EX-1 2 ct8k0605ex1.htm EXHIBIT 1. 2ND QUARTER EARNINGS RELEASE Exhibit 1. 2nd Quarter Earnings Release
Exhibit 1

 


FOR IMMEDIATE RELEASE
July 13, 2005

FOR ADDITIONAL INFORMATION PLEASE CONTACT JEAN R. HALE, CHAIRMAN, PRESIDENT, AND C.E.O., COMMUNITY TRUST BANCORP, INC. AT (606) 437-3294

Community Trust Bancorp, Inc. reports record earnings for the second quarter 2005 of $8.5 million or $0.57 per share.

Earnings Summary
 
    
2Q 2005 
    
1Q 2005
    
2Q 2004
  
Net income (in thousands)
  
$
8,478
  
$
7,961
  
$
7,756
  
Earnings per share (basic)
    
0.57
    
0.54
    
0.52
  
Earnings per share (diluted)
    
0.56
    
0.53
    
0.51
  
                     
Return on average assets
    
1.21
%
  
1.18
%
  
1.26
%
Return on average equity
    
13.96
    
13.50
    
13.81
  
Efficiency ratio
    
57.86
    
59.13
    
58.37
  
                     
Dividends declared per share
  
$
0.24
  
$
0.24
  
$
0.21
  
Book value per share
    
16.46
    
16.02
    
15.25
  

Community Trust Bancorp, Inc. (NASDAQ-CTBI) is reporting record earnings for the second quarter 2005 of $8.5 million or $0.57 per share compared to $7.8 million or $0.52 per share earned during the second quarter of 2004 and $8.0 million or $0.54 per share earned during the first quarter of 2005. Year-to-date earnings for the six months ended June 30, 2005 were $16.4 million or $1.11 per share compared to $15.0 million or $1.02 per share for the six months ended June 30, 2004.

Second Quarter and Year-to-Date Highlights

v  
The Company's basic earnings per share of $0.57 for the second quarter 2005 reflects an increase of 9.6% over prior year. Year-to-date earnings per share increased 8.8% over prior year.

v  
The Company's net interest margin of 3.95% for the second quarter 2005 was a decrease of 2 basis points and 14 basis points, respectively, from prior quarter and prior year.

v  
Noninterest income for the second quarter 2005 was positively impacted by $0.6 million with the final valuation adjustment of loans obtained from the Hazard acquisition in 2001 to their net realizable value. Noninterest income for the quarter was negatively impacted by less income from gains on sales of residential real estate loans as customers continue to favor portfolio loan products. A charge of $0.1 million was taken to the valuation reserve for capitalized mortgage servicing rights due to the current interest rate environment.

v  
The Company experienced growth in its loan portfolio at a rate of 14.0% from June 30, 2004 and an annualized rate of 27.1% from the first quarter 2005. Total loan growth for the second quarter 2005 was $131.9 million including the $74.6 million obtained from the Danville acquisition. Total loans have grown $254.8 million from June 30, 2004.

v  
Total deposits including repurchase agreements grew by $66.2 million during the second quarter to $2.3 billion due to the Danville acquisition. Management began pricing deposits at the middle of the market during the second quarter to retain and grow deposits less aggressively. Total deposits have grown by 9.9% or $210.8 million from the $2.1 billion on June 30, 2004. Internal growth was 67.1% of the growth in deposits since June 30, 2004. Deposits totaling $69.4 million were obtained in the Danville acquisition.

Return on average assets for the quarter ended June 30, 2005 was 1.21% compared to 1.26% for the second quarter 2004 and 1.18% for the first quarter 2005. Return on average assets for the first six months of 2005 was 1.20% compared to 1.22% for the first six months of 2004. Return on average shareholders’ equity for the quarter ended June 30, 2005 was 13.96% compared to 13.81% for the quarter ended June 30, 2004 and 13.50% for the quarter ended March 31, 2005. Return on average equity for the six months ended June 30, 2005 was 13.73% compared to 13.39% for the first six months of 2004. CTBI’s efficiency ratio for the six months ended June 30, 2005 was 58.48% compared 58.45% for the six months ended June 30, 2004.

Net Interest Income

Our net interest margin of 3.95% for the quarter ended June 30, 2005 was a 14 basis point decrease from the 4.09% for the quarter ended June 30, 2004 and a 2 basis point decrease from the quarter ended March 31, 2005. The decrease in the net interest margin was primarily attributable to our increased cost of funds from competitive pricing as $158.7 million of our $210.8 million growth in deposits and repurchase agreements from June 30, 2004 to June 30, 2005 was in interest bearing deposits.

Noninterest Income

Noninterest income of $8.5 million for the quarter ended June 30, 2005 was a 10.8% increase from the $7.7 million earned for the quarter ended March 31, 2005 and a
6.4% decrease from the quarter ended June 30, 2004. The following table displays the quarterly activity in the various significant noninterest income accounts.
 
Noninterest Income Summary
                    
(in thousands)
    
2Q 2005
    
1Q 2005
    
2Q 2004
  
Deposit related fees
  
$
4,460
  
$
4,047
  
$
4,462
  
Loan related fees
    
1,292
    
1,218
    
1,349
  
Mortgage servicing rights
    
(94
)
  
226
    
763
  
Trust revenue
    
740
    
740
    
614
  
Gains on sales of loans
    
347
    
305
    
410
  
Other revenue
    
1,793
    
1,169
    
1,522
  
Total noninterest income
  
$
8,538
  
$
7,705
  
$
9,120
  
 
Noninterest income for the quarter ended June 30, 2005 was negatively impacted by a $0.1 million charge to our valuation reserve for capitalized mortgage servicing rights. Noninterest income for the second quarter 2004 and the first quarter 2005 was positively impacted by $0.8 million and $0.2 million pre-tax, respectively, because of the improvement in the fair market value of our capitalized mortgage servicing rights.

Noninterest Expense

Noninterest expense of $19.7 million was a 4.9% increase from the $18.8 million for the second quarter 2004 and a 2.5% increase from the first quarter 2005. The increase in noninterest expense is reflective of the additional operating expenses, primarily personnel, associated with the six new branches and loan production offices opened during the first quarter 2005 and the last six months of 2004. The impact to noninterest expense relative to the Danville acquisition was immaterial.

Balance Sheet Review

The Company's loan portfolio grew $254.8 million or 14.0% from prior year as growth occurred in all three major loan categories, commercial, residential real estate, and consumer loans. Loan growth excluding the Danville acquisition totaled approximately $180 million. Total deposits and repurchase agreements of $2.3 billion at June 30, 2005 represent an increase of 9.9% from June 30, 2004. Deposit growth excluding the Danville acquisition was approximately $142 million. The Company’s assets were $2.8 billion at June 30, 2005, an increase of 16.4% from prior year.

Shareholders’ equity of $245.0 million on June 30, 2005 was an 8.6% increase from the $225.6 million on June 30, 2004. The Company's annualized dividend yield to shareholders as of June 30, 2005 was 2.93%.

Asset Quality

Nonperforming loans increased to $21.4 million, or 1.0% of total loans, from the $19.9 million, or 1.1% of total loans, at June 30, 2004 and the $17.9 million, or 0.9% of total loans, at March 31, 2005. The increase in nonperforming loans is attributable to an increase in nonaccrual loans resulting primarily from a $1.9 million loan which is a workout and $1 million in various loans from the Danville acquisition. Specific reserves have been established for any potential losses. The Company does not believe that these customers are indicators of an overall weakness in a particular industry or economic sector.

Foreclosed properties on June 30, 2005 were $5.9 million, a decrease from the $6.2 million at June 30, 2004 but an increase from the $5.0 million reported at March 31, 2005. The increase in foreclosed properties during the second quarter is primarily attributable to a property obtained in the Danville acquisition which has been sold subsequent to quarter-end.

Net loan charge-offs for the quarter ended June 30, 2005 of $1.8 million, or 0.4% of average loans, increased from the $1.2 million, or 0.3% of average loans for the second quarter of 2004 and the $0.9 million, or 0.2% of average loans for the first quarter of 2005. Year-to-date 2005 net loan charge-offs are less than the same period 2004. Our reserve for losses on loans as a percentage of total loans outstanding at June 30, 2005 decreased to 1.41% from the 1.42% at June 30, 2004 and March 31, 2005.

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 $2.8 billion, is headquartered in Pikeville, Kentucky and has 74 banking locations across eastern, northern, central, and south central Kentucky, five banking locations in southern West Virginia, two loan production offices in Kentucky, and five trust offices across Kentucky.

Additional information follows.

 
 
 

Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
June 30, 2005
  
(in thousands except per share data)
  
                       
   
Three
 
Three
 
Three
 
Six
 
Six
 
 
  
Months
 
Months
 
Months
 
Months
 
Months
 
 
  
Ended
 
Ended
  
Ended
 
Ended
 
Ended
 
 
  
6/30/2005
  
3/31/2005
  
6/30/2004
  
6/30/2005
  
6/30/2004
  
                                 
Interest income
  
$
38,598
  
$
36,498
  
$
31,022
  
$
75,096
  
$
62,319
  
Interest expense
    
13,509
   
12,119
   
8,368
   
25,628
   
16,984
 
Net interest income
    
25,089
   
24,379
   
22,654
   
49,468
   
45,335
 
Loan loss provision
    
1,700
   
1,367
   
1,785
   
3,067
   
3,918
 
                                 
Securities gains
    
3
   
-
   
-
   
3
   
1
 
Gains on sales of loans
    
347
   
305
   
410
   
652
   
869
 
Deposit service charges
    
4,460
   
4,047
   
4,462
   
8,507
   
8,699
 
Trust revenue
    
740
   
740
   
614
   
1,480
   
1,175
 
Insurance commissions
    
120
   
97
   
79
   
217
   
144
 
Other noninterest income
    
2,868
   
2,516
   
3,555
   
5,384
   
6,247
 
Total noninterest income
    
8,538
   
7,705
   
9,120
   
16,243
   
17,135
 
                                 
Personnel expense
    
10,613
   
10,261
   
10,015
   
20,874
   
19,706
 
Occupancy and equipment
    
2,690
   
2,539
   
2,365
   
5,229
   
4,778
 
Amortization of core deposit intangible
    
145
   
145
   
145
   
290
   
290
 
Other noninterest expense
    
6,236
   
6,262
   
6,247
   
12,498
   
12,192
 
Total noninterest expense
    
19,684
   
19,207
   
18,772
   
38,891
   
36,966
 
                                 
Net income before taxes
    
12,243
   
11,510
   
11,217
   
23,753
   
21,586
 
Income taxes
    
3,765
   
3,549
   
3,461
   
7,314
   
6,550
 
Net income
  
$
8,478
  
$
7,961
  
$
7,756
  
$
16,439
  
$
15,036
  
                                 
Memo: TEQ interest income
  
$
38,991
  
$
36,895
  
$
31,407
  
$
75,886
  
$
63,093
  
                                 
Average shares outstanding
    
14,881
   
14,857
   
14,792
   
14,869
   
14,803
 
Basic earnings per share
  
$
0.57
  
$
0.54
  
$
0.52
  
$
1.11
  
$
1.02
  
Diluted earnings per share
  
$
0.56
  
$
0.53
  
$
0.51
  
$
1.08
  
$
1.00
  
Dividends per share
  
$
0.24
  
$
0.24
  
$
0.21
  
$
0.48
  
$
0.42
  
                                 
Average balances:
                                
Loans, net of unearned income
  
$
1,982,353
  
$
1,920,843
  
$
1,791,776
  
$
1,951,768
  
$
1,768,384
  
Earning assets
    
2,590,466
   
2,533,552
   
2,264,796
   
2,562,166
   
2,266,114
 
Total assets
    
2,801,407
   
2,739,463
   
2,469,417
   
2,770,607
   
2,470,678
 
Deposits
    
2,196,635
   
2,158,802
   
2,062,734
   
2,177,823
   
2,059,430
 
Interest bearing liabilities
    
2,122,698
   
2,079,406
   
1,848,146
   
2,101,172
   
1,857,735
 
Shareholders' equity
    
243,568
   
239,124
   
225,822
   
241,358
   
225,795
 
                                 
Performance ratios:
                                
Return on average assets
    
1.21
%
  
1.18
%
  
1.26
%
  
1.20
%
  
1.22
%
Return on average equity
    
13.96
%
  
13.50
%
  
13.81
%
  
13.73
%
  
13.39
%
Yield on average earning assets (tax equivalent)
    
6.04
%
  
5.91
%
  
5.58
%
  
5.97
%
  
5.60
%
Cost of interest bearing funds (tax equivalent)
    
2.55
%
  
2.36
%
  
1.82
%
  
2.46
%
  
1.84
%
Net interest margin (tax equivalent)
    
3.95
%
  
3.97
%
  
4.09
%
  
3.96
%
  
4.09
%
Efficiency ratio
    
57.86
%
  
59.13
%
  
58.37
%
  
58.48
%
  
58.45
%
                                 
Loan charge-offs
  
$
(2,607
)
$
(1,952
)
$
(2,040
)
$
(4,558
)
$
(4,604
)
Recoveries
    
801
   
1,077
   
886
   
1,878
   
1,815
 
Net charge-offs
  
$
(1,806
)
$
(875
)
$
(1,154
)
$
(2,680
)
$
(2,789
)
                                 
Market Price:
                                
High
  
$
33.78
  
$
32.90
  
$
31.18
  
$
33.78
  
$
31.18
  
Low
    
27.94
   
28.00
   
25.84
 
$
27.94
    
25.16
 
Close
    
32.72
   
28.81
   
27.73
 
$
32.72
    
27.73
 
                                 
                                 
                                 
                                 
                 
As of
    
As of 
    
As of 
  
 
                
6/30/2005
    
3/31/2005
    
6/30/2004
  
                                 
Assets:
                                
Loans, net of unearned
              
$
2,069,167
  
$
1,937,285
  
$
1,814,343
  
Loan loss reserve
                
(29,163
)
  
(27,509
)
  
(25,782
)
Net loans
                
2,040,004
   
1,909,776
   
1,788,561
 
Loans held for sale
                
110
   
-
   
2,500
 
Securities AFS
                
473,717
   
467,443
   
334,317
 
Securities HTM
                
55,829
   
59,752
   
72,420
 
Other earning assets
                
20,076
   
90,061
   
15,386
 
Cash and due from banks
                
82,979
   
79,627
   
72,774
 
Premises and equipment
                
57,400
   
52,559
   
50,698
 
Goodwill and core deposit intangible
                
66,976
   
63,226
   
63,661
 
Other assets
                
46,757
   
43,014
   
41,973
 
Total Assets
              
$
2,843,848
  
$
2,765,458
  
$
2,442,290
  
                                 
                                 
Liabilities and Equity:
                                
NOW accounts
              
$
15,472
  
$
15,310
  
$
13,837
  
Savings deposits
                
594,819
   
601,424
   
607,674
 
CD's >=$100,000
                
414,651
   
402,508
   
347,184
 
Other time deposits
                
781,993
   
743,077
   
714,164
 
Total interest bearing deposits
                
1,806,935
   
1,762,319
   
1,682,859
 
Noninterest bearing deposits
                
420,387
   
403,537
   
368,298
 
Total deposits
                
2,227,322
   
2,165,856
   
2,051,157
 
Repurchase agreements
                
114,576
   
109,807
   
79,971
 
Other interest bearing liabilities
                
236,007
   
231,710
   
69,260
 
Noninterest bearing liabilities
                
20,897
   
20,014
   
16,271
 
Total liabilities
                
2,598,802
   
2,527,387
   
2,216,659
 
Shareholders' equity
                
245,046
   
238,071
   
225,631
 
Total Liabilities and Equity
              
$
2,843,848
  
$
2,765,458
  
$
2,442,290
  
                                 
Ending shares outstanding
                
14,889
   
14,863
   
14,792
 
Memo: Market value of HTM Securities
              
$
54,703
  
$
58,379
  
$
70,411
  
                                 
90 days past due loans
              
$
4,237
  
$
3,870
  
$
6,433
  
Nonaccrual loans
                
16,312
   
13,101
   
11,982
 
Restructured loans
                
876
   
934
   
1,476
 
Foreclosed properties
                
5,945
   
5,049
   
6,223
 
                                 
Tier 1 leverage ratio
                
8.68
%
  
8.81
%
  
9.16
%
Tier 1 risk based ratio
                
11.13
%
  
11.71
%
  
11.80
%
Total risk based ratio
                
12.38
%
  
12.95
%
  
13.05
%
FTE employees
                
986
   
967
   
937
 
                                 
                                 
                                 
                                 
Community Trust Bancorp, Inc. reported earnings for the three and nine months ending June 30, 2005 and 2004 as follows:
                                 
                                 
       
Three Months Ended
  
 Six Months Ended
 
       
 June 30
  
 June 30
  
           
2005
    
2004
    
2005
    
2004
  
(in thousands except per share information)
                                
                                 
Net income
        
$
8,478
  
$
7,756
  
$
16,439
  
$
15,036
  
                                 
Basic earnings per share
        
$
0.57
  
$
0.52
  
$
1.11
  
$
1.02
  
                                 
Diluted earnings per share
        
$
0.56
  
$
0.51
  
$
1.08
  
$
1.00
  
                                 
Average shares outstanding
          
14,881
    
14,792
    
14,869
    
14,803
  
                                 
Total assets (end of period)
        
$
2,843,848
  
$
2,442,290
              
                                 
Return on average equity
          
13.96
%
  
13.81
%
  
13.73
%
  
13.39
%
                                 
Return on average assets
          
1.21
%
  
1.26
%
  
1.20
%
  
1.22
%
                                 
Provision for loan losses
        
$
1,700
  
$
1,785
  
$
3,067
  
$
3,918
  
                                 
Gains on sales of loans
        
$
347
  
$
410
  
$
652
  
$
869