10-K: Community Trust Bancorp Reports Increased Earnings and Asset Growth in 2024

Community Trust Bancorp, Inc. (CTBI) announced increased earnings and asset growth for the fiscal year ended December 31, 2024, driven by net interest income and noninterest income growth.

Summary

• Community Trust Bancorp, Inc. (CTBI) reported net earnings of $82.8 million, or $4.61 per basic share, for the year ended December 31, 2024, compared to $78.0 million, or $4.36 per basic share, for the previous year.
• Total revenue increased by $17.8 million year-over-year, with net interest revenue rising by $12.9 million and noninterest income increasing by $4.9 million.
• The provision for credit losses increased by $4.1 million compared to the prior year, while noninterest expense increased by $5.5 million.
• Total consolidated assets reached $6.2 billion at December 31, 2024, up from $5.8 billion the prior year.
• Total consolidated deposits, including repurchase agreements, amounted to $5.3 billion.
• Shareholders' equity stood at $757.6 million at the end of 2024.
• Trust assets under management totaled $3.7 billion, including CTB's investment portfolio of $1.1 billion.
• The company's loan portfolio increased by $435.7 million, or 10.8%, from December 31, 2023.
• CTBIs CBLR ratio as of December 31, 2024 was 13.76%.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with increased earnings and asset growth, but also acknowledges some challenges such as increased credit losses and nonperforming loans. The sentiment is moderately positive.

Positives

• Net interest income increased by $12.9 million, or 7.4%, from December 31, 2023.
• Noninterest income for the year ended December 31, 2024 of $62.6 million increased $4.9 million, or 8.5%, compared to the year ended December 31, 2023.
• Deposits, including repurchase agreements, at $5.3 billion increased $360.5 million, or 7.3%, from December 31, 2023.
• Shareholders equity at December 31, 2024 of $757.6 million was a $55.4 million, or 7.9%, increase from the $702.2 million at December 31, 2023.

Negatives

• Provision for credit losses was $11.0 million for the year ended December 31, 2024 compared to $6.8 million for the year ended December 31, 2023.
• Net loan charge-offs were $5.5 million, or 0.13% of average loans, for the year ended December 31, 2024, compared to $3.2 million, or 0.08% of average loans, for the year ended December 31, 2023.
• Total nonperforming loans at $26.7 million at December 31, 2024 increased $12.7 million, or 91.1%, from December 31, 2023.

Risks

• Economic conditions in the markets CTBI serves could adversely affect borrowers' ability to repay loans and the value of collateral.
• Climate change and related regulations could impact the coal industry in certain markets, affecting demand for financing and collateral values.
• Epidemics, pandemics, or other infectious disease outbreaks could disrupt business operations and impact customers' ability to repay loans.
• Changes in interest rates could adversely affect earnings and financial condition.
• Failure to effectively manage credit risk could lead to losses.
• Strong competition within the market area may reduce CTBI's ability to attract and retain deposits and originate loans.
• An extended disruption of vital infrastructure or a security breach could negatively impact business operations.
• CTBI may have difficulty in the future continuing to grow through acquisitions.
• CTBI is subject to liquidity risk.
• The banking industry is heavily regulated, and CTBI's business may be adversely affected by legislation or changes in regulatory policies and oversight.
• CTBI is subject to environmental liability risk associated with lending activity.

Future Outlook

Management's goals for 2025 include basic earnings per share between $4.86 and $5.06, net income between $88.0 and $91.6 million, ROAA between 1.41% and 1.46%, ROAE between 11.17% and 11.62%, revenues between $261.6 and $272.3 million, assets between $6.19 and $6.57 billion, loans between $4.53 and $4.71 billion, deposits between $5.32 and $5.54 billion, and shareholders equity between $797.8 and $830.3 million.

Management Comments

• Management elected to use the CBLR framework for CTBI and CTB.

Industry Context

The report acknowledges ongoing consolidation within the financial services industry and increasing competition for deposits, reflecting broader trends in the banking sector.

Comparison to Industry Standards

• The report mentions competition from state banks, national banks, thrifts, trust companies, insurance companies, mortgage banking operations, credit unions, finance companies, brokerage companies, and other financial and non-financial companies.
• The report notes that larger financial institutions could strengthen their competitive position as a result of ongoing consolidation within the financial services industry.
• The report states that competition for deposits may be increasing as a consequence of Federal Deposit Insurance Corporation (FDIC) assessments shifting from deposits to an asset-based formula, as larger banks may move away from non-deposit funding sources.

Management Changes

Legal Proceedings

• CTBI and subsidiaries, and from time to time, our officers, are named defendants in legal actions arising from ordinary business activities.

Related Party Transactions

• In the ordinary course of business, CTB has made extensions of credit and had transactions with certain directors and executive officers of CTBI or our subsidiaries, including their associates.
• A director of CTBI is a shareholder in a law firm that provided services to CTBI and our subsidiaries during the years 2024, 2023, and 2022.

Stakeholder Impact

• The company's performance impacts shareholders through increased earnings and dividend yield.
• Employees benefit from competitive compensation and benefits packages, as well as opportunities for personal and professional growth.
• Customers are served through a wide range of commercial and personal banking services.
• The company supports numerous community organizations through financing projects for affordable housing, economic development, and revitalization of distressed and underserved areas.

Next Steps

• The company intends to continue to grow through acquisitions of banks and other financial institutions, subject to regulatory approval.
• The company plans to open a branch consolidation in Mt. Sterling in the 3rd quarter 2025.

Key Dates