Updated 3/6/25
Community Trust Bancorp, Inc. (CTBI) is a regional bank that has been serving customers for over a century. Headquartered in Pikeville, Kentucky, the bank has built a strong presence across Kentucky, West Virginia, and Tennessee. Known for its conservative financial management and steady performance, CTBI has become a reliable choice for long-term investors, particularly those seeking consistent dividend income.
For dividend investors, CTBI presents an appealing opportunity. The company offers a solid yield, a history of dependable payouts, and a strong financial position that supports long-term stability. Below, we take a deep dive into the bank’s dividend profile, financial health, valuation, and potential risks.
Key Dividend Metrics
📢 Dividend Yield: 3.61%
📈 5-Year Dividend Growth Rate: Modest and steady increases
🛡 Payout Ratio: 40.35% (A healthy balance of earnings retention and shareholder returns)
📅 Next Dividend Payment Date: April 1, 2025
❌ Ex-Dividend Date: March 14, 2025
📊 5-Year Average Dividend Yield: 4.09%
Dividend Overview
CTBI’s dividend yield currently sits at 3.61%, which is solid for a regional bank. While not the highest in the sector, it’s a reliable payout backed by strong fundamentals. Investors who prioritize stability over high yields may find this appealing.
The company’s payout ratio of 40.35% signals that the dividend is well-covered by earnings. A lower payout ratio suggests the company is retaining enough capital to reinvest in operations while still rewarding shareholders. This balance is key for long-term sustainability, especially in an industry subject to interest rate fluctuations and economic cycles.
CTBI also has a long history of paying dividends consistently. Over the years, the company has demonstrated a commitment to returning capital to shareholders, making it a strong candidate for those seeking a steady income stream.
Dividend Growth and Safety
Dividend safety is one of the most important factors for income investors, and CTBI appears to check that box.
The bank has steadily increased its dividend over the years, albeit at a modest pace. This slow and steady approach aligns well with the company’s overall conservative financial strategy. While some investors prefer rapid dividend growth, CTBI offers stability, which can be equally valuable in uncertain economic times.
Profitability metrics reinforce the strength of the dividend. With a 34.85% profit margin and a 48.28% operating margin, the company has a cushion to maintain payouts even during economic downturns. Additionally, with a return on equity (ROE) of 11.35% and a return on assets (ROA) of 1.38%, CTBI is generating solid returns on its investments, further supporting its ability to sustain and grow dividends over time.
Chart Analysis
Price Action and Trend
The stock has been on a solid uptrend since mid-2024, with a noticeable surge in the latter part of the year. That momentum pushed the price well above both the 50-day moving average (orange line) and the 200-day moving average (blue line). However, after reaching a peak around $60, the price started to roll over, and now it’s declining below the 50-day moving average.
The most recent close at $52.09 is below the 50-day moving average, suggesting short-term weakness. At the same time, the 200-day moving average is still sloping upwards, which means the longer-term trend remains intact. If the price finds support around the 200-day moving average, this could indicate a potential stabilization.
Volume and Market Participation
Volume has remained relatively stable, with occasional spikes on both up and down days. Looking at the recent volume bars, there has been a slight increase in selling volume as the stock pulls back from its highs. This suggests that some investors are locking in profits or rotating out.
One of the notable periods of volume came during the strong rally in late 2024 when buying interest was dominant. Since then, volume has been declining slightly, signaling that momentum is cooling off. If the stock continues dropping with increasing volume, it could mean further downside ahead. On the flip side, if volume picks up during an attempted rebound, it could indicate buyers stepping in at lower levels.
Moving Averages and Potential Support
Right now, the 50-day moving average is acting as resistance, with the price failing to hold above it. If this level continues to push the price lower, the next major support to watch is the 200-day moving average, currently trending around $50.
Historically, the 200-day moving average has provided solid support in prior pullbacks, so it will be important to see if buyers emerge around this level again. If the price can hold there, it could set up for another attempt to move higher. However, if it breaks below, that could indicate a deeper pullback is underway.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart shows that the stock has been cooling off from its previously overbought levels. Earlier, RSI had spiked above 70, indicating strong momentum, but it has since been drifting lower.
Currently, the RSI is trending closer to the 40-50 range, which suggests neutral to slightly bearish conditions. If RSI dips below 30, that would indicate the stock is oversold and could be due for a bounce. On the other hand, if it turns higher from here, it could mean that buyers are beginning to regain control.
Recent Candlestick Behavior
The last five candlesticks paint a picture of indecision and selling pressure.
- The most recent candle closed near the lower end of its daily range, signaling that sellers had control by the end of the session.
- There were a few attempts to push higher earlier in the week, but each rally was met with resistance.
- The lower wicks on some of these candles show buyers trying to step in, but not with enough force to reverse the trend.
- If this pattern continues, it may lead to further downside testing of support levels.
For now, the price action suggests a cooling-off period after an extended rally, and whether this turns into a full-on correction or a temporary pause will depend on upcoming price movement and volume behavior.
Analyst Ratings
📈 Upgrades
- 🔵 Raymond James recently upgraded CTBI from “Market Perform” to “Outperform” with a price target of $60. Analysts highlighted the bank’s strong capital reserves, stable credit quality, and improving profitability. The stock had been trading at a discount compared to its regional banking peers, which contributed to the more optimistic outlook.
- 🟢 Piper Sandler issued an “Overweight” rating on CTBI, setting a price target of $64. The upgrade was driven by better-than-expected loan growth, stronger fee income, and consistent operational efficiency. Analysts also pointed to the bank’s ability to maintain solid earnings even in a changing interest rate environment.
📉 Downgrades
- 🔴 Sandler O’Neill lowered their rating on CTBI from “Hold” to “Sell,” expressing concerns about near-term valuation risks. The downgrade was influenced by the potential for margin compression and slower-than-expected loan demand. While the long-term fundamentals remain intact, the firm suggested that the stock may be facing headwinds in the short term.
- 🟠 Hilliard Lyons shifted its rating from “Buy” to “Hold,” signaling a more neutral stance. The change was attributed to regulatory uncertainties and a potential slowdown in earnings growth. While CTBI remains financially strong, analysts believe the stock could trade sideways until more clarity emerges on future profitability trends.
📊 Consensus Price Target
The average analyst price target for CTBI is $60, reflecting a cautiously optimistic outlook. While some firms see upside potential, others remain watchful of possible near-term challenges. Investors will be looking for upcoming earnings reports and broader economic trends to determine the next move for the stock.
Earnings Report Summary
Community Trust Bancorp, Inc. (CTBI) wrapped up 2024 with a solid financial performance, showing steady growth across key areas. The fourth quarter results reflected strong loan growth, rising interest income, and a stable deposit base, all while keeping asset quality in check.
For the last three months of the year, the bank reported net income of 22.5 million, which translates to earnings per share of 1.25. That’s a slight increase from the previous quarter and a noticeable jump from the same time last year. Much of this strength came from higher net interest income, which rose nearly 5 percent from the third quarter and more than 15 percent year-over-year.
Noninterest income, which includes fees from services outside of traditional lending, also saw an increase, reaching 16.2 million, about 18 percent higher than last year. At the same time, expenses ticked up, which is to be expected as the bank continues to expand operations.
One of the standout figures from the report was loan growth. The bank’s total loan portfolio increased to 4.5 billion, marking an annualized growth rate of 12.5 percent from the previous quarter and more than 10 percent year-over-year. That’s a strong pace, showing that demand for loans remains high despite economic uncertainty.
On the asset quality side, nonperforming loans edged up slightly to 26.7 million, though loan charge-offs remained relatively low at 1.0 million for the quarter. While an increase in nonperforming assets isn’t ideal, it’s not unusual given the broader economic environment. The bank’s conservative lending practices should help keep these risks manageable.
Deposits were another bright spot, growing to 5.3 billion, an annualized 18.7 percent increase from the prior quarter. This strong deposit growth reflects customer confidence and a stable funding base for future lending.
Looking at the full year, CTBI generated 82.8 million in net income, with a return on assets of 1.41 percent and a return on equity of 11.31 percent. Efficiency also improved, with the bank lowering its operating cost ratio compared to 2023. And for dividend investors, the company increased its annual dividend payout to 1.86 per share, up from 1.80 the prior year.
Overall, CTBI ended the year on a strong note. With continued loan demand, solid deposit growth, and steady profitability, the bank appears to be in a good position heading into 2025.
Financial Health and Stability
CTBI’s financials paint the picture of a well-managed bank with a focus on maintaining stability.
Profitability and Returns
- Net Income: $82.81 million (Trailing Twelve Months)
- Return on Equity: 11.35% (A sign of efficient capital utilization)
- Return on Assets: 1.38% (Strong performance for a regional bank)
These figures suggest that CTBI is maintaining strong profitability while managing risks effectively. The bank’s ability to generate consistent earnings supports the long-term sustainability of its dividend.
Balance Sheet Strength
- Total Cash: $80.35 million
- Total Debt: $320.19 million
- Book Value Per Share: $41.95
CTBI’s debt levels are within a manageable range, especially considering its profitability. With a book value per share of $41.95, the stock appears to be trading near its intrinsic value, which is another positive sign for long-term investors.
Valuation and Stock Performance
CTBI’s valuation metrics suggest that the stock is fairly priced, possibly even undervalued compared to its historical norms.
- Price-to-Earnings (P/E) Ratio: 11.30
- Price-to-Book (P/B) Ratio: 1.24
- Price-to-Sales (P/S) Ratio: 3.77
Regional banks typically trade in the 10-15 P/E range, so CTBI’s valuation is well within reasonable limits. The Price-to-Book (P/B) ratio of 1.24 is also in line with industry standards, indicating that the stock is not significantly overvalued.
From a technical perspective, CTBI is trading between its 52-week high of $61.67 and 52-week low of $38.53. The current price of $51.51 places it near the middle of this range. Its 200-day moving average of $50.48 and 50-day moving average of $53.80 suggest that the stock is experiencing some short-term fluctuations but remains in a stable long-term trend.
Additionally, with a beta of 0.65, CTBI exhibits lower volatility compared to the broader market. For investors seeking less price fluctuation, this could be an attractive feature.
Risks and Considerations
No investment is without risk, and CTBI is no exception. While the company is financially sound and offers a reliable dividend, there are several factors that investors should keep in mind.
Interest Rate Sensitivity
Banks are heavily influenced by interest rate movements. If rates decline, CTBI’s net interest margin could shrink, potentially impacting profitability. On the other hand, rising rates could benefit the bank, but only if loan demand remains strong.
Regional Exposure
CTBI primarily operates in a limited geographic area. While this allows the company to focus on its core markets, it also means that economic downturns in Kentucky, West Virginia, or Tennessee could have an outsized impact on its financial performance. Unlike larger national banks that can diversify geographically, CTBI is more exposed to regional economic conditions.
Slow Growth Profile
While CTBI is a solid dividend stock, it doesn’t offer the same growth potential as some of its larger banking peers. Investors looking for significant stock price appreciation may find better opportunities elsewhere. CTBI is more suited for those prioritizing income and stability over aggressive growth.
Regulatory and Compliance Risks
Like all financial institutions, CTBI must comply with banking regulations. Any changes in these regulations could impact operations, potentially increasing costs or limiting profitability. While the bank has a solid track record of compliance, it remains a factor worth considering.
Final Thoughts
For dividend investors, Community Trust Bancorp offers a compelling blend of yield, stability, and financial strength. The 3.61% dividend yield, combined with a conservative 40.35% payout ratio, suggests that the company’s dividend is well-covered and positioned for long-term sustainability.
CTBI’s profitability, balance sheet strength, and history of consistent dividend payments make it an attractive option for those seeking reliable income. While it may not offer the high-growth potential of larger financial institutions, it provides steady payouts and financial stability, making it a solid addition to a dividend-focused portfolio.
Every investor has different goals, but for those looking for consistent income and a dependable regional bank, CTBI stands out as a strong candidate in the dividend space.
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