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Loans

3 Months Ended

Mar. 31, 2022

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)	March 31 2022		December 31 2021
Hotel/motel	$	274,256	$	257,062
Commercial real estate residential		337,447		335,233
Commercial real estate nonresidential		774,791		757,893
Dealer floorplans		72,766		69,452
Commercial other		322,109		290,478
Commercial unsecured SBA PPP		22,482		47,335
Commercial loans		1,803,851		1,757,453

Real estate mortgage		780,453		767,185
Home equity lines		107,230		106,667
Residential loans		887,683		873,852

Consumer direct		156,620		156,683
Consumer indirect		667,387		620,825
Consumer loans		824,007		777,508

Loans and lease financing	$	3,515,541	$	3,408,813

The loan portfolios presented above are net of unearned fees and unamortized premiums. Unearned fees included above totaled $2.4 million as of March 31, 2022 and $4.0 million as of December 31, 2021 while the unamortized premiums on the indirect lending portfolio totaled $26.0 million as of March 31, 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.

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.

Consumer indirect loans are 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 $1.9 million at March 31, 2022 and $2.6 million at December 31, 2021.

The following tables present the balance in the allowance for credit losses (“ACL”) for the periods ended March 31, 2022, December 31, 2021 and March 31, 2021:

	Three Months Ended March 31, 2022
(in thousands)	Beginning Balance		Provision Charged to Expense			Losses Charged Off			Recoveries		Ending Balance
ACL
Hotel/motel	$	5,080	$	(153	)	$	(216	)	$	0	$	4,711
Commercial real estate residential		3,986		110			(31	)		5		4,070
Commercial real estate nonresidential		8,884		174			0			111		9,169
Dealer floorplans		1,436		83			0			0		1,519
Commercial other		4,422		478			(157	)		101		4,844
Real estate mortgage		7,637		97			(93	)		21		7,662
Home equity		866		(33	)		(19	)		5		819
Consumer direct		1,951		(180	)		(170	)		186		1,787
Consumer indirect		7,494		299			(634	)		569		7,728
Total	$	41,756	$	875		$	(1,320	)	$	998	$	42,309

	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 March 31, 2021
(in thousands)	Beginning Balance		Provision Charged to Expense			Losses Charged Off			Recoveries		Ending Balance
ACL
Hotel/motel	$	6,356	$	308		$	0		$	0	$	6,664
Commercial real estate residential		4,464		199			(24	)		2		4,641
Commercial real estate nonresidential		11,086		(135	)		(151	)		13		10,813
Dealer floorplans		1,382		(64	)		0			0		1,318
Commercial other		4,289		269			(112	)		125		4,571
Real estate mortgage		7,832		(690	)		(8	)		9		7,143
Home equity		844		(93	)		(5	)		4		750
Consumer direct		1,863		(14	)		(154	)		116		1,811
Consumer indirect		9,906		(2,279	)		(1,016	)		1,024		7,635
Total	$	48,022	$	(2,499	)	$	(1,470	)	$	1,293	$	45,346

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 twelve 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 twelve 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 high rate of inflation, the potential 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. Given this uncertainty, 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 loan losses for the quarter was $0.9 million, compared to provision of $0.5 million for the quarter ended December 31, 2021 and a recovery of provision of $2.5 million for the first quarter 2021. Our reserve coverage (allowance for credit losses to nonperforming loans) at March 31, 2022 was 309.1%, compared to 251.2% at December 31, 2021 and 215.5% at March 31, 2021. Our credit loss reserve as a percentage of total loans outstanding at March 31, 2022 was 1.20% (1.21% excluding PPP loans) compared to 1.22% at December 31, 2021 (1.24% excluding PPP loans) and 1.28% at March 31, 2021 (1.38% excluding PPP 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 class of loans for both March 31, 2022 and December 31, 2021 were as follows:

	March 31, 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		216		202		418
Commercial real estate nonresidential		2,431		1,430		414		4,275
Commercial other		0		269		52		321
Commercial unsecured SBA PPP		0		0		8		8
Total commercial loans		2,431		1,915		676		5,022

Real estate mortgage		0		3,985		3,509		7,494
Home equity lines		0		501		471		972
Total residential loans		0		4,486		3,980		8,466

Consumer direct		0		0		23		23
Consumer indirect		0		0		179		179
Total consumer loans		0		0		202		202

Loans and lease financing	$	2,431	$	6,401	$	4,858	$	13,690

	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 March 31, 2022 and December 31, 2021 (includes loans 90 days past due and still accruing as well):

March 31, 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	$	274,256	$	274,256
Commercial real estate residential		2,019		202		369		2,590		334,857		337,447
Commercial real estate nonresidential		1,119		305		3,756		5,180		769,611		774,791
Dealer floorplans		0		0		0		0		72,766		72,766
Commercial other		923		10		82		1,015		321,094		322,109
Commercial unsecured SBA PPP		0		279		8		287		22,195		22,482
Total commercial loans		4,061		796		4,215		9,072		1,794,779		1,803,851

Real estate mortgage		1,249		3,206		5,001		9,456		770,997		780,453
Home equity lines		479		205		775		1,459		105,771		107,230
Total residential loans		1,728		3,411		5,776		10,915		876,768		887,683

Consumer direct		371		182		22		575		156,045		156,620
Consumer indirect		1,516		339		178		2,033		665,354		667,387
Total consumer loans		1,887		521		200		2,608		821,399		824,007

Loans and lease financing	$	7,676	$	4,728	$	10,191	$	22,595	$	3,492,946	$	3,515,541

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 7.8% 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 consumer 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:

March 31, 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	$	37,289	$	27,824	$	11,120	$	53,233	$	18,607	$	49,251	$	0	$	197,324
Watch		3,960		9,149		13,921		8,741		8,709		29,113		0		73,593
OAEM		0		0		0		0		0		0		0		0
Substandard		0		0		0		0		3,339		0		0		3,339
Doubtful		0		0		0		0		0		0		0		0
Total hotel/motel	$	41,249	$	36,973	$	25,041	$	61,974	$	30,655	$	78,364	$	0	$	274,256

Commercial real estate residential
Risk rating:
Pass	$	26,018	$	135,618	$	48,239	$	17,798	$	18,552	$	52,486	$	10,157	$	308,868
Watch		614		2,214		2,367		2,000		2,409		7,488		37		17,129
OAEM		0		0		0		0		0		15		0		15
Substandard		322		4,260		1,917		383		1,715		2,614		224		11,435
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate residential	$	26,954	$	142,092	$	52,523	$	20,181	$	22,676	$	62,603	$	10,418	$	337,447

Commercial real estate nonresidential
Risk rating:
Pass	$	46,930	$	213,550	$	97,038	$	80,023	$	52,560	$	198,565	$	29,254	$	717,920
Watch		2,647		4,430		2,688		3,072		2,602		13,046		1,041		29,526
OAEM		0		0		0		0		0		112		20		132
Substandard		1,347		4,883		5,499		3,416		1,119		10,618		24		26,906
Doubtful		0		0		0		0		0		307		0		307
Total commercial real estate nonresidential	$	50,924	$	222,863	$	105,225	$	86,511	$	56,281	$	222,648	$	30,339	$	774,791

Dealer floorplans
Risk rating:
Pass	$	0	$	0	$	0	$	0	$	0	$	0	$	72,309	$	72,309
Watch		0		0		0		0		0		0		457		457
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	$	72,766	$	72,766

Commercial other
Risk rating:
Pass	$	38,977	$	60,835	$	39,687	$	13,194	$	29,265	$	29,659	$	80,968	$	292,585
Watch		949		648		702		364		473		1,177		6,728		11,041
OAEM		0		0		0		0		3		0		0		3
Substandard		1,357		6,954		2,844		1,254		329		795		4,947		18,480
Doubtful		0		0		0		0		0		0		0		0
Total commercial other	$	41,283	$	68,437	$	43,233	$	14,812	$	30,070	$	31,631	$	92,643	$	322,109

Commercial unsecured SBA PPP
Risk rating:
Pass	$	0	$	22,176	$	306	$	0	$	0	$	0	$	0	$	22,482
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	$	22,176	$	306	$	0	$	0	$	0	$	0	$	22,482

Commercial loans
Risk rating:
Pass	$	149,214	$	460,003	$	196,390	$	164,248	$	118,984	$	329,961	$	192,688	$	1,611,488
Watch		8,170		16,441		19,678		14,177		14,193		50,824		8,263		131,746
OAEM		0		0		0		0		3		127		20		150
Substandard		3,026		16,097		10,260		5,053		6,502		14,027		5,195		60,160
Doubtful		0		0		0		0		0		307		0		307
Total commercial loans	$	160,410	$	492,541	$	226,328	$	183,478	$	139,682	$	395,246	$	206,166	$	1,803,851

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:

March 31, 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	$	11,934	$	94,324	$	106,258
Nonperforming		0		0		0		0		0		635		337		972
Total home equity lines	$	0	$	0	$	0	$	0	$	0	$	12,569	$	94,661	$	107,230

Mortgage loans
Performing	$	44,293	$	196,891	$	151,515	$	70,288	$	35,606	$	274,366	$	0	$	772,959
Nonperforming		0		0		0		485		415		6,594		0		7,494
Total mortgage loans	$	44,293	$	196,891	$	151,515	$	70,773	$	36,021	$	280,960	$	0	$	780,453

Residential loans
Performing	$	44,293	$	196,891	$	151,515	$	70,288	$	35,606	$	286,300	$	94,324	$	879,217
Nonperforming		0		0		0		485		415		7,229		337		8,466
Total residential loans	$	44,293	$	196,891	$	151,515	$	70,773	$	36,021	$	293,529	$	94,661	$	887,683

Consumer direct loans
Performing	$	19,055	$	62,560	$	34,193	$	16,419	$	9,332	$	15,038	$	0	$	156,597
Nonperforming		0		0		14		0		9		0		0		23
Total consumer direct loans	$	19,055	$	62,560	$	34,207	$	16,419	$	9,341	$	15,038	$	0	$	156,620

Consumer indirect loans
Performing	$	123,676	$	235,189	$	167,492	$	70,474	$	46,187	$	24,190	$	0	$	667,208
Nonperforming		0		105		7		53		0		14		0		179
Total consumer indirect loans	$	123,676	$	235,294	$	167,499	$	70,527	$	46,187	$	24,204	$	0	$	667,387

Consumer loans
Performing	$	142,731	$	297,749	$	201,685	$	86,893	$	55,519	$	39,228	$	0	$	823,805
Nonperforming		0		105		21		53		9		14		0		202
Total consumer loans	$	142,731	$	297,854	$	201,706	$	86,946	$	55,528	$	39,242	$	0	$	824,007

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 $4.3 million at March 31, 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:

	March 31, 2022
(in thousands)	Number of Loans		Recorded Investment		Specific Reserve
Hotel/motel		1	$	8,348	$	0
Commercial real estate residential		4		7,119		0
Commercial real estate nonresidential		11		19,827		200
Commercial other		4		11,634		300
Total collateral dependent loans		20	$	46,928	$	500

	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

	March 31, 2021
(in thousands)	Number of Loans		Recorded Investment		Specific Reserve
Hotel/motel		6	$	34,174	$	550
Commercial real estate residential		5		8,679		0
Commercial real estate nonresidential		10		19,431		200
Commercial other		1		1,267		0
Total collateral dependent loans		22	$	63,551	$	750

The hotel/motel, commercial real estate residential, and commercial real estate nonresidential segments are all collateralized with real estate. One of the four loans listed in the commercial other segment at March 31, 2022 is collateralized by various chattel, including surface mining equipment, preparation plant equipment, and a first mortgage on a preparation plant, real estate, and improvements. The other three loans in this category are collateralized by accounts receivable, equipment, and inventory.

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 months ended March 31, 2022 and 2021 and the year ended December 31, 2021:

	Three Months Ended March 31, 2022
	Pre-Modification Outstanding Balance
(in thousands)	Number of Loans		Term Modification		Combination		Total Modification
Hotel/motel		0	$	0	$	0	$	0
Commercial real estate residential		2		154		0		154
Commercial real estate nonresidential		2		245		0		245
Commercial other		4		964		0		964
Total commercial loans		8		1,363		0		1,363

Real estate mortgage		2		0		916		916
Total residential loans		2		0		916		916

Total troubled debt restructurings		10	$	1,363	$	916	$	2,279

	Three Months Ended March 31, 2022
	Post-Modification Outstanding Balance
(in thousands)	Number of Loans		Term Modification		Combination		Total Modification
Hotel/motel		0	$	0	$	0	$	0
Commercial real estate residential		2		154		0		154
Commercial real estate nonresidential		2		244		0		244
Commercial other		4		963		0		963
Total commercial loans		8		1,361		0		1,361

Real estate mortgage		2		0		916		916
Total residential loans		2		0		916		916

Total troubled debt restructurings		10	$	1,361	$	916	$	2,277

	Year Ended December 31, 2021
	Pre-Modification Outstanding Balance
(in thousands)	Number of Loans		Term Modification		Combination		Other		Total Modification
Hotel/motel		0	$	0	$	0	$	0	$	0
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
Hotel/motel		0		0		0		0		0
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 March 31, 2021
	Pre-Modification Outstanding Balance
(in thousands)	Number of Loans		Term Modification		Combination		Total Modification
Hotel/motel		0	$	0	$	0	$	0
Commercial real estate residential		0		0		0		0
Commercial real estate nonresidential		1		0		284		284
Commercial other		0		0		0		0
Total commercial loans		1		0		284		284

Real estate mortgage		0		0		0		0
Total residential loans		0		0		0		0

Total troubled debt restructurings		1	$	0	$	284	$	284

	Three Months Ended March 31, 2021
	Post-Modification Outstanding Balance
(in thousands)	Number of Loans		Term Modification		Combination		Total Modification
Hotel/motel		0	$	0	$	0	$	0
Commercial real estate residential		0		0		0		0
Commercial real estate nonresidential		1		0		284		284
Commercial other		0		0		0		0
Total commercial loans		1		0		284		284

Real estate mortgage		0		0		0		0
Total residential loans		0		0		0		0

Total troubled debt restructurings		1	$	0	$	284	$	284

No charge-offs have resulted from modifications for any of the presented periods. We had commitments to extend additional credit in the amount of $175 thousand and $52 thousand at March 31, 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 twelve months which have 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 segment, are TDRs for which there was a payment default during the periods indicated and such default was within twelve months of the loan modification. There were no defaulted restructured loans for the three months ended March 31, 2022.

(in thousands)	Three Months Ended March 31, 2022				Year Ended December 31, 2021
	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Commercial:
Hotel/motel		0	$	0		1	$	1,113
Commercial other		0		0		0		0
Residential:
Real estate mortgage		0		0		1		275
Total defaulted restructured loans		0	$	0		2	$	1,388