EX-99.1 2 ctber8k0607ex99_1.htm CTBI 2ND QUARTER 2007 EARNINGS RELEASE 8-K EXHIBIT 99.1 ctber8k0607ex99_1.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE
July 17, 2007

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

Pikeville, Kentucky:

COMMUNITY TRUST BANCORP, INC. REPORTS EARNINGS FOR THE SECOND QUARTER 2007.
 
Earnings Summary
                              
(in thousands except per share data)
  
2Q
2007
    
1Q
2007
    
2Q
2006
    
6 Months
2007
    
6 Months
2006
  
Net income
   $
8,858
     $
8,022
     $
9,892
     $
16,880
     $
19,660
  
Earnings per share
    
0.58
      
0.53
      
0.66
      
1.11
      
1.31
  
Earnings per share (diluted)
    
0.57
      
0.52
      
0.65
      
1.09
      
1.29
  
                                         
Return on average assets
     1.18 %     1.09 %     1.33 %     1.13 %     1.35 %
Return on average equity
    
12.16
      
11.33
      
15.02
      
11.75
      
15.14
  
Efficiency ratio
    
58.22
      
64.68
      
55.73
      
61.40
      
56.95
  
                                         
Dividends declared per share
   $
0.27
     $
0.27
     $
0.26
     $
0.54
     $
0.52
  
Book value per share
    
19.17
      
18.93
      
17.54
      
19.17
      
17.54
  
                                         
Weighted average shares
    
15,216
      
15,191
      
15,051
      
15,203
      
15,031
  
Weighted average shares (diluted)
    
15,448
      
15,437
      
15,274
      
15,421
      
15,246
  
 
Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the quarter ended June 30, 2007 of $8.9 million or $0.58 per basic share compared to $8.0 million or $0.53 per share earned during the quarter ended March 31, 2007 and $9.9 million or $0.66 per share earned during the second quarter of 2006.  Earnings for the six months ended June 30, 2007 were $16.9 million or $1.11 per share compared to $19.7 million or $1.31 per share earned for the first six months of 2006.

Second Quarter 2007 Highlights

v  
The Company's basic earnings per share for the second quarter 2007 increased 9.4% from prior quarter but decreased 12.1% from prior year second quarter.  Year-to-date earnings per share have decreased 15.3% from the six months ended June 30, 2006.  Both the prior quarter and YTD earnings comparisons are impacted by the one-time expense associated with the refinancing of the Company's trust preferred securities during the first quarter 2007.  Core earnings for the quarter and YTD 2007 continue to reflect the pressure on the Company's net interest margin as deposits grew during the first six months of 2007 more quickly than the Company has been able to deploy them into higher yielding loans versus short-term investments.  During 2006, the Company's loans repriced more quickly than its deposits resulting in a stronger net interest margin than the Company has experienced in 2007 as deposit repricing continued.

v  
The Company's net interest margin increased 2 basis points from prior quarter but has declined 17 basis points from prior year second quarter as the Company continues operating within the inverted yield curve environment.  Our year-to-date net interest margin has declined 18 basis points from the first six months of 2006.  Since deposit repricing has been through a 12-month cycle, management anticipates that the margin will continue to improve incrementally during the remainder of 2007 in the current stable rate environment.

v  
The Company's loan portfolio grew at an annualized rate of 8.0% during the quarter and 3.6% from June 30, 2006.

v  
Nonperforming loans as a percentage of total loans at June 30, 2007 were 1.08%, an increase of $6.0 million over prior quarter and a $6.9 million increase from same period prior year.  The increase in nonperforming loans is primarily in smaller commercial loans with collateral.  These loans are reviewed for impairment and specific reserves are established when appropriate.

v  
CTBI's year-to-date efficiency ratio improved during the second quarter 2007 and is anticipated to continue to improve for the remainder of 2007 as the first quarter was impacted by the one-time charge for the redemption and refinancing of the Company's trust preferred securities.

Net Interest Income

Our net interest margin for the second quarter 2007 was 3.86% compared to 3.84% for the first quarter 2007, an improvement of 2 basis points, and a decline of 17 basis points compared to the 4.03% for the second quarter 2006.  The year-to-date net interest margin decline was 18 basis points.  As deposits have completed a 12-month repricing cycle, management anticipates incremental improvement in the net interest margin for the remainder of 2007 in the current stable rate environment.

Net interest income increased 2.8% from prior quarter but decreased 2.2% from prior year second quarter.  Year-to-date net interest income has decreased 2.0% compared to the first six months of 2006.  Average earning assets as a percentage of total assets of 92.8% for the quarter ended June 30, 2007 have remained relatively stable compared to prior quarter and prior year second quarter of 92.7% and 92.3%, respectively.  Year-to-date average earning assets have increased 2.6% compared to the six months ended June 30, 2006.

Noninterest Income

Noninterest income for the second quarter 2007 was a 5.6% increase from the quarter ended March 31, 2007, primarily due to increased deposit service charges.  Noninterest income increased 11.4% for the second quarter compared to same period prior year and 10.6% for the six months ended June 30, 2007 compared to the first six months of 2006.  Year over year increases resulted primarily from increases in trust revenue and loan related fees.

Noninterest Expense

Noninterest expense for the quarter decreased 6.9% from prior quarter as a result of the first quarter charge from unamortized debt issuance costs with the redemption of trust preferred securities, but increased 5.4% over prior year second quarter.  Noninterest expense for the six months ended June 30, 2007 increased 8.7% from the six months ended June 30, 2006, with increases in personnel, data processing expenses, and the nonrecurring redemption expense.

Balance Sheet Review

The Company’s total assets decreased $98.0 million or 3.2% from prior quarter, $59.5 million of which was the decrease in federal funds sold associated with the first quarter refinance of our trust preferred capital securities.  However, total assets have increased $33.8 million or 1.1% year over year.  Loans outstanding at June 30, 2007 were $2.2 billion reflecting a $43.6 million, annualized 8.0%, increase during the quarter, and a $76.2 million or 3.6% increase year over year.  The Company's investment portfolio decreased $17.5 million, an annualized 13.8%, and $54.8 million or 10.1%, respectively, from prior quarter and prior year second quarter.  Deposits, including repurchase agreements, declined $42.0 million, an annualized 6.6%, during the quarter as the Company focused on managing its deposit growth and pricing controls due to its liquidity position resulting from deposit growth during the first quarter.  Deposits have increased 1.6% year over year.

Shareholders’ equity of $291.7 million on June 30, 2007 was an annualized increase of 5.4% from the $287.8 million on March 31, 2007 and a 10.2% increase from the $264.6 million on June 30, 2006.  The Company's annualized dividend yield to shareholders as of June 30, 2007 was 3.34%.

Asset Quality

Nonperforming loans at June 30, 2007 were $23.9 million compared to $17.9 million at March 31, 2007 and $17.0 million at June 30, 2006.  The increase in nonperforming loans was primarily smaller commercial loans with collateral that are individually reviewed with specific reserves established when appropriate.

Foreclosed properties at June 30, 2007 of $3.9 million were a $0.4 million increase from the $3.5 million on March 31, 2007 and a $1.1 million decrease from the $5.0 million on June 30, 2006.

Net loan charge-offs for the quarter of $1.2 million, or 0.23% of average loans annualized, was an increase from prior quarter's 0.17% of average loans annualized but a decrease from the 0.31% from prior year second quarter.  Our reserve for losses on loans as a percentage of total loans outstanding at June 30, 2007 decreased to 1.25% from the 1.30% at June 30, 2006.  The adequacy of our reserve for losses on loans is analyzed quarterly and adjusted as necessary.

Additional Information

Community Trust Bancorp, Inc. entered into an agreement and plan of merger with Eagle Fidelity, Inc. on May 31, 2007.  On June 21, 2007, a third party made a tender offer with certain conditions to the shareholders of Eagle Fidelity, Inc. to purchase their stock for $45 cash per share.  The outcome of this action is unknown at this time.

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 $3.0 billion, is headquartered in Pikeville, Kentucky and has 74 banking locations across eastern, northeast, central, and south central Kentucky, five banking locations in southern West Virginia, and five trust offices across Kentucky.

Additional information follows.


 
 
Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
June 30, 2007
  
(in thousands except per share data and # of employees)
  
                               
   
Three Months
    
Three Months
    
Three Months
    
Six Months
    
Six Months
  
   
Ended
    
Ended
    
Ended
    
Ended
    
Ended
  
   
June 30, 2007
    
March 31, 2007
    
June 30, 2006
    
June 30, 2007
    
June 30, 2006
  
Interest income
   $
50,085
     $
49,179
     $
47,189
     $
99,264
     $
91,577
  
Interest expense
    
23,474
      
23,289
      
19,983
      
46,763
      
38,014
  
Net interest income
    
26,611
      
25,890
      
27,206
      
52,501
      
53,563
  
Loan loss provision
    
1,846
      
470
      
1,350
      
2,316
      
1,350
  
                                         
Gains on sales of loans
    
316
      
296
      
316
      
612
      
620
  
Deposit service charges
    
5,330
      
4,804
      
5,309
      
10,134
      
9,861
  
Trust revenue
    
1,180
      
1,199
      
861
      
2,379
      
1,742
  
Loan related fees
    
867
      
1,021
      
488
      
1,888
      
1,112
  
Other noninterest income
    
1,281
      
1,178
      
1,080
      
2,459
      
2,462
  
Total noninterest income
    
8,974
      
8,498
      
8,054
      
17,472
      
15,797
  
                                         
Personnel expense
    
11,100
      
11,114
      
10,823
      
22,214
      
21,788
  
Occupancy and equipment
    
2,875
      
2,989
      
2,967
      
5,864
      
5,953
  
Amortization of core deposit intangible
    
158
      
159
      
158
      
317
      
317
  
Other noninterest expense
    
6,805
      
8,234
      
5,919
      
15,039
      
11,886
  
Total noninterest expense
    
20,938
      
22,496
      
19,867
      
43,434
      
39,944
  
                                         
Net income before taxes
    
12,801
      
11,422
      
14,043
      
24,223
      
28,066
  
Income taxes
    
3,943
      
3,400
      
4,151
      
7,343
      
8,406
  
Net income
   $
8,858
     $
8,022
     $
9,892
     $
16,880
     $
19,660
  
                                         
Memo: TEQ interest income
   $
50,463
     $
49,571
     $
47,580
     $
100,034
     $
92,358
  
                                         
Average shares outstanding
    
15,216
      
15,191
      
15,051
      
15,203
      
15,031
  
Basic earnings per share
   $
0.58
     $
0.53
     $
0.66
     $
1.11
     $
1.31
  
Diluted earnings per share
   $
0.57
     $
0.52
     $
0.65
     $
1.09
     $
1.29
  
Dividends per share
   $
0.27
     $
0.27
     $
0.26
     $
0.54
     $
0.52
  
                                         
Average balances:
                                        
Loans, net of unearned income
   $
2,199,233
     $
2,165,510
     $
2,124,485
     $
2,182,465
     $
2,110,740
  
Earning assets
    
2,801,966
      
2,774,634
      
2,746,069
      
2,788,376
      
2,717,183
  
Total assets
    
3,020,931
      
2,994,535
      
2,974,836
      
3,007,806
      
2,943,728
  
Deposits
    
2,379,683
      
2,358,675
      
2,291,822
      
2,369,237
      
2,283,250
  
Interest bearing liabilities
    
2,275,637
      
2,260,472
      
2,244,540
      
2,268,097
      
2,215,491
  
Shareholders' equity
    
292,096
      
287,204
      
264,181
      
289,664
      
261,803
  
                                         
Performance ratios:
                                        
Return on average assets
     1.18 %     1.09 %     1.33 %     1.13 %     1.35 %
Return on average equity
     12.16 %     11.33 %     15.02 %     11.75 %     15.14 %
Yield on average earning assets (tax equivalent)
     7.22 %     7.25 %     6.95 %     7.23 %     6.85 %
Cost of interest bearing funds (tax equivalent)
     4.14 %     4.18 %     3.57 %     4.16 %     3.46 %
Net interest margin (tax equivalent)
     3.86 %     3.84 %     4.03 %     3.85 %     4.03 %
Efficiency ratio (tax equivalent)
     58.22 %     64.68 %     55.73 %     61.40 %     56.95 %
                                         
Loan charge-offs
   $
1,843
     $
1,650
     $
2,555
     $
3,494
     $
4,916
  
Recoveries
     (608 )     (731 )     (895 )     (1,340 )     (1,874 )
Net charge-offs
   $
1,235
     $
919
     $
1,660
     $
2,154
     $
3,042
  
                                         
Market Price:
                                        
High
   $
37.98
     $
41.50
     $
35.50
     $
41.50
     $
35.90
  
Low
    
31.40
      
33.87
      
31.50
      
31.40
      
30.60
  
Close
    
32.30
      
36.23
      
34.93
      
32.30
      
34.93
  


 
Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
June 30, 2007
  
(in thousands except per share data and # of employees)
  

   
As of
    
As of
    
As of
  
   
June 30, 2007
    
March 31, 2007
    
June 30, 2006
  
Assets:
                  
Loans, net of unearned
   $
2,215,057
     $
2,171,484
     $
2,138,817
  
Loan loss reserve
     (27,688 )     (27,077 )     (27,814 )
Net loans
    
2,187,369
      
2,144,407
      
2,111,003
  
Loans held for sale
    
3,899
      
893
      
2,140
  
Securities AFS
    
425,058
      
440,587
      
472,678
  
Securities HTM
    
36,689
      
38,655
      
44,550
  
Other equity investments
    
28,038
      
28,032
      
27,325
  
Other earning assets
    
69,072
      
195,968
      
51,226
  
Cash and due from banks
    
78,214
      
78,324
      
81,185
  
Premises and equipment
    
54,369
      
55,148
      
57,230
  
Goodwill and core deposit intangible
    
67,293
      
67,452
      
66,391
  
Other assets
    
50,829
      
49,320
      
53,324
  
Total Assets
   $
3,000,830
     $
3,098,786
     $
2,967,052
  
                         
Liabilities and Equity:
                        
NOW accounts
   $
16,470
     $
14,910
     $
25,296
  
Savings deposits
    
669,598
      
698,783
      
629,022
  
CD's>=$100,000
    
445,725
      
447,914
      
412,700
  
Other time deposits
    
796,443
      
796,402
      
774,606
  
Total interest bearing deposits
    
1,928,236
      
1,958,009
      
1,841,624
  
Noninterest bearing deposits
    
436,702
      
435,023
      
448,842
  
Total deposits
    
2,364,938
      
2,393,032
      
2,290,466
  
Repurchase agreements
    
154,531
      
168,441
      
188,224
  
Other interest bearing liabilities
    
157,871
      
219,614
      
199,161
  
Noninterest bearing liabilities
    
31,833
      
29,901
      
24,641
  
Total liabilities
    
2,709,173
      
2,810,988
      
2,702,492
  
Shareholders' equity
    
291,657
      
287,798
      
264,560
  
Total Liabilities and Equity
   $
3,000,830
     $
3,098,786
     $
2,967,052
  
                         
Ending shares outstanding
    
15,217
      
15,203
      
15,083
  
Memo: Market value of HTM securities
   $
35,314
     $
37,371
     $
42,002
  
                         
90 days past due loans
   $
7,684
     $
4,270
     $
5,644
  
Nonaccrual loans
    
16,159
      
13,605
      
10,697
  
Restructured loans
    
43
      
55
      
693
  
Foreclosed properties
    
3,898
      
3,514
      
5,000
  
                         
Tier 1 leverage ratio
     9.71 %     9.62 %     9.06 %
Tier 1 risk based ratio
     12.32 %     12.11 %     11.51 %
Total risk based ratio
     13.52 %     13.28 %     12.72 %
FTE employees
    
1,012
      
1,014
      
1,019
  
 
 
 
Community Trust Bancorp, Inc.
  
Financial Summary (Unaudited)
  
June 30, 2007
  
(in thousands except per share data and # of employees)
  
 
Community Trust Bancorp, Inc. reported earnings for the three and six months ending June 30, 2007 and 2006 as follows:
  
                         
   
Three Months Ended 
  
Six Months Ended 
   
June 30  
  
June 30  
   
2007 
  
2006 
  
2007 
  
2006 
Net income
   $
8,858
     $
9,892
     $
16,880
     $
19,660
  
                                 
Basic earnings per share
   $
0.58
     $
0.66
     $
1.11
     $
1.31
  
                                 
Diluted earnings per share
   $
0.57
     $
0.65
     $
1.09
     $
1.29
  
                                 
Average shares outstanding
    
15,216
      
15,051
      
15,203
      
15,031
  
                                 
Total assets (end of period)
   $
3,000,830
     $
2,967,052
                  
                                 
Return on average equity
     12.16 %     15.02 %     11.75 %     15.14 %
                                 
Return on average assets
     1.18 %     1.33 %     1.13 %     1.35 %
                                 
Provision for loan losses
   $
1,846
     $
1,350
     $
2,316
     $
1,350
  
                                 
Gains on sales of loans
   $
316
     $
316
     $
612
     $
620