CCB Bankshares, Inc. Second Quarter Results Suppressed as a Result of Merger-Related Expenses and Market Expansion

SOUTH HILL, Va., Aug. 22, 2017

Earnings

CCB Bankshares, Inc. reported net income to common shareholders for the first six months of 2017 of $228 thousand compared to $370 thousand for the first six months of 2016.   On a basic and dilutive basis, this was equivalent to $0.15 per share compared to $0.24 per share for the second quarter of 2016.  The Company reported a net loss of ($18) thousand for the second quarter of 2017 as a result of merger-related expenses, compared to net income of $100 thousand for the second period of 2016, or ($0.01) and $0.07 per share on a basic and dilutive basis, respectively.  On June 28, 2017, the Company announced its plans for a strategic merger of equals with Bank of McKenney, headquartered in McKenney, Virginia.  Pending regulatory and shareholder approval, the merger is expected to occur during the fourth quarter of 2017 and will result in a bank with approximately $450 million in combined assets and a market area stretching from the Richmond metropolitan area to North Raleigh, North Carolina. 

President and CEO James R. Black stated, "We are excited about the anticipated strategic merger with Bank of McKenney that was announced in late June.  As a result of expected merger-related expenses, our earnings for the quarterly were suppressed. The team is diligently working on all aspects of the merger in addition to standalone operations. During the quarter, we received regulatory approval to open a full-service branch in Clarksville, Virginia. We expect that the branch will open during the first half of 2018 and are eager to deliver our community bank services. This recent investment is a testament of our commitment to the local communities and our successfully growing bank."

In comparing the second quarter of 2017 to the same quarter in 2016, net interest income increased by $194 thousand or 11.8%.  The net interest margin for the second quarter of 2017 was 3.67%, flat to the margin for the second quarter of 2016.  On a year-to-date basis, the net interest margin at June 30, 2017 was 3.63%, compared to 3.78% for the first six months of 2016.  Because of the judicious use of floor rates, which provided rate protection during the recession, recent increases in the prime rate have not resulted in significant increases in the weighted yield of the loan portfolio.  The weighted rate on interest-bearing deposits increased 7 basis points year-over-year due to competitively-priced products designed to increase core deposit growth. 

Noninterest income totaled $207 thousand for the second quarter of 2017 compared to $201 thousand for the same period in 2016, a 3.2% increase.  Income from ATM usage and merchant services were the primary contributors.  Noninterest expense of $1.998 million represents a 33.6% increase from $1.495 million for the second quarter of 2016.  Noninterest expense year-to-date is at $3.6 million versus $2.9 million at June 2016.  Merger expenses year-to-date, many of which are non-deductible for tax purposes, totaled $226 thousand with most of that recognized in the second quarter.  Several factors contributed to the increase, salary expense due to additional needed staffing, and data processing and telecommunications expense.  Provision expense at June 30, 2017 was $35 thousand compared to $190 thousand at June 30, 2016. 

Pretax core earnings for the second quarter of 2017, excluding merger expenses to date, were 27.2% or $101 thousand less than the second quarter of 2016.  On a year-to-date basis, pretax core earnings excluding merger expenses to date were about $123 thousand or 15.1% less than 2016.  Actual performance is consistent with strategic projections as the Company continues to invest in human capital and enhance its presence with initiatives such as opening a loan center in Clarksville in the 4^th quarter of 2016 and a purchase of a full-service branch located in Clarksville, VA. The branch is expected to open in early 2018.