Community Trust Bancorp, Inc. (NASDAQ: CTBI):
Earnings Summary
(in thousands except per share data)
3Q
2010
2Q
2010
3Q
2009
9 Months
2010
9 Months
2009
Net income $ 8,450 $ 8,553 $ 5,584 $ 23,794 $ 18,101 Earnings per
share $ 0.55 $ 0.56 $ 0.37 $ 1.56 $ 1.20 Earnings per
share--diluted $ 0.55 $ 0.56 $ 0.37 $ 1.56 $ 1.19 Return on
average assets 1.04% 1.06% 0.72% 1.00% 0.80% Return on average
equity 9.95% 10.40% 6.94% 9.62% 7.65% Efficiency ratio 59.52%
60.41% 61.67% 59.79% 64.59% Tangible common equity 8.58% 8.43%
8.51% 8.58% 8.51% Dividends declared per share $ 0.305 $
0.30 $ 0.30 $ 0.905 $ 0.90 Book value per share $ 22.10 $ 21.69 $
21.04 $ 22.10 $ 21.04 Weighted average shares 15,239 15,228
15,145 15,223 15,116 Weighted average shares--diluted
15,275 15,305 15,198
15,260 15,207
Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings
for the third quarter 2010 of $8.5 million or $0.55 per basic share
compared to $5.6 million or $0.37 per basic share earned during the
third quarter of 2009 and $8.6 million or $0.56 per basic share
earned during the quarter ended June 30, 2010. Earnings for the
nine months ended September 30, 2010 were $23.8 million or $1.56
per basic share compared to $18.1 million or $1.20 per basic share
for the nine months ended September 30, 2009.
CTBI continues to maintain a significantly higher level of
capital than required by regulatory authorities to be designated as
well-capitalized. On September 30, 2010, our Tangible Common
Equity/Tangible Assets Ratio remained considerably higher than our
peer institutions at 8.58%, our Tier 1 Leverage Ratio of 10.22% was
522 basis points higher than the 5.00% required, our Tier 1
Risk-Based Capital Ratio of 13.37% was 737 basis points higher than
the required 6.00%, and our Total Risk-Based Capital Ratio of
14.62% was 462 basis points higher than the 10.00% regulatory
requirement for this designation.
Third Quarter 2010 Highlights
- CTBI's quarterly basic earnings per
share increased $0.18 per share from third quarter 2009 but
decreased $0.01 per share from second quarter 2010. Year-to-date
basic earnings per share increased $0.36 per share from prior year.
Year-to-date earnings were positively impacted by increased net
interest income, partially offset by decreased noninterest income
and increased noninterest expense.
- CTBI experienced significant
improvement in our net interest margin year over year; however, our
net interest margin for the quarter decreased 5 basis points from
second quarter 2010.
- As problem loans continued to work
through the collection process, nonperforming loans increased from
the $45.2 million at September 30, 2009 to $56.6 million but
decreased $5.7 million during the third quarter 2010 compared to
$62.3 million at June 30, 2010. The linked quarter decrease in
nonperforming loans was in the nonaccrual classification.
Nonperforming assets increased $15.9 million from prior year third
quarter but decreased $4.8 million from prior quarter-end.
- The loan loss provision for the quarter
decreased $2.1 million from prior year same quarter but increased
$0.6 million from prior quarter. The loan loss provision for the
nine months ended September 30, 2010 increased $0.2 million from
prior year.
- Net loan charge-offs for the quarter
ended September 30, 2010 of $5.6 million, or 0.91% of average loans
annualized, was an increase from the $5.2 million, or 0.87%,
experienced for the second quarter 2009 and from prior quarter’s
$1.8 million, or 0.30%, as previously identified problem credits
work through the liquidation process.
- Our loan loss reserves as a percentage
of total loans outstanding at September 30, 2010 were 1.40%
compared to 1.33% at September 30, 2009 and 1.48% at June 30, 2010
as specific reserves were utilized in the liquidation of previously
identified problem credits.
- Noninterest income increased for the
quarter ended September 30, 2010 compared to same period 2009 and
prior quarter as a result of increased gains on sales of loans and
the change in the fair value of our mortgage servicing rights
portfolio. Year-to-date noninterest income decreased $1.1 million
due to declines in gains on sales of loans and the fair value of
mortgage servicing rights, partially offset by increases in trust
revenue and deposit service charges.
- Our loan portfolio increased $42.8
million year over year and $4.3 million, an annualized rate of
0.7%, during the quarter with increases in the commercial and
residential loan portfolios offset partially by a decline in the
consumer loan portfolio.
- Our investment portfolio increased
$38.2 million from prior year but declined $20.4 million during the
quarter.
- Our tangible common equity/tangible
assets ratio remains strong at 8.58%.
- CTBI has received both LaFollette
First National Corporation shareholder approval and regulatory
approval for its acquisition of LaFollette First National
Corporation and First National Bank of LaFollette, the wholly-owned
subsidiary of LaFollette Corporation. CTBI anticipates the
acquisition will be completed in November 2010.
Net Interest Income
CTBI saw improvement in its net interest margin of 37 basis
points for the first nine months of 2010 and 14 basis points for
the third quarter 2010 compared to 2009; however, we saw a 5 basis
point decline from prior quarter. Net interest income for the
quarter increased 8.6% from prior year third quarter and 0.3% from
prior quarter with average earning assets increasing 4.4% and 0.4%,
respectively, for the same periods. The yield on average earning
assets decreased 29 basis points from prior year third quarter and
10 basis points from prior quarter as higher yielding investment
opportunities are limited. The cost of interest bearing funds
decreased 56 basis points and 5 basis points, respectively, for the
same periods. Net interest income for the nine months ended
September 30, 2010 increased 14.4% from prior year.
Noninterest Income
Noninterest income for the quarter ended September 30, 2010
increased 14.9% and 11.0% from prior year third quarter and prior
quarter, respectively. Year-to-date noninterest income declined
3.4% from prior year. The decrease in noninterest income was
significantly impacted by decreased gains on sales of loans as 2009
was a period of significant refinancing of residential real estate
loans, as well as a $1.2 million decline in the fair value of our
mortgage servicing rights. The decline in these noninterest income
sources was partially offset by increases in trust and brokerage
revenue and deposit service charges.
Noninterest Expense
Noninterest expense for the quarter increased 6.3% from prior
year third quarter and 1.5% from prior quarter. Noninterest expense
for the first nine months of 2010 increased 1.6% from 2009 as
increased personnel expenses were offset by a decrease in FDIC
insurance premiums and special assessment.
Balance Sheet Review
CTBI continues to experience internal growth of its banking
franchise. Total assets at $3.2 billion increased 6.5% from the
third quarter 2009 and an annualized 2.8% during the quarter. Loans
outstanding at September 30, 2010 were $2.4 billion with a 1.8%
growth from prior year and an annualized 0.7% growth from June 30,
2010. Loan growth during the quarter of $4.7 million in the
commercial loan portfolio and $9.8 million in the residential loan
portfolio was partially offset by a decline in the consumer loan
portfolio of $10.1 million. CTBI's investment portfolio increased
$38.2 million over prior year third quarter but decreased $20.4
million from prior quarter as CTBI continues to experience growth
in its deposit base while loan demand remains weak. Deposits,
including repurchase agreements, at $2.8 billion increased 6.9%
from September 30, 2009 and an annualized 1.3% from prior quarter
end.
Shareholders’ equity at September 30, 2010 was $336.8 million
compared to $318.6 million at September 30, 2009 and $330.3 million
at June 30, 2010. CTBI's annualized dividend yield to shareholders
as of September 30, 2010 was 4.50%.
Asset Quality
CTBI's total nonperforming loans were $56.6 million at September
30, 2010, an increase from the $45.2 million at September 30, 2009
but a decrease from the $62.3 million at June 30, 2010. The quarter
over quarter decrease in nonperforming loans is primarily
attributable to the liquidation process of one large coal-related
credit and one hotel/motel credit discussed in prior earnings
releases. Both loans had specific reserves in place that were more
than adequate to cover the amounts charged-off. Loans 30-89 days
past due at $29.9 million increased $10.3 million from September
30, 2009 and $6.3 million during the quarter. The quarter over
quarter increase in 30-89 days past due loans is a result of two
commercial real estate secured credit relationships. One
relationship is secured by income-producing properties while the
second is secured by 1-4 family properties. Both loans are
well-secured based upon current property valuations. Our loan
portfolio management processes focus on the immediate
identification, management, and resolution of problem loans to
maximize recovery and minimize loss.
Our level of foreclosed properties increased to $41.1 million
for the third quarter 2010 compared to $36.6 million at September
30, 2009 and $40.1 million at June 30, 2010. Sales of foreclosed
properties for the nine months ended September 30, 2010 totaled
$5.1 million while new foreclosed properties totaled $9.1 million.
Our nonperforming loans and foreclosed properties remain primarily
concentrated in our Central Kentucky Region.
Net loan charge-offs for the quarter were $5.6 million, or 0.91%
of average loans annualized, an increase from prior year third
quarter's $5.2 million or 0.87% and prior quarter’s $1.8 million or
0.30%. Of the total net charge-offs for the quarter, $4.3 million
was in commercial loans, $0.8 million was in indirect auto loans,
and $0.3 million was in residential real estate mortgage loans.
Specific reserves covered 94.8% of the commercial loan charge-offs.
Allocations to loan loss reserves were $3.7 million for the quarter
ended September 30, 2010 compared to $5.8 million for the quarter
ended September 30, 2009 and $3.1 million for the quarter ended
June 30, 2010. Our loan loss reserves as a percentage of total
loans outstanding at September 30, 2010 was 1.40% compared to 1.33%
at September 30, 2009 and 1.48% at June 30, 2010. Although there
was an increase in net charge-offs during the quarter, management
believes the current loan loss reserve is adequate. The adequacy of
our loan loss reserves is analyzed quarterly and adjusted as
necessary with a focus on maintaining appropriate reserves for
potential losses. The analysis includes an individual loan review
including current valuation of the collateral. Specific reserves
are allocated to address any identified shortfalls in collateral
while additional reserves address many other considerations,
including but not limited to historical losses, loss trends, and
current economic conditions, for adequate reserve coverage.
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 $3.2 billion, is
headquartered in Pikeville, Kentucky and has 70 banking locations
across eastern, northeastern, 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, 2010 (in thousands except per
share data and # of employees)
Three Three Three Nine Nine Months Months Months Months Months
Ended Ended Ended Ended Ended September 30, 2010 June 30, 2010
September 30, 2009 September 30, 2010 September 30, 2009 Interest
income $ 38,315 $ 38,444 $ 38,756 $ 115,256 $ 114,357 Interest
expense 8,938 9,166 11,711
27,256 37,429 Net interest
income 29,377 29,278 27,045 88,000 76,928 Loan loss provision 3,676
3,106 5,772 12,504 12,275 Gains on sales of loans 575 337
341 1,354 3,581 Deposit service charges 5,920 5,949 5,721 17,166
16,187 Trust revenue 1,492 1,458 1,345 4,374 3,756 Loan related
fees 862 46 525 1,748 2,767 Securities gains - - (1 ) - 514 Other
noninterest income 1,748 1,752
1,295 5,238 4,129 Total
noninterest income 10,597 9,542 9,226 29,880 30,934
Personnel expense 11,560 11,632 10,296 34,637 32,214 Occupancy and
equipment 2,675 2,701 2,948 8,100 8,854 FDIC insurance premiums
1,118 1,140 1,086 3,257 4,832 Amortization of core deposit
intangible 72 159 159 390 476 Other noninterest expense
8,573 8,023 8,090 24,710
23,578 Total noninterest expense 23,998
23,655 22,579 71,094
69,954 Net income before taxes 12,300
12,059 7,920 34,282 25,633 Income taxes 3,850
3,506 2,336 10,488 7,532
Net income $ 8,450 $ 8,553 $ 5,584 $
23,794 $ 18,101 Memo: TEQ interest income $
38,659 $ 38,780 $ 39,097 $ 116,277 $ 115,321 Average shares
outstanding 15,239 15,228 15,145 15,223 15,116 Diluted average
shares outstanding 15,275 15,305 15,198 15,260 15,207 Basic
earnings per share $ 0.55 $ 0.56 $ 0.37 $ 1.56 $ 1.20 Diluted
earnings per share $ 0.55 $ 0.56 $ 0.37 $ 1.56 $ 1.19 Dividends per
share $ 0.305 $ 0.30 $ 0.30 $ 0.905 $ 0.90
Average
balances: Loans, net of unearned income $ 2,441,432 $ 2,440,353
$ 2,396,918 $ 2,439,646 $ 2,367,577 Earning assets 2,981,517
2,970,867 2,855,199 2,940,679 2,831,555 Total assets 3,238,075
3,222,645 3,069,950 3,194,600 3,040,342 Deposits 2,588,941
2,582,042 2,426,908 2,555,046 2,399,331 Interest bearing
liabilities 2,347,844 2,349,394 2,245,748 2,324,037 2,223,960
Shareholders' equity 336,772 329,888 319,387 330,701 316,370
Performance ratios: Return on average assets 1.04 % 1.06 %
0.72 % 1.00 % 0.80 % Return on average equity 9.95 % 10.40 % 6.94 %
9.62 % 7.65 % Yield on average earning assets (tax equivalent) 5.14
% 5.24 % 5.43 % 5.29 % 5.45 % Cost of interest bearing funds (tax
equivalent) 1.51 % 1.56 % 2.07 % 1.57 % 2.25 % Net interest margin
(tax equivalent) 3.95 % 4.00 % 3.81 % 4.05 % 3.68 % Efficiency
ratio (tax equivalent) 59.52 % 60.41 % 61.67 % 59.79 % 64.59 %
Loan charge-offs $ 6,449 $ 2,617 $ 5,987 $ 13,382 $ 13,557
Recoveries (855 ) (793 ) (750 ) (2,473
) (2,418 ) Net charge-offs $ 5,594 $ 1,824 $ 5,237 $ 10,909
$ 11,139
Market Price: High $ 28.00 $ 31.56 $ 28.49 $
31.56 $ 37.17 Low 24.50 24.89 25.15 22.15 22.55 Close 27.09 25.10
26.17 27.09 26.17
Community Trust Bancorp, Inc.
Financial Summary (Unaudited)
September 30, 2010
(in thousands except per share data and #
of employees)
As of As of As of September 30, 2010 June 30, 2010 September
30, 2009
Assets: Loans, net of unearned $ 2,445,507 $
2,441,222 $ 2,402,697 Loan loss reserve (34,238 )
(36,156 ) (31,957 ) Net loans 2,411,269 2,405,066 2,370,740
Loans held for sale 1,223 1,466 754 Securities AFS 332,235 352,616
278,961 Securities HTM 1,662 1,662 16,687 Other equity investments
29,057 29,054 29,051 Other earning assets 157,258 122,728 77,978
Cash and due from banks 71,149 71,196 63,122 Premises and equipment
47,805 48,403 50,172 Goodwill and core deposit intangible 65,318
65,390 65,865 Other assets 114,764 111,711
82,046
Total Assets $ 3,231,740
$ 3,209,292 $ 3,035,376
Liabilities and
Equity: NOW accounts $ 19,500 $ 18,553 $ 19,329 Savings
deposits 635,056 631,990 628,954 CD's >=$100,000 583,884 608,952
493,911 Other time deposits 817,796 816,731
799,664 Total interest bearing deposits
2,056,236 2,076,226 1,941,858 Noninterest bearing deposits
519,059 494,901 462,096 Total
deposits 2,575,295 2,571,127 2,403,954 Repurchase agreements
188,164 183,287 180,348 Other interest bearing liabilities 94,047
89,865 93,880 Noninterest bearing liabilities 37,390
34,682 38,554 Total liabilities
2,894,896 2,878,961 2,716,736 Shareholders' equity 336,844
330,331 318,640
Total
Liabilities and Equity $ 3,231,740 $ 3,209,292 $
3,035,376 Ending shares outstanding 15,239 15,228
15,146 Memo: Market value of HTM securities $ 1,667 $ 1,662 $
16,865 30 - 89 days past due loans $ 29,935 $ 23,677 $
19,635 90 days past due loans 20,252 16,857 15,685 Nonaccrual loans
36,329 45,435 29,476 Restructured loans (excluding 90 days past due
and nonaccrual) 6,377 5,196 - Foreclosed properties 41,083 40,105
36,607 Other repossessed assets 193 226 176 Tier 1 leverage
ratio 10.22 % 10.12 % 10.25 % Tier 1 risk based ratio 13.37 % 13.20
% 12.92 % Total risk based ratio 14.62 % 14.46 % 14.17 % Tangible
equity to tangible assets ratio 8.58 % 8.43 % 8.51 % FTE employees
980 992 987
Community Trust Bancorp, Inc.
Financial Summary (Unaudited)
September 30, 2010
(in thousands except per share data and #
of employees)
Community Trust Bancorp, Inc. reported earnings for the
three and nine months ending September 30, 2010 and 2009 as
follows: Three Months Ended Nine Months
Ended
September 30 September 30 2010 2009
2010 2009 Net income $ 8,450 $ 5,584 $ 23,794 $ 18,101 Basic
earnings per share $ 0.55 $ 0.37 $ 1.56 $ 1.20 Diluted
earnings per share $ 0.55 $ 0.37 $ 1.56 $ 1.19 Average
shares outstanding 15,239 15,145 15,223 15,116 Total assets
(end of period) $ 3,231,740 $ 3,035,376 Return on average
equity 9.95 % 6.94 % 9.62 % 7.65 % Return on average assets
1.04 % 0.72 % 1.00 % 0.80 % Provision for loan losses $
3,676 $ 5,772 $ 12,504 $ 12,275 Gains on sales of loans $
575 $ 341 $ 1,354 $ 3,581
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