Community Trust Bancorp, Inc. (NASDAQ: CTBI):
         
Earnings Summary
 
(in thousands except per share data)   4Q

2010
  3Q

2010
  4Q

2009
  Year

2010
  Year

2009
Net income $ 9,240 $ 8,450 $ 6,958 $ 33,034 $ 25,059
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%
Efficiency ratio 58.50% 59.52% 60.74% 59.45% 63.56%
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
 

Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports earnings increased 32.8% for the fourth quarter 2010 to $9.2 million, or $0.61 per basic share, compared to $7.0 million, or $0.46 per basic share, earned during the fourth quarter of 2009 and 9.4% from the $8.5 million, or $0.55 per basic share, earned during the quarter ended September 30, 2010. Earnings for the year ended December 31, 2010 increased 31.8% to $33.0 million, or $2.17 per basic share, compared to $25.1 million, or $1.66 per basic share, for the year ended December 31, 2009.

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.

Net Interest Income

CTBI saw improvement in its net interest margin of 30 basis points for the year 2010 and 9 basis points for the fourth quarter 2010 compared to 2009, and a 20 basis point improvement from prior quarter. Net interest income for the quarter increased 9.3% from prior year fourth quarter and 6.4% from prior quarter with average earning assets increasing 7.0% and 1.5%, respectively, for the same periods. The yield on average earning assets decreased 28 basis points from prior year fourth quarter but improved 5 basis points from prior quarter. The cost of interest bearing funds decreased 46 basis points and 18 basis points, respectively, for the same periods. The decrease in the cost of interest bearing funds was primarily the result of the repricing of our CD products which decreased 27 basis points during the quarter. Net interest income for the year ended December 31, 2010 increased 13.0% from prior year.

Noninterest Income

Noninterest 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 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 $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)
 
  Three   Three   Three   Twelve   Twelve
Months Months Months Months Months
Ended Ended Ended Ended Ended
December 31, 2010 September 30, 2010 December 31, 2009 December 31, 2010 December 31, 2009
Interest income $ 39,255 $ 38,315 $ 38,693 $ 154,511 $ 153,050
Interest expense   8,001     8,938     10,111     35,257     47,540  
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
Trust revenue 1,472 1,492 1,291 5,846 5,047
Loan related fees 1,499 862 1,050 3,247 3,817
Securities gains - - 140 - 654
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
 
Personnel expense 12,627 11,560 11,347 47,264 43,561
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
Income taxes   4,124     3,850     3,070     14,612     10,602  
Net income $ 9,240   $ 8,450   $ 6,958   $ 33,034   $ 25,059  
 
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
 
Average balances:
Loans, net of unearned income $ 2,525,256 $ 2,441,432 $ 2,432,234 $ 2,461,225 $ 2,383,875
Earning assets 3,025,155 2,981,517 2,828,169 2,961,971 2,830,701
Total assets 3,295,719 3,238,075 3,067,154 3,220,087 3,047,100
Deposits 2,634,055 2,588,941 2,441,057 2,574,961 2,409,848
Interest bearing liabilities 2,392,413 2,347,844 2,235,089 2,341,272 2,226,765
Shareholders' equity 342,380 336,772 321,688 333,645 317,711
 
Performance ratios:
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 %
 
Loan charge-offs $ 4,254 $ 6,449 $ 5,302 $ 17,636 $ 18,859
Recoveries   (841 )   (855 )   (795 )   (3,314 )   (3,213 )
Net charge-offs $ 3,413 $ 5,594 $ 4,507 $ 14,322 $ 15,646
 
Market Price:
High $ 29.91 $ 28.00 $ 27.08 $ 31.56 $ 37.17
Low 26.52 24.50 22.41 22.15 22.41
Close 28.96 27.09 24.45 28.96 24.45
 
 

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
Assets:
Loans, net of unearned $ 2,605,180 $ 2,445,507 $ 2,435,760
Loan loss reserve   (34,805 )   (34,238 )   (32,643 )
Net loans 2,570,375 2,411,269 2,403,117
Loans held for sale 455 1,223 1,818
Securities AFS 338,675 332,235 270,237
Securities HTM 1,662 1,662 14,336
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
Other assets   117,172     114,764     109,074  
Total Assets $ 3,355,872   $ 3,231,740   $ 3,086,659  
 
Liabilities and Equity:
NOW accounts $ 33,641 $ 19,500 $ 17,389
Savings deposits 679,755 635,056 638,250
CD's >=$100,000 609,930 583,884 516,445
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  
Total deposits 2,706,117 2,575,295 2,462,209
Repurchase agreements 188,275 188,164 180,471
Other interest bearing liabilities 92,259 94,047 94,217
Noninterest bearing liabilities   30,583     37,390     28,305  
Total liabilities 3,017,234 2,894,896 2,765,202
Shareholders' equity   338,638     336,844     321,457  
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
Nonaccrual loans 43,923 36,329 32,247
Restructured loans (excluding 90 days past due and nonaccrual) 5,690 6,377 -
Foreclosed properties 42,935 41,083 37,333
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 %
FTE employees 1,041 980 982
 

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
2010 2009 2010 2009
Net income $ 9,240 $ 6,958 $ 33,034 $ 25,059
 
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
 

 

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