CTBI: Community Trust Bancorp, Inc. (NASDAQ-CTBI)

Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the 3rd-quarter 2k19 of $15.30 million, or $0.860 for each basic share, contrast to $18.30 million, or $1.030 for each basic share, earned during the 2nd-quarter 2k19 and $16.10 million, or $0.910 for each basic share, earned during the 3rd-quarter 2k18. Earnings for the nine months finished September 30, 2k19 were $48.50 million, or $2.740 for each basic share, contrast to $43.50 million, or $2.460 for each basic share, earned during the nine months finished September 30, 2k18.

3rd Quarter 2k19 Highlights

  • Net interest income for the quarter of $36.50 million was $0.50 million, or 1.40 percent, above previous quarter and $0.40 million, or 1.10 percent, above 3rd-quarter 2k18.
  • Provision for loan losses for the quarter finished September 30, 2k19 reduced $0.30 million from previous quarter and $0.30 million from previous year similar quarter.
  • Our loan portfolio raised $22.60 million, an annualized 2.80 percent, during the quarter and $36.90 million, or 1.20 percent, from September 30, 2k18.
  • Net loan charge-offs for the quarter finished September 30, 2k19 were $1.40 million, or 0.180 percent of average loans annualized, contrast to $1.60 million, or 0.20 percent, practiced for the 2nd-quarter 2k19 and $1.50 million, or 0.190 percent, for the 3rd-quarter 2k18.
  • Nonperforming loans at $31.40 million raised $7.40 million from June 30, 2k19 and $10.40 million from September 30, 2k18. While both the 30-89 days past due and nonaccrual loan categories reduced for the quarter, our loans 90+ days past due raised $9.30 million from previous quarter and $12.30 million from previous year similar quarter. Nonperforming assets at $51.30 million raised $4.70 million from June 30, 2k19 and $0.50 million from September 30, 2k18.
  • Deposits, counting repurchase agreements, reduced $52.10 million, an annualized 5.60 percent, during the quarter but raised $93.70 million, or 2.70 percent, from September 30, 2k18.
  • Noninterest income for the quarter finished September 30, 2k19 of $12.40 million was a $0.10 million incline over previous quarter, but a decline of $0.30 million, or 2.20 percent, from previous year similar quarter.
  • Noninterest cost for the quarter finished September 30, 2k19 of $29.90 million reduced $0.10 million, or 0.50 percent, from previous quarter, but raised $1.80 million, or 6.30 percent, from previous year similar quarter.
  • The variance in income tax cost from prior quarter is a result of the $3.60 million reversal of the valuation allowance on our deferred tax asset for CTBI’s net operating losses, as a result of the enactment of Kentucky HB458, which was talked about in further detail in our previous quarter filings.

Net Interest Income

Net interest income for the quarter of $36.50 million was a boost of $0.50 million, or 1.40 percent, from 2nd-quarter 2k19 and $0.40 million from 3rd-quarter 2k18. Our net interest margin at 3.590 percent raised 2 basis points from previous quarter but declined 9 basis points from prior year similar quarter, while our average earning assets reduced $7.90 million but raised $143.20 million, respectively, during those similar durations. Our yield on average earning assets reduced 2 basis points from prior quarter but raised 17 basis points from prior year similar quarter, and our cost of funds reduced 5 basis points from prior quarter but raised 39 basis points from prior year similar quarter. Our ratio of average loans to deposits, counting repurchase agreements, was 88.10 percent for the quarter finished September 30, 2k19 contrast to 87.30 percent for the quarter finished June 30, 2k19 and 89.50 percent for the quarter finished September 30, 2k18. Net interest income for the nine months finished September 30, 2k19 raised $2.70 million, or 2.50 percent, from September 30, 2k18.

Noninterest Income

Noninterest income for the quarter finished September 30, 2k19 of $12.40 million was a $0.10 million, or 1.10 percent, incline over prior quarter, but a decline of $0.30 million, or 2.20 percent, from previous year similar quarter. A $0.30 million incline in deposit related fees from prior quarter was partially offset by a $0.20 million negative variance in net securities gains. The decline in noninterest income from prior year similar quarter included a $0.40 million decline in loan related fees and $0.10 million decline in trust revenue, partially offset by a $0.20 million incline in deposit related fees. Noninterest income for the nine months finished September 30, 2k19 was a $2.90 million, or 7.30 percent, decline from previous year. The decline in noninterest income from prior year was mainly the result of a $1.50 million decline in loan related fees, a $0.60 million decline in trust revenue, and a $2.30 million decline in other operating revenue, partially offset by a $0.90 million incline in securities gains and a $0.40 million incline in gains on sales of loans. The decline in loan related fees is because of a decline in the fair market value of our mortgage servicing rights. Other operating revenue for the nine months finished September 30, 2k18 included a $1.00 million gain on the sale of a partnership interest resulting from a low income housing tax credit recapture and $1.20 million in bank owned life insurance revenue as a result of death benefits.

Noninterest Cost

Noninterest cost for the quarter finished September 30, 2k19 of $29.90 million reduced $0.10 million, or 0.50 percent, from previous quarter, but raised $1.80 million, or 6.30 percent, from previous year similar quarter. Noninterest cost was influenced quarter over quarter and year over year by a $1.50 million incline in net other real estate owned cost. This incline was offset by a $1.10 million decline in personnel cost and a $0.60 million decline in FDIC insurance quarter over quarter. Year over year, the incline was also influenced by a $0.30 million incline in data processing cost, offset by a $0.60 million decline in FDIC insurance and a $0.20 million decline in personnel cost. The decline in personnel cost was the result of a tier adjustment to our performance-based bonus accrual. CTBI’s projected performance for 2k19 as measured against its performance based incentive, revealed in its January 30, 2k19 SEC Form 8-K, is expected to be above the minimum acceptable performance level required for an incentive payment but below the target. Noninterest cost for the nine months finished September 30, 2k19 was $89.00 million, a $0.20 million, or 0.30 percent, decline from the 1st-nine months of 2k18.

Balance Sheet Review

CTBI’s total assets at $4.30 billion reduced $39.60 million, or 3.60 percent annualized, from June 30, 2k19 but raised $163.80 million, or 3.90 percent, from September 30, 2k18. Loans outstanding at September 30, 2k19 were $3.20 billion, a boost of $22.60 million, an annualized 2.80 percent, from June 30, 2k19 and $36.90 million, or 1.20 percent, from September 30, 2k18. We practiced inclines during the quarter of $7.90 million in the commercial loan portfolio, $6.70 million in the residential loan portfolio, $3.60 million in the indirect consumer loan portfolio, and $4.40 million in the direct consumer loan portfolio. CTBI’s investment portfolio raised $58.30 million, or an annualized 38.90 percent, from June 30, 2k19 and $82.40 million, or 14.50 percent, from September 30, 2k18. Deposits in other banks reduced $115.70 million from previous quarter but raised $38.30 million from prior year similar quarter. Deposits, counting repurchase agreements, at $3.60 billion reduced $52.10 million, or an annualized 5.60 percent, from June 30, 2k19 but raised $93.70 million, or 2.70 percent, from September 30, 2k18.

Shareholders’ equity at September 30, 2k19 was $605.50 million, a 7.20 percent annualized incline from the $594.70 million at June 30, 2k19 and a 10.00 percent incline from the $550.30 million at September 30, 2k18. CTBI’s annualized dividend yield to shareholders as of September 30, 2k19 was 3.570 percent.

Asset Quality

CTBI’s total nonperforming loans, not counting performing troubled debt restructurings, were $31.40 million, or 0.980 percent of total loans, at September 30, 2k19 contrast to $24.00 million, or 0.750 percent of total loans, at June 30, 2k19 and $21.00 million, or 0.660 percent of total loans, at September 30, 2k18. Accruing loans 90+ days past due raised $9.30 million from prior quarter and $12.30 million from September 30, 2k18. The incline in 90+ days past due loans included $7.30 million for two loan relationships which are in the process of collection. We do not anticipate a loss on these credits. Nonaccrual loans reduced $1.80 million during the quarter and $1.90 million from September 30, 2k18. Accruing loans 30-89 days past due at $22.90 million was a decline of $7.70 million from prior quarter and $5.20 million from September 30, 2k18. Our loan portfolio administration processes focus on the immediate identification, administration, 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 innoteworthydelays, at September 30, 2k19 totalled $56.30 million, contrast to $54.60 million at June 30, 2k19 and $46.90 million at September 30, 2k18.

Our level of foreclosed properties at $19.80 million at September 30, 2k19 was a $2.70 million decline from the $22.50 million at June 30, 2k19 and a $9.80 million decline from the $29.70 million at September 30, 2k18. Sales of foreclosed properties for the quarter finished September 30, 2k19 totalled $1.20 million while new foreclosed properties totalled $0.60 million. At September 30, 2k19, the book value of properties under contracts to sell was $2.20 million; however, the closings had not occurred at quarter-end. Write-downs on foreclosed properties for the 3rd-quarter 2k19 totalled $2.20 million contrast to $0.70 million in the 2nd-quarter 2k19 and $0.70 million in the 3rd-quarter 2k18. The raised in write-downs for the quarter included a $1.70 million write-down related to one commercial property. As revealed in our Form 10-K for the year finished December 31, 2k18, CTBI is required to dispose of any foreclosed property that has not been sold within 10 years. As of December 31, 2k18, foreclosed property with a total book value of $2.40 million had been held by us for at least nine years. During the 1st-nine months of 2k19, we disposed of all of these properties. At September 30, 2k19, we held no foreclosed property for nine years or more.

Net loan charge-offs for the quarter finished September 30, 2k19 were $1.40 million, or 0.180 percent of average loans annualized, contrast to $1.60 million, or 0.20 percent, practiced for the 2nd-quarter 2k19 and $1.50 million, or 0.190 percent, for the 3rd-quarter 2k18. Of the net charge-offs for the quarter, $0.50 million were in commercial loans, $0.40 million were in indirect consumer loans, $0.40 million were in residential loans, and $0.10 million were in direct consumer loans. Allocations to loan loss reserves were $1.30 million for the quarter finished September 30, 2k19 contrast to $1.60 million for the quarter finished June 30, 2k19 and $1.50 million for the quarter finished September 30, 2k18. Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at September 30, 2k19 was 110.80 percent contrast to 146.00 percent at June 30, 2k19 and 170.10 percent at September 30, 2k18. Our loan loss reserve as a percentage of total loans outstanding at September 30, 2k19 was 1.080 percent, down from the 1.10 percent at June 30, 2k19 and 1.130 percent at September 30, 2k18.