0001140361-20-024962.txt : 20201109 0001140361-20-024962.hdr.sgml : 20201109 20201109091446 ACCESSION NUMBER: 0001140361-20-024962 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 70 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201109 DATE AS OF CHANGE: 20201109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNITY TRUST BANCORP INC /KY/ CENTRAL INDEX KEY: 0000350852 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 610979818 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-31220 FILM NUMBER: 201296351 BUSINESS ADDRESS: STREET 1: 346 NORTH MAYO TRAIL STREET 2: P.O. BOX 2947 CITY: PIKEVILLE STATE: KY ZIP: 41502-2947 BUSINESS PHONE: (606)433-4643 MAIL ADDRESS: STREET 1: 346 NORTH MAYO TRAIL STREET 2: P.O. BOX 2947 CITY: PIKEVILLE STATE: KY ZIP: 41502-2947 FORMER COMPANY: FORMER CONFORMED NAME: COMMUNITY TRUST BANCORP INC/ DATE OF NAME CHANGE: 19971124 10-Q 1 brhc10013855_10q.htm 10-Q
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2020
 
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________

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.)
   
346 North Mayo Trail
P.O. Box 2947
Pikeville, Kentucky
41502
(Address of principal executive offices)
(Zip code)

(606) 432-1414
(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock
(Title of class)

CTBI
Nasdaq Global Select Market
(Trading symbol)
(Name of exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes 
No

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes 
No





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer 
Accelerated Filer 
Non-accelerated Filer 
     
Smaller Reporting Company
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.       

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes
   No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock – 17,810,401 shares outstanding at October 31, 2020



CAUTIONARY STATEMENT
REGARDING 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; our participation in the Paycheck Protection Program administered by the Small Business Administration; 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.

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

The accompanying information has not been audited by our independent registered public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period.  All such adjustments are of a normal and recurring nature.

The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Registrant’s annual report on Form 10-K.  Accordingly, the reader of the Form 10-Q should refer to the Registrant’s Form 10-K for the year ended December 31, 2019 for further information in this regard.


1


Community Trust Bancorp, Inc.
Condensed Consolidated Balance Sheets

(dollars in thousands)
 
(unaudited)
September 30
2020
   
December 31
2019
 
Assets:
           
Cash and due from banks
 
$
58,206
   
$
58,680
 
Interest bearing deposits
   
199,562
     
206,003
 
Cash and cash equivalents
   
257,768
     
264,683
 
                 
Certificates of deposit in other banks
   
245
     
245
 
Debt securities available-for-sale at fair value (amortized cost of $931,919 and $593,945, respectively)
   
949,089
     
599,844
 
Debt securities held-to-maturity at amortized cost (fair value of $0 and $517, respectively)
   
0
     
517
 
Equity securities at fair value
   
2,212
     
1,953
 
Loans held for sale
   
20,125
     
1,167
 
                 
Loans
   
3,557,899
     
3,248,664
 
Allowance for credit losses*
   
(47,986
)
   
(35,096
)
Net loans
   
3,509,913
     
3,213,568
 
                 
Premises and equipment, net
   
42,115
     
44,046
 
Right-of-use asset
   
13,536
     
14,550
 
Federal Home Loan Bank stock
   
10,123
     
10,474
 
Federal Reserve Bank stock
   
4,887
     
4,887
 
Goodwill
   
65,490
     
65,490
 
Bank owned life insurance
   
70,317
     
69,269
 
Mortgage servicing rights
   
3,109
     
3,263
 
Other real estate owned
   
15,586
     
19,480
 
Accrued interest receivable
   
14,714
     
14,836
 
Other assets
   
41,192
     
37,731
 
Total assets
 
$
5,020,421
   
$
4,366,003
 
                 
Liabilities and shareholders’ equity:
               
Deposits:
               
Noninterest bearing
 
$
1,103,863
   
$
865,760
 
Interest bearing
   
2,790,318
     
2,539,812
 
Total deposits
   
3,894,181
     
3,405,572
 
                 
Repurchase agreements
   
367,788
     
226,917
 
Federal funds purchased
   
2,400
     
7,906
 
Advances from Federal Home Loan Bank
   
400
     
415
 
Long-term debt
   
57,841
     
57,841
 
Deferred taxes
   
5,220
     
5,110
 
Operating lease liability
   
12,811
     
13,729
 
Finance lease liability
   
1,446
     
1,456
 
Accrued interest payable
   
5,179
     
2,839
 
Other liabilities
   
28,705
     
29,332
 
Total liabilities
   
4,375,971
     
3,751,117
 
                 
Shareholders’ equity:
               
Preferred stock, 300,000 shares authorized and unissued
   
-
     
-
 
Common stock, $5 par value, shares authorized 25,000,000; shares outstanding 2020 – 17,802,012; 2019 – 17,793,165
   
89,010
     
88,966
 
Capital surplus
   
225,098
     
224,907
 
Retained earnings
   
317,748
     
296,760
 
Accumulated other comprehensive income, net of tax
   
12,594
     
4,253
 
Total shareholders’ equity
   
644,450
     
614,886
 
                 
Total liabilities and shareholders’ equity
 
$
5,020,421
   
$
4,366,003
 

*Effective January 1, 2020, the allowance for loan and lease losses became the allowance for credit losses with the implementation of ASU 2016-13, commonly referred to as CECL.

See notes to condensed consolidated financial statements.

2


Community Trust Bancorp, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(unaudited)

 
Three Months Ended
September 30
   
Nine Months Ended
September 30
 
(in thousands except per share data)
 
2020
   
2019
   
2020
   
2019
 
Interest income:
                       
Interest and fees on loans, including loans held for sale
 
$
39,577
   
$
41,781
   
$
121,306
   
$
124,009
 
Interest and dividends on securities
                               
Taxable
   
3,220
     
3,086
     
9,133
     
9,338
 
Tax exempt
   
629
     
552
     
1,752
     
1,810
 
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
   
129
     
207
     
407
     
764
 
Interest on Federal Reserve Bank deposits
   
61
     
1,330
     
645
     
3,641
 
Other, including interest on federal funds sold
   
10
     
31
     
50
     
131
 
Total interest income
   
43,626
     
46,987
     
133,293
     
139,693
 
                                 
Interest expense:
                               
Interest on deposits
   
4,975
     
8,649
     
17,229
     
25,680
 
Interest on repurchase agreements and federal funds purchased
   
691
     
1,169
     
2,472
     
3,516
 
Interest on advances from Federal Home Loan Bank
   
0
     
0
     
0
     
39
 
Interest on long-term debt
   
280
     
650
     
1,206
     
1,929
 
Total interest expense
   
5,946
     
10,468
     
20,907
     
31,164
 
                                 
Net interest income
   
37,680
     
36,519
     
112,386
     
108,529
 
Provision for credit losses*
   
2,433
     
1,253
     
15,091
     
3,006
 
Net interest income after provision for credit losses
   
35,247
     
35,266
     
97,295
     
105,523
 
                                 
Noninterest income:
                               
Service charges on deposit accounts
   
6,296
     
6,859
     
17,179
     
19,504
 
Gains on sales of loans, net
   
2,470
     
450
     
4,706
     
1,298
 
Trust and wealth management income
   
2,692
     
2,725
     
8,145
     
8,065
 
Loan related fees
   
1,383
     
622
     
2,300
     
1,635
 
Bank owned life insurance
   
602
     
590
     
1,739
     
1,837
 
Brokerage revenue
   
310
     
418
     
995
     
978
 
Securities gains
   
142
     
14
     
1,328
     
574
 
Other noninterest income
   
1,016
     
711
     
2,919
     
2,920
 
Total noninterest income
   
14,911
     
12,389
     
39,311
     
36,811
 
                                 
Noninterest expense:
                               
Officer salaries and employee benefits
   
3,115
     
2,812
     
8,970
     
9,483
 
Other salaries and employee benefits
   
13,022
     
12,208
     
37,351
     
37,583
 
Occupancy, net
   
2,029
     
2,031
     
5,952
     
5,894
 
Equipment
   
695
     
776
     
2,102
     
2,264
 
Data processing
   
1,936
     
1,987
     
5,789
     
5,539
 
Bank franchise tax
   
1,815
     
1,656
     
5,439
     
5,054
 
Legal fees
   
467
     
555
     
1,440
     
1,409
 
Professional fees
   
534
     
577
     
1,617
     
1,654
 
Advertising and marketing
   
797
     
894
     
1,999
     
2,560
 
FDIC insurance
   
295
     
(280
)
   
736
     
266
 
Other real estate owned provision and expense
   
505
     
2,476
     
1,975
     
4,271
 
Repossession expense
   
285
     
334
     
595
     
823
 
Amortization of limited partnership investments
   
984
     
745
     
2,792
     
2,688
 
Other noninterest expense
   
2,994
     
3,111
     
8,846
     
9,507
 
Total noninterest expense
   
29,473
     
29,882
     
85,603
     
88,995
 
                                 
Income before income taxes
   
20,685
     
17,773
     
51,003
     
53,339
 
Income taxes
   
3,238
     
2,504
     
7,325
     
4,807
 
Net income
   
17,447
     
15,269
     
43,678
     
48,532
 
                                 
Other comprehensive income:
                               
Unrealized holding gains on debt securities available-for-sale:
                               
Unrealized holding gains arising during the period
   
2,107
     
2,538
     
12,340
     
15,184
 
Less: Reclassification adjustments for realized gains (losses) included in net income
   
24
     
(2
)
   
1,069
     
4
 
Tax expense
   
541
     
664
     
2,930
     
3,640
 
Other comprehensive income, net of tax
   
1,542
     
1,876
     
8,341
     
11,540
 
Comprehensive income
 
$
18,989
   
$
17,145
   
$
52,019
   
$
60,072
 
                                 
Basic earnings per share
 
$
0.98
   
$
0.86
   
$
2.46
   
$
2.74
 
Diluted earnings per share
 
$
0.98
   
$
0.86
   
$
2.46
   
$
2.74
 
                                 
Weighted average shares outstanding-basic
   
17,746
     
17,726
     
17,746
     
17,720
 
Weighted average shares outstanding-diluted
   
17,752
     
17,743
     
17,753
     
17,733
 

*Effective January 1, 2020, the provision for loan losses became the provision for credit losses with the implementation of ASU 2016-13, commonly referred to as CECL.

See notes to condensed consolidated financial statements.

3


Consolidated Statements of Changes in Shareholders’ Equity
Quarterly

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, June 30, 2020
   
17,794,598
   
$
88,973
   
$
224,688
   
$
307,134
   
$
11,052
   
$
631,847
 
Net income
                           
17,447
             
17,447
 
Other comprehensive income, net of tax of $541
                                   
1,542
     
1,542
 
Cash dividends declared ($0.385 per share)
                           
(6,833
)
           
(6,833
)
Issuance of common stock
   
7,414
     
37
     
195
                     
232
 
Stock-based compensation
                   
215
                     
215
 
Balance, September 30, 2020
   
17,802,012
   
$
89,010
   
$
225,098
   
$
317,748
   
$
12,594
   
$
644,450
 

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, June 30, 2019
   
17,772,309
   
$
88,862
   
$
223,833
   
$
278,960
   
$
3,053
   
$
594,708
 
Net income
                           
15,269
             
15,269
 
Other comprehensive income, net of tax of $664
                                   
1,876
     
1,876
 
Cash dividends declared ($0.38 per share)
                           
(6,736
)
           
(6,736
)
Issuance of common stock
   
4,942
     
24
     
183
                     
207
 
Stock-based compensation
                   
194
                     
194
 
Balance, September 30, 2019
   
17,777,251
   
$
88,886
   
$
224,210
   
$
287,493
   
$
4,929
   
$
605,518
 

See notes to condensed consolidated financial statements.

4

 
Consolidated Statements of Changes in Shareholders’ Equity
Year-to-Date

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, December 31, 2019
   
17,793,165
   
$
88,966
   
$
224,907
   
$
296,760
   
$
4,253
   
$
614,886
 
Implementation of ASU 2016-13
                           
(2,366
)
           
(2,366
)
Balance, January 1, 2020
   
17,793,165
     
88,966
     
224,907
     
294,394
     
4,253
     
612,520
 
Net income
                           
43,678
             
43,678
 
Other comprehensive income, net of tax of $2,930
                                   
8,341
     
8,341
 
Cash dividends declared ($1.145 per share)
                           
(20,324
)
           
(20,324
)
Issuance of common stock
   
36,952
     
185
     
504
                     
689
 
Repurchase of common stock
   
(32,664
)
   
(164
)
   
(935
)
                   
(1,099
)
Issuance of restricted stock
   
21,544
     
108
     
(108
)
                   
0
 
Vesting of restricted stock
   
(16,985
)
   
(85
)
   
85
                     
0
 
Stock-based compensation
                   
645
                     
645
 
Balance, September 30, 2020
   
17,802,012
   
$
89,010
   
$
225,098
   
$
317,748
   
$
12,594
   
$
644,450
 

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, December 31, 2018
   
17,732,853
   
$
88,665
   
$
223,161
   
$
258,935
   
$
(6,611
)
 
$
564,150
 
Implementation of ASU 2016-02
                           
(480
)
   
0
     
(480
)
Balance, January 1, 2019
   
17,732,853
     
88,665
     
223,161
     
258,455
     
(6,611
)
   
563,670
 
Net income
                           
48,532
             
48,532
 
Other comprehensive income, net of tax of $3,640