[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended June 30, 2008
|
|
Or
|
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from _____________ to
_____________
|
|
Kentucky
|
61-0979818
|
(State
or other jurisdiction of incorporation or organization)
|
IRS
Employer Identification No.
|
346
North Mayo Trail
Pikeville,
Kentucky
(address
of principal executive offices)
|
41501
(Zip
Code)
|
Yes ü
|
No
|
Large
accelerated filer
|
Accelerated
filer ü
|
Non-accelerated
filer
|
Smaller
reporting company
|
(Do
not check if a smaller reporting company)
|
Yes
|
No
ü
|
(dollars
in thousands)
|
(unaudited)
June
30
2008
|
December
31
2007
|
||||||
Assets:
|
||||||||
Cash
and due from banks
|
$ | 88,886 | $ | 105,209 | ||||
Federal
funds sold
|
4,426 | 32,041 | ||||||
Cash
and cash equivalents
|
93,312 | 137,250 | ||||||
Securities
available-for-sale at fair value
|
||||||||
(amortized
cost of $309,498 and $325,879, respectively)
|
306,869 | 324,153 | ||||||
Securities
held-to-maturity at amortized cost
|
||||||||
(fair
value of $29,157 and $32,350, respectively)
|
29,296 | 32,959 | ||||||
Loans
held for sale
|
1,494 | 2,334 | ||||||
Loans
|
2,273,646 | 2,227,897 | ||||||
Allowance
for loan losses
|
(29,096 | ) | (28,054 | ) | ||||
Net
loans
|
2,244,550 | 2,199,843 | ||||||
Premises
and equipment, net
|
52,448 | 53,391 | ||||||
Federal
Reserve Bank and Federal Home Loan Bank stock
|
28,703 | 28,060 | ||||||
Goodwill
|
65,059 | 65,059 | ||||||
Core
deposit intangible (net of accumulated amortization of $5,905
and
|
||||||||
$5,588,
respectively)
|
1,599 | 1,917 | ||||||
Bank
owned life insurance
|
23,736 | 23,285 | ||||||
Mortgage
servicing rights
|
3,256 | 3,258 | ||||||
Other
assets
|
28,022 | 31,175 | ||||||
Total
assets
|
$ | 2,878,344 | $ | 2,902,684 | ||||
Liabilities
and shareholders’ equity:
|
||||||||
Deposits
|
||||||||
Noninterest
bearing
|
$ | 447,677 | $ | 449,861 | ||||
Interest
bearing
|
1,830,446 | 1,843,303 | ||||||
Total
deposits
|
2,278,123 | 2,293,164 | ||||||
Repurchase
agreements
|
142,453 | 158,980 | ||||||
Federal
funds purchased and other short-term borrowings
|
17,880 | 18,364 | ||||||
Advances
from Federal Home Loan Bank
|
40,809 | 40,906 | ||||||
Long-term
debt
|
61,341 | 61,341 | ||||||
Other
liabilities
|
31,587 | 28,574 | ||||||
Total
liabilities
|
2,572,193 | 2,601,329 | ||||||
Shareholders’
equity:
|
||||||||
Preferred
stock, 300,000 shares authorized and unissued
|
- | - | ||||||
Common
stock, $5 par value, shares authorized 25,000,000;
|
||||||||
shares
outstanding 2008 – 14,989,038; 2007 – 15,044,124
|
74,945 | 75,221 | ||||||
Capital
surplus
|
148,004 | 149,005 | ||||||
Retained
earnings
|
84,911 | 78,251 | ||||||
Accumulated
other comprehensive income (loss), net of tax
|
(1,709 | ) | (1,122 | ) | ||||
Total
shareholders’ equity
|
306,151 | 301,355 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 2,878,344 | $ | 2,902,684 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
(in
thousands except per share data)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Interest
income:
|
||||||||||||||||
Interest
and fees on loans, including loans held for sale
|
$ | 37,308 | $ | 43,194 | $ | 77,063 | $ | 85,381 | ||||||||
Interest
and dividends on securities
|
||||||||||||||||
Taxable
|
3,226 | 4,632 | 6,638 | 9,277 | ||||||||||||
Tax
exempt
|
471 | 488 | 945 | 989 | ||||||||||||
Interest
and dividends on Federal Reserve and Federal
|
285 | 449 | 794 | 887 | ||||||||||||
Home
Loan Bank stock
|
||||||||||||||||
Other,
including interest on federal funds sold
|
380 | 1,322 | 910 | 2,730 | ||||||||||||
Total
interest income
|
41,670 | 50,085 | 86,350 | 99,264 | ||||||||||||
Interest
expense:
|
||||||||||||||||
Interest
on deposits
|
13,522 | 19,600 | 29,049 | 38,651 | ||||||||||||
Interest
on repurchase agreements and other short-term
|
||||||||||||||||
Borrowings
|
1,090 | 2,175 | 2,558 | 4,333 | ||||||||||||
Interest
on advances from Federal Home Loan Bank
|
376 | 711 | 753 | 1,415 | ||||||||||||
Interest
on long-term debt
|
1,000 | 988 | 2,000 | 2,364 | ||||||||||||
Total
interest expense
|
15,988 | 23,474 | 34,360 | 46,763 | ||||||||||||
Net
interest income
|
25,682 | 26,611 | 51,990 | 52,501 | ||||||||||||
Provision
for loan losses
|
2,648 | 1,846 | 5,017 | 2,316 | ||||||||||||
Net
interest income after provision for loan losses
|
23,034 | 24,765 | 46,973 | 50,185 | ||||||||||||
Noninterest
income:
|
||||||||||||||||
Service
charges on deposit accounts
|
5,503 | 5,330 | 10,602 | 10,134 | ||||||||||||
Gains
on sales of loans, net
|
494 | 316 | 1,040 | 612 | ||||||||||||
Trust
income
|
1,298 | 1,180 | 2,489 | 2,379 | ||||||||||||
Loan
related fees
|
1,079 | 867 | 1,378 | 1,888 | ||||||||||||
Bank
owned life insurance
|
269 | 240 | 532 | 472 | ||||||||||||
Securities
losses
|
0 | 0 | (50 | ) | 0 | |||||||||||
Other
|
1,038 | 1,041 | 2,433 | 1,987 | ||||||||||||
Total
noninterest income
|
9,681 | 8,974 | 18,424 | 17,472 | ||||||||||||
Noninterest
expense:
|
||||||||||||||||
Salaries
and employee benefits
|
10,600 | 11,100 | 21,311 | 22,214 | ||||||||||||
Occupancy,
net
|
1,708 | 1,642 | 3,334 | 3,402 | ||||||||||||
Equipment
|
1,114 | 1,233 | 2,167 | 2,462 | ||||||||||||
Data
processing
|
1,426 | 1,166 | 2,807 | 2,316 | ||||||||||||
Bank
franchise tax
|
914 | 866 | 1,804 | 1,732 | ||||||||||||
Legal
and professional fees
|
724 | 814 | 1,437 | 1,567 | ||||||||||||
Other
|
3,957 | 4,117 | 7,584 | 9,741 | ||||||||||||
Total
noninterest expense
|
20,443 | 20,938 | 40,444 | 43,434 | ||||||||||||
Income
before income taxes
|
12,272 | 12,801 | 24,953 | 24,223 | ||||||||||||
Income
taxes
|
3,652 | 3,943 | 7,788 | 7,343 | ||||||||||||
Net
income
|
8,620 | 8,858 | 17,165 | 16,880 | ||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||
Unrealized
holding losses on securities available-for-sale
|
(3,618 | ) | (1,445 | ) | (587 | ) | (837 | ) | ||||||||
Comprehensive
income
|
$ | 5,002 | $ | 7,413 | $ | 16,578 | $ | 16,043 | ||||||||
Basic
earnings per share
|
$ | 0.58 | $ | 0.58 | $ | 1.14 | $ | 1.11 | ||||||||
Diluted
earnings per share
|
$ | 0.57 | $ | 0.57 | $ | 1.13 | $ | 1.09 | ||||||||
Weighted
average shares outstanding-basic
|
14,989 | 15,216 | 14,995 | 15,203 | ||||||||||||
Weighted
average shares outstanding-diluted
|
15,152 | 15,448 | 15,145 | 15,421 | ||||||||||||
Dividends
declared per share
|
$ | 0.29 | $ | 0.27 | $ | 0.58 | $ | 0.54 |
Six
months ended
|
||||||||
June
30
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 17,165 | $ | 16,880 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
2,567 | 2,917 | ||||||
Change
in net deferred tax liability
|
(222 | ) | (439 | ) | ||||
Stock
based compensation
|
368 | 339 | ||||||
Excess
tax benefits of stock-based compensation
|
421 | 560 | ||||||
Provision
for loan and other real estate losses
|
5,142 | 2,581 | ||||||
Securities
losses
|
50 | 0 | ||||||
Gains
on sale of mortgage loans held for sale
|
(1,040 | ) | (612 | ) | ||||
(Gains)
losses on sale of assets, net
|
(70 | ) | 116 | |||||
Proceeds
from sale of mortgage loans held for sale
|
52,933 | 34,256 | ||||||
Funding
of mortgage loans held for sale
|
(51,053 | ) | (36,112 | ) | ||||
Amortization
of securities premiums, net
|
(96 | ) | 330 | |||||
Change
in cash surrender value of bank owned life insurance
|
(451 | ) | (406 | ) | ||||
Fair
value adjustments of mortgage servicing rights
|
2 | (172 | ) | |||||
Amortization/write-off
of debt issuance costs
|
0 | 1,950 | ||||||
Changes
in:
|
||||||||
Other
liabilities
|
1,826 | 6,227 | ||||||
Other
assets
|
4,137 | (24 | ) | |||||
Net
cash provided by operating activities
|
31,679 | 28,391 | ||||||
Cash
flows from investing activities:
|
||||||||
Securities
available-for-sale:
|
||||||||
Proceeds
from sales
|
29,950 | 46,700 | ||||||
Proceeds
from prepayments and maturities
|
41,076 | 22,324 | ||||||
Purchase
of securities
|
(54,648 | ) | (69,800 | ) | ||||
Securities
held-to-maturity:
|
||||||||
Proceeds
from prepayments and maturities
|
3,684 | 3,770 | ||||||
Change
in loans, net
|
(53,073 | ) | (51,018 | ) | ||||
Purchase
of premises, equipment, and other real estate
|
(1,314 | ) | (1,304 | ) | ||||
Additional
investment in equity securities
|
(643 | ) | (11 | ) | ||||
Redemption
of investment in unconsolidated subsidiaries
|
0 | 1,841 | ||||||
Investment
in unconsolidated subsidiaries
|
0 | (1,841 | ) | |||||
Proceeds
from sale of other real estate and other repossessed
assets
|
2,422 | 1,465 | ||||||
Additional
investment in other real estate owned
|
(104 | ) | (2 | ) | ||||
Additional
investment in bank owned life insurance
|
0 | (1,391 | ) | |||||
Net
cash used in investing activities
|
(32,650 | ) | (49,267 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Change
in deposits, net
|
(15,041 | ) | 23,771 | |||||
Change
in repurchase agreements and other short-term borrowings,
net
|
(17,011 | ) | (7,561 | ) | ||||
Payments
on advances from Federal Home Loan Bank
|
(97 | ) | (193 | ) | ||||
Payment
for redemption of junior subordinated debentures
|
0 | (61,341 | ) | |||||
Additional
junior subordinated debentures
|
0 | 61,341 | ||||||
Issuance
of common stock
|
932 | 1,514 | ||||||
Purchase
of common stock
|
(2,630 | ) | 0 | |||||
Excess
tax benefits of stock-based compensation
|
(421 | ) | (560 | ) | ||||
Dividends
paid
|
(8,699 | ) | (8,198 | ) | ||||
Net
cash provided by (used in) financing activities
|
(42,967 | ) | 8,773 | |||||
Net
decrease in cash and cash equivalents
|
(43,938 | ) | (12,103 | ) | ||||
Cash
and cash equivalents at beginning of period
|
137,250 | 157,538 | ||||||
Cash
and cash equivalents at end of period
|
$ | 93,212 | $ | 145,435 | ||||
Supplemental
disclosures:
|
||||||||
Income
taxes paid
|
$ | 9,529 | $ | 5,717 | ||||
Interest
paid
|
31,430 | 40,764 | ||||||
Non-cash
activities
|
||||||||
Loans
to facilitate the sale of other real estate and other repossessed
assets
|
885 | 106 | ||||||
Common
stock dividends accrued, paid in subsequent quarter
|
8,686 | 8,214 | ||||||
Real
estate acquired in settlement of loans
|
4,234 | 1,326 |
Six
Months Ended
|
||||||||
June
30
|
||||||||
2008
|
2007
|
|||||||
Expected
dividend yield
|
4.10 | % | 2.77 | % | ||||
Risk-free
interest rate
|
3.23 | % | 4.81 | % | ||||
Expected
volatility
|
31.01 | % | 33.50 | % | ||||
Expected
term (in years)
|
7.5 | 7.5 | ||||||
Weighted
average fair value of options
|
$ | 6.41 | $ | 12.74 |
(in
thousands)
|
Amortized
Cost
|
Fair
Value
|
||||||
U.S.
Treasury and government agencies
|
$ | 23,315 | $ | 23,694 | ||||
State
and political subdivisions
|
43,965 | 44,151 | ||||||
U.S.
government sponsored agencies and mortgage-backed pass through
certificates
|
207,317 | 205,323 | ||||||
Collateralized
mortgage obligations
|
1 | 1 | ||||||
Total
debt securities
|
274,598 | 273,169 | ||||||
Marketable
equity securities
|
34,900 | 33,700 | ||||||
Total
available-for-sale securities
|
$ | 309,498 | $ | 306,869 |
(in
thousands)
|
Amortized
Cost
|
Fair
Value
|
||||||
State
and political subdivisions
|
$ | 1,901 | $ | 1,912 | ||||
U.S.
government sponsored agencies and mortgage-backed pass through
certificates
|
27,395 | 27,245 | ||||||
Total
held-to-maturity securities
|
$ | 29,296 | $ | 29,157 |
(in
thousands)
|
Amortized
Cost
|
Fair
Value
|
||||||
U.S.
Treasury and government agencies
|
$ | 20,307 | $ | 20,736 | ||||
State
and political subdivisions
|
40,472 | 41,137 | ||||||
U.S.
government sponsored agencies and mortgage-backed pass through
certificates
|
205,049 | 202,542 | ||||||
Collateralized
mortgage obligations
|
1 | 1 | ||||||
Other
debt securities
|
20,000 | 19,687 | ||||||
Total
debt securities
|
285,829 | 284,103 | ||||||
Marketable
equity securities
|
40,050 | 40,050 | ||||||
Total
available-for-sale securities
|
$ | 325,879 | $ | 324,153 |
(in
thousands)
|
Amortized
Cost
|
Fair
Value
|
||||||
State
and political subdivisions
|
$ | 1,901 | $ | 1,914 | ||||
U.S.
government sponsored agencies and mortgage-backed pass through
certificates
|
31,058 | 30,436 | ||||||
Total
held-to-maturity securities
|
$ | 32,959 | $ | 32,350 |
(in
thousands)
|
June
30
2008
|
December
31
2007
|
||||||
Commercial
construction
|
$ | 150,356 | $ | 143,773 | ||||
Commercial
secured by real estate
|
653,830 | 640,574 | ||||||
Commercial
other
|
354,441 | 333,774 | ||||||
Real
estate construction
|
59,956 | 69,021 | ||||||
Real
estate mortgage
|
600,654 | 599,665 | ||||||
Consumer
|
443,654 | 435,273 | ||||||
Equipment
lease financing
|
10,755 | 5,817 | ||||||
Total
loans
|
$ | 2,273,646 | $ | 2,227,897 |
Six
Months Ended
|
||||||||
June
30
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Allowance
balance at January 1
|
$ | 28,054 | $ | 27,526 | ||||
Additions
to allowance charged against operations
|
5,017 | 2,316 | ||||||
Recoveries
credited to allowance
|
1,253 | 1,340 | ||||||
Losses
charged against allowance
|
(5,228 | ) | (3,494 | ) | ||||
Allowance
balance at June 30, 2008
|
$ | 29,096 | $ | 27,688 |
Six
Months Ended
|
||||||||
June
30
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Net
gain on sale of loans held for sale
|
$ | 1,040 | $ | 612 | ||||
Net
loan servicing income
|
||||||||
Servicing
fees
|
431 | 436 | ||||||
Late
fees
|
31 | 34 | ||||||
Ancillary
fees
|
114 | 69 | ||||||
Fair
value adjustments
|
(245 | ) | (9 | ) | ||||
Net
loan servicing income
|
331 | 530 | ||||||
Mortgage
banking income
|
$ | 1,371 | $ | 1,142 |
(in
thousands)
|
Six
Months Ended
June
30
2008
|
|||
Fair
value, beginning of period
|
$ | 3,258 | ||
New
servicing assets created
|
243 | |||
Change
in fair value during the period due to:
|
||||
Time
decay (1)
|
(91 | ) | ||
Payoffs
(2)
|
(186 | ) | ||
Changes
in valuation inputs or assumptions (3)
|
32 | |||
Fair
value, end of period
|
$ | 3,256 |
(1)
|
Represents
decrease in value due to regularly scheduled loan principal payments and
partial loan paydowns.
|
(2)
|
Represents
decrease in value due to loans that paid off during the
period.
|
(3)
|
Represents
change in value resulting from market-driven changes in interest rates and
prepayment speeds.
|
(in
thousands)
|
June
30
2008
|
December
31
2007
|
||||||
Subsidiaries:
|
||||||||
Repurchase
agreements
|
$ | 142,453 | $ | 158,980 | ||||
Federal
funds purchased
|
17,880 | 18,364 | ||||||
Total
short-term debt
|
$ | 160,333 | $ | 177,344 |
(in
thousands)
|
June
30
2008
|
December
31
2007
|
||||||
Monthly
amortizing
|
$ | 809 | $ | 906 | ||||
Term
|
40,000 | 40,000 | ||||||
$ | 40,809 | $ | 40,906 |
Principal
Payments Due by Period at June 30, 2008
|
||||||||||||||||||||||||||||
(in
thousands)
|
Total
|
Within
1 Year
|
2
Years
|
3
Years
|
4
Years
|
5
Years
|
After
5 Years
|
|||||||||||||||||||||
Outstanding
advances, weighted average interest rate – 3.91%
|
$ | 809 | $ | 118 | $ | 634 | $ | 8 | $ | 8 | $ | 8 | $ | 33 |
(in
thousands)
|
June
30
2008
|
December
31
2007
|
||||||
Advance
#146, 3.70%, due 8/30/08
|
$ | 40,000 | $ | 40,000 |
(in
thousands)
|
June
30
2008
|
December
31
2007
|
||||||
Junior
subordinated debentures, 6.52%, due 6/1/37
|
$ | 61,341 | $ | 61,341 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Numerator:
|
||||||||||||||||
Net
income
|
$ | 8,620 | $ | 8,858 | $ | 17,165 | $ | 16,880 | ||||||||
Denominator:
|
||||||||||||||||
Basic
earnings per share:
|
||||||||||||||||
Weighted
average shares
|
14,989 | 15,216 | 14,995 | 15,203 | ||||||||||||
Diluted
earnings per share:
|
||||||||||||||||
Effect
of dilutive stock options
|
163 | 232 | 150 | 218 | ||||||||||||
Adjusted
weighted average shares
|
15,152 | 15,448 | 15,145 | 15,421 | ||||||||||||
Earnings
per share:
|
||||||||||||||||
Basic
earnings per share
|
$ | 0.58 | $ | 0.58 | $ | 1.14 | $ | 1.11 | ||||||||
Diluted
earnings per share
|
$ | 0.57 | $ | 0.57 | $ | 1.13 | $ | 1.09 |
(in
thousands)
|
Fair
Value Measurements at June 30, 2008 Using
|
|||||||||||||||
Fair
Value
June
30
2008
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Other
Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Available-for-sale
securities
|
$ | 306,869 | $ | 0 | $ | 292,428 | $ | 14,441 | ||||||||
Mortgage
servicing rights
|
3,256 | 0 | 0 | 3,256 | ||||||||||||
Total
recurring assets measured at fair value
|
$ | 310,125 | $ | 0 | $ | 292,498 | $ | 17,697 |
(in
thousands)
|
Available-for-Sale
Securities
|
Mortgage
Servicing Rights
|
||||||
Beginning
balance, January 1, 2008
|
$ | 40,050 | $ | 3,258 | ||||
Total
realized and unrealized gains and losses
|
||||||||
Included
in net income
|
0 | 32 | ||||||
Included
in other comprehensive income
|
(459 | ) | 0 | |||||
Purchases,
issuances, and settlements
|
(25,150 | ) | (34 | ) | ||||
Ending
balance, June 30, 2008
|
$ | 14,441 | $ | 3,256 |
(in
thousands)
|
Fair
Value Measurements at June 30, 2008 Using
|
|||||||||||||||
Fair
Value
June
30
2008
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Other
Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Impaired
loans
|
$ | 10,781 | $ | 0 | $ | 0 | $ | 10,781 |
Pay
Date
|
Record
Date
|
Amount
Per Share
|
July
1, 2008
|
June
15, 2008
|
$
0.29
|
April
1, 2008
|
March
15, 2008
|
$
0.29
|
January
1, 2008
|
December
15, 2007
|
$
0.29
|
October
1, 2007
|
September
15, 2007
|
$
0.27
|
July
1, 2007
|
June
15, 2007
|
$
0.27
|
April
1, 2007
|
March
15, 2007
|
$
0.27
|
v
|
CTBI's
basic earnings per share for the second quarter 2008 increased 1.8% from
prior quarter as the result of a 10.7% increase in noninterest
income. Year-to-date basic earnings per share increased 2.7%
from prior year.
|
v
|
The
total 100 basis point decline in interest rates that occurred beginning on
March 18, 2008 has negatively impacted our net interest margin during the
second quarter since 37% of our loans reprice within 30
days. Our net interest margin decreased 12 basis points from
prior quarter but increased 2 basis points from prior year second
quarter.
|
v
|
Net
interest income decreased $0.6 million from prior quarter and $0.9 million
from prior year second quarter. The decrease in net interest
income from prior year second quarter resulted from a $104 million decline
in average earning assets as management continues to manage its net
interest margin. Management has utilized the liquidity from its
investment portfolio to fund loans and repay $40 million in Federal Home
Loan Bank advances while allowing deposits to decline $98.9 million during
the past 12 months as loan demand has been curtailed and other investment
opportunities have been limited by current economic
conditions.
|
v
|
Noninterest
income for the quarter increased 10.7% over prior quarter and 7.9% over
prior year second quarter with increases in deposit service charges, trust
revenue, and the fair value of mortgage servicing rights. Gains
on sales of loans increased from prior year, but decreased from prior
quarter.
|
v
|
Noninterest
expense for the first six months of 2008 has decreased $3.0 million or
6.9% from prior year primarily due to no accrual for the company-wide
incentive-based compensation plan and the 2007 charge from unamortized
debt issuance costs with the redemption of trust preferred
securities.
|
v
|
Nonperforming
loans increased $1.6 million at June 30, 2008 to $44.2 million compared to
$42.6 million at prior quarter-end and $23.9 million for prior year
quarter ended June 30, 2007. CTBI experienced a decline in
nonperforming loans in its Eastern and Northeastern Regions while
nonperforming loans remained relatively flat in the South Central Region
and increased in the Central Kentucky Region. The increase in
the Central Kentucky Region is primarily attributable to two borrowers
adversely impacted by the continuing weakness in the housing market and
the resulting increase in time required by the legal process for movement
from foreclosure to liquidation.
|
v
|
Our
loan portfolio increased an annualized 3.9% during the quarter with $21.8
million in growth. Loan growth from prior year second quarter
was $58.6 million.
|
v
|
Our
investment portfolio, which is a source of liquidity to fund loan growth,
increased an annualized 6.3% from prior quarter but declined 27.2% from
prior year second quarter. Management has utilized this
liquidity in lieu of increased deposit costs (deposits have declined $98.9
million year over year) to support loan growth and for margin
management.
|
v
|
Our
efficiency ratio was 57.25% for the quarter ended June 30, 2008 compared
to 56.39% and 58.22% for the quarters ended March 31, 2008 and June 30,
2007, respectively.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Return
on average shareholders' equity
|
11.22 | % | 12.16 | % | 11.21 | % | 11.75 | % | ||||||||
Return
on average assets
|
1.19 | % | 1.18 | % | 1.19 | % | 1.13 | % |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Yield
on interest earning assets
|
6.26 | % | 7.22 | % | 6.51 | % | 7.23 | % | ||||||||
Cost
of interest bearing funds
|
3.01 | 4.14 | 3.23 | 4.16 | ||||||||||||
Net
interest spread
|
3.25 | % | 3.08 | % | 3.28 | % | 3.07 | % | ||||||||
Net
interest margin
|
3.88 | % | 3.86 | % | 3.94 | % | 3.85 | % |
Six
Months Ended
|
||||||||
June
30
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Allowance
balance at January 1
|
$ | 28,054 | $ | 27,526 | ||||
Additions
to allowance charged against operations
|
5,017 | 2,316 | ||||||
Recoveries
credited to allowance
|
1,253 | 1,340 | ||||||
Losses
charged against allowance
|
(5,228 | ) | (3,494 | ) | ||||
Allowance
balance at June 30, 2008
|
$ | 29,096 | $ | 27,688 | ||||
Allowance
for loan losses to period-end loans
|
1.28 | % | 1.25 | % | ||||
Average
loans, net of unearned income
|
$ | 2,251,892 | $ | 2,182,465 | ||||
Provision
for loan losses to average loans, annualized
|
0.45 | % | 0.21 | % | ||||
Loan
charge-offs net of recoveries, to average loans,
annualized
|
0.35 | % | 0.20 | % |
(in
thousands)
|
Nonaccrual
Loans
|
As
a % of Loan Balances by Category
|
Restructured
Loans
|
As
a % of Loan Balances by Category
|
Accruing
Loans Past Due 90 Days or More
|
As
a % of Loan Balances by Category
|
Total
Loan Balances
|
|||||||||||||||||||||
June
30, 2008
|
||||||||||||||||||||||||||||
Commercial
construction
|
$ | 13,264 | 8.82 | % | $ | 0 | 0.00 | % | $ | 6,301 | 4.19 | % | $ | 150,356 | ||||||||||||||
Commercial
secured by real estate
|
6,058 | 0.93 | 0 | 0.00 | 5,038 | 0.77 | 653,830 | |||||||||||||||||||||
Commercial
other
|
4,789 | 1.35 | 0 | 0.00 | 1,374 | 0.39 | 354,441 | |||||||||||||||||||||
Consumer
real estate construction
|
1,380 | 2.30 | 0 | 0.00 | 12 | 0.02 | 59,956 | |||||||||||||||||||||
Consumer
real estate secured
|
3,010 | 0.50 | 0 | 0.00 | 2,500 | 0.42 | 600,654 | |||||||||||||||||||||
Consumer
other
|
0 | 0.00 | 0 | 0.00 | 426 | 0.10 | 443,654 | |||||||||||||||||||||
Equipment
lease financing
|
0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 10,755 | |||||||||||||||||||||
Total
|
$ | 28,501 | 1.25 | % | $ | 0 | 0.00 | % | $ | 15,651 | 0.69 | % | $ | 2,273,646 |
(in
thousands)
|
Nonaccrual
Loans
|
As
a % of Loan Balances by Category
|
Restructured
Loans
|
As
a % of Loan Balances by Category
|
Accruing
Loans Past Due 90 Days or More
|
As
a % of Loan Balances by Category
|
Total
Loan Balances
|
|||||||||||||||||||||
December
31, 2007
|
||||||||||||||||||||||||||||
Commercial
construction
|
$ | 8,682 | 6.04 | % | $ | 0 | 0.00 | % | $ | 1,733 | 1.21 | % | $ | 143,773 | ||||||||||||||
Commercial
secured by real estate
|
5,715 | 0.89 | 0 | 0.00 | 3,300 | 0.52 | 640,574 | |||||||||||||||||||||
Commercial
other
|
4,489 | 1.34 | 20 | 0.01 | 1,305 | 0.39 | 333,774 | |||||||||||||||||||||
Consumer
real estate construction
|
723 | 1.05 | 0 | 0.00 | 722 | 1.05 | 69,021 | |||||||||||||||||||||
Consumer
real estate secured
|
2,628 | 0.44 | 0 | 0.00 | 2,113 | 0.35 | 599,665 | |||||||||||||||||||||
Consumer
other
|
0 | 0.00 | 0 | 0.00 | 449 | 0.10 | 435,273 | |||||||||||||||||||||
Equipment
lease financing
|
0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 5,817 | |||||||||||||||||||||
Total
|
$ | 22,237 | 1.00 | % | $ | 20 | 0.00 | % | $ | 9,622 | 0.43 | % | $ | 2,227,897 |
Item
1.
|
Legal
Proceedings
|
None
|
Item
1A.
|
Risk
Factors
|
None
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
None
|
Item
3.
|
Defaults
Upon Senior Securities
|
None
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
Nominee
|
In
Favor
|
Withheld
|
Charles
J. Baird
|
8,719,520
|
151,935
|
Nick
A. Cooley
|
5,780,493
|
3,090,963
|
Jean
R. Hale
|
8,839,091
|
32,364
|
James
McGhee II
|
8,843,842
|
27,613
|
M.
Lynn Parrish
|
8,384,272
|
487,183
|
Paul
E. Patton
|
8,808,384
|
63,071
|
Dr.
James R. Ramsey
|
8,849,368
|
22,087
|
Gary
G. White
|
8,849,644
|
21,811
|
In
Favor
|
Against
|
Abstained
|
8,839,047
|
20,424
|
11,982
|
Item
5.
|
Other
Information:
|
|
CTBI's
Principal Executive Officer and Principal Financial Officer have furnished
to the SEC the certifications with respect to this Form 10-Q that are
required by Sections 302 and 906 of the Sarbanes-Oxley Act of
2002
|
||
Item
6.
|
a.
Exhibits:
|
|
(1) Form
of Severance Agreement between CTBI and executive officers, as
amended
|
Exhibit
10.6
|
|
(2) Senior
Management Incentive Plan (2008), as amended
|
Exhibit
10.7
|
|
(3) Voluntary
Deferred Compensation Plan, as amended
|
Exhibit
10.9
|
|
(4) Certifications
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
|
Exhibit
31.1
Exhibit
31.2
|
|
(5) Certifications
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
Exhibit
32.1
Exhibit
32.2
|
COMMUNITY TRUST BANCORP, INC. | |||
Date:
August 8, 2008
|
By:
|
/s/ Jean R. Hale | |
Jean R. Hale | |||
Chairman, President and Chief Executive Officer | |||
|
By:
|
/s/ Kevin J. Stumbo | |
Kevin J. Stumbo | |||
Executive Vice President and Treasurer | |||
(Principal Financial Officer) |