Higher expenses and an uptick in problem loans weighed down quarterly profits at Community Trust Bancorp (CTBI) in Pikeville, Ky.
The $3.6 billion-asset company reported second-quarter profit of $11.9 million on Wednesday, down 2% from the same period in 2012. Per-share earnings were 77 cents, 3 cents higher than the expectations of analysts polled by Bloomberg.
An 8% rise in noninterest expense, to $26 million, nearly wiped out gains in fee and lending revenue. The higher expenses included cost increases of $800,000 for personnel, $400,000 in real estate owned and $300,000 for repossession.
Worsening asset quality also cut into Community Trust's profits. Provision for loan losses rose 51%, to $3.7 million, and net chargeoffs increased by 40%, to $3.5 million. Nonperforming loans rose 18%, to $41.6 million.
Community Trust's net interest income rose 3%, to $33.3 million, and its net interest margin widened by 6 basis points, to 3.99%. Its loan portfolio expanded by 1%, to $2.6 billion.
Noninterest income rose 11%, to $13.3 million. Deposit fees ticked up 4%, to $6.2 million, and loan-related fees more than doubled, to $1.5 million.