Community Trust’s (NASDAQ: CTBI) Q1 2024 report highlights improvements in key financial metrics, signaling signs of recovery. Net interest income reached $43.88 million, up 1.40% from the previous quarter and down 0.70% from Q1 2023. The net interest margin also improved slightly to 3.23%.
Non-interest income was a bright spot, surging significantly. Loan-related fees and life insurance revenue were major contributors. This growth offset the slowdown in loan growth, which has been affected by higher interest rates.
Deposit trends showed positive signs, with non-interest-bearing deposits returning to growth. This could indicate a potential recovery in the cost of deposits that has weighed on banks in recent quarters. Overall, deposits increased by 1.40% compared to the previous quarter.
Despite these improvements, the impact of future monetary policy decisions remains uncertain. If the Fed does not cut rates in 2024, it could put pressure on banks’ net interest margins and loan growth.
Community Trust’s management has a strong commitment to dividend payments, with a current yield of 4.40%. The dividend has been constant or increased for 23 years. However, analysts maintain a ‘hold’ rating on the stock due to the potential risks associated with a prolonged high-rate environment.
