AP NEWS

Community Trust Bancorp, Inc. Reports Record Earnings for the Year 2018

January 16, 2019

PIKEVILLE, Ky.--(BUSINESS WIRE)--Jan 16, 2019--Community Trust Bancorp, Inc. (NASDAQ:CTBI):

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the fourth quarter 2018 of $15.7 million, or $0.89 per basic share, compared to $16.1 million, or $0.91 per basic share, earned during the third quarter 2018 and $14.9 million, or $0.84 per basic share, earned during the fourth quarter 2017. Earnings for the year ended December 31, 2018 were a record $59.2 million, or $3.35 per basic share, compared to $51.5 million or $2.92 per basic share earned during the year ended December 31, 2017.

4 th Quarter 2018 Highlights

Net interest income for the quarter of $36.3 million was an increase of $0.1 million, or 0.4%, from third quarter 2018 and $1.2 million, or 3.4%, from prior year fourth quarter. Provision for loan losses for the quarter ended December 31, 2018 increased $0.2 million from prior quarter but decreased $1.1 million from prior year same quarter. Our loan portfolio increased $30.8 million, an annualized 3.8%, during the quarter and $85.7 million, or 2.7%, from December 31, 2017. Net loan charge-offs for the quarter ended December 31, 2018 were $1.6 million, or 0.20% of average loans annualized, compared to $1.5 million, or 0.19%, experienced for the third quarter 2018 and $3.1 million, or 0.39%, for the fourth quarter 2017. Nonperforming loans at $22.1 million increased $1.0 million from September 30, 2018 but decreased $6.2 million from December 31, 2017. Nonperforming assets at $49.4 million decreased $1.4 million from September 30, 2018 and $11.1 million from December 31, 2017. Deposits, including repurchase agreements, increased $14.0 million during the quarter and $31.0 million from December 31, 2017. Noninterest income for the quarter ended December 31, 2018 of $12.2 million was a decrease of $0.4 million, or 3.3%, from prior quarter and $0.2 million, or 1.4%, from prior year same quarter. The decrease in noninterest income was primarily the result of a decrease in loan related fees due to a decline in the fair value of our mortgage servicing rights. Noninterest expense for the quarter ended December 31, 2018 of $28.2 million increased $0.1 million, or 0.2%, from prior quarter, and $0.4 million, or 1.6%, from prior year same quarter. The variance in noninterest expense from prior year same quarter was primarily due to increases in taxes other than income, property, and payroll and net other real estate owned expense, partially offset by a decrease in personnel expense. The decrease in personnel expense was due to the 2017 one-time bonus to employees as a result of the positive impact on income tax expense during the period. Income tax expense continues to be positively impacted by the change in the corporate income tax rate from 35% to 21%. We utilize various tax exempt investments and loans, including municipal bonds, bank owned life insurance, and low income housing projects, to lower our effective income tax rate. With the current tax laws, our effective tax rate for the year ended December 31, 2018 was 16% compared to 28% for the year ended December 31, 2017.

Net Interest Income

Net interest income for the quarter of $36.3 million was an increase of $0.1 million, or 0.4%, from third quarter 2018 and $1.2 million, or 3.4%, from prior year fourth quarter. Our net interest margin at 3.68% was flat to prior quarter but increased 3 basis points from prior year same quarter, while our average earning assets increased $18.9 million and $68.1 million, respectively, during those same periods. Our yield on average earning assets increased 14 basis points from prior quarter and 36 basis points from prior year same quarter, and our cost of funds increased 21 basis points from prior quarter and 47 basis points from prior year same quarter. Our ratio of average loans to deposits, including repurchase agreements, was 89.8% for the quarter ended December 31, 2018 compared to 89.5% for the quarter ended September 30, 2018 and 89.1% for the quarter ended December 31, 2017. Net interest income for the year ended December 31, 2018 increased $4.8 million from December 31, 2017 with a 1 basis point decrease in our net interest margin and a $114.5 million increase in average earning assets.

Noninterest Income

Noninterest income for the quarter ended December 31, 2018 of $12.2 million was a decrease of $0.4 million, or 3.3%, from prior quarter and $0.2 million, or 1.4%, from prior year same quarter. The decrease in noninterest income was primarily the result of a decrease in loan related fees due to a decline in the fair value of our mortgage servicing rights. Noninterest income for the year ended December 31, 2018 was a $3.4 million, or 7.1%, increase from prior year. Year over year noninterest income has been positively impacted by increases in deposit service charges ($0.9 million), trust revenue ($0.9 million), and bank owned life insurance income ($1.5 million).

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2018 of $28.2 million increased $0.1 million, or 0.2%, from prior quarter, and $0.4 million, or 1.6%, from prior year same quarter. The variance in noninterest expense from prior year same quarter was primarily due to increases in taxes other than property and payroll ($0.4 million) and net other real estate owned expense ($0.5 million), partially offset by a decrease in personnel expense ($0.5 million). The decrease in personnel expense was due to the 2017 one-time bonus to employees as a result of the positive impact on income tax expense during the period. Noninterest expense for the year ended December 31, 2018 was $117.4 million, a $7.5 million, or 6.8%, increase over the year 2017. The year over year increase included a $2.7 million increase in personnel expense and a $1.1 million increase in taxes other than income, property, and payroll, in addition to the $3.6 million customer reimbursement expense discussed in the second quarter 10-Q related to two deposit add-on products. The increase in personnel expense included increases in salaries ($0.7 million), bonuses ($0.2 million), and the cost of group medical and life insurance ($1.4 million).

Balance Sheet Review

CTBI’s total assets at $4.2 billion increased $27.8 million, or 2.6% annualized, from September 30, 2018 and $65.4 million, or 1.6%, from December 31, 2017. Loans outstanding at December 31, 2018 were $3.2 billion, an increase of $30.8 million, or an annualized 3.8%, from September 30, 2018 and $85.7 million, or 2.7%, from December 31, 2017. We experienced an increase during the quarter of $31.0 million in the commercial loan portfolio and $3.2 million in the indirect loan portfolio, offset by decreases of $1.7 million in both the residential and consumer loan portfolios. CTBI’s investment portfolio increased $25.7 million, or an annualized 17.9%, from September 30, 2018 and $9.1 million, or 1.6%, from December 31, 2017. Deposits in other banks decreased $35.6 million from prior quarter and $57.9 million from prior year-end. Deposits, including repurchase agreements, at $3.5 billion increased $14.0 million, or an annualized 1.6%, from September 30, 2018 and $31.0 million, or 0.9%, from December 31, 2017.

Shareholders’ equity at December 31, 2018 was $564.2 million, a 10.0% annualized increase from the $550.3 million at September 30, 2018 and a 6.3% increase from the $530.7 million at December 31, 2017. CTBI’s annualized dividend yield to shareholders as of December 31, 2018 was 3.64%.

Asset Quality

CTBI’s total nonperforming loans, not including performing troubled debt restructurings, were $22.1 million, or 0.69% of total loans, at December 31, 2018 compared to $21.0 million, or 0.66% of total loans, at September 30, 2018 and $28.3 million, or 0.91% of total loans, at December 31, 2017. Accruing loans 90+ days past due increased $2.2 million from prior quarter but remained relatively flat compared to December 31, 2017. Nonaccrual loans decreased $1.2 million during the quarter and $6.3 million from December 31, 2017. Accruing loans 30-89 days past due at $22.7 million was a decrease of $5.5 million from September 30, 2018 but increased $3.3 million from December 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 December 31, 2018 totaled $46.4 million, compared to $46.9 million at September 30, 2018 and $47.4 million at December 31, 2017.

Our level of foreclosed properties at $27.3 million at December 31, 2018 was a $2.4 million decrease from the $29.7 million at September 30, 2018 and a $4.7 million decrease from the $32.0 million at December 31, 2017. Sales of foreclosed properties for the quarter ended December 31, 2018 totaled $3.6 million while new foreclosed properties totaled $1.8 million. At December 31, 2018, the book value of properties under contracts to sell was $3.3 million; however, the closings had not occurred at year-end. Write-downs on foreclosed properties for the fourth quarter 2018 totaled $0.5 million compared to $0.7 million in the third quarter 2018 and $0.2 in the fourth quarter 2017. Write-downs for the year 2018 were $2.5 million compared to $3.0 million for the year 2017.

Net loan charge-offs for the quarter ended December 31, 2018 were $1.6 million, or 0.20% of average loans annualized, compared to $1.5 million, or 0.19%, experienced for the third quarter 2018 and $3.1 million, or 0.39%, for the fourth quarter 2017. Of the net charge-offs for the quarter, $0.3 million were in commercial loans, $0.7 million were in indirect auto loans, $0.4 million were in residential loans, and $0.2 million were in consumer direct loans. Allocations to loan loss reserves were $1.7 million for the quarter ended December 31, 2018 compared to $1.5 million for the quarter ended September 30, 2018 and $2.9 million for the quarter ended December 31, 2017. Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at September 30, 2018 was 162.7% compared to 170.1% at September 30, 2018 and 127.8% at December 31, 2017. Our loan loss reserve as a percentage of total loans outstanding at December 31, 2018 was 1.12%, down from the 1.13% at September 30, 2018 and 1.16% at December 31, 2017.

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 69 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.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190116005480/en/

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

KEYWORD: UNITED STATES NORTH AMERICA KENTUCKY

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING

SOURCE: Community Trust Bancorp, Inc.

Copyright Business Wire 2019.

PUB: 01/16/2019 09:00 AM/DISC: 01/16/2019 09:01 AM

http://www.businesswire.com/news/home/20190116005480/en

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