Community Trust Bancorp, Inc. (NASDAQ: CTBI)
Earnings Summary
(in thousands except per share data)
1Q
2021
4Q
2020
1Q
2020
Net income
$23,618
$15,826
$6,579
Earnings per share
$1.33
$0.89
$0.37
Earnings per share – diluted
$1.33
$0.89
$0.37
Return on average assets
1.84%
1.24%
0.60%
Return on average equity
14.48%
9.64%
4.24%
Efficiency ratio
50.37%
62.75%
59.18%
Tangible common equity
11.27%
11.62%
12.77%
Dividends declared per share
$0.385
$0.385
$0.380
Book value per share
$37.14
$36.77
$34.46
Weighted average shares
17,774
17,755
17,752
Weighted average shares – diluted
17,787
17,769
17,763
Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports record
earnings for the first quarter 2021 of $23.6 million, or $1.33 per
basic share, compared to $15.8 million, or $0.89 per basic share,
earned during the fourth quarter 2020 and $6.6 million, or $0.37
per basic share, earned during the first quarter 2020.
1st Quarter 2021 Highlights
- Net interest income for the quarter of $40.2 million was $1.6
million, or 4.2%, above prior quarter and $4.0 million, or 11.0%,
above first quarter 2020.
- We recovered $2.5 million of our provision for credit losses
during the quarter ended March 31, 2021, as a result of improvement
in our net charge-off experience affecting our vintage loss
analysis in several segments, the most significant of those being
the indirect lending and residential lending segments. Provision
for credit losses for the prior quarter and prior year same quarter
was $1.0 million and $12.7 million, respectively.
- Our loan portfolio decreased $15.4 million, an annualized 1.8%,
during the quarter but increased $251.3 million, or 7.6%, from
March 31, 2020.
- CTBI experienced significant improvement in loan losses, as our
net loan charge-offs for the quarter ended March 31, 2021 decreased
to $0.2 million, or 0.02% of average loans annualized, compared to
$0.9 million, or 0.10% annualized, experienced for the fourth
quarter 2020 and $1.4 million, or 0.17% annualized, for the first
quarter 2020.
- Asset quality has continued to improve, as our nonperforming
loans, excluding troubled debt restructurings, at $21.0 million
decreased $5.5 million from December 31, 2020 and $14.3 million
from March 31, 2020. Nonperforming assets at $27.3 million
decreased $7.0 million from December 31, 2020 and $27.9 million
from March 31, 2020.
- Deposits, including repurchase agreements, increased $216.1
million, an annualized 20.0%, during the quarter and $956.0
million, or 26.3%, from March 31, 2020.
- Noninterest income for the quarter ended March 31, 2021 of
$15.6 million was a $0.3 million, or 2.1%, increase from prior
quarter and a $4.1 million, or 35.2%, increase from prior year same
quarter.
- Noninterest expense for the quarter ended March 31, 2021 of
$28.3 million decreased $5.3 million, or 15.8%, from prior quarter,
but increased slightly by $0.1 million, or 0.3%, from prior year
same quarter.
COVID-19
We continue working with our customers through the COVID-19
pandemic. At March 31, 2021, the number of customers with CARES Act
deferrals reduced to 226 for a total outstanding amount of $81.8
million. The majority of our CARES Act deferrals have been 90 day
deferrals. Total outstanding deferrals include 73 commercial loan
deferrals with a total outstanding amount of $73.8 million, 83
residential loan deferrals with a total outstanding amount of $6.5
million, and 70 consumer loan deferrals with a total outstanding
amount of $1.5 million. Included in the commercial loan deferrals
are 20 four time deferrals totaling $40.5 million and 2 five time
deferrals totaling $10.6 million. In most cases, these loans have
been downgraded; however, they remain within the pass category, as
little to no loss is anticipated. One of the loans was already
graded substandard prior to the deferrals being granted. These loan
deferrals and modifications have been executed consistent with the
guidelines of the CARES Act. Pursuant to the CARES Act, these loan
deferrals are not included in our nonperforming loans disclosed
below.
At March 31, 2021, we had closed 2,962 Paycheck Protection
Program (PPP) loans totaling $277.0 million, stemming from the
CARES Act passed by Congress as a stimulus response to the
potential economic impacts of COVID-19. The initial phase of the
PPP program expired on August 8, 2020, and the loan forgiveness
process began shortly thereafter. Through March 31, 2021, we have
had 1,563 of our PPP loans forgiven by the SBA in a total amount of
$117.2 million, including $98.1 million during the first quarter
2021. An additional stimulus package, included as part of the
Consolidated Appropriations Act 2021, was signed into law in late
December providing for an additional $284 billion in funding under
the PPP, with authority to make loans under the program being
extended through May 31, 2021. As of March 31, 2021, CTBI has
closed 1,857 loans totaling $99.1 million in new PPP loans stemming
from the Consolidated Appropriations Act 2021.
Net Interest Income
Net interest income for the quarter of $40.2 million was an
increase of $1.6 million, or 4.2%, from fourth quarter 2020 and
$4.0 million, or 11.0%, from first quarter 2020. Our net interest
margin at 3.31% increased 11 basis points from prior quarter but
decreased 27 basis points from prior year same quarter, while our
average earning assets increased $136.4 million and $863.8 million,
respectively, during those same periods. Our yield on average
earning assets increased 5 basis points from prior quarter but
decreased 78 basis points from prior year same quarter, and our
cost of funds decreased 7 basis points from prior quarter and 71
basis points from prior year same quarter. The PPP loan portfolio
had an annualized yield for the quarter of 6.03%. Interest income
on the portfolio was $0.7 million, while the amortization of loan
origination fees from current outstanding loans and recognition of
net fee income from paid and forgiven loans was $3.3 million. These
fees are amortized over the life of the loan with any unamortized
balance fully recognized at the time of loan forgiveness. The
impact to the net interest margin of the $3.3 million in fee income
recognized was 27 basis points.
Our ratio of average loans to deposits, including repurchase
agreements, was 79.9% for the quarter ended March 31, 2021 compared
to 82.3% for the quarter ended December 31, 2020 and 89.9% for the
quarter ended March 31, 2020.
Noninterest Income
Noninterest income for the quarter ended March 31, 2021 of $15.6
million was a $0.3 million, or 2.1%, increase from prior quarter
and a $4.1 million, or 35.2%, increase from prior year same
quarter. The increase in noninterest income from prior quarter was
primarily the result of increases in loan related fees ($0.5
million), net gains on other real estate owned ($0.5 million), and
trust revenue ($0.2 million), partially offset by a decline in
securities gains ($0.6 million) and deposit related fees ($0.3
million). The increase from prior year same quarter resulted from
increases in loan related fees ($2.2 million) and net gains on
loans ($2.0 million), partially offset by a decline in securities
gains ($0.4 million). The increase in loan related fees was
primarily the result of a $1.0 million positive adjustment to the
fair market value of our mortgage servicing rights.
Noninterest Expense
Noninterest expense for the quarter ended March 31, 2021 of
$28.3 million decreased $5.3 million, or 15.8%, from prior quarter,
but increased slightly by $0.1 million, or 0.3%, from prior year
same quarter. The decrease in noninterest expense quarter over
quarter included decreases in personnel expense ($3.3 million),
taxes other than property and payroll ($1.5 million), and net other
real estate owned expense ($0.4 million). The decrease in personnel
expense from prior quarter was primarily the result of a $2.4
million charge in the fourth quarter 2020 to post retirement
benefits related to our bank owned life insurance and a $1.3
million increase in our accruals during the fourth quarter 2020 for
special payments to employees. Noninterest expense year over year
was impacted by increases in personnel expense ($1.8 million
primarily as a result of resumed normal accruals for our incentive
program) and data processing expense ($0.2 million), offset by
decreases in taxes other than property and payroll ($1.5 million)
and net other real estate owned expense ($0.6 million). 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 have experienced a
decline in taxes other than property and payroll and a
corresponding increase in income taxes.
Balance Sheet Review
CTBI’s total assets at $5.4 billion increased $221.0 million, or
17.4% annualized, from December 31, 2020 and $1.0 billion, or
23.1%, from March 31, 2020. Loans outstanding at March 31, 2021
were $3.5 billion, a decrease of $15.4 million, an annualized 1.8%,
from December 31, 2020 but an increase of $251.3 million, or 7.6%,
from March 31, 2020. Loans, excluding PPP loans, declined $17.5
million during the quarter as we experienced the payoff of a $30
million credit and continuing soft loan demand. We experienced an
increase in the commercial loan portfolio during the quarter of
$7.0 million (including $2.1 million in PPP loans), offset by
decreases of $16.7 million in the residential loan portfolio as
customers continued to refinance into the secondary market with low
fixed rate mortgages, $2.9 million in the direct consumer loan
portfolio, and $2.8 million in the indirect consumer loan
portfolio. CTBI’s investment portfolio increased $157.7 million, or
an annualized 64.0%, from December 31, 2020 and $522.2 million, or
82.2%, from March 31, 2020 as we continued to deploy our increased
liquidity in investments due to continued soft loan demand.
Deposits in other banks increased $72.5 million from prior quarter
and $231.5 million from prior year same quarter. Deposits,
including repurchase agreements, at $4.6 billion increased $216.1
million, or an annualized 20.0%, from December 31, 2020 and $956.0
million, or 26.3%, from March 31, 2020.
Shareholders’ equity at March 31, 2021 was $662.1 million, a
$7.2 million increase from the $654.9 million at December 31, 2020
and a $49.1 million increase from the $612.9 million at March 31,
2020. CTBI’s annualized dividend yield to shareholders as of March
31, 2021 was 3.50%.
Asset Quality
CTBI’s total nonperforming loans, not including performing
troubled debt restructurings, were $21.0 million, or 0.59% of total
loans, at March 31, 2021 compared to $26.6 million, or 0.75% of
total loans, at December 31, 2020 and $35.4 million, or 1.08% of
total loans, at March 31, 2020. Accruing loans 90+ days past due
decreased $8.3 million from prior quarter and $9.2 million from
March 31, 2021. Nonaccrual loans increased $2.8 million during the
quarter but decreased $5.1 million from March 31, 2020. Accruing
loans 30-89 days past due at $13.2 million increased $0.7 million
from prior quarter but decreased $10.9 million from March 31, 2020.
Our loan portfolio management processes focus on the immediate
identification, management, and resolution of problem loans to
maximize recovery and minimize loss.
Our level of foreclosed properties at $6.2 million at March 31,
2021 was a $1.5 million decrease from the $7.7 million at December
31, 2020 and a $13.6 million decrease from the $19.8 million at
March 31, 2020. Sales of foreclosed properties for the quarter
ended March 31, 2021 totaled $1.1 million. No new foreclosed
properties were booked during the first quarter 2021. At March 31,
2021, the book value of properties under contracts to sell was $0.9
million; however, the closings had not occurred at quarter-end.
Net loan charge-offs for the quarter ended March 31, 2021 were
$0.2 million, or 0.02% of average loans annualized, compared to
$0.9 million, or 0.10%, experienced for the fourth quarter 2020 and
$1.4 million, or 0.17%, for the first quarter 2020. Loan
charge-offs for the quarter were primarily in the commercial loan
portfolio.
Allowance for Credit Losses
We recognized a recapture of allowance for credit losses with a
credit to provision for credit losses of $2.5 million for the first
quarter of 2021, compared to a provision for credit losses of $1.0
million for the prior quarter and $12.7 million for the first
quarter of 2020. The change in the provision for credit losses
compared to the fourth quarter of 2020 was due primarily to the
improvement in net charge off experience affecting our vintage loss
analysis in several segments, the most significant of those being
the indirect lending and residential lending segments. The indirect
lending segment experienced no net losses in the quarter, compared
to the 12 quarter rolling average losses of 0.35 percent. The
residential lending segment experienced no net losses in the
quarter compared to the 12 quarter rolling average of 0.07 percent.
Overall, the decrease in the allowance for credit losses attributed
to historical loss factors was $2.4 million. Our reserve coverage
(allowance for credit losses to nonperforming loans) at March 31,
2021 was 215.5% compared to 180.7% at December 31, 2020 and 139.8%
at March 31, 2020. Our credit loss reserve as a percentage of total
loans outstanding at March 31, 2021 was 1.28% (1.38% excluding PPP
loans) compared to 1.35% at December 31, 2020 (1.46% excluding PPP
loans) and 1.50% at March 31, 2020. The PPP program began in April
2020.
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; the effects of the COVID-19 pandemic on our
business operations and credit quality and on general economic and
financial market conditions, as well as our ability to respond to
the related challenges; 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, regulations, and enforcement
actions 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 $5.4 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) March 31, 2021 (in thousands except per
share data and # of employees) Three Three Three Months
Months Months Ended Ended Ended March 31, 2021 December 31, 2020
March 31, 2020 Interest income
$
44,211
$
43,148
$
44,699
Interest expense
3,969
4,543
8,455
Net interest income
40,242
38,605
36,244
Loan loss provision
(2,499)
956
12,707
Gains on sales of loans
2,433
2,520
483
Deposit service charges
6,022
6,282
5,916
Trust revenue
2,951
2,786
2,884
Loan related fees
2,270
1,741
95
Securities gains (losses)
(168)
441
249
Other noninterest income
2,069
1,479
1,894
Total noninterest income
15,577
15,249
11,521
Personnel expense
16,833
20,106
15,031
Occupancy and equipment
2,828
2,595
2,706
Data processing expense
2,159
2,152
1,978
FDIC insurance premiums
326
320
147
Other noninterest expense
6,164
8,463
8,359
Total noninterest expense
28,310
33,636
28,221
Net income before taxes
30,008
19,262
6,837
Income taxes
6,390
3,436
258
Net income
$
23,618
$
15,826
$
6,579
Memo: TEQ interest income
$
44,428
$
43,336
$
44,868
Average shares outstanding
17,774
17,755
17,752
Diluted average shares outstanding
17,787
17,769
17,763
Basic earnings per share
$
1.33
$
0.89
$
0.37
Diluted earnings per share
$
1.33
$
0.89
$
0.37
Dividends per share
$
0.385
$
0.385
$
0.38
Average balances: Loans
$
3,548,358
$
3,548,178
$
3,262,928
Earning assets
4,957,636
4,821,196
4,093,833
Total assets
5,219,406
5,092,100
4,382,408
Deposits, including repurchase agreements
4,442,647
4,310,970
3,630,426
Interest bearing liabilities
3,335,206
3,261,814
2,847,197
Shareholders' equity
661,302
652,827
624,411
Performance ratios: Return on average assets
1.84%
1.24%
0.60%
Return on average equity
14.48%
9.64%
4.24%
Yield on average earning assets (tax equivalent)
3.63%
3.58%
4.41%
Cost of interest bearing funds (tax equivalent)
0.48%
0.55%
1.19%
Net interest margin (tax equivalent)
3.31%
3.20%
3.58%
Efficiency ratio (tax equivalent)
50.37%
62.75%
59.18%
Loan charge-offs
$
1,470
$
1,961
$
2,415
Recoveries
(1,293)
(1,041)
(1,017)
Net charge-offs
$
177
$
920
$
1,398
Market Price: High
$
47.53
$
38.50
$
46.87
Low
$
36.02
$
27.74
$
27.68
Close
$
44.03
$
37.05
$
31.79
As of As of As of March 31, 2021 December 31, 2020 March 31,
2020
Assets: Loans
$
3,538,804
$
3,554,211
$
3,287,541
Loan loss reserve
(45,346)
(48,022)
(49,445)
Net loans
3,493,458
3,506,189
3,238,096
Loans held for sale
17,748
23,259
1,403
Securities AFS
1,155,195
997,261
633,479
Equity securities at fair value
2,243
2,471
1,721
Other equity investments
14,858
14,935
16,241
Other earning assets
358,529
286,074
127,065
Cash and due from banks
66,664
54,250
67,728
Premises and equipment
40,997
42,001
43,568
Right of use asset
12,787
13,215
14,210
Goodwill and core deposit intangible
65,490
65,490
65,490
Other assets
132,150
133,996
143,644
Total Assets
$
5,360,119
$
5,139,141
$
4,352,645
Liabilities and Equity: Interest bearing checking
$
91,803
$
78,308
$
69,717
Savings deposits
1,814,711
1,756,178
1,370,836
CD's >=$100,000
547,767
545,613
538,820
Other time deposits
496,182
495,058
554,891
Total interest bearing deposits
2,950,463
2,875,157
2,534,264
Noninterest bearing deposits
1,283,309
1,140,925
860,844
Total deposits
4,233,772
4,016,082
3,395,108
Repurchase agreements
354,235
355,862
236,908
Other interest bearing liabilities
58,731
58,736
63,159
Lease liability
13,549
13,972
14,853
Other noninterest bearing liabilities
37,763
39,624
29,695
Total liabilities
4,698,050
4,484,276
3,739,723
Shareholders' equity
662,069
654,865
612,922
Total Liabilities and Equity
$
5,360,119
$
5,139,141
$
4,352,645
Ending shares outstanding
17,826
17,810
17,787
30 - 89 days past due loans
$
13,204
$
12,465
$
24,074
90 days past due loans
8,816
17,133
18,044
Nonaccrual loans
12,223
9,444
17,333
Restructured loans (excluding 90 days past due and nonaccrual)
68,485
68,554
64,526
Foreclosed properties
6,224
7,694
19,816
Community bank leverage ratio
12.70%
12.70%
13.79%
Tangible equity to tangible assets ratio
11.27%
11.62%
12.77%
FTE employees
970
998
1,003
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210421005358/en/
Community Trust Bancorp, Inc. Jean R. Hale, (606)
437-3294 Chairman, President, and C.E.O.
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