Community Trust Bank(CTBI) - 2025 Q2 - Quarterly Results

Earnings Summary Community Trust Bancorp, Inc. achieved record earnings in Q2 2025, driven by increased net interest and noninterest income and reduced credit loss provisions 2Q 2025 Earnings Highlights Community Trust Bancorp, Inc. reported record earnings for the second quarter of 2025, with net income reaching $24.9 million, or $1.38 per basic share. This represents significant growth compared to both the prior quarter and the prior year, driven by increased net interest revenue and noninterest income, alongside a decrease in the provision for credit losses 2Q 2025 Earnings Highlights Data | (in thousands except per share data) | 2Q 2025 | 1Q 2025 | 2Q 2024 | YTD 2025 | YTD 2024 | | :--------------------------------- | :------ | :------ | :------ | :------- | :------- | | Net income | $24,899 | $21,972 | $19,499 | $46,871 | $38,178 | | Earnings per share | $1.38 | $1.22 | $1.09 | $2.60 | $2.13 | | Earnings per share - diluted | $1.38 | $1.22 | $1.09 | $2.60 | $2.13 | | Return on average assets | 1.58% | 1.44% | 1.35% | 1.51% | 1.33% | | Return on average equity | 12.51% | 11.50% | 11.03% | 12.01% | 10.82% | | Efficiency ratio | 50.70% | 51.86% | 52.17% | 51.26% | 53.51% | | Tangible common equity | 11.72% | 11.57% | 11.39% | | | | Dividends declared per share | $0.47 | $0.47 | $0.46 | $0.94 | $0.92 | | Book value per share | $44.57 | $43.32 | $39.91 | | | | Weighted average shares | 18,012 | 17,995 | 17,939 | 18,004 | 17,932 | | Weighted average shares - diluted | 18,036 | 18,022 | 17,959 | 18,029 | 17,951 | - Net interest income for the quarter was $54.0 million, an increase of $2.8 million (5.4%) from the prior quarter and $8.4 million (18.3%) from the prior year same quarter[1][2] - Provision for credit losses for the quarter decreased by $1.5 million from the prior quarter and $0.9 million from the prior year same quarter[1][2] - Noninterest income for the quarter was $16.2 million, an increase of $1.3 million (8.6%) from the prior quarter and $0.5 million (2.9%) from the prior year same quarter[1][2][3] Financial Performance Analysis Analysis of Q2 2025 financial performance reveals growth in net interest and noninterest income, alongside an increase in noninterest expenses Net Interest Income Net interest income for Q2 2025 increased significantly, driven by higher income on earning assets and a decrease in the rate paid on interest-bearing liabilities. The net interest margin also expanded, reflecting improved asset yields and lower funding costs Net Interest Income Data | ($ in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | Change (%) 2Q 2025 Compared to 1Q 2025 | Change (%) 2Q 2025 Compared to 2Q 2024 | | :------------------------------- | :------- | :------- | :------- | :------------------------------------- | :------------------------------------- | | Income on earning assets | $85,571 | $82,054 | $76,648 | 4.3 | 11.6 | | Expense on interest bearing liabilities | 31,531 | 30,787 | 30,970 | 2.4 | 1.8 | | Net interest income | 54,040 | 51,267 | 45,678 | 5.4 | 18.3 | | Net interest income, tax equivalent | $54,323 | $51,540 | $45,970 | 5.4 | 18.2 | | Earning assets yield | 5.76% | 5.71% | 5.66% | 0.9 | 1.8 | | Rate paid on interest bearing liabilities | 3.00% | 3.02% | 3.30% | (0.7) | (9.1) | | Net interest margin | 3.64% | 3.57% | 3.38% | 2.0 | 7.7 | - Net interest income for the quarter was $54.0 million, increasing $2.8 million (5.4%) from the prior quarter and $8.4 million (18.3%) from the prior year same quarter[4] - Net interest margin, on a fully tax equivalent basis, increased to 3.64%, up 7 basis points from the prior quarter and 26 basis points from the prior year same quarter[4] - Yield on average earning assets increased 5 basis points QoQ and 10 basis points YoY, while the cost of funds decreased 2 basis points QoQ and 30 basis points YoY[4] Noninterest Income Total noninterest income for Q2 2025 saw an increase, primarily due to higher deposit-related fees and loan-related fees quarter-over-quarter. Year-over-year growth was modest, with trust revenue and securities gains offsetting a decline in bank-owned life insurance revenue Noninterest Income Data | ($ in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | Percent Change (%) 2Q 2025 Compared to 1Q 2025 | Percent Change (%) 2Q 2025 Compared to 2Q 2024 | | :------------------------- | :------- | :------- | :------- | :--------------------------------------------- | :--------------------------------------------- | | Deposit related fees | $7,350 | $6,822 | $7,308 | 7.7 | 0.6 | | Trust revenue | 4,092 | 3,981 | 3,736 | 2.8 | 9.6 | | Gains on sales of loans | 77 | 47 | 119 | 64.0 | (35.3) | | Loan related fees | 1,249 | 965 | 1,320 | 29.4 | (5.4) | | Bank owned life insurance revenue | 1,102 | 1,035 | 1,815 | 6.5 | (39.3) | | Brokerage revenue | 526 | 494 | 683 | 6.5 | (23.0) | | Other | 1,775 | 1,553 | 727 | 14.3 | 144.2 | | Total noninterest income | $16,171 | $14,897 | $15,708 | 8.6 | 2.9 | - Total noninterest income for Q2 2025 was $16.2 million, an increase of $1.3 million (8.6%) from the prior quarter and $0.5 million (2.9%) from the prior year same quarter[8] - Quarter-over-quarter variance was primarily due to increases in deposit related fees (+$0.5 million) and loan related fees (+$0.3 million)[8] - Year-over-year increases in trust revenue (+$0.4 million) and securities gains (+$0.6 million) were partially offset by a decrease in bank owned life insurance revenue (-$0.7 million)[8] Noninterest Expense Noninterest expense increased in Q2 2025, mainly due to a higher accrual for annual incentive payments to employees and increased data processing expenses. Personnel expenses and data processing were also significant contributors to the year-over-year increase Noninterest Expense Data | ($ in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | Percent Change (%) 2Q 2025 Compared to 1Q 2025 | Percent Change (%) 2Q 2025 Compared to 2Q 2024 | | :------------------------------- | :------- | :------- | :------- | :--------------------------------------------- | :--------------------------------------------- | | Salaries | $13,667 | $13,269 | $13,037 | 3.0 | 4.8 | | Employee benefits | 7,987 | 6,849 | 6,554 | 16.6 | 21.9 | | Net occupancy and equipment | 3,172 | 3,440 | 3,089 | (7.8) | 2.7 | | Data processing | 3,326 | 2,859 | 2,669 | 16.3 | 24.6 | | Legal and professional fees | 1,001 | 1,225 | 978 | (18.3) | 2.4 | | Advertising and marketing | 765 | 673 | 856 | 13.7 | (10.6) | | Taxes other than property and payroll | 573 | 529 | 438 | 8.3 | 30.8 | | Other | 5,172 | 5,364 | 4,801 | (3.6) | 7.7 | | Total noninterest expense | $35,663 | $34,208 | $32,422 | 4.3 | 10.0 | - Total noninterest expense for Q2 2025 was $35.7 million, an increase of $1.5 million (4.3%) from the prior quarter and $3.2 million (10.0%) from the prior year same quarter[9] - The quarter-over-quarter increase primarily resulted from an increase in the accrual for annual incentive payments to employees and a $0.5 million increase in data processing expense, partially offset by decreases in net occupancy and equipment expense (-$0.3 million) and legal and professional fees (-$0.2 million)[9] - The year-over-year increase was primarily due to increases in personnel expense (+$2.1 million) and data processing expense (+$0.7 million)[9] Balance Sheet Review The balance sheet review highlights growth in total loans, deposits, and shareholders' equity, reflecting overall asset expansion Total Loans The total loan portfolio continued to grow in Q2 2025, reaching $4.7 billion. Growth was observed across commercial and residential loan portfolios, while indirect consumer loans experienced a slight decrease Total Loans Data | ($ in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | Percent Change (%) 2Q 2025 Compared to 1Q 2025 | Percent Change (%) 2Q 2025 Compared to 2Q 2024 | | :------------------------------- | :---------- | :---------- | :---------- | :--------------------------------------------- | :--------------------------------------------- | | Commercial nonresidential real estate | $913,463 | $913,238 | $825,934 | 0.0 | 10.6 | | Commercial residential real estate | 559,906 | 535,427 | 480,418 | 4.6 | 16.5 | | Hotel/motel | 477,175 | 475,582 | 417,161 | 0.3 | 14.4 | | Other commercial | 432,021 | 433,379 | 428,263 | (0.3) | 0.9 | | Total commercial | 2,382,565 | 2,357,626 | 2,151,776 | 1.1 | 10.7 | | Residential mortgage | 1,112,672 | 1,066,973 | 978,144 | 4.3 | 13.8 | | Home equity loans/lines | 177,135 | 172,688 | 154,311 | 2.6 | 14.8 | | Total residential | 1,289,807 | 1,239,661 | 1,132,455 | 4.0 | 13.9 | | Consumer indirect | 878,506 | 888,635 | 819,689 | (1.1) | 7.2 | | Consumer direct | 150,915 | 150,614 | 157,327 | 0.2 | (4.1) | | Total consumer | 1,029,421 | 1,039,249 | 977,016 | (0.9) | 5.4 | | Total loans | $4,701,793 | $4,636,536 | $4,261,247 | 1.4 | 10.3 | - Total loans outstanding increased to $4.7 billion, up $65.3 million (annualized 5.6%) from March 31, 2025, and $440.5 million (10.3%) from June 30, 2024[7][12] - The increase in loans from the prior quarter included a $24.9 million increase in the commercial loan portfolio and a $50.2 million increase in the residential loan portfolio[12] - The increase was partially offset by a $10.1 million decrease in the indirect consumer loan portfolio[12] Total Deposits and Repurchase Agreements Total deposits and repurchase agreements increased in Q2 2025, driven by growth in interest-bearing deposits, particularly interest checking and time deposits. The company maintains a diversified deposit base with no significant customer concentration Total Deposits and Repurchase Agreements Data | ($ in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | Percent Change (%) 2Q 2025 Compared to 1Q 2025 | Percent Change (%) 2Q 2025 Compared to 2Q 2024 | | :--------------------------------------- | :---------- | :---------- | :---------- | :--------------------------------------------- | :--------------------------------------------- | | Noninterest bearing deposits | $1,258,205 | $1,235,544 | $1,241,514 | 1.8 | 1.3 | | Interest bearing deposits: | | | | | | | Interest checking | 173,795 | 158,968 | 138,767 | 9.3 | 25.2 | | Money market savings | 1,820,230 | 1,828,051 | 1,664,580 | (0.4) | 9.4 | | Savings accounts | 508,467 | 516,379 | 527,251 | (1.5) | (3.6) | | Time deposits | 1,472,311 | 1,372,363 | 1,161,686 | 7.3 | 26.7 | | Repurchase agreements | 225,075 | 246,556 | 227,576 | (8.7) | (1.1) | | Total interest bearing deposits and repurchase agreements | 4,199,878 | 4,122,317 | 3,719,860 | 1.9 | 12.9 | | Total deposits and repurchase agreements | $5,458,083 | $5,357,861 | $4,961,374 | 1.9 | 10.0 | - Deposits, including repurchase agreements, increased to $5.5 billion, up $100.2 million (annualized 7.5%) from March 31, 2025, and $496.7 million (10.0%) from June 30, 2024[7][12] - Deposit growth outpaced loan growth, leading to an increase in deposits in other banks by $46.6 million QoQ and $212.0 million YoY[12] - No single customer accounted for more than 3% of the $5.2 billion in deposits as of June 30, 2025, indicating a diversified deposit base[12] Shareholders' Equity Shareholders' equity continued to grow in Q2 2025, supported by earnings and a reduction in net unrealized losses on securities. The company's annualized dividend yield was 3.55% - Shareholders' equity increased to $806.9 million, up $22.7 million (annualized 11.6%) during the quarter and $87.5 million (12.2%) from June 30, 2024[7][13] - Net unrealized losses on securities, net of deferred taxes, decreased to $80.6 million at June 30, 2025, from $86.1 million at March 31, 2025, and $107.1 million at June 30, 2024[13] - CTBI's annualized dividend yield to shareholders as of June 30, 2025, was 3.55%[13] Asset Quality and Credit Losses Asset quality analysis shows a decrease in nonperforming loans quarter-over-quarter and a reduced provision for credit losses Asset Quality Overview Total nonperforming loans decreased quarter-over-quarter but increased year-over-year. While accruing loans 90+ days past due decreased, nonaccrual loans saw an increase. The company actively manages problem loans to minimize losses - Total nonperforming loans were $24.4 million at June 30, 2025, decreasing $2.1 million from March 31, 2025, but increasing $4.6 million from June 30, 2024[7][14] - Accruing loans 90+ days past due decreased by $2.4 million QoQ and $6.3 million YoY, while nonaccrual loans increased by $0.2 million QoQ and $10.8 million YoY[14] - Net loan charge-offs for Q2 2025 were $1.4 million, an annualized 0.12% of average loans, comparable to $1.6 million (0.14%) in Q1 2025 and $1.4 million (0.13%) in Q2 2024[7][15] Allowance for Credit Losses The provision for credit losses decreased significantly in Q2 2025, with a portion allocated to fund loan growth. Reserve coverage improved quarter-over-quarter, while the loan loss reserve as a percentage of total loans remained stable - Provision for credit losses was $2.1 million for the quarter, decreasing $1.5 million from the prior quarter and $0.9 million from the prior year same quarter[2][17] - Of the provision for the quarter, $0.9 million was allotted to fund loan growth[17] - Reserve coverage (allowance for credit losses to nonperforming loans) at June 30, 2025, was 237.1%, compared to 214.7% at March 31, 2025, and 263.0% at June 30, 2024[17] - The loan loss reserve as a percentage of total loans outstanding remained at 1.23% from March 31, 2025, compared to 1.22% at June 30, 2024[17] Company Information and Forward-Looking Statements This section outlines forward-looking statement disclaimers and provides a profile of Community Trust Bancorp, Inc Forward-Looking Statements This section highlights that certain statements in the report are forward-looking and subject to various risks and uncertainties. These include economic conditions, portfolio performance, regulatory changes, competition, and integration difficulties from acquisitions. The company does not undertake to update these statements - Forward-looking statements are subject to risks and uncertainties including economic conditions, portfolio growth, credit performance, prevailing inflation and interest rates, regulatory changes, and competition[18] - The banking industry is subject to various monetary, operational, and fiscal policies and regulations from federal and state authorities, which could affect CTBI's results[18] - CTBI undertakes no obligation to update any forward-looking statements made[18] Company Profile Community Trust Bancorp, Inc. is headquartered in Pikeville, Kentucky, with $6.4 billion in assets. It operates 72 banking locations across eastern, northeastern, central, and south central Kentucky, six banking locations in southern West Virginia, and three banking locations in northeastern Tennessee, along with multiple trust offices - Community Trust Bancorp, Inc. is headquartered in Pikeville, Kentucky, with assets of $6.4 billion[19] - The company has 72 banking locations across Kentucky, six in southern West Virginia, and three in northeastern Tennessee[19] - It also operates four trust offices across Kentucky and one trust office in Tennessee[19] Unaudited Financial Summaries Unaudited financial summaries present detailed income statements, balance sheets, and key performance ratios for recent periods Income Statement and Performance Ratios This section provides a detailed unaudited income statement for the three and six months ended June 30, 2025, compared to prior periods, along with key performance ratios such as return on average assets, return on average equity, and net interest margin Income Statement and Performance Ratios Data | | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $85,571 | $82,054 | $76,648 | $167,625 | $151,650 | | Interest expense | 31,531 | 30,787 | 30,970 | 62,318 | 62,381 | | Net interest income | 54,040 | 51,267 | 45,678 | 105,307 | 89,269 | | Provision for credit losses | 2,094 | 3,568 | 2,972 | 5,662 | 5,628 | | Total noninterest income | 16,171 | 14,897 | 15,708 | 31,068 | 30,842 | | Total noninterest expense | 35,663 | 34,208 | 32,422 | 69,871 | 64,642 | | Net income | $24,899 | $21,972 | $19,499 | $46,871 | $38,178 | | Basic earnings per share | $1.38 | $1.22 | $1.09 | $2.60 | $2.13 | | Diluted earnings per share | $1.38 | $1.22 | $1.09 | $2.60 | $2.13 | | Dividends per share | $0.47 | $0.47 | $0.46 | $0.94 | $0.92 | | Return on average assets | 1.58% | 1.44% | 1.35% | 1.51% | 1.33% | | Return on average equity | 12.51% | 11.50% | 11.03% | 12.01% | 10.82% | | Net interest margin (tax equivalent) | 3.64% | 3.57% | 3.38% | 3.61% | 3.31% | | Efficiency ratio (tax equivalent) | 50.70% | 51.86% | 52.17% | 51.26% | 53.51% | | Net charge-offs | $1,353 | $1,575 | $1,395 | $2,928 | $3,023 | Balance Sheet and Key Ratios This section presents a detailed unaudited balance sheet as of June 30, 2025, March 31, 2025, and June 30, 2024, outlining assets, liabilities, and equity. It also includes key balance sheet ratios such as community bank leverage ratio and tangible equity to tangible assets ratio Balance Sheet and Key Ratios Data | | As of June 30, 2025 | As of March 31, 2025 | As of June 30, 2024 | | :--------------------------------- | :------------------ | :------------------- | :------------------ | | Assets: | | | | | Loans | $4,701,793 | $4,636,536 | $4,261,247 | | Allowance for credit losses | (57,825) | (56,961) | (52,148) | | Net loans | 4,643,968 | 4,579,575 | 4,209,099 | | Securities AFS | 994,990 | 1,008,552 | 1,090,322 | | Other earning assets | 320,830 | 274,229 | 108,823 | | Total Assets | $6,390,938 | $6,276,518 | $5,804,339 | | Liabilities and Equity: | | | | | Total deposits | 5,233,008 | 5,111,305 | 4,733,798 | | Repurchase agreements | 225,075 | 246,556 | 227,576 | | Total liabilities | 5,584,069 | 5,492,346 | 5,085,016 | | Shareholders' equity | 806,869 | 784,172 | 719,323 | | Total Liabilities and Equity | $6,390,938 | $6,276,518 | $5,804,339 | | Ending shares outstanding | 18,105 | 18,102 | 18,026 | | 30 - 89 days past due loans | $20,055 | $14,537 | $24,099 | | 90 days past due loans | 8,449 | 10,835 | 14,703 | | Nonaccrual loans | 15,937 | 15,692 | 5,127 | | Foreclosed properties | 4,857 | 4,795 | 1,626 | | Community bank leverage ratio | 13.80% | 13.81% | 13.90% | | Tangible equity to tangible assets ratio | 11.72% | 11.57% | 11.39% | | FTE employees | 937 | 939 | 930 |