Community Trust Bancorp, Inc. (NASDAQ: CTBI):

Earnings Summary

(in thousands except per share data)

1Q
2024

4Q
2023

1Q
2023

Net income

$18,679

$18,659

$19,313

Earnings per share

$1.04

$1.04

$1.08

Earnings per share – diluted

$1.04

$1.04

$1.08

 

 

 

 

Return on average assets

1.30%

1.30%

1.44%

Return on average equity

10.61%

10.98%

12.03%

Efficiency ratio

4.94%

55.74%

55.29%

Tangible common equity

11.10%

11.16%

10.82%

 

 

Dividends declared per share

$0.46

$0.46

$0.44

Book value per share

$39.28

$39.01

$36.54

 

Weighted average shares

17,926

17,901

17,872

Weighted average shares – diluted

17,943

17,926

17,884

Community Trust Bancorp, Inc. (NASDAQ-CTBI) achieved earnings for the first quarter 2024 of $18.7 million, or $1.04 per basic share, compared to $18.7 million, or $1.04 per basic share, earned during the fourth quarter 2023 and $19.3 million, or $1.08 per basic share, earned during the first quarter 2023. Total revenue was $2.0 million above prior quarter and $1.1 million above prior year same quarter. Net interest revenue increased $0.6 million compared to prior quarter but decreased $0.3 million compared to prior year same quarter, and noninterest income increased $1.4 million compared to prior quarter and $1.5 million compared to prior year same quarter. Our provision for credit losses for the quarter increased $0.8 million from prior quarter and $1.5 million from prior year fourth quarter. Noninterest expense increased $0.6 million compared to prior quarter and $0.3 million compared to prior year same quarter. Noninterest expense and tax expense were impacted by an accounting method change (ASU No. 2023-02), which is intended to improve the accounting and disclosures for investments in tax credit structures. Historically, the amortization expense related to our tax credits has been booked to noninterest expense. Beginning in January 2024, the amortization expense is now booked to tax expense. Our total amortization expense related to tax credits was $0.8 million for the three months ended March 31, 2024.

1st Quarter 2024 Highlights

  • Net interest income for the quarter of $43.6 million was $0.6 million above prior quarter but $0.3 million below prior year same quarter, as our net interest margin increased 4 basis points from prior quarter but decreased 26 basis points from prior year same quarter.
  • Provision for credit losses at $2.7 million for the quarter increased $0.8 million from prior quarter and $1.5 million from prior year same quarter.
  • Our loan portfolio at $4.2 billion increased $110.3 million, an annualized 10.9%, from December 31, 2023 and $383.8 million, or 10.2%, from March 31, 2023.
  • We had net loan charge-offs of $1.6 million, or 0.16% of average loans annualized, for the first quarter 2024 compared to $1.0 million, or 0.10% of average loans annualized, for the fourth quarter 2023 and $0.4 million for the first quarter 2023.
  • Our total nonperforming loans increased to $15.9 million at March 31, 2024 from $14.0 million at December 31, 2023 and $12.2 million at March 31, 2023. Nonperforming assets at $17.1 million increased $1.5 million from December 31, 2023 and $2.1 million from March 31, 2024.
  • Deposits, including repurchase agreements, at $5.0 billion increased $69.1 million, or an annualized 5.6%, from December 31, 2023 and $266.7 million, or 5.6% from March 31, 2023.
  • Shareholders’ equity at $707.7 million increased $5.5 million, or an annualized 3.2%, during the quarter and $50.9 million, or 7.7%, from March 31, 2023.
  • Noninterest income for the quarter ended March 31, 2024 of $15.1 million was $1.4 million, or 10.3%, above prior quarter and $1.5 million, or 10.6%, above prior year same quarter.
  • Noninterest expense for the quarter ended March 31, 2024 of $32.2 million was $0.6 million, or 1.9%, above prior quarter and $0.3 million, or 1.0%, above prior year same quarter.

Net Interest Income

Percent Change

1Q 2024 Compared to:

($ in thousands)

1Q
2024

4Q

2023

1Q
2023

4Q
2023

1Q
2023

Components of net interest income

Income on earning assets

$75,002

$73,329

$60,995

2.3%

23.0%

Expense on interest bearing liabilities

31,411

30,354

17,079

3.5%

83.9%

Net interest income

43,591

42,975

43,916

1.4%

(0.7%)

TEQ

294

297

298

(1.0%)

(1.3%)

Net interest income, tax equivalent

$43,885

$43,272

$44,214

1.4%

(0.7%)

 

Average yield and rates paid:

Earning assets yield

5.55%

5.43%

4.84%

2.2%

14.7%

Rate paid on interest bearing liabilities

3.35%

3.27%

2.06%

2.4%

62.6%

Gross interest margin

2.20%

2.16%

2.78%

1.9%

(20.9%)

Net interest margin

3.23%

3.19%

3.49%

1.3%

(7.4%)

 

Average balances:

Investment securities

$1,148,014

$1,144,078

$1,251,948

0.3%

(8.3%)

Loans

$4,096,866

$4,022,547

$3,739,443

1.8%

9.6%

Earning assets

$5,458,075

$5,377,827

$5,131,385

1.5%

6.4%

Interest-bearing liabilities

$3,773,513

$3,687,660

$3,362,331

2.3%

12.2%

Net interest income for the quarter of $43.6 million was $0.6 million above prior quarter but $0.3 million below prior year same quarter. Our net interest margin, on a fully tax equivalent basis, at 3.23% increased 4 basis points from prior quarter but decreased 26 basis points from prior year same quarter. Our average earning assets increased $80.2 million from prior quarter and $326.7 million from prior year same quarter. Our yield on average earning assets increased 12 basis points from prior quarter and 71 basis points from prior year same quarter, and our cost of funds increased 8 basis points from prior quarter and 129 basis points from prior year same quarter.

Our ratio of average loans to deposits, including repurchase agreements, was 82.7% for the quarter ended March 31, 2024 compared to 81.8% for the quarter ended December 31, 2023 and 79.8% for the quarter ended March 31, 2023.

Noninterest Income

Percent Change

1Q 2024 Compared to:

($ in thousands)

1Q
2024

4Q
2023

1Q
2023

4Q
2023

1Q
2023

Deposit related fees

$7,011

$7,312

$7,287

(4.1%)

(3.8%)

Trust revenue

3,517

3,318

3,079

6.0%

14.2%

Gains on sales of loans

45

54

121

(16.7%)

(62.8%)

Loan related fees

1,352

467

845

189.5%

60.0%

Bank owned life insurance revenue

1,292

816

858

58.3%

50.6%

Brokerage revenue

490

285

348

71.9%

40.8%

Other

1,427

1,473

1,144

(3.1%)

24.7%

Total noninterest income

$15,134

$13,725

$13,682

10.3%

10.6%

 

Noninterest income for the quarter ended March 31, 2024 of $15.1 million was $1.4 million, or 10.3%, above prior quarter and $1.5 million, or 10.6%, above prior year same quarter. The quarter over quarter increase included a $0.9 million increase in loan related fees, a $0.5 million increase in bank owned life insurance revenue, a $0.2 million increase in trust revenue, and a $0.2 million increase in brokerage revenue, partially offset by $0.3 million decrease in deposit related fees. The year over year increase included a $0.5 million increase in loan related fees, a $0.4 million increase in bank owned life insurance revenue, and a $0.4 million increase in trust revenue. The increase in loan related fees resulted from the fluctuation in the fair market value of our mortgage servicing rights.

Noninterest Expense

Percent Change

1Q 2024 Compared to:

($ in thousands)

1Q
2024

4Q
2023

1Q
2023

4Q
2023

1Q
2023

Salaries

$13,036

$13,163

$12,633

(1.0%)

3.2%

Employee benefits

7,086

5,282

6,275

34.2%

12.9%

Net occupancy and equipment

3,028

3,045

3,028

(0.6%)

(0.0%)

Data processing

2,518

2,630

2,303

(4.3%)

9.3%

Legal and professional fees

832

900

816

(7.6%)

2.0%

Advertising and marketing

577

923

820

(37.5%)

(29.6%)

Taxes other than property and payroll

442

421

432

5.0%

2.3%

Other

4,701

5,264

5,583

(10.7%)

(15.8%)

Total noninterest expense

$32,220

$31,628

$31,890

1.9%

1.0%

Noninterest expense for the quarter ended March 31, 2024 of $32.2 million was $0.6 million, or 1.9%, above prior quarter and $0.3 million, or 1.0%, above prior year same quarter. The increase in noninterest expense quarter over quarter included a $1.7 million increase in personnel expense, partially offset by decreases in other direct expenses ($0.7 million) and advertising expense ($0.2 million). The increase in personnel expense included a $1.0 million increase in bonuses and incentives and a $0.7 million increase in the cost of group medical and life insurance benefits. The decrease in other direct expenses was the result of the accounting change related to the amortization of tax credits discussed above. The increase year over year primarily resulted from a $1.2 million increase in personnel expense, partially offset by a $1.0 million decrease in other direct expenses related to the amortization of tax credits. The year over year increase in personnel expense included a $0.4 million increase in salaries and a $0.7 million increase in the cost of group medical and life insurance benefits.

Balance Sheet Review

Total Loans

Percent Change

1Q 2024 Compared to:

($ in thousands)

1Q
2024

4Q
2023

1Q
2023

4Q
2023

1Q
2023

Commercial nonresidential real estate

$813,904

$778,637

$750,498

4.5%

8.4%

Commercial residential real estate

456,585

417,943

385,328

9.2%

18.5%

Hotel/motel

416,759

395,765

348,876

5.3%

19.5%

Other commercial

397,922

391,390

392,398

1.7%

1.4%

Total commercial

2,085,170

1,983,735

1,877,100

5.1%

11.1%

 

Residential mortgage

955,616

937,524

846,435

1.9%

12.9%

Home equity loans/lines

151,577

147,036

124,096

3.1%

22.1%

Total residential

1,107,193

1,084,560

970,531

2.1%

14.1%

 

Consumer indirect

813,005

823,505

772,570

(1.3%)

5.2%

Consumer direct

155,807

159,106

157,158

(2.1%)

(0.9%)

Total consumer

968,812

982,611

929,728

(1.4%)

4.2%

 

Total loans

$4,161,175

$4,050,906

$3,777,359

2.7%

10.2%

Total Deposits and Repurchase Agreements

Percent Change

1Q 2024 Compared to:

($ in thousands)

1Q
2024

4Q
2023

1Q
2023

4Q
2023

1Q
2023

Non-interest bearing deposits

$1,274,583

$1,260,690

$1,409,839

1.1%

(9.6%)

Interest bearing deposits

Interest checking

131,227

123,927

120,678

5.9%

8.7%

Money market savings

1,608,849

1,525,537

1,408,314

5.5%

14.2%

Savings accounts

543,338

535,063

642,232

1.5%

(15.4%)

Time deposits

1,226,273

1,279,405

962,361

(4.2%)

27.4%

Repurchase agreements

234,671

225,245

208,777

4.2%

12.4%

Total interest bearing deposits and repurchase agreements

3,744,358

3,689,177

3,342,362

1.5%

12.0%

Total deposits and repurchase agreements

$5,018,941

$4,949,867

$4,752,201

1.4%

5.6%

CTBI’s total assets at $5.9 billion as of March 31, 2024 increased $80.6 million, or 5.6% annualized, from December 31, 2023 and $320.9 million, or 5.8%, from March 31, 2023. Loans outstanding at $4.2 billion increased $110.3 million, an annualized 10.9%, from December 31, 2023 and $383.8 million, or 10.2%, from March 31, 2023. The increase in loans from prior quarter included a $101.4 million increase in the commercial loan portfolio, a $22.6 million increase in the residential loan portfolio, partially offset by a $10.5 million decrease in the indirect consumer loan portfolio and a $3.3 million decrease in the consumer direct loan portfolio. CTBI’s investment portfolio decreased $51.8 million, or an annualized 17.9%, from December 31, 2023 and $128.4 million, or 10.3%, from March 31, 2023. Deposits in other banks increased $24.9 million from prior quarter and $62.3 million from March 31, 2023. Deposits, including repurchase agreements, at $5.0 billion increased $69.1 million, or an annualized 5.6%, from December 31, 2023 and $266.7 million, or 5.6% from March 31, 2023. CTBI is not dependent on any one customer or group of customers for their source of deposits. As of March 31, 2024, no one customer accounted for more than 2.25% of our $5.0 billion in deposits. Only three customer relationships accounted for more than 1% each.

Shareholders’ equity at $707.7 million increased $5.5 million, or an annualized 3.2%, during the quarter and $50.9 million, or 7.7%, from March 31, 2023. Net unrealized losses on securities, net of deferred taxes, were $106.9 million at March 31, 2024, compared to $103.3 million at December 31, 2023 and $112.4 million at March 31, 2023. In addition, we had a cumulative effect impact related to the adoption of ASU No. 2023-02, discussed above, that reduced retained earnings by $2.0 million. CTBI’s annualized dividend yield to shareholders as of March 31, 2024 was 4.31%.

Asset Quality

Our total nonperforming loans increased to $15.9 million at March 31, 2024 from $14.0 million at December 31, 2023 and $12.2 million at March 31, 2023. Accruing loans 90+ days past due at $11.6 million increased $1.6 million from prior quarter and $5.3 million from March 31, 2023. Nonaccrual loans at $4.3 million increased $0.3 million from prior quarter but decreased $1.7 million from March 31, 2023. Accruing loans 30-89 days past due at $12.2 million decreased $3.1 million from prior quarter but increased $0.5 million from March 31, 2023. Our loan portfolio management processes focus on the immediate identification, management, and resolution of problem loans to maximize recovery and minimize loss.

We had net loan charge-offs of $1.6 million, or 0.16% of average loans annualized, for the first quarter 2024 compared to $1.0 million, or 0.10% of average loans annualized, for the fourth quarter 2023 and $0.4 million, or 0.05% of average loans annualized for the first quarter 2023.

Allowance for Credit Losses

Our provision for credit losses for the quarter increased $0.8 million from prior quarter and $1.5 million from prior year same quarter. Our reserve coverage (allowance for credit losses to nonperforming loans) at March 31, 2024 was 319.0% compared to 354.7% at December 31, 2023 and 382.3% at March 31, 2023. Our credit loss reserve as a percentage of total loans outstanding at March 31, 2024 remained at 1.22% from December 31, 2023, down from the 1.24% at March 31, 2023.

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. CTBI’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, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; the effects of epidemics, pandemics, or other infectious disease outbreaks; results of various investment activities; the effects of competitors’ pricing policies, changes in laws and regulations, competition, and 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; and the resolution of legal proceedings and related matters. In addition, the banking industry in general is subject to various monetary, operational, and fiscal policies and regulations, which include, but are not limited to, those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, and state regulators, whose policies, regulations, and enforcement actions could affect CTBI’s results. These statements are representative only on the date hereof, and CTBI undertakes no obligation to update any forward-looking statements made.

Community Trust Bancorp, Inc., with assets of $5.9 billion, is headquartered in Pikeville, Kentucky and has 71 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, three banking locations in northeastern Tennessee, four trust offices across Kentucky, and one trust office in Tennessee.

Additional information follows.

Community Trust Bancorp, Inc.
Financial Summary (Unaudited)
March 31, 2024
(in thousands except per share data and # of employees)
 
ThreeThreeThree
MonthsMonthsMonths
EndedEndedEnded
March 31, 2024December 31, 2023March 31, 2023
Interest income

$

75,002

 

$

73,329

 

$

60,995

 

Interest expense

 

31,411

 

 

30,354

 

 

17,079

 

Net interest income

 

43,591

 

 

42,975

 

 

43,916

 

Loan loss provision

 

2,656

 

 

1,815

 

 

1,116

 

 
Gains on sales of loans

 

45

 

 

54

 

 

121

 

Deposit related fees

 

7,011

 

 

7,312

 

 

7,287

 

Trust revenue

 

3,517

 

 

3,318

 

 

3,079

 

Loan related fees

 

1,352

 

 

467

 

 

845

 

Securities gains (losses)

 

371

 

 

258

 

 

218

 

Other noninterest income

 

2,838

 

 

2,316

 

 

2,132

 

Total noninterest income

 

15,134

 

 

13,725

 

 

13,682

 

 
Personnel expense

 

20,122

 

 

18,445

 

 

18,908

 

Occupancy and equipment

 

3,028

 

 

3,045

 

 

3,028

 

Data processing expense

 

2,518

 

 

2,630

 

 

2,303

 

FDIC insurance premiums

 

642

 

 

655

 

 

606

 

Other noninterest expense

 

5,910

 

 

6,853

 

 

7,045

 

Total noninterest expense

 

32,220

 

 

31,628

 

 

31,890

 

 
Net income before taxes

 

23,849

 

 

23,257

 

 

24,592

 

Income taxes

 

5,170

 

 

4,598

 

 

5,279

 

Net income

$

18,679

 

$

18,659

 

$

19,313

 

 
Memo: TEQ interest income

$

75,296

 

$

73,626

 

$

61,293

 

 
Average shares outstanding

 

17,926

 

 

17,901

 

 

17,872

 

Diluted average shares outstanding

 

17,943

 

 

17,926

 

 

17,884

 

Basic earnings per share

$

1.04

 

$

1.04

 

$

1.08

 

Diluted earnings per share

$

1.04

 

$

1.04

 

$

1.08

 

Dividends per share

$

0.46

 

$

0.46

 

$

0.44

 

 
Average balances:
Loans

$

4,096,866

 

$

4,022,547

 

$

3,739,443

 

Earning assets

 

5,458,075

 

 

5,377,827

 

 

5,131,385

 

Total assets

 

5,786,515

 

 

5,713,977

 

 

5,458,067

 

Deposits, including repurchase agreements

 

4,956,820

 

 

4,916,208

 

 

4,688,103

 

Interest bearing liabilities

 

3,773,513

 

 

3,687,660

 

 

3,362,331

 

Shareholders' equity

 

708,341

 

 

674,349

 

 

651,008

 

 
Performance ratios:
Return on average assets

 

1.30

%

 

1.30

%

 

1.44

%

Return on average equity

 

10.61

%

 

10.98

%

 

12.03

%

Yield on average earning assets (tax equivalent)

 

5.55

%

 

5.43

%

 

4.84

%

Cost of interest bearing funds (tax equivalent)

 

3.35

%

 

3.27

%

 

2.06

%

Net interest margin (tax equivalent)

 

3.23

%

 

3.19

%

 

3.49

%

Efficiency ratio (tax equivalent)

 

54.94

%

 

55.74

%

 

55.29

%

 
Loan charge-offs

$

2,667

 

$

2,529

 

$

1,765

 

Recoveries

 

(1,039

)

 

(1,538

)

 

(1,351

)

Net charge-offs

$

1,628

 

$

991

 

$

414

 

 
Market Price:
High

$

44.38

 

$

45.74

 

$

47.35

 

Low

$

38.44

 

$

33.91

 

$

37.31

 

Close

$

42.65

 

$

43.86

 

$

37.95

 

 
As ofAs ofAs of
March 31, 2024December 31, 2023March 31, 2023
Assets:
Loans

$

4,161,175

 

$

4,050,906

 

$

3,777,359

 

Loan loss reserve

 

(50,571

)

 

(49,543

)

 

(46,683

)

Net loans

 

4,110,604

 

 

4,001,363

 

 

3,730,676

 

Loans held for sale

 

57

 

 

152

 

 

182

 

Securities AFS

 

1,111,505

 

 

1,163,724

 

 

1,241,080

 

Equity securities at fair value

 

3,529

 

 

3,158

 

 

2,380

 

Other equity investments

 

9,327

 

 

9,599

 

 

9,713

 

Other earning assets

 

239,554

 

 

214,664

 

 

177,209

 

Cash and due from banks

 

55,841

 

 

58,833

 

 

60,762

 

Premises and equipment

 

46,595

 

 

45,311

 

 

42,636

 

Right of use asset

 

15,500

 

 

15,703

 

 

17,037

 

Goodwill and core deposit intangible

 

65,490

 

 

65,490

 

 

65,490

 

Other assets

 

192,253

 

 

191,699

 

 

182,155

 

Total Assets

$

5,850,255

 

$

5,769,696

 

$

5,529,320

 

 
Liabilities and Equity:
Interest bearing checking

$

131,227

 

$

123,927

 

$

120,678

 

Savings deposits

 

2,152,187

 

 

2,060,600

 

 

2,050,546

 

CD's >=$100,000

 

678,148

 

 

704,222

 

 

501,557

 

Other time deposits

 

548,125

 

 

575,183

 

 

460,804

 

Total interest bearing deposits

 

3,509,687

 

 

3,463,932

 

 

3,133,585

 

Noninterest bearing deposits

 

1,274,583

 

 

1,260,690

 

 

1,409,839

 

Total deposits

 

4,784,270

 

 

4,724,622

 

 

4,543,424

 

Repurchase agreements

 

234,671

 

 

225,245

 

 

208,777

 

Other interest bearing liabilities

 

65,014

 

 

65,075

 

 

65,254

 

Lease liability

 

16,208

 

 

16,393

 

 

17,619

 

Other noninterest bearing liabilities

 

42,368

 

 

36,153

 

 

37,425

 

Total liabilities

 

5,142,531

 

 

5,067,488

 

 

4,872,499

 

Shareholders' equity

 

707,724

 

 

702,208

 

 

656,821

 

Total Liabilities and Equity

$

5,850,255

 

$

5,769,696

 

$

5,529,320

 

 
Ending shares outstanding

 

18,019

 

 

18,000

 

 

17,976

 

 
30 - 89 days past due loans

$

12,234

 

$

15,343

 

$

11,728

 

90 days past due loans

 

11,550

 

 

9,920

 

 

6,218

 

Nonaccrual loans

 

4,302

 

 

4,048

 

 

5,993

 

Foreclosed properties

 

1,266

 

 

1,616

 

 

2,776

 

 
Community bank leverage ratio

 

13.74

%

 

13.69

%

 

13.71

%

Tangible equity to tangible assets ratio

 

11.10

%

 

11.16

%

 

10.82

%

FTE employees

 

945

 

 

967

 

 

945