Community Trust Bancorp, Inc. (NASDAQ: CTBI):
Earnings Summary (in thousands except per share data)
2Q
2018
1Q
2018
2Q
2017
6 Months
2018
6 Months
2017
Net income $11,599 $15,814 $11,541 $27,413 $22,818 Earnings per
share $0.66 $0.89 $0.65 $1.55 $1.29 Earnings per share - diluted
$0.66 $0.89 $0.65 $1.55 $1.29 Return on average assets 1.11%
1.55% 1.14% 1.33% 1.15% Return on average equity 8.56% 12.00% 8.97%
10.26% 9.00% Efficiency ratio 66.05% 59.24% 59.32% 62.67% 60.23%
Tangible common equity 11.51% 11.43% 11.19% Dividends
declared per share $0.33 $0.33 $0.32 $0.66 $0.64 Book value per
share $30.59 $30.33 $29.14 Weighted average shares 17,687
17,671 17,626 17,679 17,621 Weighted average shares - diluted
17,703 17,687 17,645 17,695 17,641
Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings
for the second quarter 2018 of $11.6 million, or $0.66 per basic
share, compared to $15.8 million, or $0.89 per basic share, earned
during the first quarter 2018 and $11.5 million, or $0.65 per basic
share, earned during the second quarter 2017. Earnings for the six
months ended June 30, 2018 were $27.4 million, or $1.55 per basic
share, compared to $22.8 million or $1.29 per basic share earned
during the six months ended June 30, 2017.
As disclosed by CTBI in Annual Reports on Form 10-K for the
years ended December 31, 2017 and 2016, and previous Quarterly
Reports on Form 10-Q, CTB will be required to make certain customer
reimbursements related to two deposit add-on products. CTBI further
disclosed in such filings that management had established a related
accrual, and that the actual reimbursement amount could materially
vary from the amount management had evaluated as most likely. On
June 14, 2018, CTBI filed a Form 8-K disclosing an increase in the
accrual from $1.2 million to $4.75 million to reflect a change in
the amount management determined to be the most likely amount as a
result of communications with regulatory agency representatives. As
a result of the increased accrual, a charge to earnings was
reflected in the second quarter 2018 financial results of $2.8
million after-tax, or $0.16 per share.
2nd Quarter 2018 Highlights
- Net interest income for the quarter of
$35.1 million was an increase of $0.6 million, or 1.6%, from first
quarter 2018 and $0.9 million, or 2.7%, from prior year second
quarter.
- Provision for loan losses for the
quarter ended June 30, 2018 increased $1.0 million from prior
quarter but decreased $0.8 million from prior year same
quarter.
- Our loan portfolio increased $50.8
million, an annualized 6.5%, during the quarter and $81.7 million,
or 2.6%, from June 30, 2017.
- Net loan charge-offs for the quarter
ended June 30, 2018 were $1.3 million, or 0.17% of average loans
annualized, compared to $1.9 million, or 0.25%, experienced for the
first quarter 2018 and $1.3 million, or 0.18%, for the second
quarter 2017.
- Nonperforming loans at $22.0 million
decreased $3.9 million from March 31, 2018 and $6.0 million from
June 30, 2017. Nonperforming assets at $52.3 million decreased $5.7
million from March 31, 2018 and $8.3 million from June 30,
2017.
- Deposits, including repurchase
agreements, decreased $6.3 million during the quarter but increased
$195.4 million from June 30, 2017.
- Noninterest income for the quarter
ended June 30, 2018 of $13.7 million was an increase of $0.4
million, or 3.2%, from prior quarter and $1.4 million, or 11.6%,
from prior year same quarter. The increase in noninterest income
was primarily due to a gain on the sale of a partnership interest
resulting from a low income housing tax credit recapture and
an increase in deposit service charges.
- Noninterest expense for the quarter
ended June 30, 2018 of $32.4 million increased $3.8 million, or
13.1%, from prior quarter, and $4.9 million, or 17.7%, from prior
year same quarter. The variance in noninterest expense from prior
quarter was primarily due to the above mentioned increase in the
customer reimbursement accrual. Additionally, personnel expense
increased from prior year same quarter with increases in bonuses
and the cost of group medical and life insurance.
- Income tax expense continues to be
positively impacted by the change in the corporate income tax rate
from 35% to 21%. We utilize various tax exempt investments and
loans, including municipal bonds, bank owned life insurance, and
low income housing projects, to lower our effective income tax
rate. With the current tax laws, our effective tax rate for the six
months ended June 30, 2018 was 16% compared to 28% for the six
months ended June 30, 2017.
Net Interest Income
Net interest income for the quarter of $35.1 million was an
increase of $0.6 million, or 1.6%, from first quarter 2018 and $0.9
million, or 2.7%, from prior year second quarter. Our net interest
margin at 3.61% decreased 4 basis points from prior quarter and 7
basis points from prior year same quarter, while our average
earning assets increased $57.8 million and $145.5 million,
respectively, during those same periods. Our yield on average
earning assets increased 3 basis points from prior quarter and 18
basis points from prior year same quarter, and our cost of funds
increased 11 basis points from prior quarter and 37 basis points
from prior year same quarter. Our ratio of average loans to
deposits, including repurchase agreements, was 88.1% for the
quarter ended June 30, 2018 compared to 88.6% for the quarter ended
March 31, 2018 and 89.9% for the quarter ended June 30, 2017.
Noninterest Income
Noninterest income for the quarter ended June 30, 2018 of $13.7
million was an increase of $0.4 million, or 3.2%, from prior
quarter and $1.4 million, or 11.6%, from prior year same quarter.
The increase in noninterest income was primarily due to a gain on
the sale of a partnership interest totaling $1.0 million related to
one of our tax credit investments. As a result of the sale of this
interest, a portion of the tax credits previously claimed was
recaptured during the current quarter totaling $0.8 million, which
was recorded in income tax expense. The variance in noninterest
income from prior quarter was also impacted by a $0.3 million
increase in deposit service charges and a $0.3 million decrease in
losses on the sale of securities, offset by a $1.0 million decrease
in bank owned life insurance income and a $0.2 million decrease in
loan related fees as a result of fluctuations in the fair value
adjustments of our mortgage servicing rights. The increase from
prior year same quarter was also positively impacted by a $0.2
million increase in trust revenue. Additionally, noninterest income
for the second quarter 2017 included a $0.6 million gain on the
repurchase of trust preferred securities. Noninterest income for
the six months ended June 30, 2018 was a $3.2 million, or 13.2%,
increase from prior year.
Noninterest Expense
Noninterest expense for the quarter ended June 30, 2018 of $32.4
million increased $3.8 million, or 13.1%, from prior quarter, and
$4.9 million, or 17.7%, from prior year same quarter. The variance
in noninterest expense from prior quarter was primarily due to the
above mentioned $3.6 million increase in the customer reimbursement
accrual. Personnel expense increased from prior year same quarter
with increases in bonuses ($0.7 million) and the cost of group
medical and life insurance ($0.4 million). Noninterest expense for
the six months ended June 30, 2018 was $61.1 million, a $5.9
million or 10.7% increase over the first six months of 2017,
primarily due to the same items detailed above.
Balance Sheet Review
CTBI’s total assets at $4.2 billion increased $9.4 million, or
0.9% annualized, from March 31, 2018 and $124.1 million, or 3.0%,
from June 30, 2017. Loans outstanding at June 30, 2018 were $3.2
billion, an increase of $50.8 million, or an annualized 6.5%, from
March 31, 2018 and $81.7 million, or 2.6%, from June 30, 2017. We
experienced an increase during the quarter of $16.1 million in the
commercial loan portfolio, $5.7 million in the residential loan
portfolio, $20.2 million in the indirect loan portfolio, and $8.8
million in the consumer direct loan portfolio. CTBI’s investment
portfolio decreased $19.1 million, or an annualized 12.7%, from
March 31, 2018 and $24.8 million, or 4.1%, from June 30, 2017.
Deposits, including repurchase agreements, at $3.6 billion
decreased $6.3 million, or an annualized 0.7%, from March 31, 2018
but increased $195.4 million, or 5.8%, from June 30, 2017.
Shareholders’ equity at June 30, 2018 was $542.2 million, a 3.5%
annualized increase from the $537.5 million at March 31, 2018 and a
5.3% increase from the $514.9 million at June 30, 2017. CTBI’s
annualized dividend yield to shareholders as of June 30, 2018 was
2.64%.
Asset Quality
CTBI’s total nonperforming loans, not including troubled debt
restructurings, were $22.0 million, or 0.69% of total loans, at
June 30, 2018 compared to $25.9 million, or 0.83% of total loans,
at March 31, 2018 and $28.0 million, or 0.91% of total loans, at
June 30, 2017. Accruing loans 90+ days past due decreased $1.8
million from prior quarter and $1.2 million from June 30, 2017.
Nonaccrual loans decreased $2.1 million during the quarter and $4.8
million from June 30, 2017. Accruing loans 30-89 days past due at
$23.5 million was an increase of $6.6 million from March 31, 2018
and $8.3 million from June 30, 2017. The increase in past due loans
30-89 days is due to one relationship which is well-collateralized,
and no loss is expected. 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, 2018
totaled $46.7 million, a $1.5 million decrease from the $48.2
million at March 31, 2018 and a $4.0 million decrease from the
$50.7 million at June 30, 2017.
Our level of foreclosed properties at $30.3 million at June 30,
2018 was a $1.7 million decrease from the $32.0 million at March
31, 2018 and a $2.4 million decrease from the $32.6 million at June
30, 2017. Sales of foreclosed properties for the quarter ended June
30, 2018 totaled $2.4 million while new foreclosed properties
totaled $1.6 million. At June 30, 2018, the book value of
properties under contracts to sell was $1.9 million; however, the
closings had not occurred at quarter-end. Write-downs on foreclosed
properties for the second quarter 2018 totaled $0.9 million
compared to $0.5 million in the first quarter 2018 and $1.4 million
in the second quarter 2017.
Net loan charge-offs for the quarter ended June 30, 2018 were
$1.3 million, or 0.17% of average loans annualized, compared to
$1.9 million, or 0.25%, experienced for the first quarter 2018 and
$1.3 million, or 0.18%, for the second quarter 2017. Of the net
charge-offs for the quarter, $0.5 million were in commercial loans,
$0.4 million were in indirect auto loans, $0.2 million were in
residential loans, and $0.2 million were in consumer direct loans.
Allocations to loan loss reserves were $1.9 million for the quarter
ended June 30, 2018 compared to $0.9 million for the quarter ended
March 31, 2018 and $2.8 million for the quarter ended June 30,
2017. Our reserve coverage (allowance for loan and lease loss
reserve to nonperforming loans) at June 30, 2018 was 162.6%
compared to 135.6% at March 31, 2018 and 132.6% at June 30, 2017.
Our loan loss reserve as a percentage of total loans outstanding
remained at 1.13% from March 31, 2018 to June 30, 2018, down from
the 1.20% at June 30, 2017.
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. Community Trust
Bancorp, Inc.’s (“CTBI”) 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,
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, changes in laws and
regulations, competition, and 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; and the resolution of legal
proceedings and related matters. In addition, the banking industry
in general is subject to various monetary, operational, and fiscal
policies and regulations, which include, but are not limited to,
those determined by the Federal Reserve Board, the Federal Deposit
Insurance Corporation, the Consumer Financial Protection Bureau,
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 $4.2 billion, is
headquartered in Pikeville, Kentucky and has 70 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, 2018 (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, 2018 March 31, 2018
June 30, 2017 June 30, 2018 June 30, 2017 Interest income $ 42,025
$ 40,580 $ 38,411 $ 82,605 $ 75,179 Interest expense 6,877
5,989 4,171 12,866
7,849 Net interest income 35,148 34,591 34,240 69,739
67,330 Loan loss provision 1,929 946 2,764 2,875 3,993 Gains
on sales of loans 304 279 251 583 507 Deposit service charges 6,480
6,221 6,199 12,701 12,159 Trust revenue 2,856 2,958 2,649 5,814
5,235 Loan related fees 919 1,144 773 2,063 1,778 Securities gains
(losses) 2 (288 ) 18 (286 ) 10 Other noninterest income
3,179 2,996 2,421 6,175
4,201 Total noninterest income 13,740 13,310
12,311 27,050 23,890 Personnel expense 15,422 15,619 14,044
31,041 28,968 Occupancy and equipment 2,770 2,833 2,720 5,603 5,533
Data processing expense 1,634 1,636 1,757 3,270 3,546 FDIC
insurance premiums 279 314 315 593 607 Other noninterest expense
12,334 8,279 8,730
20,613 16,556 Total noninterest expense 32,439
28,681 27,566 61,120 55,210 Net income before taxes 14,520
18,274 16,221 32,794 32,017 Income taxes 2,921
2,460 4,680 5,381 9,199
Net income $ 11,599 $ 15,814 $ 11,541 $
27,413 $ 22,818 Memo: TEQ interest income $
42,253 $ 40,804 $ 38,910 $ 83,057 $ 76,187 Average shares
outstanding 17,687 17,671 17,626 17,679 17,621 Diluted average
shares outstanding 17,703 17,687 17,645 17,695 17,641 Basic
earnings per share $ 0.66 $ 0.89 $ 0.65 $ 1.55 $ 1.29 Diluted
earnings per share $ 0.66 $ 0.89 $ 0.65 $ 1.55 $ 1.29 Dividends per
share $ 0.33 $ 0.33 $ 0.32 $ 0.66 $ 0.64
Average
balances: Loans $ 3,131,964 $ 3,111,116 $ 3,027,044 $ 3,121,597
$ 2,990,865 Earning assets 3,928,066 3,870,216 3,782,548 3,899,301
3,743,834 Total assets 4,196,693 4,144,105 4,052,791 4,170,544
4,014,155 Deposits, including repurchase agreements 3,556,340
3,511,260 3,366,489 3,533,925 3,364,651 Interest bearing
liabilities 2,818,168 2,782,467 2,731,147 2,800,416 2,696,164
Shareholders' equity 543,513 534,278 515,834 538,921 511,560
Performance ratios: Return on average assets 1.11 % 1.55 %
1.14 % 1.33 % 1.15 % Return on average equity 8.56 % 12.00 % 8.97 %
10.26 % 9.00 % Yield on average earning assets (tax equivalent)
4.31 % 4.28 % 4.13 % 4.30 % 4.10 % Cost of interest bearing funds
(tax equivalent) 0.98 % 0.87 % 0.61 % 0.93 % 0.59 % Net interest
margin (tax equivalent) 3.61 % 3.65 % 3.68 % 3.63 % 3.68 %
Efficiency ratio (tax equivalent) 66.05 % 59.24 % 59.32 % 62.67 %
60.23 % Loan charge-offs $ 2,526 $ 2,977 $ 2,189 $ 5,503 $
4,680 Recoveries (1,179 ) (1,069 ) (845 )
(2,248 ) (1,887 ) Net charge-offs $ 1,347 $ 1,908 $
1,344 $ 3,255 $ 2,793
Market Price: High $ 53.00 $
50.70 $ 46.90 $ 53.00 $ 50.40 Low $ 43.95 $ 43.00 $ 41.07 $ 43.00 $
41.07 Close $ 49.95 $ 45.20 $ 43.75 $ 49.95 $ 43.75 As of As
of As of June 30, 2018 March 31, 2018 June 30, 2017
Assets:
Loans $ 3,169,042 $ 3,118,241 $ 3,087,342 Loan loss reserve
(35,771 ) (35,189 ) (37,133 ) Net loans 3,133,271
3,083,052 3,050,209 Loans held for sale 1,093 1,145 4,624
Securities AFS 585,764 604,890 610,368 Securities HTM 659 659 858
Other equity investments 22,814 22,814 22,814 Other earning assets
150,880 159,608 90,711 Cash and due from banks 54,987 44,792 51,224
Premises and equipment 46,483 45,860 47,036 Goodwill and core
deposit intangible 65,490 65,490 65,543 Other assets 143,745
167,427 137,726
Total
Assets $ 4,205,186 $ 4,195,737 $ 4,081,113
Liabilities and Equity: NOW accounts $ 51,563 $
55,034 $ 48,476 Savings deposits 1,156,601 1,131,371 1,070,706 CD's
>=$100,000 694,641 705,978 592,794 Other time deposits
587,078 601,942 610,770 Total
interest bearing deposits 2,489,883 2,494,325 2,322,746 Noninterest
bearing deposits 819,525 825,345
782,864 Total deposits 3,309,408 3,319,670 3,105,610
Repurchase agreements 248,781 244,822 257,208 Other interest
bearing liabilities 68,121 67,241 167,455 Noninterest bearing
liabilities 36,701 26,515 35,925
Total liabilities 3,663,011 3,658,248 3,566,198
Shareholders' equity 542,175 537,489
514,915
Total Liabilities and Equity $
4,205,186 $ 4,195,737 $ 4,081,113
Ending shares outstanding 17,725 17,721 17,671 Memo: Market value
of HTM securities $ 660 $ 660 $ 858 30 - 89 days past due
loans $ 23,488 $ 16,914 $ 15,234 90 days past due loans 7,189 9,027
8,362 Nonaccrual loans 14,812 16,923 19,651 Restructured loans
(excluding 90 days past due and nonaccrual) 56,814 56,119 53,786
Foreclosed properties 30,262 32,004 32,638 Other repossessed assets
83 118 45 Common equity Tier 1 capital 15.80 % 15.73 % 14.91
% Tier 1 leverage ratio 13.11 % 13.14 % 12.72 % Tier 1 risk-based
capital ratio 17.67 % 17.62 % 16.81 % Total risk based capital
ratio 18.84 % 18.78 % 18.05 % Tangible equity to tangible assets
ratio 11.51 % 11.43 % 11.19 % FTE employees 988 986 1,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180718005473/en/
Community Trust Bancorp, Inc.Jean R. Hale,
606-437-3294Chairman, President, and C.E.O.
Community Trust Bancorp (NASDAQ:CTBI)
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