CB Financial Services (CBFV) 17 Nov 172017 Q1 Earnings call transcript

Good morning, everyone. Good morning, this is Pat McCune, CEO of Community Bank. We're starting our investor call following our announcement yesterday of our transaction with First West Virginia. I am in the Ralph J.

Sommers Operations Center in Waynesburg, along with Kevin Lemley, our CFO, and Ralph Burchianti, who is our Chief Credit Officer.

Pat the President Progressive CEO they in by and Community Bank, joined are Petroplus, Bill and Wheeling. are O'Brien, of the Bank; although We President of Wheeling Community Bank success Progressive further and be as this explain to interest representatives of combination employees and to number well. transaction in them a address the their morning, went This a to assure to the is personally of to Bank that going

CB of O'Brien Pat cautioned materials with everybody briefly Before page statements about regarding continue, found Bank Financial when ask as and Community his I that they filed. Bank will are I'm and proxy We Financial and and the It investor the all like comments some to in and start, contain the relevant merger. assumptions give be included the West not undertake of read the management's then to review about forward-looking Services, statements. second Releases all that are information Virginia deck. comments the I'd the which www.communitybank.tv, Progressive First make Having such the only website, available and urged presentation statement beliefs and done date investor time to forward-looking that, remind has to on discussed and transaction, are forward-looking other as But and based and the that do update disclosures to the Highlights Investors speak other presentation, made. they legal are and become merger related the to call been important they presentation and is Community on during be current can this to Press section. X-K, statements listeners obligated on found the can also

Bank. and with with presuming Financial and West are Virginia some most people and extent, to the of First probably Community Services the all So Progressive familiar on CB I'm that Bank call

For independent, of we're commercial you a XXX-year-old those you'll us, full-service recall managed, locally who know bank.

although Pittsburgh, do in tri-state business and Our area, primary we throughout the we business of is market specialize south relationships.

we with I lending program Although, friendly XX for aware and an as many Progressive and of similar program know well. remember been a interested Bank years lending and visiting in Dick story. Pat years. mortgage have can We've I can ago. O'Brien Dlesk tell consumer active

a businesses and Progressive relationships. continue enviable as deposits to offices hand some we XXXX certainly the redeploying would the forward of the and years to the to of commercial table activities next look eligible, the us shale. point. resurgence We're Bank has have and a a the capability We evident. into transaction into another to And Virginia, an is the particular is $X.XX the other very in and core many excited we the Community bank a low-cost, refine with will that the billion to states Progressive at lend hope, an for significant in many delighted poised of Progressive for exciting market, market expertise share become in of has on Valley announcements think Progressive Progressive three West are by local the Index that gas. bank, to have of future family associated Ohio to Virginia is and cap the Utica market Bank as bring in the and We over XX the with and opportunity of that classic, many important resurgence Marcellus independent, West business our with in would with several natural family. you rationale full-service driven seen the Russell make sure I'm have a for economic deposit. about brings other Progressive, growth, manufacturing course, which

everyone, and are that camp, XX banks the transaction. of I've in with, spoken and about that the both So and uniformly investors the excited this then last Progressive in and friends hours the praising Community camp I've certainly Bank talked to

like Pat O'Brien. turn to I'd it to now over So

an of Ohio many Valley. As you O'Brien, banker let makes transaction community sense. with outstanding just about heard us why With regard you a Jessica? this connection more on have bit and who to talk more bit about a line it's that, think the would sure. access, with Mr. him have Pat, problem? little a transaction? of Wheeling shortly, Do little and there? I'm history of long and you with those the our you tell Pat's know, that, will and Pat are may is we meaningful Ohio please who with reason one leader a I'll For his absolute be the Valley, you there's miscommunication

open. And sir, your is line

Pat you can This now? Good is morning. O'Brien, hear me

Yes, Pat. hear I can you.

embedded morning Thank with sent you excited just Progressive to was truly is Bill use for very appreciate and We X-K you your you truly interest Investor for to a great. announced everybody night. Petroplus today, and Pat, It last very Deck thank in listening transaction transaction the that out transformational evening. I in your to in CBFV. the Bank with future. Good that guide near with us last the in that To Okay, in have is my the you, I'd in. Pat joining that introduction. time was being together comments like that and saw joined

the attractive at you Valley. there. And about that, expansion few the looking are transactional a see Ohio And X, the just at so if River It's highlights rationale for talk I'm to you'll into looking Page moments. an

share is market Virginia fifth largest First the MSA. deposit West in Wheeling, Virginia the West

sizable a a a And detail deposits, $XXX very in million and that little low very which into attractive more good moments. at of in cost, is chunk bit I a worth, So drive few us. will to

attractive Again, transactional. costs for those XX% earnings around average basis about XX XX. are profile It points, year of in XX%. September are points. full basis with of accretion billion as deposits, that's and CBFV. very First of share together, of deposits, funding XX a core than Total cost more And a non-time, $X improves liquidity per somewhere certainly combined XX% deposits again, weighted

it's relational that together, of So have. very group we deposits a low-cost, sticky

as history a just Valley for National of east the market corner panhandle range. by Pennsylvania in the in mentioned familiarity, far I Ohio of which purchased in was XXXX Bank, have Virginia. the As WesBanco to is do I XXXX long worked County, Wheeling to Ohio I which Pat or live market. Valley West that the Washington Pennsylvania, southwestern bordering the

in Ohio through worked XXXX I XXXX. from the Valley So

the of the employees with base of because as And several so of communities and I have Progressive that a time customer with familiarity with the here, well spent.

Ohio personal Just on of Valley graduated all of children West note, from Medical Central Catholic. Wheeling a Wheeling, Center. my my in two And three children Virginia born at were

familiar Ohio So at that both the Valley mentioned I market. with core River and CBFV professionally Ohio fact the are and long-tie Again, contiguous Valley I very tie have market contiguous. a personally, -- our and

expansion. Virginia Virginia is market Utica of it's the Wheeling, Ohio PTT another the Shale renewed on about this are thing very Belmont things very couple plays. So West natural separated county are in Chemical Ohio, the that excited West that's by for Eastern Panhandle us the cracker that this of economic River. be Marcellus of the because Belmont occurring the Global we gets and and And in a that development horizon, County, will proposed A transaction borders transformational the County that plant feel Ohio. is

approximately transaction. then impact Energy. Virginia. So is total the County, a Ohio in have Brooke of $XX coming County, a an an it's And Belmont in right in County, was County county that of of understand branch state we Wheeling the on most have and is the this last And other there investments Virginia just from will river West side we the week, just north investment will into China which announcement in billion office West Wellsburg, have actually Brooke an which And where those will is. in significant of recently,

little in PowerPoint, Virginia. deposits year-old the Wheeling, just is about very and community that Progressive five those low share it's Going market West Page of cost. are costs very, Bank. Again, which in page next the XXX deposit X, headquartered to bank institution, A a number bit of

In is addition, Bank team, Virginia. very driven Progressive and growth the that recent Morgantown, some and by into his some Petroplus of within Bill loan there's progressive West been market of

not Virginia the just south Waynesburg, Valley. West in you're the Morgantown, map market in Pennsylvania. is County if at chart, Ohio the Now of core Greene looking of But it's in our

corridor, bank along University south, a Interstate which XX into Virginia, natural the West Virginia for is Morgantown, it's where is West again, located. our progression So

and about efficiency about interest As able in information to million you financial bank deposits. about ratio in with be loans are million ROE there page on X, the all and at some margin, the of well. see as $XXX listed ROA, Bank, highlights a $XXX-million look Progressive Net $XXX you'll

asset West good well. as number a addition, quality strong First In Virginia that has

to representing which Page will deeply looking are Pat maps, into Pennsylvania, a the next down and the see of little And Going bit I in drives do just that if of red Progressive Bank as the River, locations. right us, Community branch southwestern just the the just Bank. dots the south locations the to represent more X, you page, you. information enjoy along just blue at of gave But I Pittsburgh, west Ohio said, dots of is map, you all

move to can it's logical of hour's So we and for Virginia we into; people one the to know. to the panhandle like lot Southwestern able drive, one a a of be West get are Pennsylvania. a market whole in of people It's half an very us the

is our culture quite think we So merged well.

X, the base. on flip to information you As granular bit about a just deposit more Page little low-cost number

the can median. line, see page again, will PowerPoint, Progressive cost short-term solid this red on of and line, the go very And funds section X of cost gone which peers, funds can see of peer when have of how You in gray is you interest versus Bank, the is a in time positive. they've rates the see down continued you the to up, during

banks that proposed Bellaire, thing branch Ohio of of is river very right cracker of one near close Virginia. we to along six bring locations a across very West in And risen; future. are in seven River the the peers' that Virginia us are funds are Again, and announced have formally Valley, in those PTT During Buckhannon, and hopeful Ohio seven cost that West for we in again, one River right again, as Belmont be will in positive time, in the our locations plant County together. Ohio, the those

down it deposits of deposit that this portfolio we're the the reiterates value getting transaction. the in details, Looking again,

you rationale of positive show, the merging Page some forma pro of together. again, look you that look our can at PowerPoint, As at the banks X numbers ourselves

can you forma, and not On the it's our about estate expand real XX.X% do $XXX a residential million loans, at loans side, the to contribution, look pro loan huge in of portfolio. where

after much again, However, as rate ARM is analyzed loans that rates mortgages. would years year and adjust that we've go that loans, of into adjustable would -- XX one the portfolio, XX/X in

mix, which us against. remains on and loans that the mortgage So down basis to positive we of and bottom, don't deposits risk with for are which coming then, a deposit to accounts the books. that strong anticipate base very rate combined transactional points, lend it And at residential the with taking at again, much emphasizes XX we're very of our again those is -- interest a cost move continue into lot

exchange mix transaction terms you'll shareholders. $XX.XX the to cash And XX% First West of And that X.XXx. able that million, XX% shareholders value the shares the based of of for price $XX at flip will transaction occurs, approximately is stock -- common tangible on stocks, ratio to be you combined XX% is value stock First CBFV of page combined The Virginia bank or West As to seven, after company. the X.XXXX elections book transaction. cash, consideration see of Virginia summary own

board We West available to are members. seats First going three for have board Virginia

Board has company, One of on will since that whom and be of the CEO President served Bill XXXX. and Chairman, Petroplus,

and bank Ohio valuable forward. is embedded in we in go a be will history of the he community, the very embedded So member as to us this Valley

the chosen that be FDIC Community from Valley market. We the regulatory approvals we for shareholders on yet, state. same market the We shareholders help kind the move ahead haven't the will next members need to CBFV the be First We the to as over both other the still from share but complement we as need combined we as West and of two together attributes the board Bank Ohio will the Virginia well the in will approvals in shareholders us that months. able few looking and board work the normal company of approval further of those

and time non-interest XX% a that phased during very There's to team going Big while but time the frame Allegheny market, core do the area eight, page the that doing and does, Fayette to County, challenge ramp and a that examining Butler a well, that's on We way we're outlined, very we impact. feel thereafter. very expense the in job it's that model. Mid we assumptions cost as Mon the markets Bank in that well. a Community confident a number these which and consumer in vibrant attainable leading as see we of extensive shortly XX% after our in very Beaver, into County save Pittsburgh as able Ohio in in of Greene, commercial ability put good continue summary lending with low in spent to deploy up the Valley loans XXX% Washington, mortgage You'll in lending is our as be will XXXX loan that both where well it go then that deposits Valley, very growth, and and to feel

We we year, lending notice, in us, we Greater last had to ways the Pittsburgh continue continuing those market. push lender Greater market. our into will would follow and for expand are has a success, great to the who commercial Pittsburgh look to who You presence hired

then impacts, loan assets common you tangible down just bullet other highlights But excluding diluted, on tangible XX% hit then, we transaction internal XXXX the XXXX, earnings it in about to view with transactional into approximately accretive. quickly to value XX% earn about XX% X.X details the move accretive. leverage, of points including the as attractive an Tangible X.X% you, over those years, book return back see the rate as impact You'll equity per to share, X. and X.X%. be page of go the And XX%

attractive So in it's an we think respect. that transaction

As is discount from you'll exchange Community as Again, peers. corner, go trading I'd same your pro peers valuation value a that to attention through, value, on -- the valuation well. bottom forma Bank you book the in times, see at to traded tangible right-hand that also from price the to relative perspective, roughly particularly, right call attractive area X.XX

peer for shareholders, X.X% a X.X%. median our yield, addition, about In dividend

that's strong continues dividend very to our So ratio be one investors. for our

high Pat, to Kevin, else. quick anything the to transaction or PowerPoint. a turn maybe back for Ralph, that's the view So going the of and PowerPoint it color level you through over presentation any additional

Thank it for Bill during bank you, come Jessica, Good a I investor with job would to we'll you that well. open any this as through? and to And again, the thought leadership and please working can that, Valley Pat. identify to wanted the deck up people, I protecting and look build for elsewhere. and this and allow found forward Petroplus combined did bank to his questions we be on market to great in his website Bank congratulate the thank he Ohio him share his just With And transaction. on job. Community questions.

you a And question, caller, ask Instructions] have please your [Operator question. do

won't would on. shares perspective, stock, some X.X million, doing add be outstanding? am provide maybe X.X all, as in of First about math look maybe have you of correctly forward and million the then Progressive questions Bank picture with well but price that couple additional financial working being few of the full a the to closely have you I leadership purchase about integration. million yet, to strategic I color $XX A that can From team of with financial congratulations questions, on the a this

That's correct, Doug.

cash? funded? are the the additional we purchase that is in price of XX% how funding And How is being

We have sufficient to cash on hand that. accomplish

about for then the paying issuing be X.X dilutive which current XX% stock, the So and is additional cash will to about which XX% amount, million.

that is So right? about that

Yes.

that to it's And been dividend just trading of above referring closer CB X.X%, based the current is was the then because $X.XX has on a X.X%. to that O'Brien Pat share $XX, yield

investor I calculated the how yield just dividend the So wasn't in presentation? being was sure

the calculated the was is versus stock the price probably done. you've calculation done up, the that when that goes today. And as was Yes, of stock correct

I'm in having two CBFV, a that saw people to the get been through O'Brien to efficiency cost some the I -- that corporate ratio XX.X%. slide operations some I slides has late. appreciation I there overlap. one million lower? finally, and Pat of was went into the maybe not kind plans, maybe saw when about of plan of bit Is redeploying the that that And redundancies, different saw part deck, areas assuming the of is corporate $X of

I'll good morning. Doug, Pat. hit one, that Yes.

are identified standpoint from of a redundancies exactly a the number of operations. right. You that There are we've already

Fiserv. Some of are within that those systems on Jack We're will on Henry. the are duplicated. be They

We we're will, as well. other of process savings. Bank, redundancies operational that's Progressive obviously, expense there yet. granularly of those there side beginning then, in as together, today saves them driving be corporate and with know those will that there we're so and our are That's savings where all derived. We that people of part with number FTE, would within but the combine the and be that on saves expect, And everybody center will system and cost branches don't a

and benefit approach maybe side to to it West Bank the from current to mean, agents well? as customers but far know cross-sell -- that great sure in Underwriters, date similar it will a about the a as be maybe there early, insurance of operations on make thought too to cross-sell to Exchange just have you and I Ohio Pennsylvania, in And then, as hire licensed activities little the Virginia, I Progressive that insurance the all --

as we've cross-refer the brokerage side. the and success a years Underwriters, of owns and Community And successful agents We integrating had insurance for the bank of side known those listening been lines of firm the both bankers personal on in, as to Exchange the last number insurance full-service as Bank business. well together over the commercial

definitely develop the insurance Virginia, the lenders revenue of what we look the will additional side and lenders between we linking market West at commercial additional and of Underwriters we and revenue will Bank the commercial lines As do, insurance be through through Underwriters drive Community and same with consumer the Ohio producers personal Valley to the partnership we with similarly that to extend Exchange and the producers insurance agency. Exchange

And were in can modeling that you I merger any assume assumptions those correct? an any of when you the merger of the from for all included like -- of the any moving standpoint, Or did insurance? include in EU the I am insurance not EPS were doing -- of on increased benefits revenues the forward, insurance any

any in significant -- way. type Not of in any

that We from Exchange, but President earnings in Boyer, did Rich also model not Virginia. West recall I the additional licensed in would of Exchange, is

could Banks' your lower. boost and are So the just take Bank modeling. questions has to reserves thoughts there. about The Community bit my that always part of line loss What it know loss with some Community that had not get the allowance that? to other little And a opportunity is out historical that question, am upside Progressive bit reserve present so last are a reserves of existing I monopolizing any even not in Progressive's Is moving very contemplated is I XXXX forward in in Bank, ratio? more in charge a for conservative, loan that provision

is they're at take so that. existing calculation. X.X%, point. existing reserve our conservative the is than higher I reserve their reserve think Ralph in by fairly way. they're Their We Burchianti actually reserve this can this -- Their

it's So reviewed think and it, we certainly adequate. we

though. It away goes

will do portfolio a the calculation, by way mark loan of on purchasing. the away, reserve That and we're that a establish credit course, we'll go

as I credit million believe. think we I modeled $X.X mark,

[Operator your Instructions] you your do And have question. state please ask question, another and caller, name

FIG Chase Shanon Partners. is This with

when you you are in talking were about XXXX, that? to referring the you XXX Just earnings wanted to earnings for the saw consensus XX% using I check, accretion

projected any budget that We for period rate West absent First basically, increases. used interest Virginia's internal projections

So that reasonable. sounds number

XXX I slides? see XXXX for reasonable? that, So what then is what from Does XX% that accretion earnings for had of and consensus CBFV the that from in we sound

reasonable. Yes, sounds that

the And your of line Perito. Michael question from next comes

for O'Brien. a Maybe Pat question

liquidity loan looking through So says from three of growth over years. deck and on next of it slide the funded CBFV $XXX million incremental assumes of the FWVB and here, redeployment excess

will make want you three way. 'XX, some have thinking where am net right funded liquidity pro So I in XXXX, that you on expect which by all about you to by loan just I and next been that forma between the saying, before incremental million to institution, 'XX, Is growth are cost if that down $XX funded that be about the that do break the that bringing now more might essentially sure excess of versus guys funding? essentially over years, higher

is correct. That

FWVB I that legacy guess, growth how versus CB franchise? the much of $XXX is million And assumption from coming

from We're growth still not some of to think of drill occur. lending First as that market. those There market numbers. to working core though where the staff revamping couple West in that, And our on Pennsylvania some that we that's in growth confidence the down CBFV, of about of needs anticipating in lies years that as we're is but the traditional it, robust will Virginia to first the budgeting be

particular. talking now, we market Pittsburgh making are is as market from Mike, good there us right markets Community before, of know you Washington as that As a County, we the core inroads in the know well Bank and robust

taking to people the a Valley an in place Ohio funds of and it's market, Greater Valley strategy So low-cost of aggressive Pittsburgh processes them in more lend we the while Ohio redeploying in those effectively in the and market. way put

years? down kind I work at be over mean, about it you will few the can I maybe, carrying. one, I the like would think of guess, portfolio guys seems guess, the points you next redeploy your the then to XX Kevin, going of be basis obviously margin, deal how impact -- because day investment fast so bigger that it's start. the guys Just dilutive to And and on be you

priced Well, get And First to up quickly ourselves cost of favorably two the as going slow but and the Virginia. funds the years. ramp deployment redeployed over the dedicated the of it three next of money to is key to deposits possible, West that we've is as from trying be to

Is you look maybe are with and Or you guys there like anything, historically? run to investment that guys going portfolio guess, to I or sell is in investment consistent have reposition portfolio how pretty the anything your that? it

It's historically. just very consistent restructure with have and the what will combined But as at improve the you we of same we once we to noted, portfolio, done for run some opportunities forma pro look time. yield we'll

kind for a I like capital, The feel is that ratio maybe capital TCE you is moving position then a about mean, to a nice for to the ballpark I would it's later transaction. And like guys? into do even going come the of little than seems question that Pat the see think pro for mean, deal on forward forma lower guys Pat capital you like the Is successfully maybe here level little on it O'Brien higher? X% how year? or closed or McCune you after either/or. a next

Pat to that? want O'Brien, you take

We than there X.X%. run little a with as healthier Mike, have know, Sure. number you traditionally,

higher this And up sense and we build the just probably to at operating makes not a that, need we so it's would to size slightly than just probably into break look bit, levels would, us. we company as to probably but that way new we perform,

back, XXXX XXXX, -- a seems question I range, are last you you've to will continue kind is if out gap good to should move by like to as after is looking which few just that and as guys deployed, on back guess, on liquidity at forma close cost towards gets this see. you about you the takes you basis mean, guys FedFirst, one numbers what I you level that back I that get other of -- you mean, just it help that the and it deal? more running focus need XXX beyond in look higher I the bps me, into of I of of you can, bps. to itself? kind provided XXXX get of point, there XX saves from the be maybe think ROA taking guess, which obviously, do you Or it that the there in try and think deck, and helpful, to get level? pro items were do think I this

going From in the bps an We're some be long-term of and do a to up are up. to ROA that hard work think little discussions probably I our a thing. get the get I to people where to that is long-term Mike, recent north reinvest important. very some XX to going reinvest and continue is ROA it. bit view is place going in as able levels extremely again, earlier, redeploying for our be, to our doubt to We back to company we of perspective, There a of somewhere well funds back about health X% no questions challenging as be good in return. to don't see, to earning going to back

key help should throw safely as and for will off hard redeploy very managing being our prudent Underwriters Exchange the well ROA that us that money and to income with is ROA. synergy the our fee in enhance and our number beyond But profitably of additional that Some cost improving. expenses to saves overall working

more [Operator at questions Instructions] there are this time. And no

doing it's key support very to about building successful Well, in call. so. think both listened We transaction. franchise, and in an Goodbye. the thank participated you, stronger excited the appreciate are Again, who this more and banks your even everyone, and we

all. you. you Thank Thank

And call. today's this concludes conference

You may now disconnect.