CTBI Community Trust Bancorp Inc

Community Trust Bancorp, Inc. (NASDAQ: CTBI): � � � � � � � Earnings Summary (in thousands except per share data) � 1Q 2007 � 4Q 2006 � 1Q 2006 Net income $ 8,022� $ 9,520� $ 9,768� Earnings per share $ 0.53� $ 0.63� $ 0.65� Earnings per share (diluted) $ 0.52� $ 0.62� $ 0.64� � Return on average assets 1.09% 1.28% 1.36% Return on average equity 11.33% 13.45% 15.27% Efficiency ratio 64.68% 57.43% 58.21% � Dividends declared per share $ 0.27� $ 0.27� $ 0.26� Book value per share $ 18.93� $ 18.63� $ 17.30� � Weighted average shares 15,191� 15,154� 15,011� Weighted average shares (diluted) � � 15,437� � � 15,417� � � 15,252� � Community Trust Bancorp, Inc. (NASDAQ: CTBI) is pleased to report earnings for the quarter ended March 31, 2007 of $8.0 million or $0.53 per basic share compared to $9.5 million or $0.63 per share earned during the quarter ended December 31, 2006 and $9.8 million or $0.65 per share earned during the first quarter of 2006. First Quarter 2007 Highlights The Company had previously announced that it would elect the early adoption of Statement of Financial Accounting Standards ("SFAS") No. 159. Upon review of emerging guidance, the Company has determined that it is inappropriate for us to early adopt SFAS No. 159. Accordingly, the Company will not early adopt the standard. As previously announced, the Company has refunded its trust preferred securities and has incurred a pre-tax charge from unamortized debt issuance costs of approximately $1.9 million in the first quarter of 2007. The Company's basic earnings per share for the first quarter 2007 decreased 15.9% from prior quarter and 18.5% from prior year first quarter. In addition to the impact to earnings discussed above, the Company has also experienced continuing pressure on its net interest margin as time deposits have continued repricing in the current stable rate environment. Period over period earnings comparisons also reflect normal changes in our loan loss provision as reserve adequacy is reviewed on a quarterly basis. As anticipated by management, the Company's net interest margin decreased 11 basis points from prior quarter and 20 basis points from prior year first quarter as the Company continues operating within the inverted yield curve environment. The Company�s average earning assets for the quarter ended March 31, 2007 increased 1.7% over the quarter ended December 31, 2006 and 3.2% from the quarter ended March 31, 2006. The Company's investment portfolio increased an annualized 10.6% from prior quarter but decreased 9.1% from March 31, 2006. The Company's loan portfolio grew at an annualized rate of 0.8% during the quarter and 3.3% from March 31, 2006. Nonperforming loans as a percentage of total loans at March 31, 2007 were 0.83% of total loans, an increase of $3.7 over prior quarter and a $2.0 million increase from same period prior year. The increase in nonperforming loans is primarily in smaller commercial loans with collateral. These loans are reviewed for impairment and specific reserves are established when appropriate. Return on average assets for the quarter ended March 31, 2007 was 1.09% compared to 1.28% and 1.36% for prior quarter and prior year first quarter, respectively. Our return on average shareholders' equity for the quarter ended March 31, 2007 was 11.33% compared to 13.45% for the fourth quarter 2006 and 15.27% for the first quarter 2006. CTBI's efficiency ratio for the quarter was 64.68% compared to 57.43% and 58.21% for prior quarter and prior year first quarter, respectively. Net Interest Income As interest rates have stabilized, our net interest margin has continued to compress as expected. Our net interest margin for the first quarter 2007 was 3.84% compared to 3.95% for the fourth quarter 2006 and 4.04% for the first quarter 2006. Net interest income decreased 3.2% from prior quarter and 1.8% from prior year. Average earning assets increased to $2.8 billion from $2.7 billion for the quarters ended December 31, 2006 and March 31, 2006, respectively. Average earning assets as a percentage of total assets of 92.7% have remained relatively stable compared to prior quarter and prior year first quarter of 92.4% and 92.3% respectively. Noninterest Income Noninterest income for the quarter was a decrease of 0.9% from the quarter ended December 31, 2006, but an increase of 9.8% from prior year first quarter. The increases in loan related fees and trust revenue from prior quarter were offset by decreases in deposit service charges and nonrecurring revenue items. Noninterest Expense Noninterest expense increased 9.7% over prior quarter and 12.0% over prior year first quarter as a result of the charge from unamortized debt issuance costs with the redemption of trust preferred securities. Balance Sheet Review The Company�s total assets grew $129 million or 4.3% from prior quarter and prior year first quarter. The growth in assets included $59.5 million in temporary funds related to a timing difference with the refinance of our trust preferred capital securities. Loans outstanding at March 31, 2007 were $2.2 billion reflecting a $4.0 million, annualized 0.8%, increase during the quarter. Deposits, including repurchase agreements, increased $58.7 million, an annualized 9.5%, during the quarter. The growth in deposits after funding of loans resulted in an increase in our investment portfolio of $12.9 million during the quarter, and federal funds sold increased $130.4 million, including the $59.5 million discussed above. Shareholders� equity of $287.8 million on March 31, 2007 was an annualized increase of 7.8% from the $282.4 million on December 31, 2006 and a 10.8% increase from the $259.8 million on March 31, 2006. Asset Quality Nonperforming loans at March 31, 2007 were $17.9 million compared to $14.2 million at December 31, 2006 and $16.0 million at March 31, 2006. The increase in nonperforming loans was primarily smaller commercial loans with collateral that are individually reviewed with specific reserves established when appropriate. Foreclosed properties at March 31, 2007 of $3.5 million are a $1.0 million decrease from the $4.5 million on December 31, 2006 and a $1.5 million decrease from the $5.0 million on March 31, 2006. Net loan charge-offs for the quarter of $0.9 million, or 0.17% of average loans annualized, was a decrease of 45.3% from prior quarter and 33.5% from prior year first quarter. Reflective of the improvement in net charge-offs, our reserve for losses on loans as a percentage of total loans outstanding at March 31, 2007 decreased to 1.25% from the 1.27% at December 31, 2006 and the 1.34% at March 31, 2006. 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. The Company�s 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, the performance of coal and coal related industries, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; results of various investment activities; the effects of competitors� pricing policies, of changes in laws and regulations on competition and of 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; the adoption by the Company of an FFIEC policy that provides guidance on the reporting of delinquent consumer loans and the timing of associated credit charge-offs for financial institution subsidiaries; and the resolution of legal proceedings and related matters. In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and state regulators, whose policies and regulations could affect the Company�s results. These statements are representative only on the date hereof, and the Company undertakes no obligation to update any forward-looking statements made. Community Trust Bancorp, Inc., with assets of $3.1 billion, is headquartered in Pikeville, Kentucky and has 74 banking locations across eastern, northeast, central, and south central Kentucky, five banking locations in southern West Virginia, and five trust offices across Kentucky. Additional information follows. Community Trust Bancorp, Inc. Financial Summary (Unaudited) March 31, 2007 (in thousands except per share data) � Three Months Ended Three Months Ended Three Months Ended March 31, 2007 December 31, 2006 March 31, 2006 Interest income $ 49,179� $ 49,234� $ 44,388� Interest expense 23,289� 22,496� 18,031� Net interest income 25,890� 26,738� 26,357� Loan loss provision 470� 1,200� -� � Gains on sales of loans 296� 380� 304� Deposit service charges 4,804� 5,081� 4,552� Trust revenue 1,199� 1,074� 881� Loan related fees 1,021� 700� 624� Other noninterest income 1,178� 1,337� 1,382� Total noninterest income 8,498� 8,572� 7,743� � Personnel expense 11,114� 11,607� 10,965� Occupancy and equipment 2,989� 2,779� 2,986� Amortization of core deposit intangible 159� 158� 159� Other noninterest expense 8,234� 5,962� 5,967� Total noninterest expense 22,496� 20,506� 20,077� � Net income before taxes 11,422� 13,604� 14,023� Income taxes 3,400� 4,084� 4,255� Net income $ 8,022� $ 9,520� $ 9,768� � Memo: TEQ interest income $ 49,571� $ 49,631� $ 44,778� � Average shares outstanding 15,191� 15,154� 15,011� Basic earnings per share $ 0.53� $ 0.63� $ 0.65� Diluted earnings per share $ 0.52� $ 0.62� $ 0.64� Dividends per share $ 0.27� $ 0.27� $ 0.26� � Average balances: Loans, net of unearned income $ 2,165,510� $ 2,160,249� $ 2,096,842� Earning assets 2,774,634� 2,727,043� 2,687,976� Total assets 2,994,557� 2,951,213� 2,912,275� Deposits 2,358,675� 2,328,294� 2,274,582� Interest bearing liabilities 2,260,472� 2,220,325� 2,186,119� Shareholders' equity 287,218� 280,707� 259,398� � Performance ratios: Return on average assets 1.09% 1.28% 1.36% Return on average equity 11.33% 13.45% 15.27% Yield on average earning assets (tax equivalent) 7.25% 7.22% 6.76% Cost of interest bearing funds (tax equivalent) 4.18% 4.02% 3.34% Net interest margin (tax equivalent) 3.84% 3.95% 4.04% Efficiency ratio (tax equivalent) 64.68% 57.43% 58.21% � Loan charge-offs $ 1,650� $ 2,413� $ 2,361� Recoveries (731) (733) (979) Net charge-offs $ 919� $ 1,680� $ 1,382� � Market Price: High $ 41.50� $ 42.59� $ 35.90� Low 33.87� 36.51� 30.60� Close 36.23� 41.53� 33.90� � Community Trust Bancorp, Inc. Financial Summary (Unaudited) March 31, 2007 (in thousands except per share data) � As of As of As of March 31, 2007 December 31, 2006 March 31, 2006 Assets: � Loans, net of unearned $ 2,171,484� $ 2,167,458� $ 2,101,236� Loan loss reserve (27,077) (27,526) (28,124) Net loans 2,144,407� 2,139,932� 2,073,112� Loans held for sale 893� 1,431� 1,367� Securities AFS 440,587� 425,851� 484,323� Securities HTM 38,655� 40,508� 46,690� Other equity investments 28,032� 28,027� 26,999� Other earning assets 195,968� 65,043� 78,307� Cash and due from banks 78,324� 94,336� 83,804� Premises and equipment 55,148� 55,665� 57,695� Goodwill and core deposit intangible 67,452� 67,610� 66,550� Other assets 49,320� 51,358� 50,787� Total Assets $ 3,098,786� $ 2,969,761� $ 2,969,634� � � Liabilities and Equity: NOW accounts $ 14,910� $ 18,107� $ 19,762� Savings deposits 698,783� 669,263� 634,302� CD's >=$100,000 447,914� 438,080� 417,464� Other time deposits 796,402� 785,723� 775,094� Total interest bearing deposits 1,958,009� 1,911,173� 1,846,622� Noninterest bearing deposits 435,023� 429,994� 463,169� Total deposits 2,393,032� 2,341,167� 2,309,791� Repurchase agreements 168,441� 161,630� 161,538� Other interest bearing liabilities 219,614� 158,526� 216,051� Noninterest bearing liabilities 29,901� 26,063� 22,422� Total liabilities 2,810,988� 2,687,386� 2,709,802� Shareholders' equity 287,798� 282,375� 259,832� Total Liabilities and Equity $ 3,098,786� $ 2,969,761� $ 2,969,634� � Ending shares outstanding 15,203� 15,158� 15,015� Memo: Market value of HTM securities $ 37,371� $ 39,015� $ 44,531� � 90 days past due loans $ 4,270� $ 4,294� $ 4,148� Nonaccrual loans 13,605� 9,863� 11,072� Restructured loans 55� 66� 733� Foreclosed properties 3,514� 4,524� 4,962� � Tier 1 leverage ratio 9.62% 9.58% 9.01% Tier 1 risk based ratio 12.11% 12.21% 11.28% Total risk based ratio 13.28% 13.43% 12.52% FTE employees 1,014� 1,021� 1,007� � Community Trust Bancorp, Inc. Financial Summary (Unaudited) March 31, 2007 (in thousands except per share data) � Community Trust Bancorp, Inc. reported earnings for the three months ending March 31, 2007 and 2006 as follows: � � Three Months Ended March 31 2007� 2006� � � � Net income $ 8,022� $ 9,768� � Basic earnings per share $ 0.53� $ 0.65� � Diluted earnings per share $ 0.52� $ 0.64� � Average shares outstanding 15,191� 15,011� � Total assets (end of period) $ 3,098,786� $ 2,969,634� � Return on average equity 11.33% 15.27% � Return on average assets 1.09% 1.36% � Provision for loan losses $ 470� $ -� � Gains on sales of loans $ 296� $ 304�