Community Trust Bancorp, Inc. (NASDAQ:CTBI):
Earnings
Summary
(in thousands except per share data)
2Q
2014
1Q
2014
2Q
2013
6 Months
2014
6 Months
2013
Net income $12,195 $10,140 $11,942 $22,335 $23,762 Earnings per
share $0.70 $0.59 $0.70 $1.29 $1.39 Earnings per share - diluted
$0.70 $0.58 $0.69 $1.28 $1.38 Return on average assets 1.33%
1.13% 1.31% 1.23% 1.31% Return on average equity 11.32% 9.72%
11.76% 10.53% 11.79% Efficiency ratio 56.96% 62.00% 55.21% 59.45%
56.44% Tangible common equity 10.26% 9.88% 9.35% Dividends
declared per share $0.290 $0.291 $0.286 $0.581 $0.572 Book value
per share $24.90 $24.23 $23.23 Weighted average shares
17,318 17,308 17,121 17,313 17,107 Weighted average shares -
diluted 17,393 17,403
17,205 17,393 17,188
Community Trust Bancorp, Inc. (NASDAQ:CTBI) reports earnings for
the second quarter 2014 of $12.2 million, or $0.70 per basic share,
compared to $11.9 million, or $0.70 per basic share, earned during
the second quarter 2013 and $10.1 million, or $0.59 per basic
share, earned during the first quarter 2014. The increased net
income for the quarter was primarily due to decreases in our loan
loss provision and noninterest expense with lower net other real
estate owned expense and fewer operating losses. Year-to-date
earnings for the six months ended June 30, 2014 were $22.3 million,
or $1.29 per basic share, compared to $23.8 million, or $1.39 per
basic share earned during the first six months of 2013. The
variance from prior year is due to decreased net interest income
and noninterest income, partially offset by decreases in our
provision for loan losses and noninterest expense.
On June 2, 2014, CTBI distributed a 10% stock dividend to
shareholders of record on May 15, 2014. All share data has been
restated accordingly.
2nd Quarter 2014 Highlights
- CTBI’s basic earnings per share for the
quarter was flat to prior year second quarter but increased $0.11
from first quarter 2014. Year-to-date basic earnings per share
decreased $0.10 from prior year.
- Net interest income for the quarter
decreased 1.5% from prior year second quarter but increased 0.2%
from prior quarter as our net interest margin decreased 7 basis
points and 5 basis points, respectively, for those time periods.
Average earning assets increased 0.6% from second quarter 2013 and
0.7% from prior quarter while our yield on average earning assets
decreased 14 basis points and 6 basis points, respectively. The
yield on all earning asset portfolios declined quarter over
quarter, while the cost of interest bearing funds remained stable.
Net interest income for the six months ended June 30, 2014
decreased 1.4% from prior year.
- Nonperforming loans at $44.5 million
increased $3.0 million from June 30, 2013 and $2.1 million from
March 31, 2014, primarily due to one credit relationship which
management has reviewed and considers to be well secured and in the
process of collection. Nonperforming assets at $77.6 million
decreased $7.1 million from June 30, 2013 and $1.1 million from
March 31, 2014.
- Net loan charge-offs for the quarter
ended June 30, 2014 were $0.7 million, or 0.11% of average loans
annualized, compared to $3.5 million, or 0.54%, experienced for the
second quarter 2013 and $1.7 million, or 0.27%, for the first
quarter 2014. Year-to-date net charge-offs declined from 0.38% of
average loans to 0.19%.
- Our loan loss provision for the quarter
decreased $2.9 million from prior year second quarter and $0.6
million from prior quarter. Year-to-date provision decreased $3.1
million. The decline in our loan loss provision was primarily due
to the trend of decreasing net losses to average loans resulting in
a 2 basis point reduction in our allowance for loan and lease
losses. The reduction in our allowance for loan and lease losses
impacted our second quarter 2014 earnings per basic share by
$0.02.
- Noninterest income decreased 17.3% for
the quarter ended June 30, 2014 compared to the same period in 2013
but increased 9.0% from prior quarter. Noninterest income for the
first six months of 2014 decreased 16.5% from prior year. The
decrease from prior year was primarily attributable to decreases in
gains on sales of loans, deposit service charges, loan related fees
resulting from the fluctuation in the fair value of our mortgage
servicing rights, and other noninterest income due to the prior
year death benefits received in bank owned life insurance.
- Noninterest expense for the quarter
ended June 30, 2014 decreased 2.8% from prior year second quarter
and 6.0% from prior quarter. The quarterly improvement is due to
decreases in net other real estate owned expense and operating
losses. Noninterest expense for the first six months of 2014
decreased 0.3% from prior year. Noninterest expense for the year
was positively impacted by the decrease in net other real estate
owned expense as well as adjustments totaling $0.8 million to
reduce the accrual for the Federal Reserve determination which was
previously disclosed in our annual report on Form 10-K for the year
ended December 31, 2013.
- Our loan portfolio increased $47.8
million from June 30, 2013 and $47.1 million during the
quarter.
- Our investment portfolio decreased
$39.8 million from June 30, 2013 and $2.6 million during the
quarter.
- Deposits, including repurchase
agreements, declined $21.7 million from June 30, 2013 and $36.7
million during the quarter. During the second quarter 2014,
substantially all decline was in interest bearing deposits. Year
over year interest bearing deposits, including repurchase
agreements, declined $48.9 million while noninterest bearing
deposits increased $27.1 million.
- Our tangible common equity/tangible
assets ratio increased to 10.26%.
Net Interest Income
Net interest income for the quarter decreased $0.5 million, or
1.5%, from prior year second quarter but increased $0.1 million, or
0.2% from prior quarter as our net interest margin decreased 7
basis points and 5 basis points, respectively, for those time
periods. The current low rate environment continues to have a
negative impact on our net interest margin. Average earning assets
increased 0.6% from second quarter 2013 and 0.7% from prior quarter
while our yield on average earning assets decreased 14 basis points
and 6 basis points, respectively. Loans represented 76.3% of our
average earning assets for the quarter ended June 30, 2014 compared
to 75.6% for the quarter ended June 30, 2013 and 76.6% for the
quarter ended March 31, 2014. The cost of interest bearing funds
decreased 6 basis points from prior year second quarter but
remained flat to prior quarter. Net interest income for the six
months ended June 30, 2014 decreased $1.0 million, or 1.4%, from
prior year.
Noninterest Income
Noninterest income decreased $2.3 million, or 17.3%, for the
quarter ended June 30, 2014 compared to the same period in 2013 but
increased $0.9 million, or 9.0%, from prior quarter. The decrease
from prior year second quarter included decreases in gains on sales
of loans, deposit service charges, loan related fees, and bank
owned life insurance income. The decrease in gains on sales of
loans from prior year was reflective of the decline in secondary
market residential real estate mortgage activity, and the decrease
in deposit service charges from prior year was a result of the
change in our processing of overdrafts. However, gains on sales of
loans increased $0.1 million from the first quarter 2014, and
deposit service charges increased $0.6 million from prior quarter
with increases in overdraft revenue and Visa debit fee income. Loan
related fees were impacted by the fluctuation in the fair value of
our mortgage servicing rights, and the decrease in other
noninterest income was due to the prior year death benefits
received in bank owned life insurance of $0.9 million.
Noninterest income for the first six months of 2014 decreased
$4.2 million, or 16.5%, from prior year. Gains on sales of loans
were $1.7 million below prior year, deposit service charges were
$0.5 million below prior year, and loan related fees were $1.0
million below prior year due to a $0.8 million change in fair value
adjustments in our mortgage servicing portfolio.
Noninterest Expense
Noninterest expense for the quarter ended June 30, 2014
decreased $0.7 million, or 2.8%, from prior year second quarter and
$1.6 million, or 6.0%, from prior quarter. The quarterly
improvement is due to decreases in net other real estate owned
expense and operating losses. Noninterest expense for the first six
months of 2014 decreased $0.2 million, or 0.3%, from prior year.
Noninterest expense for the year was positively impacted by a $0.8
million decrease in net other real estate owned expense as well as
adjustments totaling $0.8 million to the accrual for the Federal
Reserve determination, partially offset by increased personnel
expense of $0.5 million, an increase in operating losses of $0.4
million, and increased data processing expense of $0.3 million.
Balance Sheet Review
CTBI’s total assets at $3.7 billion increased $14.4 million, or
0.4%, from June 30, 2013 but decreased $16.0 million, or an
annualized 1.7%, during the quarter. Loans outstanding at June 30,
2014 were $2.6 billion, increasing $47.8 million, or 1.8%, from
June 30, 2013 and $47.1 million, or an annualized 7.3%, during the
quarter. We experienced growth during the quarter of $36.8 million
in the commercial loan portfolio, $6.9 million in the residential
loan portfolio, and $3.4 million in the consumer loan portfolio.
CTBI’s investment portfolio decreased $39.8 million, or 5.8%, from
June 30, 2013 and $2.6 million, or an annualized 1.6%, during the
quarter. Deposits in other banks decreased $62.9 million during the
quarter to fund loan growth. Deposits, including repurchase
agreements, at $3.1 billion decreased $21.7 million, or 0.7%, from
June 30, 2013 and $36.7 million, or an annualized 4.7%, from prior
quarter.
Shareholders’ equity at June 30, 2014 was $433.9 million
compared to $400.3 million at June 30, 2013 and $422.0 million at
March 31, 2014. CTBI’s annualized dividend yield to shareholders as
of June 30, 2014 was 3.39%.
Asset Quality
CTBI’s total nonperforming loans were $44.5 million at June 30,
2014, a 7.1% increase from the $41.6 million at June 30, 2013 and a
5.0% increase from the $42.4 million at March 31, 2014. Loans 90+
days past due increased $3.3 million for the quarter, partially
offset by a $1.2 million decrease in nonaccrual loans. The increase
in loans 90+ days past due was primarily the result of one credit
relationship totaling $2.6 million. Loans in the 90+ days past due
category are reviewed by management and are considered to be well
secured and in the process of collection; therefore, these loans
require no specific reserves to the allowance for loan and lease
losses. Loans 30-89 days past due at $21.5 million was an increase
of $5.0 million from June 30, 2013 but a decrease of $2.1 million
from March 31, 2014. 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 June 30, 2014
totaled $66.2 million, compared to $63.4 million at June 30, 2013
and $65.3 million at March 31, 2014.
We continue to experience improvement in other real estate
owned. Our level of foreclosed properties at $33.1 million at June
30, 2014 was a decrease from $43.1 million at June 30, 2013 and
$36.3 million at March 31, 2014. Sales of foreclosed properties for
the quarter ended June 30, 2014 totaled $5.1 million while new
foreclosed properties totaled $2.2 million. At June 30, 2014, the
book value of properties under contracts to sell was $2.6 million;
however, the closings had not occurred at quarter-end.
Net loan charge-offs for the quarter ended June 30, 2014 were
$0.7 million, or 0.11% of average loans annualized, compared to
$3.5 million, or 0.54%, experienced for the second quarter 2013 and
$1.7 million, or 0.27%, for the first quarter 2014. Of the total
net charge-offs for the quarter, $0.1 million were in commercial
loans, $0.2 million were in indirect auto loans, and $0.2 million
were in residential real estate mortgage loans. Year-to-date net
charge-offs declined from 0.38% of average loans to 0.19%.
Allocations to loan loss reserves were $0.7 million for the quarter
ended June 30, 2014 compared to $3.7 million for the quarter ended
June 30, 2013 and $1.3 million for the quarter ended March 31,
2014. Loan loss provision for the six months ended June 30, 2014
decreased $3.1 million. Our reserve coverage (allowance for loan
and lease loss reserve to nonperforming loans) at June 30, 2014 was
75.5% compared to 80.8% at June 30, 2013 and 79.2% at March 31,
2014. Our loan loss reserve as a percentage of total loans
outstanding decreased to 1.28% from the 1.30% at June 30, 2013 and
March 31, 2014. The decline in our loan loss provision was
primarily due to the trend of decreasing net losses to average
loans and a 2 basis point reduction in our allowance for loan and
lease losses. The reduction in our allowance for loan and lease
losses impacted our earnings per basic share by $0.02.
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 $3.7 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) June 30, 2014 (in thousands except per share
data and # of employees)
Three Three Three Six Six Months Months
Months Months Months Ended Ended Ended Ended Ended
June 30, 2014
March 31, 2014
June 30, 2013
June 30, 2014 June 30, 2013 Interest income $ 35,811 $ 35,693 $
36,783 $ 71,504 $ 73,559 Interest expense 2,978
2,943 3,441 5,921
7,020 Net interest income 32,833 32,750 33,342 65,583 66,539
Loan loss provision 735 1,345 3,661 2,080 5,220 Gains on
sales of loans 288 190 755 478 2,152 Deposit service charges 5,987
5,431 6,182 11,418 11,949 Trust revenue 2,199 2,109 2,023 4,308
4,023 Loan related fees 766 679 1,496 1,445 2,444 Securities gains
(losses) (51 ) (60 ) (8 ) (111 ) (8 ) Other noninterest income
1,783 1,716 2,826
3,499 4,634 Total noninterest income 10,972
10,065 13,274 21,037 25,194 Personnel expense 13,274 13,417
13,214 26,691 26,196 Occupancy and equipment 2,875 3,064 2,960
5,939 5,865 Data processing expense 1,933 1,925 1,775 3,858 3,588
FDIC insurance premiums 558 649 637 1,207 1,239 Other noninterest
expense 6,616 7,806 7,401
14,422 15,398 Total noninterest expense
25,256 26,861 25,987 52,117 52,286 Net income before taxes
17,814 14,609 16,968 32,423 34,227 Income taxes 5,619
4,469 5,026 10,088
10,465 Net income $ 12,195 $ 10,140 $ 11,942
$ 22,335 $ 23,762 Memo: TEQ interest
income $ 36,298 $ 36,141 $ 37,230 $ 72,439 $ 74,451 Average
shares outstanding 17,318 17,308 17,121 17,313 17,107 Diluted
average shares outstanding 17,393 17,403 17,205 17,393 17,188 Basic
earnings per share $ 0.70 $ 0.59 $ 0.70 $ 1.29 $ 1.39 Diluted
earnings per share $ 0.70 $ 0.58 $ 0.69 $ 1.28 $ 1.38 Dividends per
share $ 0.290 $ 0.291 $ 0.286 $ 0.581 $ 0.572
Average
balances: Loans $ 2,604,064 $ 2,595,729 $ 2,566,536 $ 2,599,920
$ 2,559,537 Earning assets 3,413,628 3,389,490 3,393,342 3,401,626
3,393,593 Total assets 3,670,820 3,648,545 3,665,249 3,659,744
3,662,581 Deposits, including repurchase agreements 3,129,289
3,114,169 3,139,180 3,121,771 3,137,403 Interest bearing
liabilities 2,554,122 2,546,743 2,597,011 2,550,453 2,598,476
Shareholders' equity 432,211 423,175 407,203 427,718 406,381
Performance ratios: Return on average assets 1.33 % 1.13 %
1.31 % 1.23 % 1.31 % Return on average equity 11.32 % 9.72 % 11.76
% 10.53 % 11.79 % Yield on average earning assets (tax equivalent)
4.26 % 4.32 % 4.40 % 4.29 % 4.42 % Cost of interest bearing funds
(tax equivalent) 0.47 % 0.47 % 0.53 % 0.47 % 0.54 % Net interest
margin (tax equivalent) 3.92 % 3.97 % 3.99 % 3.94 % 4.01 %
Efficiency ratio (tax equivalent) 56.96 % 62.00 % 55.21 % 59.45 %
56.44 % Loan charge-offs $ 1,629 $ 2,545 $ 4,115 $ 4,174 $
6,303 Recoveries (896 ) (807 ) (662 )
(1,703 ) (1,439 ) Net charge-offs $ 733 $ 1,738 $ 3,453 $
2,471 $ 4,864
Market Price: High $ 38.60 $ 41.13 $
33.27 $ 41.13 $ 33.27 Low $ 32.33 $ 34.18 $ 29.23 $ 32.33 $ 29.23
Close $ 34.22 $ 37.71 $ 32.38 $ 34.22 $ 32.38
Community Trust Bancorp, Inc. Financial Summary
(Unaudited) June 30, 2014 (in thousands except per share
data and # of employees)
As of As of As of June 30, 2014 March 31, 2014 June 30, 2013
Assets: Loans $ 2,632,609 $ 2,585,508 $ 2,584,801 Loan loss
reserve (33,617 ) (33,615 ) (33,601 ) Net
loans 2,598,992 2,551,893 2,551,200 Loans held for sale 895 1,610
2,991 Securities AFS 647,536 650,127 687,362 Securities HTM 1,662
1,662 1,662 Other equity investments 22,814 22,814 30,559 Other
earning assets 76,653 140,715 63,071 Cash and due from banks 72,637
64,386 56,100 Premises and equipment 50,552 51,182 52,703 Goodwill
and core deposit intangible 66,074 66,127 66,287 Other assets
114,787 118,062 126,316
Total Assets $ 3,652,602 $ 3,668,578 $
3,638,251
Liabilities and Equity: NOW accounts
$ 28,851 $ 27,819 $ 28,191 Savings deposits 911,073 931,135 874,800
CD's >=$100,000 601,602 605,478 641,979 Other time deposits
694,075 707,587 752,752
Total interest bearing deposits 2,235,601 2,272,019 2,297,722
Noninterest bearing deposits 651,588 652,170
624,451 Total deposits 2,887,189 2,924,189
2,922,173 Repurchase agreements 217,979 217,656 204,735 Other
interest bearing liabilities 77,774 71,321 76,763 Noninterest
bearing liabilities 35,782 33,369
34,236 Total liabilities 3,218,724 3,246,535
3,237,907 Shareholders' equity 433,878 422,043
400,344
Total Liabilities and Equity $
3,652,602 $ 3,668,578 $ 3,638,251
Ending shares outstanding 17,421 17,416 17,232 Memo: Market value
of HTM securities $ 1,632 $ 1,619 $ 1,621 30 - 89 days past
due loans $ 21,466 $ 23,532 $ 16,507 90 days past due loans 18,807
15,546 22,562 Nonaccrual loans 25,725 26,884 19,012 Restructured
loans (excluding 90 days past due and nonaccrual) 45,756 44,803
42,181 Foreclosed properties 33,062 36,299 43,080 Other repossessed
assets 5 5 Tier 1 leverage ratio 11.83 % 11.68 % 11.01 %
Tier 1 risk based ratio 16.66 % 16.57 % 15.52 % Total risk based
ratio 17.91 % 17.81 % 16.77 % Tangible equity to tangible assets
ratio 10.26 % 9.88 % 9.35 % FTE employees 1,016 1,024 1,045
Community Trust Bancorp, Inc. Financial Summary
(Unaudited) June 30, 2014 (in thousands except per share
data and # of employees)
Community Trust Bancorp, Inc. reported
earnings for the three and six months ending June 30, 2014 and 2013
as follows:
Three Months Ended
Six Months Ended
June 30
June 30 2014 2013 2014 2013 Net income $ 12,195 $
11,942 $ 22,335 $ 23,762 Basic earnings per share $ 0.70 $
0.70 $ 1.29 $ 1.39 Diluted earnings per share $ 0.70 $ 0.69
$ 1.28 $ 1.38 Average shares outstanding 17,318 17,121
17,313 17,107 Total assets (end of period) $ 3,652,602 $
3,638,251 Return on average equity 11.32 % 11.76 % 10.53 %
11.79 % Return on average assets 1.33 % 1.31 % 1.23 % 1.31 %
Provision for loan losses $ 735 $ 3,661 $ 2,080 $ 5,220
Gains on sales of loans $ 288 $ 755 $ 478 $ 2,152
Community Trust Bancorp, Inc.Jean R. Hale,
606-437-3294Chairman, President, and C.E.O.
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