Press Release

Community Trust Bancorp, Inc. Reports Record Earnings for the Year 2016

Company Release - 1/18/2017 9:22 AM ET

PIKEVILLE, Ky.--(BUSINESS WIRE)-- Community Trust Bancorp, Inc. (NASDAQ:CTBI):

                               
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

  • Our loan portfolio increased $7.1 million during the quarter and $64.4 million from December 31, 2015.
  • Our investment portfolio decreased $26.1 million during the quarter but increased $9.7 million from December 31, 2015.
  • Deposits, including repurchase agreements, increased $16.1 million during the quarter and $100.4 million from December 31, 2015.
  • 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.
  • 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

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

Source: Community Trust Bancorp, Inc.