Community Trust Bancorp, Inc. (NASDAQ: CTBI)
Earnings Summary
(in thousands
except per share data)
3Q2013
2Q2013
3Q2012
9 Months2013
9 Months2012
Net income $12,653 $11,942 $10,209 $36,415 $34,310 Earnings
per share $0.81 $0.77 $0.66 $2.34 $2.22 Earnings per share -
diluted $0.81 $0.76 $0.66 $2.33 $2.21 Return on average
assets 1.38% 1.31% 1.11% 1.33% 1.26% Return on average equity
12.39% 11.76% 10.26% 11.99% 11.89% Efficiency ratio 54.80% 55.21%
58.19% 55.89% 56.95% Tangible common equity 9.57% 9.35% 9.22%
Dividends declared per share $0.320 $0.315 $0.315 $0.950
$0.935 Book value per share $26.03 $25.56 $25.38 Weighted
average shares 15,594 15,565 15,491 15,566 15,450 Weighted
average shares - diluted 15,688 15,641
15,555 15,647 15,501
Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings
for the third quarter 2013 of $12.7 million, or $0.81 per basic
share, compared to $10.2 million, or $0.66 per basic share, earned
during the third quarter 2012 and $11.9 million, or $0.77 per basic
share, earned during the second quarter 2013. Earnings for the nine
months ended September 30, 2013 were $36.4 million, or $2.34 per
basic share, compared to $34.3 million, or $2.22 per basic share
for the nine months ended September 30, 2012.
3rd Quarter 2013 Highlights
- CTBI’s basic earnings per share for the
quarter increased $0.15 per share from the third quarter 2012 and
$0.04 per share from the second quarter 2013. Year-to-date basic
earnings per share increased $0.12 per share from prior year.
- Net interest income for the quarter
increased 3.3% from prior year third quarter and 2.4% from prior
quarter as our net interest margin increased 11 basis points and 8
basis points, respectively, for those time periods. Average earning
assets remained relatively stable from third quarter 2012 but
decreased 0.6% from prior quarter. Net interest income for the nine
months ended September 30, 2013 increased 2.4% from prior
year.
- Nonperforming loans at $42.3 million
increased $8.2 million from September 30, 2012 and $0.7 million
from June 30, 2013. Nonperforming assets at $84.7 million decreased
$4.9 million from September 30, 2012 but increased $0.1 million
from June 30, 2013.
- Net loan charge-offs for the quarter
ended September 30, 2013 were $1.7 million, or 0.26% of average
loans annualized, compared to $2.9 million, or 0.45%, experienced
for the third quarter 2012 and $3.5 million, or 0.54%, for the
second quarter 2013. Year-to-date net charge-offs were $6.6
million, or 0.34%, compared to $6.5 million, or 0.34%, for the nine
months ended September 30, 2012.
- Our loan loss provision for the quarter
decreased $0.8 million from prior year third quarter and $1.5
million from prior quarter. Year-to-date provision expense of $7.3
million is $0.8 million higher than 2012.
- Our loan loss reserve as a percentage
of total loans outstanding remained at 1.30% from September 30,
2012 to September 30, 2013. Our reserve coverage (allowance for
loan loss reserve to nonperforming loans) at September 30, 2013 was
80.5% compared to 97.5% at September 30, 2012 and 80.8% at June 30,
2013.
- Noninterest income increased 11.4% for
the quarter ended September 30, 2013 compared to the same period in
2012 but decreased 9.1% from prior quarter. Noninterest income for
the nine months ended September 30, 2013 increased 9.6%. The
increase year over year in noninterest income included increases in
gains on sales of loans, deposit service charges, trust revenue,
loan related fees, and bank owned life insurance income, offset
slightly by a decrease in securities gains; although, each of these
areas saw declines quarter over quarter except deposit service
charges.
- Noninterest expense for the quarter
ended September 30, 2013 decreased 0.9% from prior year third
quarter and 1.5% from prior quarter. Noninterest expense for the
nine months ended September 30, 2013 increased 2.9% from prior
year. The year over year increase from prior year resulted
primarily from increases in personnel expense, data processing
expense, and other real estate owned expense. The quarter over
quarter decrease is primarily due to decreased other real estate
owned expense.
- Our loan portfolio increased $64.8
million from September 30, 2012 and $31.6 million during the
quarter.
- Our investment portfolio increased
$42.7 million from September 30, 2012 but declined $23.4 million
during the quarter.
- Deposits, including repurchase
agreements, declined $41.3 million from September 30, 2012 and
$37.9 million during the quarter.
- Other interest bearing liabilities
increased $30 million at the end of the quarter due to an FHLB
advance which matured and was paid on October 2, 2013.
- Our tangible common equity/tangible
assets ratio remains strong at 9.57%.
Net Interest Income
Net interest income for the quarter increased $1.1 million from
prior year third quarter and $0.8 million from prior quarter as our
net interest margin increased 11 basis points and 8 basis points,
respectively. Average earning assets remained relatively stable
from third quarter 2012 but decreased 0.6% from prior quarter. The
yield on average earning assets decreased 13 basis points but
increased 6 basis points for these respective time periods. Loans
represented 77.0% of our average earning assets for the quarter
ended September 30, 2013 compared to 75.4% for the quarter ended
September 30, 2012 and 75.6% for the quarter ended June 30, 2013.
The cost of interest bearing funds decreased 31 basis points from
prior year third quarter and 2 basis points from prior quarter. Net
interest income for the nine months ended September 30, 2013
increased $2.3 million from prior year with average earning assets
increasing 1.1% and our net interest margin increasing 5 basis
points.
Noninterest Income
Noninterest income increased 11.4% for the quarter ended
September 30, 2013 compared to the same period in 2012 but
decreased 9.1% from prior quarter. Noninterest income for the nine
months ended September 30, 2013 increased 9.6%. The increase year
over year in noninterest income included increases in gains on
sales of loans, deposit service charges, trust revenue, loan
related fees, and bank owned life insurance income, offset slightly
by a decrease in securities gains; although, each of these areas
saw declines quarter over quarter except deposit service charges.
Loan related fees were impacted by a $0.3 million positive variance
year over year in fair value adjustments to our mortgage servicing
rights.
Noninterest Expense
Noninterest expense for the third quarter 2013 decreased 0.9%
from prior year third quarter and 1.5% from prior quarter.
Noninterest expense for the nine months ended September 30, 2013
increased 2.9% from prior year. The year over year increase from
prior year resulted primarily from a $0.9 million increase in
personnel expense, a $0.7 million increase in data processing
expense, and a $1.2 million increase in other real estate owned
expense. The quarter over quarter decrease is primarily due to a
$0.3 million decrease in other real estate owned expense.
Balance Sheet Review
CTBI’s total assets at $3.6 billion increased $2.3 million, or
0.1%, from September 30, 2012 and $5.6 million, or an annualized
0.6%, during the quarter. Loans outstanding at September 30, 2013
were $2.6 billion, increasing $64.8 million, or 2.5%, from
September 30, 2012 and $31.6 million, or an annualized 4.8%, during
the quarter. We experienced loan growth during the quarter of $22.7
million in the commercial loan portfolio, $4.8 million in the
residential loan portfolio, and $4.1 million in the consumer loan
portfolio. CTBI’s investment portfolio increased $42.7 million, or
6.9%, from September 30, 2012 but decreased $23.4 million, or an
annualized 13.5%, during the quarter. Deposits, including
repurchase agreements, at $3.1 billion decreased $41.3 million, or
1.3%, from September 30, 2012 and $37.9 million, or an annualized
4.8%, from prior quarter. Deposits in other banks declined $22.8
million during the quarter and $107.1 million from September 30,
2012 as a result of loan growth and a decline in deposits. Other
interest bearing liabilities increased $30 million at the end of
the quarter due to an FHLB advance which matured and was paid on
October 2, 2013.
Shareholders’ equity at September 30, 2013 was $408.7 million
compared to $396.1 million at September 30, 2012 and $400.3 million
at June 30, 2013. CTBI’s annualized dividend yield to shareholders
as of September 30, 2013 was 3.15%.
Asset Quality
CTBI’s total nonperforming loans were $42.3 million at September
30, 2013, a 24.2% increase from the $34.0 million at September 30,
2012 and a 1.7% increase from the $41.6 million at June 30, 2013.
The increase for the quarter included a $2.6 million increase in
the 90+ days past due category partially offset by a $1.9 million
decrease in nonaccrual loans. Loans 30-89 days past due at $23.3
million is an increase of $1.7 million from September 30, 2012 and
$6.8 million from June 30, 2013. Our loan portfolio management
processes focus on the immediate identification, management, and
resolution of problem loans to maximize recovery and minimize loss.
Impaired loans, loans not expected to meet contractual principal
and interest payments other than insignificant delays, at September
30, 2013 totaled $63.3 million, compared to $60.9 million at
September 30, 2012 and $63.4 million at June 30, 2013.
Our level of foreclosed properties at $42.5 million at September
30, 2013 was a decrease from $55.6 million at September 30, 2012
and $43.1 million at June 30, 2013. Sales of foreclosed properties
for the nine months ended September 30, 2013 totaled $8.7 million
while new foreclosed properties totaled $6.2 million. At September
30, 2013, the book value of properties under contracts to sell was
$4.3 million; however, the closings had not occurred at
quarter-end.
Net loan charge-offs for the quarter ended September 30, 2013
were $1.7 million, or 0.26% of average loans annualized, compared
to $2.9 million, or 0.45%, experienced for the third quarter 2012
and $3.5 million, or 0.54%, for the second quarter 2013. Of the
total net charge-offs for the quarter, $0.7 million were in
commercial loans, $0.5 million were in indirect auto loans, and
$0.3 million were in residential real estate mortgage loans.
Year-to-date net charge-offs were $6.6 million, or 0.34%, compared
to $6.5 million, or 0.34%, for the nine months ended September 30,
2012. Allocations to loan loss reserves were $2.1 million for the
quarter ended September 30, 2013 compared to $2.9 million for the
quarter ended September 30, 2012 and $3.7 million for the quarter
ended June 30, 2013. Our loan loss reserve as a percentage of total
loans outstanding has remained at 1.30% from September 30, 2012 to
September 30, 2013.
Recent Form 8-K Filing
On October 11, 2013, CTBI filed an 8-K to disclose that the
Federal Reserve has made requests for information and is currently
investigating Community Trust Bank’s (“CTB”) overdraft
fee assessment methodology. On October 7, 2013, representatives of
the Federal Reserve informed CTB that Federal Reserve staff is
recommending that the Federal Reserve Division of Consumer and
Community Affairs cite CTB for a violation based on an unfair and
deceptive practice. CTBI continues to believe that CTB’s practices
are neither unfair nor deceptive and are consistent with
methodologies prevalent in the banking industry. If the Federal
Reserve takes such action, it would likely result in material
adverse consequences to CTBI and its affiliates. Such adverse
consequences may be material to the financial position of CTBI or
its results of operations. CTBI expects to recognize an accrual
against earnings with respect to this matter, but cannot reasonably
estimate the amount of such accrual until additional information is
received from the Federal Reserve.
Forward-Looking Statements
Certain of the statements contained herein that are not
historical facts are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act. CTBI’s actual
results may differ materially from those included in the
forward-looking statements. Forward-looking statements are
typically identified by words or phrases such as “believe,”
“expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may
fluctuate,” and similar expressions or future or conditional verbs
such as “will,” “should,” “would,” and “could.” These
forward-looking statements involve risks and uncertainties
including, but not limited to, economic conditions, portfolio
growth, the credit performance of the portfolios, including
bankruptcies, and seasonal factors; changes in general economic
conditions including the performance of financial markets, the
performance of coal and coal related industries, prevailing
inflation and interest rates, realized gains from sales of
investments, gains from asset sales, and losses on commercial
lending activities; results of various investment activities; the
effects of competitors’ pricing policies, of changes in laws and
regulations on competition and of demographic changes on target
market populations’ savings and financial planning needs; industry
changes in information technology systems on which we are highly
dependent; failure of acquisitions to produce revenue enhancements
or cost savings at levels or within the time frames originally
anticipated or unforeseen integration difficulties; the adoption by
CTBI of an FFIEC policy that provides guidance on the reporting of
delinquent consumer loans and the timing of associated credit
charge-offs for financial institution subsidiaries; and the
resolution of legal proceedings and related matters. In addition,
the banking industry in general is subject to various monetary and
fiscal policies and regulations, which include those determined by
the Federal Reserve Board, the Federal Deposit Insurance
Corporation, and state regulators, whose policies and regulations
could affect CTBI’s results. These statements are representative
only on the date hereof, and CTBI undertakes no obligation to
update any forward-looking statements made.
Community Trust Bancorp, Inc., with assets of $3.6 billion, is
headquartered in Pikeville, Kentucky and has 71 banking locations
across eastern, northeastern, central, and south central Kentucky,
six banking locations in southern West Virginia, four banking
locations in northeastern Tennessee, four trust offices across
Kentucky, and one trust office in Tennessee.
Additional information follows.
Community Trust Bancorp,
Inc.Financial Summary (Unaudited)September 30,
2013(in thousands except per share data and # of employees)
Three Three
Three Nine
Nine Months Months Months Months Months Ended
Ended Ended Ended Ended September 30, 2013
June 30, 2013 September 30, 2012
September 30, 2013 September 30, 2012 Interest
income $ 37,455 $ 36,783 $ 38,450 $ 111,014 $ 115,631 Interest
expense 3,305 3,441
5,404
10,325 17,260 Net
interest income 34,150 33,342 33,046 100,689 98,371 Loan loss
provision 2,129 3,661 2,919 7,349 6,504 Gains on sales of
loans 653 755 660 2,805 1,982 Deposit service charges 6,349 6,182
6,038 18,298 17,865 Trust revenue 2,005 2,023 1,734 6,028 5,169
Loan related fees 1,088 1,496 631 3,532 2,528 Securities gains (23
) (8 ) - (31 ) 819 Other noninterest income 1,999
2,826 1,775
6,633 5,651
Total noninterest income 12,071 13,274 10,838 37,265
34,014 Personnel expense 13,248 13,214 13,285 39,444 38,500
Occupancy and equipment 2,865 2,960 2,926 8,730 8,551 FDIC
insurance premiums 624 637 643 1,863 1,913 Amortization of core
deposit intangible 53 53 53 160 160 Other noninterest expense
8,801 9,123
8,906 27,680
26,587 Total noninterest expense
25,591 25,987 25,813 77,877 75,711 Net income before taxes
18,501 16,968 15,152 52,728 50,170 Income taxes 5,848
5,026 4,943
16,313
15,860 Net income $ 12,653
$ 11,942 $ 10,209
$ 36,415 $ 34,310 Memo:
TEQ interest income $ 37,905 $ 37,230 $ 38,922 $ 112,356 $ 117,007
Average shares outstanding 15,594 15,565 15,491 15,566
15,450 Diluted average shares outstanding 15,688 15,641 15,555
15,647 15,501 Basic earnings per share $ 0.81 $ 0.77 $ 0.66 $ 2.34
$ 2.22 Diluted earnings per share $ 0.81 $ 0.76 $ 0.66 $ 2.33 $
2.21 Dividends per share $ 0.320 $ 0.315 $ 0.315 $ 0.950 $ 0.935
Average balances: Loans $ 2,596,805 $ 2,566,536 $
2,542,832 $ 2,572,096 $ 2,547,890 Earning assets 3,372,755
3,393,342 3,371,420 3,386,571 3,348,807 Total assets 3,638,742
3,665,249 3,650,422 3,654,547 3,635,890 Deposits, including
repurchase agreements 3,121,466 3,139,180 3,145,049 3,132,032
3,138,332 Interest bearing liabilities 2,578,567 2,597,011
2,611,981 2,591,766 2,614,379
Shareholders’ equity
405,043 407,203 395,902 405,930 385,526
Performance
ratios: Return on average assets 1.38 % 1.31 % 1.11 % 1.33 %
1.26 % Return on average equity 12.39 % 11.76 % 10.26 % 11.99 %
11.89 % Yield on average earning assets (tax equivalent) 4.46 %
4.40 % 4.59 % 4.44 % 4.67 % Cost of interest bearing funds (tax
equivalent) 0.51 % 0.53 % 0.82 % 0.53 % 0.88 % Net interest margin
(tax equivalent) 4.07 % 3.99 % 3.96 % 4.03 % 3.98 % Efficiency
ratio (tax equivalent) 54.80 % 55.21 % 58.19 % 55.89 % 56.95 %
Loan charge-offs $ 2,519 $ 4,115 $ 3,664 $ 8,822 $ 8,997
Recoveries (802 ) (662 )
(800 ) (2,241 )
(2,511 ) Net charge-offs $ 1,717 $ 3,453 $ 2,864 $
6,581 $ 6,486
Market Price: High $ 41.54 $ 36.60 $
36.92 $ 41.54 $ 36.92 Low $ 35.80 $ 32.15 $ 33.15 $ 32.15 $ 29.13
Close $ 40.59 $ 35.62 $ 35.53 $ 40.59 $ 35.53
Community Trust Bancorp,
Inc.Financial Summary (Unaudited)September 30,
2013(in thousands except per share data and # of employees)
As of As of
As of September 30, 2013
June 30, 2013 September 30, 2012
Assets: Loans $ 2,616,365 $ 2,584,801 $ 2,551,537 Loan loss
reserve (34,013 ) (33,601 )
(33,189 ) Net loans 2,582,352 2,551,200
2,518,348 Loans held for sale 768 2,991 771 Securities AFS 663,916
687,362 621,230 Securities HTM 1,662 1,662 1,662 Other equity
investments 30,559 30,559 30,558 Other earning assets 46,156 63,071
153,663 Cash and due from banks 74,252 56,100 59,480 Premises and
equipment 51,898 52,703 55,068 Goodwill and core deposit intangible
66,234 66,287 66,447 Other assets 126,057
126,316 134,304
Total Assets $ 3,643,854
$ 3,638,251 $ 3,641,531
Liabilities and Equity: NOW accounts $ 26,889 $
28,191 $ 22,200 Savings deposits 864,073 874,800 848,068
CD’s >=$100,000
627,347 641,979 647,433 Other time deposits 739,179
752,752
794,159 Total interest bearing deposits 2,257,488
2,297,722 2,311,860 Noninterest bearing deposits
616,796 624,451
599,984 Total deposits 2,874,284 2,922,173
2,911,844 Repurchase agreements 214,755 204,735 218,511 Other
interest bearing liabilities 106,590 76,763 71,634 Noninterest
bearing liabilities 39,548
34,236 43,445
Total liabilities 3,235,177 3,237,907 3,245,434
Shareholders’ equity
408,677 400,344
396,097
Total Liabilities and
Equity $ 3,643,854 $ 3,638,251
$ 3,641,531 Ending shares
outstanding 15,698 15,665 15,604 Memo: Market value of HTM
securities $ 1,614 $ 1,621 $ 1,664 30 - 89 days past due
loans $ 23,274 $ 16,507 $ 21,539 90 days past due loans 25,133
22,562 15,928 Nonaccrual loans 17,131 19,012 18,098 Restructured
loans (excluding 90 days past due and nonaccrual) 42,630 42,181
28,493 Foreclosed properties 42,481 43,080 55,551 Other repossessed
assets - - 25 Tier 1 leverage ratio 11.29 % 11.01 % 10.51 %
Tier 1 risk based ratio 15.71 % 15.52 % 14.86 % Total risk based
ratio 16.96 % 16.77 % 16.12 % Tangible equity to tangible assets
ratio 9.57 % 9.35 % 9.22 % FTE employees 1,026 1,045 1,032
Community Trust Bancorp,
Inc.Financial Summary (Unaudited)September 30,
2013(in thousands except per share data and # of employees)
Community Trust Bancorp, Inc. reported earnings for the
three and nine months ending September 30, 2013 and 2012 as
follows: Three Months Ended
Nine Months Ended September 30
September 30 2013
2012 2013 2012 Net
income $ 12,653 $ 10,209 $ 36,415 $
34,310 Basic earnings per share $ 0.81 $ 0.66 $ 2.34 $ 2.22
Diluted earnings per share $ 0.81 $ 0.66 $ 2.33 $ 2.21
Average shares outstanding 15,594 15,491 15,566 15,450
Total assets (end of period) $ 3,643,854 $ 3,641,531
Return on average equity 12.39 % 10.26 % 11.99 % 11.89 %
Return on average assets 1.38 % 1.11 % 1.33 % 1.26 %
Provision for loan losses $ 2,129 $ 2,919 $ 7,349 $ 6,504
Gains on sales of loans $ 653 $ 660 $ 2,805 $ 1,982
Community Trust Bancorp, Inc.Jean R. Hale, 606-437-3294Chairman,
President, and C.E.O.
Community Trust Bancorp (NASDAQ:CTBI)
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