Community Trust Bank(CTBI) - 2021 Q3 - Quarterly Report

Financial Performance - Community Trust Bancorp, Inc. reported third quarter 2021 earnings of $21.1 million, or$ 1.19 per basic share, compared to $23.9 million, or$ 1.35 per basic share in the previous quarter, and $17.4 million, or$ 0.98 per basic share in the same quarter last year [225]. - Noninterest income for the quarter was $14.4 million, a decrease of$ 1.1 million, or 7.3%, from the previous quarter and $0.5 million, or 3.5%, from the same quarter last year [232]. - Total noninterest expense for Q3 2021 was$ 30.3 million, an increase of $0.8 million, or 2.8%, from the prior quarter [246]. - Shareholders' equity increased to$ 691.6 million at September 30, 2021, up $7.6 million from June 30, 2021 [249]. - Cash dividends were$ 1.170 per share for the nine months ended September 30, 2021, compared to $1.145 per share for the same period in 2020 [264]. Income and Expenses - Net interest income for the third quarter 2021 was$ 42.0 million, an increase of $2.0 million, or 5.0%, from the previous quarter and$ 4.3 million, or 11.5%, from the same quarter last year [226]. - The net interest margin for the third quarter 2021 was 3.23%, an increase of 12 basis points from the previous quarter and 7 basis points from the same quarter last year [238]. - The average yield on earning assets was 3.52% for the nine months ended September 30, 2021, down from 3.99% in the same period last year, a decrease of 11.9% [236]. Loan Portfolio - The loan portfolio decreased by $50.3 million, an annualized 5.8%, during the quarter, but loans excluding PPP loans increased by$ 26.6 million [228]. - Total loans amounted to $3,398,229 thousand, reflecting a decrease of 4.4% compared to the prior year [251]. - Loans outstanding were$ 3.4 billion, a decrease of $50.3 million, or 5.8% annualized, from June 30, 2021 [247]. - The ratio of average loans to deposits was 73.1% for Q3 2021, down from 75.0% in Q2 2021 and 82.8% in Q3 2020 [241]. Credit Quality - The provision for credit losses showed a recovery of$ 0.2 million during the quarter, reflecting improved credit metrics [227]. - Nonperforming loans decreased to $18.7 million at September 30, 2021, down from$ 21.1 million at June 30, 2021, and $26.6 million from December 31, 2020 [230]. - Nonperforming loans were$ 18.7 million, or 0.55% of total loans, down from $21.1 million, or 0.61% at the end of the previous quarter [252]. - Net loan charge-offs for the quarter were$ 0.3 million, or 0.04% of average loans annualized, compared to a net recovery of $0.6 million in the prior quarter [258]. Assets and Deposits - Total consolidated assets as of September 30, 2021, were$ 5.4 billion, with total consolidated deposits of $4.6 billion [222]. - Total deposits and repurchase agreements were$ 4,588,258 thousand, a decrease of 2.3% from the previous quarter [251]. - The investment portfolio increased by $168.1 million, or 49.0% annualized, from June 30, 2021 [247]. - The total interest-bearing deposits and repurchase agreements were$ 3,270,100 thousand, a decrease of 4.0% from the previous quarter [251]. Capital and Liquidity - CTBI's community bank leverage ratio (CBLR) as of September 30, 2021, was 12.71%, indicating a strong capital position [267]. - As of September 30, 2021, CTBI had approximately $207.8 million in cash and cash equivalents and approximately$ 1.5 billion in securities available for liquidity needs, compared to $338.2 million and$ 997.3 million at December 31, 2020 [260]. - The reserve coverage for credit losses was 220.0% at September 30, 2021, compared to 197.2% at June 30, 2021 [242]. Risk Management - The company has a robust loan portfolio risk management process, including weekly and monthly reviews of delinquent loans [252]. - CTBI maintains an allowance for credit losses (ACL) to cover estimated credit losses on individually evaluated loans and the remainder of the loan and lease portfolio [290]. - The internal risk grading system evaluates commercial credits with outstanding bank share balances of $1 million or greater [291]. Market Conditions - A 200 basis point increase in the yield curve is estimated to increase net interest income by 3.94% over one year and 5.53% over two years [300]. - A 25 basis point decrease in the yield curve would decrease net interest income by an estimated 0.62% over one year and 1.49% over two years [300]. - Historical loss rates for loans are adjusted for significant factors reflecting current conditions, including delinquency trends and economic conditions [296]. Foreclosures and Properties - The level of foreclosed properties decreased to$ 4.3 million, down $1.5 million from the previous quarter [254]. - Sales of foreclosed properties for the nine months ended September 30, 2021, totaled$ 3.6 million, while new foreclosures totaled $0.9 million [254]. - Foreclosed properties are booked at the current fair market value less expected sales costs, with periodic appraisals typically conducted every 12 to 24 months [297].