Exhibit 1
FOR IMMEDIATE RELEASE
October 13, 2004
FOR ADDITIONAL INFORMATION PLEASE CONTACT JEAN R. HALE, VICE CHAIRMAN, PRESIDENT, AND C.E.O., COMMUNITY TRUST BANCORP, INC. AT (606) 437-3294
Community Trust Bancorp, Inc. reports record earnings for the third quarter 2004 of $8.0 million or $0.59 per share.
Earnings Summary | ||||||||||
3Q 2004 | 2Q 2004 | 3Q 2003 | ||||||||
Net income(in thousands) | $ | 8,014 | $ | 7,756 | $ | 7,281 | ||||
| Earnings per share | $ | 0.59 | $ | 0.58 | $ | 0.54 | ||||
| Earnings per share (diluted) | $ | 0.58 | $ | 0.57 | $ | 0.53 | ||||
| Return on average assets | 1.26 | % | 1.26 | % | 1.15 | % | ||||
| Return on average equity | 13.83 | % | 13.81 | % | 13.45 | % | ||||
| Efficiency ratio | 59.35 | % | 58.37 | % | 58.84 | % | ||||
| Dividends declared per share | $ | 0.23 | $ | 0.23 | $ | 0.21 | ||||
| Book value per share | $ | 17.30 | $ | 16.78 | $ | 16.02 | ||||
Community Trust Bancorp, Inc. (NASDAQ-CTBI) is pleased to report record earnings for the third quarter 2004 of $8.0 million or $0.59 per share compared to $7.3 million or $0.54 per share earned during the third quarter of 2003 and $7.8 million or $0.58 per share earned during the second quarter of 2004. Year-to-date earnings for the nine months ended September 30, 2004 were $23.1 million or $1.71 per share compared to $21.3 million or $1.58 per share for the nine months ended September 30, 2003.
Third Quarter and Year-to-Date Highlights
Return on average assets for the quarter ended September 30, 2004 remained flat to prior quarter at 1.26% but improved 11 basis points from the 1.15% for the third quarter 2003. Return on average assets for the first nine months of 2004 was 1.24% compared to 1.15% for the first nine months of 2003. Return on average shareholders’ equity for the quarter ended September 30, 2004 was 13.83% compared to 13.81% for the quarter ended June 30, 2004 and 13.45% for the quarter ended September 30, 2003. Return on average equity for the nine months ended September 30, 2004 was 13.54% compared to 13.37% for the first nine months of 2003. CTBI’s efficiency ratio for the three months ended September 30, 2004 was 59.35% compared to 58.37% for the three months ended June 30, 2004 and 58.84% for the three months ended September 30, 2003. However, the efficiency ratio for the nine months ended September 30, 2004 improved to 58.75% from 59.17% for the nine months ended September 30, 2003.
Balance Sheet Review
The Company’s earning assets grew by $213.5 million during the third quarter of 2004. The investment portfolio grew by $166.9 million; while the loan portfolio grew by $50.6 million. The growth in the investment portfolio was funded by a mixture of short term and long-term borrowings from the Federal Home Loan Bank of Cincinnati, OH. The Company performed in-depth analysis of this transaction prior to consummation and determined the impact to the overall interest rate risk profile of the Company to be minimal while increasing its future net interest revenue. The Company's loan portfolio grew $182.6 million or 10.9% from prior year as growth occurred in all three major loan categories, commercial, residential real estate, and consumer loans. Total deposits and repurchase agreements of $2.1 billion at September 30, 2004 remained relatively stable with a 1.7% decline from September 30 , 2003 and a 0.2% increase from prior quarter.
Shareholders’ equity of $232.9 million on September 30, 2004 is an 8.2% increase from the $215.3 million on September 30, 2003 and an increase of 3.2% from the $225.6 on June 30, 2004. The Company's annualized dividend yield to shareholders as of September 30, 2004 was 2.96%.
Asset Quality
Nonperforming loans decreased to $21.4 million, or 1.1% of total loans, from the $24.9 million, or 1.5% of total loans, at September 30, 2003, but increased from the $19.9 million, or 1.1% of total loans, at June 30, 2004.
Foreclosed properties on September 30, 2004 were $5.7 million, a decrease from the $6.2 million at June 30, 2004 but an increase from the $3.7 million reported at September 30, 2003.
Net loan charge-offs for the quarter ended September 30, 2004 of $1.3 million were 9.3% less than the $1.5 million for the third quarter of 2003 but 15.9% greater than the $1.2 million for the second quarter of 2004. Year-to-date annualized net charge-offs at September 30, 2004 were 0.3% of average loans compared to 0.5% of average loans at September 30, 2003. Our reserve for losses on loans as a percentage of total loans outstanding at September 30, 2004 remained flat to June 30, 2004 and September 30, 2003 at 1.42%.
Net Interest Income
Our net interest margin of 4.08% for the quarter ended September 30, 2004 remained relatively flat to prior quarter with a slight decrease of 1 basis point and improved 46 basis points from the quarter ended September 30, 2003. Management expects compression in the future in the net interest margin as a result of increased competition for deposits and the securities transactions discussed above, although the transactions will increase net interest revenue.
Noninterest Income
Noninterest income decreased 15.0% for the quarter ended September 30, 2004 compared to the quarter ended September 30, 2003 and 6.0% compared to the quarter ended June 30, 2004. Year-to-date noninterest income decreased 8.9% from prior year. As residential mortgage refinancing slowed, the Company had a decrease in gains on sales of loans of $1.2 million in the third quarter 2004 compared to the third quarter 2003. Noninterest income for the quarter ended September 30, 2004 was negatively impacted by a charge to our valuation reserve for capitalized mortgage servicing rights of $0.2 million. Noninterest income for the second quarter 2004 and for the third quarter 2003 were positively impacted by $0.8 million and $0.7 million, respectively, because of the improvement in the fair market value of our capitalized mortgage servicing rights.
Noninterest income has been positively impacted by $1.4 million during 2004 derived from the adjustment of the carrying value of loans acquired with the 2002 acquisition of Citizens National Bank of Hazard to its net realizable value. There was minimal recapture during the third quarter.
The Company restructured its investment portfolio in September 2004 by selling certain securities totaling approximately $70 million with relatively short average lives and reinvesting the proceeds into FHLMC securities with a moderately longer average life. The transactions resulted in a gain on sale of securities of $0.6 million and an increase in yield in this securities pool of 60 basis points.
Noninterest Expense
Noninterest expense for the quarter ended September 30, 2004 of $18.9 million was a 4.5% increase from the $18.1 million for the third quarter 2003 and a 0.8% increase from the second quarter 2004. The increase in noninterest expense from prior year and prior quarter was primarily attributable to increased personnel expense due to the filling of budgeted key positions and the accrual of a performance-based incentive in the amount of $0.7 million. Year-to-date the incentive accrual is $2.1 million. No incentive accrual was booked last year for the third quarter or year-to-date.
Other Activities
The Company gifted real estate with a market value of $1.2 million to the Whitley County School System in September 2004. This action resulted in a decrease in other real estate and a corresponding increase in contribution expense of $0.4 million as well as a reduction in taxes of $0.4 million.
On August 1, 2004, the Company opened loan production offices in Louisville, Kentucky and in Florence, Kentucky, and on October 6, 2004, the Company opened a new branch in London, Kentucky, making the second new branch location for the year. Additionally, during the third quarter 2004, the Company completed a branch renovation and a branch relocation in Middlesboro and Berea, respectively.
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. 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 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 the Company 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 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 $2.7 billion, is headquartered in Pikeville, Kentucky and has 71 banking locations across eastern, northern, central, and south central Kentucky, 5 banking locations in southern West Virginia, 2 loan production offices in Kentucky, and 5 trust offices across Kentucky.
Additional information follows.
Community Trust Bancorp, Inc. | ||||||||||||||||
Financial Summary (Unaudited) | ||||||||||||||||
September 30, 2004 | ||||||||||||||||
(in thousands except per share data) | ||||||||||||||||
Three | Three | Three | Nine | Nine | ||||||||||||
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| Months | Months | Months | Months | Months | ||||||||||
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| Ended | Ended | Ended | Ended | Ended | ||||||||||
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| 9/30/04 | 6/30/04 | 9/30/03 | 9/30/04 | 9/30/03 | ||||||||||
| Interest income | $ | 32,623 | $ | 31,022 | $ | 31,420 | $ | 94,942 | $ | 96,775 | ||||||
| Interest expense | 9,138 | 8,368 | 10,644 | 26,122 | 34,453 | |||||||||||
| Net interest income | 23,485 | 22,654 | 20,776 | 68,820 | 62,322 | |||||||||||
| Loan loss provision | 2,045 | 1,785 | 2,085 | 5,963 | 7,217 | |||||||||||
| Securities gains | 588 | - | 476 | 589 | 3,042 | |||||||||||
| Gains on sales of loans | 368 | 410 | 1,613 | 1,237 | 4,729 | |||||||||||
| Deposit service charges | 4,525 | 4,462 | 4,483 | 13,224 | 12,645 | |||||||||||
| Trust revenue | 638 | 614 | 604 | 1,813 | 1,851 | |||||||||||
| Insurance commissions | 118 | 79 | 257 | 262 | 497 | |||||||||||
| Other noninterest income | 2,338 | 3,555 | 2,660 | 8,585 | 5,460 | |||||||||||
| Total noninterest income | 8,575 | 9,120 | 10,093 | 25,710 | 28,224 | |||||||||||
| Personnel expense | 9,959 | 10,015 | 8,705 | 29,665 | 25,604 | |||||||||||
| Occupancy and equipment | 2,377 | 2,365 | 2,377 | 7,155 | 7,091 | |||||||||||
| Amortization of core deposit intangible | 145 | 145 | 145 | 435 | 435 | |||||||||||
| Other noninterest expense | 6,436 | 6,247 | 6,884 | 18,628 | 19,356 | |||||||||||
| Total noninterest expense | 18,917 | 18,772 | 18,111 | 55,883 | 52,486 | |||||||||||
| Net income before taxes | 11,098 | 11,217 | 10,673 | 32,684 | 30,843 | |||||||||||
| Income taxes | 3,084 | 3,461 | 3,392 | 9,634 | 9,505 | |||||||||||
| Net income | $ | 8,014 | $ | 7,756 | $ | 7,281 | $ | 23,050 | $ | 21,338 | ||||||
| Memo: TEQ interest income | $ | 33,021 | $ | 31,407 | $ | 31,806 | $ | 96,114 | $ | 97,978 | ||||||
| Average shares outstanding | 13,459 | 13,447 | 13,428 | 13,458 | 13,481 | |||||||||||
| Basic earnings per share | $ | 0.59 | $ | 0.58 | $ | 0.54 | $ | 1.71 | $ | 1.58 | ||||||
| Diluted earnings per share | $ | 0.58 | $ | 0.57 | $ | 0.53 | $ | 1.68 | $ | 1.56 | ||||||
| Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.21 | $ | 0.69 | $ | 0.59 | ||||||
Average balances: | ||||||||||||||||
| Loans, net of unearned income | $ | 1,842,208 | $ | 1,791,776 | $ | 1,659,808 | $ | 1,793,171 | $ | 1,641,067 | ||||||
| Earning assets | 2,331,175 | 2,264,796 | 2,316,603 | 2,287,959 | 2,292,061 | |||||||||||
| Total assets | 2,535,480 | 2,469,417 | 2,514,735 | 2,492,436 | 2,490,872 | |||||||||||
| Deposits | 2,076,493 | 2,062,734 | 2,130,906 | 2,065,159 | 2,116,108 | |||||||||||
| Interest bearing liabilities | 1,904,067 | 1,848,146 | 1,933,207 | 1,873,291 | 1,925,107 | |||||||||||
| Shareholders' equity | 230,522 | 225,822 | 214,703 | 227,382 | 213,367 | |||||||||||
Performance ratios: | ||||||||||||||||
| Return on average assets | 1.26 | % | 1.26 | % | 1.15 | % | 1.24 | % | 1.15 | % | ||||||
| Return on average equity | 13.83 | % | 13.81 | % | 13.45 | % | 13.54 | % | 13.37 | % | ||||||
| Yield on average earning assets (tax equivalent) | 5.64 | % | 5.58 | % | 5.45 | % | 5.61 | % | 5.72 | % | ||||||
| Cost of interest bearing funds (tax equivalent) | 1.91 | % | 1.82 | % | 2.18 | % | 1.86 | % | 2.39 | % | ||||||
| Net interest margin (tax equivalent) | 4.08 | % | 4.09 | % | 3.62 | % | 4.09 | % | 3.71 | % | ||||||
| Efficiency ratio | 59.35 | % | 58.37 | % | 58.84 | % | 58.75 | % | 59.17 | % | ||||||
| Loan charge-offs | $ | (2,144 | ) | $ | (2,040 | ) | $ | (2,484 | ) | $ | (6,748 | ) | $ | (9,457 | ) | |
| Recoveries | 806 | 886 | 1,008 | 2,621 | 2,785 | |||||||||||
| Net charge-offs | $ | (1,338 | ) | $ | (1,154 | ) | $ | (1,476 | ) | $ | (4,127 | ) | $ | (6,672 | ) | |
Market Price: | ||||||||||||||||
| High | $ | 32.50 | $ | 34.30 | $ | 28.26 | $ | 34.30 | $ | 28.26 | ||||||
| Low | 29.21 | 28.42 | 23.76 | $ | 27.68 | 22.46 | ||||||||||
| Close | 31.08 | 30.50 | 26.43 | $ | 31.08 | 26.43 | ||||||||||
As of | As of | As of | ||||||||||||||
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| 9/30/04 | 6/30/04 | 9/30/03 | |||||||||
Assets: | ||||||||||||||||
| Loans, net of unearned | $ | 1,864,988 | $ | 1,814,343 | $ | 1,682,346 | ||||||||||
| Loan loss reserve | (26,488 | ) | (25,782 | ) | (23,816 | ) | ||||||||||
| Net loans | 1,838,500 | 1,788,561 | 1,658,530 | |||||||||||||
| Loans held for sale | 532 | 2,500 | 3,973 | |||||||||||||
| Securities AFS | 508,870 | 334,317 | 518,690 | |||||||||||||
| Securities HTM | 64,809 | 72,420 | 90,846 | |||||||||||||
| Other earning assets | 13,269 | 15,386 | 1,282 | |||||||||||||
| Cash and due from banks | 71,058 | 72,774 | 72,396 | |||||||||||||
| Premises and equipment | 51,711 | 50,698 | 49,632 | |||||||||||||
| Goodwill and core deposit intangible | 63,516 | 63,661 | 64,096 | |||||||||||||
| Other assets | 42,662 | 41,973 | 40,895 | |||||||||||||
Total Assets | $ | 2,654,927 | $ | 2,442,290 | $ | 2,500,340 | ||||||||||
Liabilities and Equity: | ||||||||||||||||
| NOW accounts | $ | 15,606 | $ | 13,837 | $ | 14,327 | ||||||||||
| Savings deposits | 589,916 | 607,674 | 608,360 | |||||||||||||
| CD's >=$100,000 | 366,141 | 347,184 | 365,332 | |||||||||||||
| Other time deposits | 714,268 | 714,164 | 775,683 | |||||||||||||
| Total interest bearing deposits | 1,685,931 | 1,682,859 | 1,763,702 | |||||||||||||
| Noninterest bearing deposits | 375,266 | 368,298 | 343,917 | |||||||||||||
| Total deposits | 2,061,197 | 2,051,157 | 2,107,619 | |||||||||||||
| Repurchase agreements | 74,447 | 79,971 | 64,444 | |||||||||||||
| Other interest bearing liabilities | 266,410 | 69,260 | 92,077 | |||||||||||||
| Noninterest bearing liabilities | 19,942 | 16,271 | 20,899 | |||||||||||||
| Total liabilities | 2,421,996 | 2,216,659 | 2,285,039 | |||||||||||||
| Shareholders' equity | 232,931 | 225,631 | 215,301 | |||||||||||||
Total Liabilities and Equity | $ | 2,654,927 | $ | 2,442,290 | $ | 2,500,340 | ||||||||||
| Ending shares outstanding | 13,462 | 13,447 | 13,439 | |||||||||||||
| Memo: Market value of HTM Securities | $ | 64,261 | $ | 70,411 | $ | 90,222 | ||||||||||
| 90 days past due loans | $ | 4,775 | $ | 6,433 | $ | 6,468 | ||||||||||
| Nonaccrual loans | 15,613 | 11,982 | 16,973 | |||||||||||||
| Restructured loans | 1,051 | 1,476 | 1,506 | |||||||||||||
| Foreclosed properties | 5,702 | 6,223 | 3,737 | |||||||||||||
| Tier 1 leverage ratio | 9.12 | % | 9.16 | % | 8.46 | % | ||||||||||
| Tier 1 risk based ratio | 11.75 | % | 11.80 | % | 11.17 | % | ||||||||||
| Total risk based ratio | 13.00 | % | 13.05 | % | 12.42 | % | ||||||||||
| FTE employees | 939 | 937 | 892 | |||||||||||||
| Community Trust Bancorp, Inc. reported earnings for the three and nine months ending September 30, 2004 and 2003 as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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| September 30 | September 30 | ||||||||||||
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| 2004 | 2003 | 2004 | 2003 | ||||||||||
(in thousands except per share information) | ||||||||||||||||
| Net income | $ | 8,014 | $ | 7,281 | $ | 23,050 | $ | 21,338 | ||||||||
| Basic earnings per share | $ | 0.59 | $ | 0.54 | $ | 1.71 | $ | 1.58 | ||||||||
| Diluted earnings per share | $ | 0.58 | $ | 0.53 | $ | 1.68 | $ | 1.56 | ||||||||
| Average shares outstanding | 13,459 | 13,428 | 13,458 | 13,481 | ||||||||||||
| Total assets (end of period) | $ | 2,654,927 | $ | 2,500,340 | ||||||||||||
| Return on average equity | 13.83 | % | 13.45 | % | 13.54 | % | 13.37 | % | ||||||||
| Return on average assets | 1.26 | % | 1.15 | % | 1.24 | % | 1.15 | % | ||||||||
| Provision for loan losses | $ | 2,045 | $ | 2,085 | $ | 5,963 | $ | 7,217 | ||||||||
| Gains on sales of loans | $ | 368 | $ | 1,613 | $ | 1,237 | $ | 4,729 | ||||||||