 2019. Total assets increased $77.3 million, or 5.7%, since June 30, 2018. Total loans, excluding PCI loans, were $1.024 billion at June 30, 2019, increasing $30.5 million, or 3.1%, from year end 2018 and $56.9 million, or 5.9%, from June 30, 2018. Total PCI loans were $35.9 million at June 30, 2019 versus $38.3 million at year end 2018 and $39.9 million at June 30, 2018.

During the second quarter of 2019, total loan growth was $26.3 million, or 2.6%. Construction and land development loans grew by $13.5 million, or 10.9%, and totaled $137.0 million at June 30, 2019. Commercial mortgage loans, the largest category of loans, grew by $9.6 million, or 2.5%, and were $388.8 million at June 30, 2019. Residential 1 – 4 family loans grew by $4.3 million, or 2.0%.

During the first six months of 2019, loans grew by $30.5 million, or 3.1%. Construction and land development loans grew by $16.5 million, or 13.7%, commercial mortgage loans grew by $8.8 million, or 2.3%, and residential 1 – 4 family mortgages grew by $3.4 million.

The Company’s loan portfolio exhibited balanced growth when comparing June 30, 2019 and June 30, 2018. Total loans grew $56.9 million, or 5.9%, over the time frame with commercial loans growing by $21.0 million, or 12.3%, followed by growth of $17.8 million, or 15.0%, in construction and land development loans, and $12.6 million in commercial mortgage loans.

The following table shows the composition of the Company's loan portfolio, excluding PCI loans, at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

LOANS (excluding PCI loans)
(Dollars in thousands)	30-Jun-19						31-Mar-19						31-Dec-18						30-Jun-18
	Amount			% of Loans			Amount			% of Loans			Amount			% of Loans			Amount			% of Loans
Mortgage loans on real estate:
Residential 1-4 family	$	219,690			21.45	%	$	215,348			21.58	%	$	216,268			21.77	%	$	217,610			22.50	%
Commercial		388,750			37.95			379,112			37.99			379,904			38.23			376,134			38.88
Construction and land development		136,951			13.37			123,475			12.37			120,413			12.12			119,110			12.31
Second mortgages		6,803			0.66			6,966			0.70			6,778			0.68			7,387			0.76
Multifamily		57,251			5.59			57,931			5.81			59,557			5.99			54,329			5.62
Agriculture		10,617			1.04			10,780			1.08			8,370			0.84			7,467			0.77
Total real estate loans		820,062			80.06			793,612			79.53			791,290			79.63			782,037			80.84
Commercial loans		191,032			18.66			190,832			19.12			188,722			18.99			170,065			17.58
Consumer installment loans		11,603			1.13			11,923			1.19			12,048			1.21			13,717			1.42
All other loans		1,553			0.15			1,615			0.16			1,645			0.17			1,542			0.16
Gross loans		1,024,250			100.00	%		997,982			100.00	%		993,705			100.00	%		967,361			100.00	%
Allowance for loan losses		(8,819	)					(8,661	)					(8,983	)					(9,089	)
Loans, net of unearned income	$	1,015,431					$	989,321					$	984,722					$	958,272

The Company’s securities portfolio, excluding restricted equity securities, increased $3.4 million since year end 2018 to total $252.3 million at June 30, 2019. Securities balances increased $9.1 million since June 30, 2018. Net gains of $238,000 were realized during the second quarter of 2019 through sales and call activity. For the first six months of 2019, there have been net gains of $224,000 realized through sales and call activity. The Company actively manages the portfolio to improve its liquidity and maximize the return within the desired risk profile.

The Company had cash and cash equivalents of $32.8 million, $34.2 million and $23.8 million at June 30, 2019, December 31, 2018 and June 30, 2018, respectively. There were federal funds sold of $228,000 at June 30, 2019 and $180,000 at June 30, 2018. This compares with federal funds purchased of $19.4 million at December 31, 2018. Interest bearing bank deposits were $14.7 million at June 30, 2019 compared with $15.9 million at December 31, 2018 and $12.0 million at June 30, 2018.

The following table shows the composition of the Company's securities portfolio, excluding restricted equity securities, at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

SECURITIES PORTFOLIO
(Dollars in thousands)	30-Jun-19				31-Dec-18				30-Jun-18
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities Available for Sale
U.S. Treasury issue	$	22,972	$	22,898	$	13,460	$	13,124	$	25,021	$	24,520
U.S. Government agencies		24,375		24,222		24,689		24,609		9,077		9,124
State, county, and municipal		94,175		97,290		112,465		112,542		120,935		120,079
Mortgage backed securities		50,025		50,635		46,877		46,417		22,479		21,828
Asset backed securities		10,763		10,790		5,342		5,411		15,057		14,954
Corporate		6,007		6,069		4,685		4,623		8,539		8,658
Total securities available for sale	$	208,317	$	211,904	$	207,518	$	206,726	$	201,108	$	199,163

	30-Jun-19				31-Dec-18				30-Jun-18
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities Held to Maturity
U.S. Government agencies	$	10,000	$	9,941	$	10,000	$	9,790	$	10,000	$	9,713
State, county, and municipal		30,368		31,267		32,108		32,463		33,585		33,792
Mortgage backed securities		-		-		-		-		404		409
Total securities held to maturity	$	40,368		41,208	$	42,108	$	42,253	$	43,989	$	43,914

Interest bearing deposits at June 30, 2019 were $1.036 billion, an increase of $35.9 million from December 31, 2018 and $63.9 million greater than at June 30, 2018. Time deposits less than or equal to $250,000 have shown the largest dollar volume growth during 2019 with $23.4 million in additional balances and now totaling $508.6 million. Time deposits over $250,000 grew by $9.8 million and were $138.8 million at June 30, 2019. Money market deposit accounts grew $3.8 million, or 3.0%.

The following table compares the mix of interest bearing deposits at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018.

INTEREST BEARING DEPOSITS
(Dollars in thousands)
	30-Jun-19		31-Mar-19		31-Dec-18		30-Jun-18
NOW	$	163,224	$	151,647	$	165,946	$	162,984
MMDA		130,720		123,024		126,933		145,071
Savings		94,508		94,229		92,910		94,498
Time deposits less than or equal to $250,000		508,598		499,698		485,155		452,734
Time deposits over $250,000		138,759		133,817		128,945		116,657
Total interest bearing deposits	$	1,035,809	$	1,002,415	$	999,889	$	971,944

FHLB advances were $48.7 million at June 30, 2019, compared with $59.4 million at December 31, 2018 and $90.7 million at June 30, 2018.

Shareholders’ equity was $147.4 million at June 30, 2019, $137.5 million at December 31, 2018 and $128.6 million at June 30, 2018. Shareholders’ equity to assets was 10.3% at June 30, 2019, 9.9% at December 31, 2018 and 9.5% at June 30, 2018.

Asset Quality – non-covered assets

The allowance for loan losses equaled 79.9% of nonaccrual loans at June 30, 2019, compared with 78.8% at March 31, 2019, 94.6% at December 31, 2018 and 97.3% at June 30, 2018. The ratio of nonperforming assets to loans and OREO was 1.17% at June 30, 2019, 1.22% at March 31, 2019, 1.07% at December 31, 2018 and 1.29% at June 30, 2018.

The following table reconciles the activity in the Company's non-covered allowance for loan losses, by quarter, for the past five quarters.

ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)	2019					2018
	Second		First			Fourth			Third			Second
	Quarter		Quarter			Quarter			Quarter			Quarter
Allowance for loan losses:
Beginning of period	$	8,661	$	8,983		$	8,993		$	9,089		$	8,968
Provision for loan losses		125		-			-			-			-
Net recoveries (charge-offs)		33		(322	)		(10	)		(96	)		121
End of period	$	8,819	$	8,661		$	8,983		$	8,993		$	9,089

The following table sets forth selected asset quality data, excluding PCI loans, and ratios for the dates indicated.

ASSET QUALITY (excluding PCI loans)
(Dollars in thousands)	2019						2018
	30-Jun-19			31-Mar-19			31-Dec-18			30-Sep-18			30-Jun-18
Nonaccrual loans	$	11,045		$	10,990		$	9,500		$	8,894		$	9,343
Total nonperforming loans		11,045			10,990			9,500			8,894			9,343
Other real estate owned		983			1,225			1,099			1,732			3,147
Total nonperforming assets	$	12,028		$	12,215		$	10,599		$	10,626		$	12,490
Allowance for loan losses to loans		0.86	%		0.87	%		0.90	%		0.93	%		0.94
Allowance for loan losses to nonaccrual loans		79.85			78.81			94.57			101.11			97.28
Nonperforming assets to loans and other real estate		1.17			1.22			1.07			1.10			1.29
Net (recoveries)/charge-offs/for quarter to average loans, annualized		(0.01	)%		0.13	%		0.00	%		0.04	%		(0.05	)

A further breakout of nonaccrual loans, excluding PCI loans, at June 30, 2019, December 31, 2018 and June 30, 2018 is below.

NONACCRUAL LOANS (excluding PCI loans)
(Dollars in thousands)	30-Jun-19		31-Dec-18		30-Jun-18
	Amount		Amount		Amount
Mortgage loans on real estate:
Residential 1-4 family	$	2,148	$	1,257	$	1,578
Commercial		1,388		2,123		2,274
Construction and land development		4,091		4,571		5,184
Multifamily		2,526		-		-

Total real estate loans	$	10,153	$	7,951	$	9,036
Commercial loans		886		1,549		307
Consumer installment loans		6		-		-
Gross loans	$	11,045	$	9,500	$	9,343

Capital Requirements

The Bank’s ratio of total risk-based capital was 13.5% at June 30, 2019 compared with 13.3% at December 31, 2018. The tier 1 risk-based capital ratio was 12.7% at June 30, 2019 and 12.6% at December 31, 2018. The Company’s tier 1 leverage ratio was 10.5% at June 30, 2019 and 10.2% at December 31, 2018. 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 June 30, 2019 and 12.6% at December 31, 2018.

Earnings Conference Call and Webcast

The Company will host a conference call for interested parties on Friday, July 26, 2019, at 10:00 a.m. Eastern Time to discuss the financial results for the second quarter of 2019. The public is invited to listen to this conference call by dialing 866-374-8379 at least five minutes prior to the call. Interested parties may also listen to this conference call through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site at www.cbtrustcorp.com.

A replay of the conference call will be available from 12:00 noon Eastern Time on July 26, 2019, until 9:00 a.m. Eastern Time on August 16, 2019. The replay will be available by dialing 877-344-7529 and entering access code 10133022 or through the internet by accessing the "Corporate Overview – Corporate Profile" page of the Company's internet site www.cbtrustcorp.com.

About Community Bankers Trust Corporation and Essex Bank

Community Bankers Trust Corporation is the holding company for Essex Bank, a Virginia state bank with 25 full-service offices, 19 of which are in Virginia and six of which are in Maryland. The Bank also operates two loan production offices. The Bank’s Cumberland office in Virginia will close on August 2, 2019.

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.

Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to the Company’s operations, performance, future strategy and goals. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in the following: the quality or composition of the Company’s loan or investment portfolios, including collateral values and the repayment abilities of borrowers and issuers; assumptions that underlie the Company’s allowance for loan losses; general economic and market conditions, either nationally or in the Company’s market areas; the interest rate environment; competitive pressures among banks and financial institutions or from companies outside the banking industry; real estate values; the demand for deposit, loan and investment products and other financial services; the demand, development and acceptance of new products and services; the performance of vendors or other parties with which the Company does business; time and costs associated with de novo branching, acquisitions, dispositions and similar transactions; the realization of gains and expense savings from acquisitions, dispositions and similar transactions; consumer profiles and spending and savings habits; levels of fraud in the banking industry; the level of attempted cyber-attacks in the banking industry; the securities and credit markets; costs associated with the integration of banking and other internal operations; the soundness of other financial institutions with which the Company does business; inflation; technology; and legislative and regulatory requirements. Many of these factors and additional risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and other reports filed from time to time by the Company with the Securities and Exchange Commission. This press release speaks only as of its date, and the Company disclaims any duty to update the information in it.

Contact: Bruce E. Thomas

Executive Vice President/Chief Financial Officer

Community Bankers Trust Corporation

804-934-9999

COMMUNITY BANKERS TRUST CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(Dollars in thousands, except per share data)
	30-Jun-19			31-Dec-18			30-Jun-18
Assets
Cash and due from banks	$	17,858		$	18,292		$	11,607
Interest bearing bank deposits		14,696			15,927			12,020
Federal funds sold		228			-			180
Total cash and cash equivalents		32,782			34,219			23,807

Securities available for sale, at fair value		211,904			206,726			199,163
Securities held to maturity, at cost		40,368			42,108			43,989
Equity securities, restricted, at cost		7,718			7,800			8,935
Total securities		259,990			256,634			252,087

Loans held for resale		639			146			-

Loans		1,024,250			993,705			967,361
Purchased credit impaired (PCI) loans		35,898			38,285			39,911
Allowance for loan losses		(8,819	)		(8,983	)		(9,089	)
Allowance for loan losses – PCI loans		(156	)		(156	)		(200	)
Net loans		1,051,173			1,022,851			997,983

Bank premises and equipment, net		30,635			31,488			30,423
Bank premises and equipment held for sale		1,252			1,252			552
Leased assets		6,944			-			-
Other real estate owned		983			1,099			3,147
Bank owned life insurance		29,199			28,834			28,466
Other assets		17,534			16,627			17,403
Total assets	$	1,431,131		$	1,393,150		$	1,353,868

Liabilities
Deposits:
Noninterest bearing	$	180,399		$	165,086		$	151,956
Interest bearing		1,035,809			999,889			971,944
Total deposits		1,216,208			1,164,975			1,123,900

Federal funds purchased		-			19,440			-
Federal Home Loan Bank borrowings		48,696			59,447			90,691
Trust preferred capital notes		4,124			4,124			4,124
Lease liabilities		7,192			-			-
Other liabilities		7,515			7,703			6,509
Total liabilities		1,283,735			1,255,689			1,225,224

Shareholders' Equity
Common stock (200,000,000 shares authorized $0.01 par value; 22,258,456, 22,132,304, and 22,111,495 shares issued and outstanding, respectively)		223			221			221
Additional paid in capital		149,752			148,763			148,242
Retained deficit		(4,529	)		(10,244	)		(17,556	)
Accumulated other comprehensive income (loss)		1,950			(1,279	)		(2,263	)
Total shareholders' equity		147,396			137,461			128,644
Total liabilities and shareholders' equity	$	1,431,131		$	1,393,150		$	1,353,868

COMMUNITY BANKERS TRUST CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands)	YTD		Three months ended					YTD		Three months ended
	2019		30-Jun-19		31-Mar-19			2018		30-Jun-18			31-Mar-18
Interest and dividend income
Interest and fees on loans	$	25,059	$	12,640	$	12,419		$	22,229	$	11,353		$	10,876
Interest and fees on PCI loans		2,544		1,251		1,293			2,672		1,274			1,398
Interest on federal funds sold		5		5		-			1		1			-
Interest on deposits in other banks		213		117		96			109		69			40
Interest and dividends on securities
Taxable		2,994		1,472		1,522			2,452		1,266			1,186
Nontaxable		897		421		476			1,126		547			579
Total interest and dividend income		31,712		15,906		15,806			28,589		14,510			14,079
Interest expense
Interest on deposits		6,823		3,589		3,234			4,498		2,355			2,143
Interest on borrowed funds		764		317		447			977		508			469
Total interest expense		7,587		3,906		3,681			5,475		2,863			2,612

Net interest income		24,125		12,000		12,125			23,114		11,647			11,467
Provision for loan losses		125		125		-			-		-			-
Net interest income after provision for loan losses		24,000		11,875		12,125			23,114		11,647			11,467

Noninterest income
Service charges and fees		1,316		707		609			1,192		611			581
Gain (loss) on securities transactions, net		224		238		(14	)		14		(16	)		30
Gain on sale of loans		-		-		-			53		53			-
Income on bank owned life insurance		365		184		181			367		184			183
Mortgage loan income		162		100		62			191		80			111
Other		398		222		176			351		223			128
Total noninterest income		2,465		1,451		1,014			2,168		1,135			1,033

Noninterest expense
Salaries and employee benefits		10,654		5,273		5,381			10,868		5,019			5,849
Occupancy expenses		1,849		919		930			1,581		769			812
Equipment expenses		775		394		381			658		344			314
FDIC assessment		312		162		150			404		198			206
Data processing fees		1,147		579		568			985		499			486
Other real estate expenses, net		97		105		(8	)		95		45			50
Other operating expenses		2,997		1,559		1,438			2,962		1,313			1,649
Total noninterest expense		17,831		8,991		8,840			17,553		8,187			9,366

Income before income taxes		8,634		4,335		4,299			7,729		4,595			3,134
Income tax expense		1,587		791		796			1,353		813			540
Net income	$	7,047	$	3,544	$	3,503		$	6,376	$	3,782		$	2,594

COMMUNITY BANKERS TRUST CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(Dollars in thousands)	Three months ended
	30-Jun-19		31-Mar-19			31-Dec-18			30-Sep-18		30-Jun-18
Interest and dividend income
Interest and fees on loans	$	12,640	$	12,419		$	12,169		$	11,893	$	11,353
Interest and fees on PCI loans		1,251		1,293			1,285			1,265		1,274
Interest on federal funds sold		5		-			4			-		1
Interest on deposits in other banks		117		96			100			94		69
Interest and dividends on securities
Taxable		1,472		1,522			1,442			1,364		1,266
Nontaxable		421		476			508			528		547
Total interest and dividend income		15,906		15,806			15,508			15,144		14,510
Interest expense
Interest on deposits		3,589		3,234			3,060			2,699		2,355
Interest on borrowed funds		317		447			355			465		508
Total interest expense		3,906		3,681			3,415			3,164		2,863

Net interest income		12,000		12,125			12,093			11,980		11,647
Provision for loan losses		125		-			-			-		-
Net interest income after provision for loan losses		11,875		12,125			12,093			11,980		11,647

Noninterest income
Service charges and fees		707		609			692			626		611
Gain (loss) on securities transactions, net		238		(14	)		(12	)		68		(16	)
Gain on sale of loans		-		-			-			65		53
Income on bank owned life insurance		184		181			184			184		184
Mortgage loan income		100		62			31			97		80
Other		222		176			189			171		223
Total noninterest income		1,451		1,014			1,084			1,211		1,135

Noninterest expense
Salaries and employee benefits		5,273		5,381			5,580			5,029		5,019
Occupancy expenses		919		930			827			780		769
Equipment expenses		394		381			374			366		344
FDIC assessment		162		150			177			195		198
Data processing fees		579		568			655			482		499
Other real estate expenses, net		105		(8	)		(45	)		63		45
Other operating expenses		1,559		1,438			1,465			1,376		1,313
Total noninterest expense		8,991		8,840			9,033			8,291		8,187

Income before income taxes		4,335		4,299			4,144			4,900		4,595
Income tax expense		791		796			787			945		813
Net income	$	3,544	$	3,503		$	3,357		$	3,955	$	3,782

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

	Three months ended June 30, 2019								Three months ended June 30, 2018
	Average Balance Sheet			Interest Income / Expense		Average Rates Earned / Paid			Average Balance Sheet			Interest Income / Expense		Average Rates Earned / Paid
ASSETS:
Loans, including fees	$	1,011,448		$	12,640		5.01	%	$	958,955		$	11,353		4.75	%
PCI loans, including fees		36,212			1,251		13.67			41,157			1,274		12.24
Total loans		1,047,660			13,891		5.32			1,000,112			12,627		5.06
Interest bearing bank balances		19,436			117		2.41			14,819			69		1.85
Federal funds sold		799			5		2.36			87			1		1.82
Securities (taxable)		189,429			1,472		3.11			174,781			1,266		2.90
Securities (tax exempt)(1)		59,098			533		3.60			76,864			693		3.61
Total earning assets		1,316,422			16,018		4.88			1,266,663			14,656		4.64
Allowance for loan losses		(8,820	)							(9,271	)
Non-earning assets		102,513								92,502
Total assets	$	1,410,115							$	1,349,894

LIABILITIES AND SHAREHOLDERS’ EQUITY
Demand - interest bearing	$	156,053		$	86		0.22		$	157,028		$	80		0.20
Savings and money market		217,219			307		0.57			238,583			309		0.52
Time deposits		647,159			3,196		1.98			561,056			1,966		1.41
Total interest bearing deposits		1,020,431			3,589		1.41			956,667			2,355		0.99
Short-term borrowings		996			7		2.70			4,771			26		2.20
FHLB and other borrowings		58,888			310		2.08			103,188			482		1.87
Total interest bearing liabilities		1,080,315			3,906		1.45			1,064,626			2,863		1.08
Noninterest bearing deposits		170,783								152,498
Other liabilities		14,183								5,909
Total liabilities		1,265,281								1,223,033
Shareholders’ equity		144,834								126,861
Total liabilities and shareholders’ equity	$	1,410,115							$	1,349,894
Net interest earnings				$	12,112							$	11,793
Interest spread							3.43	%							3.56	%
Net interest margin							3.69	%							3.73	%

Tax-equivalent adjustment:
Securities				$	111							$	146

(1) Income and yields are reported on a tax-equivalent basis assuming a federal tax rate of 21%.

COMMUNITY BANKERS TRUST CORPORATION

NET INTEREST MARGIN ANALYSIS

AVERAGE BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

	Six months ended June 30, 2019								Six months ended June 30, 2018
	Average Balance Sheet			Interest Income / Expense		Average Rates Earned / Paid			Average Balance Sheet			Interest Income / Expense		Average Rates Earned / Paid
ASSETS:
Loans, including fees	$	1,005,168		$	25,059		5.03	%	$	951,201		$	22,229		4.71	%
PCI loans, including fees		36,993			2,544		13.68			42,257			2,672		12.58
Total loans		1,042,161			27,603		5.34			993,458			24,901		5.05
Interest bearing bank balances		16,920			213		2.53			11,955			109		1.83
Federal funds sold		429			5		2.36			72			1		1.71
Securities (taxable)		187,908			2,994		3.19			175,667			2,452		2.79
Securities (tax exempt)(1)		63,132			1,135		3.60			79,091			1,424		3.60
Total earning assets		1,310,550			31,950		4.92			1,260,243			28,887		4.62
Allowance for loan losses		(8,951	)							(9,224	)
Non-earning assets		99,758								90,567
Total assets	$	1,401,357							$	1,341,586

LIABILITIES AND SHAREHOLDERS’ EQUITY
Demand - interest bearing	$	156,908		$	173		0.22		$	156,359		$	156		0.20
Savings and money market		219,071			600		0.55			238,660			624		0.53
Time deposits		635,354			6,050		1.92			556,546			3,718		1.35
Total interest bearing deposits		1,011,333			6,823		1.36			951,565			4,498		0.95
Short-term borrowings		3,900			56		2.91			3,563			37		2.12
FHLB and other borrowings		66,012			708		2.13			104,354			940		1.79
Total interest bearing liabilities		1,081,245			7,587		1.41			1,059,482			5,475		1.04
Noninterest bearing deposits		165,668								150,446
Other liabilities		12,078								5,731
Total liabilities		1,258,991								1,215,659
Shareholders’ equity		142,366								125,927
Total liabilities and shareholders’ equity	$	1,401,357							$	1,341,586
Net interest earnings				$	24,363							$	23,412
Interest spread							3.51	%							3.58	%
Net interest margin							3.75	%							3.75	%

Tax-equivalent adjustment:
Securities				$	238							$	299

(1) Income and yields are reported on a tax-equivalent basis assuming a federal tax rate of 21%.