6
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 22, 1998
COMMUNITY TRUST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Kentucky 0-11129 61-0979818
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
208 North Mayo Trail
Pikeville, Kentucky 41501
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(606) 432-1414
Not Applicable
(Former name or former address, if changed since last
report)
Item 5. Resignation of Chief Financial Officer
CTBI will take a Special Charge of $8,000,000 (pretax)
in the third quarter.
See Exhibit 1.
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.
September 22, 1998 By:/s/Burlin Coleman
Burlin Coleman
Chairman of the Board
President & CEO
INDEX TO EXHIBITS
Exhibit Sequentially Numbered Pages
1 Community Trust Bancorp, Inc. 5-6
Press Release dated September 22, 1998
Exhibit 1
FOR IMMEDIATE RELEASE
September 22, 1998
FOR ADDITIONAL INFORMATION PLEASE CONTACT BURLIN COLEMAN,
CHAIRMAN AND C.E.O., COMMUNITY TRUST BANCORP, INC. AT
(606) 437-3276
CTBI will take a Special Charge of $8,000,000 (pretax) in
the Third Quarter
Community Trust Bancorp, Inc. expects to report third
quarter earnings of approximately $700,000 ($0.07 per share)
compared to $4,412,000 ($0.44 per share) last year.
CTBI will reduce staff by 78 FTE (9% of total staff)
and take a one-time charge of $750,000 to cover expenses
associated with restructuring and reduction in staff. In
addition, CTBI will make a special provision of $7,250,000
to the Reserve for Losses on Loans to clean up problems in
the Indirect Loan Portfolio. This portfolio has been a
continuing problem and this special provision will allow
management to expedite the resolution of this issue. The
third quarter results will also include the reversal of
income tax accruals of approximately $1,500,000.
CTBI currently pays 100% of employees family health
insurance. Due to the rising costs of health insurance, it
will require employees to contribute 25% of the cost of
health insurance. This will result in an estimated savings
of $750,000 annually.
Overall, CTBI expects estimated cost reductions of
$2,500,000 in 1999 as a result of the staff reductions and
restructuring. The special loan loss provision will
eliminate the drain on earnings CTBI has been experiencing
from indirect loan losses.
CTBI plans to sell or merge nine (9) small branches and
relocate its Marketing, Training, and Indirect Lending
departments to Pikeville from Lexington, Kentucky. Five of
the branches which are in Wal-Mart Supercenters and Winn
Dixie stores with total deposits of approximately
$18,000,000 will be sold and four (4) traditional branches
will be merged into other CTBI main offices or nearby
branches.
The in-store branches are recent start-ups and have
been performing up to expectations. However, since CTBI is
flush with deposits as a result of its recent acquisition of
Bank One and PNC branches with total deposits in excess of
$400,000,000, management believes it is no longer advisable
to continue to fund start-up costs for these new branches.
Moving the Marketing, Training, and Indirect Lending
departments into existing space in Pikeville will reduce
occupancy costs and provide management efficiencies.
Working with a consultant, management has identified
employees, in addition to those at the 9 branches, whose
positions were eliminated in the consolidation of operations
and excess staff primarily in the teller and CSR areas.
Employees affected by the relocations will be offered an
opportunity to relocate to Pikeville, but some will choose
not to relocate and will not be replaced.
Terminations within the affected job groups will be
done on a seniority basis with employees whose positions
were eliminated in the consolidation of operations being
offered reassignments. Also, a voluntary retirement package
will be offered to affected employees who are at least 58
years of age who have been employed at least 15 years.
The branch sales, mergers, relocations and staff
reductions are expected to be completed by the end of 1998.
Exit packages will be offered to all terminated
employees including those who choose to leave rather than
accept reassignments.
In January, CTBI adopted stricter underwriting and
collection policies for the Indirect Lending Department and
began eliminating unprofitable dealers. As a result of
these changes, monthly loan volumes are approximately 50% of
1997 peak. Analysis of the 1998 portfolio shows defaults in
this portfolio are very acceptable.
Relocating Indirect Lending to Pikeville will allow
closer supervision by senior management. CTBI will be
focusing on dealers within its own markets where there are
opportunities to cross sell other bank products.
We are confident this action will address the problems
in the Indirect portfolio and result in a profitable line of
business going forward.