Community Trust Bancorp, Inc. (NASDAQ: CTBI):
Earnings Summary
(in thousands except per share data)
4Q
2010
3Q
2010
4Q
2009
Year
2010
Year
2009
Net income $ 9,240 $ 8,450 $ 6,958 $ 33,034 $ 25,059 Earnings per
share $ 0.61 $ 0.55 $ 0.46 $ 2.17 $ 1.66 Earnings per share—diluted
$ 0.60 $ 0.55 $ 0.46 $ 2.16 $ 1.65 Return on average assets
1.11% 1.04% 0.90% 1.03% 0.82% Return on average equity 10.71% 9.95%
8.58% 9.90% 7.89% Efficiency ratio 58.50% 59.52% 60.74% 59.45%
63.56% Tangible common equity 8.27% 8.58% 8.47% 8.27% 8.47%
Dividends declared per share $ 0.305 $ 0.305 $ 0.30 $ 1.21 $ 1.20
Book value per share $ 22.16 $ 22.10 $ 21.17 $ 22.16 $ 21.17
Weighted average shares 15,265 15,239 15,168 15,234 15,129 Weighted
average shares—diluted 15,294 15,275
15,200 15,259 15,169
Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings
increased 32.8% for the fourth quarter 2010 to $9.2 million, or
$0.61 per basic share, compared to $7.0 million, or $0.46 per basic
share, earned during the fourth quarter of 2009 and 9.4% from the
$8.5 million, or $0.55 per basic share, earned during the quarter
ended September 30, 2010. Earnings for the year ended December 31,
2010 increased 31.8% to $33.0 million, or $2.17 per basic share,
compared to $25.1 million, or $1.66 per basic share, for the year
ended December 31, 2009.
CTBI continues to maintain a significantly higher level of
capital than required by regulatory authorities to be designated as
well-capitalized. On December 31, 2010, our Tangible Common
Equity/Tangible Assets Ratio remains strong at 8.27%, our Tier 1
Leverage Ratio of 10.16% was 516 basis points higher than the 5.00%
required, our Tier 1 Risk-Based Capital Ratio of 12.90% was 690
basis points higher than the required 6.00%, and our Total
Risk-Based Capital Ratio of 14.10% was 410 basis points higher than
the 10.00% regulatory requirement for this designation.
Fourth Quarter and Year 2010 Highlights
- CTBI completed the acquisition of
LaFollette First National Corporation and First National Bank of
LaFollette, the wholly-owned subsidiary of LaFollette Corporation
(“LaFollette”), on November 17, 2010.
- CTBI's quarterly basic earnings per
share increased $0.15 per share from fourth quarter 2009 and $0.06
per share from third quarter 2010. Basic earnings per share for the
year 2010 increased $0.51 per share from prior year. Earnings for
the year 2010 were positively impacted by increased net interest
income and decreased provision for loan loss, partially offset by
decreased noninterest income and increased noninterest expense. The
acquisition of LaFollette increased earnings by $0.02 per basic
share.
- CTBI experienced significant
improvement in our net interest margin year over year increasing
from 3.77% for the year ended December 31, 2009 to 4.07% for the
year ended December 31, 2010 as deposit expense decreased
significantly.
- As problem loans continued to work
through the collection process, nonperforming loans increased from
the $41.3 million at December 31, 2009 and $56.6 million at
September 30, 2010 to $61.9 million at December 31, 2010. December
31, 2010 information includes $2.1 million in nonperforming loans
for First National Bank of LaFollette. The linked quarter increase
in nonperforming loans was in the nonaccrual classification.
Nonperforming assets increased $26.1 million from prior year fourth
quarter and $7.1 million from prior quarter-end.
- The loan loss provision for the quarter
decreased $1.2 million from prior year same quarter but increased
$0.3 million from prior quarter. The loan loss provision for the
year ended December 31, 2010 decreased $1.0 million from prior
year.
- Net loan charge-offs for the quarter
ended December 31, 2010 of $3.4 million, or 0.54% of average loans
annualized, was a decrease from the $4.5 million, or 0.73%,
experienced for the fourth quarter 2009 and from prior quarter’s
$5.6 million, or 0.91%. Net loan charge-offs for the year 2010
decreased from $15.6 million for the year 2009 to $14.3 million for
the year 2010.
- Our loan loss reserve as a percentage
of total loans outstanding at December 31, 2010 was 1.34% compared
to 1.34% at December 31, 2009 and 1.40% at September 30, 2010.
Generally accepted accounting principles require that expected
credit losses associated with loans obtained in an acquisition be
reflected in the estimation of loan fair value as of the
acquisition date and prohibits any carryover of an allowance for
credit losses. Excluding amounts related to loans obtained in the
fourth quarter 2010 acquisition of LaFollette, the
allowance-to-legacy loan ratio was 1.40% and 1.34%, respectively,
at December 31, 2010 and 2009, and 1.40% at September 30,
2010.
- Noninterest income increased for the
quarter ended December 31, 2010 compared to same period 2009 and
prior quarter as a result of a $0.4 million increase in the fair
value of our mortgage servicing rights during the fourth quarter
2010. Noninterest income for the year 2010 decreased $0.5 million
from prior year due to declines in gains on sales of loans and the
fair value of our mortgage servicing rights, partially offset by
increases in trust and brokerage revenue and deposit service
charges.
- Our loan portfolio increased $169.4
million year over year and $159.7 million during the quarter,
including a $119.1 million increase resulting from the acquisition
of LaFollette.
- Our investment portfolio increased
$55.8 million from prior year and $6.4 million during the quarter,
including the $29.2 million increase from the LaFollette
acquisition.
- Our tangible common equity/tangible
assets ratio remains strong at 8.27%. The acquisition of LaFollette
was an all cash transaction and decreased our tangible common
equity/tangible assets ratio by 56 basis points.
Net Interest Income
CTBI saw improvement in its net interest margin of 30 basis
points for the year 2010 and 9 basis points for the fourth quarter
2010 compared to 2009, and a 20 basis point improvement from prior
quarter. Net interest income for the quarter increased 9.3% from
prior year fourth quarter and 6.4% from prior quarter with average
earning assets increasing 7.0% and 1.5%, respectively, for the same
periods. The yield on average earning assets decreased 28 basis
points from prior year fourth quarter but improved 5 basis points
from prior quarter. The cost of interest bearing funds decreased 46
basis points and 18 basis points, respectively, for the same
periods. The decrease in the cost of interest bearing funds was
primarily the result of the repricing of our CD products which
decreased 27 basis points during the quarter. Net interest income
for the year ended December 31, 2010 increased 13.0% from prior
year.
Noninterest Income
Noninterest income for the quarter ended December 31, 2010
increased 5.3% and 4.2% from prior year fourth quarter and prior
quarter, respectively. The quarterly increase was primarily a
result of a $0.4 million increase in the fair value of our mortgage
servicing rights during the fourth quarter 2010. Noninterest income
for the year 2010 declined 1.2% 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 $0.8 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 4.6% from prior
year fourth quarter and 4.0% from prior quarter. Noninterest
expense for the year 2010 increased 2.4% from 2009 as increased
personnel expenses were partially offset by a decrease in FDIC
insurance premiums and special assessment.
Balance Sheet Review
CTBI’s total assets at $3.4 billion increased $269.2 million, or
8.7%, from the fourth quarter 2009 and $124.1 million, or 3.8%,
during the quarter, including an increase of $193.7 million from
the acquisition of LaFollette. Loans outstanding at December 31,
2010 were $2.6 billion, increasing $169.4 million, or 7.0%, year
over year and $159.7 million, or 6.5%, during the quarter,
including a $119.1 million increase resulting from the acquisition
of LaFollette. Loan growth of $102.3 million in the commercial loan
portfolio and $103.2 million in the residential loan portfolio was
partially offset by a decline in the consumer loan portfolio of
$36.1 million. CTBI's investment portfolio increased $55.8 million,
or 19.6%, from prior year and $6.4 million, or 1.9%, during the
quarter, including the $29.2 million increase from LaFollette.
Deposits, including repurchase agreements, at $2.9 billion
increased $251.7 million, or 9.5%, from December 31, 2009 and
$130.9 million, or 4.7%, from prior quarter, including $174.5
million from the acquisition of LaFollette.
Shareholders’ equity at December 31, 2010 was $338.6 million
compared to $321.5 million at December 31, 2009 and $336.8 million
at September 30, 2010. CTBI's annualized dividend yield to
shareholders as of December 31, 2010 was 4.21%.
Asset Quality
CTBI's total nonperforming loans were $61.9 million at December
31, 2010, an increase from the $41.3 million at December 31, 2009
and the $56.6 million at September 30, 2010. Nonperforming loans
include an increase of $2.1 million from the acquisition of
LaFollette. The quarter over quarter increase in nonperforming
loans is primarily attributable to three large commercial credits.
One is an automobile floor plan and two are motel loans. Specific
reserves of $2.9 million have been established for two of these
loans. Loans 30-89 days past due at $28.9 million increased from
the $24.8 million at December 31, 2009 but declined from the $29.9
million from prior quarter, including a $3.7 million increase from
the LaFollette acquisition. 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 $42.9 million
for the fourth quarter 2010 compared to $37.3 million at December
31, 2009 and $41.1 million at September 30, 2010. The increase in
foreclosed properties includes $2.8 million from the acquisition of
LaFollette. Sales of foreclosed properties for the year ended
December 31, 2010 totaled $8.4 million while new foreclosed
properties totaled $11.7 million. Our nonperforming loans and
foreclosed properties remain primarily concentrated in our Central
Kentucky Region.
Net loan charge-offs for the quarter were $3.4 million, or 0.54%
of average loans annualized, a decrease from prior year fourth
quarter's $4.5 million or 0.73% and prior quarter’s $5.6 million or
0.91%. Of the total net charge-offs for the quarter, $2.5 million
was in commercial loans, $0.5 million was in indirect auto loans,
and $0.04 million was in residential real estate mortgage loans.
Allocations to loan loss reserves were $4.0 million for the quarter
ended December 31, 2010 compared to $5.2 million for the quarter
ended December 31, 2009 and $3.7 million for the quarter ended
September 30, 2010. Our loan loss reserve as a percentage of total
loans outstanding at December 31, 2010 was 1.34% compared to 1.34%
at December 31, 2009 and 1.40% at September 30, 2010. Generally
accepted accounting principles require that expected credit losses
associated with loans obtained in an acquisition be reflected in
the estimation of loan fair value as of the acquisition date and
prohibits any carryover of an allowance for credit losses.
Excluding amounts related to loans obtained in the fourth quarter
2010 acquisition of LaFollette, the allowance-to-legacy loan ratio
was 1.40% and 1.34%, respectively, at December 31, 2010 and 2009,
and 1.40% at September 30, 2010.
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 $3.4 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, four banking
locations in Tennessee, and five trust offices across Kentucky.
Additional information follows.
Community Trust Bancorp, Inc. Financial Summary
(Unaudited) December 31, 2010 (in thousands except per
share data and # of employees) Three Three
Three Twelve Twelve Months Months Months
Months Months Ended Ended Ended Ended Ended December 31, 2010
September 30, 2010 December 31, 2009 December 31, 2010 December 31,
2009 Interest income $ 39,255 $ 38,315 $ 38,693 $ 154,511 $ 153,050
Interest expense 8,001 8,938
10,111 35,257 47,540 Net
interest income 31,254 29,377 28,582 119,254 105,510 Loan loss
provision 3,980 3,676 5,193 16,484 17,468 Gains on sales of
loans 288 575 743 1,642 4,324 Deposit service charges 6,089 5,920
5,783 23,255 21,970 Trust revenue 1,472 1,492 1,291 5,846 5,047
Loan related fees 1,499 862 1,050 3,247 3,817 Securities gains - -
140 - 654 Other noninterest income 1,698 1,748
1,479 6,936 5,608
Total noninterest income 11,046 10,597 10,486 40,926 41,420
Personnel expense 12,627 11,560 11,347 47,264 43,561 Occupancy and
equipment 2,823 2,675 2,661 10,923 11,515 FDIC insurance premiums
1,153 1,118 963 4,410 5,795 Amortization of core deposit intangible
40 72 158 430 634 Other noninterest expense 8,313
8,573 8,718 33,023
32,296 Total noninterest expense 24,956
23,998 23,847 96,050
93,801 Net income before taxes 13,364 12,300 10,028
47,646 35,661 Income taxes 4,124 3,850
3,070 14,612 10,602 Net
income $ 9,240 $ 8,450 $ 6,958 $ 33,034
$ 25,059 Memo: TEQ interest income $ 39,610 $ 38,659
$ 39,023 $ 155,887 $ 154,344 Average shares outstanding
15,265 15,239 15,168 15,234 15,129 Diluted average shares
outstanding 15,294 15,275 15,200 15,259 15,169 Basic earnings per
share $ 0.61 $ 0.55 $ 0.46 $ 2.17 $ 1.66 Diluted earnings per share
$ 0.60 $ 0.55 $ 0.46 $ 2.16 $ 1.65 Dividends per share $ 0.305 $
0.305 $ 0.30 $ 1.21 $ 1.20
Average balances: Loans,
net of unearned income $ 2,525,256 $ 2,441,432 $ 2,432,234 $
2,461,225 $ 2,383,875 Earning assets 3,025,155 2,981,517 2,828,169
2,961,971 2,830,701 Total assets 3,295,719 3,238,075 3,067,154
3,220,087 3,047,100 Deposits 2,634,055 2,588,941 2,441,057
2,574,961 2,409,848 Interest bearing liabilities 2,392,413
2,347,844 2,235,089 2,341,272 2,226,765 Shareholders' equity
342,380 336,772 321,688 333,645 317,711
Performance
ratios: Return on average assets 1.11 % 1.04 % 0.90 % 1.03 %
0.82 % Return on average equity 10.71 % 9.95 % 8.58 % 9.90 % 7.89 %
Yield on average earning assets (tax equivalent) 5.19 % 5.14 % 5.47
% 5.26 % 5.45 % Cost of interest bearing funds (tax equivalent)
1.33 % 1.51 % 1.79 % 1.51 % 2.13 % Net interest margin (tax
equivalent) 4.15 % 3.95 % 4.06 % 4.07 % 3.77 % Efficiency ratio
(tax equivalent) 58.50 % 59.52 % 60.74 % 59.45 % 63.56 %
Loan charge-offs $ 4,254 $ 6,449 $ 5,302 $ 17,636 $ 18,859
Recoveries (841 ) (855 ) (795 ) (3,314
) (3,213 ) Net charge-offs $ 3,413 $ 5,594 $ 4,507 $ 14,322
$ 15,646
Market Price: High $ 29.91 $ 28.00 $ 27.08 $
31.56 $ 37.17 Low 26.52 24.50 22.41 22.15 22.41 Close 28.96 27.09
24.45 28.96 24.45
Community Trust Bancorp, Inc.
Financial Summary (Unaudited)
December 31, 2010
(in thousands except per share data and #
of employees)
As of As of As of
December 31, 2010 September 30, 2010 December 31, 2009
Assets: Loans, net of unearned $ 2,605,180 $ 2,445,507 $
2,435,760 Loan loss reserve (34,805 ) (34,238 )
(32,643 ) Net loans 2,570,375 2,411,269 2,403,117 Loans held
for sale 455 1,223 1,818 Securities AFS 338,675 332,235 270,237
Securities HTM 1,662 1,662 14,336 Other equity investments 30,107
29,057 29,048 Other earning assets 113,037 157,258 81,360 Cash and
due from banks 62,559 71,149 62,720 Premises and equipment 55,343
47,805 49,242 Goodwill and core deposit intangible 66,487 65,318
65,707 Other assets 117,172 114,764
109,074
Total Assets $ 3,355,872 $
3,231,740 $ 3,086,659
Liabilities and
Equity: NOW accounts $ 33,641 $ 19,500 $ 17,389 Savings
deposits 679,755 635,056 638,250 CD's >=$100,000 609,930 583,884
516,445 Other time deposits 857,313 817,796
799,316 Total interest bearing deposits
2,180,639 2,056,236 1,971,400 Noninterest bearing deposits
525,478 519,059 490,809 Total
deposits 2,706,117 2,575,295 2,462,209 Repurchase agreements
188,275 188,164 180,471 Other interest bearing liabilities 92,259
94,047 94,217 Noninterest bearing liabilities 30,583
37,390 28,305 Total liabilities
3,017,234 2,894,896 2,765,202 Shareholders' equity 338,638
336,844 321,457
Total
Liabilities and Equity $ 3,355,872 $ 3,231,740 $
3,086,659 Ending shares outstanding 15,282 15,239
15,184 Memo: Market value of HTM securities $ 1,662 $ 1,667 $
14,435 30 - 89 days past due loans $ 28,935 $ 29,935 $
24,774 90 days past due loans 17,997 20,252 9,067 Nonaccrual loans
43,923 36,329 32,247 Restructured loans (excluding 90 days past due
and nonaccrual) 5,690 6,377 - Foreclosed properties 42,935 41,083
37,333 Other repossessed assets 129 193 276 Tier 1 leverage
ratio 10.16 % 10.22 % 10.38 % Tier 1 risk based ratio 12.90 % 13.37
% 12.90 % Total risk based ratio 14.10 % 14.62 % 14.15 % Tangible
equity to tangible assets ratio 8.27 % 8.58 % 8.47 % FTE employees
1,041 980 982
Community Trust Bancorp, Inc.
Financial Summary (Unaudited)
December 31, 2010
(in thousands except per share data and #
of employees)
Community Trust Bancorp, Inc. reported earnings for the
three and twelve months ending December 31, 2010 and 2009 as
follows: Three Months Ended Twelve Months Ended
December 31 December 31 2010 2009 2010
2009 Net income $ 9,240 $ 6,958 $ 33,034 $ 25,059 Basic
earnings per share $ 0.61 $ 0.46 $ 2.17 $ 1.66 Diluted
earnings per share $ 0.60 $ 0.46 $ 2.16 $ 1.65 Average
shares outstanding 15,265 15,168 15,234 15,129 Total assets
(end of period) $ 3,355,872 $ 3,086,659 Return on average
equity 10.71 % 8.58 % 9.90 % 7.89 % Return on average assets
1.11 % 0.90 % 1.03 % 0.82 % Provision for loan losses $
3,980 $ 5,193 $ 16,484 $ 17,468 Gains on sales of loans $
288 $ 743 $ 1,642 $ 4,324
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