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VB

Village Bank & Trust Financial Corp. (VBFC)·Q1 2024 Earnings Summary

Executive Summary

  • VBFC delivered Q1 2024 net income of $1.77M and diluted EPS of $1.19, up 15% YoY, as NIM compressed just 7bps YoY to 3.72% amid rising funding costs .
  • Commercial bank core loans grew 2.84% QoQ and deposits rose 2.47% QoQ; noninterest-bearing deposits fell to 37.10% of total, offset by $20.0M of brokered time deposits at a 4.89% rate .
  • Mortgage banking posted $69k net income driven by a $233.9k fair value adjustment to forward sales commitments and IRLC/held-for-sale timing, a positive surprise vs persistent industry headwinds .
  • No quantitative guidance ranges provided; management reiterated focus on deposit mix discipline, earning asset yield lift, and vigilance on credit quality as catalysts for margin stabilization .
  • Wall Street consensus estimates from S&P Global were unavailable for VBFC this quarter; therefore beats/misses vs consensus cannot be determined [SpgiEstimatesError: Missing CIQ mapping for VBFC].

What Went Well and What Went Wrong

What Went Well

  • Core relationship growth: Commercial core loans +4.02% QoQ and consumer/residential +0.86% QoQ; consumer/residential +34.17% YoY driven by purchase ARMs and home equity .
  • Margin resilience: Despite 153bps higher cost of interest-bearing liabilities and 103bps higher cost of funds, yield on earning assets rose 91bps YoY to 5.42%, limiting NIM compression to 3.72% .
  • Mortgage segment stabilization: Net income of $69k in Q1 aided by the $233.9k fair value/timing adjustment; management continues actions to navigate weak mortgage environment .

What Went Wrong

  • Funding pressure: Noninterest-bearing deposits fell to 37.10% (from 40.91% in Q4 2023 and 41.11% in Q1 2023), reflecting consumer/business drawdowns and migration to interest-bearing products .
  • Elevated deposit costs: Money market rate rose 192bps YoY to 2.93%, and time deposit rate rose 240bps YoY to 3.21%, necessitating issuance of $20.0M brokered time deposits at 4.89% .
  • Noninterest income softness at the commercial bank: Down YoY due to lower service/charge fee income; mortgage still facing macro headwinds despite Q1 timing benefit .

Financial Results

Consolidated P&L and NIM (last 5 quarters; $USD Millions; EPS in $; % annualized)

MetricQ1 2023Q2 2023Q3 2023Q4 2023Q1 2024
Interest Income ($M)$7.583 $8.099 $8.462 $9.130 $9.335
Interest Expense ($M)$1.218 $1.975 $2.348 $2.445 $2.939
Net Interest Income ($M)$6.365 $6.124 $6.114 $6.685 $6.396
Provision for Credit Losses ($M)$0.000 $0.000 $0.000 $0.050 $0.150
Noninterest Income (Loss) ($M)$1.256 $1.221 $(3.669) $1.156 $1.604
Noninterest Expense ($M)$5.756 $5.832 $5.752 $5.697 $5.629
Pre-tax Income ($M)$1.865 $1.513 $(3.307) $2.094 $2.221
Net Income ($M)$1.540 $1.239 $(2.553) $1.692 $1.772
Diluted EPS ($)$1.04 $0.83 $(1.72) $1.14 $1.19
Net Interest Margin (%)3.79% 3.53% 3.46% 3.83% 3.72%

YoY/Sequential context:

  • EPS: $1.19 vs $1.04 YoY (+14%), vs $1.14 sequential (+4%) .
  • NIM: 3.72% vs 3.79% YoY (−7bps), vs 3.83% sequential (−11bps) .

Segment Results (Pre-tax, Tax, Net by segment; $USD Thousands)

MetricQ1 2023Q4 2023Q1 2024
Commercial Banking Pre-tax$2,267 $2,410 $2,134
Mortgage Banking Pre-tax$(402) $(316) $87
Commercial Banking Income Tax$409 $468 $431
Mortgage Banking Income Tax$(84) $(66) $18
Commercial Banking Net Income$1,858 $1,942 $1,703
Mortgage Banking Net Income (Loss)$(318) $(250) $69
Consolidated Net Income$1,540 $1,692 $1,772

KPIs and Balance Sheet Highlights

KPIQ1 2023Q4 2023Q1 2024
Total Loans ($M)$539.818 $575.008 $591.338
Core Loans QoQ Growth—+1.58% +2.84%
Total Deposits ($M)$618.016 $605.345 $620.269
Noninterest-bearing Demand (% of Deposits)41.11% 40.91% 37.10%
Time Deposits ($M)$46.601 $46.550 $68.534
Brokered Time Deposits Issued ($M)——$20.0 @ 4.89%
Yield on Earning Assets (%)4.51% —5.42%
Cost of Interest-bearing Liabilities (%)1.22% —2.75%
Overall Cost of Funds (%)0.75% —1.78%
ACL/Loans (%)0.61% 0.59% 0.60%
NPL/Loans (%)0.12% 0.06% 0.05%
CET1 Ratio (%)14.52% 13.86% 13.51%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/Net Interest Income2024Not providedNot providedMaintained – no quantitative guidance
NIM2024Not providedCommentary: expect support from increasing earning asset yields and disciplined deposit mix/cost; pressure to slow Maintained – qualitative commentary
Operating Expenses2024Not providedNot providedMaintained – no quantitative guidance
Tax Rate2024Not providedNot providedMaintained – no quantitative guidance
Dividends2024Not discussedNot discussedNo update

Earnings Call Themes & Trends

Note: A Q1 2024 earnings call transcript was not available in our document set; themes below rely on press release commentary across Q3–Q1.

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
Funding costs & deposit mixElevated liability costs; money market rate +200bps; noninterest-bearing deposit % ~40%; expectation of continued pressure Liability costs +179bps YoY; noninterest-bearing ~41%; pressure expected to slow Cost of interest-bearing liabilities +153bps YoY; noninterest-bearing down to 37.10%; brokered time deposits added Deteriorating mix; cost pressure moderating
Net interest margin (NIM) trajectoryNIM 3.46%; balance sheet repositioning expected to improve forward run rate NIM expanded to 3.83% sequentially post-repositioning NIM 3.72%; modest compression, supported by higher earning asset yields Stabilizing post-repositioning
Mortgage segment performanceLoss; originations down; macro headwinds Loss; rate/inventory headwinds persist Positive $69k net income due to $233.9k fair value/timing benefit; environment still weak Improving modestly (one-off assist)
Asset quality & ACL adequacyStrong metrics; ACL/Loans 0.59%; NPL/Loans 0.06% Strong; ACL/Loans 0.59%; NPL/Loans 0.06% Strong; ACL/Loans 0.60%; NPL/Loans 0.05% Stable/strong
Balance sheet repositioning impacts$4.986M AFS sale loss; accretive projections to EPS/NIM/ROA/ROTCE Benefit seen: NIM +37bps vs Q3 Continuing benefit: higher earning asset yield; QoQ NIM modest compression with deposit costs Beneficial carry-forward

Management Commentary

  • “We are pleased with the Company’s performance during the first quarter in spite of the rising cost of deposits and continued investments in the future… NIM… only compressed 7 basis points to 3.72% compared to first quarter 2023.” — Jay Hendricks, President & CEO .
  • “The commercial bank grew core loans 2.84% and deposits 2.47% during the first quarter 2024… increasing earning asset yields and disciplined management of our deposit mix and cost will support our net interest margin the remainder of the year.” — Jay Hendricks .
  • “We finished the year with a good fourth quarter and well positioned for 2024… NIM… expanded 37 basis points to 3.83% from the third quarter.” — Jay Hendricks .
  • “Our strong capital position put us in a position to prune and reposition our investment portfolio… while the actions had a negative effect on the quarter, the go-forward impact on our margin and earnings is meaningful.” — Jay Hendricks .

Q&A Highlights

  • A Q1 2024 earnings call transcript was not available; thus, no Q&A highlights or guidance clarifications could be extracted [ListDocuments: none for earnings-call-transcript in Q2 2024 timeframe].

Estimates Context

  • Attempts to retrieve S&P Global/Capital IQ consensus for Q1 2024 EPS and revenue failed due to missing CIQ mapping for VBFC; therefore consensus comparisons are unavailable at this time [SpgiEstimatesError: Missing CIQ mapping for VBFC].
  • Action: We recommend re-checking SPGI mapping or alternative data sources before making beat/miss determinations.
MetricConsensus (S&P Global)ActualBeat/Miss
Diluted EPS ($)N/A$1.19 N/A
Net Interest Income ($M)N/A$6.396 N/A
Net Income ($M)N/A$1.772 N/A

Key Takeaways for Investors

  • Margin stabilization narrative remains intact post Q3 balance sheet repositioning; Q1 NIM at 3.72% with 91bps YoY increase in earning asset yields partly offsetting higher funding costs .
  • Deposit mix is the swing factor: noninterest-bearing share fell to 37.10%; management supplemented with $20.0M brokered CDs at 4.89%—watch for mix shifts and cost discipline in 2024 .
  • Commercial core loan momentum is healthy (+2.84% QoQ; +9.58% YoY core loans), with growth concentrated in nonowner-occupied CRE; credit quality remains strong with NPL/Loans at 0.05% .
  • Mortgage segment printed a small profit on a $233.9k fair value/timing adjustment; sustainability depends on macro rate/inventory normalization—monitor segment run-rate beyond one-off effects .
  • Capital and liquidity robust (CET1 13.51%, Tier 1 leverage 11.36%); supports continued growth and resilience under higher-for-longer rate scenarios .
  • Sequential EPS ($1.19) improved vs Q4 ($1.14) despite NIM compression; continued yield lift on loans and securities is key to defending earnings power .
  • Near-term trading: stock may be sensitive to deposit cost/mix updates and signs of mortgage segment normalization; medium-term thesis hinges on execution in deposit discipline and earning asset yield expansion alongside preserved credit quality .

Additional Reference Data

Deposits by Type ($USD Thousands)

TypeQ1 2023Q4 2023Q1 2024
Noninterest-bearing Demand$254,039 $247,624 $230,118
Interest Checking$80,265 $76,289 $78,739
Money Market$186,096 $195,249 $207,640
Savings$51,015 $39,633 $35,238
Time Deposits$46,601 $46,550 $68,534
Total Deposits$618,016 $605,345 $620,269

Loans by Category ($USD Thousands)

CategoryQ1 2023Q4 2023Q1 2024
C&I + Owner Occupied CRE$204,605 $208,793 $213,964
Nonowner Occupied CRE$164,463 $167,924 $183,786
ADC (Acq./Dev./Construction)$49,426 $47,495 $43,514
Consumer/Residential$96,615 $128,532 $129,631
Student$20,195 $17,923 $15,782
Other$4,267 $4,265 $4,596
Total Loans$539,818 $575,008 $591,338

Notes:

  • Primary source document: Form 8-K with attached Q1 2024 earnings press release (Exhibit 99.1) filed April 26, 2024 .
  • Prior quarter and prior two quarters: Q4 2023 (filed Jan 25, 2024) and Q3 2023 (filed Oct 26, 2023) press releases used for trend analysis .
  • No separate Q1 2024 earnings call transcript or other press releases were found in the document catalog for the specified period [ListDocuments: none].