CTBI Community Trust Bancorp Inc

Community Trust Bancorp, Inc. (NASDAQ-CTBI):

Earnings Summary

 

 

 

 

 

(in thousands except per share data)

3Q

2019

2Q

2019

3Q

2018

9 Months

2019

9 Months

2018

Net income

$15,269

$18,324

$16,106

$48,532

$43,519

Earnings per share

$0.86

$1.03

$0.91

$2.74

$2.46

Earnings per share - diluted

$0.86

$1.03

$0.91

$2.74

$2.46

 

 

 

 

 

 

Return on average assets

1.40%

1.69%

1.52%

1.50%

1.39%

Return on average equity

10.02%

12.45%

11.62%

11.01%

10.72%

Efficiency ratio

61.16%

62.22%

57.33%

61.32%

60.88%

Tangible common equity

12.64%

12.27%

11.80%

 

 

 

 

 

 

 

 

Dividends declared per share

$0.38

$0.36

$0.36

$1.10

$1.02

Book value per share

$34.06

$33.46

$31.04

 

 

 

 

 

 

 

 

Weighted average shares

17,726

17,721

17,691

17,720

17,683

Weighted average shares - diluted

17,743

17,733

17,710

17,733

17,700

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the third quarter 2019 of $15.3 million, or $0.86 per basic share, compared to $18.3 million, or $1.03 per basic share, earned during the second quarter 2019 and $16.1 million, or $0.91 per basic share, earned during the third quarter 2018. Earnings for the nine months ended September 30, 2019 were $48.5 million, or $2.74 per basic share, compared to $43.5 million, or $2.46 per basic share, earned during the nine months ended September 30, 2018.

3rd Quarter 2019 Highlights

• Net interest income for the quarter of $36.5 million was $0.5 million, or 1.4%, above prior quarter and $0.4 million, or 1.1%, above third quarter 2018.

• Provision for loan losses for the quarter ended September 30, 2019 decreased $0.3 million from prior quarter and $0.3 million from prior year same quarter.

• Our loan portfolio increased $22.6 million, an annualized 2.8%, during the quarter and $36.9 million, or 1.2%, from September 30, 2018.

• Net loan charge-offs for the quarter ended September 30, 2019 were $1.4 million, or 0.18% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the second quarter 2019 and $1.5 million, or 0.19%, for the third quarter 2018.

• Nonperforming loans at $31.4 million increased $7.4 million from June 30, 2019 and $10.4 million from September 30, 2018. While both the 30-89 days past due and nonaccrual loan categories decreased for the quarter, our loans 90+ days past due increased $9.3 million from prior quarter and $12.3 million from prior year same quarter. Nonperforming assets at $51.3 million increased $4.7 million from June 30, 2019 and $0.5 million from September 30, 2018.

• Deposits, including repurchase agreements, decreased $52.1 million, an annualized 5.6%, during the quarter but increased $93.7 million, or 2.7%, from September 30, 2018.

• Noninterest income for the quarter ended September 30, 2019 of $12.4 million was a $0.1 million increase over prior quarter, but a decrease of $0.3 million, or 2.2%, from prior year same quarter.

• Noninterest expense for the quarter ended September 30, 2019 of $29.9 million decreased $0.1 million, or 0.5%, from prior quarter, but increased $1.8 million, or 6.3%, from prior year same quarter.

• The variance in income tax expense from prior quarter is a result of the $3.6 million reversal of the valuation allowance on our deferred tax asset for CTBI’s net operating losses, as a result of the enactment of Kentucky HB458, which was discussed in further detail in our prior quarter filings.

Net Interest Income

Net interest income for the quarter of $36.5 million was an increase of $0.5 million, or 1.4%, from second quarter 2019 and $0.4 million from third quarter 2018. Our net interest margin at 3.59% increased 2 basis points from prior quarter but declined 9 basis points from prior year same quarter, while our average earning assets decreased $7.9 million but increased $143.2 million, respectively, during those same periods. Our yield on average earning assets decreased 2 basis points from prior quarter but increased 17 basis points from prior year same quarter, and our cost of funds decreased 5 basis points from prior quarter but increased 39 basis points from prior year same quarter. Our ratio of average loans to deposits, including repurchase agreements, was 88.1% for the quarter ended September 30, 2019 compared to 87.3% for the quarter ended June 30, 2019 and 89.5% for the quarter ended September 30, 2018. Net interest income for the nine months ended September 30, 2019 increased $2.7 million, or 2.5%, from September 30, 2018.

Noninterest Income

Noninterest income for the quarter ended September 30, 2019 of $12.4 million was a $0.1 million, or 1.1%, increase over prior quarter, but a decrease of $0.3 million, or 2.2%, from prior year same quarter. A $0.3 million increase in deposit related fees from prior quarter was partially offset by a $0.2 million negative variance in net securities gains. The decrease in noninterest income from prior year same quarter included a $0.4 million decrease in loan related fees and $0.1 million decrease in trust revenue, partially offset by a $0.2 million increase in deposit related fees. Noninterest income for the nine months ended September 30, 2019 was a $2.9 million, or 7.3%, decrease from prior year. The decrease in noninterest income from prior year was primarily the result of a $1.5 million decrease in loan related fees, a $0.6 million decrease in trust revenue, and a $2.3 million decrease in other operating revenue, partially offset by a $0.9 million increase in securities gains and a $0.4 million increase in gains on sales of loans. The decrease in loan related fees is due to a decline in the fair market value of our mortgage servicing rights. Other operating revenue for the nine months ended September 30, 2018 included a $1.0 million gain on the sale of a partnership interest resulting from a low income housing tax credit recapture and $1.2 million in bank owned life insurance revenue as a result of death benefits.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2019 of $29.9 million decreased $0.1 million, or 0.5%, from prior quarter, but increased $1.8 million, or 6.3%, from prior year same quarter. Noninterest expense was impacted quarter over quarter and year over year by a $1.5 million increase in net other real estate owned expense. This increase was offset by a $1.1 million decrease in personnel expense and a $0.6 million decrease in FDIC insurance quarter over quarter. Year over year, the increase was also impacted by a $0.3 million increase in data processing expense, offset by a $0.6 million decline in FDIC insurance and a $0.2 million decrease in personnel expense. The decrease in personnel expense was the result of a tier adjustment to our performance-based bonus accrual. CTBI’s projected performance for 2019 as measured against its performance based incentive, disclosed in its January 30, 2019 SEC Form 8-K, is expected to be above the minimum acceptable performance level required for an incentive payment but below the target. Noninterest expense for the nine months ended September 30, 2019 was $89.0 million, a $0.2 million, or 0.3%, decrease from the first nine months of 2018.

Balance Sheet Review

CTBI’s total assets at $4.3 billion decreased $39.6 million, or 3.6% annualized, from June 30, 2019 but increased $163.8 million, or 3.9%, from September 30, 2018. Loans outstanding at September 30, 2019 were $3.2 billion, an increase of $22.6 million, an annualized 2.8%, from June 30, 2019 and $36.9 million, or 1.2%, from September 30, 2018. We experienced increases during the quarter of $7.9 million in the commercial loan portfolio, $6.7 million in the residential loan portfolio, $3.6 million in the indirect consumer loan portfolio, and $4.4 million in the direct consumer loan portfolio. CTBI’s investment portfolio increased $58.3 million, or an annualized 38.9%, from June 30, 2019 and $82.4 million, or 14.5%, from September 30, 2018. Deposits in other banks decreased $115.7 million from prior quarter but increased $38.3 million from prior year same quarter. Deposits, including repurchase agreements, at $3.6 billion decreased $52.1 million, or an annualized 5.6%, from June 30, 2019 but increased $93.7 million, or 2.7%, from September 30, 2018.

Shareholders’ equity at September 30, 2019 was $605.5 million, a 7.2% annualized increase from the $594.7 million at June 30, 2019 and a 10.0% increase from the $550.3 million at September 30, 2018. CTBI’s annualized dividend yield to shareholders as of September 30, 2019 was 3.57%.

Asset Quality

CTBI’s total nonperforming loans, not including performing troubled debt restructurings, were $31.4 million, or 0.98% of total loans, at September 30, 2019 compared to $24.0 million, or 0.75% of total loans, at June 30, 2019 and $21.0 million, or 0.66% of total loans, at September 30, 2018. Accruing loans 90+ days past due increased $9.3 million from prior quarter and $12.3 million from September 30, 2018. The increase in 90+ days past due loans included $7.3 million for two loan relationships which are in the process of collection. We do not anticipate a loss on these credits. Nonaccrual loans decreased $1.8 million during the quarter and $1.9 million from September 30, 2018. Accruing loans 30-89 days past due at $22.9 million was a decrease of $7.7 million from prior quarter and $5.2 million from September 30, 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 September 30, 2019 totaled $56.3 million, compared to $54.6 million at June 30, 2019 and $46.9 million at September 30, 2018.

Our level of foreclosed properties at $19.8 million at September 30, 2019 was a $2.7 million decrease from the $22.5 million at June 30, 2019 and a $9.8 million decrease from the $29.7 million at September 30, 2018. Sales of foreclosed properties for the quarter ended September 30, 2019 totaled $1.2 million while new foreclosed properties totaled $0.6 million. At September 30, 2019, the book value of properties under contracts to sell was $2.2 million; however, the closings had not occurred at quarter-end. Write-downs on foreclosed properties for the third quarter 2019 totaled $2.2 million compared to $0.7 million in the second quarter 2019 and $0.7 million in the third quarter 2018. The increased in write-downs for the quarter included a $1.7 million write-down related to one commercial property. 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 nine months of 2019, we disposed of all of these properties. At September 30, 2019, we held no foreclosed property for nine years or more.

Net loan charge-offs for the quarter ended September 30, 2019 were $1.4 million, or 0.18% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the second quarter 2019 and $1.5 million, or 0.19%, for the third quarter 2018. Of the net charge-offs for the quarter, $0.5 million were in commercial loans, $0.4 million were in indirect consumer loans, $0.4 million were in residential loans, and $0.1 million were in direct consumer loans. Allocations to loan loss reserves were $1.3 million for the quarter ended September 30, 2019 compared to $1.6 million for the quarter ended June 30, 2019 and $1.5 million for the quarter ended September 30, 2018. Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at September 30, 2019 was 110.8% compared to 146.0% at June 30, 2019 and 170.1% at September 30, 2018. Our loan loss reserve as a percentage of total loans outstanding at September 30, 2019 was 1.08%, down from the 1.10% at June 30, 2019 and 1.13% at September 30, 2018.

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 70 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, three 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, 2019 (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, 2019 June 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Interest income

$

46,987

 

$

46,817

 

$

43,607

 

$

139,693

 

$

126,212

 

Interest expense

 

10,468

 

 

10,790

 

 

7,471

 

 

31,164

 

 

20,337

 

Net interest income

 

36,519

 

 

36,027

 

 

36,136

 

 

108,529

 

 

105,875

 

Loan loss provision

 

1,253

 

 

1,563

 

 

1,543

 

 

3,006

 

 

4,418

 

  Gains on sales of loans

 

450

 

 

518

 

 

319

 

 

1,298

 

 

902

 

Deposit service charges

 

6,859

 

 

6,525

 

 

6,671

 

 

19,504

 

 

19,372

 

Trust revenue

 

2,725

 

 

2,765

 

 

2,836

 

 

8,065

 

 

8,650

 

Loan related fees

 

622

 

 

440

 

 

1,022

 

 

1,635

 

 

3,085

 

Securities gains (losses)

 

14

 

 

204

 

 

(2

)

 

574

 

 

(288

)

Other noninterest income

 

1,719

 

 

1,800

 

 

1,817

 

 

5,735

 

 

7,992

 

Total noninterest income

 

12,389

 

 

12,252

 

 

12,663

 

 

36,811

 

 

39,713

 

  Personnel expense

 

15,020

 

 

16,087

 

 

15,264

 

 

47,066

 

 

46,305

 

Occupancy and equipment

 

2,807

 

 

2,561

 

 

2,744

 

 

8,158

 

 

8,347

 

Data processing expense

 

1,987

 

 

1,789

 

 

1,695

 

 

5,539

 

 

4,965

 

FDIC insurance premiums

 

(280

)

 

369

 

 

314

 

 

266

 

 

907

 

Other noninterest expense

 

10,348

 

 

9,224

 

 

8,089

 

 

27,966

 

 

28,702

 

Total noninterest expense

 

29,882

 

 

30,030

 

 

28,106

 

 

88,995

 

 

89,226

 

  Net income before taxes

 

17,773

 

 

16,686

 

 

19,150

 

 

53,339

 

 

51,944

 

Income taxes

 

2,504

 

 

(1,638

)

 

3,044

 

 

4,807

 

 

8,425

 

Net income

$

15,269

 

$

18,324

 

$

16,106

 

$

48,532

 

$

43,519

 

  Memo: TEQ interest income

$

47,170

 

$

47,009

 

$

43,833

 

$

140,288

 

$

126,890

 

  Average shares outstanding

 

17,726

 

 

17,721

 

 

17,691

 

 

17,720

 

 

17,683

 

Diluted average shares outstanding

 

17,743

 

 

17,733

 

 

17,710

 

 

17,733

 

 

17,700

 

Basic earnings per share

$

0.86

 

$

1.03

 

$

0.91

 

$

2.74

 

$

2.46

 

Diluted earnings per share

$

0.86

 

$

1.03

 

$

0.91

 

$

2.74

 

$

2.46

 

Dividends per share

$

0.38

 

$

0.36

 

$

0.36

 

$

1.10

 

$

1.02

 

  Average balances: Loans

$

3,188,446

 

$

3,178,903

 

$

3,167,357

 

$

3,187,540

 

$

3,137,027

 

Earning assets

 

4,061,410

 

 

4,069,323

 

 

3,918,183

 

 

4,032,753

 

 

3,905,673

 

Total assets

 

4,341,985

 

 

4,353,936

 

 

4,190,768

 

 

4,316,483

 

 

4,177,368

 

Deposits, including repurchase agreements

 

3,617,671

 

 

3,640,061

 

 

3,539,482

 

 

3,604,780

 

 

3,535,806

 

Interest bearing liabilities

 

2,857,468

 

 

2,883,586

 

 

2,789,473

 

 

2,851,830

 

 

2,796,724

 

Shareholders' equity

 

604,271

 

 

590,240

 

 

549,837

 

 

589,139

 

 

542,600

 

  Performance ratios: Return on average assets

 

1.40

%

 

1.69

%

 

1.52

%

 

1.50

%

 

1.39

%

Return on average equity

 

10.02

%

 

12.45

%

 

11.62

%

 

11.01

%

 

10.72

%

Yield on average earning assets (tax equivalent)

 

4.61

%

 

4.63

%

 

4.44

%

 

4.65

%

 

4.34

%

Cost of interest bearing funds (tax equivalent)

 

1.45

%

 

1.50

%

 

1.06

%

 

1.46

%

 

0.97

%

Net interest margin (tax equivalent)

 

3.59

%

 

3.57

%

 

3.68

%

 

3.62

%

 

3.65

%

Efficiency ratio (tax equivalent)

 

61.16

%

 

62.22

%

 

57.33

%

 

61.32

%

 

60.88

%

  Loan charge-offs

$

2,316

 

$

2,797

 

$

2,828

 

$

7,168

 

$

8,331

 

Recoveries

 

(876

)

 

(1,228

)

 

(1,305

)

 

(3,065

)

 

(3,553

)

Net charge-offs

$

1,440

 

$

1,569

 

$

1,523

 

$

4,103

 

$

4,778

 

  Market Price: High

$

44.22

 

$

43.60

 

$

52.80

 

$

44.22

 

$

53.00

 

Low

$

38.05

 

$

39.45

 

$

45.65

 

$

38.03

 

$

43.00

 

Close

$

42.58

 

$

42.29

 

$

46.35

 

$

42.58

 

$

46.35

 

 

Community Trust Bancorp, Inc.

Financial Summary (Unaudited)

September 30, 2019

(in thousands except per share data and # of employees)

As of As of As of September 30, 2019 June 30, 2019 September 30, 2018 Assets: Loans

$

3,214,785

 

$

3,192,207

 

$

3,177,888

 

Loan loss reserve

 

(34,811

)

 

(34,998

)

 

(35,791

)

Net loans

 

3,179,974

 

 

3,157,209

 

 

3,142,097

 

Loans held for sale

 

1,943

 

 

1,067

 

 

1,029

 

Securities AFS

 

649,976

 

 

591,586

 

 

569,208

 

Securities HTM

 

517

 

 

619

 

 

659

 

Equity securities at fair value

 

1,743

 

 

1,727

 

 

-

 

Other equity investments

 

15,681

 

 

16,247

 

 

19,600

 

Other earning assets

 

155,441

 

 

271,186

 

 

124,413

 

Cash and due from banks

 

68,472

 

 

52,545

 

 

53,912

 

Premises and equipment

 

44,223

 

 

44,404

 

 

45,808

 

Right of use asset

 

14,702

 

 

15,028

 

 

-

 

Goodwill and core deposit intangible

 

65,490

 

 

65,490

 

 

65,490

 

Other assets

 

139,501

 

 

160,149

 

 

151,627

 

Total Assets

$

4,337,663

 

$

4,377,257

 

$

4,173,843

 

  Liabilities and Equity: NOW accounts

$

54,365

 

$

51,209

 

$

59,379

 

Savings deposits

 

1,385,188

 

 

1,445,166

 

 

1,190,977

 

CD's >=$100,000

 

570,158

 

 

569,829

 

 

624,801

 

Other time deposits

 

530,262

 

 

537,933

 

 

571,685

 

Total interest bearing deposits

 

2,539,973

 

 

2,604,137

 

 

2,446,842

 

Noninterest bearing deposits

 

849,582

 

 

833,044

 

 

826,804

 

Total deposits

 

3,389,555

 

 

3,437,181

 

 

3,273,646

 

Repurchase agreements

 

228,755

 

 

233,238

 

 

250,983

 

Other interest bearing liabilities

 

64,162

 

 

63,667

 

 

61,433

 

Lease liability

 

15,286

 

 

15,544

 

 

-

 

Other noninterest bearing liabilities

 

34,387

 

 

32,919

 

 

37,517

 

Total liabilities

 

3,732,145

 

 

3,782,549

 

 

3,623,579

 

Shareholders' equity

 

605,518

 

 

594,708

 

 

550,264

 

Total Liabilities and Equity

$

4,337,663

 

$

4,377,257

 

$

4,173,843

 

  Ending shares outstanding

 

17,777

 

 

17,772

 

 

17,728

 

Memo: Market value of HTM securities

$

517

 

$

619

 

$

660

 

  30 - 89 days past due loans

$

22,927

 

$

30,616

 

$

28,172

 

90 days past due loans

 

20,330

 

 

11,076

 

 

8,005

 

Nonaccrual loans

 

11,090

 

 

12,902

 

 

13,032

 

Restructured loans (excluding 90 days past due and nonaccrual)

 

60,413

 

 

60,713

 

 

58,008

 

Foreclosed properties

 

19,833

 

 

22,536

 

 

29,666

 

Other repossessed assets

 

-

 

 

-

 

 

54

 

  Common equity Tier 1 capital

 

17.03

%

 

16.83

%

 

16.08

%

Tier 1 leverage ratio

 

13.84

%

 

13.61

%

 

13.37

%

Tier 1 risk-based capital ratio

 

18.82

%

 

18.67

%

 

17.94

%

Total risk based capital ratio

 

19.93

%

 

19.80

%

 

19.11

%

Tangible equity to tangible assets ratio

 

12.64

%

 

12.27

%

 

11.80

%

FTE employees

 

1,001

 

 

1,002

 

 

979

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191016005501/en/

Jean R. Hale, Chairman, President, and C.E.O., Community Trust Bancorp, Inc. At (606) 437-3294