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Section 1: 8-K (CTBI SEPTEMBER 30, 2016 EARNINGS RELEASE 8-K)

 


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
September 30, 2016


Community Trust Bancorp, Inc.
(Exact name of registrant as specified in its charter)


Kentucky
61-0979818
(State or other jurisdiction of
(IRS Employer Identification Number)
incorporation or organization)
 
   
346 North Mayo Trail
 
Pikeville, Kentucky
41501
(Address of principal executive offices)
(Zip code)


 (606) 432-1414
(Registrant's telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ]
Soliciting material pursuant to Rule 425 under the Securities Act (17 CFR 240.14a-12)
[   ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[   ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 

 
 
Item 2.02 – Results of Operations and Financial Condition

On October 19, 2016, Community Trust Bancorp, Inc. issued a press release announcing its financial results for the quarter and nine months ended September 30, 2016.  A copy of this press release is being furnished to the Securities and Exchange Commission pursuant to Item 2.02 – Results of Operations and Financial Condition and Item 7.01 – Regulation FD Disclosure of Form 8-K and is attached hereto as Exhibit 99.1.  The information in this Form 8-K and in Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

Item 9.01 – Financial Statements and Exhibits

(d) Exhibits

The following exhibit is filed with this report:

99.1
Press Release dated October 19, 2016



Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  COMMUNITY TRUST BANCORP, INC.  
       
Date:  October 19, 2016
By:
/s/ Jean R. Hale  
    Jean R. Hale  
    Chairman, President and Chief Executive Officer  
       

 


 
Exhibit Index

Exhibit No.
Description
   
99.1
Press Release dated October 19, 2016


(Back To Top)

Section 2: EX-99.1 (CTBI SEPTEMBER 30, 2016 EARNINGS RELEASE 8-K EXHIBIT 99.1)

Exhibit 99.1

FOR IMMEDIATE RELEASE
October 19, 2016

FOR ADDITIONAL INFORMATION, PLEASE CONTACT JEAN R. HALE, CHAIRMAN, PRESIDENT, AND C.E.O., COMMUNITY TRUST BANCORP, INC. AT (606) 437-3294

Pikeville, Kentucky:

COMMUNITY TRUST BANCORP, INC. REPORTS EARNINGS FOR THE THIRD QUARTER 2016

Earnings Summary
                             
(in thousands except per share data)
 
3Q
2016
   
2Q
2016
   
3Q
2015
   
9 Months
2016
   
9 Months
2015
 
Net income
 
$
12,312
   
$
11,566
   
$
11,222
   
$
35,480
   
$
34,562
 
Earnings per share
 
$
0.70
   
$
0.66
   
$
0.64
   
$
2.02
   
$
1.98
 
Earnings per share - diluted
 
$
0.70
   
$
0.66
   
$
0.64
   
$
2.02
   
$
1.98
 
                                         
Return on average assets
   
1.25
%
   
1.19
%
   
1.18
%
   
1.21
%
   
1.23
%
Return on average equity
   
9.81
%
   
9.46
%
   
9.50
%
   
9.63
%
   
9.99
%
Efficiency ratio
   
57.45
%
   
59.98
%
   
60.53
%
   
58.68
%
   
58.82
%
Tangible common equity
   
11.24
%
   
11.17
%
   
10.82
%
               
                                         
Dividends declared per share
 
$
0.32
   
$
0.31
   
$
0.31
   
$
0.94
   
$
0.91
 
Book value per share
 
$
28.40
   
$
28.11
   
$
26.87
                 
                                         
Weighted average shares
   
17,554
     
17,530
     
17,440
     
17,532
     
17,420
 
Weighted average shares - diluted
   
17,569
     
17,542
     
17,491
     
17,548
     
17,472
 

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the third quarter 2016 of $12.3 million, or $0.70 per basic share, compared to $11.2 million, or $0.64 per basic share, earned during the third quarter 2015 and $11.6 million, or $0.66 per basic share, earned during the second quarter 2016.  Earnings for the nine months ended September 30, 2016 were $35.5 million, or $2.02 per basic share, compared to $34.6 million, or $1.98 per basic share earned for the nine months ended September 30, 2015.

3rd Quarter 2016 Highlights

v
Our loan portfolio increased $110.8 million from September 30, 2015 but decreased $0.1 million during the quarter.

v
Our investment portfolio increased $54.0 million from September 30, 2015 and $51.6 million during the quarter.

v
Deposits, including repurchase agreements, increased $84.9 million from September 30, 2015 and $13.0 million during the quarter.

v
Nonperforming loans at $28.3 million decreased $4.4 million from September 30, 2015 but increased $3.6 million from June 30, 2016.  Nonperforming assets at $66.1 million decreased $1.4 million from September 30, 2015 but increased $3.5 million from June 30, 2016.

v
Net loan charge-offs for the quarter ended September 30, 2016 were $2.1 million, or 0.28% of average loans annualized, compared to $2.2 million, or 0.31%, experienced for the third quarter 2015 and $2.5 million, or 0.35%, for the second quarter 2016.

Net Interest Income

Net interest income for the quarter of $33.2 million was an increase of $0.3 million, or 0.8%, from prior year third quarter and $0.2 million, or 0.5%, from prior quarter as we grew our earning assets.  Our net interest margin decreased 11 basis points and 5 basis points during the respective time periods.  The extended low rate environment continues to have a negative impact on our net interest margin as the yield on average earning assets continued to decline while our cost of funds increased slightly.    Average earning assets increased $140.5 million, or 4.0%, from third quarter 2015 and $29.7 million, or 3.2%, annualized, from prior quarter, while our yield on average earning assets decreased 6 basis points and 4 basis points, respectively, during these time periods.  The cost of interest bearing funds increased 6 basis points from prior year third quarter and 1 basis point from prior quarter.  Our ratio of average loans to deposits, including repurchase agreements, for the quarter ended September 30, 2016 was 88.3% compared to 87.5% for the quarter ended September 30, 2015 and 88.1% for the quarter ended June 30, 2016.  Net interest income for the nine months ended September 30, 2016 of $99.6 million was an increase of $0.6 million, or 0.6%, over the first nine months of 2015, although we experienced a 13 basis point decline in our net interest margin.

Noninterest Income

Noninterest income for the quarter ended September 30, 2016 of $13.2 million was an increase of $1.2 million, or 9.6%, from prior year same quarter and $1.4 million, or 12.0%, from prior quarter.  The increase for the quarter was primarily due to increases in gains on sales of loans, deposit service charges, trust revenue, loan related fees, and securities gains.  Loan related fees were affected by fluctuations in the fair value adjustments of our mortgage servicing rights with an increase of $0.4 million from the same quarter last year and an increase of $0.2 million quarter over quarter.  Noninterest income for the nine months ended September 30, 2016 of $35.9 million was an increase of $0.9 million, or 2.7%, from the first nine months of 2015.  The year-to-date increase in noninterest income was primarily due to a $0.7 million increase in deposit services charges, a $0.2 million increase in trust revenue, and a $0.4 million increase in securities gains, partially offset by declines in gains on sales of loans ($0.2 million) and loan related fees ($0.1 million).  Loan related fees decreased year-to-date as a result of the $0.2 million decline in the fair value of mortgage servicing rights.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2016 of $26.7 million was a decrease of $0.8 million, or 3.1%, from prior year third quarter and $0.5 million, or 1.9%, from prior quarter.  The decrease in noninterest expense from prior year same quarter was primarily due to decreases in FDIC insurance, net other real estate owned expense, and operating losses, partially offset by an increase in personnel expense.  The decrease from prior quarter in FDIC insurance premiums and operating losses was combined with a decrease in personnel expense, but was partially offset by an increase in our net other real estate owned expense.  The fluctuation in our personnel expense is a result of changes in our group medical insurance expense caused by differences in our claims paid experience as a self-insured employer.  Noninterest expense for the nine months ended September 30, 2016 of $80.1 million was an increase of $0.5 million, or 0.6%, compared to the first nine months of 2015, primarily due to the $1.4 million increase in personnel expense which included a $0.8 million increase in salaries, a $1.1 million increase in the cost of group medical and life insurance, and a $0.4 million decrease in bonuses.  The increase in personnel expense was partially offset by declines in data processing expense ($0.5 million) and net other real estate owned expense ($0.6 million).

Balance Sheet Review

CTBI’s total assets at $3.9 billion increased $122.1 million, or 3.2%, from September 30, 2015 and $34.9 million, or an annualized 3.6%, during the quarter.  Loans outstanding at September 30, 2016 were $2.9 billion, increasing $110.8 million, or 3.9%, from September 30, 2015 but decreasing $0.1 million during the quarter.  We experienced a decline during the quarter of $9.5 million in the commercial loan portfolio and $5.7 million in the residential loan portfolio, offset by increases of $12.6 million in the indirect loan portfolio and $2.5 million in the consumer direct loan portfolio.  CTBI’s investment portfolio increased $54.0 million, or 9.3%, from September 30, 2015 and $51.6 million, or an annualized 35.3%, during the quarter.  Excess cash on deposit at the Federal Reserve was redeployed into short term investments offering higher yields while maintaining the short duration position of our investment portfolio.  Deposits, including repurchase agreements, at $3.3 billion increased $84.9 million, or 2.6%, from September 30, 2015 and $13.0 million, or an annualized 1.6%, from prior quarter.

Shareholders’ equity at September 30, 2016 was $500.1 million compared to $470.6 million at September 30, 2015 and $493.6 million at June 30, 2016.  CTBI’s annualized dividend yield to shareholders as of September 30, 2016 was 3.45%.

Asset Quality

CTBI’s total nonperforming loans were $28.3 million at September 30, 2016, a 13.5% decrease from the $32.7 million at September 30, 2015 but a 14.6% increase from the $24.7 million at June 30, 2016.  Loans 90+ days past due increased $3.3 million during the quarter but decreased $6.5 million from September 30, 2015.  Nonaccrual loans increased $0.4 million during the quarter and $2.1 million from September 30, 2015.  Loans 30-89 days past due at $19.8 million was an increase of $0.8 million from June 30, 2016 and an increase of $1.0 million from September 30, 2015.  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, 2016 totaled $55.0 million, an increase of $6.7 million from the $48.3 million at September 30, 2015 and $1.7 million from the $53.3 million at June 30, 2016.  While nonperforming loans and impaired loans increased during the quarter, the increase was primarily in loans 90+ days past due and still accruing.  These loans are considered to be well secured and in the process of collection.  Management analyzes all loans that are 90+ days past due or otherwise impaired to determine the amount of impairment that should be recognized.  During the quarter, the amount of impairment recognized decreased by $0.2 million.

Our level of foreclosed properties at $37.7 million at September 30, 2016 was a $3.0 million increase from the $34.7 million at September 30, 2015 but was relatively flat to June 30, 2016.  Sales of foreclosed properties for the quarter ended September 30, 2016 totaled $0.7 million while new foreclosed properties totaled $1.0 million.  At September 30, 2016, the book value of properties under contracts to sell was $4.7 million; however, the closings had not occurred at quarter-end.

Net loan charge-offs for the quarter ended September 30, 2016 were $2.1 million, or 0.28% of average loans annualized, compared to $2.2 million, or 0.31%, experienced for the third quarter 2015 and $2.5 million, or 0.35%, for the second quarter 2016.  Of the net charge-offs for the quarter, $0.8 million were in commercial loans, $0.8 million were in indirect auto loans, $0.4 million were in residential real estate mortgage loans, and $0.1 million were in consumer direct loans.  Allocations to loan loss reserves were $2.2 million for the quarter ended September 30, 2016 compared to $2.5 million for the quarter ended September 30, 2015 and $1.9 million for the quarter ended June 30, 2016.  Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at September 30, 2016 was 126.5% compared to 108.6% at September 30, 2015 and 144.6% at June 30, 2016.  Our loan loss reserve as a percentage of total loans outstanding remained at 1.22% at September 30, 2016 compared to prior quarter, down from the 1.26% at September 30, 2015.

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 $3.9 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)
 
 September 30, 2016  
(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, 2016
   
June 30, 2016
   
September 30, 2015
   
September 30, 2016
   
September 30, 2015
 
Interest income
 
$
36,679
   
$
36,374
   
$
35,912
   
$
109,580
   
$
107,720
 
Interest expense
   
3,452
     
3,315
     
2,947
     
9,970
     
8,668
 
Net interest income
   
33,227
     
33,059
     
32,965
     
99,610
     
99,052
 
Loan loss provision
   
2,191
     
1,873
     
2,520
     
5,829
     
6,740
 
                                         
Gains on sales of loans
   
595
     
446
     
462
     
1,357
     
1,575
 
Deposit service charges
   
6,563
     
6,272
     
6,348
     
18,680
     
17,976
 
Trust revenue
   
2,440
     
2,396
     
2,297
     
7,111
     
6,902
 
Loan related fees
   
1,260
     
739
     
641
     
2,610
     
2,747
 
Securities gains (losses)
   
458
     
(4
)
   
12
     
522
     
142
 
Other noninterest income
   
1,870
     
1,920
     
2,275
     
5,646
     
5,657
 
Total noninterest income
   
13,186
     
11,769
     
12,035
     
35,926
     
34,999
 
                                         
Personnel expense
   
14,216
     
14,322
     
13,975
     
42,671
     
41,242
 
Occupancy and equipment
   
2,745
     
2,695
     
2,688
     
8,212
     
8,232
 
Data processing expense
   
1,601
     
1,559
     
1,577
     
4,729
     
5,204
 
FDIC insurance premiums
   
469
     
576
     
606
     
1,628
     
1,798
 
Other noninterest expense
   
7,656
     
8,040
     
8,688
     
22,881
     
23,189
 
Total noninterest expense
   
26,687
     
27,192
     
27,534
     
80,121
     
79,665
 
                                         
Net income before taxes
   
17,535
     
15,763
     
14,946
     
49,586
     
47,646
 
Income taxes
   
5,223
     
4,197
     
3,724
     
14,106
     
13,084
 
Net income
 
$
12,312
   
$
11,566
   
$
11,222
   
$
35,480
   
$
34,562
 
                                         
Memo: TEQ interest income
 
$
37,178
   
$
36,880
   
$
36,414
   
$
111,116
   
$
109,250
 
                                         
Average shares outstanding
   
17,554
     
17,530
     
17,440
     
17,532
     
17,420
 
Diluted average shares outstanding
   
17,569
     
17,542
     
17,491
     
17,548
     
17,472
 
Basic earnings per share
 
$
0.70
   
$
0.66
   
$
0.64
   
$
2.02
   
$
1.98
 
Diluted earnings per share
 
$
0.70
   
$
0.66
   
$
0.64
   
$
2.02
   
$
1.98
 
Dividends per share
 
$
0.32
   
$
0.31
   
$
0.31
   
$
0.94
   
$
0.91
 
                                         
Average balances:
                                       
Loans
 
$
2,931,791
   
$
2,913,461
   
$
2,803,332
   
$
2,908,115
   
$
2,773,249
 
Earning assets
   
3,664,598
     
3,634,945
     
3,524,058
     
3,640,043
     
3,506,303
 
Total assets
   
3,932,705
     
3,900,660
     
3,788,917
     
3,907,076
     
3,772,031
 
Deposits, including repurchase agreements
   
3,319,608
     
3,307,591
     
3,203,122
     
3,294,233
     
3,184,151
 
Interest bearing liabilities
   
2,634,254
     
2,615,806
     
2,562,274
     
2,624,794
     
2,563,526
 
Shareholders' equity
   
499,180
     
491,634
     
468,442
     
491,882
     
462,454
 
                                         
Performance ratios:
                                       
Return on average assets
   
1.25
%
   
1.19
%
   
1.18
%
   
1.21
%
   
1.23
%
Return on average equity
   
9.81
%
   
9.46
%
   
9.50
%
   
9.63
%
   
9.99
%
Yield on average earning assets (tax equivalent)
   
4.04
%
   
4.08
%
   
4.10
%
   
4.08
%
   
4.17
%
Cost of interest bearing funds (tax equivalent)
   
0.52
%
   
0.51
%
   
0.46
%
   
0.51
%
   
0.45
%
Net interest margin (tax equivalent)
   
3.66
%
   
3.71
%
   
3.77
%
   
3.71
%
   
3.84
%
Efficiency ratio (tax equivalent)
   
57.45
%
   
59.98
%
   
60.53
%
   
58.68
%
   
58.82
%
                                         
Loan charge-offs
 
$
2,962
   
$
3,302
   
$
2,899
   
$
8,729
   
$
7,819
 
Recoveries
   
(875
)
   
(797
)
   
(729
)
   
(2,607
)
   
(2,172
)
Net charge-offs
 
$
2,087
   
$
2,505
   
$
2,170
   
$
6,122
   
$
5,647
 
                                         
Market Price:
                                       
High
 
$
37.49
   
$
36.95
   
$
37.63
   
$
37.49
   
$
37.63
 
Low
 
$
33.71
   
$
32.98
   
$
33.62
   
$
30.89
   
$
31.53
 
Close
 
$
37.11
   
$
34.66
   
$
35.51
   
$
37.11
   
$
35.51
 
 
 

 
Community Trust Bancorp, Inc.
 
Financial Summary (Unaudited)
 
 September 30, 2016  
(in thousands except per share data and # of employees)
 
   
   
As of
   
As of
   
As of
 
   
September 30, 2016
   
June 30, 2016
   
September 30, 2015
 
Assets:
                 
Loans
 
$
2,931,299
   
$
2,931,385
   
$
2,820,460
 
Loan loss reserve
   
(35,801
)
   
(35,697
)
   
(35,540
)
Net loans
   
2,895,498
     
2,895,688
     
2,784,920
 
Loans held for sale
   
2,075
     
1,707
     
1,983
 
Securities AFS
   
631,201
     
579,115
     
576,713
 
Securities HTM
   
1,181
     
1,661
     
1,661
 
Other equity investments
   
22,814
     
22,814
     
22,814
 
Other earning assets
   
74,419
     
81,894
     
116,754
 
Cash and due from banks
   
49,584
     
59,700
     
54,041
 
Premises and equipment
   
47,840
     
48,104
     
48,541
 
Goodwill and core deposit intangible
   
65,662
     
65,702
     
65,821
 
Other assets
   
139,952
     
138,937
     
134,900
 
Total Assets
 
$
3,930,226
   
$
3,895,322
   
$
3,808,148
 
                         
Liabilities and Equity:
                       
NOW accounts
 
$
45,834
   
$
50,362
   
$
32,249
 
Savings deposits
   
1,023,590
     
1,025,394
     
1,004,635
 
CD's >=$100,000
   
597,417
     
574,657
     
561,856
 
Other time deposits
   
623,957
     
626,103
     
638,832
 
Total interest bearing deposits
   
2,290,798
     
2,276,516
     
2,237,572
 
Noninterest bearing deposits
   
763,187
     
765,467
     
737,657
 
Total deposits
   
3,053,985
     
3,041,983
     
2,975,229
 
Repurchase agreements
   
262,295
     
261,298
     
256,153
 
Other interest bearing liabilities
   
69,110
     
66,674
     
71,640
 
Noninterest bearing liabilities
   
44,726
     
31,757
     
34,541
 
Total liabilities
   
3,430,116
     
3,401,712
     
3,337,563
 
Shareholders' equity
   
500,110
     
493,610
     
470,585
 
Total Liabilities and Equity
 
$
3,930,226
   
$
3,895,322
   
$
3,808,148
 
                         
Ending shares outstanding
   
17,608
     
17,560
     
17,513
 
Memo: Market value of HTM securities
 
$
1,182
   
$
1,662
   
$
1,651
 
                         
30 - 89 days past due loans
 
$
19,765
   
$
18,995
   
$
18,812
 
90 days past due loans
   
11,498
     
8,237
     
18,001
 
Nonaccrual loans
   
16,798
     
16,447
     
14,722
 
Restructured loans (excluding 90 days past due and nonaccrual)
   
54,026
     
55,088
     
43,081
 
Foreclosed properties
   
37,665
     
37,740
     
34,654
 
Other repossessed assets
   
103
     
136
     
136
 
                         
Common equity Tier 1 capital
   
14.97
%
   
14.79
%
   
14.49
%
Tier 1 leverage ratio
   
12.69
%
   
12.57
%
   
12.40
%
Tier 1 risk-based capital ratio
   
17.05
%
   
16.88
%
   
16.63
%
Total risk based capital ratio
   
18.30
%
   
18.13
%
   
17.88
%
Tangible equity to tangible assets ratio
   
11.24
%
   
11.17
%
   
10.82
%
FTE employees
   
991
     
998
     
980
 
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