Overdraft Sanctions Hit Profits at Community Trust of Ky.

Community Trust Bancorp (CTBI) in Pikeville, Ky., posted lower profit in the fourth quarter as sanctions tied to a Federal Reserve Board investigation took a bite out of earnings.

The $3.6 billion asset company earned $8.8 million in the fourth quarter, down 17% from the same period in 2012. Earnings per share of 56 cents were 21 cents lower than the average estimate of analysts polled by Bloomberg.

Community Trust accrued $6.2 million against earnings in the fourth quarter because of regulatory sanctions related to its overdraft practices. The Fed ordered Community Trust in November to reimburse customers who were charged certain overdraft fees in the years since June 2010. The company says it does not yet know the total amount that it will pay as a result of the sanctions.

The accrual helped push Community Trust's total noninterest expenses up by 16%, to $32.4 million. Higher personnel and data processing costs also contributed to the increase.

Net interest income rose 0.7%, to $34 million. The company's net interest margin widened 2 basis points, to 4.05%.

Noninterest income ticked up 0.8%, to $12 million. Community Trust attributed the increase to gains from trust fees and other real estate owned.

Community Trust lowered its loan-loss provision to $1.2 million, a 59% decline. Net loan chargeoffs also fell 59%, to $1.2 million.