Over the past four quarters,
Community Trust Bancorp Inc.
) has beaten the Zacks Consensus Estimate three times and missed
just once, amassing an average surprise of 14.8%. Most recently,
this regional bank holding company delivered a solid 19.7% surprise
in the second quarter 2012. With a P/B multiple of just 1.4, this
Zacks #1 Rank (Strong Buy) stock is an attractive pick for value
Impressive Second Quarter Results
On July 18, Community Trust Bancorp delivered second quarter 2012
earnings per share of 79 cents, substantially outpacing the Zacks
Consensus Estimate of 66 cents. Moreover, earnings were up 36.2%
from 58 cents in the prior-year quarter. Results benefited from
impressive growth in fee income and lower operating expenses,
partially offset by a marginal dip in net interest income.
Net interest income fell 2% from the year-ago quarter to $32.3
million. Similarly, net interest margin (NIM) declined 24 basis
points (bps) to 3.93%. Nevertheless, non-interest income surged
nearly 13% to $12.0 million, reflecting higher trust revenue as
well as securities gains. Furthermore, non-interest expenses
declined 11% to $24.1 million as a result of lower personnel
expense and FDIC insurance premiums.
The company expects NIM to fall 7 bps in the third quarter and 2
bps points in the fourth quarter, due to the increased cost of
interest bearing funds. For 2012, NIM is expected to decrease
nearly 4 bps.
Community Trust witnessed a decent improvement in its asset quality
during the quarter. As of June 30, 2012, total nonperforming loans
stood at $35.3 million, down 41% from $59.6 million as of June 30,
2011. Likewise on an annualized basis, net loan charge-offs were
0.39% of average loans, down 13 basis points from the year-ago
Earnings Estimates Rising
Over the last 7 days, the Zacks Consensus Estimate for 2012
increased 9.0% to $2.92 per share, implying a year-over-year jump
of 15.4%. For 2013, three out of four estimates have risen over the
same timeframe, helping the Zacks Consensus Estimate improve 3.6%
Valuation Looks Reasonable
Along with a P/B multiple of 1.4, Community Trust has a forward
price-to-earnings (P/E) ratio of 11.6 (A P/E ratio under 15.0 and
P/B ratio under 3.0 generally indicate value). Furthermore, over
the last year, the company's share price has gained nearly 20%.
Additionally, Community Trust Bancorp currently enjoys a solid
dividend yield of 3.7%. The second quarter of 2012 marked the
company's 42nd straight dividend-paying quarter. Therefore, in
addition to being a value stock, the company also offers a steady
The chart below clearly shows that after a plunge in
September/October 2011, the stock is back on the recovery path.
Moreover, the Zacks Consensus Estimate is on an upward trajectory
for the years ahead.
Pikeville, Kentucky-based Community Trust Bancorp is a bank holding
company and has nearly 80 banking branches and about 5 trust
offices spread across Kentucky, West Virginia and Tennessee. The
company offers a wide range of commercial and personal banking and
trust and wealth management services. With a market capitalization
of $526.1 million, Community Trust competes with Heartland
Financial USA Inc. (
) and First Financial Bancorp (
COMMUN TRUST BC (CTBI): Free Stock Analysis
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