10-Q 1 ef20026286_10q.htm 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2024
 
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________

Commission file number 001-31220

COMMUNITY TRUST BANCORP, INC.
(Exact name of registrant as specified in its charter)

Kentucky
61-0979818
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
   
346 North Mayo Trail
P.O. Box 2947
Pikeville, Kentucky
41502
(Address of principal executive offices)
(Zip code)

(606) 432-1414
(Registrant’s telephone number)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Common Stock
(Title of class)

CTBI
The NASDAQ Global Select Market
(Trading symbol)
(Name of exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☑
No

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☑
No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer
Accelerated Filer  ☑
Non-accelerated Filer 
     
Smaller Reporting Company
Emerging Growth Company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.       

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes 
   No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock – 18,026,091 shares outstanding at April 30, 2024



CAUTIONARY STATEMENT
REGARDING 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. Community Trust Bancorp, Inc.’s (“CTBI”) 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.

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

The accompanying information has not been audited by our independent registered public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period.  All such adjustments are of a normal and recurring nature.

The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Registrant’s annual report on Form 10-K.  Accordingly, the reader of the Form 10-Q should refer to the Registrant’s Form 10-K for the year ended December 31, 2023 for further information in this regard.

1

Community Trust Bancorp, Inc.
Condensed Consolidated Balance Sheets

(dollars in thousands)
 
(unaudited)
March 31
2024
   
December 31
2023
 
Assets:
           
Cash and due from banks
 
$
55,841
   
$
58,833
 
Interest bearing deposits
    237,457       212,567  
Cash and cash equivalents
   
293,298
     
271,400
 
                 
Certificates of deposit in other banks
   
245
     
245
 
Debt securities available-for-sale at fair value (amortized cost of $1,253,750 and $1,301,244, respectively)
   
1,111,505
     
1,163,724
 
Equity securities at fair value
   
3,529
     
3,158
 
Loans held for sale
   
57
     
152
 
                 
Loans
   
4,161,175
     
4,050,906
 
Allowance for credit losses
   
(50,571
)
   
(49,543
)
Net loans
   
4,110,604
     
4,001,363
 
                 
Premises and equipment, net
   
46,595
     
45,311
 
Operating right-of-use assets
   
12,433
     
12,607
 
Finance right-of-use assets     3,067       3,096  
Federal Home Loan Bank stock
   
4,440
     
4,712
 
Federal Reserve Bank stock
   
4,887
     
4,887
 
Goodwill
   
65,490
     
65,490
 
Bank owned life insurance
   
101,178
     
101,461
 
Mortgage servicing rights
   
7,792
     
7,665
 
Other real estate owned
   
1,266
     
1,616
 
Deferred tax asset
    29,917       28,141  
Accrued interest receivable
   
23,532
     
23,575
 
Other assets
   
30,420
     
31,093
 
Total assets
 
$
5,850,255
   
$
5,769,696
 
                 
Liabilities and shareholders’ equity:
               
Deposits:
               
Noninterest bearing
 
$
1,274,583
   
$
1,260,690
 
Interest bearing
   
3,509,687
     
3,463,932
 
Total deposits
   
4,784,270
     
4,724,622
 
                 
Repurchase agreements
   
234,671
     
225,245
 
Federal funds purchased
   
500
     
500
 
Advances from Federal Home Loan Bank
   
329
     
334
 
Long-term debt
   
64,185
     
64,241
 
Operating lease liability
   
12,771
     
12,958
 
Finance lease liability
   
3,437
     
3,435
 
Accrued interest payable
   
9,365
     
7,389
 
Other liabilities
   
33,003
     
28,764
 
Total liabilities
   
5,142,531
     
5,067,488
 
                 
Shareholders’ equity:
               
Preferred stock, 300,000 shares authorized and unissued
   
-
     
-
 
Common stock, $5.00 par value, shares authorized 25,000,000; shares issued and outstanding 202418,019,349; 202317,999,840
   
90,096
     
89,999
 
Capital surplus
   
231,626
     
231,130
 
Retained earnings
   
492,869
     
484,400
 
Accumulated other comprehensive loss, net of tax
   
(106,867
)
   
(103,321
)
Total shareholders’ equity
   
707,724
     
702,208
 
                 
Total liabilities and shareholders’ equity
 
$
5,850,255
   
$
5,769,696
 

See notes to condensed consolidated financial statements.

2

Community Trust Bancorp, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(unaudited)

 
Three Months Ended
 
   
March 31
 
(in thousands except per share data)
 
2024
   
2023
 
Interest income:
           
Interest and fees on loans, including loans held for sale
 
$
64,716
   
$
51,947
 
Interest and dividends on securities
               
Taxable
   
6,730
     
6,758
 
Tax exempt
   
659
     
682
 
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
   
209
     
174
 
Interest on Federal Reserve Bank deposits
   
2,591
     
1,350
 
Other, including interest on federal funds sold
   
97
     
84
 
Total interest income
   
75,002
     
60,995
 
                 
Interest expense:
               
Interest on deposits
   
27,676
     
14,391
 
Interest on repurchase agreements and federal funds purchased
   
2,575
     
1,616
 
Interest on advances from Federal Home Loan Bank     0       43  
Interest on long-term debt
   
1,160
     
1,029
 
Total interest expense
   
31,411
     
17,079
 
                 
Net interest income
   
43,591
     
43,916
 
Provision for credit losses
   
2,656
     
1,116
 
Net interest income after provision for credit losses
   
40,935
     
42,800
 
                 
Noninterest income:
               
Deposit related fees
   
7,011
      7,287  
Gains on sales of loans, net
   
45
     
121
 
Trust and wealth management income
   
3,517
     
3,079
 
Loan related fees
   
1,352
     
845
 
Bank owned life insurance
   
1,292
     
858
 
Brokerage revenue
   
490
     
348
 
Securities gains
   
371
     
218
 
Other noninterest income
   
1,056
     
926
 
Total noninterest income
   
15,134
     
13,682
 
                 
Noninterest expense:
               
Officer salaries and employee benefits
   
4,241
     
4,152
 
Other salaries and employee benefits
   
15,881
     
14,756
 
Occupancy, net
   
2,378
     
2,302
 
Equipment
   
650
     
726
 
Data processing
   
2,518
     
2,303
 
Bank franchise tax
   
424
     
419
 
Legal fees
   
218
     
268
 
Professional fees
   
614
     
548
 
Advertising and marketing
   
577
     
820
 
FDIC insurance
   
642
     
606
 
Repossession expense
   
226
     
231
 
Other noninterest expense
   
3,851
     
4,759
 
Total noninterest expense
   
32,220
     
31,890
 
                 
Income before income taxes
   
23,849
     
24,592
 
Income taxes
   
5,170
     
5,279
 
Net income
   
18,679
     
19,313
 
                 
Other comprehensive gain (loss):
               
Unrealized holding gains (losses) on debt securities available-for-sale:
               
Unrealized holding gains (losses) arising during the period
   
(4,725
)
   
24,716
 
Less: Reclassification adjustments for realized gains included in net income
   
0
     
4
 
Tax expense (benefit)
   
(1,179
)
   
7,997
 
Other comprehensive gain (loss), net of tax
   
(3,546
)
   
16,715
 
Comprehensive income
 
$
15,133
   
$
36,028
 
                 
Basic earnings per share
 
$
1.04
   
$
1.08
 
Diluted earnings per share
 
$
1.04
   
$
1.08
 
                 
Weighted average shares outstanding-basic
   
17,926
     
17,872
 
Weighted average shares outstanding-diluted
   
17,943
     
17,884
 

See notes to condensed consolidated financial statements.

3

Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, December 31, 2023
   
17,999,840
   
$
89,999
   
$
231,130
   
$
484,400
   
$
(103,321
)
 
$
702,208
 
Net income
                           
18,679
             
18,679
 
Other comprehensive loss
                                   
(3,546
)
   
(3,546
)
Cash dividends declared ($0.46 per share)
                           
(8,249
)
           
(8,249
)
Issuance of common stock
   
29,026
     
145
     
146
                     
291
 
Issuance of restricted stock
   
15,000
     
75
     
(75
)
                   
0
 
Vesting of restricted stock
   
(22,408
)
   
(112
)
   
112
                     
0
 
Forfeiture of restricted stock
    (2,109 )     (11 )     11                       0  
Stock-based compensation
                   
302
                     
302
 
Cumulative effect of FASB adjustment
                            (1,961 )             (1,961 )
Balance, March 31, 2024
   
18,019,349
   
$
90,096
   
$
231,626
   
$
492,869
   
$
(106,867
)
 
$
707,724
 

(in thousands except per share and share amounts)
 
Common
Shares
   
Common
Stock
   
Capital
Surplus
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
   
Total
 
Balance, December 31, 2022
   
17,918,280
   
$
89,591
   
$
229,012
   
$
438,596
   
$
(129,152
)
 
$
628,047
 
Net income
                           
19,313
             
19,313
 
Other comprehensive income
                                   
16,715
   
16,715
Cash dividends declared ($0.44 per share)
                           
(7,865
)
           
(7,865
)
Issuance of common stock
   
26,118
     
131
     
147
                     
278
 
Issuance of restricted stock
   
52,865
     
264
     
(264
)
                   
0
 
Vesting of restricted stock
   
(20,128
)
   
(101
)
   
101
                     
0
 
Forfeiture of restricted stock
    (790 )     (4 )     4                       0  
Stock-based compensation
                   
333
                     
333
 
Balance, March 31, 2023
   
17,976,345
   
$
89,881
   
$
229,333
   
$
450,044
   
$
(112,437
)
 
$
656,821
 

See notes to condensed consolidated financial statements.

4

Community Trust Bancorp, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)

  Three Months Ended
 
   
March 31
 
(in thousands)
 
2024
   
2023
 
Cash flows from operating activities:
           
Net income
 
$
18,679
   
$
19,313
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
1,100
     
907
 
Non-cash operating lease expense
    0       398  
Deferred taxes
   
246
     
228
 
Stock-based compensation
   
343
     
377
 
Provision for credit losses
   
2,656
     
1,116
 
Write-downs of other real estate owned and other repossessed assets
   
42
     
81
 
Gains on sale of mortgage loans held for sale
   
(45
)
   
(121
)
Securities gains
   
0
     
(4
)
Fair value adjustments in equity securities
   
(371
)
   
(214
)
Gains on sale of assets, net
   
(40
)
   
(37
)
Proceeds from sale of mortgage loans held for sale
   
1,758
     
4,658
 
Funding of mortgage loans held for sale
   
(1,619
)
   
(4,610
)
Amortization of securities premiums and discounts, net
   
595
     
752
 
Change in cash surrender value of bank owned life insurance
   
(983
)
   
(578
)
Changes in lease liabilities
   
(187
)
   
(376
)
Mortgage servicing rights:
               
Fair value adjustments
   
(108
)
   
397
 
New servicing assets created
   
(19
)
   
(50
)
Changes in:
               
Accrued interest receivable
   
43
     
580
 
Other assets
   
(