Community Bankers Trust Corporation Reports Second Quarter Results, Including Tax Provisions Adjusted from Preliminary Results Announced on July 29, 2009.GLEN ALLEN Glen Allen is the name of several places in the United States of America:
It was originally set up when banks could not perform trust company services. Corporation (the "Company") (NYSE NYSE See: New York Stock Exchange Amex: BTC BTC Baku-Tbilisi-Ceyhan (crude oil pipeline) BTC Belgische Technische Coöperatie (Dutch: Belgian Technical Cooperation) BTC Berlinale Talent Campus BTC Business Travel Coalition ), the holding company for Essex Bank (the "Bank"), reported its results for the second quarter of 2009, which included adjustments to the tax provisions that the Company had preliminarily reported in a July 29, 2009 press release and corresponding adjustments to earnings and other items affected by the Company's tax provisions. In preparing final financial statements for the second quarter, the Company re-evaluated the calculation of its tax provision. Based upon this evaluation, management determined that the tax impact of the goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge, as preliminarily reported, had been incorrectly stated. The Company had inadvertently treated the goodwill impairment charge as a tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). item and reduced income tax expense accordingly. However, since the transactions that generated the original goodwill in May 2008 were considered tax-free exchanges tax-free exchange An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. , the impairment charge is not deductible for tax purposes. Following these adjustments, the Company reported a net loss available to common stockholders for the second quarter of 2009 of $24.4 million, or $1.14 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This loss was primarily the result of a non-cash goodwill impairment charge of $24.0 million and an FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). special assessment of $583,000. The second quarter results also reflected $265,000 of dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the costs associated with the Company's TARP investment. Excluding the goodwill impairment charge, the FDIC special assessment, and the costs associated with TARP, the Company would have had net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $56,000, or $0.00 per basic and diluted share, for the second quarter. The adjustments described above caused the income tax provisions to change from an $8.2 million benefit to a $410,000 benefit for the second quarter and from a $2.9 million benefit to a $4.9 million expense for the six months ended June 30, 2009. Thus, the net loss available to common stockholders for the three month period ended June 30, 2009 was adjusted from $16.6 million, as preliminarily reported, to $24.4 million. For the six month period ended June 30, 2009, the loss available to common stockholders was adjusted from $5.9 million to $13.7 million. Accordingly, loss per share, basic and diluted, were $1.14 and $0.64 for the three month and six month periods ended June 30, 2009, respectively. In addition, common tangible book value was $4.65 per share at June 30, 2009, and the Company's price to common book value and price to common tangible book value were 60.6% and 79.6%, respectively, based on the quarter end closing stock price of $3.70. The Company's equity to asset ratio was 11.6%. Complete results for the Company for the second quarter of 2009 and the first six months of 2009 are set forth below. As noted above, the largest component of the Company's net loss available to common stockholders was the non-cash goodwill impairment charge. The Company is required to assess the value of its goodwill for impairment periodically, which assessment was performed during the second quarter of 2009, one year following the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the Company's mergers on May 31, 2008 with TransCommunity Financial Corporation and BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. of Virginia, Inc. The assessment resulted in a goodwill impairment that reflected the decline in overall general economic conditions, rapid change in the market valuations of financial institutions and the discount that shares of the Company's common stock have traded to their tangible book value for an extended period of time. The Company's average closing stock price during the second quarter of 2008 versus 2009 was $6.64 per share and $3.67 per share, respectively, which represented a 44.73% decline. On the last business day prior to May 31, 2009, the closing stock price was $3.10 per share. The impairment charge did not have a material impact on the Company's liquidity or strong reserves. Based on these results, the Company reported a net loss available to common stockholders of $13.7 million for the six months ended June 30, 2009, or $0.64 per basic and diluted share. Excluding the goodwill impairment charge, the FDIC special assessment, the costs associated with TARP, and the $21.3 million gain that the Company recorded in the first quarter with respect to its acquisition of the operations of Suburban Federal Savings Bank Noun 1. federal savings bank - a federally chartered savings bank FSB savings bank - a thrift institution in the northeastern United States; since deregulation in the 1980s they offer services competitive with many commercial banks ("SFSB SFSB Stateful Session Bean (Java) SFSB Strojarski Fakultet Slavonski Brod SFSB set front side bus ") from the FDIC, the Company's net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. would have equaled $3.3 million, or $0.15 per basic and diluted share, for the six month period. This loss was attributable to the Company's increasing its provision for loan losses to $6.0 million for the period. The allowance for loan losses to total loans, excluding FDIC-covered assets (which are described below), is 2.21% and reflects prudent recognition of general economic conditions. The following table provides a reconcilement of the Company's operating results to present the items and assessments described above: [TABLE OMITTED] Balance Sheet Total assets aggregated $1.28 billion at June 30, 2009. Total assets declined $63.2 million or 4.69% from March 31, 2009. This decline was directly attributable to management's planned reduction in interest bearing bank balances of $15.4 million, a reduction in securities of $23.1 million and the non-cash goodwill impairment charge of $24.0 million. Loans not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered. by the FDIC shared-loss agreements increased $9.6 million or 1.77% from $542.2 million at March 31, 2009 to $551.8 million at June 30, 2009. Despite the reduction in time deposits noted below, the Company remains highly liquid with a structured securities portfolio, as well as a net seller of overnight funds. The Company had federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold of $25.8 million at June 30, 2009. Management anticipates funding future loan growth by divesting FDIC-covered assets and by reducing its position in overnight funds sales. The Company's loan and FDIC-covered loan to deposit ratio equaled 75.7% at June 30, 2009. Excluding FDIC-covered loans, the loan-to-deposit ratio equaled 51.7% at quarter-end. Loans The Company's loan portfolio, excluding FDIC covered assets, at June 30, 2009 and December 31, 2008, was comprised of the following: [TABLE OMITTED] On January 30, 2009, the Bank acquired certain assets and assumed all deposit liabilities relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc seven former branch offices of SFSB. The Bank purchased approximately $348 million in loans and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and is currently providing loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. to its existing loan customers. The Bank has entered into shared-loss agreements with the FDIC with respect to certain covered assets acquired. The following is a summary of information for impaired and nonaccrual loans as of June 30, 2009, excluding FDIC covered assets (dollars in thousands): [TABLE OMITTED] Securities Amortized costs and fair values of securities available for sale at June 30, 2009 were as follows: [TABLE OMITTED] As of June 30, 2009, there were $2.3 million of securities available for sale that were in a continuous loss position for more than twelve months. These securities, primarily municipal obligations, had an unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. position of $118,000 at June 30, 2009. Management has evaluated the investment portfolio by security and determined the declines in fair value were primarily attributable to changes in credit and market spreads, not in estimated cash flows or credit quality. Amortized costs and fair values of securities held to maturity at June 30, 2009 were as follows: [TABLE OMITTED] No held to maturity securities had been in a loss position for twelve months or more at June 30, 2009. Deposits Total deposits equaled $1.07 billion at June 30, 2009 versus $1.11 billion at March 31, 2009. Higher cost time deposits decreased during the quarter while lower cost savings and transactional deposit accounts increased $4.7 million during the second quarter. Savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. equaled $58.4 million at June 30, 2009 compared to $55.8 million at March 31, 2009, an increase of 4.66%. NOW and Money Market Deposit accounts totaled $205.4 million at June 30, 2009 compared to $203.3 million at March 31, 2009. The following table breaks down interest bearing deposit totals by category at June 30, 2009, March 31, 2009 and December 31, 2008: [TABLE OMITTED] Capital At June 30, 2009, the Company's ratio of total capital to risk-weighted assets Risk-Weighted Assets In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk. Notes: The idea of risk-weighted assets is a move away from having a static requirement for capital. was 17.61%. The ratio of Tier 1 Capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. to risk-weighted assets was 16.48%, and the leverage ratio (Tier 1 capital to average adjusted total assets) was 9.08%. All three ratios exceed capital adequacy guidelines outlined by its regulator, and the Company is considered "well-capitalized". The Company has trust preferred subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". that qualifies as regulatory capital. This trust preferred debt has a 30-year maturity with a 5-year call option, was issued at a rate of three month LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 3.00%, and was priced at 4.22% in the second quarter of 2009. Results of Operations For the three months ended June 30, 2009, the Company recognized a provision for loan losses of $540,000 versus $5.5 million for the first quarter of 2009. The year-to-date provision for loan losses was $6.0 million, which increased the loan loss reserve to $12.2 million or 2.21% of non-FDIC covered loans. Net charge-offs of loans equaled $346,000 for the three months ended June 30, 2009 and $794,000 for the first six months of 2009. The following table provides asset quality ratios, excluding FDIC-covered assets, at June 30, 2009 and March 31, 2009: [TABLE OMITTED] Management proactively identified impaired loans during the first quarter of the year and had significantly increased the Company's loan loss provision commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the risks inherent in the portfolio. Although, loans migrated to non-accrual status during the second quarter, the majority of which was comprised of two credits, the Company had sufficiently reserved for them with its prior provisions. Covered Assets On January 30, 2009, the Bank entered into a purchase and assumption agreement with the FDIC, as receiver, for SFSB. The Bank assumed all deposit liabilities and purchased certain assets of SFSB. In connection with the SFSB transaction, the Bank entered into two shared-loss agreements with the FDIC with respect to the loan and foreclosed real estate assets purchased. One agreement relates to losses arising from single family one-to-four residential mortgage loans, and one agreement relates to losses arising from other loans and foreclosed real estate. Under the shared-loss agreements, the FDIC will reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the Bank for 80% of losses arising from covered loan assets, on the first $118 million of such covered loans, and for 95% of losses on covered loans thereafter. The shared-loss agreements provide for indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from from the first dollar of losses without any threshold requirement. The reimbursable re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. losses from the FDIC are based on the book value of the relevant loan as determined by the FDIC at the date of the transaction, January 30, 2009. New loans made after that date are not covered by the shared-loss agreements. At June 30, 2009, FDIC-covered assets totaled $278.4 million. Of this amount, $191.8 million are performing loans, $64.4 million are non-accrual loans, $21.5 million are other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most , and $714,000 are loans 90 days past due and still accruing. All of these loan relationships are under the shared-loss agreements, which limit the potential loss to the Company in the event that these loans should default. The Company's special assets department is aggressively working towards the appropriate resolution of these credits. Following an independent loan review encompassing 100% of the acquired loan portfolio, management recognized, in the first quarter of 2009, all anticipated losses and the FDIC-guaranteed portion on such losses as reflected in the mark to market value recorded on the Company's financial statements for that period. Furthermore, the Company offset against the $45 million negative bid it was awarded from the FDIC in the transaction, a net discount of $23.8 million, reflecting its portion of the anticipated losses, leaving a net fair market value of the FDIC-covered assets of $296.3 million. Allowance for Loan Losses Activity in the allowance for loan losses, for the six months ended June 30, 2009 and 2008, was comprised of the following: [TABLE OMITTED] Net interest earnings totaled $9.5 million and $18.5 million for the three and six month periods ended June 30, 2009, respectively. The increase in the amount of non-accrual loans noted during the second quarter of the year slightly hampered the net interest margin. The net interest margin for the three months ended June 30, 2009 equaled 3.30%, a decrease from 3.37% for the three months ended March 31, 2009. Despite the increase in non-accrual loans, margin compression was mitigated somewhat as management lowered rates on virtually all deposit accounts. The Company, by virtue of aggressively lowering the rates paid on certificates of deposits and not renewing certain brokered funds, lowered balances in this high cost category by $41.9 million during the second quarter of 2009. Average cost of deposits was 2.51% during the quarter. Non-interest income was $1.3 million and $23.4 million for the three and six month periods ended June 30, 2009, respectively. Excluding the gain recorded on the SFSB transaction in the first quarter, non-interest income would have equaled $2.2 million for the six-month period. The single largest component of non-interest income was service charges on deposit accounts, which totaled $618,000 and $1.2 million for the three and six month periods ended June 30, 2009, respectively. During the second quarter of 2009, non-interest income was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. affected by securities gains of $341,000. For the three months ended June 30, 2009, non-interest expense was $34.8 million. Excluding the goodwill impairment charge and the FDIC special assessment, non-interest expense would have totaled $10.2 million for the three months ended June 30, 2009. Salaries and wages equaled $5.0 million for the quarter, which would have been 49.37% of non-interest expenses, as so adjusted. On a linked quarter basis, salaries and wages increased $602,000, which was the result of increased management staffing in the first quarter and one full quarter of operations in Maryland. Non-interest expense was $44.2 million for the six months ended June 30, 2009. Excluding the non-cash goodwill impairment charge and the FDIC special assessment, non-interest expenses would have totaled $19.6 million. Salaries and wages equaled $9.5 million, or 48.30% of non-interest expenses, as so adjusted, for the first six months of 2009. Management anticipates ongoing operating efficiencies throughout the remainder of 2009 as SFSB's operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. will be converted in early August. The following table provides a reconcilement of non-interest expenses, as discussed above: [TABLE OMITTED] About Community Bankers Trust Corporation The Company is the holding company for Essex Bank, a Virginia state bank with 25 full-service offices, 14 of which are in Virginia, seven of which are in Maryland and four of which are in Georgia. Additional information is available on the Company's website at www.cbtrustcorp.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to the Company's operations, growth 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: general economic and market conditions, either nationally or locally; the interest rate environment; competitive pressures among banks and financial institutions or from companies outside the banking industry; real estate values; the quality or composition of the Company's loan or investment portfolios; the demand for deposit, loan, and investment products and other financial services; the demand, development and acceptance of new products and services; the timing of future reimbursements from the FDIC to the Company under the shared-loss agreements; consumer profiles and spending and savings habits; the securities and credit markets; costs associated with the integration of banking and other internal operations, including the integration of SFSB's operations in the third quarter of 2009; management's evaluation of goodwill and other assets on a periodic basis, and any resulting impairment charges, under applicable accounting standards; the soundness of other financial institutions with which the Company does business; inflation; technology; and legislative and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. . These factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2008 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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