EX-1 2 ct8k0905ex1.htm EXHIBIT 1. 3RD QUARTER 2005 EARNINGS RELEASE Exhibit 1. 3rd Quarter 2005 Earnings Release
Exhibit 1.


FOR IMMEDIATE RELEASE
October 18, 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 third quarter 2005 of $9.1 million or $0.61 per share.
 
Earnings Summary
    
 3Q
2005
 2Q
2005
 3Q
2004
Net income (in thousands)
$
9,083
  
$
8,478
  
$
8,014
  
Earnings per share (basic)
$
0.61
  
$
0.57
  
$
0.54
  
Earnings per share (diluted)
$
0.60
  
$
0.56
  
$
0.53
  
                   
Return on average assets
  
1.26
%
  
1.21
%
  
1.26
%
Return on average equity
  
14.50
%
  
13.96
%
  
13.83
%
Efficiency ratio
  
55.27
%
  
57.86
%
  
59.35
%
                   
Dividends declared per share
$
0.24
  
$
0.24
  
$
0.21
  
Book value per share
$
16.77
  
$
16.46
  
$
15.73
  

Community Trust Bancorp, Inc. (NASDAQ-CTBI) is reporting record earnings for the third quarter 2005 of $9.1 million or $0.61 per share compared to $8.0 million or $0.54 per share earned during the third quarter of 2004 and $8.5 million or $0.57 per share earned during the second quarter of 2005. Year-to-date earnings for the nine months ended September 30, 2005 were $25.5 million or $1.71 per share compared to $23.1 million or $1.56 per share for the nine months ended September 30, 2004.

Third Quarter and Year-to-Date Highlights

v  
The Company's basic earnings per share of $0.61 for the third quarter 2005 reflects an increase of 13.0% over prior year. Year-to-date earnings per share increased 9.6% over prior year.

v  
The Company's net interest margin of 4.08% for the third quarter 2005 was flat to prior year but an increase of 13 basis points from prior quarter.

v  
Deposit related fees for the third quarter 2005 increased 4.3% from prior quarter and 5.9% from the third quarter 2004. Loan related fees for the third quarter 2005 increased 5.5% from prior quarter and 9.0% from the third quarter 2004.

v  
The Company experienced growth in its loan portfolio, including the Danville acquisition, at a rate of 12.8% from September 30, 2004 and an annualized rate of 6.7% from the second quarter 2005. Total loan growth for the third quarter 2005 was $34.9 million. Total loans have grown $239.1 million from September 30, 2004, with $165.4 million being internal growth.
 
v  
Total deposits, including repurchase agreements, grew by $23.5 million during the third quarter to $2.4 billion. Total deposits have grown by 10.8% or $229.7 million, including the Danville acquisition, from the $2.1 billion on September 30, 2004, with $159.9 million being internal growth.
 
Return on average assets for the quarter ended September 30, 2005 was 1.26% compared to 1.26% for the third quarter 2004 and 1.21% for the second quarter 2005. Return on average assets for the first nine months of 2005 was 1.22% compared to 1.24% for the first nine months of 2004. Return on average shareholders’ equity for the quarter ended September 30, 2005 was 14.50% compared to 13.83% for the quarter ended September 30, 2004 and 13.96% for the quarter ended June 30, 2005. Return on average equity for the nine months ended September 30, 2005 was 14.00% compared to 13.54% for the first nine months of 2004. CTBI’s efficiency ratio for the nine months ended September 30, 2005 was 57.36% compared to 58.75% for the nine months ended September 30, 2004.

Net Interest Income
 
Our net interest margin of 4.08% for the quarter ended September 30, 2005 was flat to the quarter ended September 30, 2004 but was a 13 basis point increase from 3.95% for the quarter ended June 30, 2005. The increase in the net interest margin was primarily attributable to our increased yield on interest earning assets from prior quarter.

Noninterest Income
 
Noninterest income of $8.7 million for the quarter ended September 30, 2005 was a 1.1% increase from the $8.6 million earned for the quarter ended September 30, 2004, and a 1.5% increase from the quarter ended June 30, 2005. The following table displays the quarterly activity in the various significant noninterest income accounts.
 
Noninterest Income Summary
              
(in thousands)
  
 3Q
2005
 2Q
2005
 3Q
2004
Deposit related fees
  
$
4,723
  
$
4,460
  
$
4,525
  
Loan related fees
    
1,408
    
1,292
    
1,334
  
Mortgage servicing rights
    
81
    
(94
)
  
(200
)
Trust revenue
    
750
    
740
    
638
  
Gains on sales of loans
    
440
    
347
    
368
  
Securities gains
    
0
    
3
    
588
  
Other revenue
    
1,266
    
1,790
    
1,322
  
Total noninterest income
  
$
8,668
  
$
8,538
  
$
8,575
  

Noninterest income for the third quarter 2005 was positively impacted by increases in both deposit and loan related fees. Deposit related fees for the third quarter 2005 increased $0.2 million or 4.3% compared to prior year third quarter and $0.3 million or 5.9% compared to the second quarter 2005. Loan related fees for the third quarter 2005 increased $0.1 million or 5.5% compared to prior year third quarter and $0.1 million or 9.0% compared to the second quarter 2005. The increase in loan related fees primarily consisted of increases in consumer lending fees.
 
Noninterest income for the quarter ended September 30, 2005 was also positively impacted by $0.3 million compared to the third quarter 2004 and by $0.2 million compared to the second quarter 2005 because of the improvement in the fair value of our capitalized mortgage servicing rights.
 
Noninterest Expense
 
Noninterest expense of $19.8 million was a 4.6% increase from the $18.9 million for the third quarter 2004 and a 0.5% increase from the second quarter 2005. The increase in noninterest expense is reflective of the additional operating expenses, primarily personnel, associated with the three new branches and two new loan production offices which have been opened in the past 12 months, as well as the two recently acquired branches. Included in the three new branches is the Allen, Kentucky branch which opened on October 3, 2005.

Balance Sheet Review
 
The Company’s assets were $2.8 billion at September 30, 2005, an increase of 6.7% from prior year. Total assets decreased $10.8 million from June 30, 2005 as a result of the payment of $40 million in FHLB advances which matured in September. The Company's loan portfolio grew $239.1 million or 12.8% 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 which occurred in June 2005, totaled $165.4 million. Total deposits and repurchase agreements of $2.4 billion at September 30, 2005 represent an increase of 10.8% from September 30, 2004. Deposit growth excluding the Danville acquisition totaled $159.9 million.
 
Shareholders’ equity of $250.3 million on September 30, 2005 was a 7.5% increase from the $232.9 million on September 30, 2004. The Company's annualized dividend yield to shareholders as of September 30, 2005 was 2.98%.

Asset Quality
 
Nonperforming loans at September 30, 2005 were $21.8 million, or 1.0% of total loans, compared to $21.4 million, or 1.1% of total loans, at September 30, 2004 and $21.4 million, or 1.0% of total loans, at June 30, 2005. The increase in nonperforming loans was minimal with respect to the increase in the loan portfolio; therefore, the percentage of nonperforming loans to total loans decreased. The mix of nonperforming loans changed, however, as nonaccrual loans decreased $2.0 million from prior quarter and loans 90 days past due and still accruing interest increased $2.3 million from prior quarter. Loans past due 90 days or more must be well secured and in the process of collection to continue accruing interest.
 
Foreclosed properties on September 30, 2005 were $5.7 million, relatively flat to September 30, 2004, but a decrease from the $5.9 million at June 30, 2005.
 
Net loan charge-offs for the quarter ended September 30, 2005 of $1.9 million, or 0.4% of average loans, increased from the $1.3 million, or 0.3% of average loans for the third quarter of 2004 and the $1.8 million, or 0.4% of average loans for the second quarter of 2005. Year-to-date 2005 net loan charge-offs of $4.6 million, or 0.3% of average loans, was an increase from $4.1 million, or 0.3% of average loans, for the same period 2004. Our reserve for losses on loans as a percentage of total loans outstanding at September 30, 2005 was 1.41% compared to 1.41% at June 30, 2005 and 1.42% at September 30, 2004.

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 75 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)
  
September 30, 2005
  
(in thousands except per share data)
  
                       
 
 
 
Three 
    
Three
   
Three
   
Nine
   
Nine
 
 
 
  
Months 
    
Months
   
Months
   
Months
   
Months
 
 
    
Ended 
    
Ended
    
Ended
   
Ended
   
Ended
 
 
    
9/30/2005 
    
6/30/2005
    
9/30/2004
    
9/30/2005
    
9/30/2004
  
                                 
Interest income
  
$
41,572
  
$
38,598
  
$
32,623
  
$
116,668
  
$
94,942
  
Interest expense
    
14,825
   
13,509
   
9,138
   
40,453
   
26,122
 
Net interest income
    
26,747
   
25,089
   
23,485
   
76,215
   
68,820
 
Loan loss provision
    
2,470
   
1,700
   
2,045
   
5,537
   
5,963
 
                                 
Securities gains
    
-
   
3
   
588
   
3
   
589
 
Gains on sales of loans
    
440
   
347
   
368
   
1,092
   
1,237
 
Deposit service charges
    
4,723
   
4,460
   
4,525
   
13,230
   
13,224
 
Trust revenue
    
750
   
740
   
638
   
2,230
   
1,813
 
Insurance commissions
    
112
   
120
   
118
   
329
   
262
 
Other noninterest income
    
2,643
   
2,868
   
2,338
   
8,027
   
8,585
 
Total noninterest income
    
8,668
   
8,538
   
8,575
   
24,911
   
25,710
 
                                 
Personnel expense
    
10,816
   
10,613
   
9,959
   
31,690
   
29,665
 
Occupancy and equipment
    
2,808
   
2,690
   
2,377
   
8,037
   
7,155
 
Amortization of core deposit intangible
    
159
   
145
   
145
   
449
   
435
 
Other noninterest expense
    
6,007
   
6,236
   
6,436
   
18,505
   
18,628
 
Total noninterest expense
    
19,790
   
19,684
   
18,917
   
58,681
   
55,883
 
                                 
Net income before taxes
    
13,155
   
12,243
   
11,098
   
36,908
   
32,684
 
Income taxes
    
4,072
   
3,765
   
3,084
   
11,386
   
9,634
 
Net income
  
$
9,083
  
$
8,478
  
$
8,014
  
$
25,522
  
$
23,050
  
                                 
Memo: TEQ interest income
  
$
41,964
  
$
38,991
  
$
33,021
  
$
117,850
  
$
96,114
  
                                 
Average shares outstanding
    
14,917
   
14,881
   
14,805
   
14,885
   
14,804
 
Basic earnings per share
  
$
0.61
  
$
0.57
  
$
0.54
  
$
1.71
  
$
1.56
  
Diluted earnings per share
  
$
0.60
  
$
0.56
  
$
0.53
  
$
1.68
  
$
1.53
  
Dividends per share
  
$
0.24
  
$
0.24
  
$
0.21
  
$
0.72
  
$
0.63
  
                                 
Average balances:
                                
Loans, net of unearned income
  
$
2,085,841
  
$
1,982,353
  
$
1,842,208
  
$
1,996,950
  
$
1,793,171
  
Earning assets
    
2,638,037
   
2,590,466
   
2,331,175
   
2,587,734
   
2,287,959
 
Total assets
    
2,857,569
   
2,801,407
   
2,535,480
   
2,799,913
   
2,492,436
 
Deposits
    
2,250,172
   
2,196,635
   
2,076,493
   
2,202,204
   
2,065,159
 
Interest bearing liabilities
    
2,159,150
   
2,122,698
   
1,904,067
   
2,120,710
   
1,873,291
 
Shareholders' equity
    
248,594
   
243,568
   
230,522
   
243,797
   
227,382
 
                                 
Performance ratios:
                                
Return on average assets
    
1.26
%
  
1.21
%
  
1.26
%
  
1.22
%
  
1.24
%
Return on average equity
    
14.50
%
  
13.96
%
  
13.83
%
  
14.00
%
  
13.54
%
Yield on average earning assets (tax equivalent)
    
6.31
%
  
6.04
%
  
5.64
%
  
6.09
%
  
5.61
%
Cost of interest bearing funds (tax equivalent)
    
2.72
%
  
2.55
%
  
1.91
%
  
2.55
%
  
1.86
%
Net interest margin (tax equivalent)
    
4.08
%
  
3.95
%
  
4.08
%
  
4.00
%
  
4.09
%
Efficiency ratio
    
55.27
%
  
57.86
%
  
59.35
%
  
57.36
%
  
58.75
%
                                 
Loan charge-offs
  
$
(2,593
)
$
(2,607
)
$
(2,145
)
$
(7,151
)
$
(6,749
)
Recoveries
    
659
   
801
   
806
   
2,537
   
2,621
 
Net charge-offs
  
$
(1,934
)
$
(1,806
)
$
(1,339
)
$
(4,614
)
$
(4,128
)
                                 
Market Price:
                                
High
  
$
35.01
  
$
33.78
  
$
29.55
  
$
35.01
  
$
31.18
  
Low
    
30.77
   
27.94
   
26.56
 
$
27.94
    
25.16
 
Close
    
32.18
   
32.72
   
28.26
 
$
32.18
    
28.26
 
                                 
 
                                
                                 
                                 
                                 
 
                
As of 
    
As of
   
As of
 
 
                
9/30/2005 
    
6/30/2005
    
9/30/2004
  
                                 
Assets:
                                
Loans, net of unearned
              
$
2,104,067
  
$
2,069,167
  
$
1,864,988
  
Loan loss reserve
                
(29,699
)
  
(29,163
)
  
(26,488
)
Net loans
                
2,074,368
   
2,040,004
   
1,838,500
 
Loans held for sale
                
745
   
110
   
532
 
Securities AFS
                
419,205
   
473,717
   
508,870
 
Securities HTM
                
50,957
   
55,829
   
64,809
 
Other earning assets
                
27,684
   
20,076
   
13,269
 
Cash and due from banks
                
82,982
   
82,979
   
71,058
 
Premises and equipment
                
57,585
   
57,400
   
51,711
 
Goodwill and core deposit intangible
                
68,398
   
66,976
   
63,516
 
Other assets
                
51,076
   
46,757
   
42,662
 
Total Assets
              
$
2,833,000
  
$
2,843,848
  
$
2,654,927
  
                                 
                                 
Liabilities and Equity:
                                
NOW accounts
              
$
14,590
  
$
15,472
  
$
15,606
  
Savings deposits
                
611,217
   
594,819
   
589,916
 
CD's >=$100,000
                
414,811
   
414,651
   
366,141
 
Other time deposits
                
770,233
   
781,993
   
714,268
 
Total interest bearing deposits
                
1,810,851
   
1,806,935
   
1,685,931
 
Noninterest bearing deposits
                
437,872
   
420,387
   
375,266
 
Total deposits
                
2,248,723
   
2,227,322
   
2,061,197
 
Repurchase agreements
                
116,628
   
114,576
   
74,447
 
Other interest bearing liabilities
                
193,429
   
236,007
   
266,410
 
Noninterest bearing liabilities
                
23,933
   
20,897
   
19,942
 
Total liabilities
                
2,582,713
   
2,598,802
   
2,421,996
 
Shareholders' equity
                
250,287
   
245,046
   
232,931
 
Total Liabilities and Equity
              
$
2,833,000
  
$
2,843,848
  
$
2,654,927
  
                                 
Ending shares outstanding
                
14,922
   
14,889
   
14,808
 
Memo: Market value of HTM Securities
              
$
49,717
  
$
54,703
  
$
64,261
  
                                 
90 days past due loans
              
$
6,556
  
$
4,237
  
$
4,775
  
Nonaccrual loans
                
14,314
   
16,312
   
15,613
 
Restructured loans
                
894
   
876
   
1,051
 
Foreclosed properties
                
5,674
   
5,945
   
5,702
 
                                 
Tier 1 leverage ratio
                
8.68
%
  
8.68
%
  
9.14
%
Tier 1 risk based ratio
                
11.34
%
  
11.13
%
  
11.75
%
Total risk based ratio
                
12.59
%
  
12.38
%
  
13.00
%
FTE employees
                
988
   
986
   
939
 
                                 
                                 
                                 
                                 
                                 
Community Trust Bancorp, Inc. reported earnings for the three and nine months ending September 30, 2005 and 2004 as follows:
                                 
                                 
 
        
 Three Months Ended    
  
 Nine Months Ended    
  
 
        
 September 30  
  
 September 30
  
         
 2005
  
 2004
  
 2005
  
 2004
  
(in thousands except per share information)
                                 
Net income
        
$
9,083
  
$
8,014
  
$
25,522
  
$
23,050
  
                                 
Basic earnings per share
        
$
0.61
  
$
0.54
  
$
1.71
  
$
1.56
  
                                 
Diluted earnings per share
        
$
0.60
  
$
0.53
  
$
1.68
  
$
1.53
  
                                 
Average shares outstanding
          
14,917
    
14,805
    
14,885
    
14,804
  
                                 
Total assets (end of period)
        
$
2,833,000
  
$
2,654,927
              
                                 
Return on average equity
          
14.50
%
  
13.83
%
  
14.00
%
  
13.54
%
                                 
Return on average assets
          
1.26
%
  
1.26
%
  
1.22
%
  
1.24
%
                                 
Provision for loan losses
        
$
2,470
  
$
2,045
  
$
5,537
  
$
5,963
  
                                 
Gains on sales of loans
        
$
440
  
$
368
  
$
1,092
  
$
1,237