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Community Trust Bancorp Upped to Strong Buy

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On Oct 5, Zacks Investment Research upgraded Community Trust Bancorp Inc. (CTBI - Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Community Trust Bancorp has been witnessing rising earnings estimates on the back of strong second-quarter 2013 results and solid capital deployment activities. Moreover, this well-known commercial and personal banking along with trust and wealth management services provider recorded a year-to-date return of 18.6%. The year-over-year expected earnings growth rate for this stock is 3.9%.

Community Trust Bancorp reported its second-quarter results on Jul 17 with earnings per share of 76 cents, beating the Zacks Consensus Estimate of 74 cents by 2.7% but lagging the year-ago earnings of 79 cents by 3.8%. Better-than-expected results were driven by higher top line. The company maintained a strong capital position with solid loans and deposit balances during the quarter.

Net interest income surged 3.1% year over year to $33.3 million. This upsurge reflected lower interest expenses. Non-interest income increased 10.8% to $13.3 million, as compared with the prior-year period. Higher gains on sale of loans and elevated deposit service charges were the primary reasons for the upswing.

However, on the downside, non-interest expenses surged 7.9% year over year to $26.0 million. Higher personnel costs along with elevated occupancy and equipment expenses mainly drove the increase.

In Jul 2013, Community Trust Bancorp announced a 1.6% increase in its quarterly cash dividend. The increased dividend of 32 cents per share was paid on Oct 1, 2013 to shareholders of record on Sep 15, 2013.

Following second-quarter 2013 results, the Zacks Consensus Estimate for 2013 increased 0.7% to $3.00 per share, over the last 60 days for Community Trust Bancorp. For 2014, the Zacks Consensus Estimate advanced 0.3% to $3.03 per share over the same time period.

Other Stocks to Consider

Besides Community Trust Bancorp, other Southeast banks that are worth considering include SY Bancorp Inc. (SYBT - Free Report) and Simmons First National Corporation (SFNC - Free Report) with a Zacks Rank #1, while WesBanco Inc. (WSBC - Free Report) carries a Zacks Rank #2 (Buy).

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