SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 11-K
 
FOR ANNUAL REPORTS OF EMPLOYEE STOCK REPURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
[X]
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
For the fiscal year ended December 31, 2017
   
 
Or
   
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
 
For the transition period from _____________ to _____________
   

Commission file number 0-11129

A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:

COMMUNITY TRUST BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN

B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

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
Pikeville, Kentucky
(address of principal executive offices)
41501
(Zip Code)

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

 
 
 
Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Contents

Report of Independent Registered Public Accounting Firm
 
   
Financial Statements:
  
   
 
Statements of Net Assets Available for Benefits
 
   
 
Statements of Changes in Net Assets Available for Benefits
 
   
 
Notes to Financial Statements
 
   
Supplemental Schedules:
  
   
 
Schedule H, Part IV. Line 4i - Schedule of Assets (Held at Year-End)
 
 
Schedule H, Part IV. Line 4j - Schedule of Reportable Transactions
 
   
 

 
 
 
Report of Independent Registered Public Accounting Firm
 
 

Plan Administrator, Plan Participants
    and Audit Committee
Community Trust Bancorp, Inc. Employee
    Stock Ownership Plan
Pikeville, Kentucky


Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of Community Trust Bancorp, Inc. Employee Stock Ownership Plan (Plan) as of December 31, 2017 and 2016, the related statements of changes in net assets available for benefits for the years then ended and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2017 and 2016, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion
These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board (United States).
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.
Report on Supplemental Information
The supplemental information in the accompanying schedules, the schedule of assets (held at year-end) at December 31, 2017, and the schedule of reportable transactions for the year ended December 31, 2017, have been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements.  The supplemental schedules are the responsibility of the Plan’s management.  Our audit procedures included determining whether the supplemental schedules reconcile to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedules.  In forming our opinion on the supplemental schedules, we evaluated whether the supplemental schedules, including their form and content, are presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  In our opinion, the schedule of assets (held at year-end) at December 31, 2017, and the schedule of reportable transactions for the year ended December 31, 2017, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

We have served as the Plan’s auditor since 2006.

/s/ BKD, LLP
Louisville, Kentucky
June 28, 2018
Federal Employer Identification Number:  44-0160260
 
 
Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Statements of Net Assets Available for Benefits

December 31, 2017 and 2016


Assets
  
2017
    
2016
  
Cash
  
$
202
    
$
105,013
  
                 
Investments at fair value:
                
Community Trust Bancorp, Inc. common stock
    
34,716,421
      
39,100,077
  
Mutual funds
    
974,796
      
927,988
  
Money market funds
    
181,561
      
86,758
  
Total investments
    
35,872,778
      
40,114,823
  
                 
Receivables:
                
Trade settlements receivable
    
0
      
6,678
  
Accrued interest and dividends
    
242,718
      
252,728
  
Total receivables
    
242,718
      
259,406
  
                 
Net assets available for benefits
  
$
36,115,698
    
$
40,479,242
  

See notes to financial statements.

 
 
Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2017 and 2016


Additions:
  
2017
    
2016
  
Contributions
  
$
1,586,880
    
$
1,538,272
  
                 
Investment income (loss):
                
Net appreciation (depreciation) in fair value of investments
    
(1,938,665
)
    
11,587,493
  
Interest and dividends
    
1,012,624
      
1,000,777
  
Total investment income (loss)
    
(926,041
)
    
12,588,270
  
                 
Deductions:
                
Benefits paid to participants
    
(5,024,383
)
    
(1,556,500
)
                 
Increase (decrease) in net assets available for benefits
    
(4,363,544
)
    
12,570,042
  
                 
Net assets available for benefits:
                
Beginning of year
    
40,479,242
      
27,909,200
  
                 
End of year
  
$
36,115,698
    
$
40,479,242
  

See notes to financial statements.

 
 
Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Notes to Financial Statements

As of December 31, 2017 and 2016 and
For the Years Ended December 31, 2017 and 2016


1.  Description of Plan

The following description of the Community Trust Bancorp, Inc. Employee Stock Ownership Plan (the “Plan”) is provided for general information purposes only.  Participants should refer to the Plan Document and Summary Plan Description for more complete information, which are available from the Plan Administrator.

General

The Plan is an employee stock ownership plan covering substantially all employees of Community Trust Bancorp, Inc. (“CTBI”) and all participating subsidiaries, which include Community Trust Bank, Inc. and Community Trust and Investment Company (“CTIC”).  All amounts contributed to the Plan are held by the trustee, CTIC.  The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Eligibility

An employee becomes eligible to participate in the Plan on the entry date following the attainment of age twenty-one and completion of twelve consecutive months of employment in which the employee has at least 1,000 hours of service.

Contributions

In its sole discretion, annually CTBI shall determine an amount to contribute, if any, equal to a percentage of compensation for each eligible participant.  The contributions are non-participant directed and invested directly in CTBI stock.  During 2017 and 2016, the contribution percentage was 4%.

Participant Accounts

Each participant’s account is credited with employer contributions. Earnings or losses on the investments are allocated in proportion to the participant’s interest therein.

Each participant is entitled to exercise voting rights attributable to the shares of CTBI common stock allocated to the participant’s account.  The Retirement and Employee Benefits Committee is not permitted to vote any share for a participant.  The trustee votes shares for which a participant has given no instructions.

Participant Investment Account Options

The Plan provides for the establishment of various investment funds including CTBI common stock, mutual funds and money market funds.  Employer contributions are automatically invested in CTBI common stock. Once a participant attains the age of 55 and has completed ten years of participation in the Plan, the participant may allocate a portion of their Plan balance to other investments within 90 days after the close of each Plan year.  These elections may be made for six consecutive years.

Vesting

Vesting of an employee’s interest is 100% in cases of normal retirement at age sixty-five, death or total disability.  If a participant’s employment ceases for any other reason, the full value of his or her account is payable to him or her if he has completed at least 1,000 hours or more of vesting service for three plan years.  Forfeited non vested accounts are allocated to the accounts of participants based upon compensation.

Payment of Benefits

Distribution of funds as a result of retirement or termination from employment may be made either in a lump sum payment (including CTBI common stock if elected) or payments in cash and/or CTBI common stock made in equal annual installments over a period equal to five years.  Notwithstanding the foregoing, if the vested interest in the ESOP Stock Fund of the Plan exceeds $1,080,000 (as adjusted per Code Section 409(o)), the distribution period may be extended by one year for each $215,000 (as adjusted per Code) or portion thereof that the ESOP Stock Fund  exceeds $1,080,000, up to a maximum of five additional years.

Forfeited Accounts

At December 31, 2017 and 2016, forfeited non-vested accounts totaled $30,630 and $28,494, respectively.  These amounts will be used to reinstate any previously forfeited balances required, if any, with the remainder reallocated to participants based upon compensation.

2.  Summary of Significant Accounting Policies

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Valuation of Investments and Income Recognition

Investments are reported at fair value.  Common stocks and mutual funds are valued at the closing price reported on the active market on which the individual securities are traded.  Dividend income is recorded on the ex-dividend date.  Purchases and sales of securities are recognized on the trade date basis.  Net appreciation/depreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Market Risks and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.

The Plan invests in various mutual funds and CTBI common stock.  Investment securities, in general, are exposed to various risks, such as interest rates, credit, and overall market volatility.  Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for plan benefits.

Administrative Expenses

Administrative expenses of the Plan are paid by the Plan’s Sponsor as provided in the Plan document.

Payment of Benefits

Distributions to participants are recorded by the Plan when payments are made.

3.  Net Assets by Participant and Non-Participant Directed Investments

All CTBI stock is non-participant directed, while the mutual and money market funds are participant directed. Information about the net assets and the significant components of the changes in net assets relating to the participant and non-participant directed investments is as
follows:

   
2017
  
   
Participant Directed Funds
    
Non-Participant Directed Employer Fund
    
Total
  
Additions:
                  
Investment income:
                  
Net appreciation (depreciation) in fair value of investments
  
$
116,161
    
$
(2,054,826
)
  
$
(1,938,665
)
Interest and Dividends
    
36,343
      
976,281
      
1,012,624
  
Net investment gain (loss)
    
152,504
      
(1,078,545
)
    
(926,041
)
                         
Contributions
    
-
      
1,586,880
      
1,586,880
  
Transfers from non-participant directed funds to participant directed funds
    
265,806
      
-
      
265,806
  
                         
Total additions
    
418,310
      
508,335
      
926,645
  
                         
Deductions:
                        
Benefits paid to participants
    
(276,699
)
    
(4,747,684
)
    
(5,024,383
)
Transfers from non-participant directed funds to participant directed funds
    
-
      
(265,806
)
    
(265,806
)
                         
Total deductions
    
(276,699
)
    
(5,013,490
)
    
(5,290,189
)
                         
Net increase (decrease)
    
141,611
      
(4,505,155
)
    
(4,363,544
)
                         
Net assets available for benefits, beginning of year
    
1,014,746
      
39,464,496
      
40,479,242
  
                         
Net assets available for benefits, end of year
  
$
1,156,357
    
$
34,959,341
    
$
36,115,698
  
 
   
2016
  
   
Participant Directed Funds
    
Non-Participant Directed Employer Fund
    
Total
  
Additions:
                  
Investment income:
                  
Net appreciation in fair value of investments
  
$
58,996
    
$
11,528,497
    
$
11,587,493
  
Interest and Dividends
    
17,162
      
983,615
      
1,000,777
  
Net investment gain
    
76,158
      
12,512,112
      
12,588,270
  
                         
Contributions
    
-
      
1,538,272
      
1,538,272
  
Transfers from non-participant directed funds to participant directed funds
    
49,042
      
-
      
49,042
  
                         
Total additions
    
125,200
      
14,050,384
      
14,175,584
  
                         
Deductions:
                        
Benefits paid to participants
    
(16,598
)
    
(1,539,902
)
    
(1,556,500
)
Transfers from non-participant directed funds to participant directed funds
    
-
      
(49,042
)
    
(49,042
)
                         
Total deductions
    
(16,598
)
    
(1,588,944
)
    
(1,605,542
)
                         
Net increase
    
108,602
      
12,461,440
      
12,570,042
  
                         
Net assets available for benefits, beginning of year
    
906,144
      
27,003,056
      
27,909,200
  
                         
Net assets available for benefits, end of year
  
$
1,014,746
    
$
39,464,496
    
$
40,479,242
  

4.  Federal Income Tax Status

The Plan received a Letter of Determination from the Internal Revenue Service on August 28, 2015, stating the Plan and related trust are in compliance with the applicable requirements of the Internal Revenue Code, and therefore, not subject to tax.  The Plan and related trust are currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code.

5.  Plan Termination

Although it has not expressed any intent to do so, CTBI has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of termination, participants will become fully vested in their accounts.

6.  Exempt Party-In-Interest Transactions

Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, any employer whose employees are covered by the Plan, and certain others.  All amounts contributed to the Plan are held by the trustee, CTIC.  Professional fees for the administration and audit of the Plan, investment of assets, and trustee services are paid by CTBI.  During the years ended December 31, 2017 and 2016, the Plan received dividend income of $986,291 and $967,518, respectively.
 
The Plan held the following party-in-interest investments (at fair value) at December 31:

   
2017
    
2016
  
CTBI common stock
  
$
34,716,421
    
$
39,100,077
  
Shares outstanding
    
737,079
      
788,308
  
                 

7.  Plan Amendment

On August 28, 2015, the IRS issued a determination letter for the Plan.  Therefore, Amendment Number One effective January 1, 2013 was adopted on November 2, 2015 outlining that the beneficiary of any participant who dies while performing Qualified Military Service shall be entitled to receive the payment of a benefit equal to the benefit which the Participant would have been entitled had that Participant resumed employment and then thereafter terminated employment due to death.  On October 24, 2016, the Plan adopted Amendment Number Two, effective January 1, 2017, which modifies the employer contribution from a stated formula to a discretionary contribution.

8.  Terminated Participants

Included in net assets available for benefits are amounts allocated to individuals who have withdrawn from the Plan.  Amounts distributed to these participants after December 31, 2017 and 2016 were approximately $109,742 and $34,369, respectively.

9. Fair Value of Plan Assets

ASC Topic 820, Fair Value Measurements defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability.  In support of this principle, ASC Topic 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.  There have been no significant changes in the valuation techniques during the year ended December 31, 2017.  The Plan had no liabilities measured at fair value on a recurring basis.  In addition, the Plan had no assets or liabilities measured at fair value on a nonrecurring basis.  The fair value hierarchy is as follows:

Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, quoted prices in inactive markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Following are descriptions of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statement of net assets available for benefits, as well as the general classification of such assets pursuant to the valuation hierarchy.

Investments

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.  Level 1 securities include Community Trust Bancorp, Inc. common stock, mutual funds, and money market funds.  Shares of mutual funds are valued at quoted market prices.  The fair values of Community Trust Bancorp, Inc. common stock are derived from the closing price reported on the NASDAQ Stock Exchange.

The following table presents the fair value measurements of assets recognized in the accompanying statements of net assets available for benefits measured at fair value on a recurring basis and the level within the ASC Topic 820, fair value hierarchy, in which the fair value measurements fall at December 31, 2017 and December 31, 2016:

         
Fair Value Measurements at December 31, 2017 Using
  
   
Fair Value
    
Quoted Prices in Active Markets for Identical Assets
(Level 1)
    
Significant Other Observable Inputs
(Level 2)
    
Significant Unobservable Inputs
(Level 3)
  
                         
CTBI common stock
  
$
34,716,421
    
$
34,716,421
    
$
0
    
$
0
  
Mutual funds
    
974,796
      
974,796
      
0
      
0
  
Money market funds
    
181,561
      
181,561
      
0
      
0
  
   
$
35,872,778
    
$
35,872,778
    
$
0
    
$
0
  


         
Fair Value Measurements at December 31, 2016 Using
  
   
Fair Value
    
Quoted Prices in Active Markets for Identical Assets
(Level 1)
    
Significant Other Observable Inputs
(Level 2)
    
Significant Unobservable Inputs
(Level 3)
  
                         
CTBI common stock
  
$
39,100,077
    
$
39,100,077
    
$
0
    
$
0
  
Mutual funds
    
927,988
      
927,988
      
0
      
0
  
Money market funds
    
86,758
      
86,758
      
0
      
0
  
   
$
40,114,823
    
$
40,114,823
    
$
0
    
$
0
  



 
 
SUPPLEMENTAL SCHEDULES

Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Form 5500, Schedule H, Part IV, Line 4i
EIN 61-0979818, Plan #007
Schedule of Assets (Held at Year-End)
December 31, 2017

Identity of Issuer (a) (b)
Description of Investment (c)
  
Cost (d)
    
Current Value (e)
  
               
Mutual Funds
              
Federated MDT Small Cap Core Instl
Equity Fund, 2,272 units
      
**
  
$
45,456
  
                   
Federated Intl Leaders Inst
Equity Fund, 1,093 units
      
**
    
40,914
  
                   
Vanguard Growth Index Adm
Equity Fund, 1,118 units
      
**
    
80,891
  
                   
Vanguard Small Cap Growth Index Adm
Equity Fund, 458  units
      
**
    
25,885
  
                   
Vanguard Selected Value Inv
Equity Fund, 1,746 units
      
**
    
54,580
  
                   
Vanguard TG Retirement 2015 Inv
Equity Bond Fund, 700 units
      
**
    
10,733
  
                   
Vanguard TG Retirement 2020 Inv
Equity Bond Fund, 6,716 units
      
**
    
210,741
  
                   
Vanguard TG Retirement 2025 Inv
Equity Bond Fund, 1,597 units
      
**
    
29,538
  
                   
Vanguard TG Retirement 2030 Inv
Equity Bond Fund, 1,177 units
      
**
    
39,586
  
                   
Vanguard Target Retirement Income Inv
Equity Bond Fund, 315 units
      
**
    
4,275
  
                   
Vanguard Windsor II Admiral
Equity Fund, 1,987 units
      
**
    
133,398
  
                   
Vanguard 500 Index Admiral
Equity Fund, 598 units
      
**
    
147,556
  
                   
William Blair Small-Mid Cap Gr I
Equity Fund, 1,783 units
      
**
    
43,636
  
                   
Vanguard Interm-Term Invest-Grde Adm
Fixed Bond Fund, 5,640 units
      
**
    
54,989
  
                   
Vanguard Short-Term Bond Index Adm
Fixed Bond Fund, 5,069 units
      
**
    
52,618
  
                   
               
974,796
  
Money Market Funds
                  
Goldman Sachs FS Government FST
Money Market Fund, 181,561 shares
      
**
    
181,561
  
Common Stock
                  
Community Trust Bancorp, Inc.  *
Common Stock, 737,079 shares
    
18,440,546
      
34,716,421
  
                   
Total Investments
    
$
18,440,546
    
$
35,872,778
  
                   
*
Indicates a party-in-interest to the Plan.
  
**
Cost information is not required for participant- directed investments and, therefore, is not included.
  
 
 
Community Trust Bancorp, Inc.
Employee Stock Ownership Plan

Form 5500, Schedule H, Part IV, Line 4j
EIN 61-0979818, Plan #007
Schedule of Reportable Transactions

For the Year Ended December 31, 2017
 

Identity of Party Involved
and Description of Asset
Purchase Price
Selling Price
  
Number of Transactions
  
Cost of Asset
  
Realized
Loss
  
                   
Series of transactions in excess of 5%
                  
                   
Community Trust Bancorp, Inc. common stock
    
$
4,501,164
      
60
    
$
4,887,536
    
$
(386,372
)
                                   
Community Trust Bancorp, Inc. common stock
$           2,811,511
            
34
    
$
2,811,511
          
 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, CTBI has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
  COMMUNITY TRUST BANCORP, INC.  
       
Date:  June 28, 2018
By:
/s/ Jean R. Hale  
    Jean R. Hale  
    Chairman, President, and Chief Executive Officer  
       
 
By:
/s/ Kevin J. Stumbo  
    Kevin J. Stumbo  
    Executive Vice President, Chief Financial Officer, and Treasurer  
       
 
By:
/s/ Howard W. Blackburn, Jr.  
    Howard W. Blackburn, Jr.  
    Senior Vice President/Director of Human Resources