Community Trust Bancorp, Inc. Reports Earnings for the 4th Quarter and Year 2024

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

Earnings Summary

Community Trust Bancorp, Inc. (NASDAQ-CTBI) achieved earnings for the fourth quarter 2024 of $22.5 million, or $1.25 per basic share, compared to $22.1 million, or $1.23 per basic share, earned during the third quarter 2024 and $18.7 million, or $1.04 per basic share, earned during the fourth quarter 2023. Total revenue for the quarter was $2.9 million above prior quarter and $9.0 million above prior year same quarter. Net interest revenue for the quarter increased $2.3 million compared to prior quarter and $6.6 million compared to prior year same quarter, and noninterest income increased $0.6 million compared to prior quarter and $2.4 million compared to prior year same quarter. Our provision for credit losses for the quarter decreased $0.1 million from prior quarter but increased $0.8 million from prior year same quarter. Noninterest expense increased $1.3 million compared to prior quarter and $2.1 million compared to prior year same quarter. Net income for the year ended December 31, 2024 was $82.8 million, or $4.61 per basic share, compared to $78.0 million, or $4.36 per basic share, for the year ended December 31, 2023.

4^th Quarter 2024 Highlights

• Net interest income for the quarter of $49.5 million was $2.3 million, or 4.9%, above prior quarter and $6.6 million, or 15.2%, above prior year same quarter, as our net interest margin increased 4 basis points from prior quarter and 24 basis points from prior year same quarter.

• Provision for credit losses at $2.6 million for the quarter decreased $0.1 million from prior quarter but increased $0.8 million from prior year same quarter.

• Noninterest income for the quarter ended December 31, 2024 of $16.2 million was $0.6 million, or 3.8%, above prior quarter and $2.4 million, or 17.7%, above prior year same quarter.

• Noninterest expense for the quarter ended December 31, 2024 of $33.8 million was $1.3 million, or 3.9%, above prior quarter and $2.1 million, or 6.8%, above prior year same quarter.

• Our loan portfolio at $4.5 billion increased $136.2 million, an annualized 12.5%, from September 30, 2024 and $435.7 million, or 10.8%, from December 31, 2023.

• We had net loan charge-offs of $1.0 million, or an annualized 0.09% of average loans, for the fourth quarter 2024 compared to $1.5 million, or an annualized 0.14% of average loans, for the third quarter 2024 and $1.0 million, or 0.10% of average loans annualized, for the fourth quarter 2023.

• Our total nonperforming loans increased to $26.7 million at December 31, 2024 from $25.1 million at September 30, 2024 and $14.0 million at December 31, 2023. Nonperforming assets at $30.3 million increased $3.9 million from September 30, 2024 and $14.7 million from December 31, 2023.

• Deposits, including repurchase agreements, at $5.3 billion increased $238.8 million, or an annualized 18.7%, from September 30, 2024 and $360.5 million, or 7.3%, from December 31, 2023.

• Shareholders' equity at $757.6 million decreased $3.2 million, or an annualized 1.7%, during the quarter but increased $55.4 million, or 7.9%, from December 31, 2023. Shareholders' equity was negatively impacted during the quarter by the increase in unrealized losses on securities driven by higher long-term interest rates.

Net Interest Income

Net interest income for the quarter of $49.5 million was $2.3 million, or 4.9%, above prior quarter and $6.6 million, or 15.2%, above prior year same quarter. Our net interest margin, on a fully tax equivalent basis, at 3.43% increased 4 basis points from prior quarter and 24 basis points from prior year same quarter. Our quarterly average earning assets increased $209.3 million from prior quarter and $401.6 million from prior year same quarter. Our yield on average earning assets decreased 6 basis points from prior quarter but increased 23 basis points from prior year same quarter, while our cost of funds decreased 18 basis points from prior quarter and 9 basis points from prior year same quarter. Net interest income for the year ended December 31, 2024 was $186.0 million compared to $173.1 million for the year ended December 31, 2023.

Our ratio of average loans to deposits, including repurchase agreements, was 84.4% for the quarter ended December 31, 2024 compared to 85.8% for the quarter ended September 30, 2024 and 81.8% for the quarter ended December 31, 2023.

Noninterest Income

Noninterest income for the quarter ended December 31, 2024 of $16.2 million was $0.6 million, or 3.8%, above prior quarter and $2.4 million, or 17.7%, above prior year same quarter. Quarter over quarter increases in loan related fees ($0.7 million), trust revenue ($0.3 million), and securities gains ($0.3 million) were offset by decreases in deposit related fees ($0.3 million) and bank owned life insurance revenue ($0.3 million). Year over year increases included loan related fees ($1.0 million), trust fees ($0.6 million), deposit related fees ($0.3 million), securities gains ($0.3 million), and brokerage revenue ($0.2 million). The increase in loan related fees for the quarter resulted primarily from the fluctuation in the fair market value of our mortgage servicing rights. The increase in securities gains for the quarter was primarily the result of the valuation of our Visa Class B stock. Noninterest income for the year 2024 was $62.6 million compared to $57.7 million for the year 2023.

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2024 of $33.8 million was $1.3 million, or 3.9%, above prior quarter and $2.1 million, or 6.8%, above prior year same quarter. The quarter over quarter increase primarily resulted from increases in personnel expense ($0.7 million) and data processing expense ($0.4 million). The year over year increase was primarily due to increases in personnel expense ($1.7 million, which included a $1.1 million increase in bonuses and incentives and a $0.5 million increase in the cost of group medical and life insurance benefits) and data processing ($0.6 million). Other noninterest expense was positively impacted year over year by the accounting method change related to investments in tax credit structures (ASU No. 2023-02). Noninterest expense for the year 2024 was $130.9 million compared to $125.4 million for the year 2023.

Balance Sheet Review

Total Loans

Total Deposits and Repurchase Agreements

CTBI's total assets at $6.2 billion as of December 31, 2024 increased $230.3 million, or 15.4% annualized, from September 30, 2024 and $423.5 million, or 7.3%, from December 31, 2023. Loans outstanding at $4.5 billion increased $136.2 million, an annualized 12.5%, from September 30, 2024 and $435.7 million, or 10.8%, from December 31, 2023. The increase in loans from prior quarter included a $58.6 million increase in the commercial loan portfolio, a $44.7 million increase in the residential loan portfolio, and a $34.1 million increase in the indirect consumer loan portfolio, partially offset by a $1.2 million decrease in the consumer direct loan portfolio. CTBI's investment portfolio decreased $41.8 million, or an annualized 15.1%, from September 30, 2024 and $107.4 million, or 9.2%, from December 31, 2023. The decrease in our investment portfolio quarter over quarter was primarily attributable to an increase in our unrealized losses in the amount of $23.7 million, while our unrealized losses decreased year over year by $6.6 million. Deposits in other banks increased $141.5 million from prior quarter and $83.9 million from December 31, 2023. Deposits, including repurchase agreements, at $5.3 billion increased $238.8 million, or an annualized 18.7%, from September 30, 2024 and $360.5 million, or 7.3%, from December 31, 2023. CTBI is not dependent on any one customer or group of customers for their source of deposits. As of December 31, 2024, no one customer accounted for more than 4% of our $5.1 billion in deposits. Only three customer relationships accounted for more than 1% each.

Shareholders' equity at $757.6 million decreased $3.2 million, or an annualized 1.7%, during the quarter but increased $55.4 million, or 7.9%, from December 31, 2023. Net unrealized losses on securities, net of deferred taxes, were $98.4 million at December 31, 2024, compared to $80.6 million at September 30, 2024 and $103.3 million at December 31, 2023. CTBI's annualized dividend yield to shareholders as of December 31, 2024 was 3.55%.

Asset Quality

Our total nonperforming loans increased to $26.7 million at December 31, 2024 from $25.1 million at September 30, 2024 and $14.0 million at December 31, 2023. Accruing loans 90+ days past due at $10.3 million decreased $8.8 million from prior quarter but increased $0.4 million from December 31, 2023. Nonaccrual loans at $16.4 million increased $10.4 million from prior quarter and $12.3 million from December 31, 2023. The increase in nonaccrual loans included an $8.0 million credit that is 80% USDA guaranteed. Accruing loans 30-89 days past due at $16.8 million decreased $3.7 million from prior quarter but increased $1.5 million from December 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 $1.0 million, or an annualized 0.09% of average loans, for the fourth quarter 2024 compared to $1.5 million, or an annualized 0.14% of average loans, for the third quarter 2024 and $1.0 million, or 0.10% of average loans annualized, for the fourth quarter 2023. Of the net charge-offs for the quarter, $0.5 million were in indirect consumer loans, $0.2 million were in commercial loans, $0.2 million were in direct consumer loans, and $0.1 million were in residential loans. Net loan charge-offs for the year 2024 were in line with management's expectations at $5.5 million, or 0.13% of average loans, compared to $3.2 million, or 0.08% of average loans for the year 2023.

Allowance for Credit Losses

Our provision for credit losses at $2.6 million for the quarter decreased $0.1 million from prior quarter but increased $0.8 million from prior year same quarter. Of the provision for the quarter, $1.6 million was allotted to fund loan growth. Provision for credit losses for the year 2024 increased $4.1 million from the year 2023. Our reserve coverage (allowance for credit losses to nonperforming loans) at December 31, 2024 was 206.0% compared to 212.7% at September 30, 2024 and 354.7% at December 31, 2023. Our credit loss reserve as a percentage of total loans outstanding at December 31, 2024 remained at 1.23% from September 30, 2024 compared to 1.22% at December 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 $6.2 billion, is headquartered in Pikeville, Kentucky and has 72 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.

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MARK A. GOOCH, CHAIRMAN, PRESIDENT, AND CEO, COMMUNITY TRUST BANCORP, INC. AT (606) 437-3229