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Section 1: 8-K (CTBI MARCH 31, 2018 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)
March 31, 2018


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))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.             
 
 

 
 
 
Item 2.02 – Results of Operations and Financial Condition

On April 18, 2018, Community Trust Bancorp, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2018.  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 April 18, 2018



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:
April 18, 2018
By:
     
   
/s/ Jean R. Hale
   
Jean R. Hale
   
Chairman, President and Chief Executive Officer

 
Exhibit Index

Exhibit No.
Description
   
99.1
Press Release dated April 18, 2018


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Section 2: EX-99 (CTBI MARCH 31, 2018 EARNINGS RELEASE FORM 8-K EX. 99.1)

Exhibit 99.1

FOR IMMEDIATE RELEASE
April 18, 2018

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 FIRST QUARTER 2018

Earnings Summary
                 
(in thousands except per share data)
 
1Q
2018
   
4Q
2017
   
1Q
2017
 
Net income
 
$
15,814
   
$
14,912
   
$
11,277
 
Earnings per share
 
$
0.89
   
$
0.84
   
$
0.64
 
Earnings per share - diluted
 
$
0.89
   
$
0.84
   
$
0.64
 
                         
Return on average assets
   
1.55
%
   
1.43
%
   
1.15
%
Return on average equity
   
12.00
%
   
11.18
%
   
9.02
%
Efficiency ratio
   
59.24
%
   
57.76
%
   
61.18
%
Tangible common equity
   
11.43
%
   
11.43
%
   
11.14
%
                         
Dividends declared per share
 
$
0.33
   
$
0.33
   
$
0.32
 
Book value per share
 
$
30.33
   
$
30.00
   
$
28.73
 
                         
Weighted average shares
   
17,671
     
17,650
     
17,615
 
Weighted average shares - diluted
   
17,687
     
17,674
     
17,638
 

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports record earnings for the first quarter 2018 of $15.8 million, or $0.89 per basic share, compared to $14.9 million, or $0.84 per basic share, earned during the fourth quarter 2017 and $11.3 million, or $0.64 per basic share, earned during the first quarter 2017.

1st Quarter 2018 Highlights

v
Net interest income for the quarter of $34.6 million was a decrease of $0.5 million, or 1.5%, from fourth quarter 2017 but an increase of $1.5 million, or 4.5%, from prior year first quarter.

v
Provision for loan losses for the quarter ended March 31, 2018 decreased $1.9 million from prior quarter and $0.3 million from prior year same quarter.

v
Our loan portfolio decreased $4.7 million, an annualized 0.6%, during the quarter but increased $148.4 million, or 5.0%, from March 31, 2017.

v
Net loan charge-offs for the quarter ended March 31, 2018 were $1.9 million, or 0.25% of average loans annualized, compared to $3.1 million, or 0.39%, experienced for the fourth quarter 2017 and $1.4 million, or 0.20%, for the first quarter 2017.

v
Nonperforming loans at $25.9 million decreased $2.3 million from December 31, 2017 but increased $0.9 million from March 31, 2017.  Nonperforming assets at $58.1 million decreased $2.3 million from December 31, 2017 and $2.8 million from March 31, 2017.

v
Deposits, including repurchase agreements, increased $56.8 million during the quarter and $147.2 million from March 31, 2017.

v
Noninterest income for the quarter ended March 31, 2018 of $13.3 million was an increase of $0.9 million, or 7.2%, from prior quarter and $1.7 million, or 15.0%, from prior year same quarter.  The increase in noninterest income included a $1.2 million increase in bank owned life insurance revenue as a result of death benefits.

v
Noninterest expense for the quarter ended March 31, 2018 of $28.7 million increased $0.9 million, or 3.4%, from prior quarter, and $1.0 million, or 3.8%, from prior year same quarter.  The variance in noninterest expense from prior quarter included increases in bank franchise taxes, net other real estate owned expense, and repossession expense.  The variance from prior year included increases in personnel expense, taxes other than property/payroll, operating losses, and repossession expense.

v
Income tax expense was positively impacted this quarter by the change in the corporate income tax rate from 35% to 21%.  We utilize various tax exempt investments, including municipal bonds, bank owned life insurance, and low income housing projects, to lower our effective income tax rate.  With the current tax laws, we expect our effective income tax rate for the year to be within the 13% to 17% range.

Net Interest Income

Net interest income for the quarter of $34.6 million was a decrease of $0.5 million, or 1.5%, from fourth quarter 2017 but an increase of $1.5 million, or 4.5%, from prior year first quarter.  Our net interest margin at 3.65% remained flat from prior quarter but was down three basis points from prior year same quarter, while our average earning assets increased $1.2 million and $165.5 million, respectively, during those same periods.  Our yield on average earning assets increased 6 basis points from prior quarter and 20 basis points from prior year same quarter, and our cost of funds increased 7 basis points from prior quarter and 31 basis points from prior year same quarter.  Our ratio of average loans to deposits, including repurchase agreements, was 88.6% for the quarter ended March 31, 2018 compared to 89.1% for the quarter ended December 31, 2017 and 87.9% for the quarter ended March 31, 2017.

Noninterest Income

Noninterest income for the quarter ended March 31, 2018 of $13.3 million was an increase of $0.9 million, or 7.2%, from prior quarter and $1.7 million, or 15.0%, from prior year same quarter.  The increase in noninterest income included an increase of $1.2 million in bank owned life insurance revenue as a result of death benefits.  This increase was partially offset by $0.3 million in losses on the sale of securities.

Noninterest Expense

Noninterest expense for the quarter ended March 31, 2018 of $28.7 million increased $0.9 million, or 3.4%, from prior quarter, and $1.0 million, or 3.8%, from prior year same quarter.  The variance in noninterest expense from prior quarter included increases in bank franchise taxes ($0.5 million), net other real estate owned expense ($0.5 million), and repossession expense ($0.2 million).  The quarter over quarter increase in noninterest expense was partially offset by a $0.2 million decrease in personnel expense.  Bonuses and incentives declined by $0.6 million due to the one-time bonus declared in December 2017, while cost increases included group medical and life insurance ($0.3 million), salaries ($0.1 million), and payroll taxes ($0.1 million).  The variance in noninterest expense from prior year included an increase in personnel expense of $0.7 million, primarily due to an increase in the cost of group medical and life insurance ($0.5 million) and salaries ($0.2 million), in addition to increases in bank franchise taxes ($0.2 million), operating losses ($0.2 million), and repossession expense ($0.2 million).  The year over year increase in noninterest expense was partially offset by a $0.2 million decrease in data processing expense.

Balance Sheet Review

CTBI’s total assets at $4.2 billion increased $59.5 million, or 5.8% annualized, from December 31, 2017 and $161.6 million, or 4.0%, from March 31, 2017.  Loans outstanding at March 31, 2018 were $3.1 billion, a decrease of $4.7 million, or an annualized 0.6%, from December 31, 2017 but an increase of $148.4 million, or 5.0%, from March 31, 2017.  We experienced a decrease during the quarter of $7.6 million in the commercial loan portfolio, $1.8 million in the indirect loan portfolio, and $1.2 million in the consumer direct loan portfolio, partially offset by an increase of $5.9 million in the residential loan portfolio.  The decline in the commercial loan portfolio was the result of the payout of a $13 million dealer floor plan.  CTBI’s investment portfolio increased $19.1 million, or an annualized 13.2%, from December 31, 2017 but decreased $1.0 million, or 0.2%, from March 31, 2017.  Deposits in other banks increased $20.2 million from prior quarter and $2.6 million from March 31, 2017.  Deposits, including repurchase agreements, at $3.6 billion increased $56.8 million, or an annualized 6.6%, from December 31, 2017 and $147.2 million, or 4.3%, from March 31, 2017.

Shareholders’ equity at March 31, 2018 was $537.5 million, a 5.2% annualized increase from the $530.7 million at December 31, 2017 and a 5.9% increase from the $507.5 million at March 31, 2017.  CTBI’s annualized dividend yield to shareholders as of March 31, 2018 was 2.92%.

Asset Quality

CTBI’s total nonperforming loans, not including troubled debt restructurings, were $25.9 million, or 0.83% of total loans, at March 31, 2018 compared to $28.3 million, or 0.91% of total loans, at December 31, 2017 and $25.1 million, or 0.84% of total loans, at March 31, 2017.  Accruing loans 90+ days past due decreased $1.1 million from prior quarter but increased $0.4 million from March 31, 2017.  Nonaccrual loans decreased $1.2 million during the quarter, but increased $0.4 million from March 31, 2017.  Accruing loans 30-89 days past due at $16.9 million was a decrease of $2.5 million from December 31, 2017 but an increase of $1.6 million from March 31, 2017.  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, 2018 totaled $48.2 million, a $0.8 million increase from the $47.4 million at December 31, 2017 but a $2.1 million decrease from the $50.3 million at March 31, 2017.

Our level of foreclosed properties at $32.0 million at March 31, 2018 was relatively flat to December 31, 2017, but a $3.7 million decrease from the $35.7 million at March 31, 2017.  Sales of foreclosed properties for the quarter ended March 31, 2018 totaled $0.8 million while new foreclosed properties totaled $1.3 million.  At March 31, 2018, the book value of properties under contracts to sell was $2.5 million; however, the closings had not occurred at quarter-end.  Write-downs on foreclosed properties for the first quarter 2018 totaled $0.5 million compared to $0.2 million in the fourth quarter 2017 and $0.5 million in the first quarter 2017.

Net loan charge-offs for the quarter ended March 31, 2018 were $1.9 million, or 0.25% of average loans annualized, compared to $3.1 million, or 0.39%, experienced for the fourth quarter 2017 and $1.4 million, or 0.20%, for the first quarter 2017.  Of the net charge-offs for the quarter, $0.3 million were in commercial loans, $1.2 million were in indirect auto loans, $0.2 million were in residential loans, and $0.2 million were in consumer direct loans.  Allocations to loan loss reserves were $0.9 million for the quarter ended March 31, 2018 compared to $2.9 million for the quarter ended December 31, 2017 and $1.2 million for the quarter ended March 31, 2017.  Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at March 31, 2018 was 135.6% compared to 127.8% at December 31, 2017 and 142.4% at March 31, 2017.  Our loan loss reserve as a percentage of total loans outstanding was reduced to 1.13% at March 31, 2018 from the 1.16% at December 31, 2017 and the 1.20% at March 31, 2017.  The decline in the loan loss reserve is primarily attributable to a reduction in our soft factor allocation for trends in delinquencies. 

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 $4.2 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)
 
 March 31, 2018  
(in thousands except per share data and # of employees)
 
                   
   
Three
   
Three
   
Three
 
   
Months
   
Months
   
Months
 
   
Ended
   
Ended
   
Ended
 
   
March 31, 2018
   
December 31, 2017
   
March 31, 2017
 
Interest income
 
$
40,580
   
$
40,673
   
$
36,768
 
Interest expense
   
5,989
     
5,571
     
3,678
 
Net interest income
   
34,591
     
35,102
     
33,090
 
Loan loss provision
   
946
     
2,862
     
1,229
 
                         
Gains on sales of loans
   
279
     
423
     
256
 
Deposit service charges
   
6,221
     
6,463
     
5,960
 
Trust revenue
   
2,958
     
2,684
     
2,586
 
Loan related fees
   
1,144
     
1,108
     
1,005
 
Securities gains (losses)
   
(288
)
   
15
     
(8
)
Other noninterest income
   
2,996
     
1,723
     
1,780
 
Total noninterest income
   
13,310
     
12,416
     
11,579
 
                         
Personnel expense
   
15,619
     
15,782
     
14,924
 
Occupancy and equipment
   
2,833
     
2,804
     
2,813
 
Data processing expense
   
1,636
     
1,782
     
1,789
 
FDIC insurance premiums
   
314
     
316
     
292
 
Other noninterest expense
   
8,279
     
7,052
     
7,826
 
Total noninterest expense
   
28,681
     
27,736
     
27,644
 
                         
Net income before taxes
   
18,274
     
16,920
     
15,796
 
Income taxes
   
2,460
     
2,008
     
4,519
 
Net income
 
$
15,814
   
$
14,912
   
$
11,277
 
                         
Memo: TEQ interest income
 
$
40,804
   
$
41,186
   
$
37,277
 
                         
Average shares outstanding
   
17,671
     
17,650
     
17,615
 
Diluted average shares outstanding
   
17,687
     
17,674
     
17,638
 
Basic earnings per share
 
$
0.89
   
$
0.84
   
$
0.64
 
Diluted earnings per share
 
$
0.89
   
$
0.84
   
$
0.64
 
Dividends per share
 
$
0.33
   
$
0.33
   
$
0.32
 
                         
Average balances:
                       
Loans
 
$
3,111,116
   
$
3,116,070
   
$
2,954,283
 
Earning assets
   
3,870,216
     
3,869,028
     
3,704,690
 
Total assets
   
4,144,105
     
4,141,555
     
3,975,089
 
Deposits, including repurchase agreements
   
3,511,260
     
3,498,571
     
3,362,792
 
Interest bearing liabilities
   
2,782,467
     
2,778,996
     
2,660,794
 
Shareholders' equity
   
534,278
     
529,334
     
507,237
 
                         
Performance ratios:
                       
Return on average assets
   
1.55
%
   
1.43
%
   
1.15
%
Return on average equity
   
12.00
%
   
11.18
%
   
9.02
%
Yield on average earning assets (tax equivalent)
   
4.28
%
   
4.22
%
   
4.08
%
Cost of interest bearing funds (tax equivalent)
   
0.87
%
   
0.80
%
   
0.56
%
Net interest margin (tax equivalent)
   
3.65
%
   
3.65
%
   
3.68
%
Efficiency ratio (tax equivalent)
   
59.24
%
   
57.76
%
   
61.18
%
                         
Loan charge-offs
 
$
2,977
   
$
3,962
   
$
2,491
 
Recoveries
   
(1,069
)
   
(860
)
   
(1,042
)
Net charge-offs
 
$
1,908
   
$
3,102
   
$
1,449
 
                         
Market Price:
                       
High
 
$
50.70
   
$
51.90
   
$
50.40
 
Low
 
$
43.00
   
$
45.00
   
$
43.25
 
Close
 
$
45.20
   
$
47.10
   
$
45.75
 
 

 
 
Community Trust Bancorp, Inc.
 
Financial Summary (Unaudited)
 
 March 31, 2018  
(in thousands except per share data and # of employees)
 
   
   
As of
   
As of
   
As of
 
   
March 31, 2018
   
December 31, 2017
   
March 31, 2017
 
Assets:
                 
Loans
 
$
3,118,241
   
$
3,122,940
   
$
2,969,865
 
Loan loss reserve
   
(35,189
)
   
(36,151
)
   
(35,713
)
Net loans
   
3,083,052
     
3,086,789
     
2,934,152
 
Loans held for sale
   
1,145
     
1,033
     
2,599
 
Securities AFS
   
604,890
     
585,761
     
605,701
 
Securities HTM
   
659
     
659
     
858
 
Other equity investments
   
22,814
     
22,814
     
22,814
 
Other earning assets
   
159,608
     
139,392
     
163,362
 
Cash and due from banks
   
44,792
     
47,528
     
51,089
 
Premises and equipment
   
45,860
     
46,318
     
47,298
 
Goodwill and core deposit intangible
   
65,490
     
65,490
     
65,583
 
Other assets
   
167,427
     
140,447
     
140,705
 
Total Assets
 
$
4,195,737
   
$
4,136,231
   
$
4,034,161
 
                         
Liabilities and Equity:
                       
NOW accounts
 
$
55,034
   
$
51,218
   
$
50,762
 
Savings deposits
   
1,131,371
     
1,108,572
     
1,093,019
 
CD's >=$100,000
   
705,978
     
702,218
     
601,063
 
Other time deposits
   
601,942
     
610,925
     
609,990
 
Total interest bearing deposits
   
2,494,325
     
2,472,933
     
2,354,834
 
Noninterest bearing deposits
   
825,345
     
790,930
     
804,944
 
Total deposits
   
3,319,670
     
3,263,863
     
3,159,778
 
Repurchase agreements
   
244,822
     
243,814
     
257,497
 
Other interest bearing liabilities
   
67,241
     
67,498
     
73,614
 
Noninterest bearing liabilities
   
26,515
     
30,357
     
35,788
 
Total liabilities
   
3,658,248
     
3,605,532
     
3,526,677
 
Shareholders' equity
   
537,489
     
530,699
     
507,484
 
Total Liabilities and Equity
 
$
4,195,737
   
$
4,136,231
   
$
4,034,161
 
                         
Ending shares outstanding
   
17,721
     
17,693
     
17,661
 
Memo: Market value of HTM securities
 
$
660
   
$
660
   
$
858
 
                         
30 - 89 days past due loans
 
$
16,914
   
$
19,388
   
$
15,316
 
90 days past due loans
   
9,027
     
10,176
     
8,583
 
Nonaccrual loans
   
16,923
     
18,119
     
16,498
 
Restructured loans (excluding 90 days past due and nonaccrual)
   
56,119
     
53,010
     
55,822
 
Foreclosed properties
   
32,004
     
31,996
     
35,665
 
Other repossessed assets
   
118
     
155
     
103
 
                         
Common equity Tier 1 capital
   
15.73
%
   
15.33
%
   
15.21
%
Tier 1 leverage ratio
   
13.14
%
   
12.89
%
   
12.85
%
Tier 1 risk-based capital ratio
   
17.62
%
   
17.22
%
   
17.25
%
Total risk based capital ratio
   
18.78
%
   
18.41
%
   
18.49
%
Tangible equity to tangible assets ratio
   
11.43
%
   
11.43
%
   
11.14
%
FTE employees
   
986
     
990
     
996
 
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