|(in thousands except per share data)||4Q 2010||3Q 2010||4Q 2009||Year 2010||Year 2009|
|Earnings per share||$||0.61||$||0.55||$||0.46||$||2.17||$||1.66|
|Earnings per share—diluted||$||0.60||$||0.55||$||0.46||$||2.16||$||1.65|
|Return on average assets||1.11%||1.04%||0.90%||1.03%||0.82%|
|Return on average equity||10.71%||9.95%||8.58%||9.90%||7.89%|
|Tangible common equity||8.27%||8.58%||8.47%||8.27%||8.47%|
|Dividends declared per share||$||0.305||$||0.305||$||0.30||$||1.21||$||1.20|
|Book value per share||$||22.16||$||22.10||$||21.17||$||22.16||$||21.17|
|Weighted average shares||15,265||15,239||15,168||15,234||15,129|
|Weighted average shares—diluted||15,294||15,275||15,200||15,259||15,169|
CTBI continues to maintain a significantly higher level of capital than required by regulatory authorities to be designated as well-capitalized. On December 31, 2010, our Tangible Common Equity/Tangible Assets Ratio remains strong at 8.27%, our Tier 1 Leverage Ratio of 10.16% was 516 basis points higher than the 5.00% required, our Tier 1 Risk-Based Capital Ratio of 12.90% was 690 basis points higher than the required 6.00%, and our Total Risk-Based Capital Ratio of 14.10% was 410 basis points higher than the 10.00% regulatory requirement for this designation.Fourth Quarter and Year 2010 Highlights
- CTBI completed the acquisition of LaFollette First National Corporation and First National Bank of LaFollette, the wholly-owned subsidiary of LaFollette Corporation (“LaFollette”), on November 17, 2010.
- CTBI's quarterly basic earnings per share increased $0.15 per share from fourth quarter 2009 and $0.06 per share from third quarter 2010. Basic earnings per share for the year 2010 increased $0.51 per share from prior year. Earnings for the year 2010 were positively impacted by increased net interest income and decreased provision for loan loss, partially offset by decreased noninterest income and increased noninterest expense. The acquisition of LaFollette increased earnings by $0.02 per basic share.
- CTBI experienced significant improvement in our net interest margin year over year increasing from 3.77% for the year ended December 31, 2009 to 4.07% for the year ended December 31, 2010 as deposit expense decreased significantly.
- As problem loans continued to work through the collection process, nonperforming loans increased from the $41.3 million at December 31, 2009 and $56.6 million at September 30, 2010 to $61.9 million at December 31, 2010. December 31, 2010 information includes $2.1 million in nonperforming loans for First National Bank of LaFollette. The linked quarter increase in nonperforming loans was in the nonaccrual classification. Nonperforming assets increased $26.1 million from prior year fourth quarter and $7.1 million from prior quarter-end.
- The loan loss provision for the quarter decreased $1.2 million from prior year same quarter but increased $0.3 million from prior quarter. The loan loss provision for the year ended December 31, 2010 decreased $1.0 million from prior year.
- Net loan charge-offs for the quarter ended December 31, 2010 of $3.4 million, or 0.54% of average loans annualized, was a decrease from the $4.5 million, or 0.73%, experienced for the fourth quarter 2009 and from prior quarter’s $5.6 million, or 0.91%. Net loan charge-offs for the year 2010 decreased from $15.6 million for the year 2009 to $14.3 million for the year 2010.
- Our loan loss reserve as a percentage of total loans outstanding at December 31, 2010 was 1.34% compared to 1.34% at December 31, 2009 and 1.40% at September 30, 2010. Generally accepted accounting principles require that expected credit losses associated with loans obtained in an acquisition be reflected in the estimation of loan fair value as of the acquisition date and prohibits any carryover of an allowance for credit losses. Excluding amounts related to loans obtained in the fourth quarter 2010 acquisition of LaFollette, the allowance-to-legacy loan ratio was 1.40% and 1.34%, respectively, at December 31, 2010 and 2009, and 1.40% at September 30, 2010.
- Noninterest income increased for the quarter ended December 31, 2010 compared to same period 2009 and prior quarter as a result of a $0.4 million increase in the fair value of our mortgage servicing rights during the fourth quarter 2010. Noninterest income for the year 2010 decreased $0.5 million from prior year due to declines in gains on sales of loans and the fair value of our mortgage servicing rights, partially offset by increases in trust and brokerage revenue and deposit service charges.
- Our loan portfolio increased $169.4 million year over year and $159.7 million during the quarter, including a $119.1 million increase resulting from the acquisition of LaFollette.
- Our investment portfolio increased $55.8 million from prior year and $6.4 million during the quarter, including the $29.2 million increase from the LaFollette acquisition.
- Our tangible common equity/tangible assets ratio remains strong at 8.27%. The acquisition of LaFollette was an all cash transaction and decreased our tangible common equity/tangible assets ratio by 56 basis points.
Noninterest IncomeNoninterest income for the quarter ended December 31, 2010 increased 5.3% and 4.2% from prior year fourth quarter and prior quarter, respectively. The quarterly increase was primarily a result of a $0.4 million increase in the fair value of our mortgage servicing rights during the fourth quarter 2010. Noninterest income for the year 2010 declined 1.2% 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 $0.8 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 4.6% from prior year fourth quarter and 4.0% from prior quarter. Noninterest expense for the year 2010 increased 2.4% from 2009 as increased personnel expenses were partially offset by a decrease in FDIC insurance premiums and special assessment. Balance Sheet Review CTBI’s total assets at $3.4 billion increased $269.2 million, or 8.7%, from the fourth quarter 2009 and $124.1 million, or 3.8%, during the quarter, including an increase of $193.7 million from the acquisition of LaFollette. Loans outstanding at December 31, 2010 were $2.6 billion, increasing $169.4 million, or 7.0%, year over year and $159.7 million, or 6.5%, during the quarter, including a $119.1 million increase resulting from the acquisition of LaFollette. Loan growth of $102.3 million in the commercial loan portfolio and $103.2 million in the residential loan portfolio was partially offset by a decline in the consumer loan portfolio of $36.1 million. CTBI's investment portfolio increased $55.8 million, or 19.6%, from prior year and $6.4 million, or 1.9%, during the quarter, including the $29.2 million increase from LaFollette. Deposits, including repurchase agreements, at $2.9 billion increased $251.7 million, or 9.5%, from December 31, 2009 and $130.9 million, or 4.7%, from prior quarter, including $174.5 million from the acquisition of LaFollette.
Shareholders’ equity at December 31, 2010 was $338.6 million compared to $321.5 million at December 31, 2009 and $336.8 million at September 30, 2010. CTBI's annualized dividend yield to shareholders as of December 31, 2010 was 4.21%.Asset Quality CTBI's total nonperforming loans were $61.9 million at December 31, 2010, an increase from the $41.3 million at December 31, 2009 and the $56.6 million at September 30, 2010. Nonperforming loans include an increase of $2.1 million from the acquisition of LaFollette. The quarter over quarter increase in nonperforming loans is primarily attributable to three large commercial credits. One is an automobile floor plan and two are motel loans. Specific reserves of $2.9 million have been established for two of these loans. Loans 30-89 days past due at $28.9 million increased from the $24.8 million at December 31, 2009 but declined from the $29.9 million from prior quarter, including a $3.7 million increase from the LaFollette acquisition. 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 $42.9 million for the fourth quarter 2010 compared to $37.3 million at December 31, 2009 and $41.1 million at September 30, 2010. The increase in foreclosed properties includes $2.8 million from the acquisition of LaFollette. Sales of foreclosed properties for the year ended December 31, 2010 totaled $8.4 million while new foreclosed properties totaled $11.7 million. Our nonperforming loans and foreclosed properties remain primarily concentrated in our Central Kentucky Region. Net loan charge-offs for the quarter were $3.4 million, or 0.54% of average loans annualized, a decrease from prior year fourth quarter's $4.5 million or 0.73% and prior quarter’s $5.6 million or 0.91%. Of the total net charge-offs for the quarter, $2.5 million was in commercial loans, $0.5 million was in indirect auto loans, and $0.04 million was in residential real estate mortgage loans. Allocations to loan loss reserves were $4.0 million for the quarter ended December 31, 2010 compared to $5.2 million for the quarter ended December 31, 2009 and $3.7 million for the quarter ended September 30, 2010. Our loan loss reserve as a percentage of total loans outstanding at December 31, 2010 was 1.34% compared to 1.34% at December 31, 2009 and 1.40% at September 30, 2010. Generally accepted accounting principles require that expected credit losses associated with loans obtained in an acquisition be reflected in the estimation of loan fair value as of the acquisition date and prohibits any carryover of an allowance for credit losses. Excluding amounts related to loans obtained in the fourth quarter 2010 acquisition of LaFollette, the allowance-to-legacy loan ratio was 1.40% and 1.34%, respectively, at December 31, 2010 and 2009, and 1.40% at September 30, 2010.
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 $3.4 billion, is headquartered in Pikeville, Kentucky and has 70 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, four banking locations in Tennessee, and five trust offices across Kentucky.Additional information follows.
|Community Trust Bancorp, Inc.|
|Financial Summary (Unaudited)|
|December 31, 2010|
|(in thousands except per share data and # of employees)|
|December 31, 2010||September 30, 2010||December 31, 2009||December 31, 2010||December 31, 2009|
|Net interest income||31,254||29,377||28,582||119,254||105,510|
|Loan loss provision||3,980||3,676||5,193||16,484||17,468|
|Gains on sales of loans||288||575||743||1,642||4,324|
|Deposit service charges||6,089||5,920||5,783||23,255||21,970|
|Loan related fees||1,499||862||1,050||3,247||3,817|
|Other noninterest income||1,698||1,748||1,479||6,936||5,608|
|Total noninterest income||11,046||10,597||10,486||40,926||41,420|
|Occupancy and equipment||2,823||2,675||2,661||10,923||11,515|
|FDIC insurance premiums||1,153||1,118||963||4,410||5,795|
|Amortization of core deposit intangible||40||72||158||430||634|
|Other noninterest expense||8,313||8,573||8,718||33,023||32,296|
|Total noninterest expense||24,956||23,998||23,847||96,050||93,801|
|Net income before taxes||13,364||12,300||10,028||47,646||35,661|
|Memo: TEQ interest income||$||39,610||$||38,659||$||39,023||$||155,887||$||154,344|
|Average shares outstanding||15,265||15,239||15,168||15,234||15,129|
|Diluted average shares outstanding||15,294||15,275||15,200||15,259||15,169|
|Basic earnings per share||$||0.61||$||0.55||$||0.46||$||2.17||$||1.66|
|Diluted earnings per share||$||0.60||$||0.55||$||0.46||$||2.16||$||1.65|
|Dividends per share||$||0.305||$||0.305||$||0.30||$||1.21||$||1.20|
|Loans, net of unearned income||$||2,525,256||$||2,441,432||$||2,432,234||$||2,461,225||$||2,383,875|
|Interest bearing liabilities||2,392,413||2,347,844||2,235,089||2,341,272||2,226,765|
|Return on average assets||1.11||%||1.04||%||0.90||%||1.03||%||0.82||%|
|Return on average equity||10.71||%||9.95||%||8.58||%||9.90||%||7.89||%|
|Yield on average earning assets (tax equivalent)||5.19||%||5.14||%||5.47||%||5.26||%||5.45||%|
|Cost of interest bearing funds (tax equivalent)||1.33||%||1.51||%||1.79||%||1.51||%||2.13||%|
|Net interest margin (tax equivalent)||4.15||%||3.95||%||4.06||%||4.07||%||3.77||%|
|Efficiency ratio (tax equivalent)||58.50||%||59.52||%||60.74||%||59.45||%||63.56||%|
|Community Trust Bancorp, Inc. Financial Summary (Unaudited) December 31, 2010 (in thousands except per share data and # of employees)|
|As of||As of||As of|
|December 31, 2010||September 30, 2010||December 31, 2009|
|Loans, net of unearned||$||2,605,180||$||2,445,507||$||2,435,760|
|Loan loss reserve||(34,805||)||(34,238||)||(32,643||)|
|Loans held for sale||455||1,223||1,818|
|Other equity investments||30,107||29,057||29,048|
|Other earning assets||113,037||157,258||81,360|
|Cash and due from banks||62,559||71,149||62,720|
|Premises and equipment||55,343||47,805||49,242|
|Goodwill and core deposit intangible||66,487||65,318||65,707|
|Liabilities and Equity:|
|Other time deposits||857,313||817,796||799,316|
|Total interest bearing deposits||2,180,639||2,056,236||1,971,400|
|Noninterest bearing deposits||525,478||519,059||490,809|
|Other interest bearing liabilities||92,259||94,047||94,217|
|Noninterest bearing liabilities||30,583||37,390||28,305|
|Total Liabilities and Equity||$||3,355,872||$||3,231,740||$||3,086,659|
|Ending shares outstanding||15,282||15,239||15,184|
|Memo: Market value of HTM securities||$||1,662||$||1,667||$||14,435|
|30 - 89 days past due loans||$||28,935||$||29,935||$||24,774|
|90 days past due loans||17,997||20,252||9,067|
|Restructured loans (excluding 90 days past due and nonaccrual)||5,690||6,377||-|
|Other repossessed assets||129||193||276|
|Tier 1 leverage ratio||10.16||%||10.22||%||10.38||%|
|Tier 1 risk based ratio||12.90||%||13.37||%||12.90||%|
|Total risk based ratio||14.10||%||14.62||%||14.15||%|
|Tangible equity to tangible assets ratio||8.27||%||8.58||%||8.47||%|
|Community Trust Bancorp, Inc. Financial Summary (Unaudited) December 31, 2010 (in thousands except per share data and # of employees)|
|Community Trust Bancorp, Inc. reported earnings for the three and twelve months ending December 31, 2010 and 2009 as follows:|
|Three Months Ended||Twelve Months Ended|
|December 31||December 31|
|Basic earnings per share||$||0.61||$||0.46||$||2.17||$||1.66|
|Diluted earnings per share||$||0.60||$||0.46||$||2.16||$||1.65|
|Average shares outstanding||15,265||15,168||15,234||15,129|
|Total assets (end of period)||$||3,355,872||$||3,086,659|
|Return on average equity||10.71||%||8.58||%||9.90||%||7.89||%|
|Return on average assets||1.11||%||0.90||%||1.03||%||0.82||%|
|Provision for loan losses||$||3,980||$||5,193||$||16,484||$||17,468|
|Gains on sales of loans||$||288||$||743||$||1,642||$||4,324|