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Section 1: 8-K (CTBI DECEMBER 31, 2016 EARNINGS RELEASE FORM 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)
December 31, 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 January 18, 2017, Community Trust Bancorp, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 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 January 18, 2017



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:  January 18, 2017
By:
/s/ Jean R. Hale  
    Jean R. Hale  
    Chairman, President and Chief Executive Officer  
       

 
 

 

 
Exhibit Index

Exhibit No.
Description
   
99.1
Press Release dated January 18, 2017

(Back To Top)

Section 2: EX-99.1 (CTBI DECEMBER 31, 2016 EARNINGS RELEASE FORM 8-K EXHIBIT 99.1)

Exhibit 99.1

FOR IMMEDIATE RELEASE
January 18, 2017

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 RECORD EARNINGS FOR THE YEAR 2016

Earnings Summary
                             
(in thousands except per share data)
 
4Q
2016
   
3Q
2016
   
4Q
2015
   
Year
2016
   
Year
2015
 
Net income
 
$
11,866
   
$
12,312
   
$
11,870
   
$
47,346
   
$
46,432
 
Earnings per share
 
$
0.67
   
$
0.70
   
$
0.68
   
$
2.70
   
$
2.66
 
Earnings per share - diluted
 
$
0.67
   
$
0.70
   
$
0.68
   
$
2.70
   
$
2.66
 
                                         
Return on average assets
   
1.19
%
   
1.25
%
   
1.22
%
   
1.21
%
   
1.23
%
Return on average equity
   
9.41
%
   
9.81
%
   
9.91
%
   
9.58
%
   
9.97
%
Efficiency ratio
   
58.15
%
   
57.45
%
   
56.35
%
   
58.54
%
   
58.20
%
Tangible common equity
   
11.25
%
   
11.24
%
   
10.68
%
               
                                         
Dividends declared per share
 
$
0.32
   
$
0.32
   
$
0.31
   
$
1.26
   
$
1.22
 
Book value per share
 
$
28.40
   
$
28.40
   
$
27.12
                 
                                         
Weighted average shares
   
17,593
     
17,554
     
17,464
     
17,548
     
17,431
 
Weighted average shares - diluted
   
17,617
     
17,569
     
17,516
     
17,566
     
17,483
 

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the fourth quarter 2016 of $11.9 million, or $0.67 per basic share, compared to $12.3 million, or $0.70 per basic share, earned during the third quarter 2016 and $11.9 million, or $0.68 per basic share, earned during the fourth quarter 2015.  Earnings for the year ended December 31, 2016 were a record $47.3 million, or $2.70 per basic share, compared to $46.4 million, or $2.66 per basic share earned for the year ended December 31, 2015.

4th Quarter 2016 Highlights

v
Our loan portfolio increased $7.1 million during the quarter and $64.4 million from December 31, 2015.

v
Our investment portfolio decreased $26.1 million during the quarter but increased $9.7 million from December 31, 2015.

v
Deposits, including repurchase agreements, increased $16.1 million during the quarter and $100.4 million from December 31, 2015.

v
Nonperforming loans at $27.5 million decreased $0.8 million from September 30, 2016 and $1.1 million from December 31, 2015.  Nonperforming assets at $63.4 million decreased $2.6 million from September 30, 2016 and $6.0 million from December 31, 2015.

v
Net loan charge-offs for the quarter ended December 31, 2016 were $1.9 million, or 0.26% of average loans annualized, compared to $2.1 million, or 0.28%, experienced for the third quarter 2016 and $1.4 million, or 0.19%, for the fourth quarter 2015.  Net charge-offs for the year 2016 were $8.0 million, or 0.28% of average loans, compared to $7.0 million, or 0.25%, for the year 2015.

Net Interest Income

Net interest income for the quarter of $33.4 million was an increase of $0.2 million, or 0.6%, from third quarter 2016 and $0.2 million, or 0.7%, from prior year fourth quarter.  Our net interest margin remained flat to prior quarter at 3.66% but decreased 8 basis points from prior year same quarter, while our average earnings assets increased $25.9 million and $111.9 million, respectively, during those same periods.  Our cost of funds increased 2 basis points from prior quarter and 6 basis points from prior year same quarter.  Our ratio of average loans to deposits, including repurchase agreements, for the quarter ended December 31, 2016 was 87.9% compared to 88.3% for the quarter ended September 30, 2016 and 87.5% for the quarter ended December 31, 2015.  Net interest income for the year ended December 31, 2016 of $133.0 million was an increase of $0.8 million, or 0.6%, over 2015, although we experienced an 11 basis point decline in our net interest margin.  Average earning assets for the year ended December 31, 2016 increased $128.2 million over prior year.

Noninterest Income

Noninterest income for the quarter ended December 31, 2016 of $12.5 million was a decrease of $0.7 million, or 5.1%, from prior quarter but an increase of $0.7 million, or 6.0%, from prior year same quarter.  The decrease from prior quarter was due to decreases in gains on sales of loans, deposit service charges, and securities gains, partially offset by an increase in loan related fees.  Gains on sales of loans and securities gains, however, increased from prior year same quarter.  Loan related fees were affected by fluctuations in the fair value adjustments of our mortgage servicing rights with an increase of $0.3 million from prior quarter and from same quarter last year.  Noninterest income for the year ended December 31, 2016 of $48.4 million was an increase of $1.6 million, or 3.5%, from 2015.  The increase in noninterest income year over year was primarily due to a $0.7 million increase in deposit services charges, a $0.3 million increase in trust revenue, a $0.3 million increase in loan related fees, and a $0.6 million positive variance in securities gains (losses).

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2016 of $27.0 million was an increase of $0.3 million, or 1.2%, from prior quarter and $1.2 million, or 4.8%, from prior year same quarter.  Noninterest expense for the year of $107.1 million increased $1.7 million, or 1.6%, from prior year.  The increase in noninterest expense was primarily due to an increase in personnel expense, partially offset by decreased FDIC insurance expense.  The increase 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.

Balance Sheet Review

CTBI’s total assets at $3.9 billion increased $1.9 million, or an annualized 0.2%, from September 30, 2016 and $28.2 million, or 0.7%, from prior year.  Loans outstanding at December 31, 2016 were $2.9 billion, increasing $7.1 million, or an annualized 1.0%, from September 30, 2016 and $64.4 million, or 2.2%, from prior year.  We experienced a decline during the quarter of $5.0 million in the commercial loan portfolio, offset by increases of $1.5 million in the residential loan portfolio, $9.3 million in the indirect loan portfolio, and $1.3 million in the consumer direct loan portfolio.  CTBI’s investment portfolio decreased $26.1 million, or an annualized 16.4%, from September 30, 2016 but increased $9.7 million, or 1.6%, from prior year.  Deposits in other banks increased $29.2 million from prior quarter, but decreased $42.1 million from December 31, 2015.  Deposits, including repurchase agreements, at $3.3 billion increased $16.1 million, or an annualized 1.9%, from September 30, 2016 and $100.4 million, or 3.1%, from prior year.

Shareholders’ equity at December 31, 2016 was $500.6 million compared to $500.1 million at September 30, 2016 and $475.6 million at December 31, 2015.  CTBI’s annualized dividend yield to shareholders as of December 31, 2016 was 2.58%.

Asset Quality

CTBI’s total nonperforming loans were $27.5 million at December 31, 2016, a 2.9% decrease from the $28.3 million at September 30, 2016 and a 4.0% decrease from the $28.6 million at December 31, 2015.  Loans 90+ days past due decreased $0.7 million during the quarter and $1.2 million from December 31, 2015.  Nonaccrual loans decreased $0.2 million during the quarter but increased $0.1 million from December 31, 2015.  Loans 30-89 days past due at $16.4 million was a decrease of $3.4 million from September 30, 2016 but an increase of $2.0 million from December 31, 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 December 31, 2016 totaled $52.2 million, a decrease of $2.8 million from the $55.0 million at September 30, 2016 but an increase of $2.3 million from the $49.9 million at December 31, 2015.

Our level of foreclosed properties at $35.9 million at December 31, 2016 was a $1.8 million decrease from the $37.7 million at September 30, 2016 and a $4.8 million decrease from the $40.7 million at December 31, 2015.  Sales of foreclosed properties for the quarter ended December 31, 2016 totaled $2.8 million while new foreclosed properties totaled $1.6 million.  At December 31, 2016, the book value of properties under contracts to sell was $1.9 million; however, the closings had not occurred at quarter-end.

Net loan charge-offs for the quarter ended December 31, 2016 were $1.9 million, or 0.26% of average loans annualized, compared to $2.1 million, or 0.28%, experienced for the third quarter 2016 and $1.4 million, or 0.19%, for the fourth quarter 2015.  Of the net charge-offs for the quarter, $0.7 million were in commercial loans, $0.9 million were in indirect auto loans, $0.2 million were in residential real estate mortgage loans, and $0.1 million were in consumer direct loans.  Net charge-offs for the year 2016 were $8.0 million, or 0.28% of average loans, compared to $7.0 million, or 0.25% of average loans, for the year 2015.  Allocations to loan loss reserves were $2.0 million for the quarter ended December 31, 2016 compared to $2.2 million for the quarter ended September 30, 2016 and $1.9 million for the quarter ended December 31, 2015.  Allocations for the year 2016 were $7.9 million compared to $8.7 million for the year 2015.  Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at December 31, 2016 was 130.8% compared to 126.5% at September 30, 2016 and 126.2% at December 31, 2015.  Our loan loss reserve as a percentage of total loans outstanding remained at 1.22% at December 31, 2016 compared to prior quarter, down from the 1.26% at December 31, 2015.

Other Matters

Based on a recent discussion with a regulatory agency representative concerning the status of an ongoing review of two CTB deposit add-on products, CTBI believes it is likely that it will be cited for two violations based on alleged unfair and deceptive practices with respect to such products.  CTBI has evaluated the possible violations and their potential financial impact.  Based upon this analysis, management established an accrual in 2014 for possible customer reimbursements.  We have not received a final written notice citing such violations and have not been informed as to the amount of, or relevant time period for, related reimbursement.  The actual amount of reimbursement may materially vary from the amount management has evaluated as most likely at December 31, 2016.

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)
 
December 31, 2016   
(in thousands except per share data and # of employees)
 
                               
   
Three
   
Three
   
Three
   
Twelve
   
Twelve
 
   
Months
   
Months
   
Months
   
Months
   
Months
 
   
Ended
   
Ended
   
Ended
   
Ended
   
Ended
 
   
December 31, 2016
   
September 30, 2016
   
December 31, 2015
   
December 31, 2016
   
December 31, 2015
 
Interest income
 
$
36,996
   
$
36,679
   
$
36,300
   
$
146,576
   
$
144,020
 
Interest expense
   
3,585
     
3,452
     
3,105
     
13,555
     
11,773
 
Net interest income
   
33,411
     
33,227
     
33,195
     
133,021
     
132,247
 
Loan loss provision
   
2,043
     
2,191
     
1,910
     
7,872
     
8,650
 
                                         
Gains on sales of loans
   
474
     
595
     
403
     
1,831
     
1,978
 
Deposit service charges
   
6,286
     
6,563
     
6,306
     
24,966
     
24,282
 
Trust revenue
   
2,474
     
2,440
     
2,384
     
9,585
     
9,286
 
Loan related fees
   
1,497
     
1,260
     
1,074
     
4,107
     
3,821
 
Securities gains (losses)
   
0
     
458
     
(248
)
   
522
     
(106
)
Other noninterest income
   
1,784
     
1,870
     
1,891
     
7,430
     
7,548
 
Total noninterest income
   
12,515
     
13,186
     
11,810
     
48,441
     
46,809
 
                                         
Personnel expense
   
14,404
     
14,216
     
13,321
     
57,075
     
54,563
 
Occupancy and equipment
   
2,737
     
2,745
     
2,643
     
10,949
     
10,875
 
Data processing expense
   
1,768
     
1,601
     
1,539
     
6,497
     
6,743
 
FDIC insurance premiums
   
161
     
469
     
584
     
1,789
     
2,382
 
Other noninterest expense
   
7,935
     
7,656
     
7,691
     
30,816
     
30,880
 
Total noninterest expense
   
27,005
     
26,687
     
25,778
     
107,126
     
105,443
 
                                         
Net income before taxes
   
16,878
     
17,535
     
17,317
     
66,464
     
64,963
 
Income taxes
   
5,012
     
5,223
     
5,447
     
19,118
     
18,531
 
Net income
 
$
11,866
   
$
12,312
   
$
11,870
   
$
47,346
   
$
46,432
 
                                         
Memo: TEQ interest income
 
$
37,515
   
$
37,178
   
$
36,797
   
$
148,631
   
$
146,047
 
                                         
Average shares outstanding
   
17,593
     
17,554
     
17,464
     
17,548
     
17,431
 
Diluted average shares outstanding
   
17,617
     
17,569
     
17,516
     
17,566
     
17,483
 
Basic earnings per share
 
$
0.67
   
$
0.70
   
$
0.68
   
$
2.70
   
$
2.66
 
Diluted earnings per share
 
$
0.67
   
$
0.70
   
$
0.68
   
$
2.70
   
$
2.66
 
Dividends per share
 
$
0.320
   
$
0.320
   
$
0.310
   
$
1.260
   
$
1.220
 
                                         
Average balances:
                                       
Loans
 
$
2,939,605
   
$
2,931,791
   
$
2,847,128
   
$
2,916,031
   
$
2,791,871
 
Earning assets
   
3,690,451
     
3,664,598
     
3,578,521
     
3,652,714
     
3,524,506
 
Total assets
   
3,959,515
     
3,932,705
     
3,844,441
     
3,920,257
     
3,790,282
 
Deposits, including repurchase agreements
   
3,343,232
     
3,319,608
     
3,253,160
     
3,306,550
     
3,201,545
 
Interest bearing liabilities
   
2,643,451
     
2,634,254
     
2,586,609
     
2,629,484
     
2,569,344
 
Shareholders' equity
   
501,891
     
499,180
     
475,261
     
494,398
     
465,682
 
                                         
Performance ratios:
                                       
Return on average assets
   
1.19
%
   
1.25
%
   
1.22
%
   
1.21
%
   
1.23
%
Return on average equity
   
9.41
%
   
9.81
%
   
9.91
%
   
9.58
%
   
9.97
%
Yield on average earning assets (tax equivalent)
   
4.04
%
   
4.04
%
   
4.08
%
   
4.07
%
   
4.14
%
Cost of interest bearing funds (tax equivalent)
   
0.54
%
   
0.52
%
   
0.48
%
   
0.52
%
   
0.46
%
Net interest margin (tax equivalent)
   
3.66
%
   
3.66
%
   
3.74
%
   
3.70
%
   
3.81
%
Efficiency ratio (tax equivalent)
   
58.15
%
   
57.45
%
   
56.35
%
   
58.54
%
   
58.20
%
                                         
Loan charge-offs
 
$
2,939
   
$
2,962
   
$
2,051
   
$
11,668
   
$
9,870
 
Recoveries
   
(1,028
)
   
(875
)
   
(695
)
   
(3,635
)
   
(2,867
)
Net charge-offs
 
$
1,911
   
$
2,087
   
$
1,356
   
$
8,033
   
$
7,003
 
                                         
Market Price:
                                       
High
 
$
51.35
   
$
37.49
   
$
37.15
   
$
51.35
   
$
37.63
 
Low
 
$
35.85
   
$
33.71
   
$
33.68
   
$
30.89
   
$
31.53
 
Close
 
$
49.60
   
$
37.11
   
$
34.96
   
$
49.60
   
$
34.96
 
 
 

 
Community Trust Bancorp, Inc.
 
Financial Summary (Unaudited)
 
December 31, 2016   
(in thousands except per share data and # of employees)
 
                               
   
As of
   
As of
   
As of
 
   
December 31, 2016
   
September 30, 2016
   
December 31, 2015
 
Assets:
                 
Loans
 
$
2,938,371
   
$
2,931,299
   
$
2,873,961
 
Loan loss reserve
   
(35,933
)
   
(35,801
)
   
(36,094
)
Net loans
   
2,902,438
     
2,895,498
     
2,837,867
 
Loans held for sale
   
1,244
     
2,075
     
1,172
 
Securities AFS
   
605,394
     
631,201
     
594,936
 
Securities HTM
   
866
     
1,181
     
1,661
 
Other equity investments
   
22,814
     
22,814
     
22,814
 
Other earning assets
   
98,937
     
74,419
     
141,313
 
Cash and due from banks
   
48,603
     
49,584
     
51,974
 
Premises and equipment
   
47,940
     
47,840
     
48,188
 
Goodwill and core deposit intangible
   
65,623
     
65,662
     
65,781
 
Other assets
   
138,310
     
139,952
     
138,228
 
Total Assets
 
$
3,932,169
   
$
3,930,226
   
$
3,903,934
 
                         
Liabilities and Equity:
                       
NOW accounts
 
$
45,872
   
$
45,834
   
$
44,567
 
Savings deposits
   
1,054,475
     
1,023,590
     
997,042
 
CD's >=$100,000
   
598,832
     
597,417
     
559,497
 
Other time deposits
   
614,211
     
623,957
     
629,701
 
Total interest bearing deposits
   
2,313,390
     
2,290,798
     
2,230,807
 
Noninterest bearing deposits
   
767,918
     
763,187
     
749,975
 
Total deposits
   
3,081,308
     
3,053,985
     
2,980,782
 
Repurchase agreements
   
251,065
     
262,295
     
251,225
 
Other interest bearing liabilities
   
67,101
     
69,110
     
165,993
 
Noninterest bearing liabilities
   
32,080
     
44,726
     
30,351
 
Total liabilities
   
3,431,554
     
3,430,116
     
3,428,351
 
Shareholders' equity
   
500,615
     
500,110
     
475,583
 
Total Liabilities and Equity
 
$
3,932,169
   
$
3,930,226
   
$
3,903,934
 
                         
Ending shares outstanding
   
17,629
     
17,608
     
17,537
 
Memo: Market value of HTM securities
 
$
867
   
$
1,182
   
$
1,651
 
                         
30 - 89 days past due loans
 
$
16,408
   
$
19,765
   
$
14,401
 
90 days past due loans
   
10,847
     
11,498
     
12,046
 
Nonaccrual loans
   
16,623
     
16,798
     
16,563
 
Restructured loans (excluding 90 days past due and nonaccrual)
   
54,633
     
54,026
     
49,283
 
Foreclosed properties
   
35,856
     
37,665
     
40,674
 
Other repossessed assets
   
103
     
103
     
183
 
                         
Common equity Tier 1 capital
   
15.18
%
   
14.97
%
   
14.58
%
Tier 1 leverage ratio
   
12.75
%
   
12.69
%
   
12.40
%
Tier 1 risk-based capital ratio
   
17.25
%
   
17.05
%
   
16.70
%
Total risk based capital ratio
   
18.50
%
   
18.30
%
   
17.95
%
Tangible equity to tangible assets ratio
   
11.25
%
   
11.24
%
   
10.68
%
FTE employees
   
996
     
991
     
984
 
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