EX-99.1 2 ctber8k0907ex99.htm CTBI 3RD QUARTER 2007 EARNINGS RELEASE 8-K EX. 99.1 ctber8k0907ex99.htm

Exhibit 99.1



FOR IMMEDIATE RELEASE
October 16, 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 THIRD QUARTER 2007.

Earnings Summary
          
(in thousands except per share data)
3Q
2007
2Q
2007
3Q
2006
9 Months
2007
9 Months
2006
Net income
$
10,476
$
8,858
$
9,884
$
27,356
$
29,544
Earnings per share
$
0.69
$
0.58
$
0.65
$
1.80
$
1.96
Earnings per share (diluted)
$
0.68
$
0.57
$
0.64
$
1.77
$
1.93
                     
Return on average assets
1.39%
1.18%
1.34%
1.22%
1.34%
Return on average equity
14.04%
12.16%
14.40%
12.53%
14.89%
Efficiency ratio
52.36%
58.22%
55.35%
58.30%
56.41%
           
Dividends declared per share
$
0.27
$
0.27
$
0.26
$
0.81
$
0.78
Book value per share
$
19.62
$
19.17
$
18.16
$
19.62
$
18.16
                     
Weighted average shares
  
15,183
  
15,216
  
15,129
  
15,186
  
15,064
Weighted average shares (diluted)
  
15,342
  
15,448
  
15,369
  
15,417
  
15,272
 
Community Trust Bancorp, Inc. (NASDAQ-CTBI) reports earnings for the quarter ended September 30, 2007 of $10.5 million or $0.69 per basic share compared to $8.9 million or $0.58 per share earned during the quarter ended June 30, 2007 and $9.9 million or $0.65 per share earned during the third quarter of 2006.  Earnings for the nine months ended September 30, 2007 were $27.4 million or $1.80 per share compared to $29.5 million or $1.96 per share earned for the first nine months of 2006.

Third Quarter 2007 Highlights

v  
CTBI's basic earnings per share for the third quarter 2007 increased 19.0% from prior quarter and 6.2% from prior year third quarter.  Year-to-date earnings per share, however, decreased 8.2% from the nine months ended September 30, 2006.

v  
Current quarter earnings were impacted by the receipt of a $1.2 million fee in relation to the termination of the acquisition of Eagle Fidelity, Inc. and the reversal of an employee incentive accrual in the amount of $1.5 million.

v  
CTBI repurchased 196,500 shares of its common stock during the third quarter 2007, leaving 382,019 shares remaining under CTBI's current repurchase authorization.

v  
Core earnings for the quarter and YTD 2007 continue to reflect the pressure on our net interest income as CTBI continues operating within the inverted yield curve.

v  
Nonperforming loans as a percentage of total loans at September 30, 2007 were 1.41%, an increase of $7.6 million over prior quarter and a $15.9 million increase from same period prior year.  The quarter over quarter increase in nonperforming loans is driven by the residential real estate development market in Central Kentucky and consists of three borrowing relationships.  The relationships have been thoroughly analyzed and appropriate reserves established for any potential loss.  The accounts are in the process of collection and we anticipate minimal loss.

v  
Our loan portfolio grew at an annualized rate of 3.5% during the quarter and 3.7% from September 30, 2006.

v  
Our investment portfolio declined 15.2% from prior quarter and 14.5% from prior year resulting from the payment of a $40 million FHLB advance and a decline in deposits which were funded through the sale of auction rate securities.  The FHLB advance was acquired in the third quarter 2004 to fund growth in our investment portfolio.

v  
Our efficiency ratio improved significantly during the third quarter 2007 as a result of the acquisition termination fee and the reversal of the incentive accrual.

Net Interest Income
 
  As anticipated by management, our net interest margin remained stable during the third quarter 2007.  Our quarterly net interest margin remained at 3.86%, the same as prior quarter, but was a decrease of 22 basis points from the third quarter 2006.  Our year-to-date net interest margin has declined 19 basis points from the first nine months of 2006.

Net interest income for the quarter remained at $26.6 million, the same as  prior quarter, but decreased 3.2% from prior year third quarter, as the yield on average earnings assets increased 2 basis points from September 2006 to September 2007 in comparison to the 33 basis point increase in the cost of interest bearing funds.  Year-to-date net interest income has decreased 2.4% compared to the first nine months of 2006.  Average earning assets have increased 2.5% year over year.

Noninterest Income
 
Noninterest income for the third quarter 2007 remained relatively stable to prior quarter after normalizing for the receipt of a $1.2 million fee associated with the termination of the Eagle Fidelity, Inc. acquisition, but increased 6.6% normalized from the third quarter 2006.  Year-to-date noninterest income normalized increased more than 9% from the nine months ended September 30, 2006, with increases in gains on sales of loans, deposit service charges, trust revenue, and loan related fees.
 
Noninterest Expense
 
Noninterest expense for the quarter decreased 7.7% from prior quarter as a result of the reversal of an employee incentive accrual.  Year-to-date noninterest expense, however, increased 4.8% as the third quarter accrual reversal was offset by the first quarter charge related to unamortized debt issuance costs with the redemption of trust preferred securities.

Balance Sheet Review
 
CTBI’s total assets decreased $71.7 million or 2.4% from prior quarter, resulting from the payoff a $40 million FHLB advance and a decline in deposits which were funded through the sale of auction rate securities.  Total assets have increased $34.8 million or 1.2% year over year.  Loans outstanding at September 30, 2007 were $2.2 billion reflecting a $19.4 million, annualized 3.5%, increase during the quarter, and an $80.4 million or 3.7% increase year over year.  CTBI's investment portfolio decreased $74.7 million from prior quarter and $70.4 million from prior year third quarter.  Deposits, including repurchase agreements, declined $39.7 million, an annualized 6.3%, during the quarter as CTBI continued its focus on managing deposit growth and pricing controls due to its liquidity position.  Deposits have increased 1.7% year over year.
 
Shareholders’ equity of $294.9 million on September 30, 2007 was an annualized increase of 4.4% from June 30, 2007 and a 7.3% increase from September 30, 2006.  CTBI's annualized dividend yield to shareholders as of September 30, 2007 was 3.60%.

Asset Quality
 
Nonperforming loans at September 30, 2007 were $31.5 million compared to $23.9 million at June 30, 2007 and $15.7 million at September 30, 2006.  All nonperforming loans are individually reviewed with specific reserves established when appropriate.  The increase in nonperforming loans is driven primarily by three relationships related to residential development.  We anticipate nonperforming loans to remain higher than recent history as the normal legal collection time period for real estate secured assets has been slowed due to increased volumes in the industry.  Our loan portfolio management processes focus on maintaining appropriate reserves for potential losses.
 
Foreclosed properties at September 30, 2007 of $6.6 million were a $2.7 million increase from the $3.9 million on both June 30, 2007 and September 30, 2006.  The increase was driven by a $2.6 million increase in single family residential properties from our Central Kentucky Region where the market has softened.  The market has not experienced deflation in residential real estate, but the time on the market before sale has extended.
 
Net loan charge-offs for the quarter of $1.7 million, or 0.30% of average loans annualized, was an increase from prior quarter's 0.23% of average loans annualized and from the 0.29% from prior year third quarter.  Net loan charge-offs for the nine months ended September 30, 2007 of 0.23% of average loans annualized was a decrease from the 0.29% for the first nine months of 2006.  Our reserve for losses on loans as a percentage of total loans outstanding at September 30, 2007 remained at 1.25% from prior quarter, a decrease from the 1.30% at September 30, 2006.  The adequacy of our reserve for losses on loans is analyzed quarterly and adjusted as necessary.
 
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 $2.9 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)
  
September 30, 2007
  
(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, 2007
  
June 30, 2007 
  
September 30, 2006
  
September 30, 2007
  
September 30, 2006 
Interest income
   $
49,719
     $
50,085
     $
48,493
     $
148,983
     $
140,071
  
Interest expense
    
23,127
      
23,474
      
21,028
      
69,890
      
59,042
  
Net interest income
    
26,592
      
26,611
      
27,465
      
79,093
      
81,029
  
Loan loss provision
    
1,915
      
1,846
      
1,755
      
4,231
      
3,105
  
                                         
Gains on sales of loans
    
384
      
316
      
265
      
996
      
885
  
Deposit service charges
    
5,302
      
5,330
      
5,220
      
15,436
      
15,081
  
Trust revenue
    
1,240
      
1,180
      
927
      
3,619
      
2,669
  
Loan related fees
    
606
      
867
      
661
      
2,494
      
1,774
  
Other noninterest income
    
2,402
      
1,281
      
1,118
      
4,861
      
3,578
  
Total noninterest income
    
9,934
      
8,974
      
8,191
      
27,406
      
23,987
  
                                         
Personnel expense
    
9,604
      
11,100
      
10,750
      
31,818
      
32,538
  
Occupancy and equipment
    
2,843
      
2,875
      
2,735
      
8,707
      
8,688
  
Amortization of core deposit intangible
    
159
      
158
      
159
      
476
      
476
  
Other noninterest expense
    
6,718
      
6,805
      
6,313
      
21,757
      
18,199
  
Total noninterest expense
    
19,324
      
20,938
      
19,957
      
62,758
      
59,901
  
                                         
Net income before taxes
    
15,287
      
12,801
      
13,944
      
39,510
      
42,010
  
Income taxes
    
4,811
      
3,943
      
4,060
      
12,154
      
12,466
  
Net income
   $
10,476
     $
8,858
     $
9,884
     $
27,356
     $
29,544
  
                                         
Memo: TEQ interest income
   $
50,098
     $
50,463
     $
48,889
     $
150,132
     $
141,248
  
                                         
Average shares outstanding
    
15,183
      
15,216
      
15,129
      
15,186
      
15,064
  
Basic earnings per share
   $
0.69
     $
0.58
     $
0.65
     $
1.80
     $
1.96
  
Diluted earnings per share
   $
0.68
     $
0.57
     $
0.64
     $
1.77
     $
1.93
  
Dividends per share
   $
0.27
     $
0.27
     $
0.26
     $
0.81
     $
0.78
  
                                         
Average balances:
                                        
Loans, net of unearned income
   $
2,222,451
     $
2,199,233
     $
2,144,185
     $
2,195,940
     $
2,122,011
  
Earning assets
    
2,770,100
      
2,801,966
      
2,707,886
      
2,782,217
      
2,714,050
  
Total assets
    
2,989,727
      
3,020,931
      
2,932,924
      
3,001,713
      
2,940,087
  
Deposits
    
2,356,589
      
2,379,683
      
2,282,383
      
2,364,974
      
2,282,958
  
Interest bearing liabilities
    
2,233,762
      
2,275,637
      
2,205,385
      
2,256,526
      
2,212,085
  
Shareholders' equity
    
296,001
      
292,096
      
272,256
      
291,799
      
265,325
  
                                         
Performance ratios:
                                        
Return on average assets
     1.39 %     1.18 %     1.34 %     1.22 %     1.34 %
Return on average equity
     14.04 %     12.16 %     14.40 %     12.53 %     14.89 %
Yield on average earning assets (tax equivalent)
     7.18 %     7.22 %     7.16 %     7.21 %     6.96 %
Cost of interest bearing funds (tax equivalent)
     4.11 %     4.14 %     3.78 %     4.14 %     3.57 %
Net interest margin (tax equivalent)
     3.86 %     3.86 %     4.08 %     3.86 %     4.05 %
Efficiency ratio (tax equivalent)
     52.36 %     58.22 %     55.35 %     58.30 %     56.41 %
                                         
Loan charge-offs
   $
2,311
     $
1,843
     $
2,101
     $
5,804
     $
7,017
  
Recoveries
     (641 )     (608 )     (538 )     (1,980 )     (2,412 )
Net charge-offs
   $
1,670
     $
1,235
     $
1,563
     $
3,824
     $
4,605
  
                                         
Market Price:
                                        
High
   $
33.46
     $
37.98
     $
39.07
     $
41.50
     $
39.07
  
Low
    
26.47
      
31.40
      
33.62
      
26.47
      
30.60
  
Close
    
30.01
      
32.30
      
37.65
      
30.01
      
37.65
  
                                         
                                         
                                         
                                         
 
  
                   
As of 
  
As of 
  
As of 
                   
September 30, 2007
  
June 30, 2007 
  
September 30, 2006 
Assets:
                                        
Loans, net of unearned
                   $
2,234,494
     $
2,215,057
     $
2,154,129
  
Loan loss reserve
                     (27,933 )     (27,688 )     (28,006 )
Net loans
                    
2,206,561
      
2,187,369
      
2,126,123
  
Loans held for sale
                    
1,719
      
3,899
      
1,826
  
Securities AFS
                    
352,973
      
425,058
      
415,691
  
Securities HTM
                    
34,107
      
36,689
      
42,213
  
Other equity investments
                    
28,041
      
28,038
      
27,659
  
Other earning assets
                    
45,993
      
69,072
      
27,324
  
Cash and due from banks
                    
83,804
      
78,214
      
77,078
  
Premises and equipment
                    
53,650
      
54,369
      
56,025
  
Goodwill and core deposit intangible
                    
67,134
      
67,293
      
67,769
  
Other assets
                    
55,160
      
50,829
      
52,611
  
Total Assets
                   $
2,929,142
     $
3,000,830
     $
2,894,319
  
                                         
Liabilities and Equity:
                                        
NOW accounts
                   $
17,942
     $
16,470
     $
16,636
  
Savings deposits
                    
664,561
      
669,598
      
648,336
  
CD's>=$100,000
                    
436,833
      
445,725
      
421,959
  
Other time deposits
                    
787,171
      
796,443
      
778,737
  
Total interest bearing deposits
                    
1,906,507
      
1,928,236
      
1,865,668
  
Noninterest bearing deposits
                    
426,368
      
436,702
      
414,037
  
Total deposits
                    
2,332,875
      
2,364,938
      
2,279,705
  
Repurchase agreements
                    
146,876
      
154,531
      
158,085
  
Other interest bearing liabilities
                    
117,762
      
157,871
      
148,650
  
Noninterest bearing liabilities
                    
36,713
      
31,833
      
32,980
  
Total liabilities
                    
2,634,226
      
2,709,173
      
2,619,420
  
Shareholders' equity
                    
294,916
      
291,657
      
274,899
  
Total Liabilities and Equity
                   $
2,929,142
     $
3,000,830
     $
2,894,319
  
                                         
Ending shares outstanding
                    
15,032
      
15,217
      
15,141
  
Memo: Market value of HTM securities
                   $
33,090
     $
35,314
     $
40,237
  
                                         
90 days past due loans
                   $
12,261
     $
7,684
     $
6,648
  
Nonaccrual loans
                    
19,192
      
16,159
      
8,926
  
Restructured loans
                    
61
      
43
      
84
  
Foreclosed properties
                    
6,624
      
3,898
      
3,900
  
                                         
Tier 1 leverage ratio
                     9.88 %     9.71 %     9.42 %
Tier 1 risk based ratio
                     12.75 %     12.32 %     12.05 %
Total risk based ratio
                     13.99 %     13.52 %     13.30 %
FTE employees
                    
999
      
1,012
      
1,006
  
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
 
  
                                         
Community Trust Bancorp, Inc. reported earnings for the three and nine months ending September 30, 2007 and 2006 as follows:
                  
                                         
   
Three Months Ended
    
Nine Months Ended
          
   
September 30     
  
September 30     
        
   
2007 
  
2006 
  
2007 
  
2006 
        
Net income
   $
10,476
     $
9,884
     $
27,356
     $
29,544
          
                                         
Basic earnings per share
   $
0.69
     $
0.65
     $
1.80
     $
1.96
          
                                         
Diluted earnings per share
   $
0.68
     $
0.64
     $
1.77
     $
1.93
          
                                         
Average shares outstanding
    
15,183
      
15,129
      
15,186
      
15,064
          
                                         
Total assets (end of period)
   $
2,929,142
     $
2,894,319
                          
                                         
Return on average equity
     14.04 %     14.40 %     12.53 %     14.89 %        
                                         
Return on average assets
     1.39 %     1.34 %     1.22 %     1.34 %        
                                         
Provision for loan losses
   $
1,915
     $
1,755
     $
4,231
     $
3,105
          
                                         
Gains on sales of loans
   $
384
     $
265
     $
996
     $
885