Smaller regional banks have faced significant challenges since the Federal Reserve began its historic pace of rate hikes in the spring of 2022. Higher interest rates affect banks’ profitability and increase credit default rates. However, one bank that has remained relatively strong is Community Trust Bancorp (NASDAQ:CTBI). CTBI stock is up over 23% in the past year and pays a healthy dividend, making it a decent option for investors looking for a high-quality bank stock with long-term solid performance.
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Getting to Know Community Trust Bancorp
Community Trust Bancorp is a bank holding company headquartered in Kentucky with total assets amounting to $5.8 billion. It owns all the capital stock of Community Trust Bank, Community Trust and Investment Company, and operates a network of 71 banking locations spread across Kentucky, West Virginia, and Tennessee.
The bank’s business operations span commercial and personal banking, trust, and wealth management activities. Primary services include accepting time and demand deposits, providing loans (both secured and unsecured) to various entities, offering cash management services, and issuing letters of credit, among others.
They also engage in lease financing, provide various types of credit lines, and offer specialized loans like asset-based financing. The company also extends services like safe deposit box rentals, funds transfer services, and full-service brokerage and insurance services.
CTBI’s Recent Financial Results
In the first quarter of 2024, CTBI reported earnings of $18.7 million or $1.04 per basic share, beating consensus estimates of $0.98, which is also on par with the preceding quarter. Its loan portfolio increased substantially, recording an annualized increase of 10.9% from December 2023 and 10.2% from the first quarter of 2023.
Meanwhile, deposits, including repurchase agreements, saw an annualized increase of 5.6% from December 2023.
CTBI’s Board of Directors declared a cash dividend of $0.46 per share to be paid in April 2024. This marks the bank’s 43rd consecutive year of cash dividend increases.
What Is the Price Target for CTBI Stock?
Community Trust Bancorp is thinly followed by Wall Street, though the analysts covering the stock have been bullish on it. For example, Piper Sandler analyst Casey Whitman recently assigned the stock a price target of $47 while issuing an Overweight rating. He cites the bank’s history of above-peer return on assets and conservative credit culture as drivers of higher-quality growth.
Community Trust Bancorp is rated a Moderate Buy based on the recommendations and 12-month price targets two Wall Street analysts issues in the past three months. The average price target for CTBI stock is $47.00, which represents 9.5% upside potential from current levels.
The bank’s stock has been trending up, climbing 20% in the past six months. It trades at the higher end of its 52-week price range of $32.68-$45.74 and continues to demonstrate positive price momentum, trading above its 20-day (40.71) and 50-day (40.49) moving averages.
The Bottom Line on Community Trust Bancorp Stock
Community Trust Bancorp has held steady in the face of an increasingly challenging banking environment, punctuated by a recent earnings beat. The bank’s stock has shown ongoing appreciation and is complemented by a healthy dividend. It could therefore serve as a compelling option for long-term investment potential.
