Community Trust Bancorp, Inc. (NASDAQ:CTBI): Earnings Summary � � �
� � (in thousands except per share data) � 3Q 2008 � 2Q 2008 � 3Q
2007 � 9 Months 2008 � 9 Months 2007 Net income/(loss) $ (577) $
8,620 $ 10,476 $ 16,588 $ 27,356 Earnings/(loss) per share $ (0.04)
$ 0.58 $ 0.69 $ 1.11 $ 1.80 Earnings/(loss) per share (diluted) $
(0.04) $ 0.57 $ 0.68 $ 1.09 $ 1.77 � Return on average assets
(0.08)% 1.19% 1.39% 0.76% 1.22% Return on average equity (0.74)%
11.21% 14.04% 7.16% 12.53% Efficiency ratio 58.63% 57.25% 52.36%
57.43% 58.30% � Dividends declared per share $ 0.29 $ 0.29 $ 0.27 $
0.87 $ 0.81 Book value per share $ 20.26 $ 20.43 $ 19.62 $ 20.26 $
19.62 � Weighted average shares 15,011 14,989 15,183 15,000 15,186
Weighted average shares (diluted) � � 15,263 � � 15,152 � � 15,342
� � 15,153 � � 15,417 Community Trust Bancorp, Inc. (NASDAQ:CTBI)
reports earnings of $16.6 million or $1.11 per basic share
year-to-date through September 30, 2008, although it had an
operating loss of $0.6 million for the third quarter of 2008
commensurate with the actions of the federal government placing
Freddie Mac and Fannie Mae into conservatorship and the market
concerns related to this action. CTBI continues to maintain
significantly higher capital than required for a well-capitalized
designation. CTBI had a loss for the quarter ended September 30,
2008 of $0.04 per basic share. At June 30, 2008, CTBI held $14.9
million in Freddie Mac and Fannie Mae pass-through auction rate
securities which had an unrealized loss of $0.5 million. On
September 7, 2008, the U.S. Treasury placed Freddie Mac and Fannie
Mae into conservatorship. This action created market uncertainty of
the future value of Freddie Mac and Fannie Mae securities and the
value of these investments decreased materially resulting in a
$13.5 million other than temporary impairment charge to earnings on
these securities. Also, as a result of this action, CTBI recorded a
$0.8 million charge relative to trust activity for which it had
financial responsibility. CTBI maintains a significantly higher
level of capital than required by regulatory authorities to be
designated as well-capitalized. On September 30, 2008, our Tier 1
Leverage Ratio of 10.45% was 545 basis points higher than the 5.00%
required, our Tier 1 Risk-Based Capital Ratio of 13.11% was 711
basis points higher than the required 6.00%, and our Total
Risk-Based Capital Ratio of 14.36% was 436 basis points higher than
the 10.00% regulatory requirement for this designation. CTBI's
normalized earnings, which are considered to be core earnings,
continue to be within expected profitability levels as we execute
our business plan during the current global economic crisis. CTBI
has not been a participant in the types of lending and derivative
investments which have been the focus of the current financial
crisis. Financial results normalized for the other than temporary
impairment charges are shown below: Earnings Summary � � � � � (in
thousands except per share data) � 3Q 2008 � 2Q 2008 � 3Q 2007 � 9
Months 2008 � 9 Months 2007 Net income/(loss) as reported $ (577) $
8,620 $ 10,476 $ 16,588 $ 27,356 Impact of FHLMC/FNMA securities
impairment charge $ 9,386 $ - $ - $ 9,386 $ - Net income as
adjusted $ 8,809 $ 8,620 $ 10,476 $ 25,974 $ 27,356 Earnings per
share $ 0.59 $ 0.58 $ 0.69 $ 1.73 $ 1.80 Earnings per share
(diluted) $ 0.58 $ 0.57 $ 0.68 $ 1.71 $ 1.77 � Return on average
assets 1.20% 1.19% 1.39% 1.19% 1.22% Return on average equity
11.24% 11.21% 14.04% 11.22% 12.53% Efficiency ratio 56.30% 57.25%
52.36% 56.64% 58.30% � Dividends declared per share $ 0.29 $ 0.29 $
0.27 $ 0.87 $ 0.81 Book value per share $ 20.86 $ 20.43 $ 19.62 $
20.88 $ 19.62 � Weighted average shares 15,011 14,989 15,183 15,000
15,186 Weighted average shares (diluted) � � 15,263 � � 15,152 � �
15,342 � � 15,153 � � 15,417 Third Quarter 2008 Highlights CTBI's
basic earnings per share for the third quarter 2008 normalized for
the other than temporary impairment charge for auction rate
securities increased 1.7% from prior quarter but decreased 14.5%
from prior year third quarter primarily due to the increased
provision for loan losses. Year-to-date basic earnings per share
normalized decreased 3.9% from prior year. Our net interest margin
for the nine months ended September 30, 2008 increased 9 basis
points from prior year. However, net interest income decreased $0.6
million from prior year as average earning assets decreased by
$93.7 million. Noninterest income for the third quarter and
year-to-date 2008 were both impacted by the $13.5 million other
than temporary impairment charge for auction rate securities.
Normalized noninterest income for the first nine months of 2008
increased 1.9% from prior year with increases in gains on sales of
loans, deposit service charges, and trust revenue offset by a
decrease in the fair value of mortgage servicing rights. CTBI
established a tax strategy to offset the capital loss resulting
from the other than temporary impairment charge for auction rate
securities whereby the losses would be offset against capital gains
during the next five years. This strategy was available prior to
the Emergency Economic Stabilization Act of 2008 which provides for
the treatment of the losses as ordinary losses. Noninterest expense
was also impacted commensurate with the conservatorship action with
a $0.8 million charge relative to trust activity for which CTBI had
financial responsibility. Normalized noninterest expense for the
first nine months of 2008 has decreased 3.0%. Nonperforming loans
increased $5.2 million at September 30, 2008 to $49.3 million
compared to $44.2 million at prior quarter-end and $31.5 million
for prior year quarter ended September 30, 2007. The majority of
our nonperforming loans continue to be in our Central Kentucky
Region; however, all regions have seen an increase during the past
quarter with the changes in national economic conditions,
particularly the price of gasoline. Our loan portfolio increased an
annualized 7.4% during the quarter with $42.4 million in growth.
Loan growth from prior year third quarter was $81.5 million. Our
investment portfolio decreased $24.0 million for the quarter,
primarily as a result of the other than temporary impairment charge
for auction rate securities discussed above. Our investment
portfolio declined $74.9 million year over year primarily resulting
from the use of the liquidity in the portfolio to fund loan growth
and manage the net interest margin. Net Interest Income Our
quarterly net interest margin increased 9 basis points from prior
quarter and 11 basis points from prior year third quarter, and our
net interest margin for the nine months ended September 30, 2008
increased 9 basis points compared to the same period in 2007. Net
interest income for the quarter increased 3.2% from prior quarter
but declined 0.4% from prior year third quarter as average earning
assets decreased 0.3% and 2.9%, respectively, for the same periods.
Net interest income for the nine months ended September 30, 2008
decreased $0.6 million from prior year as the cost of interest
bearing funds decreased 103 basis points while the yield on average
earning assets decreased 80 basis points and average earning assets
declined $93.7 million. Noninterest Income The significant decline
in noninterest income occurred as a result of the $13.5 million
other than temporary impairment charge for the auction rate
securities. Normalized noninterest income for the third quarter
2008 decreased 2.0% from prior quarter and 4.5% from prior year
third quarter. Normalized noninterest income for the first nine
months of 2008 increased 1.9% from prior year with increases in
gains on sales of loans, deposit service charges, and trust revenue
offset by a decrease in the fair value of mortgage servicing
rights. Noninterest Expense Noninterest expense for the quarter
increased 4.2% from prior quarter and 10.2% from prior year third
quarter. Commensurate with the U.S. Treasury placing Freddie Mac
and Fannie Mae into conservatorship on September 7, 2008, CTBI
recorded a $0.8 million charge relative to trust activity for which
it had financial responsibility. Normalized noninterest expense for
the first nine months of 2008 has decreased 3.0%. Balance Sheet
Review CTBI�s total assets at $2.9 billion increased an annualized
4.2% from prior quarter but decreased 0.7% from prior year third
quarter. Loans outstanding at September 30, 2008 were $2.3 billion
reflecting an annualized 7.4% growth during the quarter and a 3.6%
growth from September 30, 2007. CTBI's investment portfolio,
however, decreased 7.1% from prior quarter and 19.4% from September
30, 2007 as a result of the use of the liquidity in our investment
portfolio to fund loan growth and the other than temporary
impairment charge for auction rate securities. Deposits, including
repurchase agreements, at $2.4 billion increased an annualized 1.9%
from prior quarter but are 1.9% below prior year third quarter.
CTBI's use of the liquidity in the investment portfolio to fund
loan growth versus growing deposits helped manage and increase the
net interest margin. Shareholders� equity at September 30, 2008 was
$305.0 million compared to $306.2 million at June 30, 2008 and
$294.9 at September 30, 2007. CTBI's annualized dividend yield to
shareholders as of September 30, 2008 was 3.37%. Asset Quality
Economic conditions continue to be challenging for both our
business and individual customers as gasoline prices have increased
and uncertainty has developed on main street with the current
credit crisis. Nonperforming loans increased during the third
quarter by $5.2 million with increases in all of our regions.
CTBI's total nonperforming loans at September 30, 2008 were $49.3
million compared to $44.2 million at June 30, 2008 and $31.5
million at September 30, 2007. Our loan portfolio management
processes focus on maintaining appropriate reserves for potential
losses. Foreclosed properties increased during the third quarter
2008 to $9.4 million from the $9.1 million at June 30, 2008 and the
$6.6 million at September 30, 2007. Sales of foreclosed properties
during the first nine months of 2008 totaled $4.2 million while new
foreclosed properties totaled $5.9 million. Net loan charge-offs
for the quarter of $2.1 million, or 0.36% of average loans
annualized, was a decrease from prior quarter's 0.38% of average
loans annualized but an increase from the 0.30% for prior year
third quarter. Allocations to loan loss reserve were $2.9 million
for the quarter ended September 30, 2008 compared to $2.6 million
for the quarter ended June 30, 2008 and $1.9 million for the
quarter ended September 30, 2007. Our loan loss reserve as a
percentage of total loans outstanding at September 30, 2008
increased to 1.29% compared to 1.28% at June 30, 2008 and 1.25% at
September 30, 2007. The adequacy of our loan loss reserve is
analyzed quarterly and adjusted as necessary. Significant Industry
Changes On October 3, 2008, the Emergency Economic Stabilization
Act of 2008 (EESA) was signed into law. This legislation was
designed to address the credit and liquidity crisis affecting the
financial system in the United States. A number of provisions of
the EESA address efforts to mitigate home foreclosures and to
further assist homeowners facing foreclosure. The EESA also
provides for a temporary increase in the standard maximum deposit
insurance amount from $100,000 to $250,000 through December 31,
2009. Another significant change as a result of the EESA related to
a change in the tax treatment of losses on the preferred stock of
Freddie Mac and Fannie Mae held by financial institutions. Under
the EESA, these securities are afforded ordinary gain and loss
treatment and a tax benefit is allowed for such losses. The EESA
was designed to provide the U.S. Treasury with a wide array of
options to facilitate an economic recovery. This was evidenced on
September 13, 2008 when the U.S. Treasury announced its intention
to make equity investments in "healthy" banks as a means to inject
capital into the credit markets. As the economy and global markets
react, it is anticipated that the Treasury's plan will continue to
evolve. 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. CTBI�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
CTBI 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 CTBI�s results. These statements are representative
only on the date hereof, and CTBI undertakes no obligation to
update any forward-looking statements made. Community Trust
Bancorp, Inc., with assets of $2.9 billion, is headquartered in
Pikeville, Kentucky and has 71 banking locations across eastern,
northeast, central, and south central Kentucky, six banking
locations in southern West Virginia, and five trust offices across
Kentucky. Additional information follows. Community Trust Bancorp,
Inc. Financial Summary (Unaudited) September 30, 2008 (in thousands
except per share data and # of employees) � � � � �
ThreeMonthsEndedSeptember 30, 2008 ThreeMonthsEndedJune 30, 2008
ThreeMonthsEndedSeptember 30, 2007 NineMonthsEndedSeptember 30,
2008 NineMonthsEndedSeptember 30, 2007 Interest income $ 41,704 $
41,670 $ 49,719 $ 128,054 $ 148,983 Interest expense � 15,205 � �
15,988 � � 23,127 � � 49,565 � � 69,890 � Net interest income
26,499 25,682 26,592 78,489 79,093 Loan loss provision 2,875 2,648
1,915 7,892 4,231 � Gains on sales of loans 292 494 384 1,332 996
Deposit service charges 5,739 5,503 5,302 16,341 15,436 Trust
revenue 1,260 1,298 1,240 3,749 3,619 Loan related fees 686 1,079
606 2,064 2,494 Securities gains (13,461 ) - - (13,511 ) - Other
noninterest income � 1,515 � � 1,307 � � 2,402 � � 4,480 � � 4,861
� Total noninterest income (3,969 ) 9,681 9,934 14,455 27,406 �
Personnel expense 10,287 10,600 9,604 31,598 31,818 Occupancy and
equipment 2,803 2,822 2,843 8,304 8,707 Amortization of core
deposit intangible 159 159 159 476 476 Other noninterest expense �
8,051 � � 6,862 � � 6,718 � � 21,366 � � 21,757 � Total noninterest
expense � 21,300 � � 20,443 � � 19,324 � � 61,744 � � 62,758 � �
Net income before taxes (1,645 ) 12,272 15,287 23,308 39,510 Income
taxes � (1,068 ) � 3,652 � � 4,811 � � 6,720 � � 12,154 � Net
income $ (577 ) $ 8,620 � $ 10,476 � $ 16,588 � $ 27,356 � � Memo:
TEQ interest income $ 42,046 $ 42,015 $ 50,098 $ 129,108 $ 150,132
� Average shares outstanding 15,011 14,989 15,183 15,000 15,186
Basic earnings per share $ (0.04 ) $ 0.58 $ 0.69 $ 1.11 $ 1.80
Diluted earnings per share $ (0.04 ) $ 0.57 $ 0.68 $ 1.09 $ 1.77
Dividends per share $ 0.29 $ 0.29 $ 0.27 $ 0.87 $ 0.81 � Average
balances: Loans, net of unearned income $ 2,291,722 $ 2,264,175 $
2,222,451 $ 2,265,265 $ 2,195,940 Earning assets 2,688,752
2,697,670 2,770,100 2,688,498 2,782,217 Total assets 2,909,419
2,915,382 2,989,727 2,908,448 3,001,713 Deposits 2,291,996
2,301,477 2,356,589 2,294,120 2,364,974 Interest bearing
liabilities 2,112,403 2,137,503 2,233,762 2,130,630 2,256,526
Shareholders' equity 311,665 309,269 296,001 309,307 291,799 �
Performance ratios: Return on average assets (0.08 %) 1.19 % 1.39 %
0.76 % 1.22 % Return on average equity (0.74 %) 11.21 % 14.04 %
7.16 % 12.53 % Yield on average earning assets (tax equivalent)
6.22 % 6.26 % 7.18 % 6.41 % 7.21 % Cost of interest bearing funds
(tax equivalent) 2.86 % 3.01 % 4.11 % 3.11 % 4.14 % Net interest
margin (tax equivalent) 3.97 % 3.88 % 3.86 % 3.95 % 3.86 %
Efficiency ratio (tax equivalent) 58.63 % 57.25 % 52.36 % 57.43 %
58.30 % � Loan charge-offs $ 2,658 $ 2,818 $ 2,311 $ 7,886 $ 5,804
Recoveries � (593 ) � (667 ) � (641 ) � (1,846 ) � (1,980 ) Net
charge-offs $ 2,065 $ 2,151 $ 1,670 $ 6,040 $ 3,824 � Market Price:
High $ 46.32 $ 31.96 $ 33.46 $ 46.32 $ 41.50 Low 15.99 26.25 26.47
15.99 26.47 Close 34.40 26.26 30.01 34.40 30.01 Community Trust
Bancorp, Inc. Financial Summary (Unaudited) September 30, 2008 (in
thousands except per share data and # of employees) � � � � As
ofSeptember 30, 2008 � As ofJune 30, 2008 � As ofSeptember 30, 2007
Assets: Loans, net of unearned $ 2,316,020 $ 2,273,646 $ 2,234,494
Loan loss reserve � (29,908 ) � (29,096 ) � (27,933 ) Net loans
2,286,112 2,244,550 2,206,561 Loans held for sale 2,175 1,494 1,719
Securities AFS 284,913 306,869 352,973 Securities HTM 27,219 29,296
34,107 Other equity investments 29,036 28,703 28,041 Other earning
assets 28,790 10,994 45,993 Cash and due from banks 77,996 84,169
83,804 Premises and equipment 51,890 52,448 53,650 Goodwill and
core deposit intangible 66,500 66,658 67,134 Other assets � 54,297
� � 53,163 � � 55,160 � Total Assets $ 2,908,928 � $ 2,878,344 � $
2,929,142 � � Liabilities and Equity: NOW accounts $ 17,780 $
17,939 $ 17,942 Savings deposits 625,377 625,574 664,561 CD's
>=$100,000 436,234 434,352 436,833 Other time deposits � 757,698
� � 752,581 � � 787,171 � Total interest bearing deposits 1,837,089
1,830,446 1,906,507 Noninterest bearing deposits � 452,678 � �
447,677 � � 426,368 � Total deposits 2,289,767 2,278,123 2,332,875
Repurchase agreements 142,238 142,453 146,876 Other interest
bearing liabilities 142,285 120,030 117,762 Noninterest bearing
liabilities � 29,650 � � 31,587 � � 36,713 � Total liabilities
2,603,940 2,572,193 2,634,226 Shareholders' equity � 304,988 � �
306,151 � � 294,916 � Total Liabilities and Equity $ 2,908,928 � $
2,878,344 � $ 2,929,142 � � Ending shares outstanding 15,055 14,989
15,032 Memo: Market value of HTM securities $ 27,065 $ 29,157 $
33,090 � 90 days past due loans $ 18,145 $ 15,651 $ 12,261
Nonaccrual loans 31,162 28,501 19,192 Restructured loans - - 61
Foreclosed properties 9,409 9,076 6,624 � Tier 1 leverage ratio
10.45 % 10.52 % 9.88 % Tier 1 risk based ratio 13.11 % 13.40 %
12.75 % Total risk based ratio 14.36 % 14.65 % 13.99 % FTE
employees 991 1,006 999 Community Trust Bancorp, Inc. Financial
Summary (Unaudited) September 30, 2008 (in thousands except per
share data and # of employees) � Community Trust Bancorp, Inc.
reported earnings for the three and nine months ending September
30, 2008 and 2007 as follows: � � � � � � Three Months Ended Nine
Months Ended September 30 September 30 2008 2007 2008 2007 Net
income $ (577 ) $ 10,476 $ 16,588 $ 27,356 � Basic earnings per
share $ (0.04 ) $ 0.69 $ 1.11 $ 1.80 � Diluted earnings per share $
(0.04 ) $ 0.68 $ 1.09 $ 1.77 � Average shares outstanding 15,011
15,183 15,000 15,186 � Total assets (end of period) $ 2,908,928 $
2,929,142 � Return on average equity -0.74 % 14.04 % 7.16 % 12.53 %
� Return on average assets -0.08 % 1.39 % 0.76 % 1.22 % � Provision
for loan losses $ 2,875 $ 1,915 $ 7,892 $ 4,231 � Gains on sales of
loans $ 292 $ 384 $ 1,332 $ 996
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