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Loans
 9 Months Ended
Sep. 30, 2022
Loans [Abstract]  
Loans
Note 4 – Loans


Major classifications of loans, net of unearned income, deferred loan origination costs and fees, and net premiums on acquired loans, are summarized as follows:

(in thousands)
  
September 30
2022
    
December 31
2021
  
Hotel/motel
  
$
335,253
    
$
257,062
  
Commercial real estate residential
    
359,643
      
335,233
  
Commercial real estate nonresidential
    
756,138
      
757,893
  
Dealer floorplans
    
73,221
      
69,452
  
Commercial other
    
310,177
      
290,478
  
Commercial unsecured SBA PPP
    
1,958
      
47,335
  
Commercial loans
    
1,836,390
      
1,757,453
  
                 
Real estate mortgage
    
814,944
      
767,185
  
Home equity lines
    
115,400
      
106,667
  
Residential loans
    
930,344
      
873,852
  
                 
Consumer direct
    
160,866
      
156,683
  
Consumer indirect
    
703,016
      
620,825
  
Consumer loans
    
863,882
      
777,508
  
                 
Loans and lease financing
  
$
3,630,616
    
$
3,408,813
  


The loan portfolios presented above are net of unearned fees and unamortized premiums.  Unearned fees included above totaled $0.9 million as of September 30, 2022 and $4.0 million as of December 31, 2021 while the unamortized premiums on the indirect lending portfolio totaled $27.3 million as of September 30, 2022 and $24.1 million as of December 31, 2021.


CTBI has segregated and evaluates its loan portfolio through ten portfolio segments with similar risk characteristics. CTBI serves customers in small and mid-sized communities in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee.  Therefore, CTBI’s exposure to credit risk is significantly affected by changes in these communities.


Hotel/motel loans are a significant concentration for CTBI, representing approximately 9.2% of total loans. This industry has unique risk characteristics as it is highly susceptible to changes in the domestic and global economic environments, which can cause the industry to experience substantial volatility. Additionally, any hotel/motel construction loans would be included in this segment as CTBI’s construction loans are primarily completed as one loan going from construction to permanent financing. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral.


Commercial real estate residential loans are commercial purpose construction and permanent financed loans for commercial purpose 1-4 family/multi-family properties. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral.


Commercial real estate nonresidential loans are secured by nonfarm, nonresidential properties, farmland, and other commercial real estate. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral. Construction for commercial real estate nonresidential loans are also included in this segment as these loans are generally one loan for construction to permanent financing.


Dealer floorplans consist of loans to dealerships to finance inventory and are collateralized under a blanket security agreement and without specific liens on individual units.  This risk is mitigated by the use of periodic inventory audits.  These audits are performed monthly and follow up is required on any out of compliance items identified.  These audits are subject to increasing frequency when fact patterns suggest more scrutiny is required.


 Commercial other loans consist of agricultural loans, receivable financing, loans to financial institutions, loans for purchasing or carrying securities, and other commercial purpose loans.  Commercial loans are underwritten based on the borrower’s ability to service debt from the business’s underlying cash flows.  As a general practice, we obtain collateral such as equipment, or other assets, although such loans may be uncollateralized but guaranteed.


CTBI’s participation in the Paycheck Protection Program (“PPP”) established by the CARES Act resulted in the creation of a new loan segment of unsecured commercial other loans that are one hundred percent guaranteed by the Small Business Administration (“SBA”).  These loans, which are subject to forgiveness, have maturities of either two or three to five years, depending on when the loan was made.  These loans currently have no allowance for credit losses.


Residential real estate loans are a mixture of fixed rate and adjustable rate first and second lien residential mortgage loans and also include real estate construction loans which are typically for owner-occupied properties.  The terms of the real estate construction loans are generally short-term with permanent financing upon completion.  As a policy, CTBI holds adjustable rate loans and sells the majority of its fixed rate first lien mortgage loans into the secondary market.  Changes in interest rates or market conditions may impact a borrower’s ability to meet contractual principal and interest payments.  Residential real estate loans are secured by real property.


Home equity lines are primarily revolving adjustable rate credit lines secured by real property.


Consumer direct loans are a mixture of fixed rate and adjustable rate products comprised of unsecured loans, consumer revolving credit lines, deposit secured loans, and all other consumer purpose loans.


Indirect loans are primarily consumer fixed rate loans secured by automobiles, trucks, vans, and recreational vehicles originated at the selling dealership underwritten and purchased by CTBI’s indirect lending department.  Both new and used products are financed.  Only dealers who have executed dealer agreements with CTBI participate in the indirect lending program.


Not included in the loan balances above were loans held for sale in the amount of $1.0 million at September 30, 2022 and $2.6 million at December 31, 2021.


The following tables present the balance in the ACL for the periods ended September 30, 2022, December 31, 2021, and September 30, 2021:


 
  
Three Months Ended
September 30, 2022
  
(in thousands)
  
Beginning Balance
    
Provision Charged to Expense
    
Losses
Charged Off
    
Recoveries
    
Ending Balance
  
ACL
                              
Hotel/motel
  
$
4,844
    
$
39
    
$
0
    
$
0
    
$
4,883
  
Commercial real estate residential
    
4,200
      
651
      
0
      
25
      
4,876
  
Commercial real estate nonresidential
    
8,968
      
617
      
0
      
10
      
9,595
  
Dealer floorplans
    
1,477
      
61
      
0
      
0
      
1,538
  
Commercial other
    
4,473
      
886
      
(307
)
    
145
      
5,197
  
Real estate mortgage
    
8,179
      
(338
)
    
(11
)
    
5
      
7,835
  
Home equity
    
887
      
41
      
0
      
12
      
940
  
Consumer direct
    
1,621
      
(71
)
    
(81
)
    
205
      
1,674
  
Consumer indirect
    
7,695
      
528
      
(804
)
    
476
      
7,895
  
Total
  
$
42,344
    
$
2,414
    
$
(1,203
)
  
$
878
    
$
44,433
  

 
  
Nine Months Ended
September 30, 2022
  
(in thousands)
  
Beginning Balance
    
Provision Charged to Expense
    
Losses
Charged Off
    
Recoveries
    
Ending Balance
  
ACL
                              
Hotel/motel
  
$
5,080
    
$
19
 
$
(216
)
  
$
0
    
$
4,883
  
Commercial real estate residential
    
3,986
      
885
      
(31
)
    
36
      
4,876
  
Commercial real estate nonresidential
    
8,884
      
568
   
0
      
143
      
9,595
  
Dealer floorplans
    
1,436
      
102
      
0
      
0
      
1,538
  
Commercial other
    
4,422
      
1,079
      
(651
)
    
347
      
5,197
  
Real estate mortgage
    
7,637
      
345
      
(188
)
    
41
      
7,835
  
Home equity
    
866
      
79
      
(24
)
    
19
      
940
  
Consumer direct
    
1,951
      
(316
)
    
(426
)
    
465
      
1,674
  
Consumer indirect
    
7,494
      
605
      
(1,815
)
    
1,611
      
7,895
  
Total
  
$
41,756
    
$
3,366
    
$
(3,351
)
  
$
2,662
    
$
44,433
  

 
  
Year Ended
December 31, 2021
  
(in thousands)
  
Beginning Balance
    
Provision Charged to Expense
    
Losses
Charged Off
    
Recoveries
    
Ending Balance
  
ACL
                              
Hotel/motel
  
$
6,356
    
$
(1,276
)
  
$
0
    
$
0
    
$
5,080
  
Commercial real estate residential
    
4,464
      
(488
)
    
(28
)
    
38
      
3,986
  
Commercial real estate
nonresidential
    
11,086
      
(2,233
)
    
(306
)
    
337
      
8,884
  
Dealer floorplans
    
1,382
      
54
      
0
      
0
      
1,436
  
Commercial other
    
4,289
      
388
      
(644
)
    
389
      
4,422
  
Real estate mortgage
    
7,832
      
3
      
(266
)
    
68
      
7,637
  
Home equity
    
844
      
39
      
(36
)
    
19
      
866
  
Consumer direct
    
1,863
      
256
      
(684
)
    
516
      
1,951
  
Consumer indirect
    
9,906
      
(3,129
)
    
(2,361
)
    
3,078
      
7,494
  
Total
  
$
48,022
    
$
(6,386
)
  
$
(4,325
)
  
$
4,445
    
$
41,756
  

 
  
Three Months Ended
September 30, 2021
  
(in thousands)
  
Beginning Balance
    
Provision Charged to Expense
    
Losses
Charged Off
    
Recoveries
    
Ending Balance
  
ACL
                              
Hotel/motel
  
$
5,674
    
$
(467
)
  
$
0
    
$
0
    
$
5,207
  
Commercial real estate residential
    
3,796
      
79
      
(4
)
    
5
      
3,876
  
Commercial real estate nonresidential
    
9,308
      
(569
)
    
(117
)
    
8
      
8,630
  
Dealer floorplans
    
1,261
      
(85
)
    
0
      
0
      
1,176
  
Commercial other
    
4,574
      
320
      
(203
)
    
52
      
4,743
  
Real estate mortgage
    
7,708
      
(269
)
    
(9
)
    
8
      
7,438
  
Home equity
    
673
      
181
      
(14
)
    
5
      
845
  
Consumer direct
    
1,635
      
290
      
(194
)
    
110
      
1,841
  
Consumer indirect
    
7,066
      
357
      
(515
)
    
551
      
7,459
  
Total
  
$
41,695
    
$
(163
)
  
$
(1,056
)
  
$
739
    
$
41,215
  

 
  
Nine Months Ended
September 30, 2021
  
(in thousands)
  
Beginning Balance
    
Provision Charged to Expense
    
Losses
Charged Off
    
Recoveries
    
Ending Balance
  
ACL
                              
Hotel/motel
  
$
6,356
    
$
(1,149
)
  
$
0
    
$
0
    
$
5,207
  
Commercial real estate residential
    
4,464
      
(567
)
    
(28
)
    
7
      
3,876
  
Commercial real estate nonresidential
    
11,086
      
(2,502
)
    
(268
)
    
314
      
8,630
  
Dealer floorplans
    
1,382
      
(206
)
    
0
      
0
      
1,176
  
Commercial other
    
4,289
      
632
      
(433
)
    
255
      
4,743
  
Real estate mortgage
    
7,832
      
(214
)
    
(203
)
    
23
      
7,438
  
Home equity
    
844
      
20
      
(33
)
    
14
      
845
  
Consumer direct
    
1,863
      
91
      
(502
)
    
389
      
1,841
  
Consumer indirect
    
9,906
      
(3,024
)
    
(2,007
)
    
2,584
      
7,459
  
Total
  
$
48,022
    
$
(6,919
)
  
$
(3,474
)
  
$
3,586
    
$
41,215
  



CTBI derived its ACL balance by using vintage modeling for the consumer and residential portfolios.  Static pool models incorporating losses by credit risk rating were developed to determine credit loss balances for the commercial loan segments.


Qualitative loss factors are based on CTBI’s judgment of delinquency trends, level of nonperforming loans, trend in loan losses, supervision and administration, quality control exceptions, and reasonable and supportable forecasts based on unemployment rates and industry concentrations.  CTBI has determined that 12 months represents a reasonable and supportable forecast period and reverts back to a historical loss rate immediately. CTBI leverages economic projections from a reputable and independent third party to form its loss driver forecasts over the 12 month forecast period. Other internal and external indicators of economic forecasts are also considered by CTBI when developing the forecast metrics.


CTBI also has an inherent model risk allocation included in its ACL calculation to allow for certain known model limitations as well as other potential risks not quantified elsewhere.  Management has identified the following known model limitations and made adjustments through this portion of the calculation for them:

(1) The inability to completely identify revolving lines of credit within the commercial other segment.  Management had to make assumptions regarding commercial renewals as those renewals are not tracked well by its loan system.

(2) The inability within the model to estimate the value of modifications made under TDRs.  Management has manually calculated the estimated impact based on research of modified terms for TDRs.

With the continued impact of the global COVID-19 pandemic, including the current historically high rate of inflation, the significant rising rate environment, and the fact that there is no immediate end foreseen, this has been identified as a significant specific event that could impact our customers’ ability to pay. As segments stabilize, these allocations are adjusted with reductions made in the hotel/motel and mortgage segments during the third quarter of 2022.  Management continues to have a significant event qualitative factor to anticipate the continued impact of COVID-19 as deferments have ended and the SBA Paycheck Protection Programs are largely over with no approved capacity to fund new loans.



Provision for credit losses for the quarter was $2.4 million, compared to provision of $0.1 million for the quarter ended June 30, 2022 and a recovery of provision of $0.2 million for the third quarter 2021.  Year-to-date provision was $3.4 million compared to a recovery of $6.9 million during the first nine months of 2021.  Our reserve coverage (allowance for credit losses to nonperforming loans) at September 30, 2022 was 324.5%, compared to 305.9% at June 30, 2022 and 220.0% at September 30, 2021.  Our credit loss reserve as a percentage of total loans outstanding at September 30, 2022 was 1.22% compared to 1.19% at June 30, 2022  and 1.21% at September 30, 2021.


Nonaccrual loans and loans 90 days past due and still accruing segregated by class of loans for both September 30, 2022 and December 31, 2021 were as follows:

 
September 30, 2022
  
 (in thousands)
  
Nonaccrual Loans
with No ACL
    
Nonaccrual Loans
with ACL
    
90+ and Still
Accruing
    
Total
Nonperforming
Loans
  
                         
Hotel/motel
  
$
0
    
$
0
    
$
0
    
$
0
  
Commercial real estate residential
    
0
      
420
      
72
      
492
  
Commercial real estate nonresidential
    
0
      
3,133
      
509
      
3,642
  
Commercial other
    
0
      
214
      
208
      
422
  
Commercial unsecured SBA PPP
     0       0       0       0  
Total commercial loans
    
0
      
3,767
      
789
      
4,556
  
                                 
Real estate mortgage
    
0
      
3,945
      
4,038
      
7,983
  
Home equity lines
    
0
      
426
      
377
      
803
  
Total residential loans
    
0
      
4,371
      
4,415
      
8,786
  
                                 
Consumer direct
    
0
      
0
      
9
      
9
  
Consumer indirect
    
0
      
0
      
341
      
341
  
Total consumer loans
    
0
      
0
      
350
      
350
  
                                 
Loans and lease financing
  
$
0
    
$
8,138
    
$
5,554
    
$
13,692
  


 
December 31, 2021
  
 (in thousands)
  
Nonaccrual Loans
with No ACL
    
Nonaccrual Loans
with ACL
    
90+ and Still
Accruing
    
Total
Nonperforming
Loans
  
                         
Hotel/motel
  
$
0
    
$
1,075
    
$
0
    
$
1,075
  
Commercial real estate residential
    
0
      
585
      
312
      
897
  
Commercial real estate nonresidential
    
2,447
      
1,602
      
144
      
4,193
  
Commercial other
    
0
      
302
      
76
      
378
  
Total commercial loans
    
2,447
      
3,564
      
532
      
6,543
  
                                 
Real estate mortgage
    
0
      
4,081
      
4,659
      
8,740
  
Home equity lines
    
0
      
579
      
513
      
1,092
  
Total residential loans
    
0
      
4,660
      
5,172
      
9,832
  
                                 
Consumer direct
    
0
      
0
      
44
      
44
  
Consumer indirect
    
0
      
0
      
206
      
206
  
Total consumer loans
    
0
      
0
      
250
      
250
  
                                 
Loans and lease financing
  
$
2,447
    
$
8,224
    
$
5,954
    
$
16,625
  

Discussion of the Nonaccrual Policy



The accrual of interest income on loans is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that the collection of interest is doubtful.  Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured.  Any loans greater than 90 days past due must be well secured and in the process of collection to continue accruing interest.  See Note 1 to the condensed consolidated financial statements for further discussion on our nonaccrual policy.


The following tables present CTBI’s loan portfolio aging analysis, segregated by class, as of September 30, 2022 and December 31, 2021:

 
September 30, 2022
  
(in thousands)
  
30-59 Days
Past Due
    
60-89
Days Past
Due
    
90+ Days
Past Due
    
Total
Past Due
    
Current
    
Total Loans
  
Hotel/motel
  
$
0
    
$
0
    
$
0
    
$
0
    
$
335,253
    
$
335,253
  
Commercial real estate residential
    
235
      
203
      
450
      
888
      
358,755
      
359,643
  
Commercial real estate nonresidential
    
1,461
      
1,136
      
3,180
      
5,777
      
750,361
      
756,138
  
Dealer floorplans
    
0
      
0
      
0
      
0
      
73,221
      
73,221
  
Commercial other
    
219
      
155
      
221
      
595
      
309,582
      
310,177
  
Commercial unsecured SBA PPP
    
73
      
1
      
0
      
74
      
1,884
      
1,958
  
Total commercial loans
    
1,988
      
1,495
      
3,851
      
7,334
      
1,829,056
      
1,836,390
  
                                                 
Real estate mortgage
    
1,100
      
3,877
      
6,126
      
11,103
      
803,841
      
814,944
  
Home equity lines
    
529
      
72
      
541
      
1,142
      
114,258
      
115,400
  
Total residential loans
    
1,629
      
3,949
      
6,667
      
12,245
      
918,099
      
930,344
  
                                                 
Consumer direct
    
407
      
90
      
9
      
506
      
160,360
      
160,866
  
Consumer indirect
    
2,852
      
581
      
341
      
3,774
      
699,242
      
703,016
  
Total consumer loans
    
3,259
      
671
      
350
      
4,280
      
859,602
      
863,882
  
                                                 
Loans and lease financing
  
$
6,876
    
$
6,115
    
$
10,868
    
$
23,859
    
$
3,606,757
    
$
3,630,616
  


 
December 31, 2021
  
(in thousands)
  
30-59 Days
Past Due
    
60-89
Days
Past Due
    
90+ Days
Past Due
    
Total
Past Due
    
Current
    
Total Loans
  
Hotel/motel
  
$
0
    
$
0
    
$
0
    
$
0
    
$
257,062
    
$
257,062
  
Commercial real estate residential
    
274
      
116
      
845
      
1,235
      
333,998
      
335,233
  
Commercial real estate nonresidential
    
1,303
      
147
      
3,509
      
4,959
      
752,934
      
757,893
  
Dealer floorplans
    
0
      
0
      
0
      
0
      
69,452
      
69,452
  
Commercial other
    
1,225
      
175
      
108
      
1,508
      
288,970
      
290,478
  
Commercial unsecured SBA PPP
    
14
      
34
      
0
      
48
      
47,287
      
47,335
  
Total commercial loans
    
2,816
      
472
      
4,462
      
7,750
      
1,749,703
      
1,757,453
  
                                                 
Real estate mortgage
    
1,171
      
2,707
      
6,859
      
10,737
      
756,448
      
767,185
  
Home equity lines
    
656
      
315
      
903
      
1,874
      
104,793
      
106,667
  
Total residential loans
    
1,827
      
3,022
      
7,762
      
12,611
      
861,241
      
873,852
  
                                                 
Consumer direct
    
396
      
179
      
44
      
619
      
156,064
      
156,683
  
Consumer indirect
    
2,889
      
533
      
206
      
3,628
      
617,197
      
620,825
  
Total consumer loans
    
3,285
      
712
      
250
      
4,247
      
773,261
      
777,508
  
                                                 
Loans and lease financing
  
$
7,928
    
$
4,206
    
$
12,474
    
$
24,608
    
$
3,384,205
    
$
3,408,813
  


The risk characteristics of CTBI’s material portfolio segments are as follows:


Hotel/motel loans are a significant concentration for CTBI, representing approximately 9.2% of total loans.  This industry has unique risk characteristics as it is highly susceptible to changes in the domestic and global economic environments, which can cause the industry to experience substantial volatility.  These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Hotel/motel lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.  Management monitors and evaluates all commercial real estate loans based on collateral and risk grade criteria.  Commercial construction loans generally are made to customers for the purpose of building income-producing properties, and any hotel/motel construction loan would be included in this segment.  Personal guarantees of the principals are generally required.  Such loans are made on a projected cash flow basis and are secured by the project being constructed.  Construction loan draw procedures are included in each specific loan agreement, including required documentation items and inspection requirements.  Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source.  If the loan is to convert to a term loan, the repayment ability is based on the borrower’s projected cash flow.  Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.  Loans in amounts greater than $500,000 generally require a performance bond to be posted by the general contractor to assure completion of the project.


Commercial real estate residential loans are commercial purpose construction and permanent financed loans for commercial purpose 1-4 family/multi-family properties.  All commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Management monitors and evaluates all commercial real estate loans based on collateral and risk grade criteria.  Commercial residential construction loans generally are made to customers for the purpose of building income-producing properties.  Personal guarantees of the principals are generally required.  Such loans are made on a projected cash flow basis and are secured by the project being constructed.  Construction loan draw procedures are included in each specific loan agreement, including required documentation items and inspection requirements.  Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source.  If the loan is to convert to a term loan, the repayment ability is based on the borrower’s projected cash flow.  Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.  Loans in amounts greater than $500,000 generally require a performance bond to be posted by the general contractor to assure completion of the project.


Commercial real estate nonresidential loans are secured by nonfarm, nonresidential properties, farmland, and other commercial real estate.  Construction for commercial real estate nonresidential loans are also included in this segment as these loans are generally one loan for construction to permanent financing.  All commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Management monitors and evaluates all commercial real estate loans based on collateral and risk grade criteria.  Commercial nonresidential construction loans generally are made to customers for the purpose of building income-producing properties.  Personal guarantees of the principals are generally required.  Such loans are made on a projected cash flow basis and are secured by the project being constructed.  Construction loan draw procedures are included in each specific loan agreement, including required documentation items and inspection requirements.  Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source.  If the loan is to convert to a term loan, the repayment ability is based on the borrower’s projected cash flow.  Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.  Loans in amounts greater than $500,000 generally require a performance bond to be posted by the general contractor to assure completion of the project.


Dealer floorplans are segmented separately as they are a unique product with unique risk factors. CTBI maintains strict processing procedures over its floorplan product with any exceptions requested by a loan officer approved by the appropriate loan committee and the floorplan manager.


Commercial other loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.  The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value.  Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis.  In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.  As we underwrite our equipment lease financing in a manner similar to our commercial loan portfolio described below, the risk characteristics for this portfolio mirror that of the commercial loan portfolio.


CTBI’s participation in the CARES Act PPP loan program has resulted in a new loan segment of unsecured commercial other loans that are one hundred percent guaranteed by the SBA. These loans, which are subject to forgiveness, have maturities of either two or three to five years, depending on when the loans were made.  These loans currently have no allowance for credit losses.


With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, CTBI generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.  Home equity loans are typically secured by a subordinate interest in 1-4 family residences. Residential construction loans are handled through the home mortgage area of the bank.  The repayment ability of the borrower and the maximum loan-to-value ratio are calculated using the normal mortgage lending criteria.  Draws are processed based on percentage of completion stages including normal inspection procedures.  Such loans generally convert to term loans after the completion of construction.


Consumer loans are secured by consumer assets such as automobiles or recreational vehicles.  Some consumer loans are unsecured such as small installment loans and certain lines of credit.  Our determination of a borrower’s ability to repay these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.  Repayment can also be impacted by changes in property values on residential properties.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.


The indirect lending area of the bank generally deals with purchasing/funding consumer contracts with new and used automobile dealers.  The dealers generate loan applications which are forwarded to the indirect loan processing area for approval or denial.  Loan approvals or denials are based on the creditworthiness and repayment ability of the borrower, and on the collateral value.  The dealers may have limited recourse agreements with CTB.

Credit Quality Indicators:


CTBI categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  CTBI also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s).  CTBI analyzes commercial loans individually by classifying the loans as to credit risk.  Loans classified as loss, doubtful, substandard, or special mention are reviewed quarterly by CTBI for further deterioration or improvement to determine if appropriately classified and valued if deemed impaired.  All other commercial loan reviews are completed every 12 to 18 months.  In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other information becomes available, CTBI will evaluate the loan grade.  CTBI uses the following definitions for risk ratings:

➢
Pass grades include investment grade, low risk, moderate risk, and acceptable risk loans.  The loans range from loans that have no chance of resulting in a loss to loans that have a limited chance of resulting in a loss.  Customers in this grade have excellent to fair credit ratings.  The cash flows are adequate to meet required debt repayments.

➢
Watch graded loans are loans that warrant extra management attention but are not currently criticized.  Loans on the watch list may be potential troubled credits or may warrant “watch” status for a reason not directly related to the asset quality of the credit.  The watch grade is a management tool to identify credits which may be candidates for future classification or may temporarily warrant extra management monitoring.

➢
Other assets especially mentioned (OAEM) reflects loans that are currently protected but are potentially weak.  These loans constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard.  The credit risk may be relatively minor yet constitute an unwarranted risk in light of circumstances surrounding a specific asset. Loans in this grade display potential weaknesses which may, if unchecked or uncorrected, inadequately protect CTBI’s credit position at some future date.  The loans may be adversely affected by economic or market conditions.

➢
Substandard grading indicates that the loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  These loans have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt with the distinct possibility that CTBI will sustain some loss if the deficiencies are not corrected.

➢
Doubtful graded loans have the weaknesses inherent in the substandard grading with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.  The probability of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to CTBI’s advantage or strengthen the asset(s), its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.


The following tables present the credit risk profile of CTBI’s commercial loan portfolio based on rating category and payment activity, segregated by class of loans and based on last credit decision or year of origination:

September 30, 2022
  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
  
2022
    
2021
    
2020
    
2019
    
2018
    
Prior
    
Revolving
Loans
    
Total
  
Hotel/motel
                                                
Risk rating:
                                                
Pass
  
$
112,819
    
$
35,913
    
$
17,878
    
$
54,855
    
$
18,332
    
$
44,135
    
$
0
    
$
283,932
  
Watch
    
8,013
      
9,019
      
6,184
      
3,879
      
3,312
      
18,935
       0      
49,342
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
1,979
      
0
      
1,979
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total hotel/motel
  
120,832
    

44,932
    

24,062
    

58,734
    

21,644
    
65,049
    

0
    

335,253
  
                                                                 
Commercial real estate residential
                                                                
Risk rating:
                                                                
Pass
  

94,915
    

119,441
    

40,624
    

16,026
    

11,053
    

39,688
    

11,474
    

333,221
  
Watch
    
1,164
      
456
      
1,526
      
855
      
4,132
      
6,891
      
112
      
15,136
  
OAEM
    
0
      
0
      
0
      
40
      
0
      
14
      
28
      
82
  
Substandard
    
425
      
4,388
      
1,754
      
354
      
1,655
      
2,628
      
0
      
11,204
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial real estate residential
  

96,504
    

124,285
    

43,904
    

17,275
    

16,840
    

49,221
    

11,614
    

359,643
  
                                                                 
Commercial real estate nonresidential
                                                                
Risk rating:
                                                                
Pass
  

142,815
    

176,194
    

83,163
    

76,669
    

45,760
    

150,451
    

22,608
    

697,660
  
Watch
    
2,908
      
2,813
      
9,819
      
2,334
      
1,621
      
11,122
      
839
      
31,456
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
96
      
19
      
115
  
Substandard
    
1,618
      
4,757
      
4,981
      
2,903
      
714
      
11,603
      
25
      
26,601
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
306
      
0
      
306
  
Total commercial real estate nonresidential
  

147,341
    

183,764
    

97,963
    

81,906
    

48,095
    

173,578
    

23,491
    

756,138
  
                                                                 
Dealer floorplans
                                                                
Risk rating:
                                                                
Pass
  

0
    

0
    

0
    

0
    

0
    

0
    

72,731
    

72,731
  
Watch
    
0
      
0
      
0
      
0
      
0
      
0
      
490
      
490
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total dealer floorplans
  

0
    

0
    

0
    

0
    

0
    

0
    

73,221
    

73,221
  
                                                                 
Commercial other
                                                                
Risk rating:
                                                                
Pass
  

71,441
    

62,568
    

36,470
    

9,792
    

2,673
    

24,792
    

75,652
    

283,388
  
Watch
    
1,376
      
519
      
673
      
280
      
261
      
1,057
      
6,602
      
10,768
  
OAEM
    
0
      
31
      
0
      
0
      
2
      
0
      
30
      
63
  
Substandard
    
6,911
      
5,599
      
931
      
945
      
164
      
621
      
787
      
15,958
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial other
  

79,728
    

68,717
    

38,074
    

11,017
    

3,100
    

26,470
    

83,071
    

310,177
  
                                                                 
Commercial unsecured SBA PPP
                                                                
Risk rating:
                                                                
Pass
  

0
    

1,958
    

0
    

0
    

0
    

0
    

0
    

1,958
  
Watch
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial unsecured SBA PPP
  

0
    

1,958
    

0
    

0
    

0
    

0
    

0
    

1,958
  
                                                                 
Commercial loans
                                                                
Risk rating:
                                                                
Pass
  

421,990
    

396,074
    

178,135
    

157,342
    

77,818
    

259,066
    

182,465
    

1,672,890
  
Watch
    
13,461
      
12,807
      
18,202
      
7,348
      
9,326
      
38,005
      
8,043
      
107,192
  
OAEM
    
0
      
31
      
0
      
40
      
2
      
2,089
      
77
      
2,239
  
Substandard
    
8,954
      
14,744
      
7,666
      
4,202
      
2,533
      
14,852
      
812
      
53,763
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
306
      
0
      
306
  
Total commercial loans
  
$
444,405
    
$
423,656
    
$
204,003
    
$
168,932
    
$
89,679
    
$
314,318
    
$
191,397
    
$
1,836,390
  


December 31, 2021
  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
  
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Revolving
Loans
    
Total
  
Hotel/motel
                                                
Risk rating:
                                                
Pass
  
$
42,056
    
$
11,231
    
$
53,713
    
$
18,752
    
$
32,765
    
$
20,087
    
$
0
    
$
178,604
  
Watch
    
9,234
      
14,021
      
8,813
      
8,780
      
2,678
      
30,502
      
0
      
74,028
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
0
      
3,355
      
1,075
      
0
      
0
      
4,430
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total hotel/motel
  

51,290
    

25,252
    

62,526
    

30,887
    

36,518
    

50,589
    

0
    

257,062
  
                                                                 
Commercial real estate residential
                                                                
Risk rating:
                                                                
Pass
  

142,364
    

54,380
    

22,320
    

19,826
    

11,919
    

45,791
    

9,544
    

306,144
  
Watch
    
2,643
      
2,359
      
1,962
      
2,119
      
554
      
6,949
      
156
      
16,742
  
OAEM
    
0
      
0
      
0
      
0
      
16
      
0
      
0
      
16
  
Substandard
    
4,822
      
1,990
      
620
      
1,835
      
596
      
2,468
      
0
      
12,331
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial real estate residential
  

149,829
    

58,729
    

24,902
    

23,780
    

13,085
    

55,208
    

9,700
    

335,233
  
                                                                 
Commercial real estate nonresidential
                                                                
Risk rating:
                                                                
Pass
  

214,563
    

99,131
    

82,386
    

57,397
    

55,422
    

168,533
    

22,389
    

699,821
  
Watch
    
5,130
      
2,865
      
3,981
      
2,802
      
3,655
      
11,828
      
767
      
31,028
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
178
      
20
      
198
  
Substandard
    
5,201
      
5,098
      
3,764
      
600
      
2,016
      
9,659
      
200
      
26,538
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
308
      
0
      
308
  
Total commercial real estate nonresidential
  

224,894
    

107,094
    

90,131
    

60,799
    

61,093
    

190,506
    

23,376
    

757,893
  
                                                                 
Dealer floorplans
                                                                
Risk rating:
                                                                
Pass
  

0
    

0
    

0
    

0
    

0
    

0
    

69,105
    

69,105
  
Watch
    
0
      
0
      
0
      
0
      
0
      
0
      
347
      
347
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total dealer floorplans
  

0
    

0
    

0
    

0
    

0
    

0
    

69,452
    

69,452
  
                                                                 
Commercial other
                                                                
Risk rating:
                                                                
Pass
  

72,650
    

43,838
    

16,495
    

29,858
    

9,105
    

13,346
    

75,119
    

260,411
  
Watch
    
7,196
      
1,967
      
1,582
      
599
      
332
      
1,071
      
11,792
      
24,539
  
OAEM
    
0
      
0
      
268
      
383
      
12
      
1
      
482
      
1,146
  
Substandard
    
1,600
      
1,589
      
147
      
184
      
287
      
451
      
124
      
4,382
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial other
  

81,446
    

47,394
    

18,492
    

31,024
    

9,736
    

14,869
    

87,517
    

290,478
  
                                                                 
Commercial unsecured SBA PPP
                                                                
Risk rating:
                                                                
Pass
  

46,227
    

1,108
    

0
    

0
    

0
    

0
    

0
    

47,335
  
Watch
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial unsecured SBA PPP
  

46,227
    

1,108
    

0
    

0
    

0
    

0
    

0
    

47,335
  
                                                                 
Commercial loans
                                                                
Risk rating:
                                                                
Pass
  

517,860
    

209,688
    

174,914
    

125,833
    

109,211
    

247,757
    

176,157
    

1,561,420
  
Watch
    
24,203
      
21,212
      
16,338
      
14,300
      
7,219
      
50,350
      
13,062
      
146,684
  
OAEM
    
0
      
0
      
268
      
383
      
28
      
179
      
502
      
1,360
  
Substandard
    
11,623
      
8,677
      
4,531
      
5,974
      
3,974
      
12,578
      
324
      
47,681
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
308
      
0
      
308
  
Total commercial loans
  
$
553,686
    
$
239,577
    
$
196,051
    
$
146,490
    
$
120,432
    
$
311,172
    
$
190,045
    
$
1,757,453
  


The following tables present the credit risk profile of CTBI’s residential real estate and consumer loan portfolios based on performing or nonperforming status, segregated by class:

September 30, 2022
  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
  
2022
    
2021
    
2020
    
2019
    
2018
    
Prior
    
Revolving
Loans
    
Total
  
Home equity lines
                                                
Performing
  
$
0
    
$
0
    
$
0
    
$
0
    
$
0
    
$
10,866
    
$
103,731
    
$
114,597
  
Nonperforming
    
0
      
0
      
0
      
0
      
0
      
471
      
332
      
803
  
Total home equity lines
  

0
    

0
    

0
    

0
    

0
    

11,337
    

104,063
    

115,400
  
                                                                 
Mortgage loans
                                                                
Performing
  

143,060
    

183,460
    

137,463
    

64,827
    

31,710
    

246,441
    

0
    

806,961
  
Nonperforming
    
0
      
167
      
77
      
478
      
291
      
6,970
      
0
      
7,983
  
Total mortgage loans
  

143,060
    

183,627
    

137,540
    

65,305
    

32,001
    

253,411
    

0
    

814,944
  
                                                                 
Residential loans
                                                                
Performing
  

143,060
    

183,460
    

137,463
    

64,827
    

31,710
    

257,307
    

103,731
    

921,558
  
Nonperforming
    
0
      
167
      
77
      
478
      
291
      
7,441
      
332
      
8,786
  
Total residential loans
  
$
143,060
    
$
183,627
    
$
137,540
    
$
65,305
    
$
32,001
    
$
264,748
    
$
104,063
    
$
930,344
  
                                                                 
Consumer direct loans
                                                                
Performing
  
$
54,072
    
$
47,750
    
$
27,195
    
$
12,335
    
$
7,345
    
$
12,160
    
$
0
    
$
160,857
  
Nonperforming
    
0
      
6
      
0
      
0
      
3
      
0
      
0
      
9
  
Total consumer direct loans
  

54,072
    

47,756
    

27,195
    

12,335
    

7,348
    

12,160
    

0
    

160,866
  
                                                                 
Consumer indirect loans
                                                                
Performing
  

289,378
    

185,678
    

130,552
    

52,575
    

31,669
    

12,823
    

0
    

702,675
  
Nonperforming
    
73
      
70
      
129
      
21
      
35
      
13
      
0
      
341
  
Total consumer indirect loans
  

289,451
    

185,748
    

130,681
    

52,596
    

31,704
    

12,836
    

0
    

703,016
  
                                                                 
Consumer loans
                                                                
Performing
  

343,450
    

233,428
    

157,747
    

64,910
    

39,014
    

24,983
    

0
    

863,532
  
Nonperforming
    
73
      
76
      
129
      
21
      
38
      
13
      
0
      
350
  
Total consumer loans
  
$
343,523
    
$
233,504
    
$
157,876
    
$
64,931
    
$
39,052
    
$
24,996
    
$
0
    
$
863,882
  


December 31, 2021
  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
  
2021
    
2020
    
2019
    
2018
    
2017
    
Prior
    
Revolving
Loans
    
Total
  
Home equity lines
                                                
Performing
  
$
0
    
$
0
    
$
0
    
$
0
    
$
0
    
$
10,909
    
$
94,666
    
$
105,575
  
Nonperforming
    
0
      
0
      
0
      
0
      
0
      
520
      
572
      
1,092
  
Total home equity lines
  

0
    

0
    

0
    

0
    
$
0
    

11,429
    

95,238
    

106,667
  
                                                                 
Mortgage loans
                                                                
Performing
  

195,731
    

161,471
    

75,792
    

37,188
    

42,597
    

245,666
    

0
    

758,445
  
Nonperforming
    
0
      
63
      
424
      
364
      
558
      
7,331
      
0
      
8,740
  
Total mortgage loans
  

195,731
    

161,534
    

76,216
    

37,552
    

43,155
    

252,997
    

0
    

767,185
  
                                                                 
Residential loans
                                                                
Performing
  

195,731
    

161,471
    

75,792
    
$
37,188
    

42,597
    

256,575
    

94,666
    

864,020
  
Nonperforming
    
0
      
63
      
424
      
364
      
558
      
7,851
      
572
      
9,832
  
Total residential loans
  
$
195,731
    
$
161,534
    
$
76,216
    
$
37,552
    
$
43,155
    
$
264,426
    
$
95,238
    
$
873,852
  
                                                                 
Consumer direct loans
                                                                
Performing
  
$
71,626
    
$
39,312
    
$
18,492
    
$
10,468
    
$
4,490
    
$
12,251
    
$
0
    
$
156,639
  
Nonperforming
    
0
      
4
      
3
      
34
      
3
      
0
      
0
      
44
  
Total consumer direct loans
  

71,626
    

39,316
    

18,495
    

10,502
    

4,493
    

12,251
    

0
    

156,683
  
                                                                 
Consumer indirect loans
                                                                
Performing
  

263,127
    

190,145
    

80,793
    

54,437
    

23,449
    

8,668
    

0
    

620,619
  
Nonperforming
    
24
      
135
      
20
      
0
      
23
      
4
      
0
      
206
  
Total consumer indirect loans
  

263,151
    

190,280
    

80,813
    

54,437
    

23,472
    

8,672
    

0
    

620,825
  
                                                                 
Consumer loans
                                                                
Performing
  

334,753
    

229,457
    

99,285
    

64,905
    

27,939
    

20,919
    

0
    

777,258
  
Nonperforming
    
24
      
139
      
23
      
34
      
26
      
4
      
0
      
250
  
Total consumer loans
  
$
334,777
    
$
229,596
    
$
99,308
    
$
64,939
    
$
27,965
    
$
20,923
    
$
0
    
$
777,508
  

A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual.


The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings have resumed was $3.4 million at September 30, 2022.  The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings began, but had been suspended, at December 31, 2021 was $2.3 million.


In accordance with ASC 326-20-30-2, if a loan does not share risk characteristics with other pooled loans in determining the allowance for credit losses, the loan shall be evaluated for expected credit losses on an individual basis. Of the loans that CTBI has individually evaluated, the loans listed below by segment are those that are collateral dependent:

 
September 30, 2022
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
1
    
$
1,181
    
$
0
  
Commercial real estate residential
    
3
      
5,820
      
0
  
Commercial real estate nonresidential
    
9
      
16,720
      
350
  
Commercial other
    
2
      
9,185
      
1,000
  
Total collateral dependent loans
    
15
    
$
32,906
    
$
1,350
  

 
December 31, 2021
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
2
    
$
9,462
    
$
600
  
Commercial real estate residential
    
4
      
7,255
      
0
  
Commercial real estate nonresidential
    
11
      
19,943
      
200
  
Commercial other
    
1
      
1,113
      
350
  
Total collateral dependent loans
    
18
    
$
37,773
    
$
1,150
  

 
September 30, 2021
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
2
    
$
9,522
    
$
600
  
Commercial real estate residential
    
4
      
7,363
      
0
  
Commercial real estate nonresidential
    
12
      
21,920
      
200
  
Commercial other
    
1
      
1,165
      
400
  
Total collateral dependent loans
    
19
    
$
39,970
    
$
1,200
  


The hotel/motel, commercial real estate residential, and commercial real estate nonresidential segments are all collateralized with real estate. The two loans listed in the commercial other segment at September 30, 2022 are collateralized by inventory, equipment, and accounts receivable.


Certain loans have been modified in TDRs, where economic concessions were granted to borrowers consisting of reductions in the interest rates, payment extensions, forgiveness of principal, and forbearances.  Presented below, segregated by class of loans, are TDRs that occurred during the three and nine months ended September 30, 2022 and 2021 and the year ended December 31, 2021:

 
Three Months Ended
September 30, 2022
  
   
Pre-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
     $
318
     $
0
     $
318
  
Commercial real estate nonresidential
    
1
      
190
      
0
      
190
  
Commercial other
    
1
      
5,222
      
0
      
5,222
  
Total commercial loans
    
4
      
5,730
      
0
      
5,730
  
                                 
Real estate mortgage
     2       288       393       681  
Total residential loans
     2       288       393       681  
                                 
Total troubled debt restructurings
    
6
    
$
6,018
    
$
393
    
$
6,411
  

 
Three Months Ended
September 30, 2022
  
   
Post-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
     $
318
     $
0
     $
318
  
Commercial real estate nonresidential
    
1
      
189
      
0
      
189
  
Commercial other
    
1
      
5,222
      
0
      
5,222
  
Total commercial loans
    
4
      
5,729
      
0
      
5,729
  
                                 
Real estate mortgage
     2       288       393       681  
Total residential loans
     2       288       393       681  
                                 
Total troubled debt restructurings
    
6
    
$
6,017
    
$
393
    
$
6,410
  

 
Nine Months Ended
September 30, 2022
  
   
Pre-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
4
     $
472
     $
0
     $
472
  
Commercial real estate nonresidential
    
3
      
435
      
0
      
435
  
Commercial other
    
10
      
11,748
      
0
      
11,748
  
Total commercial loans
    
17
      
12,655
      
0
      
12,655
  
                                 
Real estate mortgage
     5       593       1,309       1,902  
Total residential loans
     5       593       1,309       1,902  
                                 
Total troubled debt restructurings
    
22
    
$
13,248
    
$
1,309
    
$
14,557
  

 
Nine Months Ended
September 30, 2022
  
   
Post-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
4
     $
472
     $
0
     $
472
  
Commercial real estate nonresidential
    
3
      
433
      
0
      
433
  
Commercial other
    
10
      
11,747
      
0
      
11,747
  
Total commercial loans
    
17
      
12,652
      
0
      
12,652
  
                                 
Real estate mortgage
     5       593       1,309       1,902  
Total residential loans
     5       593       1,309       1,902  
                                 
Total troubled debt restructurings
    
22
    
$
13,245
    
$
1,309
    
$
14,554
  

 
Year Ended
December 31, 2021
        
   
Pre-Modification Outstanding Balance
        
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
     Other    
Total
Modification
  
Commercial real estate residential
    
6
     $
388
     $
0
     $
0     $ 388  
Commercial real estate nonresidential
    
9
      
4,179
      
2,988
       0       7,167  
Commercial other
    
5
      
417
      
0
       0       417  
Total commercial loans
    
20
      
4,984
      
2,988
       0       7,972  
                                       
Real estate mortgage
    
3
      
278
      
277
       262       817  
Total residential loans
    
3
      
278
      
277
       262       817  
                                       
Total troubled debt restructurings
    
23
    
$
5,262
    
$
3,265
     $ 262     $ 8,789  

 
Year Ended
December 31, 2021
        
   
Post-Modification Outstanding Balance
        
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
     Other    
Total
Modification
  
Commercial real estate residential
    
6
     $
424
     $
0
     $
0     $
424  
Commercial real estate nonresidential
    
9
      
4,282
      
3,000
       0       7,282  
Commercial other
    
5
      
340
      
0
       0       340  
Total commercial loans
    
20
      
5,046
      
3,000
       0       8,046  
                                       
Real estate mortgage
    
3
      
279
      
277
       262       818  
Total residential loans
    
3
      
279
      
277
       262       818  
                                       
Total troubled debt restructurings
    
23
    
$
5,325
    
$
3,277
     $ 262     $ 8,864  

 
Three Months Ended
September 30, 2021
  
   
Pre-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
    
$
255
    
$
0
    
$
255
  
Commercial real estate nonresidential
    
4
      
2,098
      
2,568
      
4,666
  
Commercial other
    
1
      
95
      
0
      
95
  
Total commercial loans
    
7
      
2,448
      
2,568
      
5,016
  
                                 
Total troubled debt restructurings
    
7
    
$
2,448
    
$
2,568
    
$
5,016
  

 
Three Months Ended
September 30, 2021
  
   
Post-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
    
$
254
    
$
0
    
$
254
  
Commercial real estate nonresidential
    
4
      
2,196
      
2,562
      
4,758
  
Commercial other
    
1
      
101
      
0
      
101
  
Total commercial loans
    
7
      
2,551
      
2,562
      
5,113
  
                                 
Total troubled debt restructurings
    
7
    
$
2,551
    
$
2,562
    
$
5,113
  

 
Nine Months Ended
September 30, 2021
  
   
Pre-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
    
$
255
    
$
0
    
$
255
  
Commercial real estate nonresidential
    
9
      
4,179
      
2,988
      
7,167
  
Commercial other
    
3
      
393
      
0
      
393
  
Total commercial loans
    
14
      
4,827
      
2,988
      
7,815
  
                                 
Total troubled debt restructurings
    
14
    
$
4,827
    
$
2,988
    
$
7,815
  

 
Nine Months Ended
September 30, 2021
  
   
Post-Modification Outstanding Balance
  
(in thousands)
  
Number of
Loans
    
Term
Modification
    
Combination
    
Total
Modification
  
Commercial real estate residential
    
2
    
$
254
    
$
0
    
$
254
  
Commercial real estate nonresidential
    
9
      
4,282
      
3,000
      
7,282
  
Commercial other
    
3
      
317
      
0
      
317
  
Total commercial loans
    
14
      
4,853
      
3,000
      
7,853
  
                                 
Total troubled debt restructurings
    
14
    
$
4,853
    
$
3,000
    
$
7,853
  


No charge-offs have resulted from modifications for any of the presented periods.  We had commitments to extend additional credit in the amount of $41 thousand and $52 thousand at September 30, 2022 and December 31, 2021, respectively, on loans that were considered TDRs.


Loans retain their accrual status at the time of their modification. As a result, if a loan is on nonaccrual at the time it is modified, it stays as nonaccrual, and if a loan is on accrual at the time of the modification, it generally stays on accrual.  Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a TDR subsequently default, CTBI evaluates the loan for possible further impairment.  The allowance for loan losses may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.  Presented below, segregated by class of loans, are loans that were modified as TDRs within the past 12 months which have subsequently defaulted.  CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual.  There were no defaulted restructured loans for the three and nine months ended September 30, 2022.

   
Three Months Ended
September 30, 2021
    
Nine Months Ended
September 30, 2021
  
(in thousands)
  
Number of Loans
    
Recorded Balance
    
Number of Loans
    
Recorded Balance
  
Commercial:
                        
Hotel/motel
    
0
    
$
0
      
1
    
$
1,113
  
Residential:
                                
Real estate mortgage
    
0
      
0
      
1
      
275
  
Total defaulted restructured loans
    
0
    
$
0
      
2
    
$
1,388