Community Trust Bancorp, Inc. (NASDAQ: CTBI):
|(in thousands except per share data)||3Q 2010||2Q 2010||3Q 2009||9 Months 2010||9 Months 2009|
|Earnings per share||$||0.55||$||0.56||$||0.37||$||1.56||$||1.20|
|Earnings per share--diluted||$||0.55||$||0.56||$||0.37||$||1.56||$||1.19|
|Return on average assets||1.04%||1.06%||0.72%||1.00%||0.80%|
|Return on average equity||9.95%||10.40%||6.94%||9.62%||7.65%|
|Tangible common equity||8.58%||8.43%||8.51%||8.58%||8.51%|
|Dividends declared per share||$||0.305||$||0.30||$||0.30||$||0.905||$||0.90|
|Book value per share||$||22.10||$||21.69||$||21.04||$||22.10||$||21.04|
|Weighted average shares||15,239||15,228||15,145||15,223||15,116|
|Weighted average shares--diluted||15,275||15,305||15,198||15,260||15,207|
CTBI continues to maintain a significantly higher level of capital than required by regulatory authorities to be designated as well-capitalized. On September 30, 2010, our Tangible Common Equity/Tangible Assets Ratio remained considerably higher than our peer institutions at 8.58%, our Tier 1 Leverage Ratio of 10.22% was 522 basis points higher than the 5.00% required, our Tier 1 Risk-Based Capital Ratio of 13.37% was 737 basis points higher than the required 6.00%, and our Total Risk-Based Capital Ratio of 14.62% was 462 basis points higher than the 10.00% regulatory requirement for this designation.Third Quarter 2010 Highlights
- CTBI's quarterly basic earnings per share increased $0.18 per share from third quarter 2009 but decreased $0.01 per share from second quarter 2010. Year-to-date basic earnings per share increased $0.36 per share from prior year. Year-to-date earnings were positively impacted by increased net interest income, partially offset by decreased noninterest income and increased noninterest expense.
- CTBI experienced significant improvement in our net interest margin year over year; however, our net interest margin for the quarter decreased 5 basis points from second quarter 2010.
- As problem loans continued to work through the collection process, nonperforming loans increased from the $45.2 million at September 30, 2009 to $56.6 million but decreased $5.7 million during the third quarter 2010 compared to $62.3 million at June 30, 2010. The linked quarter decrease in nonperforming loans was in the nonaccrual classification. Nonperforming assets increased $15.9 million from prior year third quarter but decreased $4.8 million from prior quarter-end.
- The loan loss provision for the quarter decreased $2.1 million from prior year same quarter but increased $0.6 million from prior quarter. The loan loss provision for the nine months ended September 30, 2010 increased $0.2 million from prior year.
- Net loan charge-offs for the quarter ended September 30, 2010 of $5.6 million, or 0.91% of average loans annualized, was an increase from the $5.2 million, or 0.87%, experienced for the second quarter 2009 and from prior quarter’s $1.8 million, or 0.30%, as previously identified problem credits work through the liquidation process.
- Our loan loss reserves as a percentage of total loans outstanding at September 30, 2010 were 1.40% compared to 1.33% at September 30, 2009 and 1.48% at June 30, 2010 as specific reserves were utilized in the liquidation of previously identified problem credits.
- Noninterest income increased for the quarter ended September 30, 2010 compared to same period 2009 and prior quarter as a result of increased gains on sales of loans and the change in the fair value of our mortgage servicing rights portfolio. Year-to-date noninterest income decreased $1.1 million due to declines in gains on sales of loans and the fair value of mortgage servicing rights, partially offset by increases in trust revenue and deposit service charges.
- Our loan portfolio increased $42.8 million year over year and $4.3 million, an annualized rate of 0.7%, during the quarter with increases in the commercial and residential loan portfolios offset partially by a decline in the consumer loan portfolio.
- Our investment portfolio increased $38.2 million from prior year but declined $20.4 million during the quarter.
- Our tangible common equity/tangible assets ratio remains strong at 8.58%.
- CTBI has received both LaFollette First National Corporation shareholder approval and regulatory approval for its acquisition of LaFollette First National Corporation and First National Bank of LaFollette, the wholly-owned subsidiary of LaFollette Corporation. CTBI anticipates the acquisition will be completed in November 2010.
Noninterest IncomeNoninterest income for the quarter ended September 30, 2010 increased 14.9% and 11.0% from prior year third quarter and prior quarter, respectively. Year-to-date noninterest income declined 3.4% 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 $1.2 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 6.3% from prior year third quarter and 1.5% from prior quarter. Noninterest expense for the first nine months of 2010 increased 1.6% from 2009 as increased personnel expenses were offset by a decrease in FDIC insurance premiums and special assessment. Balance Sheet Review CTBI continues to experience internal growth of its banking franchise. Total assets at $3.2 billion increased 6.5% from the third quarter 2009 and an annualized 2.8% during the quarter. Loans outstanding at September 30, 2010 were $2.4 billion with a 1.8% growth from prior year and an annualized 0.7% growth from June 30, 2010. Loan growth during the quarter of $4.7 million in the commercial loan portfolio and $9.8 million in the residential loan portfolio was partially offset by a decline in the consumer loan portfolio of $10.1 million. CTBI's investment portfolio increased $38.2 million over prior year third quarter but decreased $20.4 million from prior quarter as CTBI continues to experience growth in its deposit base while loan demand remains weak. Deposits, including repurchase agreements, at $2.8 billion increased 6.9% from September 30, 2009 and an annualized 1.3% from prior quarter end. Shareholders’ equity at September 30, 2010 was $336.8 million compared to $318.6 million at September 30, 2009 and $330.3 million at June 30, 2010. CTBI's annualized dividend yield to shareholders as of September 30, 2010 was 4.50%.
Asset QualityCTBI's total nonperforming loans were $56.6 million at September 30, 2010, an increase from the $45.2 million at September 30, 2009 but a decrease from the $62.3 million at June 30, 2010. The quarter over quarter decrease in nonperforming loans is primarily attributable to the liquidation process of one large coal-related credit and one hotel/motel credit discussed in prior earnings releases. Both loans had specific reserves in place that were more than adequate to cover the amounts charged-off. Loans 30-89 days past due at $29.9 million increased $10.3 million from September 30, 2009 and $6.3 million during the quarter. The quarter over quarter increase in 30-89 days past due loans is a result of two commercial real estate secured credit relationships. One relationship is secured by income-producing properties while the second is secured by 1-4 family properties. Both loans are well-secured based upon current property valuations. 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 $41.1 million for the third quarter 2010 compared to $36.6 million at September 30, 2009 and $40.1 million at June 30, 2010. Sales of foreclosed properties for the nine months ended September 30, 2010 totaled $5.1 million while new foreclosed properties totaled $9.1 million. Our nonperforming loans and foreclosed properties remain primarily concentrated in our Central Kentucky Region. Net loan charge-offs for the quarter were $5.6 million, or 0.91% of average loans annualized, an increase from prior year third quarter's $5.2 million or 0.87% and prior quarter’s $1.8 million or 0.30%. Of the total net charge-offs for the quarter, $4.3 million was in commercial loans, $0.8 million was in indirect auto loans, and $0.3 million was in residential real estate mortgage loans. Specific reserves covered 94.8% of the commercial loan charge-offs. Allocations to loan loss reserves were $3.7 million for the quarter ended September 30, 2010 compared to $5.8 million for the quarter ended September 30, 2009 and $3.1 million for the quarter ended June 30, 2010. Our loan loss reserves as a percentage of total loans outstanding at September 30, 2010 was 1.40% compared to 1.33% at September 30, 2009 and 1.48% at June 30, 2010. Although there was an increase in net charge-offs during the quarter, management believes the current loan loss reserve is adequate. The adequacy of our loan loss reserves is analyzed quarterly and adjusted as necessary with a focus on maintaining appropriate reserves for potential losses. The analysis includes an individual loan review including current valuation of the collateral. Specific reserves are allocated to address any identified shortfalls in collateral while additional reserves address many other considerations, including but not limited to historical losses, loss trends, and current economic conditions, for adequate reserve coverage.
Forward-Looking StatementsCertain 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 $3.2 billion, is headquartered in Pikeville, Kentucky and has 70 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, and five trust offices across Kentucky.Additional information follows.
|Community Trust Bancorp, Inc.|
|Financial Summary (Unaudited)|
|September 30, 2010|
|(in thousands except per share data and # of employees)|
|September 30, 2010||June 30, 2010||September 30, 2009||September 30, 2010||September 30, 2009|
|Net interest income||29,377||29,278||27,045||88,000||76,928|
|Loan loss provision||3,676||3,106||5,772||12,504||12,275|
|Gains on sales of loans||575||337||341||1,354||3,581|
|Deposit service charges||5,920||5,949||5,721||17,166||16,187|
|Loan related fees||862||46||525||1,748||2,767|
|Other noninterest income||1,748||1,752||1,295||5,238||4,129|
|Total noninterest income||10,597||9,542||9,226||29,880||30,934|
|Occupancy and equipment||2,675||2,701||2,948||8,100||8,854|
|FDIC insurance premiums||1,118||1,140||1,086||3,257||4,832|
|Amortization of core deposit intangible||72||159||159||390||476|
|Other noninterest expense||8,573||8,023||8,090||24,710||23,578|
|Total noninterest expense||23,998||23,655||22,579||71,094||69,954|
|Net income before taxes||12,300||12,059||7,920||34,282||25,633|
|Memo: TEQ interest income||$||38,659||$||38,780||$||39,097||$||116,277||$||115,321|
|Average shares outstanding||15,239||15,228||15,145||15,223||15,116|
|Diluted average shares outstanding||15,275||15,305||15,198||15,260||15,207|
|Basic earnings per share||$||0.55||$||0.56||$||0.37||$||1.56||$||1.20|
|Diluted earnings per share||$||0.55||$||0.56||$||0.37||$||1.56||$||1.19|
|Dividends per share||$||0.305||$||0.30||$||0.30||$||0.905||$||0.90|
|Loans, net of unearned income||$||2,441,432||$||2,440,353||$||2,396,918||$||2,439,646||$||2,367,577|
|Interest bearing liabilities||2,347,844||2,349,394||2,245,748||2,324,037||2,223,960|
|Return on average assets||1.04||%||1.06||%||0.72||%||1.00||%||0.80||%|
|Return on average equity||9.95||%||10.40||%||6.94||%||9.62||%||7.65||%|
|Yield on average earning assets (tax equivalent)||5.14||%||5.24||%||5.43||%||5.29||%||5.45||%|
|Cost of interest bearing funds (tax equivalent)||1.51||%||1.56||%||2.07||%||1.57||%||2.25||%|
|Net interest margin (tax equivalent)||3.95||%||4.00||%||3.81||%||4.05||%||3.68||%|
|Efficiency ratio (tax equivalent)||59.52||%||60.41||%||61.67||%||59.79||%||64.59||%|
|Community Trust Bancorp, Inc. Financial Summary (Unaudited) September 30, 2010 (in thousands except per share data and # of employees)|
|As of||As of||As of|
|September 30, 2010||June 30, 2010||September 30, 2009|
|Loans, net of unearned||$||2,445,507||$||2,441,222||$||2,402,697|
|Loan loss reserve||(34,238||)||(36,156||)||(31,957||)|
|Loans held for sale||1,223||1,466||754|
|Other equity investments||29,057||29,054||29,051|
|Other earning assets||157,258||122,728||77,978|
|Cash and due from banks||71,149||71,196||63,122|
|Premises and equipment||47,805||48,403||50,172|
|Goodwill and core deposit intangible||65,318||65,390||65,865|
|Liabilities and Equity:|
|Other time deposits||817,796||816,731||799,664|
|Total interest bearing deposits||2,056,236||2,076,226||1,941,858|
|Noninterest bearing deposits||519,059||494,901||462,096|
|Other interest bearing liabilities||94,047||89,865||93,880|
|Noninterest bearing liabilities||37,390||34,682||38,554|
|Total Liabilities and Equity||$||3,231,740||$||3,209,292||$||3,035,376|
|Ending shares outstanding||15,239||15,228||15,146|
|Memo: Market value of HTM securities||$||1,667||$||1,662||$||16,865|
|30 - 89 days past due loans||$||29,935||$||23,677||$||19,635|
|90 days past due loans||20,252||16,857||15,685|
|Restructured loans (excluding 90 days past due and nonaccrual)||6,377||5,196||-|
|Other repossessed assets||193||226||176|
|Tier 1 leverage ratio||10.22||%||10.12||%||10.25||%|
|Tier 1 risk based ratio||13.37||%||13.20||%||12.92||%|
|Total risk based ratio||14.62||%||14.46||%||14.17||%|
|Tangible equity to tangible assets ratio||8.58||%||8.43||%||8.51||%|
|Community Trust Bancorp, Inc. Financial Summary (Unaudited) September 30, 2010 (in thousands except per share data and # of employees)|
|Community Trust Bancorp, Inc. reported earnings for the three and nine months ending September 30, 2010 and 2009 as follows:|
|Three Months Ended||Nine Months Ended|
|September 30||September 30|
|Basic earnings per share||$||0.55||$||0.37||$||1.56||$||1.20|
|Diluted earnings per share||$||0.55||$||0.37||$||1.56||$||1.19|
|Average shares outstanding||15,239||15,145||15,223||15,116|
|Total assets (end of period)||$||3,231,740||$||3,035,376|
|Return on average equity||9.95||%||6.94||%||9.62||%||7.65||%|
|Return on average assets||1.04||%||0.72||%||1.00||%||0.80||%|
|Provision for loan losses||$||3,676||$||5,772||$||12,504||$||12,275|
|Gains on sales of loans||$||575||$||341||$||1,354||$||3,581|