EX-99.1 3 ctbi0319er8kex99-1.htm CTBI MARCH 31, 2019 EARNINGS RELEASE 8-K EXHIBIT 99.1
Exhibit 99.1

FOR IMMEDIATE RELEASE
April 17, 2019

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 FIRST QUARTER 2019

Earnings Summary
                  
(in thousands except per share data)
  
1Q
2019
    
4Q
2018
    
1Q
2018
  
Net income
  
$
14,939
    
$
15,709
    
$
15,814
  
Earnings per share
  
$
0.84
    
$
0.89
    
$
0.89
  
Earnings per share - diluted
  
$
0.84
    
$
0.89
    
$
0.89
  
                         
Return on average assets
    
1.42
%
    
1.48
%
    
1.55
%
Return on average equity
    
10.58
%
    
11.16
%
    
12.00
%
Efficiency ratio
    
60.57
%
    
58.04
%
    
59.24
%
Tangible common equity
    
12.05
%
    
12.06
%
    
11.43
%
                         
Dividends declared per share
  
$
0.36
    
$
0.36
    
$
0.33
  
Book value per share
  
$
32.50
    
$
31.81
    
$
30.33
  
                         
Weighted average shares
    
17,712
      
17,696
      
17,671
  
Weighted average shares - diluted
    
17,723
      
17,714
      
17,687
  

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the first quarter 2019 of $14.9 million, or $0.84 per basic share, compared to $15.7 million, or $0.89 per basic share, earned during the fourth quarter 2018 and $15.8 million, or $0.89 per basic share, earned during the first quarter 2018.

1st Quarter 2019 Highlights

●
Net interest income for the quarter of $36.0 million was a decrease of $0.3 million, or 0.8%, from fourth quarter 2018 but an increase of $1.4 million, or 4.0%, from prior year first quarter.

●
Provision for loan losses for the quarter ended March 31, 2019 decreased $1.6 million from prior quarter and $0.8 million from prior year same quarter with improvement in charge-offs and credit metrics combined with a decline in loan volume during the quarter.

●
Our loan portfolio decreased $18.9 million, an annualized 2.4%, during the quarter but increased $71.5 million, or 2.3%, from March 31, 2018.

●
Net loan charge-offs for the quarter ended March 31, 2019 were $1.1 million, or 0.14% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the fourth quarter 2018 and $1.9 million, or 0.25%, for the first quarter 2018.

●
Nonperforming loans at $25.4 million increased $3.3 million from December 31, 2018 but decreased $0.6 million from March 31, 2018.  Nonperforming assets at $50.4 million increased $1.0 million from December 31, 2018 but decreased $7.7 million from March 31, 2018.

●
Deposits, including repurchase agreements, increased $81.9 million, an annualized 9.4%, during the quarter and $56.1 million, or 1.6%, from March 31, 2018.

●
Noninterest income for the quarter ended March 31, 2019 of $12.2 million was relatively flat to prior quarter, but a decrease of $1.1 million, or 8.6%, from prior year same quarter.  The decrease in noninterest income from prior year was primarily the result of $1.2 million in death benefits received on bank owned life insurance in the first quarter 2018.

●
Noninterest expense for the quarter ended March 31, 2019 of $29.1 million increased $0.9 million, or 3.2%, from prior quarter, and $0.4 million, or 1.4%, from prior year same quarter.  The increase in noninterest expense was primarily due to increased personnel expense.

●
In March 2019, Kentucky enacted legislation requiring financial institutions to transition from a bank franchise tax to the Kentucky corporate income tax beginning in 2021.  As a result, we booked a one time charge of $1.0 million, or $0.06 per basic share, to income tax expense to recognize our Kentucky deferred tax liability at March 31, 2019.  While this liability will be adjusted periodically, we do not anticipate any further adjustments to have a significant impact to income.

Net Interest Income

Net interest income for the quarter of $36.0 million was a decrease of $0.3 million, or 0.8%, from fourth quarter 2018 but an increase of $1.4 million, or 4.0%, from prior year first quarter.  Our net interest margin at 3.70% was an increase of 2 basis points from prior quarter and 5 basis points from prior year same quarter, while our average earning assets increased $29.4 million and $96.2 million, respectively, during those same periods.  Our yield on average earning assets increased 13 basis points from prior quarter and 43 basis points from prior year same quarter, and our cost of funds increased 16 basis points from prior quarter and 56 basis points from prior year same quarter.  Our ratio of average loans to deposits, including repurchase agreements, was 89.9% for the quarter ended March 31, 2019 compared to 89.8% for the quarter ended December 31, 2018 and 88.6% for the quarter ended March 31, 2018.

Noninterest Income

Noninterest income for the quarter ended March 31, 2019 of $12.2 million was relatively flat to prior quarter, but a decrease of $1.1 million, or 8.6%, from prior year same quarter.  The decrease in noninterest income from prior year was primarily the result of $1.2 million in death benefits received on bank owned life insurance in the first quarter 2018.  Noninterest income for the quarter was also impacted by decreased deposit service charges ($0.1 million), trust revenue ($0.4 million), and loan related fees ($0.6 million) year over year, offset by a positive variance in securities gains of $0.6 million and miscellaneous income of $0.5 million resulting from an adjustment of a mortgage servicing account held by a third party.  The decrease in loan related fees was the result of a decline in the fair value of our mortgage servicing rights.

Noninterest Expense

Noninterest expense for the quarter ended March 31, 2019 of $29.1 million increased $0.9 million, or 3.2%, from prior quarter, and $0.4 million, or 1.4%, from prior year same quarter.  The increase in noninterest expense was primarily due to increased personnel expense.  The $0.7 million quarter over quarter increase in personnel expense included increases in salaries ($0.3 million), bonuses ($0.5 million), and related taxes ($0.2 million), partially offset by a decrease in the cost of group medical and life insurance ($0.3 million).  The $0.3 million prior year same quarter variance in personnel expense was primarily due to increased salaries ($0.5 million) and other employee benefits ($0.1 million), offset by a $0.4 million decrease in the cost of group medical and life insurance.

Balance Sheet Review

CTBI’s total assets at $4.3 billion increased $111.7 million, or 10.8% annualized, from December 31, 2018 and $117.6 million, or 2.8%, from March 31, 2018.  Loans outstanding at March 31, 2019 were $3.2 billion, a decrease of $18.9 million, an annualized 2.4%, from December 31, 2018 but an increase of $71.5 million, or 2.3%, from March 31, 2018.  We experienced an increase during the quarter of $2.8 million in the commercial loan portfolio, offset by decreases of $15.7 million in the indirect loan portfolio, $3.6 million in the residential loan portfolio, and $2.4 million in the consumer loan portfolio.  CTBI’s investment portfolio increased $5.9 million, or an annualized 4.0%, from December 31, 2018 but decreased $4.1 million, or 0.7%, from March 31, 2018.  Deposits in other banks increased $121.9 million from prior quarter and $43.8 million from prior year same quarter, as the yield earned was favorable to other investment alternatives.  Deposits, including repurchase agreements, at $3.6 billion increased $81.9 million, or an annualized 9.4%, from December 31, 2018 and $56.1 million, or 1.6%, from March 31, 2018.

Shareholders’ equity at March 31, 2019 was $577.4 million, a 9.5% annualized increase from the $564.1 million at December 31, 2018 and a 7.4% increase from the $537.5 million at March 31, 2018.  CTBI’s annualized dividend yield to shareholders as of March 31, 2019 was 3.51%.

Asset Quality

CTBI’s total nonperforming loans, not including performing troubled debt restructurings, were $25.4 million, or 0.80% of total loans, at March 31, 2019 compared to $22.1 million, or 0.69% of total loans, at December 31, 2018 and $25.9 million, or 0.83% of total loans, at March 31, 2018.  Accruing loans 90+ days past due increased $2.8 million from prior quarter and $4.0 million from March 31, 2018.  The increase in accruing loans 90+ days past due is primarily attributable to two commercial credit relationships which are income-producing, well-collateralized, and in the process of collection.  Nonaccrual loans increased $0.5 million during the quarter but decreased $4.5 million from December 31, 2018.  Accruing loans 30-89 days past due at $21.8 million was a decrease of $0.9 million from prior quarter but an increase of $4.9 million from March 31, 2018.  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, 2019 totaled $50.4 million, compared to $46.4 million at December 31, 2018 and $48.2 million at March 31, 2018.

Our level of foreclosed properties at $25.0 million at March 31, 2019 was a $2.3 million decrease from the $27.3 million at December 31, 2018 and a $7.0 million decrease from the $32.0 million at March 31, 2018.  Sales of foreclosed properties for the quarter ended March 31, 2019 totaled $2.7 million while new foreclosed properties totaled $0.9 million.  At March 31, 2019, the book value of properties under contracts to sell was $3.0 million; however, the closings had not occurred at quarter-end.  Write-downs on foreclosed properties for the first quarter 2019 totaled $0.4 million compared to $0.5 million in the fourth quarter 2018 and $0.5 million in the first quarter 2018.  As disclosed in our Form 10-K for the year ended December 31, 2018, CTBI is required to dispose of any foreclosed property that has not been sold within 10 years.  As of December 31, 2018, foreclosed property with a total book value of $2.4 million had been held by us for at least nine years.  During the first quarter 2019, $1.0 million of this total was disposed of with a gain of $0.1 million.  At March 31, 2019, foreclosed property with a total book value of $1.3 million had been held by us for at least nine years.

Net loan charge-offs for the quarter ended March 31, 2019 were $1.1 million, or 0.14% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the fourth quarter 2018 and $1.9 million, or 0.25%, for the first quarter 2018.  Of the net charge-offs for the quarter, $0.2 million were in commercial loans, $0.7 million were in indirect auto loans, $0.1 million were in residential loans, and $0.1 million were in consumer direct loans.  Allocations to loan loss reserves were $0.2 million for the quarter ended March 31, 2019 compared to $1.7 million for the quarter ended December 31, 2018 and $0.9 million for the quarter ended March 31, 2018.  Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at March 31, 2019 was 137.8% compared to 162.7% at December 31, 2018 and 135.6% at March 31, 2018.  Our loan loss reserve as a percentage of total loans outstanding at March 31, 2019 was 1.10%, down from the 1.12% at December 31, 2018 and 1.13% at March 31, 2018.  The decrease in our provision for loan losses was driven by the improvement in our twelve quarter performance metrics used in determining the allowance for loan losses, along with the 14 basis points in annualized net charge-offs for the quarter.  The twelve quarter performance metrics that have contributed to the majority of the reduction in required reserves include:  (1) historical losses, (2) delinquency trends, and (3) interest rate risks associated with rising interest rates.

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 $4.3 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.


Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
 March 31, 2019  
(in thousands except per share data and # of employees)
  
                   
   
Three
    
Three
    
Three
  
   
Months
    
Months
    
Months
  
   
Ended
    
Ended
    
Ended
  
   
March 31, 2019
    
December 31, 2018
    
March 31, 2018
  
Interest income
  
$
45,889
    
$
45,238
    
$
40,580
  
Interest expense
    
9,906
      
8,958
      
5,989
  
Net interest income
    
35,983
      
36,280
      
34,591
  
Loan loss provision
    
190
      
1,749
      
946
  
                         
Gains on sales of loans
    
330
      
386
      
279
  
Deposit service charges
    
6,120
      
6,602
      
6,221
  
Trust revenue
    
2,575
      
2,663
      
2,958
  
Loan related fees
    
573
      
644
      
1,144
  
Securities gains (losses)
    
356
      
203
      
(288
)
Other noninterest income
    
2,216
      
1,741
      
2,996
  
Total noninterest income
    
12,170
      
12,239
      
13,310
  
                         
Personnel expense
    
15,959
      
15,257
      
15,619
  
Occupancy and equipment
    
2,790
      
2,698
      
2,833
  
Data processing expense
    
1,763
      
1,715
      
1,636
  
FDIC insurance premiums
    
177
      
264
      
314
  
Other noninterest expense
    
8,394
      
8,238
      
8,279
  
Total noninterest expense
    
29,083
      
28,172
      
28,681
  
                         
Net income before taxes
    
18,880
      
18,598
      
18,274
  
Income taxes
    
3,941
      
2,889
      
2,460
  
Net income
  
$
14,939
    
$
15,709
    
$
15,814
  
                         
Memo: TEQ interest income
  
$
46,109
    
$
45,462
    
$
40,804
  
                         
Average shares outstanding
    
17,712
      
17,696
      
17,671
  
Diluted average shares outstanding
    
17,723
      
17,714
      
17,687
  
Basic earnings per share
  
$
0.84
    
$
0.89
    
$
0.89
  
Diluted earnings per share
  
$
0.84
    
$
0.89
    
$
0.89
  
Dividends per share
  
$
0.36
    
$
0.36
    
$
0.33
  
                         
Average balances:
                        
Loans
  
$
3,195,348
    
$
3,191,980
    
$
3,111,142
  
Earning assets
    
3,966,483
      
3,937,106
      
3,870,242
  
Total assets
    
4,252,544
      
4,217,158
      
4,144,131
  
Deposits, including repurchase agreements
    
3,555,931
      
3,555,292
      
3,511,286
  
Interest bearing liabilities
    
2,813,957
      
2,794,216
      
2,782,455
  
Shareholders' equity
    
572,555
      
558,632
      
534,278
  
                         
Performance ratios:
                        
Return on average assets
    
1.42
%
    
1.48
%
    
1.55
%
Return on average equity
    
10.58
%
    
11.16
%
    
12.00
%
Yield on average earning assets (tax equivalent)
    
4.71
%
    
4.58
%
    
4.28
%
Cost of interest bearing funds (tax equivalent)
    
1.43
%
    
1.27
%
    
0.87
%
Net interest margin (tax equivalent)
    
3.70
%
    
3.68
%
    
3.65
%
Efficiency ratio (tax equivalent)
    
60.57
%
    
58.04
%
    
59.24
%
                         
Loan charge-offs
  
$
2,055
    
$
2,667
    
$
2,977
  
Recoveries
    
(961
)
    
(1,035
)
    
(1,069
)
Net charge-offs
  
$
1,094
    
$
1,632
    
$
1,908
  
                         
Market Price:
                        
High
  
$
43.75
    
$
46.86
    
$
50.70
  
Low
  
$
38.03
    
$
35.70
    
$
43.00
  
Close
  
$
41.06
    
$
39.61
    
$
45.20
  


Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
 March 31, 2019  
(in thousands except per share data and # of employees)
  
                   
   
As of
    
As of
    
As of
  
   
March 31, 2019
    
December 31, 2018
    
March 31, 2018
  
Assets:
                  
Loans
  
$
3,189,732
    
$
3,208,638
    
$
3,118,241
  
Loan loss reserve
    
(35,004
)
    
(35,908
)
    
(35,189
)
Net loans
    
3,154,728
      
3,172,730
      
3,083,052
  
Loans held for sale
    
13,649
      
2,461
      
1,145
  
Securities AFS
    
599,299
      
593,746
      
604,890
  
Securities HTM
    
619
      
649
      
659
  
Equity securities at fair value
    
1,528
      
1,173
      
-
  
Other equity investments
    
17,148
      
19,600
      
22,814
  
Other earning assets
    
207,876
      
82,585
      
159,608
  
Cash and due from banks
    
49,302
      
64,632
      
44,792
  
Premises and equipment
    
44,554
      
45,291
      
45,860
  
Right of use asset
    
15,128
      
-
      
-
  
Goodwill and core deposit intangible
    
65,490
      
65,490
      
65,490
  
Other assets
    
143,972
      
153,259
      
167,427
  
Total Assets
  
$
4,313,293
    
$
4,201,616
    
$
4,195,737
  
                         
Liabilities and Equity:
                        
NOW accounts
  
$
51,656
    
$
56,964
    
$
55,034
  
Savings deposits
    
1,366,093
      
1,294,037
      
1,131,371
  
CD's >=$100,000
    
578,043
      
598,125
      
705,978
  
Other time deposits
    
545,315
      
553,508
      
601,942
  
Total interest bearing deposits
    
2,541,107
      
2,502,634
      
2,494,325
  
Noninterest bearing deposits
    
841,996
      
803,316
      
825,345
  
Total deposits
    
3,383,103
      
3,305,950
      
3,319,670
  
Repurchase agreements
    
237,506
      
232,712
      
244,822
  
Other interest bearing liabilities
    
61,572
      
60,957
      
67,241
  
Lease liability
    
15,743
      
-
      
-
  
Other noninterest bearing liabilities
    
37,990
      
37,847
      
26,516
  
Total liabilities
    
3,735,914
      
3,637,466
      
3,658,248
  
Shareholders' equity
    
577,379
      
564,150
      
537,489
  
Total Liabilities and Equity
  
$
4,313,293
    
$
4,201,616
    
$
4,195,737
  
                         
Ending shares outstanding
    
17,768
      
17,733
      
17,721
  
Memo: Market value of HTM securities
  
$
619
    
$
649
    
$
660
  
                         
30 - 89 days past due loans
  
$
21,792
    
$
22,682
    
$
16,914
  
90 days past due loans
    
13,016
      
10,198
      
9,027
  
Nonaccrual loans
    
12,378
      
11,867
      
16,923
  
Restructured loans (excluding 90 days past due and nonaccrual)
    
57,553
      
56,328
      
56,119
  
Foreclosed properties
    
24,970
      
27,273
      
32,004
  
Other repossessed assets
            
42
      
118
  
                         
Common equity Tier 1 capital
    
16.52
%
    
16.27
%
    
15.73
%
Tier 1 leverage ratio
    
13.62
%
    
13.51
%
    
13.14
%
Tier 1 risk-based capital ratio
    
18.37
%
    
18.12
%
    
17.62
%
Total risk based capital ratio
    
19.51
%
    
19.29
%
    
18.78
%
Tangible equity to tangible assets ratio
    
12.05
%
    
12.06
%
    
11.43
%
FTE employees
    
988
      
978
      
986