Community Trust Bancorp, Inc. (NASDAQ:
CTBI):
Earnings Summary
(in
thousands except per share data)
1Q2019
4Q2018
1Q2018
Net income $14,939 $15,709 $15,814 Earnings per share $0.84
$0.89 $0.89 Earnings per share - diluted $0.84 $0.89 $0.89
Return on average assets 1.42% 1.48% 1.55% Return on average equity
10.58% 11.16% 12.00% Efficiency ratio 60.57% 58.04% 59.24% Tangible
common equity 12.05% 12.06% 11.43% Dividends declared per
share $0.36 $0.36 $0.33 Book value per share $32.50 $31.81 $30.33
Weighted average shares 17,712 17,696 17,671 Weighted
average shares - diluted 17,723
17,714 17,687
Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings
for the first quarter 2019 of $14.9 million, or $0.84 per basic
share, compared to $15.7 million, or $0.89 per basic share, earned
during the fourth quarter 2018 and $15.8 million, or $0.89 per
basic share, earned during the first quarter 2018.
1st Quarter 2019 Highlights
- Net interest income for the quarter of
$36.0 million was a decrease of $0.3 million, or 0.8%, from fourth
quarter 2018 but an increase of $1.4 million, or 4.0%, from prior
year first quarter.
- Provision for loan losses for the
quarter ended March 31, 2019 decreased $1.6 million from prior
quarter and $0.8 million from prior year same quarter with
improvement in charge-offs and credit metrics combined with a
decline in loan volume during the quarter.
- Our loan portfolio decreased $18.9
million, an annualized 2.4%, during the quarter but increased $71.5
million, or 2.3%, from March 31, 2018.
- Net loan charge-offs for the quarter
ended March 31, 2019 were $1.1 million, or 0.14% of average loans
annualized, compared to $1.6 million, or 0.20%, experienced for the
fourth quarter 2018 and $1.9 million, or 0.25%, for the first
quarter 2018.
- Nonperforming loans at $25.4 million
increased $3.3 million from December 31, 2018 but decreased $0.6
million from March 31, 2018. Nonperforming assets at $50.4 million
increased $1.0 million from December 31, 2018 but decreased $7.7
million from March 31, 2018.
- Deposits, including repurchase
agreements, increased $81.9 million, an annualized 9.4%, during the
quarter and $56.1 million, or 1.6%, from March 31, 2018.
- Noninterest income for the quarter
ended March 31, 2019 of $12.2 million was relatively flat to prior
quarter, but a decrease of $1.1 million, or 8.6%, from prior year
same quarter. The decrease in noninterest income from prior year
was primarily the result of $1.2 million in death benefits received
on bank owned life insurance in the first quarter 2018.
- Noninterest expense for the quarter
ended March 31, 2019 of $29.1 million increased $0.9 million, or
3.2%, from prior quarter, and $0.4 million, or 1.4%, from prior
year same quarter. The increase in noninterest expense was
primarily due to increased personnel expense.
- In March 2019, Kentucky enacted
legislation requiring financial institutions to transition from a
bank franchise tax to the Kentucky corporate income tax beginning
in 2021. As a result, we booked a one time charge of $1.0 million,
or $0.06 per basic share, to income tax expense to recognize our
Kentucky deferred tax liability at March 31, 2019. While this
liability will be adjusted periodically, we do not anticipate any
further adjustments to have a significant impact to income.
Net Interest Income
Net interest income for the quarter of $36.0 million was a
decrease of $0.3 million, or 0.8%, from fourth quarter 2018 but an
increase of $1.4 million, or 4.0%, from prior year first quarter.
Our net interest margin at 3.70% was an increase of 2 basis points
from prior quarter and 5 basis points from prior year same quarter,
while our average earning assets increased $29.4 million and $96.2
million, respectively, during those same periods. Our yield on
average earning assets increased 13 basis points from prior quarter
and 43 basis points from prior year same quarter, and our cost of
funds increased 16 basis points from prior quarter and 56 basis
points from prior year same quarter. Our ratio of average loans to
deposits, including repurchase agreements, was 89.9% for the
quarter ended March 31, 2019 compared to 89.8% for the quarter
ended December 31, 2018 and 88.6% for the quarter ended March 31,
2018.
Noninterest Income
Noninterest income for the quarter ended March 31, 2019 of $12.2
million was relatively flat to prior quarter, but a decrease of
$1.1 million, or 8.6%, from prior year same quarter. The decrease
in noninterest income from prior year was primarily the result of
$1.2 million in death benefits received on bank owned life
insurance in the first quarter 2018. Noninterest income for the
quarter was also impacted by decreased deposit service charges
($0.1 million), trust revenue ($0.4 million), and loan related fees
($0.6 million) year over year, offset by a positive variance in
securities gains of $0.6 million and miscellaneous income of $0.5
million resulting from an adjustment of a mortgage servicing
account held by a third party. The decrease in loan related fees
was the result of a decline in the fair value of our mortgage
servicing rights.
Noninterest Expense
Noninterest expense for the quarter ended March 31, 2019 of
$29.1 million increased $0.9 million, or 3.2%, from prior quarter,
and $0.4 million, or 1.4%, from prior year same quarter. The
increase in noninterest expense was primarily due to increased
personnel expense. The $0.7 million quarter over quarter increase
in personnel expense included increases in salaries ($0.3 million),
bonuses ($0.5 million), and related taxes ($0.2 million), partially
offset by a decrease in the cost of group medical and life
insurance ($0.3 million). The $0.3 million prior year same quarter
variance in personnel expense was primarily due to increased
salaries ($0.5 million) and other employee benefits ($0.1 million),
offset by a $0.4 million decrease in the cost of group medical and
life insurance.
Balance Sheet Review
CTBI’s total assets at $4.3 billion increased $111.7 million, or
10.8% annualized, from December 31, 2018 and $117.6 million, or
2.8%, from March 31, 2018. Loans outstanding at March 31, 2019 were
$3.2 billion, a decrease of $18.9 million, an annualized 2.4%, from
December 31, 2018 but an increase of $71.5 million, or 2.3%, from
March 31, 2018. We experienced an increase during the quarter of
$2.8 million in the commercial loan portfolio, offset by decreases
of $15.7 million in the indirect loan portfolio, $3.6 million in
the residential loan portfolio, and $2.4 million in the consumer
loan portfolio. CTBI’s investment portfolio increased $5.9 million,
or an annualized 4.0%, from December 31, 2018 but decreased $4.1
million, or 0.7%, from March 31, 2018. Deposits in other banks
increased $121.9 million from prior quarter and $43.8 million from
prior year same quarter, as the yield earned was favorable to other
investment alternatives. Deposits, including repurchase agreements,
at $3.6 billion increased $81.9 million, or an annualized 9.4%,
from December 31, 2018 and $56.1 million, or 1.6%, from March 31,
2018.
Shareholders’ equity at March 31, 2019 was $577.4 million, a
9.5% annualized increase from the $564.1 million at December 31,
2018 and a 7.4% increase from the $537.5 million at March 31, 2018.
CTBI’s annualized dividend yield to shareholders as of March 31,
2019 was 3.51%.
Asset Quality
CTBI’s total nonperforming loans, not including performing
troubled debt restructurings, were $25.4 million, or 0.80% of total
loans, at March 31, 2019 compared to $22.1 million, or 0.69% of
total loans, at December 31, 2018 and $25.9 million, or 0.83% of
total loans, at March 31, 2018. Accruing loans 90+ days past due
increased $2.8 million from prior quarter and $4.0 million from
March 31, 2018. The increase in accruing loans 90+ days past due is
primarily attributable to two commercial credit relationships which
are income-producing, well-collateralized, and in the process of
collection. Nonaccrual loans increased $0.5 million during the
quarter but decreased $4.5 million from December 31, 2018. Accruing
loans 30-89 days past due at $21.8 million was a decrease of $0.9
million from prior quarter but an increase of $4.9 million from
March 31, 2018. 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 March 31, 2019 totaled $50.4
million, compared to $46.4 million at December 31, 2018 and $48.2
million at March 31, 2018.
Our level of foreclosed properties at $25.0 million at March 31,
2019 was a $2.3 million decrease from the $27.3 million at December
31, 2018 and a $7.0 million decrease from the $32.0 million at
March 31, 2018. Sales of foreclosed properties for the quarter
ended March 31, 2019 totaled $2.7 million while new foreclosed
properties totaled $0.9 million. At March 31, 2019, the book value
of properties under contracts to sell was $3.0 million; however,
the closings had not occurred at quarter-end. Write-downs on
foreclosed properties for the first quarter 2019 totaled $0.4
million compared to $0.5 million in the fourth quarter 2018 and
$0.5 million in the first quarter 2018. As disclosed in our Form
10-K for the year ended December 31, 2018, CTBI is required to
dispose of any foreclosed property that has not been sold within 10
years. As of December 31, 2018, foreclosed property with a total
book value of $2.4 million had been held by us for at least nine
years. During the first quarter 2019, $1.0 million of this total
was disposed of with a gain of $0.1 million. At March 31, 2019,
foreclosed property with a total book value of $1.3 million had
been held by us for at least nine years.
Net loan charge-offs for the quarter ended March 31, 2019 were
$1.1 million, or 0.14% of average loans annualized, compared to
$1.6 million, or 0.20%, experienced for the fourth quarter 2018 and
$1.9 million, or 0.25%, for the first quarter 2018. Of the net
charge-offs for the quarter, $0.2 million were in commercial loans,
$0.7 million were in indirect auto loans, $0.1 million were in
residential loans, and $0.1 million were in consumer direct loans.
Allocations to loan loss reserves were $0.2 million for the quarter
ended March 31, 2019 compared to $1.7 million for the quarter ended
December 31, 2018 and $0.9 million for the quarter ended March 31,
2018. Our reserve coverage (allowance for loan and lease loss
reserve to nonperforming loans) at March 31, 2019 was 137.8%
compared to 162.7% at December 31, 2018 and 135.6% at March 31,
2018. Our loan loss reserve as a percentage of total loans
outstanding at March 31, 2019 was 1.10%, down from the 1.12% at
December 31, 2018 and 1.13% at March 31, 2018. The decrease in our
provision for loan losses was driven by the improvement in our
twelve quarter performance metrics used in determining the
allowance for loan losses, along with the 14 basis points in
annualized net charge-offs for the quarter. The twelve quarter
performance metrics that have contributed to the majority of the
reduction in required reserves include: (1) historical losses, (2)
delinquency trends, and (3) interest rate risks associated with
rising interest rates.
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 $4.3 billion, is
headquartered in Pikeville, Kentucky and has 69 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)March 31,
2019(in thousands except per share data and # of employees)
Three Three Three Months
Months Months Ended Ended Ended March 31, 2019 December 31, 2018
March 31, 2018 Interest income $ 45,889 $ 45,238 $ 40,580 Interest
expense 9,906 8,958 5,989
Net interest income 35,983 36,280 34,591 Loan loss provision 190
1,749 946 Gains on sales of loans 330 386 279 Deposit
service charges 6,120 6,602 6,221 Trust revenue 2,575 2,663 2,958
Loan related fees 573 644 1,144 Securities gains (losses) 356 203
(288 ) Other noninterest income 2,216 1,741
2,996 Total noninterest income 12,170 12,239
13,310 Personnel expense 15,959 15,257 15,619 Occupancy and
equipment 2,790 2,698 2,833 Data processing expense 1,763 1,715
1,636 FDIC insurance premiums 177 264 314 Other noninterest expense
8,394 8,238 8,279 Total
noninterest expense 29,083 28,172 28,681 Net income before
taxes 18,880 18,598 18,274 Income taxes 3,941
2,889 2,460 Net income $ 14,939 $
15,709 $ 15,814 Memo: TEQ interest income $
46,109 $ 45,462 $ 40,804 Average shares outstanding 17,712
17,696 17,671 Diluted average shares outstanding 17,723 17,714
17,687 Basic earnings per share $ 0.84 $ 0.89 $ 0.89 Diluted
earnings per share $ 0.84 $ 0.89 $ 0.89 Dividends per share $ 0.36
$ 0.36 $ 0.33
Average balances: Loans $ 3,195,348 $
3,191,980 $ 3,111,142 Earning assets 3,966,483 3,937,106 3,870,242
Total assets 4,252,544 4,217,158 4,144,131 Deposits, including
repurchase agreements 3,555,931 3,555,292 3,511,286 Interest
bearing liabilities 2,813,957 2,794,216 2,782,455
Shareholders’ equity
572,555 558,632 534,278
Performance ratios: Return on
average assets 1.42 % 1.48 % 1.55 % Return on average equity 10.58
% 11.16 % 12.00 % Yield on average earning assets (tax equivalent)
4.71 % 4.58 % 4.28 % Cost of interest bearing funds (tax
equivalent) 1.43 % 1.27 % 0.87 % Net interest margin (tax
equivalent) 3.70 % 3.68 % 3.65 % Efficiency ratio (tax equivalent)
60.57 % 58.04 % 59.24 % Loan charge-offs $ 2,055 $ 2,667 $
2,977 Recoveries (961 ) (1,035 ) (1,069 ) Net
charge-offs $ 1,094 $ 1,632 $ 1,908
Market Price:
High $ 43.75 $ 46.86 $ 50.70 Low $ 38.03 $ 35.70 $ 43.00 Close $
41.06 $ 39.61 $ 45.20
Community Trust Bancorp,
Inc.Financial Summary (Unaudited)March 31,
2019(in thousands except per share data and # of employees)
As of As of As of March 31, 2019 December 31, 2018 March 31,
2018
Assets: Loans $ 3,189,732 $ 3,208,638 $ 3,118,241 Loan
loss reserve (35,004 ) (35,908 ) (35,189 ) Net
loans 3,154,728 3,172,730 3,083,052 Loans held for sale 13,649
2,461 1,145 Securities AFS 599,299 593,746 604,890 Securities HTM
619 649 659 Equity securities at fair value 1,528 1,173 - Other
equity investments 17,148 19,600 22,814 Other earning assets
207,876 82,585 159,608 Cash and due from banks 49,302 64,632 44,792
Premises and equipment 44,554 45,291 45,860 Right of use asset
15,128 - - Goodwill and core deposit intangible 65,490 65,490
65,490 Other assets 143,972 153,259
167,427
Total Assets $ 4,313,293 $
4,201,616 $ 4,195,737
Liabilities and
Equity: NOW accounts $ 51,656 $ 56,964 $ 55,034 Savings
deposits 1,366,093 1,294,037 1,131,371
CD’s >=$100,000
578,043 598,125 705,978 Other time deposits 545,315
553,508 601,942 Total interest bearing
deposits 2,541,107 2,502,634 2,494,325 Noninterest bearing deposits
841,996 803,316 825,345
Total deposits 3,383,103 3,305,950 3,319,670 Repurchase agreements
237,506 232,712 244,822 Other interest bearing liabilities 61,572
60,957 67,241 Lease liability 15,743 - - Other noninterest bearing
liabilities 37,990 37,847 26,516
Total liabilities 3,735,914 3,637,466 3,658,248
Shareholders’ equity
577,379 564,150 537,489
Total Liabilities and Equity $ 4,313,293 $ 4,201,616
$ 4,195,737 Ending shares outstanding 17,768
17,733 17,721 Memo: Market value of HTM securities $ 619 $ 649 $
660 30 - 89 days past due loans $ 21,792 $ 22,682 $ 16,914
90 days past due loans 13,016 10,198 9,027 Nonaccrual loans 12,378
11,867 16,923 Restructured loans (excluding 90 days past due and
nonaccrual) 57,553 56,328 56,119 Foreclosed properties 24,970
27,273 32,004 Other repossessed assets 42 118 Common equity
Tier 1 capital 16.52 % 16.27 % 15.73 % Tier 1 leverage ratio 13.62
% 13.51 % 13.14 % Tier 1 risk-based capital ratio 18.37 % 18.12 %
17.62 % Total risk based capital ratio 19.51 % 19.29 % 18.78 %
Tangible equity to tangible assets ratio 12.05 % 12.06 % 11.43 %
FTE employees 988 978 986
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version on businesswire.com: https://www.businesswire.com/news/home/20190417005471/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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