Keefe, Bruyette & Woods Lowers Price Target On Community Trust Bancorp Following Q4 Earnings Print

Catherine Mealor of Keefe, Bruyette & Woods commented in a note on Thursday that Community Trust Bancorp, Inc. CTBI posted fourth-quarter results that missed estimates due to higher expenses and a higher provision.

“Still, the NIM improved two basis points quarter over quarter to 3.90 percent and loans grew an impressive 7.4 percent LQA (versus our estimate of four percent) driven by growth in all portfolios,” Mealor wrote. “NPAs declined 25 basis points to 2.74 percent as both nonperform loans and early-stage delinquencies showed sequential improvement, partially offset by increased OREO balances.”

Mealor adds that personal expenses rose 6.5 percent unannualized due to increased insurance costs, bonuses and other benefits while OREO costs added $500,000 in expenses while other expenses rose $1.1 million partially doe to a $500,000 “accrual for anticipated customer refunds.”

The analyst notes that on a combined basis, the company's efficiency ratio was pushed to 61 percent from 57 percent last quarter. In addition, Mealor expected the provision to fall sub $2 million, but NCOs came in at 0.45 percent, nearly twice as expected and the company matched the NCOs with a $3.4 million provision.

After the expense driven miss, Mealor is lowering 2015 earnings per share estimates to $2.60 from $2.70 and lowering fiscal 2016 earnings per share to $2.74 from $2.80.

Shares are Market Perform rated with a price target lowered to $36 from a previous $37.