Community Trust Bancorp, Inc. Reports Earnings for the First Quarter 2007.PIKEVILLE, Ky. -- Community Trust Bancorp, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTBI CTBI Churches Together in Britain and Ireland ): [TABLE OMITTED] Community Trust Bancorp, Inc. (NASDAQ: CTBI) is pleased to report earnings for the quarter ended March 31, 2007 of $8.0 million or $0.53 per basic share compared to $9.5 million or $0.63 per share earned during the quarter ended December 31, 2006 and $9.8 million or $0.65 per share earned during the first quarter of 2006. First Quarter 2007 Highlights * The Company had previously announced that it would elect the early adoption of Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 159. Upon review of emerging guidance, the Company has determined that it is inappropriate for us to early adopt SFAS No. 159. Accordingly, the Company will not early adopt the standard. * As previously announced, the Company has refunded its trust preferred securities and has incurred a pre-tax charge from unamortized debt issuance costs of approximately $1.9 million in the first quarter of 2007. * The Company's basic earnings per share for the first quarter 2007 decreased 15.9% from prior quarter and 18.5% from prior year first quarter. In addition to the impact to earnings discussed above, the Company has also experienced continuing pressure on its net interest margin as time deposits have continued repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing in the current stable rate environment. Period over period earnings comparisons also reflect normal changes in our loan loss provision as reserve adequacy is reviewed on a quarterly basis. * As anticipated by management, the Company's net interest margin decreased 11 basis points from prior quarter and 20 basis points from prior year first quarter as the Company continues operating within the inverted yield curve Inverted Yield Curve Usually a chart showing long-term debt instruments that have lower yields than short-term debt instruments. It is sometimes referred to as a negative yield curve. environment. * The Company's average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin for the quarter ended March 31, 2007 increased 1.7% over the quarter ended December 31, 2006 and 3.2% from the quarter ended March 31, 2006. * The Company's investment portfolio increased an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. 10.6% from prior quarter but decreased 9.1% from March 31, 2006. * The Company's loan portfolio grew at an annualized rate of 0.8% during the quarter and 3.3% from March 31, 2006. * Nonperforming loans as a percentage of total loans at March 31, 2007 were 0.83% of total loans, an increase of $3.7 over prior quarter and a $2.0 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. * Return on average assets for the quarter ended March 31, 2007 was 1.09% compared to 1.28% and 1.36% for prior quarter and prior year first quarter, respectively. * Our return on average shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. for the quarter ended March 31, 2007 was 11.33% compared to 13.45% for the fourth quarter 2006 and 15.27% for the first quarter 2006. * CTBI's efficiency ratio for the quarter was 64.68% compared to 57.43% and 58.21% for prior quarter and prior year first quarter, respectively. Net Interest Income As interest rates have stabilized, our net interest margin has continued to compress as expected. Our net interest margin for the first quarter 2007 was 3.84% compared to 3.95% for the fourth quarter 2006 and 4.04% for the first quarter 2006. Net interest income decreased 3.2% from prior quarter and 1.8% from prior year. Average earning assets increased to $2.8 billion from $2.7 billion for the quarters ended December 31, 2006 and March 31, 2006, respectively. Average earning assets as a percentage of total assets of 92.7% have remained relatively stable compared to prior quarter and prior year first quarter of 92.4% and 92.3% respectively. Noninterest Income Noninterest income for the quarter was a decrease of 0.9% from the quarter ended December 31, 2006, but an increase of 9.8% from prior year first quarter. The increases in loan related fees and trust revenue from prior quarter were offset by decreases in deposit service charges and nonrecurring revenue items. Noninterest Expense Noninterest expense increased 9.7% over prior quarter and 12.0% over prior year first quarter as a result of the charge from unamortized debt issuance costs with the redemption of trust preferred securities. Balance Sheet Review The Company's total assets grew $129 million or 4.3% from prior quarter and prior year first quarter. The growth in assets included $59.5 million in temporary funds related to a timing difference with the refinance of our trust preferred capital securities. Loans outstanding at March 31, 2007 were $2.2 billion reflecting a $4.0 million, annualized 0.8%, increase during the quarter. Deposits, including repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. , increased $58.7 million, an annualized 9.5%, during the quarter. The growth in deposits after funding of loans resulted in an increase in our investment portfolio of $12.9 million during the quarter, and federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold increased $130.4 million, including the $59.5 million discussed above. Shareholders' equity of $287.8 million on March 31, 2007 was an annualized increase of 7.8% from the $282.4 million on December 31, 2006 and a 10.8% increase from the $259.8 million on March 31, 2006. Asset Quality Nonperforming loans at March 31, 2007 were $17.9 million compared to $14.2 million at December 31, 2006 and $16.0 million at March 31, 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 March 31, 2007 of $3.5 million are a $1.0 million decrease from the $4.5 million on December 31, 2006 and a $1.5 million decrease from the $5.0 million on March 31, 2006. Net loan charge-offs for the quarter of $0.9 million, or 0.17% of average loans annualized, was a decrease of 45.3% from prior quarter and 33.5% from prior year first quarter. Reflective of the improvement in net charge-offs, our reserve for losses on loans as a percentage of total loans outstanding at March 31, 2007 decreased to 1.25% from the 1.27% at December 31, 2006 and the 1.34% at March 31, 2006. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and . 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 Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. 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 Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against needs; industry changes in information technology systems on which we are highly dependent; failure of acquisitions to produce revenue enhancements revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; the adoption by the Company of an FFIEC FFIEC Federal Financial Institutions Examination Council 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 All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. 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 Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. , 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 $3.1 billion, is headquartered in Pikeville, Kentucky Pikeville is a city in Pike County, Kentucky, United States. The population was 6,295 at the 2000 census. It is the county seat of Pike CountyGR6. Pike County has a population of approximately 70,000. and has 74 banking locations across eastern, northeast, central, and south central Kentucky South Central Kentucky is a cultural region of 22 Kentucky counties located roughly between I-65 in the Bowling Green area and I-75 around the London area, but within three counties of the Tennessee border and south of the "Golden Triangle" (the areas around Louisville, Lexington, , five banking locations in southern West Virginia Southern West Virginia is a culturally and geographically distinct region in the U.S. state of West Virginia. Generally considered the heart of Appalachia, Southern West Virginia is known for its coal mining heritage and Southern affinity. , and five trust offices across Kentucky. Additional information follows. [TABLE OMITTED] |
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