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Loans
 9 Months Ended
Sep. 30, 2024
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
2024
    
December 31
2023
  
Hotel/motel
  
$
453,465
    
$
395,765
  
Commercial real estate residential
    
485,004
      
417,943
  
Commercial real estate nonresidential
    
834,985
      
778,637
  
Dealer floorplans
    
86,693
      
70,308
  
Commercial other
    
353,943
      
321,082
  
Commercial loans
    
2,214,090
      
1,983,735
  
                 
Real estate mortgage
    
1,003,123
      
937,524
  
Home equity lines
    
163,013
      
147,036
  
Residential loans
    
1,166,136
      
1,084,560
  
                 
Consumer direct
    
154,061
      
159,106
  
Consumer indirect
    
816,187
      
823,505
  
Consumer loans
    
970,248
      
982,611
  
                 
Loans and lease financing
  
$
4,350,474
    
$
4,050,906
  


The loan portfolios presented above are net of unearned fees and unamortized premiums.  Unearned fees included above totaled $0.4 million as of September 30, 2024 and $0.8 million as of December 31, 2023, while the unamortized premiums on the indirect lending portfolio totaled $30.9 million as of September 30, 2024 and $31.4 million as of December 31, 2023.


CTBI has segregated and evaluates our loan portfolio through nine 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 10.4% 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.



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 our 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 fixed rate consumer 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 $0.1 million at September 30, 2024 and $0.2 million at December 31, 2023.



The following tables present the balance in the ACL for the periods ended September 30, 2024, December 31, 2023 and September 30, 2023.

 
  
Three Months Ended
September 30, 2024
  
(in thousands)
  
Beginning
Balance
    
Provision
Charged to
Expense
    
Losses
Charged Off
    
Recoveries
    
Ending
Balance
  
ACL
                              
Hotel/motel
  
$
4,447
    
$
581
    
$
0
    
$
0
    
$
5,028
  
Commercial real estate residential
    
4,349
      
139
      
0
      
5
      
4,493
  
Commercial real estate nonresidential
    
8,706
      
388
      
0
      
6
      
9,100
  
Dealer floorplans
    
561
      
78
      
0
      
0
      
639
  
Commercial other
    
3,385
      
53
      
(278
)
    
228
      
3,388
  
Real estate mortgage
    
11,840
      
651
      
(37
)
    
6
      
12,460
  
Home equity
    
1,318
      
63
      
(40
)
    
5
      
1,346
  
Consumer direct
    
3,604
      
65
      
(249
)
    
43
      
3,463
  
Consumer indirect
    
13,938
      
718
      
(2,132
)
    
919
      
13,443
  
Total
  
$
52,148
    
$
2,736
    
$
(2,736
)
  
$
1,212
    
$
53,360
  

 
  
Nine Months Ended
September 30, 2024
  
(in thousands)
  
Beginning
Balance
    
Provision
Charged to
Expense
    
Losses
Charged Off
    
Recoveries
    
Ending
Balance
  
ACL
                              
Hotel/motel
  
$
4,592
    
$
436
    
$
0
    
$
0
    
$
5,028
  
Commercial real estate residential
    
4,285
      
189
      
0
      
19
      
4,493
  
Commercial real estate nonresidential
    
7,560
      
1,481
      
0
      
59
      
9,100
  
Dealer floorplans
    
659
      
(20
)
    
0
      
0
      
639
  
Commercial other
    
3,760
      
316
      
(1,124
)
    
436
      
3,388
  
Real estate mortgage
    
10,197
      
2,327
      
(88
)
    
24
      
12,460
  
Home equity
    
1,367
      
6
      
(40
)
    
13
      
1,346
  
Consumer direct
    
3,261
      
999
      
(971
)
    
174
      
3,463
  
Consumer indirect
    
13,862
      
2,630
      
(6,016
)
    
2,967
      
13,443
  
Total
  
$
49,543
    
$
8,364
    
$
(8,239
)
  
$
3,692
    
$
53,360
  

 
  
Year Ended
December 31, 2023
  
(in thousands)
  
Beginning
Balance
    
Provision
Charged to
Expense
    
Losses
Charged Off
    
Recoveries
    
Ending
Balance
  
ACL
                              
Hotel/motel
  
$
5,171
    
$
(579
)
  
$
0
    
$
0
    
$
4,592
  
Commercial real estate residential
    
4,894
      
(706
)
    
(28
)
    
125
      
4,285
  
Commercial real estate nonresidential
   
9,419
      
(2,252
)
    
(294
)
    
687
      
7,560
  
Dealer floorplans
    
1,776
      
(1,117
)
    
0
      
0
      
659
  
Commercial other
    
5,285
      
(91
)
    
(1,900
)
    
466
      
3,760
  
Real estate mortgage
    
7,932
      
2,364
      
(140
)
    
41
      
10,197
  
Home equity
    
1,106
      
278
      
(23
)
    
6
      
1,367
  
Consumer direct
    
1,694
      
1,804
      
(541
)
    
304
      
3,261
  
Consumer indirect
    
8,704
      
7,110
      
(5,333
)
    
3,381
      
13,862
  
Total
  
$
45,981
    
$
6,811
    
$
(8,259
)
  
$
5,010
    
$
49,543
  

 
  
Three Months Ended
September 30, 2023
  
(in thousands)
  
Beginning
Balance
    
Provision
Charged to
Expense
    
Losses
Charged Off
    
Recoveries
    
Ending
Balance
  
ACL
                              
Hotel/motel
  
$
5,192
    
$
611
    
$
0
    
$
0
    
$
5,803
  
Commercial real estate residential
    
3,749
      
66
      
0
      
9
      
3,824
  
Commercial real estate nonresidential
    
7,797
      
181
      
0
      
39
      
8,017
  
Dealer floorplans
    
1,157
      
(314
)
    
0
      
0
      
843
  
Commercial other
    
6,176
      
(595
)
    
(195
)
    
159
      
5,545
  
Real estate mortgage
    
7,884
      
439
      
(4
)
    
17
      
8,336
  
Home equity
    
1,108
      
59
      
(10
)
    
1
      
1,158
  
Consumer direct
    
2,563
      
157
      
(148
)
    
41
      
2,613
  
Consumer indirect
    
12,392
      
1,267
      
(1,655
)
    
576
      
12,580
  
Total
  
$
48,018
    
$
1,871
    
$
(2,012
)
  
$
842
    
$
48,719
  
 
 
Nine Months Ended
September 30, 2023
  
(in thousands)
  
Beginning
Balance
    
Provision
Charged to
Expense
    
Losses
Charged Off
    
Recoveries
    
Ending
Balance
  
ACL
                              
Hotel/motel
  
$
5,171
    
$
632
    
$
0
    
$
0
    
$
5,803
  
Commercial real estate residential
    
4,894
      
(1,132
)
    
(28
)
    
90
      
3,824
  
Commercial real estate nonresidential
    
9,419
      
(1,765
)
    
(9
)
    
372
      
8,017
  
Dealer floorplans
    
1,776
      
(933
)
    
0
      
0
      
843
  
Commercial other
    
5,285
      
1,376
      
(1,455
)
    
339
      
5,545
  
Real estate mortgage
    
7,932
      
470
      
(99
)
    
33
      
8,336
  
Home equity
    
1,106
      
71
      
(23
)
    
4
      
1,158
  
Consumer direct
    
1,694
      
1,069
      
(386
)
    
236
      
2,613
  
Consumer indirect
    
8,704
      
5,208
      
(3,730
)
    
2,398
      
12,580
  
Total
  
$
45,981
    
$
4,996
    
$
(5,730
)
  
$
3,472
    
$
48,719
  



Using the ACL software, forecasts include gross domestic product (GDP), retail sales and housing price index considerations.  CTBI leverages economic projections from the Federal Open Market Committee to obtain various forecasts for unemployment rate and gross domestic product, the PNC forecast for the Case-Shiller National Home Price Index, and the Wells Fargo forecast for the Advanced Retail Sales.  CTBI has elected to forecast the first four quarters of the credit loss estimate and revert to a long-run average of each considered economic factor, as permitted in ASC 326-20-30-9, over four quarters.


All periods during the reasonable and supportable forecast period are utilizing a forecasted probability of default.  Loss driver analysis was performed during which regression models were built relating default rates of the various segments to the economic factors noted above.  Historical loss data for both CTBI and segment-specific selected peers was incorporated from Federal Financial Institutions Examination Council call report data.  For loss given default, the Frye-Jacobs LGD estimation technique was utilized in the ACL software, providing a risk curve that most approximates the asset class under consideration.  Management elected to evaluate internal prepayment experience over a trailing timeframe to determine the appropriate prepayment and curtailment rates to be used in the credit loss estimate.


CTBI uses management judgement for qualitative loss factors such as delinquency trends, supervision and administration, quality control exceptions, collateral values, and industry concentrations. The ACL software allows management to approve a “worst case” scenario or a maximum loss rate for each segment.  Qualitative dollars available for allocation then become the difference between the worst case and the ACL quantitative reserve estimate.  Each factor is then given a risk weighting that is applied to determine a basis point allocation. The qualitative loss factors are as follows:


 •
Changes in delinquency trends by loan segment

•
Changes in international, national, regional, and local conditions

•
The effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses

•
The existence and effect of any concentrations of credit and changes in the levels of such concentrations

•
A supervision and administration allocation based on CTBI’s loan review process

•
Exceptions in lending policies and procedures as measured by quarterly loan portfolio exceptions reports

•
Changes in the nature and volume of the portfolio and terms of loans


Refer to Note 1 to the condensed consolidated financial statements for further information regarding our nonaccrual policy.  Nonaccrual loans and loans 90 days past due and still accruing, segregated by loan segment, as of September 30, 2024 and December 31, 2023 were as follows:

 
September 30, 2024
  
(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
      
661
      
700
      
1,361
  
Commercial real estate nonresidential
    
0
      
592
      
10,923
      
11,515
  
Commercial other
    
209
      
872
      
641
      
1,722
  
Total commercial loans
    
209
      
2,125
      
12,264
      
14,598
  
                                 
Real estate mortgage
    
0
      
3,016
      
5,515
      
8,531
  
Home equity lines
    
0
      
179
      
691
      
870
  
Total residential loans
    
0
      
3,195
      
6,206
      
9,401
  
                                 
Consumer direct
    
0
      
451
      
36
      
487
  
Consumer indirect
    
0
      
0
      
605
      
605
  
Total consumer loans
    
0
      
451
      
641
      
1,092
  
                                 
Loans and lease financing
  
$
209
    
$
5,771
    
$
19,111
    
$
25,091
  

 
December 31, 2023
  
(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
      
498
      
1,059
      
1,557
  
Commercial real estate nonresidential
    
0
      
680
      
2,270
      
2,950
  
Dealer floorplans     0       0       0       0  
Commercial other
    
236
      
452
      
162
      
850
  
Total commercial loans
    
236
      
1,630
      
3,491
      
5,357
  
                                 
Real estate mortgage
    
0
      
1,996
      
5,302
      
7,298
  
Home equity lines
    
0
      
186
      
557
      
743
  
Total residential loans
    
0
      
2,182
      
5,859
      
8,041
  
                                 
Consumer direct
    
0
      
0
      
15
      
15
  
Consumer indirect
    
0
      
0
      
555
      
555
  
Total consumer loans
    
0
      
0
      
570
      
570
  
                                 
Loans and lease financing
  
$
236
    
$
3,812
    
$
9,920
    
$
13,968
  

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, 2024 and December 31, 2023 (includes loans 90 days past due and still accruing as well):

 
September 30, 2024
  
(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
    
$
453,465
    
$
453,465
  
Commercial real estate residential
    
1,278
      
259
      
1,361
      
2,898
      
482,106
      
485,004
  
Commercial real estate nonresidential
    
2,189
      
2,752
      
11,246
      
16,187
      
818,798
      
834,985
  
Dealer floorplans
    
0
      
0
      
0
      
0
      
86,693
      
86,693
  
Commercial other
    
747
      
272
      
1,575
      
2,594
      
351,349
      
353,943
  
Total commercial loans
    
4,214
      
3,283
      
14,182
      
21,679
      
2,192,411
      
2,214,090
  
                                                 
Real estate mortgage
    
2,450
      
3,952
      
8,028
      
14,430
      
988,693
      
1,003,123
  
Home equity lines
    
1,026
      
191
      
852
      
2,069
      
160,944
      
163,013
  
Total residential loans
    
3,476
      
4,143
      
8,880
      
16,499
      
1,149,637
      
1,166,136
  
                                                 
Consumer direct
    
518
      
61
      
487
      
1,066
      
152,995
      
154,061
  
Consumer indirect
    
4,153
      
1,019
      
605
      
5,777
      
810,410
      
816,187
  
Total consumer loans
    
4,671
      
1,080
      
1,092
      
6,843
      
963,405
      
970,248
  
                                                 
Loans and lease financing
  
$
12,361
    
$
8,506
    
$
24,154
    
$
45,021
    
$
4,305,453
    
$
4,350,474
  

 
December 31, 2023
  
(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
    
$
395,765
    
$
395,765
  
Commercial real estate residential
    
1,047
      
275
      
1,525
      
2,847
      
415,096
      
417,943
  
Commercial real estate nonresidential
    
549
      
332
      
2,619
      
3,500
      
775,137
      
778,637
  
Dealer floorplans
    
0
      
0
      
0
      
0
      
70,308
      
70,308
  
Commercial other
    
663
      
494
      
641
      
1,798
      
319,284
      
321,082
  
Total commercial loans
    
2,259
      
1,101
      
4,785
      
8,145
      
1,975,590
      
1,983,735
  
                                                 
Real estate mortgage
    
1,323
      
3,455
      
6,168
      
10,946
      
926,578
      
937,524
  
Home equity lines
    
911
      
273
      
707
      
1,891
      
145,145
      
147,036
  
Total residential loans
    
2,234
      
3,728
      
6,875
      
12,837
      
1,071,723
      
1,084,560
  
                                                 
Consumer direct
    
1,013
      
118
      
15
      
1,146
      
157,960
      
159,106
  
Consumer indirect
    
4,550
      
1,029
      
555
      
6,134
      
817,371
      
823,505
  
Total consumer loans
    
5,563
      
1,147
      
570
      
7,280
      
975,331
      
982,611
  
                                                 
Loans and lease financing
  
$
10,056
    
$
5,976
    
$
12,230
    
$
28,262
    
$
4,022,644
    
$
4,050,906
  



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


Hotel/motel loans are a significant concentration for CTBI, representing approximately 10.4% 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.


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.


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.


Dealer floorplans are segmented separately as they are a unique product with unique risk factors. CTBI maintains strict processing procedures over our 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 our 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.


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.  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 is generally responsible for purchasing/funding consumer contracts with new and used automobile dealers.  Dealer loan applications 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 borrowers, and on the collateral value. Upon a dealer being funded on an approved loan application and assignment of the retail installment contract to CTB, CTB will have limited recourse with the dealer, as set forth in the CTB dealer agreement. On occasion, the dealer will execute a separate, full recourse agreement with CTB to obtain customer financing.

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 loan segment and based on last credit decision or year of origination:


  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
September 30
 
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Revolving
Loans
    
Total
  
Hotel/motel
                                                
Risk rating:
                                                
Pass
  
$
56,458
    
$
79,630
    
$
143,289
    
$
27,364
    
$
17,276
    
$
69,756
    
$
5,398
    
$
399,171
  
Watch
    
0
      
11,336
      
10,901
      
6,616
      
4,493
      
14,971
       0      
48,317
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Substandard
    
0
      
0
      
4,023
      
0
      
0
      
1,954
      
0
      
5,977
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total hotel/motel
    
56,458
      
90,966
      
158,213
      
33,980
      
21,769
      
86,681
      
5,398
      
453,465
  
                                                                 
Commercial real estate residential
                                                                
Risk rating:
                                                                
Pass
    
134,673
      
92,523
      
81,747
      
62,759
      
27,219
      
40,772
      
17,321
      
457,014
  
Watch
    
5,169
      
2,551
      
1,822
      
3,902
      
1,735
      
5,508
      
55
      
20,742
  
OAEM
    
0
      
121
      
0
      
0
      
0
      
88
      
48
      
257
  
Substandard
    
35
      
823
      
625
      
411
      
341
      
4,756
      
0
      
6,991
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial real estate residential
    
139,877
      
96,018
      
84,194
      
67,072
      
29,295
      
51,124
      
17,424
      
485,004
  
                                                                 
Commercial real estate nonresidential
                                                                
Risk rating:
                                                                
Pass
    
131,839
      
126,833
      
126,006
      
123,387
      
64,260
      
162,619
      
36,589
      
771,533
  
Watch
    
3,710
      
1,622
      
4,054
      
9,656
      
4,119
      
7,554
      
547
      
31,262
  
OAEM
    
0
      
0
      
15
      
385
      
0
      
48
      
0
      
448
  
Substandard
    
4,453
      
1,533
      
1,553
      
2,254
      
11,204
      
10,743
      
0
      
31,740
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
2
      
0
      
2
  
Total commercial real estate nonresidential
    
140,002
      
129,988
      
131,628
      
135,682
      
79,583
      
180,966
      
37,136
      
834,985
  
                                                                 
Dealer floorplans
                                                                
Risk rating:
                                                                
Pass
    
0
      
0
      
0
      
0
      
0
      
0
      
84,835
      
84,835
  
Watch
    
0
      
0
      
0
      
0
      
0
      
0
      
1,858
      
1,858
  
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
      
86,693
      
86,693
  
                                                                 
Commercial other
                                                                
Risk rating:
                                                                
Pass
    
78,716
      
48,287
      
41,287
      
27,102
      
26,125
      
20,196
      
74,308
      
316,021
  
Watch
    
2,544
      
895
      
609
      
219
      
118
      
567
      
13,954
      
18,906
  
OAEM
    
0
      
28
      
0
      
8,609
      
0
      
0
      
30
      
8,667
  
Substandard
    
1,243
      
4,284
      
2,396
      
464
      
455
      
168
      
1,339
      
10,349
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial other
    
82,503
      
53,494
      
44,292
      
36,394
      
26,698
      
20,931
      
89,631
      
353,943
  
                                                                 
Commercial other current period gross charge-offs
     (973 )     (11 )     (116 )     (17 )     (2 )     (5 )     0       (1,124 )
                                                                 
Commercial loans
                                                                
Risk rating:
                                                                
Pass
    
401,686
      
347,273
      
392,329
      
240,612
      
134,880
      
293,343
      
218,451
      
2,028,574
  
Watch
    
11,423
      
16,404
      
17,386
      
20,393
      
10,465
      
28,600
      
16,414
      
121,085
  
OAEM
    
0
      
149
      
15
      
8,994
      
0
      
136
      
78
      
9,372
  
Substandard
    
5,731
      
6,640
      
8,597
      
3,129
      
12,000
      
17,621
      
1,339
      
55,057
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
2
      
0
      
2
  
Total commercial loans
  
$
418,840
    
$
370,466
    
$
418,327
    
$
273,128
    
$
157,345
    
$
339,702
    
$
236,282
    
$
2,214,090
  
                                                                 
Total commercial loans current period gross charge-offs
   $ (973 )   $ (11 )   $ (116 )   $ (17 )   $ (2 )   $ (5 )   $ 0     $ (1,124 )


 
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
December 31
 
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
    
Total
  
Hotel/motel
                                                
Risk rating:
                                                
Pass
  
$
79,651
    
$
144,826
    
$
28,011
    
$
17,664
    
$
40,873
    
$
42,029
    
$
4,042
    
$
357,096
  
Watch
    
11,569
      
2,826
      
6,835
      
4,623
      
3,361
      
1,648
      
0
      
30,862
  
OAEM
    
0
      
3,982
      
0
      
0
      
0
      
1,954
      
0
      
5,936
  
Substandard
    
0
      
0
      
0
      
0
      
0
      
1,118
      
0
      
1,118
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
753
      
0
      
753
  
Total hotel/motel
    
91,220
      
151,634
      
34,846
      
22,287
      
44,234
      
47,502
      
4,042
      
395,765
  
                                                                 
Commercial real estate residential
                                                                
Risk rating:
                                                                
Pass
    
109,304
      
89,119
      
98,896
      
30,972
      
11,908
      
36,964
      
14,700
      
391,863
  
Watch
    
2,317
      
2,131
      
473
      
1,395
      
721
      
6,359
      
124
      
13,520
  
OAEM
    
0
      
0
      
0
      
0
      
0
      
63
      
0
      
63
  
Substandard
    
760
      
854
      
4,532
      
834
      
285
      
5,232
      
0
      
12,497
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial real estate residential
    
112,381
      
92,104
      
103,901
      
33,201
      
12,914
      
48,618
      
14,824
      
417,943
  
                                                                 
Commercial real estate residential current period gross charge-offs
    0       0       (28 )     0       0       0       0       (28 )
                                                                 
Commercial real estate nonresidential
                                                                
Risk rating:
                                                                
Pass
    
149,633
      
142,580
      
136,090
      
68,240
      
55,850
      
140,074
      
31,536
      
724,003
  
Watch
    
552
      
3,664
      
6,305
      
2,347
      
1,938
      
6,003
      
354
      
21,163
  
OAEM
    
2,375
      
15
      
0
      
7,255
      
0
      
1,486
      
0
      
11,131
  
Substandard
    
2,520
      
1,598
      
2,538
      
4,472
      
2,000
      
9,199
      
0
      
22,327
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
13
      
0
      
13
  
Total commercial real estate nonresidential
    
155,080
      
147,857
      
144,933
      
82,314
      
59,788
      
156,775
      
31,890
      
778,637
  
                                                                 
Commercial real estate nonresidential current period gross charge-offs
    0       0       (7 )     0       0       (287 )     0       (294 )
                                                                 
Dealer floorplans
                                                                
Risk rating:
                                                                
Pass
    
0
      
0
      
0
      
0
      
0
      
0
      
70,308
      
70,308
  
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 dealer floorplans
    
0
      
0
      
0
      
0
      
0
      
0
      
70,308
      
70,308
  
                                                                 
Commercial other
                                                                
Risk rating:
                                                                
Pass
    
73,115
      
47,575
      
40,448
      
30,033
      
4,780
      
22,588
      
81,791
      
300,330
  
Watch
    
1,138
      
1,109
      
569
      
126
      
239
      
635
      
5,877
      
9,693
  
OAEM
    
29
      
0
      
0
      
0
      
0
      
0
      
30
      
59
  
Substandard
    
4,921
      
3,581
      
381
      
890
      
211
      
403
      
613
      
11,000
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
0
      
0
      
0
  
Total commercial other
    
79,203
      
52,265
      
41,398
      
31,049
      
5,230
      
23,626
      
88,311
      
321,082
  
                                                                 
Commercial other current period gross charge-offs
    (725 )     (710 )     (302 )     (27 )     (90 )     (46 )     0       (1,900 )
                                                                 
Commercial loans
                                                                
Risk rating:
                                                                
Pass
    
411,703
      
424,100
      
303,445
      
146,909
      
113,411
      
241,655
      
202,377
      
1,843,600
  
Watch
    
15,576
      
9,730
      
14,182
      
8,491
      
6,259
      
14,645
      
6,355
      
75,238
  
OAEM
    
2,404
      
3,997
      
0
      
7,255
      
0
      
3,503
      
30
      
17,189
  
Substandard
    
8,201
      
6,033
      
7,451
      
6,196
      
2,496
      
15,952
      
613
      
46,942
  
Doubtful
    
0
      
0
      
0
      
0
      
0
      
766
      
0
      
766
  
Total commercial loans
  
$
437,884
    
$
443,860
    
$
325,078
    
$
168,851
    
$
122,166
    
$
276,521
    
$
209,375
    
$
1,983,735
  
                                                                 
Total commercial loans current period gross charge-offs
  $
 (725 )   $
 (710 )   $ (337 )   $ (27 )   $
 (90 )   $
 (333 )   $
0     $
 (2,222 )


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:


  
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
September 30
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Revolving
Loans
    
Total
  
Home equity lines
                                                
Performing
  
$
0
    
$
0
    
$
0
    
$
0
    
$
0
    
$
7,550
    
$
154,593
    
$
162,143
  
Nonperforming
    
0
      
0
      
0
      
0
      
0
      
409
      
461
      
870
  
Total home equity lines
    
0
      
0
      
0
      
0
      
0
      
7,959
      
155,054
      
163,013
  
 
                                                                
Home equity lines current period gross charge-offs
     0       0       0       0       0       (40 )     0       (40 )
                                                                 
Mortgage loans
                                                                
Performing
    
130,527
      
199,633
      
145,699
      
148,965
      
110,835
      
258,933
      
0
      
994,592
  
Nonperforming
    
0
      
856
      
688
      
675
      
280
      
6,032
      
0
      
8,531
  
Total mortgage loans
    
130,527
      
200,489
      
146,387
      
149,640
      
111,115
      
264,965
      
0
      
1,003,123
  
 
                                                                
Mortgage loans current period gross charge-offs
     0       0       (27 )     0       0       (61 )     0       (88 )
 
                                                                
Residential loans
                                                                
Performing
    
130,527
      
199,633
      
145,699
      
148,965
      
110,835
      
266,483
      
154,593
      
1,156,735
  
Nonperforming
    
0
      
856
      
688
      
675
      
280
      
6,441
      
461
      
9,401
  
Total residential loans
  
$
130,527
    
$
200,489
    
$
146,387
    
$
149,640
    
$
111,115
    
$
272,924
    
$
155,054
    
$
1,166,136
  
 
                                                                
Total residential loans current period gross charge-offs
   $ 0     $ 0     $ 0     $ (27 )   $ 0     $ (101 )   $ 0     $ (128 )
 
                                                                
Consumer direct loans
                                                                
Performing
  
$
44,620
    
$
40,654
    
$
24,086
    
$
18,896
    
$
10,773
    
$
14,545
    
$
0
    
$
153,574
  
Nonperforming
    
0
      
13
      
461
      
0
      
7
      
6
      
0
      
487
  
Total consumer direct loans
    
44,620
      
40,667
      
24,547
      
18,896
      
10,780
      
14,551
      
0
      
154,061
  
 
                                                                
Total consumer direct loans current period gross charge-offs
     (9 )     (239 )     (593 )     (67 )     (18 )     (45 )     0       (971 )
 
                                                                
Consumer indirect loans
                                                                
Performing
    
231,296
      
269,322
      
183,318
      
74,893
      
42,356
      
14,397
      
0
      
815,582
  
Nonperforming
    
58
      
231
      
222
      
69
      
9
      
16
      
0
      
605
  
Total consumer indirect loans
    
231,354
      
269,553
      
183,540
      
74,962
      
42,365
      
14,413
      
0
      
816,187
  
 
                                                                
Total consumer indirect loans current period gross charge-offs
     (171 )     (2,151 )     (2,059 )     (1,222 )     (198 )     (215 )     0       (6,016 )
 
                                                                
Consumer loans
                                                                
Performing
    
275,916
      
309,976
      
207,404
      
93,789
      
53,129
      
28,942
      
0
      
969,156
  
Nonperforming
    
58
      
244
      
683
      
69
      
16
      
22
      
0
      
1,092
  
Total consumer loans
  
$
275,974
    
$
310,220
    
$
208,087
    
$
93,858
    
$
53,145
    
$
28,964
    
$
0
    
$
970,248
  
 
                                                                
Total consumer loans current period gross charge-offs
   $ (180 )   $ (2,390 )   $ (2,652 )   $ (1,289 )   $ (216 )   $ (260 )   $ 0     $ (6,987 )

 
Term Loans Amortized Cost Basis by Origination Year
  
(in thousands)
December 31
 
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
    
Total
  
Home equity lines
                                                
Performing
  
$
0
    
$
0
    
$
0
    
$
0
    
$
0
    
$
7,630
    
$
138,663
    
$
146,293
  
Nonperforming
    
0
      
0
      
0
      
0
      
0
      
442
      
301
      
743
  
Total home equity lines
    
0
      
0
      
0
      
0
      
0
      
8,072
      
138,964
      
147,036
  
                                                                 
Home equity lines current period gross charge-offs
    0       0       0       0       0       (23 )     0       (23 )
                                                                 
Mortgage loans
                                                                
Performing
    
200,442
      
162,407
      
159,857
      
119,772
      
56,601
      
231,147
      
0
      
930,226
  
Nonperforming
    
0
      
200
      
151
      
192
      
533
      
6,222
      
0
      
7,298
  
Total mortgage loans
    
200,442
      
162,607
      
160,008
      
119,964
      
57,134
      
237,369
      
0
      
937,524
  
                                                                 
Mortgage loans current period gross charge-offs
    0       0       (47 )     0       (40 )     (53 )     0       (140 )
                                                                 
Residential loans
                                                                
Performing
    
200,442
      
162,407
      
159,857
      
119,772
      
56,601
      
238,777
      
138,663
      
1,076,519
  
Nonperforming
    
0
      
200
      
151
      
192
      
533
      
6,664
      
301
      
8,041
  
Total residential loans
  
$
200,442
    
$
162,607
    
$
160,008
    
$
119,964
    
$
57,134
    
$
245,441
    
$
138,964
    
$
1,084,560
  
                                                                 
Total residential loans current period gross charge-offs
  $
 0     $
 0     $
 (47 )   $
 0     $
 (40 )   $
 (76 )   $
 0     $
 (163 )
                                                                 
Consumer direct loans
                                                                
Performing
  
$
63,686
    
$
34,722
    
$
26,250
    
$
15,560
    
$
6,951
    
$
11,922
    
$
0
    
$
159,091
  
Nonperforming
    
0
      
4
      
11
      
0
      
0
      
0
      
0
      
15
  
Total consumer direct loans
    
63,686
      
34,726
      
26,261
      
15,560
      
6,951
      
11,922
      
0
      
159,106
  
                                                                 
Total consumer direct loans current period gross charge-offs
     (65 )     (263 )     (129 )     (37 )     (27 )     (20 )     0       (541 )
                                                                 
Consumer indirect loans
                                                                
Performing
    
359,049
      
251,086
      
109,231
      
69,319
      
23,767
      
10,498
      
0
      
822,950
  
Nonperforming
    
133
      
223
      
157
      
11
      
22
      
9
      
0
      
555
  
Total consumer indirect loans
    
359,182
      
251,309
      
109,388
      
69,330
      
23,789
      
10,507
      
0
      
823,505
  
                                                                 
Total consumer indirect loans current period gross charge-offs
    (541 )     (2,320 )     (1,688 )     (492 )     (121 )     (171 )     0       (5,333 )
                                                                 
Consumer loans
                                                                
Performing
    
422,735
      
285,808
      
135,481
      
84,879
      
30,718
      
22,420
      
0
      
982,041
  
Nonperforming
    
133
      
227
      
168
      
11
      
22
      
9
      
0
      
570
  
Total consumer loans
  
$
422,868
    
$
286,035
    
$
135,649
    
$
84,890
    
$
30,740
    
$
22,429
    
$
0
    
$
982,611
  
                                                                 
Total consumer loans current period gross charge-offs
  $
 (606 )   $
 (2,583 )   $
 (1,817 )   $
 (529 )   $
 (148 )   $
 (191 )   $
 0     $
 (5,874 )

* 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 are in process was $4.7 million at September 30, 2024 and $3.5 million at December 31, 2023.


In accordance with ASC 326-20-30-2, if a loan does not share risk characteristics with other pooled loans in determining the ACL, 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, 2024
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
2
    
$
5,595
    
$
0
  
Commercial real estate residential
    
0
      
0
      
0
  
Commercial real estate nonresidential
    
9
      
28,354
      
325
  
Commercial other
    
3
      
13,368
      
0
  
Total collateral dependent loans
    
14
    
$
47,317
    
$
325
  

 
December 31, 2023
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
3
    
$
6,810
    
$
0
  
Commercial real estate residential
    
2
      
5,080
      
0
  
Commercial real estate nonresidential
    
9
      
21,637
      
250
  
Commercial other
    
2
      
5,658
      
0
  
Total collateral dependent loans
    
16
    
$
39,185
    
$
250
  

 
September 30, 2023
  
(in thousands)
  
Number of
Loans
    
Recorded
Investment
    
Specific
Reserve
  
Hotel/motel
    
2
    
$
8,029
    
$
0
  
Commercial real estate residential
    
2
      
5,116
      
0
  
Commercial real estate nonresidential
    
6
      
11,633
      
0
  
Commercial other
    
2
      
6,201
      
0
  
Total collateral dependent loans
    
12
    
$
30,979
    
$
0
  


The hotel/motel, commercial real estate residential, and commercial real estate nonresidential segments are all collateralized with real estate. Two of the three loans listed in the commercial other segment at September 30, 2024 are collateralized by inventory, equipment, and accounts receivable while one loan in the amount of $8.6 million is secured by shares of common stock.


Certain loans have been modified where the customer is facing financial difficulty and economic concessions were granted to borrowers consisting of reductions in the interest rates, payment extensions, forgiveness of principal, and forbearances.  These loans, segregated by loan segment and concession granted, are presented below for the quarter ended September 30, 2024:

   
Amortized Cost at September 30, 2024
 
(in thousands)
  
Interest Rate
Reduction
    
% of total
    
Term Extension
    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
0
      
0.00
      
0
      
0.00
  
Commercial real estate nonresidential
    
0
       0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
345
      
0.10
  
Commercial loans
    
0
      
0.00
      
345
      
0.02
  
                                 
Real estate mortgage
    
183
      
0.02
      
2,030
      
0.20
  
Home equity lines
    
0
      
0.00
      
0
      
0.00
  
Residential loans
    
183
      
0.02
      
2,030
      
0.17
  
                                 
Consumer direct
    
0
      
0.00
      
71
      
0.05
  
Consumer indirect
    
0
      
0.00
      
0
      
0.00
  
Consumer loans
    
0
      
0.00
      
71
      
0.01
  
                                 
Loans and lease financing
  
$
183
      
0.00
%
  
$
2,446
       0.06
%

   
Amortized Cost at September 30, 2024
  
(in thousands)
  
Combination –
Term Extension
and Interest Rate
Reduction
    
% of total
     Payment Change    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
1,954
      
0.43
%
Commercial real estate residential
    
0
      
0.00
      
0
      
0.00
  
Commercial real estate nonresidential
    
0
      
0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
164
      
0.05
      
195
      
0.06
  
Commercial loans
    
164
      
0.01
      
2,149
      
0.10
  
                                 
Real estate mortgage
    
258
      
0.03
      
0
      
0.00
  
Home equity lines
    
32
      
0.02
      
0
      
0.00
  
Residential loans
    
290
      
0.02
      
0
      
0.00
  
                                 
Consumer direct
    
0
      
0.00
      
1
      
0.00
  
Consumer indirect
    
0
      
0.00
      
9
      
0.00
  
Consumer loans
    
0
      
0.00
      
10
      
0.00
  
                                 
Loans and lease financing
  
$
454
      
0.01
%
  
$
2,159
      
0.05
%


The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended September 30, 2024:

Loan Type
  
Interest Rate Reduction
Financial Impact
  
Term Extension
Financial Impact
Hotel/motel
           
         
Commercial real estate residential
  
 

 
        
Commercial real estate nonresidential
        
 
        
Dealer floorplans
           
 
        
Commercial other
      
Added a weighted-average 0.3 years to life of the loans
 
              
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 6.2% to 3.3%
 
Added a weighted-average 1.4 years to life of the loans
 
        
Home equity lines
  
 

 
              
Consumer direct
      
Added a weighted-average 0.2 years to life of the loans
 
        
Consumer indirect
      


Loan Type
  
Combination – Term Extension and
 Interest Rate Reduction
Financial Impact
  
Payment Changes
Financial Impact
Hotel/motel
       Provided payment changes that will be added to the end of the original loan term
         
Commercial real estate residential
  

 
         
Commercial real estate nonresidential
        
         
Dealer floorplans
        
         
Commercial other
   Increased weighted-average contractual interest rate from 4.0% to 8.5% and increased the weighted-average life by 15.0 years
   Provided payment changes that will be added to the end of the original loan term
               
Real estate mortgage
  
Weighted-average contractual interest rate remained at 8.5% and increased the weighted-average life by 20.0 years
    
         
Home equity lines
  
Reduced weighted-average contractual interest rate from 5.4% to 3.0% and increased the weighted-average life by 1.4 years
  

               
Consumer direct
      
Provided payment changes that will be added to the end of the original loan term
         
Consumer indirect
      Provided payment changes that will be added to the end of the original loan term


Those loans, segregated by loan segment and concession granted, are presented below for the nine months ended September 30, 2024:


   
Amortized Cost at September 30, 2024
  
(in thousands)
  
Interest Rate
Reduction
    
% of total
    
Term Extension
    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
0
      
0.00
      
78
      
0.02
  
Commercial real estate nonresidential
    
0
       0.00      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
937
      
0.26
  
Commercial loans
    
0
      
0.00
      
1,015
      
0.05
  
                                 
Real estate mortgage
    
1,020
      
0.10
      
7,125
      
0.71
  
Home equity lines
    
0
      
0.00
      
31
      
0.02
  
Residential loans
    
1,020
      
0.09
      
7,156
      
0.61
  
                                 
Consumer direct
    
0
      
0.00
      
103
      
0.07
  
Consumer indirect
    
0
      
0.00
      
279
      
0.03
  
Consumer loans
    
0
      
0.00
      
382
      
0.04
  
                                 
Loans and lease financing
  
$
1,020
       0.02 %  
$
8,553
       0.20 %

   
Amortized Cost at September 30, 2024
  
(in thousands)
  
Combination –
Term Extension
and Interest Rate
Reduction
    
% of total
     Payment Change    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
1,954
      
0.43
%
Commercial real estate residential
    
13
      
0.00
      
206
      
0.04
Commercial real estate nonresidential
    
27
      
0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
174
      
0.05
      
934
      
0.26
Commercial loans
    
214
      
0.01
      
3,094
      
0.14
                                 
Real estate mortgage
    
590
      
0.06
   
0
      
0.00
  
Home equity lines
    
112
      
0.07
   
0
      
0.00
  
Residential loans
    
702
      
0.06
   
0
      
0.00
  
                                 
Consumer direct
    
0
      
0.00
      
1
      
0.00
  
Consumer indirect
    
0
      
0.00
      
64
      
0.01
  
Consumer loans
    
0
      
0.00
      
65
      
0.01
  
                                 
Loans and lease financing
  
$
916
      
0.02
%
  
$
3,159
      
0.07
%


The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the nine months ended September 30, 2024:

Loan Type
  
Interest Rate Reduction
Financial Impact
  
Term Extension
Financial Impact
Hotel/motel
           
         
Commercial real estate residential
  
 
Added a weighted-average 0.3 years to life of the loans
 
        
Commercial real estate nonresidential
        
 
        
Dealer floorplans
           
 
        
Commercial other
      
Added a weighted-average 0.3 years to life of the loans
 
              
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 7.8% to 4.7%
  
Added a weighted-average 0.8 years to life of the loans
 
        
Home equity lines
  
 
Added a weighted-average 0.5 years to life of the loans
 
              
Consumer direct
      
Added a weighted-average 0.1 years to life of the loans
 
        
Consumer indirect
      
Added a weighted-average 0.3 years to life of the loans

Loan Type
  
Combination – Term Extension and
 Interest Rate Reduction
Financial Impact
  
Payment Changes
Financial Impact
Hotel/motel
       Provided payment changes that will be added to the end of the original loan term
         
Commercial real estate residential
  
Weighted-average contractual interest rate remained at 8.5% and increased the weighted-average life by 4.0 years
  Provided payment changes that will be added to the end of the original loan term
         
Commercial real estate nonresidential
   Increased weighted-average contractual interest rate from 6.0% to 8.5% and increased the weighted-average life by 10.3 years
  
         
Dealer floorplans
           
         
Commercial other
   Increased weighted-average contractual interest rate from 4.3% to 8.5% and increased the weighted-average life by 14.3 years  
Provided payment changes that will be added to the end of the original loan term
               
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 5.6% to 4.2% and increased the weighted-average life by 4.3 years
    
         
Home equity lines
  
Reduced weighted-average contractual interest rate from 9.3% to 8.6% and increased the weighted-average life by 13.1 years
  

               
Consumer direct
      
Provided payment changes that will be added to the end of the original loan term
         
Consumer indirect
      Provided payment changes that will be added to the end of the original loan term


Those loans, segregated by loan segment and concession granted, are presented below for the year ended December 31, 2023:

   
Amortized Cost at December 31, 2023
 
(in thousands)
  
Interest Rate
Reduction
    
% of total
    
Term Extension
    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
534
      
0.13
      
1,788
      
0.43
  
Commercial real estate nonresidential
    
4,504
       0.58      
5,342
      
0.69
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
6,025
      
1.88
  
Commercial loans
    
5,038
      
0.25
      
13,155
      
0.66
  
                                 
Real estate mortgage
    
581
      
0.06
      
5,431
      
0.58
  
Home equity lines
    
0
      
0.00
      
246
      
0.17
  
Residential loans
    
581
      
0.05
      
5,677
      
0.52
  
                                 
Consumer direct
    
0
      
0.00
      
165
      
0.10
  
Consumer indirect
    
0
      
0.00
      
334
      
0.04
  
Consumer loans
    
0
      
0.00
      
499
      
0.05
  
                                 
Loans and lease financing
  
$
5,619
      
0.14
%
  
$
19,331
       0.48
%

   
Amortized Cost at December 31, 2023
  
(in thousands)
  
Combination –
Term Extension
and Interest Rate
Reduction
    
% of total
     Payment Change    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
1,955
      
0.49
%
Commercial real estate residential
    
0
      
0.00
      
218
      
0.05
  
Commercial real estate nonresidential
    
0
      
0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
       0.00  
Commercial other
    
29
      
0.01
      
288
      
0.09
  
Commercial loans
    
29
      
0.00
      
2,461
      
0.01
  
                                 
Real estate mortgage
    
1,101
      
0.12
      
0
      
0.00
  
Home equity lines
    
125
      
0.09
      
42
      
0.03
  
Residential loans
    
1,226
      
0.11
      
42
      
0.00
  
                                 
Consumer direct
    
0
      
0.00
      
18
      
0.01
  
Consumer indirect
    
0
      
0.00
      
0
      
0.00
  
Consumer loans
    
0
      
0.00
      
18
      
0.00
  
                                 
Loans and lease financing
  
$
1,255
      
0.03
%
  
$
2,521
      
0.06
%


The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023:

Loan Type
  
Interest Rate Reduction
Financial Impact
  
Term Extension
Financial Impact
Hotel/motel
           
         
Commercial real estate residential
   Reduced weighted-average contractual interest rate from 9.5% to 7.8%  
Added a weighted-average 0.5 years to life of the loans
 
        
Commercial real estate nonresidential
   Reduced weighted-average contractual interest rate from 9.5% to 7.5%   Added a weighted-average 0.1 years to life of the loans
 
        
Dealer floorplans
           
 
        
Commercial other
      
Added a weighted-average 3.0 years to life of the loans
 
              
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 7.0% to 4.4%
 
Added a weighted-average 2.8 years to life of the loans
 
        
Home equity lines
  
 
Added a weighted-average 6.1 years to life of the loans
 
              
Consumer direct
      
Removed a weighted-average 0.8 years from life of the loans
 
        
Consumer indirect
      
Added a weighted-average 0.3 years to life of the loans

Loan Type
  
Combination – Term Extension and
 Interest Rate Reduction
Financial Impact
  
Payment Changes
Financial Impact
Hotel/motel
       Provided payment changes that will be added to the end of the original loan term
         
Commercial real estate residential
  

  Provided payment changes that will be added to the end of the original loan term
         
Commercial real estate nonresidential
  
 
         
Dealer floorplans
           
         
Commercial other
   Reduced weighted-average contractual interest rate from 12.8% to 11.3% and increased the weighted-average life by 2.9 years  
Provided payment changes that will be added to the end of the original loan term
               
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 6.3% to 5.8% and increased the weighted-average life by 12.2 years
    
         
Home equity lines
  
Reduced weighted-average contractual interest rate from 9.4% to 8.1% and increased the weighted-average life by 9.3 years
  
Provided payment changes that will be added to the end of the original loan term
               
Consumer direct
      
Provided payment changes that will be added to the end of the original loan term
         
Consumer indirect
     
 

Those loans, segregated by loan segment and concession granted, are presented below for the three months ended September 30, 2023:

   
Amortized Cost at September 30, 2023
  
(in thousands)
  
Interest Rate
Reduction
    
% of total
     Term Extension    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
269
      
0.07
      
196
      
0.05
  
Commercial real estate nonresidential
    
0
      
0.00
      
1,883
      
0.24
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
164
      
0.05
  
Commercial loans
    
269
      
0.01
      
2,243
      
0.11
  
                                 
Real estate mortgage
    
0
      
0.00
      
1,362
      
0.15
  
Home equity lines
    
0
      
0.00
      
224
      
0.16
  
Residential loans
    
0
      
0.00
      
1,586
      
0.15
  
                                 
Consumer direct
    
0
      
0.00
      
0
      
0.00
  
Consumer indirect
    
0
      
0.00
      
0
      
0.00
  
Consumer loans
    
0
      
0.00
      
0
      
0.00
  
                                 
Loans and lease financing
  
$
269
       0.01 %  
$
3,829
       0.10 %

    Amortized Cost at September 30, 2023
 
(in thousands)
  
Combination –
Term Extension
and Interest Rate
Reduction
    
% of total
     Payment Change    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
0
      
0.00
      
0
      
0.00
  
Commercial real estate nonresidential
    
0
      
0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
81
      
0.03
  
Commercial loans
    
0
      
0.00
      
81
      
0.00
  
                                 
Real estate mortgage
    
661
      
0.07
      
0
      
0.00
  
Home equity lines
    
49
      
0.04
      
0
      
0.00
  
Residential loans
    
710
      
0.07
      
0
      
0.00
  
                                 
Consumer direct
    
0
      
0.00
      
0
      
0.00
  
Consumer indirect
    
0
      
0.00
      
0
      
0.00
  
Consumer loans
    
0
      
0.00
      
0
      
0.00
  
                                 
Loans and lease financing
  
$
710
      
0.02
%
  
$
81
      
0.00
%
 

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended September 30, 2023:

Loan Type
  
Interest Rate Reduction
Financial Impact
  
Term Extension
Financial Impact
Hotel/motel
        
         
Commercial real estate residential
  
Reduced weighted-average contractual interest rate from 9.5% to 7.5%
  
Added a weighted-average 2.0 years to life of the loans
         
Commercial real estate nonresidential
  

 
Added a weighted-average 0.2 years to life of the loans
         
Dealer floorplans
        
         
Commercial other
      
Added a weighted-average 0.8 years to life of the loans
         
Real estate mortgage
  

 
Added a weighted-average 1.0 years to life of the loans
         
Home equity lines
      
Added a weighted-average 4.9 years to life of the loans
         
Consumer direct
      

         
Consumer indirect
      


Loan Type
 		 
Combination – Term Extension and
Interest Rate Reduction
Financial Impact
    
Payment Changes
Financial Impact
Hotel/motel
        
         
Commercial real estate residential
  

   
         
Commercial real estate nonresidential
        
         
Dealer floorplans
        
         
Commercial other
      
Provided payment changes that will be added to the end of the original loan term
         
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 5.8% to 5.7% and increased the weighted-average life by 13.1 years
    
         
Home equity lines
  
Reduced weighted-average contractual interest rate from 9.9% to 8.3% and increased the weighted-average life by 8.2 years
  

         
Consumer direct
      

         
Consumer indirect
        


Those loans, segregated by loan segment and concession granted, are presented below for the nine months ended September 30, 2023:

   
Amortized Cost at September 30, 2023
  
(in thousands)
  
Interest Rate
Reduction
    
% of total
     Term Extension    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
537
      
0.13
      
1,587
      
0.39
  
Commercial real estate nonresidential
    
4,542
      
0.58
      
5,297
      
0.67
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
1,524
      
0.48
  
Commercial loans
    
5,079
      
0.26
      
8,408
      
0.43
  
                                 
Real estate mortgage
    
58
      
0.01
      
4,373
      
0.48
  
Home equity lines
    
0
      
0.00
      
250
      
0.18
  
Residential loans
    
58
      
0.01
      
4,623
      
0.44
  
                                 
Consumer direct
    
0
      
0.00
      
192
      
0.12
  
Consumer indirect
    
0
      
0.00
      
394
      
0.05
  
Consumer loans
    
0
      
0.00
      
586
      
0.06
  
                                 
Loans and lease financing
  
$
5,137
       0.13 %  
$
13,617
       0.34 %

    Amortized Cost at September 30, 2023
 
(in thousands)
  
Combination –
Term Extension
and Interest Rate
Reduction
    
% of total
     Payment Change    
% of total
  
Hotel/motel
  
$
0
      
0.00
%
  
$
0
      
0.00
%
Commercial real estate residential
    
44
      
0.01
      
0
      
0.00
  
Commercial real estate nonresidential
    
0
      
0.00
      
0
      
0.00
  
Dealer floorplans
    
0
      
0.00
      
0
      
0.00
  
Commercial other
    
0
      
0.00
      
130
      
0.04
  
Commercial loans
    
44
      
0.00
      
130
      
0.01
  
                                 
Real estate mortgage
    
1,085
      
0.12
      
0
      
0.00
  
Home equity lines
    
126
      
0.09
      
0
      
0.00
  
Residential loans
    
1,211
      
0.11
      
0
      
0.00
  
                                 
Consumer direct
    
0
      
0.00
      
19
      
0.01
  
Consumer indirect
    
0
      
0.00
      
0
      
0.00
  
Consumer loans
    
0
      
0.00
      
19
      
0.00
  
                                 
Loans and lease financing
  
$
1,255
      
0.03
%
  
$
149
      
0.00
%


The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the nine months ended September 30, 2023:

Loan Type
  
Interest Rate Reduction
Financial Impact
  
Term Extension
Financial Impact
Hotel/motel
        
         
Commercial real estate residential
  
Reduced weighted-average contractual interest rate from 9.5% to 7.8%
  
Added a weighted-average 0.6 years to life of the loans
         
Commercial real estate nonresidential
  
Reduced weighted-average contractual interest rate from 9.5% to 7.5%
  
Added a weighted-average 0.1 years to life of the loans
         
Dealer floorplans
        
         
Commercial other
      
Added a weighted-average 1.4 years to life of the loans
         
Real estate mortgage
  
Resulted in no change of the weighted-average contractual interest rate of 3.0%
  
Added a weighted-average 2.3 years to life of the loans
         
Home equity lines
      
Added a weighted-average 5.8 years to life of the loans
         
Consumer direct
      
Removed a weighted-average 0.7 years from life of the loans
         
Consumer indirect
      
Added a weighted-average 0.3 years to life of the loans

Loan Type  
Combination – Term Extension and
Interest Rate Reduction
Financial Impact
    
Payment Changes
Financial Impact
Hotel/motel
        
         
Commercial real estate residential
  
Reduced weighted-average contractual interest rate from 10.8% to 6.5% and increased the weighted-average life by 0.3 years
    
         
Commercial real estate nonresidential
        
         
Dealer floorplans
        
         
Commercial other
      
Provided payment changes that will be added to the end of the original loan term
         
Real estate mortgage
  
Reduced weighted-average contractual interest rate from 6.3% to 5.9% and increased the weighted-average life by 12.4 years
    
         
Home equity lines
  
Reduced weighted-average contractual interest rate from 9.4% to 8.1% and increased the weighted-average life by 9.4 years
  

         
Consumer direct
      
Provided payment changes that will be added to the end of the original loan term
         
Consumer indirect
     


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 due to a borrower’s financial difficulty are closely monitored for delinquency as an early indicator of possible future default.  If a loan to a borrower experiencing financial difficulty subsequently defaults, CTBI evaluates the loan for possible further impairment. The table below represents the payment status of modified loans to borrowers experiencing financial difficulty for the past 12 months as of September 30, 2024.

   
Past Due Status (Amortized Cost Basis)
  
(in thousands)
 
Current
      
30-89 Days
      
90+ Days

 
Nonaccrual
  
Hotel/motel
  
$
1,954
    
$
0
    
$
0
    
$
0
  
Commercial real estate residential
    
119
      
219
      
237
      
0
  
Commercial real estate nonresidential
    
47
      
0
      
0
      
0
  
Dealer floorplans
    
0
      
0
      
0
      
0
  
Commercial other
    
5,215
      
335
      
0
      
64
  
Real estate mortgage
    
8,865
      
245
      
819
      
715
  
Home equity lines
    
162
      
0
      
0
      
0
  
Consumer direct
    
104
      
0
      
0
      
0
  
Consumer indirect
    
280
      
64
      
0
      
0
  
Total
  
$
16,746
    
$
863
    
$
1,056
    
$
779
  


The table below represents the payment status of loans to borrowers experiencing financial difficulty for the past 12 months as of September 30, 2023:

   
Past Due Status (Amortized Cost Basis)
  
(in thousands)
 
Current
    
30-89 Days
    
90+ Days
    
Nonaccrual
  
Hotel/motel
  
$
0
    
$
0
    
$
0
    
$
0
  
Commercial real estate residential
    
2,122
      
44
      
0
      
0
  
Commercial real estate nonresidential
    
9,813
      
0
      
26
      
0
  
Dealer floorplans
    
0
      
0
      
0
      
0
  
Commercial other
    
1,060
      
320
      
345
      
264
  
Real estate mortgage
    
3,935
      
1,442
      
139
      
349
  
Home equity lines
    
519
      
100
      
0
      
22
  
Consumer direct
    
207
      
3
      
0
      
0
  
Consumer indirect
    
366
      
29
      
0
      
0
  
Total
  
$
18,022
    
$
1,938
    
$
510
    
$
635
  


The allowance for credit 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. During the quarter ended September 30, 2024, there were five loans to borrowers experiencing financial difficulty that subsequently defaulted. CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual.  Presented below, segregated by loan segment, are loans to borrowers experiencing financial difficulty for which there was a payment default during the periods indicated and such default was within twelve months of the loan modification.


  
Three Months Ended
September 30, 2024
  
(in thousands)
  
Number of Loans
    
Recorded Balance
  
Real estate mortgage
    
5
     $
467
  
Total loans experiencing financial difficulty
    
5
    
$
467
  


 
Nine Months Ended
September 30, 2024
  
(in thousands)
 
Number of Loans
    
Recorded Balance
  
Commercial real estate residential
     1     $
237  
Commercial other
     4       316  
Real estate mortgage
    
8
      
1,263
  
Total loans experiencing financial difficulty
    
13
    
$
1,816
  



Financial instrument credit losses apply to off-balance sheet credit exposures such as unfunded loan commitments and standby letters of credit.  A liability for expected credit losses for off-balance sheet exposures is recognized if the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancellable by the entity.  Changes in this allowance are reflected in other operating expenses within the non-interest expense category.  As of September 30, 2024 and December 31, 2023, the total unfunded commitment off-balance sheet credit exposure was $1.5 million.