Community Trust Bank(US:CTBI)2022-08-07 16:00Financial Performance - Community Trust Bancorp, Inc. reported earnings of $20.3 million, or $1.14 per basic share, for Q2 2022, an increase from $19.7 million in Q1 2022 but a decrease from $23.9 million in Q2 2021[238]. - Net interest income for Q2 2022 was $40.8 million, up $0.8 million from the prior quarter and the same quarter last year, while noninterest income decreased by $1.0 million year-over-year to $14.5 million[238][244]. - Noninterest income for Q2 2022 was $14.5 million, a decrease of $0.5 million (3.1%) from the prior quarter and $1.0 million (6.6%) from the same quarter last year[253]. - Noninterest expense for Q2 2022 was $30.0 million, an increase of $0.6 million (2.1%) from the prior quarter and $0.5 million (1.6%) from the same quarter last year[255]. - The provision for credit losses for Q2 2022 was $0.1 million, compared to $0.9 million in Q1 2022 and a recovery of $4.3 million in Q2 2021[239]. Assets and Liabilities - Total consolidated assets as of June 30, 2022, were $5.4 billion, with total consolidated deposits of $4.7 billion and shareholders' equity of $632.1 million[235]. - The loan portfolio increased by $42.9 million, an annualized growth rate of 4.9%, during the quarter, and $149.6 million, or 8.9%, from December 31, 2021[240]. - Total assets as of June 30, 2022, were $5.4 billion, an increase of $4.2 million (annualized 0.3%) from March 31, 2022[256]. - Loans outstanding at June 30, 2022, were $3.6 billion, an increase of $42.9 million (annualized 4.9%) from March 31, 2022[256]. - Shareholders' equity at June 30, 2022, was $632.0 million, a decrease of $21.3 million (annualized 13.1%) from March 31, 2022, due to unrealized losses on the securities portfolio[257]. Credit Quality - Nonperforming loans slightly increased to $13.8 million at June 30, 2022, from $13.7 million at March 31, 2022, but decreased from $16.6 million at December 31, 2021[242]. - The provision for credit losses for Q2 2022 was $0.1 million, compared to $0.9 million in Q1 2022, and a recovery of $4.3 million in Q2 2021, with a reserve coverage of 305.9%[252]. - Net loan charge-offs were $42 thousand for Q2 2022, less than 0.01% of average loans annualized, compared to $0.3 million (0.04%) in Q1 2022[267]. - Total nonperforming loans slightly increased to $13.8 million at June 30, 2022, compared to $13.7 million at March 31, 2022, but decreased from $16.6 million at December 31, 2021[262]. Deposits and Funding - Deposits, including repurchase agreements, rose by $28.7 million, an annualized increase of 2.5%, during the quarter, and $96.3 million, or 4.2%, from December 31, 2021[243]. - Total deposits and repurchase agreements increased to $4,711,661 thousand in Q2 2022, a 0.6% increase compared to Q1 2022 and a 2.1% increase compared to YE 2021[260]. - Non-interest bearing deposits rose to $1,408,148 thousand, reflecting a 0.7% increase from Q1 2022 and a 5.8% increase from YE 2021[260]. Capital and Dividends - Shareholders' equity declined by $21.3 million, an annualized decrease of 13.1%, during the quarter due to unrealized losses on the securities portfolio[243]. - The Board of Directors declared a quarterly cash dividend of $0.44 per share, representing a 10% increase from the previous dividend of $0.40 per share[268]. - The annualized dividend yield to shareholders as of June 30, 2022, was 3.96%[257]. Interest Rate and Economic Impact - The Federal Open Market Committee raised the target federal funds rate three times in 2022, positively impacting the company's net interest margin[248]. - The net interest margin for Q2 2022 was 3.20%, a slight increase from 3.19% in Q1 2022 and 3.11% in Q2 2021[248]. - CTBI's financial results are significantly impacted by its ability to react to changes in interest rates, maintaining a balanced position between interest-sensitive assets and liabilities[280]. - Inflation affects the growth of assets in the banking industry, necessitating an increase in equity capital to maintain an appropriate equity-to-assets ratio[279]. Risk Management and Valuation - CTBI's allowance for credit losses (ACL) is based on ongoing assessments of loan collectability, considering historical credit loss experience and current economic conditions[289]. - The reserve for unfunded commitments is maintained to absorb estimated expected credit losses related to unfunded credit facilities[298]. - CTBI's methodology for determining the ACL requires significant management judgment, particularly in evaluating expected credit losses based on various risk factors[291]. - Fair value measurements significantly impact the carrying value of financial assets and liabilities, with potential material changes in consolidated financial statements[304]. - CTBI's fair value determination involves subjective estimates related to cash flows and discount rates, impacting the overall valuation process[302]. COVID-19 Response - CTBI has instituted programs to support customers and employees during the COVID-19 pandemic, including loan modifications and fee waivers[281]. Capital Adequacy - As of June 30, 2022, CTBI's Community Bank Leverage Ratio (CBLR) was 13.14%, while CTB's CBLR was 12.55%, indicating both are well-capitalized under applicable guidelines[277]. - The CBLR requirement was temporarily reduced to 8% in 2020, increased to 8.5% in 2021, and returned to 9% in 2022[277]. - CTBI has repurchased a total of 2,465,294 shares through its stock repurchase program since its inception[283].