Community Trust Bancorp, Inc. Reports Earnings for the Second 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) reports earnings for the quarter ended June 30, 2007 of $8.9 million or $0.58 per basic share compared to $8.0 million or $0.53 per share earned during the quarter ended March 31, 2007 and $9.9 million or $0.66 per share earned during the second quarter of 2006. Earnings for the six months ended June 30, 2007 were $16.9 million or $1.11 per share compared to $19.7 million or $1.31 per share earned for the first six months of 2006. Second Quarter 2007 Highlights * The Company's basic earnings per share for the second quarter 2007 increased 9.4% from prior quarter but decreased 12.1% from prior year second quarter. Year-to-date earnings per share have decreased 15.3% from the six months ended June 30, 2006. Both the prior quarter and YTD See Year-to-date. YTD See year to date (YTD). earnings comparisons are impacted by the one-time expense associated with the refinancing Refinancing An extension and/or increase in amount of existing debt. of the Company's trust preferred securities during the first quarter 2007. Core earnings for the quarter and YTD 2007 continue to reflect the pressure on the Company's net interest margin as deposits grew during the first six months of 2007 more quickly than the Company has been able to deploy them into higher yielding loans versus short-term investments. During 2006, the Company's loans repriced more quickly than its deposits resulting in a stronger net interest margin than the Company has experienced in 2007 as deposit 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 continued. * The Company's net interest margin increased 2 basis points from prior quarter but has declined 17 basis points from prior year second 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. Our year-to-date net interest margin has declined 18 basis points from the first six months of 2006. Since deposit repricing has been through a 12-month cycle, management anticipates that the margin will continue to improve incrementally during the remainder of 2007 in the current stable rate environment. * The Company's loan portfolio grew at 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. rate of 8.0% during the quarter and 3.6% from June 30, 2006. * Nonperforming loans as a percentage of total loans at June 30, 2007 were 1.08%, an increase of $6.0 million over prior quarter and a $6.9 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. * CTBI's year-to-date efficiency ratio improved during the second quarter 2007 and is anticipated to continue to improve for the remainder of 2007 as the first quarter was impacted by the one-time charge for the redemption and refinancing of the Company's trust preferred securities. Net Interest Income Our net interest margin for the second quarter 2007 was 3.86% compared to 3.84% for the first quarter 2007, an improvement of 2 basis points, and a decline of 17 basis points compared to the 4.03% for the second quarter 2006. The year-to-date net interest margin decline was 18 basis points. As deposits have completed a 12-month repricing cycle, management anticipates incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. improvement in the net interest margin for the remainder of 2007 in the current stable rate environment. Net interest income increased 2.8% from prior quarter but decreased 2.2% from prior year second quarter. Year-to-date net interest income has decreased 2.0% compared to the first six months of 2006. 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 as a percentage of total assets of 92.8% for the quarter ended June 30, 2007 have remained relatively stable compared to prior quarter and prior year second quarter of 92.7% and 92.3%, respectively. Year-to-date average earning assets have increased 2.6% compared to the six months ended June 30, 2006. Noninterest Income Noninterest income for the second quarter 2007 was a 5.6% increase from the quarter ended March 31, 2007, primarily due to increased deposit service charges. Noninterest income increased 11.4% for the second quarter compared to same period prior year and 10.6% for the six months ended June 30, 2007 compared to the first six months of 2006. Year over year increases resulted primarily from increases in trust revenue and loan related fees. Noninterest Expense Noninterest expense for the quarter decreased 6.9% from prior quarter as a result of the first quarter charge from unamortized debt issuance costs with the redemption of trust preferred securities, but increased 5.4% over prior year second quarter. Noninterest expense for the six months ended June 30, 2007 increased 8.7% from the six months ended June 30, 2006, with increases in personnel, data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a expenses, and the nonrecurring redemption expense. Balance Sheet Review The Company's total assets decreased $98.0 million or 3.2% from prior quarter, $59.5 million of which was the decrease in 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 associated with the first quarter refinance of our trust preferred capital securities. However, total assets have increased $33.8 million or 1.1% year over year. Loans outstanding at June 30, 2007 were $2.2 billion reflecting a $43.6 million, annualized 8.0%, increase during the quarter, and a $76.2 million or 3.6% increase year over year. The Company's investment portfolio decreased $17.5 million, an annualized 13.8%, and $54.8 million or 10.1%, respectively, from prior quarter and prior year second 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. , declined $42.0 million, an annualized 6.6%, during the quarter as the Company focused on managing its deposit growth and pricing controls due to its liquidity position resulting from deposit growth during the first quarter. Deposits have increased 1.6% year over year. 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. of $291.7 million on June 30, 2007 was an annualized increase of 5.4% from the $287.8 million on March 31, 2007 and a 10.2% increase from the $264.6 million on June 30, 2006. The Company's annualized dividend yield to shareholders as of June 30, 2007 was 3.34%. Asset Quality Nonperforming loans at June 30, 2007 were $23.9 million compared to $17.9 million at March 31, 2007 and $17.0 million at June 30, 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 June 30, 2007 of $3.9 million were a $0.4 million increase from the $3.5 million on March 31, 2007 and a $1.1 million decrease from the $5.0 million on June 30, 2006. Net loan charge-offs for the quarter of $1.2 million, or 0.23% of average loans annualized, was an increase from prior quarter's 0.17% of average loans annualized but a decrease from the 0.31% from prior year second quarter. Our reserve for losses on loans as a percentage of total loans outstanding at June 30, 2007 decreased to 1.25% from the 1.30% at June 30, 2006. The adequacy of our reserve for losses on loans is analyzed quarterly and adjusted as necessary. Additional Information Community Trust Bancorp, Inc. entered into an agreement and plan of merger with Eagle Fidelity, Inc. on May 31, 2007. On June 21, 2007, a third party made a tender offer with certain conditions to the shareholders of Eagle Fidelity, Inc. to purchase their stock for $45 cash per share. The outcome of this action is unknown at this time. 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 $3.0 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] [TABLE OMITTED] [TABLE OMITTED] |
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