8-K
COMMUNITY TRUST BANCORP INC /KY/ (CTBI)
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)
September 30, 2020
Commission file number 001-31220
Community Trust Bancorp, Inc.
(Exact name of registrant as specified in its charter)
| Kentucky | 61-0979818 |
|---|---|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| P.O. Box 2947<br><br> <br>346 North Mayo Trail<br><br> <br>Pikeville,<br> Kentucky | 41502 |
| (Address of principal executive offices) | (Zip code) |
| (606)<br> 432-1414<br><br> <br>(Registrant’s telephone number) | |
| Securities registered pursuant to Section 12(b) of the Act: | |
| Common Stock<br><br> <br>(Title of class) | |
| CTBI | The Nasdaq Global Select Market |
| --- | --- |
| (Trading symbol) | (Name of exchange on which registered) |
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 14a-12 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 7.01 – Regulation FD Disclosure
Community Trust Bancorp, Inc. (CTBI) is presenting virtually at the Piper Sandler East Coast Financial Services Conference being held Monday and Tuesday, November 9-10, 2020. A presentation is being provided that is accompanied by a series of slides. These slides include information relating to CTBI’s current and historical financial results, as well as future performance goals. A copy of these slides is being furnished to the Securities and Exchange Commission pursuant to 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 | Piper Sandler East Coast Financial Services Conference Investor Presentation |
|---|
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. | ||
|---|---|---|
| By: | ||
| Date: | November 6, 2020 | /s/ Jean R. Hale |
| Jean R. Hale | ||
| Chairman, President and Chief Executive Officer |
Exhibit Index
| Exhibit No. | Description |
|---|---|
| 99.1 | Piper Sandler East Coast Financial Services Conference Investor Presentation |
Exhibit 99.1
Piper Sandler East Coast Financial Services ConferencePresentation
Cautionary Statement Information provided herein by CTBI contains “forward-looking” information. CTBI cautions that any forward-looking statements made are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements. Please refer to CTBI’s 2019 Annual Report on Form 10-K, Cautionary Statement Regarding Forward Looking Statements for additional information. 2
Key Metrics Total Assets $5.0 billionMarket Capitalization $503.1 millionCash Dividend Yield 5.45%P/E Ratio 8.6xPrice to Book Value 0.8xPrice to Tangible Book Value 0.9xTangible Common Equity Ratio 11.68%Competitive Position2nd largest Kentucky domiciled bank holding company 2nd in Kentucky in deposit market share of all Kentucky domiciled FDIC insured institutions 6th largest bank in Kentucky in terms of deposit market share of all FDIC insured institutions Financial data as of September 30, 2020 3
Corporate History 1903 Pikeville National bank formed1987-2005 Acquired 14 banks and purchased 17 branch locations1997 Changed name to Community Trust Bancorp, Inc.2010 Acquired LaFollette First National CorporationPresently Two operational subsidiaries~ Community Trust Bank, Inc. and Community Trust and Investment Company 4
Our Banking Franchise Serving customers in 79 branch locations in 35 counties throughout Kentucky, Tennessee, and West Virginia, including 5 trust offices in Kentucky and Tennessee
Our Banking Franchise Central Region Eastern Region Northeastern RegionLoans - $737 million Loans - $1.0 billion Loans - $424 millionDeposits - $1.1 billion Deposits - $1.7 billion Deposits - $571 million• Danville • Floyd/Knott/Johnson • Advantage Valley• Lexington • Hazard • Ashland• Mt. Sterling • Pikeville • Flemingsburg• Richmond • Tug Valley • Summersville• Versailles • Whitesburg• WinchesterSouth Central Region Indirect LendingLoans - $756 million Loans - $616 million Deposits - $843 million• Campbellsville CTIC• LaFollette Assets Under Management - $2.5 billion (including $0.9 billion CTB)• Middlesboro Revenues - $14.4 million annualized• Mt. Vernon • Williamsburg • Ashland • LaFollette • Lexington • Pikeville • Versailles 3 Financial data as of September 30, 2020 6
Trust Assets Under Management & Trust Revenue Includes CTB portfolio Assets in billionsRevenue in millions 7 Sept ’20 Revenue annualized
Executive Management Team Banking Yrs. w/Name Position Experience CTBIJean R. Hale Chairman, President and CEO 51 years 51Mark A. Gooch CTB President and CEO 39 years 39Andy Waters CTIC President and CEO 33 years 16Kevin J. Stumbo EVP/Chief Financial Officer 33 years 25Steven E. Jameson EVP/Risk Manager 35 years 16James J. Gartner EVP/Chief Credit Officer 52 years (17 at OCC) 18James B. Draughn EVP/Operations 27 years 27Larry W. Jones EVP/C KY President 52 years 18Richard W. Newsom EVP/E KY President 37 years 37Ricky Sparkman EVP/SC KY/TN President 35 years 26D. Andrew Jones EVP/NE KY/WV President 33 years 33C. Wayne Hancock EVP/Senior Staff Attorney 12 years 12 8
Operational Philosophy Traditional community banking business modelExecutive management and board of director commitment to strong corporate governanceDecentralized decision making and centralized operations and risk managementStrong loan portfolio risk management processSpecialized product offeringsMaintain a strong tangible equity positionOrganic growth expectations combined with de novo branching and acquisitionConsistent long-term performance 9
Consistent Financial Performance YTD 2020 2019 2018 2017 2016 EPS $2.46 $3.64 $3.35 $2.92 $2.70ROAA 1.23% 1.49% 1.41% 1.27% 1.21%ROAE 9.26% 10.84% 10.83% 9.93% 9.58%Net Int. Margin 3.37% 3.60% 3.66% 3.67% 3.70%Efficiency Ratio 56.72% 60.70% 60.17% 58.66% 58.54%Nonperforming Loans 0.84% 1.03% 0.69% 0.91% 0.93%Net Charge-offs 0.20% 0.18% 0.20% 0.24% 0.28%% of Average Assets:Noninterest Income 1.07% 1.14% 1.24% 1.18% 1.22%Noninterest Expense 2.41% 2.73% 2.80% 2.70% 2.73% 10 All information is for the year ended December 31 except YTD 2020 which is for the nine months ended September 30.
Earnings Review
Earnings Per Share EPS decreased 10.2% from September 2019 to September 20202020 EPS goal - $3.23 to $3.29 per share 12
Net Income Net income decreased 10.0% from September 2019 to September 20202020 goal for net income - $57.5 to $58.6 million (in millions) 13
Revenues Revenues increased 4.4% from September 2019 to September 20202020 goal for revenues - $197.8 to $201.8 million (in millions) 14
Noninterest Incomeas a % of Total Revenue YTD noninterest income increased 6.8% year over year for the nine months ended September 302020 goal for noninterest revenue – 24.0% to 26.0% of total revenue (in millions) 15 Sept ’20 annualized
Net Interest Revenue YTD net interest revenue increased by 3.6% year over year for the nine months ended September 30Net interest margin decreased 25 basis pointsAverage earning assets increased $442.4 million, or 11.0% (in millions) 16 Sept ’20 annualized
Net Interest Margin Pressure on the margin1-year cumulative gap position at 9/30/20 – (8.74)% Peer data obtained from the Federal Reserve Bank Holding Company Performance Report as of 6/30/2020 for bank holding companies with consolidated assets of $3 billion to $10 billion. % of assets repricingWithin 30 days 31.11%% of liabilities repricing Within 30 days 47.99%Within 90 days 56.90%Within 180 days 61.35% 17
Net Noninterest Expenseas a % of Average Earning Assets Peer data obtained from the Federal Reserve Bank Holding Company Performance Report as of 6/30/2020 for bank holding companies with consolidated assets of $3 billion to $10 billion. (in millions) 18 Noninterest Expense & Efficiency Ratio (in millions) Sept ’20 annualized
Return on Average Assets Peer data obtained from the Federal Reserve Bank Holding Company Performance Report as of 6/30/2020 for bank holding companies with consolidated assets of $3 billion to $10 billion. 19
Balance Sheet Review
Total Assets Total assets at 9/30/20 increased $654.4 million, or an annualized 20.0%, from 12/31/19Loans increased $309.2 million or an annualized 12.7%Investment portfolio increased $348.7 million or an annualized 77.6%Deposits increased $629.5 million or an annualized 23.1%2020 goal for total assets - $4.39 to $4.66 billion (in billions) 21
Total Loans Loans increased $309.2 million, or an annualized 12.7%, from 12/31/192020 goal for total loans - $3.33 to $3.47 billion (in billions) 22 Loan Portfolio Mix September 30, 2020 Loan Rate Mix
CARES Act Loan Deferral Status 23 Deferrals One Time Two Times Three Times Resumed Payments (dollars in thousands) Number Amount Number Amount Number Amount Number Amount Commercial 829 $620,509 125 $203,431 4 $1,365 617 $435,296 Mortgage 500 59,660 59 7,026 1 27 290 37,778 Consumer 1,945 35,629 5 81 0 0 1,646 31,171 3,274 $715,798 189 $210,538 5 $1,392 2,553 $504,245
PPP Loans 24 As of September 30, 2020, we have closed 2,962 PPP loans totaling $277.0 million 2,817 were under $350 thousand132 were between $350 thousand and $2.0 million13 were over $2.0 million
Concentrations of Creditas a % of Total Loans September 30, 2020 25 There were no nonperforming loans in any of these loan categories as of September 30, 2020.
Indirect Lending Sept ‘20 annualized (in millions) 26
Net Charge-offsas a % of Average Loans Peer data obtained from the Federal Reserve Bank Holding Company Performance Report as of 6/30/2020 for bank holding companies with consolidated assets of $3 billion to $10 billion. September 30, 2020 27 Nonperforming Loansas a % of Total Loans
Nonperforming Assetsas a % of Total Assets $15.6 million in other real estate owned 28 Loan Loss Reserveas a % of Net Loans Peer data obtained from the Federal Reserve Bank Holding Company Performance Report as of 6/30/2020 for bank holding companies with consolidated assets of $3 billion to $10 billion. Loan loss reserve excluding PPP loans - 1.46%
29 Allowance for Credit Losses 4Q19 Probable Incurred Losses January 1, 2020 CECL Adoption March 31, 2020 CECL September 30, 2020 CECL (dollars in thousands) Amount % of Portfolio Amount % of Portfolio Amount % of Portfolio Amount % of Portfolio Allowance for loan and lease losses transitioned to allowance for credit losses: Commercial $21,683 1.30% $21,680 1.30% $30,030 1.79% $27,792 1.46% Residential mortgage 5,501 0.61% 7,319 0.81% 7,850 0.86% 8,695 0.98% Consumer direct 1,711 1.16% 1,671 1.13% 2,200 1.51% 1,919 1.25% Consumer indirect 6,201 1.18% 7,467 1.42% 9,365 1.69% 9,580 1.56% Total allowance for loan and lease losses/allowance for credit losses $35,096 1.08% 38,137 1.17% $49,445 1.50% $47,986 1.35% Reserve for unfunded lending commitments $274 $386 $404 $494
Total Other Real Estate Owned Sales of foreclosed properties for the nine months ended 9/30/20 totaled $5.0 millionNew bookings in the first nine months of 2020 totaled $2.1 millionProperties under contract to sell at September 30, 2020 totaled $3.1 million (in millions) 30
Total Depositsincluding Repurchase Agreements 2020 goal for total deposits including repurchase agreements - $3.69 to $3.84 billion (in billions) 31 Total Depositsincluding Repurchase Agreements September 30, 2020
Our Hoops CD product has been offered for over 20 years100 basis point increase in rate in 1996, 1998, and 2012 with the University of Kentucky’s NCAA Basketball Championships$216 million in Hoops CDs as of 9/30/20 12 Month Certificate of Deposit: April 10th through maturity, rate paid is adjusted by 1 basis point for each University of Kentucky win; bonus 100 basis points added to rate for National Championship win. 32
Shareholder Value
Dividends Per Share Dividend payout ratio at September 30, 2020 was 46.53%Desired level between 40% and 50%September 30, 2020 cash dividend yield was 5.45%Cash dividend increased to $0.385 per share effective October 1, 2020, an increase of 1.32% 34 *2020 is projected DPS
Shareholders’ Equity Shareholders’ equity has increased 29.0% during the past five years6.5% compound growth rate for the past five years2020 goal for shareholders’ equity - $632.1 to $657.9 million (in millions) 35 6.5%
Book Value Per Share Tangible Common Equity/Assets 36
Total Market Capitalization Peer data obtained from SNL Financial; peer group consists of publicly traded regional bank holding companies with comparative assets, as defined in our Proxy Statement. (in millions) 37 Price to Tangible Book Value 2015 2016 2017 2018 2019 9/30/20CTBI 1.50x 2.01x 1.79x 1.41x 1.51x 0.87xPeer 1.71x 1.83x 2.17x 1.96x 1.85x 1.48x All data is as of year-end except 2020 which is as of September 30, 2020.
5 Year Cumulative Total ReturnComparison of CTBI, NASDAQ Stock Market (U.S.), and NASDAQ Bank Stocks An investment in CTBI stock on December 31, 2014 would have underperformed the NASDAQ Stock Market (U.S.) and the NASDAQ Bank Stocks Index at December 31, 2019. 38
5 Year Cumulative Total ReturnComparison of CTBI, NASDAQ Stock Market (U.S.), and NASDAQ Bank Stocks An investment in CTBI stock on December 31, 2014 would have underperformed the NASDAQ Stock Market (U.S.) and the NASDAQ Bank Stocks Index at December 31, 2019. 38
Comparison to Russell 2000 Indexof Small Cap Companies 3-, 5-, and 10-year total returns annualized Return to Investors 39 September 30, 2020
Core Value Long-Term Investment 12 stock splits and 10 stock dividends40 years of consecutive increases in cash dividends5-year compound growth rate of cash dividends 4.6%Stock included in the NASDAQ Global Select Market, NASDAQ Dividend Achievers Index, and NASDAQ Bank Stock IndexCTBI shareholders include186 institutional investors (including CTIC – 3.4%) hold 9.7 million shares (50.7%)292 mutual funds hold 5.0 million shares (28.2%) Data as of September 30, 2020 40
Key Strategic Initiatives
Operational Priorities Build core earnings capacityQuality loan growthLow cost deposit growthMaintain net interest margin Operational efficiencyExpense controlNoninterest revenue growthCompliance managementIncrease noninterest incomeWealth managementBrokerageLife insuranceContinuing focus on improving asset quality Liquidation of other real estate owned 42
CTBI’s Franchise Value History of solid investor returnsHistorically strong capital positionInvestor focused dividend policyDividend Achievers IndexConsistent financial performanceCommunity banking strategyEconomic diversity in the markets we serveStrong experienced management team and over 1,000 dedicated employeesOur shareholders 43
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