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)
June 30, 2022
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 2.02 – Results of Operations and Financial Condition
On July 20, 2022, Community Trust Bancorp, Inc. issued a press release announcing its financial results for the quarter and six months ended June 30, 2022. A copy of this press release is being furnished to the Securities and Exchange Commission pursuant to Item 2.02 – Results of Operations and Financial Condition and 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 | Press Release dated July 20, 2022 |
|---|
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. | ||
|---|---|---|
| Date: | July 20, 2022 | By: |
| /s/ Mark A. Gooch | ||
| Mark A. Gooch | ||
| Vice Chairman, President, and Chief Executive Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
July 20, 2022
FOR ADDITIONAL INFORMATION, PLEASE CONTACT MARK A. GOOCH, VICE CHAIRMAN, PRESIDENT, AND CEO, COMMUNITY TRUST BANCORP, INC. AT (606) 437-3229
Pikeville, Kentucky:
COMMUNITY TRUST BANCORP, INC. REPORTS EARNINGS FOR THE 2^ND^ QUARTER 2022
| Earnings Summary | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands except per share data) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | YTD<br><br> <br>2022 | YTD<br><br> <br>2021 | ||||||||||
| Net income | $ | 20,271 | $ | 19,728 | $ | 23,931 | $ | 39,999 | $ | 47,549 | |||||
| Earnings per share | $ | 1.14 | $ | 1.11 | $ | 1.35 | $ | 2.24 | $ | 2.67 | |||||
| Earnings per share - diluted | $ | 1.14 | $ | 1.11 | $ | 1.34 | $ | 2.24 | $ | 2.67 | |||||
| Return on average assets | 1.49 | % | 1.48 | % | 1.76 | % | 1.48 | % | 1.80 | % | |||||
| Return on average equity | 12.75 | % | 11.77 | % | 14.20 | % | 12.25 | % | 14.34 | % | |||||
| Efficiency ratio | 53.77 | % | 53.25 | % | 53.17 | % | 53.51 | % | 51.76 | % | |||||
| Tangible common equity | 10.53 | % | 10.93 | % | 11.39 | % | |||||||||
| Dividends declared per share | $ | 0.400 | $ | 0.400 | $ | 0.385 | $ | 0.800 | $ | 0.770 | |||||
| Book value per share | $ | 35.32 | $ | 36.53 | $ | 38.36 | |||||||||
| Weighted average shares | 17,835 | 17,820 | 17,784 | 17,827 | 17,779 | ||||||||||
| Weighted average shares - diluted | 17,843 | 17,832 | 17,800 | 17,838 | 17,794 |
Community Trust Bancorp, Inc. (NASDAQ-CTBI) achieved earnings for the second quarter 2022 of $20.3 million, or $1.14 per basic share, compared to $19.7 million, or $1.11 per basic share, earned during the first quarter 2022 and $23.9 million, or $1.35 per basic share, earned during the second quarter 2021. Total revenue was $0.3 million above prior quarter but $0.2 million below prior year same quarter. Net interest revenue increased $0.8 million compared to prior quarter and prior year same quarter; however, noninterest income decreased $0.5 million compared to prior quarter and $1.0 million compared to prior year same quarter. The decrease in noninterest income quarter over quarter was primarily the result of a variance in the valuation of our mortgage servicing rights, while the decrease year over year was primarily the result of a decrease in gains on sales of loans. Provision for credit losses for the quarter was $0.1 million, compared to provision of $0.9 million for the quarter ended March 31, 2022 and a recovery of provision of $4.3 million for the second quarter 2022. Noninterest expense increased $0.6 million compared to prior quarter and $0.5 million compared to prior year same quarter. Net income for the six months ended June 30, 2022 was below prior year by $7.5 million, primarily due to the $6.8 million recovery of provision for credit losses taken in 2021.
2^nd^ Quarter 2022 Highlights
| ❖ | Net interest income for the quarter of $40.8 million was $0.8 million above prior quarter and prior year same quarter. |
|---|---|
| ❖ | Provision for loan losses for the quarter was $0.1 million, compared to provision of $0.9 million for the quarter ended March 31,<br> 2022 and a recovery of provision of $4.3 million for the second quarter 2021. |
| --- | --- |
| ❖ | Our loan portfolio increased $42.9 million, an annualized 4.9%, during the quarter and $110.0 million, or 3.2%, from June 30,<br> 2021. |
| --- | --- |
| ❖ | Net loan charge-offs were $42 thousand, or less than 0.01% of average loans annualized, for the quarter ended June 30, 2022<br> compared to net loan charge-offs of $0.3 million, or 0.04% of average loans annualized, for the first quarter 2022 and a net recovery of loan charge-offs for the second quarter 2021 of $0.6 million. |
| --- | --- |
| ❖ | Our nonperforming loans, excluding troubled debt restructurings, increased slightly to $13.8 million at June 30, 2022 from $13.7<br> million at March 31, 2022 but were $7.3 million below the $21.1 million at June 30, 2021. Nonperforming assets at $15.8 million decreased $0.2 million from March 31, 2022 and $11.2 million from June 30, 2021. |
| --- | --- |
| ❖ | Deposits, including repurchase agreements, increased $28.7 million, an annualized 2.5%, during the quarter and $17.4 million, or<br> 0.4%, from June 30, 2021. |
| --- | --- |
| ❖ | Shareholders’ equity declined $21.3 million, or an annualized 13.1%, during the quarter and $52.0 million, or 7.6%, from June 30,<br> 2021, as a result of the continued increase in unrealized losses on our securities portfolio. |
| --- | --- |
| ❖ | Noninterest income for the quarter ended June 30, 2022 of $14.5 million was $0.5 million, or 3.1%, below prior quarter and $1.0<br> million, or 6.6%, below prior year same quarter. |
| --- | --- |
| ❖ | Noninterest expense for the quarter<br> ended June 30, 2022 of $30.0 million was $0.6 million, or 2.1%, higher than prior quarter and $0.5 million, or 1.6%, above prior year same quarter. |
| --- | --- |
Net Interest Income
| Percent Change | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2Q 2022 Compared to: | ||||||||||||||||||||||||
| ($ in thousands) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | YTD<br><br> <br>2022 | YTD<br><br> <br>2021 | Percent Change | ||||||||||||||||
| Components of net interest income: | ||||||||||||||||||||||||
| Income on earning assets | $ | 45,352 | $ | 43,527 | $ | 43,875 | 4.2 | % | 3.4 | % | $ | 88,879 | $ | 88,086 | 0.9 | % | ||||||||
| Expense on interest bearing liabilities | 4,562 | 3,495 | 3,868 | 30.5 | 17.9 | 8,057 | 7,837 | 2.8 | ||||||||||||||||
| Net interest income | 40,790 | 40,032 | 40,007 | 1.9 | 2.0 | 80,822 | 80,249 | 0.7 | ||||||||||||||||
| TEQ | 232 | 235 | 230 | (1.3 | ) | 0.9 | 467 | 447 | 4.5 | |||||||||||||||
| Net interest income, tax equivalent | $ | 41,022 | $ | 40,267 | $ | 40,237 | 1.9 | % | 1.9 | % | $ | 81,289 | $ | 80,696 | 0.7 | % | ||||||||
| Average yield and rates paid: | ||||||||||||||||||||||||
| Earning assets yield | 3.56 | % | 3.46 | % | 3.41 | % | 2.9 | % | 4.2 | % | 3.51 | % | 3.52 | % | (0.4 | )% | ||||||||
| Rate paid on interest bearing liabilities | 0.54 | 0.42 | 0.45 | 28.2 | 19.7 | 0.48 | 0.47 | 3.4 | ||||||||||||||||
| Gross interest margin | 3.02 | % | 3.04 | % | 2.96 | % | (0.6 | )% | 1.9 | % | 3.03 | % | 3.05 | % | (0.9 | )% | ||||||||
| Net interest margin | 3.20 | % | 3.18 | % | 3.11 | % | 0.6 | % | 2.8 | % | 3.19 | % | 3.21 | % | (0.5 | )% | ||||||||
| Average balances: | ||||||||||||||||||||||||
| Investment securities | $ | 1,454,371 | $ | 1,486,799 | $ | 1,225,369 | (2.2 | )% | 18.7 | % | $ | 1,470,495 | 1,145,018 | 28.4 | % | |||||||||
| Loans | $ | 3,538,324 | $ | 3,440,439 | $ | 3,495,655 | 2.8 | % | 1.2 | % | $ | 3,489,652 | 3,521,861 | (0.9 | )% | |||||||||
| Earning assets | $ | 5,140,656 | $ | 5,134,150 | $ | 5,184,923 | 0.1 | % | (0.9 | )% | $ | 5,137,421 | 5,071,907 | 1.3 | % | |||||||||
| Interest-bearing liabilities | $ | 3,373,741 | $ | 3,350,208 | $ | 3,424,218 | 0.7 | % | (1.5 | )% | $ | 3,362,039 | 3,379,958 | (0.5 | )% |
Net interest income for the quarter of $40.8 million was $0.8 million above prior quarter and prior year same quarter. Our net interest income excluding PPP loans for the quarter ended June 30, 2022 was $40.3 million compared to $38.6 million for the quarter ended March 31, 2022 and $36.4 million for the quarter ended June 30, 2021. Our net interest margin, on a fully tax equivalent basis, at 3.20% increased 2 basis points from prior quarter and 9 basis points from prior year same quarter, as our average earning assets increased $6.5 million from prior quarter but decreased $44.3 million from prior year same quarter. Our yield on average earning assets increased 10 basis points from prior quarter and 15 basis points from prior year same quarter, and our cost of funds increased 12 basis points from prior quarter and 9 basis points from prior year same quarter. As discussed more fully below, the impact of the PPP loans to the net interest margin for the second quarter 2022 was 3 basis points.
The PPP loan portfolio had an annualized yield for the quarter of 13.56% compared to 17.03% for the first quarter 2022. Interest income on the portfolio was $45 thousand during the quarter, down $51 thousand from prior quarter, while the amortization of net loan origination fees from current outstanding loans and recognition of net fee income from paid and forgiven loans was $463 thousand, down $915 thousand from prior quarter. These fees are amortized over the life of the loan with any unamortized balance fully recognized at the time of loan forgiveness. The impact of the PPP loan portfolio to the net interest margin was an increase of 3 basis points for the second quarter 2022 compared to an increase of 11 basis points for the first quarter 2022.
Our ratio of average loans to deposits, including repurchase agreements, was 75.2% for the quarter ended June 30, 2022 compared to 74.2% for the quarter ended March 31, 2022 and 75.0% for the quarter ended June 30, 2021.
Noninterest Income
| Percent Change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2Q 2022 Compared to: | |||||||||||||||||||
| ($ in thousands) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | YTD<br><br> <br>2022 | YTD<br><br> <br>2021 | Percent Change | |||||||||||
| Deposit related fees | $ | 7,263 | $ | 6,746 | $ | 6,358 | 7.7 | % | 14.2 | % | $ | 14,009 | $ | 12,380 | 13.2 | % | |||
| Trust revenue | 3,198 | 3,248 | 3,349 | (1.5 | ) | (4.5 | ) | 6,446 | 6,300 | 2.3 | |||||||||
| Gains on sales of loans | 519 | 597 | 1,907 | (13.0 | ) | (72.8 | ) | 1,116 | 4,340 | (74.3 | ) | ||||||||
| Loan related fees | 1,415 | 2,062 | 1,004 | (31.4 | ) | 41.0 | 3,477 | 3,274 | 6.2 | ||||||||||
| Bank owned life insurance revenue | 702 | 691 | 581 | 1.7 | 20.8 | 1,393 | 1,154 | 20.7 | |||||||||||
| Brokerage revenue | 459 | 590 | 554 | (22.2 | ) | (17.2 | ) | 1,049 | 1,011 | 3.8 | |||||||||
| Other | 945 | 1,031 | 1,768 | (8.5 | ) | (46.7 | ) | 1,976 | 2,639 | (25.2 | ) | ||||||||
| Total noninterest income | $ | 14,501 | $ | 14,965 | $ | 15,521 | (3.1 | )% | (6.6 | )% | $ | 29,466 | $ | 31,098 | (5.2 | )% |
Noninterest income for the quarter ended June 30, 2022 of $14.5 million was $0.5 million, or 3.1%, below prior quarter and $1.0 million, or 6.6%, below prior year same quarter. The quarter over quarter decrease included a $0.6 million decrease in loan related fees and a $0.3 million decrease in securities gains, partially offset by a $0.5 million increase in deposit related fees. The decrease from prior year same quarter included a $1.4 million decrease in gains on sales of loans and a $0.5 million decrease in securities gains, partially offset by a $0.9 million increase in deposit related fees. Year-to-date noninterest income decreased $1.6 million from the six months ended June 30, 2021 due to a $3.2 million decline in gains on sales of loans, partially offset by a $1.6 million increase in deposit related fees. Gains on sales of loans were impacted by the slowdown in the industry-wide mortgage refinancing boom. Deposit related fees were primarily impacted by debit card income and overdraft charges. Loan
related fees were primarily impacted by the change in the fair market value of mortgage servicing rights.
Noninterest Expense
| Percent Change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2Q 2022 Compared to: | |||||||||||||||||||
| ($ in thousands) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | YTD<br><br> <br>2022 | YTD<br><br> <br>2021 | Percent Change | |||||||||||
| Salaries | $ | 12,219 | $ | 11,739 | $ | 11,706 | 4.1 | % | 4.4 | % | $ | 23,958 | $ | 23,118 | 3.6 | % | |||
| Employee benefits | 6,315 | 5,799 | 7,254 | 8.9 | (12.9 | ) | 12,114 | 12,675 | (4.4 | ) | |||||||||
| Net occupancy and equipment | 2,756 | 2,854 | 2,668 | (3.4 | ) | 3.3 | 5,610 | 5,496 | 2.1 | ||||||||||
| Data processing | 2,095 | 2,201 | 1,870 | (4.8 | ) | 12.0 | 4,296 | 4,029 | 6.6 | ||||||||||
| Legal and professional fees | 884 | 867 | 753 | 1.9 | 17.2 | 1,751 | 1,646 | 6.4 | |||||||||||
| Advertising and marketing | 659 | 752 | 710 | (12.6 | ) | (7.3 | ) | 1,411 | 1,432 | (1.4 | ) | ||||||||
| Taxes other than property and payroll | 425 | 426 | 375 | (0.3 | ) | 13.3 | 851 | 745 | 14.2 | ||||||||||
| Net other real estate owned expense | 43 | 353 | 488 | (87.6 | ) | (91.1 | ) | 396 | 806 | (50.8 | ) | ||||||||
| Other | 4,582 | 4,368 | 3,674 | 4.9 | 24.8 | 8,950 | 7,861 | 13.8 | |||||||||||
| Total noninterest expense | $ | 29,978 | $ | 29,359 | $ | 29,498 | 2.1 | % | 1.6 | % | $ | 59,337 | $ | 57,808 | 2.6 | % |
Noninterest expense for the quarter ended June 30, 2022 of $30.0 million was $0.6 million, or 2.1%, higher than prior quarter and $0.5 million, or 1.6%, above prior year same quarter. The increase in noninterest expense quarter over quarter was primarily the result of an increase in personnel expense ($1.0 million), partially offset by a $0.3 million decrease in net other real estate owned expense. The increase in personnel expense was due to increases in salaries and a higher accrual for bonuses and incentives. Noninterest expense for the six months ended June 30, 2022 was $1.5 million higher than the six months ended June 30, 2021. The year-to-date increase was primarily the result of increases in personnel expense, data processing expense, and loan related expenses.
Balance Sheet Review
| Total Loans | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Percent Change | ||||||||||||
| 2Q 2022 Compared to: | ||||||||||||
| ($ in thousands) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | |||||||
| Commercial nonresidential real estate | $ | 758,227 | $ | 774,791 | $ | 718,338 | (2.1 | )% | 5.6 | % | ||
| Commercial residential real estate | 354,668 | 337,447 | 309,627 | 5.1 | 14.5 | |||||||
| Hotel/motel | 280,956 | 274,256 | 261,422 | 2.4 | 7.5 | |||||||
| SBA guaranteed PPP loans | 7,788 | 22,482 | 175,983 | (65.4 | ) | (95.6 | ) | |||||
| Other commercial | 395,876 | 394,875 | 356,359 | 0.3 | 11.1 | |||||||
| Total commercial | 1,797,515 | 1,803,851 | 1,821,729 | (0.4 | ) | (1.3 | ) | |||||
| Residential mortgage | 793,249 | 780,453 | 762,649 | 1.6 | 4.0 | |||||||
| Home equity loans/lines | 110,828 | 107,230 | 102,551 | 3.4 | 8.1 | |||||||
| Total residential | 904,077 | 887,683 | 865,200 | 1.8 | 4.5 | |||||||
| Consumer indirect | 697,060 | 667,387 | 610,025 | 4.4 | 14.3 | |||||||
| Consumer direct | 159,791 | 156,620 | 151,539 | 2.0 | 5.4 | |||||||
| Total consumer | 856,851 | 824,007 | 761,564 | 4.0 | 12.5 | |||||||
| Total loans | $ | 3,558,443 | $ | 3,515,541 | $ | 3,448,493 | 1.2 | % | 3.2 | % | ||
| Total Deposits and Repurchase Agreements | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Percent Change | ||||||||||||
| 2Q 2022 Compared to: | ||||||||||||
| ($ in thousands) | 2Q<br><br> <br>2022 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2021 | 1Q<br><br> <br>2022 | 2Q<br><br> <br>2022 | |||||||
| Non-interest bearing deposits | $ | 1,408,148 | $ | 1,398,529 | $ | 1,286,989 | 0.7 | % | 9.4 | % | ||
| Interest bearing deposits | ||||||||||||
| Interest checking | 99,055 | 89,863 | 99,226 | 10.2 | (0.2 | ) | ||||||
| Money market savings | 1,243,817 | 1,200,408 | 1,281,431 | 3.6 | (2.9 | ) | ||||||
| Savings accounts | 671,349 | 666,874 | 596,426 | 0.7 | 12.6 | |||||||
| Time deposits | 1,050,559 | 1,072,630 | 1,059,630 | (2.1 | ) | (0.9 | ) | |||||
| Repurchase agreements | 238,733 | 254,623 | 370,568 | (6.2 | ) | (35.6 | ) | |||||
| Total interest bearing deposits and repurchase agreements | 3,303,513 | 3,284,398 | 3,407,281 | 0.6 | (3.0 | ) | ||||||
| Total deposits and repurchase agreements | $ | 4,711,661 | $ | 4,682,927 | $ | 4,694,270 | 0.6 | % | 0.4 | % |
CTBI’s total assets at $5.4 billion increased $4.2 million, or 0.3% annualized, from March 31, 2022 but decreased $46.8 million, or 0.9%, from June 30, 2021. Loans outstanding at June 30, 2022 were $3.6 billion, an increase of $42.9 million, an annualized 4.9%, from March 31, 2022 and $110.0 million, or 3.2%, from June 30, 2021. Loans, excluding PPP loans, increased $57.6 million during the quarter, with an $8.4 million increase in the commercial loan portfolio, $16.4 million increase in the residential loan portfolio, a $29.7 million increase in the indirect consumer loan portfolio, and a $3.1 million increase in the consumer direct loan portfolio. The PPP loan portfolio declined during the quarter $14.7 million as a result of SBA forgiveness. CTBI’s investment portfolio decreased $101.3 million, or an annualized 27.0%, from March 31, 2022 but increased $44.1 million, or 3.2%, from June 30, 2021. Deposits in other banks increased $30.2 million from prior quarter but decreased $254.2 million from prior year same quarter. Deposits, including repurchase agreements, at $4.7 billion increased $28.7 million, or an annualized 2.5%, from March 31, 2022 and $17.4 million, or 0.4%, from June 30, 2021.
Shareholders’ equity declined $21.3 million, or an annualized 13.1%, during the quarter and $52.0 million, or 7.6%, from June 30, 2021, as a result of the continued increase in unrealized losses on our securities portfolio. We experienced a $34.9 million increase in accumulated other comprehensive loss, net of tax, resulting from increases in unrealized losses on our securities portfolio during the quarter. CTBI’s annualized dividend yield to shareholders as of June 30, 2022 was 3.96%.
Asset Quality
Our total nonperforming loans, excluding troubled debt restructurings, increased slightly to $13.8 million at June 30, 2022 from $13.7 million at March 31, 2022 but were $7.3 million below the $21.1 million at June 30, 2021. Accruing loans 90+ days past due at $5.0 million increased $0.2 million from prior quarter but decreased $3.3 million from June 30, 2021. Nonaccrual loans remained at $8.8 million from prior quarter but decreased $4.0 million from June 30, 2021. Accruing loans 30-89 days past due at $10.6 million decreased $0.2 million from prior quarter and $0.3 million from June 30, 2021. Our loan portfolio management processes focus on the immediate identification, management, and resolution of problem loans to maximize recovery and minimize loss.
Our level of foreclosed properties were $2.0 million at June 30, 2022 compared to $2.3 million at March 31, 2022 and $5.8 million at June 30, 2021. Sales of foreclosed properties for the quarter ended June 30, 2022 totaled $0.7 million while new foreclosed properties totaled $0.3 million. At June 30, 2022, the book value of properties under contracts to sell was $0.4 million; however, the closings had not occurred at quarter-end.
Net loan charge-offs were $42 thousand, or less than 0.01% of average loans annualized, for the quarter ended June 30, 2022 compared to net loan charge-offs of $0.3 million, or 0.04% of average loans annualized, for the first quarter 2022 and a net recovery of loan charge-offs for the second quarter 2021 of $0.6 million. Year-to-date net loan charge-offs were $0.4 million, or 0.02% of average loans annualized, compared to a net recovery of loan charge-offs of $0.4 million for the first six months of 2021.
Allowance for Credit Losses
Provision for credit losses for the quarter was $0.1 million, compared to provision of $0.9 million for the quarter ended March 31, 2022 and a recovery of provision of $4.3 million for the second quarter 2021. Year-to-date provision was $1.0 million compared to a recovery of $6.8 million during the first six months of 2021. Our reserve coverage (allowance for credit losses to nonperforming loans) at June 30, 2022 was 305.9% compared to 309.1% at March 31, 2022 and 197.2% at June 30, 2021. Our credit loss reserve as a percentage of total loans outstanding at June 30, 2022 was 1.19% (1.19% excluding PPP loans) compared to 1.20% at March 31, 2022 (1.21% excluding PPP loans) and 1.21% at June 30, 2021 (1.27% excluding PPP loans).
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; the effects of the COVID-19 pandemic on our business operations and credit quality and on general economic and financial market conditions, as well as our ability to respond to the related challenges; 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, regulations, and enforcement actions 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 $5.4 billion, is headquartered in Pikeville, Kentucky and has 68 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, three 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) | |||||||||||||||
| June 30, 2022 | |||||||||||||||
| (in thousands except per share data and # of employees) | |||||||||||||||
| Three | Three | Three | Six | Six | |||||||||||
| Months | Months | Months | Months | Months | |||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||
| Interest income | $ | 45,352 | $ | 43,527 | $ | 43,875 | $ | 88,879 | $ | 88,086 | |||||
| Interest expense | 4,562 | 3,495 | 3,868 | 8,057 | 7,837 | ||||||||||
| Net interest income | 40,790 | 40,032 | 40,007 | 80,822 | 80,249 | ||||||||||
| Credit loss provision (recovery) | 77 | 875 | (4,257 | ) | 952 | (6,756 | ) | ||||||||
| Gains on sales of loans | 519 | 597 | 1,907 | 1,116 | 4,340 | ||||||||||
| Deposit related fees | 7,263 | 6,746 | 6,358 | 14,009 | 12,380 | ||||||||||
| Trust revenue | 3,198 | 3,248 | 3,349 | 6,446 | 6,300 | ||||||||||
| Loan related fees | 1,415 | 2,062 | 1,004 | 3,477 | 3,274 | ||||||||||
| Securities gains (losses) | (225 | ) | 99 | 280 | (126 | ) | 112 | ||||||||
| Other noninterest income | 2,331 | 2,213 | 2,623 | 4,544 | 4,692 | ||||||||||
| Total noninterest income | 14,501 | 14,965 | 15,521 | 29,466 | 31,098 | ||||||||||
| Personnel expense | 18,534 | 17,538 | 18,960 | 36,072 | 35,793 | ||||||||||
| Occupancy and equipment | 2,756 | 2,854 | 2,668 | 5,610 | 5,496 | ||||||||||
| Data processing expense | 2,095 | 2,201 | 1,870 | 4,296 | 4,029 | ||||||||||
| FDIC insurance premiums | 358 | 355 | 323 | 713 | 649 | ||||||||||
| Other noninterest expense | 6,235 | 6,411 | 5,677 | 12,646 | 11,841 | ||||||||||
| Total noninterest expense | 29,978 | 29,359 | 29,498 | 59,337 | 57,808 | ||||||||||
| Net income before taxes | 25,236 | 24,763 | 30,287 | 49,999 | 60,295 | ||||||||||
| Income taxes | 4,965 | 5,035 | 6,356 | 10,000 | 12,746 | ||||||||||
| Net income | $ | 20,271 | $ | 19,728 | $ | 23,931 | $ | 39,999 | $ | 47,549 | |||||
| Memo: TEQ interest income | $ | 45,584 | $ | 43,762 | $ | 44,105 | $ | 89,346 | $ | 88,533 | |||||
| Average shares outstanding | 17,835 | 17,820 | 17,784 | 17,827 | 17,779 | ||||||||||
| Diluted average shares outstanding | 17,843 | 17,832 | 17,800 | 17,838 | 17,794 | ||||||||||
| Basic earnings per share | $ | 1.14 | $ | 1.11 | $ | 1.35 | $ | 2.24 | $ | 2.67 | |||||
| Diluted earnings per share | $ | 1.14 | $ | 1.11 | $ | 1.34 | $ | 2.24 | $ | 2.67 | |||||
| Dividends per share | $ | 0.400 | $ | 0.400 | $ | 0.385 | $ | 0.800 | $ | 0.770 | |||||
| Average balances: | |||||||||||||||
| Loans | $ | 3,538,324 | $ | 3,440,439 | $ | 3,495,655 | $ | 3,489,652 | $ | 3,521,861 | |||||
| Earning assets | 5,140,656 | 5,134,150 | 5,184,923 | 5,137,421 | 5,071,907 | ||||||||||
| Total assets | 5,446,263 | 5,417,800 | 5,450,182 | 5,432,110 | 5,335,432 | ||||||||||
| Deposits, including repurchase agreements | 4,705,492 | 4,633,988 | 4,661,615 | 4,669,938 | 4,552,736 | ||||||||||
| Interest bearing liabilities | 3,373,741 | 3,350,208 | 3,424,218 | 3,362,039 | 3,379,958 | ||||||||||
| Shareholders' equity | 637,542 | 679,527 | 675,727 | 658,419 | 668,555 | ||||||||||
| Performance ratios: | |||||||||||||||
| Return on average assets | 1.49 | % | 1.48 | % | 1.76 | % | 1.48 | % | 1.80 | % | |||||
| Return on average equity | 12.75 | % | 11.77 | % | 14.20 | % | 12.25 | % | 14.34 | % | |||||
| Yield on average earning assets (tax equivalent) | 3.56 | % | 3.46 | % | 3.41 | % | 3.51 | % | 3.52 | % | |||||
| Cost of interest bearing funds (tax equivalent) | 0.54 | % | 0.42 | % | 0.45 | % | 0.48 | % | 0.47 | % | |||||
| Net interest margin (tax equivalent) | 3.20 | % | 3.18 | % | 3.11 | % | 3.19 | % | 3.21 | % | |||||
| Efficiency ratio (tax equivalent) | 53.77 | % | 53.25 | % | 53.17 | % | 53.51 | % | 51.76 | % | |||||
| Loan charge-offs | $ | 828 | $ | 1,320 | $ | 948 | $ | 2,148 | $ | 2,418 | |||||
| Recoveries | (786 | ) | (998 | ) | (1,554 | ) | (1,784 | ) | (2,847 | ) | |||||
| Net charge-offs | $ | 42 | $ | 322 | $ | (606 | ) | $ | 364 | $ | (429 | ) | |||
| Market Price: | |||||||||||||||
| High | $ | 42.91 | $ | 46.30 | $ | 45.95 | $ | 46.30 | $ | 47.53 | |||||
| Low | $ | 39.10 | $ | 40.53 | $ | 39.76 | $ | 39.10 | $ | 36.02 | |||||
| Close | $ | 40.44 | $ | 41.20 | $ | 40.38 | $ | 40.44 | $ | 40.38 |
| Community Trust Bancorp, Inc. | ||||||||
|---|---|---|---|---|---|---|---|---|
| Financial Summary (Unaudited) | ||||||||
| June 30, 2022 | ||||||||
| (in thousands except per share data and # of employees) | ||||||||
| As of | As of | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2022 | June 30, 2021 | |||||||
| Assets: | ||||||||
| Loans | 3,558,443 | $ | 3,515,541 | $ | 3,448,493 | |||
| Loan loss reserve | (42,344 | ) | (42,309 | ) | (41,695 | ) | ||
| Net loans | 3,516,099 | 3,473,232 | 3,406,798 | |||||
| Loans held for sale | 936 | 1,941 | 4,912 | |||||
| Securities AFS | 1,402,127 | 1,503,165 | 1,357,597 | |||||
| Equity securities at fair value | 2,128 | 2,352 | 2,523 | |||||
| Other equity investments | 13,026 | 13,026 | 13,915 | |||||
| Other earning assets | 140,384 | 108,222 | 392,591 | |||||
| Cash and due from banks | 75,373 | 58,352 | 63,917 | |||||
| Premises and equipment | 40,704 | 40,738 | 40,391 | |||||
| Right of use asset | 12,005 | 11,941 | 12,729 | |||||
| Goodwill and core deposit intangible | 65,490 | 65,490 | 65,490 | |||||
| Other assets | 179,078 | 164,674 | 133,300 | |||||
| Total Assets | 5,447,350 | $ | 5,443,133 | $ | 5,494,163 | |||
| Liabilities and Equity: | ||||||||
| Interest bearing checking | 99,055 | $ | 89,863 | $ | 99,226 | |||
| Savings deposits | 1,915,166 | 1,867,282 | 1,877,857 | |||||
| CD's >=100,000 | 573,519 | 590,476 | 561,269 | |||||
| Other time deposits | 477,040 | 482,154 | 498,361 | |||||
| Total interest bearing deposits | 3,064,780 | 3,029,775 | 3,036,713 | |||||
| Noninterest bearing deposits | 1,408,148 | 1,398,529 | 1,286,989 | |||||
| Total deposits | 4,472,928 | 4,428,304 | 4,323,702 | |||||
| Repurchase agreements | 238,733 | 254,623 | 370,568 | |||||
| Other interest bearing liabilities | 58,706 | 58,711 | 58,726 | |||||
| Lease liability | 12,479 | 12,796 | 13,529 | |||||
| Other noninterest bearing liabilities | 32,454 | 35,328 | 43,555 | |||||
| Total liabilities | 4,815,300 | 4,789,762 | 4,810,080 | |||||
| Shareholders' equity | 632,050 | 653,371 | 684,083 | |||||
| Total Liabilities and Equity | 5,447,350 | $ | 5,443,133 | $ | 5,494,163 | |||
| Ending shares outstanding | 17,895 | 17,884 | 17,831 | |||||
| 30 - 89 days past due loans | 10,595 | $ | 10,838 | $ | 10,847 | |||
| 90 days past due loans | 5,018 | 4,858 | 8,283 | |||||
| Nonaccrual loans | 8,824 | 8,832 | 12,863 | |||||
| Restructured loans (excluding 90 days past due and nonaccrual) | 75,264 | 70,814 | 66,887 | |||||
| Foreclosed properties | 1,954 | 2,299 | 5,848 | |||||
| Community bank leverage ratio | 13.14 | % | 13.15 | % | 12.45 | % | ||
| Tangible equity to tangible assets ratio | 10.53 | % | 10.93 | % | 11.39 | % | ||
| FTE employees | 958 | 963 | 961 |
All values are in US Dollars.