Record 2025 profit for Community Trust Bancorp (NASDAQ: CTBI)
Filing Impact
Filing Sentiment
Form Type
10-K
Rhea-AI Filing Summary
Community Trust Bancorp, Inc. reports record 2025 results, with net income of $98.1 million and basic earnings per share of $5.44, up from $4.61 in 2024. Total revenue reached $282.6 million as higher interest income drove a 17.7% increase in net interest income to $219.0 million.
Loans grew 9.1% to $4.89 billion, led by commercial and residential real estate, while deposits, including repurchase agreements, rose 7.3% to $5.7 billion. Total assets were $6.7 billion and shareholders’ equity climbed to $856.1 million, with a community bank leverage ratio of 13.64%.
Profitability improved, with return on average assets at 1.53% and return on average equity at 12.07%. The annual dividend was increased from $1.86 to $2.00 per share, and the company continued to invest in technology, cybersecurity, branch optimization, and community development lending.
Positive
- Record profitability and improved returns: 2025 net income rose 18.4% to $98.1 million, EPS increased to $5.44, ROAA reached 1.53%, and ROAE 12.07%, supported by 17.7% net interest income growth and disciplined expense control.
Negative
- None.
Insights
Record earnings, solid loan growth, and strong capital position CTBI well, but credit and rate risks remain.
Community Trust Bancorp, Inc. delivered record 2025 net income of $98.1 million, up 18.4% year over year, with basic EPS rising to $5.44. Net interest income grew 17.7% to $218.978 million, helped by 9.1% loan growth to $4.89 billion and a higher net interest margin of 3.62%.
Balance sheet expansion was broad-based: total assets reached $6.7 billion, deposits including repurchase agreements rose to $5.7 billion, and shareholders’ equity increased 13.0% to $856.1 million. Profitability improved, with ROAA at 1.53% and ROAE at 12.07%, while the community bank leverage ratios of 13.64% for CTBI and 13.19% for CTB indicate robust capital.
Risk disclosures highlight sizable real estate exposure, indirect consumer lending, interest rate sensitivity, cyber risk, and local economic dependence in Kentucky, West Virginia, and Tennessee. Future performance will depend on maintaining credit quality as commercial and residential real estate and consumer indirect portfolios grow, and on managing funding costs in a competitive deposit environment.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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For the fiscal year ended December 31, 2025
Or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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For the transition period from _____________ to _____________
Commission file number 001-31220
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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(Title of class)
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The
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(Trading symbol)
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(Name of exchange on which registered)
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes ☐
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Yes ☐
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
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No ☐
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Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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No ☐
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated Filer ☐
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Non-accelerated Filer ☐
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Smaller Reporting Company
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Emerging Growth Company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report.
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No ☐
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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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No ☑
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Based upon the closing price of the Common Shares of the Registrant on The NASDAQ Global Select Market, the aggregate market value of voting stock
held by non-affiliates of the Registrant as of June 30, 2025 was $934.5 million. For the purpose of the foregoing calculation only, all
directors and executive officers of the Registrant have been deemed affiliates. The number of shares outstanding of the Registrant’s Common Stock as of January 31, 2026 was 18,150,771 .
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference certain information from the
Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 28, 2026.
TABLE OF CONTENTS
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
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PART I
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Item 1. Business
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Item 1A. Risk Factors
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Item 1B. Unresolved Staff Comments
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Item 1C. Cybersecurity
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Item 2. Properties
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Item 3. Legal Proceedings
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Item 4. [Reserved]
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Information about our Executive Officers
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PART II
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Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity
Securities
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Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
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Item 8. Financial Statements and Supplementary Data
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Notes to Consolidated Financial Statements
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Reports of Independent Registered Public Accounting Firm
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A. Controls and Procedures
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Item 9B. Other Information
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PART III
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Item 10. Directors, Executive Officers, and Corporate Governance of the Registrant
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Item 11. Executive Compensation
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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Item 13. Certain Relationships, Related Transactions, and Director Independence
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Item 14. Principal Accountant Fees and Services
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PART IV
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Item 15. Exhibits and Financial Statement Schedules
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Item 16. Form 10-K Summary
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Signatures
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Table of Contents
CAUTIONARY STATEMENT
REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Community Trust
Bancorp, Inc.’s (“CTBI”) actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could.” These forward-looking statements involve risks and uncertainties including, but not limited to,
economic conditions, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including the performance of financial markets, prevailing inflation and
interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; the effects of epidemics, pandemics, or other infectious disease outbreaks; results of various investment activities;
the effects of competitors’ pricing policies, changes in laws and regulations, competition, and demographic changes on target market populations’ savings and financial planning needs; industry changes in information technology systems on which
we are highly dependent; failure of acquisitions to produce revenue enhancements or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; and the resolution of legal proceedings and
related matters. In addition, the banking industry in general is subject to various monetary, operational, and fiscal policies and regulations, which include, but are not limited to, those determined by the Federal Reserve Board, the Federal
Deposit Insurance Corporation, the Consumer Financial Protection Bureau, and state regulators, whose policies, regulations, and enforcement actions could affect CTBI’s results. These statements are representative only on the date hereof, and
CTBI undertakes no obligation to update any forward-looking statements made.
PART I
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Item 1.
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Business
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Community Trust Bancorp, Inc. (“CTBI”) is a bank holding company registered with the Board of Governors of the Federal Reserve System pursuant to Section 5(a) of the Bank Holding Company Act of
1956, as amended. CTBI was incorporated August 12, 1980, under the laws of the Commonwealth of Kentucky for the purpose of becoming a bank holding company. Currently, CTBI owns all the capital stock of one commercial bank and one trust
company, serving small and mid-sized communities in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee. The commercial bank is Community Trust Bank, Inc., Pikeville, Kentucky (“CTB”)
and the trust company is Community Trust and Investment Company, Lexington, Kentucky (“CTIC”).
At December 31, 2025, CTBI had total consolidated assets of $6.7 billion and total consolidated deposits, including repurchase agreements, of $5.7 billion. Total shareholders’ equity at
December 31, 2025 was $856.1 million. Trust assets under management at December 31, 2025 were $4.1 billion, including CTB’s investment portfolio totaling $1.1 billion.
Through our subsidiaries, CTBI engages in a wide range of commercial and personal banking and trust and wealth management activities, which include accepting time and demand deposits; making
secured and unsecured loans to corporations, individuals, and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes; and providing funds transfer services. The
lending activities of CTB include making commercial, construction, mortgage, and personal loans. Lines of credit, revolving lines of credit, term loans, and other specialized loans, including asset-based financing, are also available. Our
corporate subsidiaries act as trustees of personal trusts, as executors of estates, as trustees for employee benefit trusts, as paying agents for bond and stock issues, as investment agent, as depositories for securities, and as providers of
full-service brokerage and insurance services.
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CTBI has supported numerous community organizations through financing projects for affordable housing, economic development, and revitalization of distressed and underserved areas. CTB’s
community development lending totaled over $59.6 million for the year 2025. Also, during 2025, CTBI made contributions totaling over $719 thousand to aid low and moderate income families and communities and encourage economic development. Our
employees served over 990 hours throughout the year with organizations that provide affordable housing and other services to low and moderate income families and encourage economic development for small businesses and farms.
COMPETITION
CTBI’s subsidiaries face substantial competition for deposit, credit, trust, wealth management, and brokerage relationships in the communities we serve. Competing providers include state
banks, national banks, thrifts, trust companies, insurance companies, mortgage banking operations, credit unions, finance companies, brokerage companies, and other financial and non-financial companies which may offer products functionally
equivalent to those offered by our subsidiaries. As financial services become increasingly dependent on technology, permitting transactions to be conducted by telephone, mobile banking, and the internet, non-bank institutions are able to
attract funds and provide lending and other financial services without offices located in our market areas. Many of our nonbank competitors have fewer regulatory constraints, broader geographic service areas, greater capital, and, in some
cases, lower cost structures. In addition, competition for quality customers has intensified as a result of changes in regulation, consolidation among financial service providers, and advances in technology and product delivery systems. Many
of these providers offer services within and outside the market areas served by our subsidiaries. We strive to offer competitively priced products along with quality customer service to build customer relationships in the communities we serve.
The United States and global markets, as well as general economic conditions, have been volatile. Larger financial institutions could strengthen their competitive position as a result of
ongoing consolidation within the financial services industry.
Banking legislation in Kentucky places no limits on the number of banks or bank holding companies that a bank holding company may acquire. Interstate acquisitions are allowed where reciprocity
exists between the laws of Kentucky and the home state of the bank or bank holding company to be acquired. Bank holding companies continue to be limited to control of less than 15% of deposits held by federally insured depository institutions
in Kentucky (exclusive of inter-bank and foreign deposits). Competition for deposits may be increasing as a consequence of Federal Deposit Insurance Corporation (“FDIC”) assessments shifting from deposits to an asset-based formula, as larger
banks may move away from non-deposit funding sources.
No material portion of our business is seasonal. We are not dependent upon any one customer or a few customers, and the loss of any one or a few customers would not have a material adverse
effect on us. See note 5 to the consolidated financial statements contained herein for additional information regarding concentrations of credit.
We do not engage in any operations in foreign countries.
HUMAN CAPITAL
We recognize the long-term value of a highly skilled, dedicated workforce, with an average tenure of over 10 years, and are committed to providing our employees with opportunities for personal
and professional growth, whether it is by providing reimbursement of educational expenses, encouraging attendance at seminars and in-house training programs, or sponsoring memberships in local civic organizations.
Our employees recognize the long-term benefit of working with our organization as evidenced by the 21% of our employees who have more than 20 years of service. Our employees participate in
numerous coaching, training, and educational programs, including required periodic training on topics such as ethics, privacy regulations, anti-money laundering, and UDAAP (Unfair, Deceptive, or Abusive Acts or Practices). Additionally, CTBI
makes online training available to employees. Employees also have the opportunity to utilize programs that provide skill development online with over 8,000 varied courses, including topics in banking, finance, computers, customer service,
sales, management, and personal skills such as time management, project management, and communication skills.
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In addition to classes provided by our training department, employees also have the opportunity to work on their skill development through attending secondary education courses. These are
funded through our Educational Assistance Program.
As of December 31, 2025, CTBI and our subsidiaries had 930 full-time equivalent employees. Females comprise 75% of our workforce, and 61% of our managerial positions (supervisor or above) are
held by females. This includes 64% of our branch managers, 40% of our market presidents, and 39% of our senior vice presidents. At the time of this filing, our Board of Directors is 30% female.
CTBI offers our employees competitive compensation, as well as a highly competitive benefits package. A retirement plan, an employee stock ownership plan, group life insurance, major medical
insurance, a cafeteria plan, education reimbursement, and management and employee incentive compensation plans are available to all eligible personnel.
Employees are also offered the opportunity to complete periodic employee satisfaction surveys anonymously.
We have actively supported our employees with a wellness program for more than 20 years. Since beginning the program in 2004, participating employees have experienced improvements in
preventing cardiovascular disease, cancer, and diabetes. Many of our employees have experienced decreases in elevated medical risk factors, including alcohol consumption, tobacco usage, physical inactivity, high stress, high cholesterol, and
high blood pressure.
SUPERVISION AND REGULATION
General
As a registered bank holding company, we are restricted to those activities permissible under the Bank Holding Company Act of 1956, as amended, and are subject to actions of the Board of
Governors of the Federal Reserve System thereunder. We are required to file an annual report with the Federal Reserve Board and are subject to an annual examination by the Board.
Community Trust Bank, Inc. is a state-chartered bank subject to state and federal banking laws and regulations and periodic examination by the Kentucky Department of Financial Institutions and
the restrictions, including dividend restrictions, thereunder. CTB is also a member of the Federal Reserve System and is subject to certain restrictions imposed by and to examination and supervision under the Federal Reserve Act. Community
Trust and Investment Company is also regulated by the Kentucky Department of Financial Institutions and the Federal Reserve.
Deposits of CTB are insured up to applicable limits by the FDIC, which subjects banks to regulation and examination under the provisions of the Federal Deposit Insurance Act.
The operations of CTBI and our subsidiaries are also affected by other banking legislation and policies and practices of various regulatory authorities. Such legislation and policies include
statutory maximum rates on some loans, reserve requirements, domestic monetary and fiscal policy, and limitations on the kinds of services that may be offered.
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CTBI’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on our website at www.ctbi.com
as soon as reasonably practicable after such materials are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). CTBI’s Code of Business Conduct and Ethics and other corporate governance documents are also
available on our website. Copies of our annual report will be made available free of charge upon written request to:
Community Trust Bancorp, Inc.
Mark A. Gooch
Chairman, President, and CEO
P.O. Box 2947
Pikeville, KY 41502-2947
The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding CTBI and other issuers that file
electronically with the SEC.
Capital Requirements
Insured depository institutions are required to meet certain capital level requirements. On October 29, 2019, federal banking regulators adopted a final rule to simplify the regulatory capital
requirements for eligible community banks and holding companies that opt-in to the community bank leverage ratio framework (the “CBLR framework”), as required by Section 201 of the Economic Growth, Relief and Consumer Protection Act of 2018.
Under the final rule, which became effective as of January 1, 2020, community banks and holding companies (which includes CTB and CTBI) that satisfy certain qualifying criteria, including having less than $10 billion in average total
consolidated assets and a leverage ratio (referred to as the “community bank leverage ratio”) of greater than 9%, were eligible to opt-in to the CBLR framework. The community bank leverage ratio is the ratio of a banking organization’s Tier 1
capital to its average total consolidated assets, both as reported on the banking organization’s applicable regulatory filings. Management elected to use the CBLR framework for CTBI and CTB. CTBI’s CBLR ratio as of December 31, 2025 was
13.64%. CTB’s CBLR ratio as of December 31, 2025 was 13.19%.
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Item 1A.
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Risk Factors
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An investment in our common stock is subject to risks inherent to our business. The material risks and uncertainties that management believes affect us are described below. Before making an
investment decision, you should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference herein. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these
risk factors. See also, “Cautionary Statement Regarding Forward-Looking Statements.” If any of the following risks actually occur, our financial condition and results of operations could be materially and adversely affected. If this were to
happen, the value of our common stock could decline significantly, and you could lose all or part of your investment.
Economic Environment Risks
Economic Risk
CTBI may continue to be adversely affected by economic and market conditions.
Our financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as
well as demand for loans and other products and services we offer, is highly dependent upon the business environment in the markets where we operate, in the states of Kentucky, West Virginia, and Tennessee and in the United States as a whole.
A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings. Unfavorable
or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in
inflation or interest rates; high unemployment; natural disasters; or a combination of these or other factors. Such conditions could adversely affect the credit quality of our loans and our business, financial condition, and results of
operations.
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Economy of Our Markets
Our business may continue to be adversely affected by ongoing weaknesses in the local economies on which we depend.
Our loan portfolio is concentrated primarily in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee. Our profits depend on providing
products and services to clients in these local regions. Although unemployment rates in many of our markets have decreased, they remain above the national average. Increases in unemployment, decreases in real estate values, or increases in
interest rates could weaken the local economies in which we operate. These economic indicators typically affect certain industries, such as real estate and financial services, more significantly. Also, our growth within certain of our markets
may be adversely affected by inconsistent access to high speed internet and the lack of population and business growth in such markets in recent years. Weakness in our market area could depress our earnings and consequently our financial
condition because:
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Clients may not want, need, or qualify for our products and services;
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Borrowers may not be able to repay their loans;
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The value of the collateral securing our loans to borrowers may decline; and
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The quality of our loan portfolio may decline.
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Climate Change Risk
Our business may be adversely impacted by climate change and related initiatives.
Climate change and other emissions-related laws, regulations, and agreements have been proposed and, in some cases adopted, on the international, federal, state, and local levels. These final
and proposed initiatives take the form of restrictions, caps, taxes, or other controls on emissions. Our markets include areas where the coal industry was historically a significant part of the local economy. The importance of the coal
industry to such areas has, however, continued to decline substantially and the economies of our markets have become more diversified. Nevertheless, to the extent that existing or new climate change laws, regulations, or agreements further
impact production, purchase, or use of coal, the economies of certain areas within our markets, the demand for financing, the value of collateral securing our coal-related loans, and our financial condition and results of operations may be
adversely affected.
We, like all businesses, as well as our market areas, borrowers, and customers, may be adversely impacted to the extent that weather-related events cause damage or disruption to properties or
businesses.
Risk from Infectious Disease Outbreaks
Our business, results of operations, and financial condition may be adversely affected by epidemics, pandemics, or other infectious disease outbreaks.
We may face risks related to epidemics, pandemics or other infectious disease outbreaks, which could result in a widespread health crisis that adversely affects general commercial activity, the
global economy (including the states and local economies in which we operate), and financial markets.
Epidemics, pandemics, or infectious disease outbreaks, may result in us having to close certain offices and may require us to limit how customers conduct business through our branch network.
If our employees are required to work remotely, we may be exposed to increased cybersecurity risks such as phishing, malware, and other cybersecurity attacks, all of which could expose us to liability and could seriously disrupt our business
operations. Furthermore, our business operations may be disrupted due to vendors and third-party service providers being unable to work or provide services effectively during such a health crisis, including because of illness, quarantines, or
other government actions.
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In addition, an epidemic, a pandemic, or another infectious disease outbreak could significantly impact households and businesses, or cause limitations on commercial activity, increased
unemployment, and general economic and financial instability. An economic slow-down, or the reversal of an economic recovery, in the regions in which we conduct our business could result in declines in loan demand and collateral values.
Furthermore, negative impacts on our customers caused by such a health crisis could result in increased risk of delinquencies, defaults, foreclosures, and losses on our loans. Moreover, governmental and regulatory actions taken in response to
an epidemic, a pandemic, or another infectious disease outbreak may include decreased interest rates, which could adversely impact our interest margins and may lead to decreases in our net interest income.
The extent to which a widespread health crisis may impact our business, results of operations, and financial condition, as well as its regulatory capital and liquidity ratios, will depend on
future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and severity of the crisis, the potential for seasonal or other resurgences, actions taken by governmental authorities and
other third parties to contain and treat such an epidemic, a pandemic, or another infectious disease outbreak, and how quickly and to what extent normal economic and operating conditions can resume. Moreover, the effects of a widespread health
crisis may heighten many of the other risks described in this “Risk Factors” section. As a result, the negative effects on our business, results of operations, and financial condition from an epidemic, a pandemic, or another infectious disease
outbreak could be material.
Operational Risks
Interest Rate Risk
Changes in interest rates could adversely affect our earnings and financial condition.
Our earnings and financial condition are dependent to a large degree upon net interest income, which is the difference between interest earned from loans and investments and interest paid on
deposits and borrowings. The narrowing of interest-rate spreads, meaning the difference between the interest rates earned on loans and investments and the interest rates paid on deposits and borrowings, could adversely affect our earnings and
financial condition. Interest rates are highly sensitive to many factors, including:
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The rate of inflation;
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The rate of economic growth;
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Employment levels;
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Monetary policies; and
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Instability in domestic and foreign financial markets.
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Changes in market interest rates will also affect the level of voluntary prepayments on our loans and the receipt of payments on our mortgage-backed securities resulting in the receipt of
proceeds that may be reinvested at a lower rate than the loan or mortgage-backed security being prepaid.
We originate residential loans for sale and for our portfolio. The origination of loans for sale is designed to meet client financing needs and earn fee income. The origination of loans for
sale is highly dependent upon the local real estate market and the level and trend of interest rates. Increasing interest rates may reduce the origination of loans for sale and consequently the fee income we earn. While our commercial
banking, construction, and income property loan portfolios remain a significant portion of our activities, high interest rates may reduce our mortgage-banking activities and thereby our income. In contrast, decreasing interest rates have the
effect of causing clients to refinance mortgage loans faster than anticipated. This causes the value of assets related to the servicing rights on loans sold to be lower than originally anticipated. If this happens, we may need to write down
our servicing assets faster, which would accelerate our expense and lower our earnings.
We consider interest rate risk one of our most significant market risks. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates.
Consistency of our net interest revenue is largely dependent upon the effective management of interest rate risk. We employ a variety of measurement techniques to identify and manage our interest rate risk, including the use of an earnings
simulation model to analyze net interest income sensitivity to changing interest rates. The model is based on actual cash flows and repricing characteristics for on and off-balance sheet instruments and incorporates market-based assumptions
regarding the effect of changing interest rates on the prepayment rates of certain financial assets and liabilities. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also
incorporated into the model. These assumptions are inherently uncertain, and as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual
results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.
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Credit Risk
Our earnings and reputation may be adversely affected if we fail to effectively manage our credit risk.
Originating and underwriting loans are integral to the success of our business. This business requires us to take “credit risk,” which is the risk of losing principal and interest income
because borrowers fail to repay loans. Collateral values and the ability of borrowers to repay their loans may be affected at any time by factors such as:
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The length and severity of downturns in the local economies in which we operate or the national economy;
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The length and severity of downturns in one or more of the business sectors in which our customers operate, particularly the automobile, hotel/motel, and residential development industries; or
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A rapid increase in interest rates.
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Our loan portfolio includes loans with a higher risk of loss.
We originate commercial real estate residential loans, commercial real estate nonresidential loans, hotel/motel loans, other commercial loans, consumer loans, and residential mortgage loans,
primarily within our market area. Commercial real estate residential, commercial real estate nonresidential, hotel/motel, and other commercial loans tend to involve larger loan balances to a single borrower or groups of related borrowers and
are most susceptible to a risk of loss during a downturn in the business cycle. These loans also have historically had a greater credit risk than other loans for the following reasons:
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Commercial Real Estate Residential. Repayment is dependent on income being generated in amounts sufficient to cover
operating expenses and debt service. As of December 31, 2025, commercial real estate residential loans comprised approximately 10% of our total loan portfolio.
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Commercial Real Estate Nonresidential. Repayment is dependent on income being generated in amounts sufficient to cover
operating expenses and debt service. As of December 31, 2025, commercial real estate nonresidential loans comprised approximately 20% of our total loan portfolio.
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Hotel/Motel. The hotel and motel industry is highly susceptible to changes in the domestic and global economic environments, which has caused the industry to
experience substantial volatility due to the recent global pandemic. As of December 31, 2025, hotel/motel loans comprised approximately 10% of our total loan portfolio.
|
| • |
Other Commercial Loans. Repayment is generally dependent upon the successful operation of the borrower’s business. In
addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in value based on the success of the business. As of December 31, 2025, other commercial loans comprised
approximately 9% of our total loan portfolio.
|
Consumer loans may carry a higher degree of repayment risk than residential mortgage loans, particularly when the consumer loan is unsecured. Repayment of a consumer loan typically depends on
the borrower’s financial stability, and it is more likely to be affected adversely by job loss, illness, or personal bankruptcy. In addition, federal and state bankruptcy, insolvency, and other laws may limit the amount we can recover when a
consumer client defaults. As of December 31, 2025, consumer loans comprised approximately 21% of our total loan portfolio. Approximately 86% of our consumer loans and 18% of our total loan portfolio were consumer indirect loans. Consumer
indirect loans are fixed rate loans secured by new and used automobiles, trucks, vans, and recreational vehicles originated at selling dealerships which are purchased by us following our review and approval of such loans. These loans generally
have a greater risk of loss in the event of default than, for example, one-to-four family residential mortgage loans due to the rapid depreciation of vehicles securing the loans. We face the risk that the collateral for a defaulted loan may
not provide an adequate source of repayment of the outstanding loan balance. We also assume the risk that the dealership administering the lending process does not comply with applicable consumer protection law and regulations.
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A significant part of our lending business is focused on small to medium-sized business which may be impacted more severely during periods of economic weakness.
A significant portion of our commercial loan portfolio is tied to small to medium-sized businesses in our markets. During periods of economic weakness, small to medium-sized businesses may be
impacted more severely than larger businesses. As a result, the ability of smaller businesses to repay their loans may deteriorate, particularly if economic challenges persist over a period of time, and such deterioration would adversely
impact our results of operations and financial condition.
A large percentage of our loan portfolio is secured by real estate, in particular commercial real estate. Weakness in the real estate market or other segments of our loan portfolio would lead
to additional losses, which could have a material adverse effect on our business, financial condition, and results of operations.
As of December 31, 2025, approximately 70% of our loan portfolio was secured by real estate, with approximately 42% of the portfolio consisting of commercial real estate (“CRE”). High levels
of commercial and consumer delinquencies or declines in real estate market values could require increased net charge-offs and increases in the allowance for credit losses, which could have a material adverse effect on our business, financial
condition, and results of operations and prospects. CRE held by CTBI is not concentrated in office space/large metro areas and at risk of significant decrease in collateral value.
Competition
Strong competition within our market area may reduce our ability to attract and retain deposits and originate loans.
We face competition both in originating loans and in attracting deposits. Competition in the financial services industry is intense. We compete for clients by offering excellent service and
competitive rates on our loans and deposit products. The type of institutions we compete with include commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies, and
brokerage and investment banking firms. Competition arises from institutions located within and outside our market areas. As financial services become increasingly dependent on technology, permitting transactions to be conducted by telephone,
mobile banking, and the internet, non-bank institutions are able to attract funds and provide lending and other financial services without offices located in our market areas. As a result of their size and ability to achieve economies of
scale, certain of our competitors offer a broader range of products and services than we offer. With the increased consolidation in the financial industry, larger financial institutions may strengthen their competitive positions. In addition,
to stay competitive in our markets we may need to adjust the interest rates on our products to match the rates offered by our competitors, which could adversely affect our net interest margin. As a result, our profitability depends upon our
continued ability to successfully compete in our market areas while achieving our investment objectives.
Technology and other changes are allowing consumers to complete financial transactions through alternative methods to those which historically involved banks. For example, consumers can now
hold funds that would have been held as bank deposits in mutual funds, brokerage accounts, general purpose reloadable prepaid cards, or cyber currency. In addition, consumers can complete transactions, such as paying bills or transferring
funds, directly without utilizing the services of a bank. The process of eliminating banks as intermediaries (known as disintermediation) could result in the loss of fee income, as well as the loss of deposits and the income that might be
generated from those deposits. The related revenue reduction could adversely affect our financial condition, cash flows, and results of operations.
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Operational Risk
An extended disruption of vital infrastructure or a security breach could negatively impact our business, results of operations, and financial condition.
Our operations depend upon, among other things, our infrastructure, including equipment and facilities. Extended disruption of vital infrastructure by fire, power loss, natural disaster,
telecommunications failure, computer hacking or viruses, terrorist activity or the domestic and foreign response to such activity, or other events outside of our control could have a material adverse impact on the financial services industry as
a whole and on our business, results of operations, cash flows, and financial condition in particular. Our business recovery plan may not work as intended or may not prevent significant interruption of our operations. The occurrence of any
failures, interruptions, or security breaches of our information systems could damage our reputation, result in the loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial
liability, any of which could have an adverse effect on our financial condition and results of operation.
Our information technology systems and networks may experience interruptions, delays, or cessations of service or produce errors due to regular maintenance efforts, such as systems integration
or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive, and resource
intensive. Such disruptions could damage our reputation and otherwise adversely impact our business and results of operations.
Third party vendors provide key components of our business infrastructure, such as processing, internet connections, and network access. While CTBI selected these third party vendors carefully
through our vendor management process, we do not control their actions and generally are not able to obtain satisfactory indemnification provisions in our third party vendor written contracts. Any problems caused by third parties or arising
from their services, such as disruption in service, negligence in the performance of services or a breach of customer data security with regard to the third parties’ systems, could adversely affect our ability to deliver services, negatively
impact our business reputation, cause a loss of customers, or result in increased expenses, regulatory fines and sanctions, or litigation.
Claims and litigation may arise pertaining to fiduciary responsibility.
Customers may, from time to time, make a claim and take legal action pertaining to our performance of fiduciary responsibilities. Whether customer claims and legal action related to our
performance of fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us, they may result in significant financial liability, adversely affect the market perception of us
and our products and services, and impact customer demand for those products and services. Any such financial liability or reputational damage could have an adverse effect on our business, financial condition, and results of operations.
Significant legal actions could subject us to uninsured liabilities.
From time to time, we may be subject to claims related to our operations. These claims and legal actions, including supervisory actions by our regulators, could involve significant amounts.
We maintain insurance coverage in amounts and with deductibles we believe are appropriate for our operations. However, our insurance coverage may not cover all claims against us and related costs, and further insurance coverage may not
continue to be available at a reasonable cost. As a result, CTBI could be exposed to uninsured liabilities, which could adversely affect CTBI’s business, financial condition, or results of operations.
Technology Risk
CTBI continually encounters technological change.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology
increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and
services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to
effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry
could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
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Cyber Risk
A breach in the security of our systems could disrupt our business, result in the disclosure of confidential information, damage our reputation, and create significant financial and legal
exposure for us.
Our businesses are dependent on our ability and the ability of our third party service providers to process, record, and monitor a large number of transactions. If the financial, accounting,
data processing, or other operating systems and facilities fail to operate properly, become disabled, experience security breaches, or have other significant shortcomings, our results of operations could be materially adversely affected.
Management is responsible for the day-to-day management of information security risk, while the Risk and Compliance Committee of our Board of Directors is responsible for the oversight of
information security risk. The Risk and Compliance Committee has the responsibility to satisfy itself that the processes designed and implemented by management are adequate and functioning as designed. The Chairman of this Committee makes a
quarterly report to the Board covering key risk areas. We have an annual third-party information technology review conducted by information security professionals following industry-standard testing procedures. All employees go through
information security training annually, in addition to random quarterly phishing testing. In the event of an information security breach, we have an insurance policy in place.
Although we and our third party service providers devote significant resources to maintain and upgrade our systems and processes that are designed to protect the security of computer systems,
software, networks, and other technology assets and the confidentiality, integrity, and availability of information belonging to us and our customers, there is no assurance that our security systems and those of our third party service
providers will provide absolute security. Financial services institutions and companies engaged in data processing have reported breaches in the security of their websites or other systems, some of which have involved sophisticated and
targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks, and other means.
Despite our efforts and those of our third party service providers to ensure the integrity of these systems, it is possible that we or our third party service providers may not be able to anticipate or to implement effective preventive measures
against all security breaches of these types, especially because techniques used change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources.
A successful breach of the security of our systems or those of our third party service providers could cause serious negative consequences to us, including significant disruption of our
operations, misappropriation of our confidential information or the confidential information of our customers, or damage to our computers or operating systems, and could result in violations of applicable privacy and other laws, financial loss
to us or to our customers, loss in confidence in our security measures, customer dissatisfaction, litigation exposure, and harm to our reputation, all of which could have a material adverse effect on us. While we maintain insurance coverage
that should, subject to policy terms and conditions, cover certain aspects of our cyber risks, this insurance coverage may be insufficient to cover all losses we could experience resulting from a cyber-security breach. Moreover, the cost of
insurance sufficient to cover substantially all, or a reasonable portion, of losses related to cyber security breaches is expected to increase and such increases are likely to be material.
CTBI has not experienced any data breaches; however, one of our third party vendors did experience a data breach during 2023, as disclosed in note 19 to our consolidated financial statements in
our annual report on Form 10-K for the year ended December 31, 2023. The incident did not impact the ongoing operations of CTBI, and we do not expect any significant expenses beyond what our insurance policy covers.
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Banking customers and employees have been, and will likely continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate passwords, account
information, or other personal information, or to introduce viruses or other malware to bank information systems or customers’ computers. Though we endeavor to lessen the success of such threats through the use of authentication technology and
employee education, such cyber-attacks remain a serious issue. Publicity concerning security and cyber-related problems could inhibit the use or growth of electronic or web-based applications as a means of conducting banking and other
commercial transactions.
We could incur increased costs or reductions in revenue or suffer reputational damage in the event of misuse of information.
Our operations rely on the secure processing, transmission, and storage of confidential information in our computer systems and networks regarding our customers and their accounts. To provide
these products and services, we use information systems and infrastructure that we and third party service providers operate. As a financial institution, we also are subject to and examined for compliance with an array of data protection laws,
regulations, and guidance, as well as to our own internal privacy and information security policies and programs.
Information security risks for financial institutions like us have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet and
telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, and other external parties. Our technologies and systems may become the target of cyber-attacks or
other attacks that could result in the misuse or destruction of our or our customers’ confidential, proprietary, or other information or that could result in disruptions to the business operations of us or our customers or other third parties.
Also, our customers, in order to access some of our products and services, may use personal computers, smart mobile phones, tablet PCs, and other devices that are beyond our controls and security systems. Further, a breach or attack affecting
one of our third-party service providers or partners could impact us through no fault of our own. In addition, because the methods and techniques employed by perpetrators of fraud and others to attack systems and applications change frequently
and often are not fully recognized or understood until after they have been launched, we and our third-party service providers and partners may be unable to anticipate certain attack methods in order to implement effective preventative
measures.
While we have policies and procedures designed to prevent or limit the effect of the possible security breach of our information systems, if unauthorized persons were somehow to get access to
confidential or proprietary information in our possession or to our proprietary information, it could result in litigation and regulatory investigations, significant legal and financial exposure, damage to our reputation, or a loss of
confidence in the security of our systems that could materially adversely affect our results of operation.
Counterparty Risk
The soundness of other financial institutions could adversely affect CTBI.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are
interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services
industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional counterparties. As a result, defaults by, or even rumors or questions about, one or more financial services companies,
or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our
counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan due us. There is no assurance that any
such losses would not materially and adversely affect our businesses, financial condition, or results of operations.
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Acquisition Risks
Acquisition Risk
We may have difficulty in the future continuing to grow through acquisitions.
We may experience difficulty in making acquisitions on acceptable terms due to the decreasing number of suitable acquisition targets, competition for attractive acquisitions, regulatory
impediments, and certain limitations on interstate acquisitions.
Any future acquisitions or mergers by CTBI or our banking subsidiary are subject to approval by the appropriate federal and state banking regulators. The banking regulators evaluate a number
of criteria in making their approval decisions, such as:
| • |
Safety and soundness guidelines;
|
| • |
Compliance with all laws including the USA PATRIOT Act, the International Money Laundering Abatement and Anti-Terrorist Financing Act, the Sarbanes-Oxley Act and the related rules and regulations
promulgated under such Act or the Exchange Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, and all other applicable fair lending and consumer protection laws
and other laws relating to discriminatory business practices; and
|
| • |
Anti-competitive concerns with the proposed transaction.
|
If the banking regulators or a commenter on our regulatory application raise concerns about any of these criteria at the time a regulatory application is filed, the banking regulators may deny,
delay, or condition their approval of a proposed transaction. We have grown, and, subject to regulatory approval, intend to continue to grow, through acquisitions of banks and other financial institutions. After these acquisitions, we may
experience adverse changes in results of operations of acquired entities, unforeseen liabilities, asset quality problems of acquired entities, loss of key personnel, loss of clients because of change of identity, difficulties in integrating
data processing and operational procedures, and deterioration in local economic conditions. These various acquisition risks can be heightened in larger transactions.
Integration Risk
We may not be able to achieve the expected integration and cost savings from our bank acquisition activities.
We have a long history of acquiring financial institutions and, subject to regulatory approval, we expect this acquisition activity to resume in the future. Difficulties may arise in the
integration of the business and operations of the financial institutions that agree to merge with and into CTBI and, as a result, we may not be able to achieve the cost savings and synergies that we expect will result from the merger
activities. Achieving cost savings is dependent on consolidating certain operational and functional areas, eliminating duplicative positions and terminating certain agreements for outside services. Additional operational savings are dependent
upon the integration of the banking businesses of the acquired financial institution with that of CTBI, including the conversion of the acquired entity’s core operating systems, data systems, and products to those of CTBI and the
standardization of business practices. Complications or difficulties in the conversion of the core operating systems, data systems, and products of these other banks to those of CTBI may result in the loss of clients, damage to our reputation
within the financial services industry, operational problems, one-time costs currently not anticipated by us, and/or reduced cost savings resulting from the merger activities.
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Market and Liquidity Risks
Market Risk
CTBI’s stock price is volatile.
Our stock price has been volatile in the past, and several factors could cause the price to fluctuate substantially in the future. These factors include:
| • |
Actual or anticipated variations in earnings;
|
| • |
Changes in analysts’ recommendations or projections;
|
| • |
CTBI’s announcements of developments related to our businesses;
|
| • |
Operating and stock performance of other companies deemed to be peers;
|
| • |
New technology used or services offered by traditional and non-traditional competitors;
|
| • |
News reports of trends, concerns, and other issues related to the financial services industry; and
|
| • |
Additional governmental policies and enforcement of current laws.
|
Our stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to CTBI’s performance. General market price declines or market volatility in the future could
adversely affect the price of our common stock, and the current market price may not be indicative of future market prices.
Liquidity Risk
CTBI is subject to liquidity risk.
CTBI requires liquidity to meet our deposit and debt obligations as they come due and to fund loan demands. CTBI’s access to funding sources in amounts adequate to finance our activities or on
terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Factors that could reduce our access to liquidity sources include a downturn in the market,
difficult credit markets, or adverse regulatory actions against CTBI. CTBI’s access to deposits may also be affected by the liquidity needs of our depositors. In particular, a substantial majority of CTBI’s liabilities are demand, savings,
interest checking, and money market deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial portion of our assets are loans, which cannot be called or sold in the same time frame. To the extent
that consumer confidence in other investment vehicles, such as the stock market, increases, customers may move funds from bank deposits and products into such other investment vehicles. In addition, given the adoption of electronic banking,
these transfers could occur more quickly than they have historically. Although CTBI historically has been able to replace maturing deposits and advances as necessary, we might not be able to replace such funds in the future, especially if a
large number of our depositors sought to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could have a material adverse effect on our financial condition and results of operations.
Adverse developments affecting the financial services industry, such as bank failures or concerns involving liquidity, may have a material effect on our operations.
A financial institution’s liquidity reflects its ability to meet customer demand for loans, accommodating possible outflows in deposits, and accessing alternative sources of funds when needed,
while at the same time taking advantage of interest rate market opportunities. The ability to manage liquidity is fundamental to a financial institution’s business and success. Bank failures that occurred in 2023 highlighted the potential
results of an insured depository institution unexpectedly having to obtain needed liquidity to satisfy deposit withdrawal requests, including how quickly such requests can accelerate once uninsured depositors lose confidence in an institutions
ability to satisfy its obligations to depositors. Current market uncertainties and other external factors may impact the competitive landscape for deposits in the banking industry in an unpredictable manner. In addition, the rising interest
rate environment has continued to increase competition for liquidity and the premium at which liquidity is available to meet funding needs. These possible impacts may adversely affect our future operating results, including net income, and
negatively impact capital.
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The recent increase in longer-term interest rates has negatively impacted the market value of our investment portfolio. We have traditionally relied upon our investment portfolio as a source
of liquidity. With this reduced market value, it is more difficult to access this liquidity without an adverse impact on our capital and earnings positions.
Legal, Legislation, and Regulation Risks
Risks Related to Regulatory Policies and Oversight
The banking industry is heavily regulated, and our business may be adversely affected by legislation or changes in regulatory policies and oversight.
The earnings of banks and bank holding companies such as ours are affected by the policies of regulatory authorities, including the Federal Reserve Board, which regulates the money supply.
Among the methods employed by the Federal Reserve Board are open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, and changes in reserve requirements against member bank deposits. These
methods are used in varying combinations to influence overall growth and distribution of bank loans, investments, and deposits, and their use may also affect interest rates charged on loans or paid on deposits. The monetary policies of the
Federal Reserve Board have had a significant effect on the operating results of commercial and savings banks in the past and are expected to continue to do so in the future.
In recent years, federal banking regulators have increased regulatory scrutiny, and additional limitations on financial institutions have been proposed or adopted by regulators and by
Congress. Moreover, banking regulatory agencies have increasingly over the last few years used authority under Section 5 of the Federal Trade Commission Act to take supervisory or enforcement action with respect to alleged unfair or deceptive
acts or practices by banks to address practices that may not necessarily fall within the scope of a specific banking or consumer finance law. The banking industry is highly regulated and changes in federal and state banking regulations as well
as policies and administration guidelines may affect our practices, growth prospects, and earnings. In particular, there is no assurance that governmental actions designed to stabilize the economy and banking system will not adversely affect
our financial position or results of operations.
From time to time, CTBI and/or our subsidiaries may be involved in information requests, reviews, investigations, and proceedings (both formal and informal) by various governmental agencies and
law enforcement authorities regarding our respective businesses. Any of these matters may result in material adverse consequences to CTBI and our subsidiaries, including adverse judgements, findings, limitations on merger and acquisition
activity, settlements, fines, penalties, orders, injunctions, and other actions. Such adverse consequences may be material to the financial position of CTBI or our results of operations.
In particular, consumer products and services are subject to increasing regulatory oversight and scrutiny with respect to compliance with consumer laws and regulations. We may face a greater
number or wider scope of investigations, enforcement actions, and litigation in the future related to consumer practices. In addition, any required changes to our business operations resulting from these developments could result in a
significant loss of revenue, require remuneration to customers, trigger fines or penalties, limit the products or services we offer, require us to increase certain prices and therefore reduce demand for our products, impose additional
compliance costs on us, cause harm to our reputation, or otherwise adversely affect our consumer business.
The financial services industry has experienced leadership changes at federal banking agencies, which may impact regulations and government policy applicable to us. New appointments to the
Board of Governors of the Federal Reserve could affect monetary policy and interest rates.
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We are required to maintain certain minimum amounts and types of capital and may be subject to more stringent capital requirements in the future. A failure to meet applicable
capital requirements could have a material adverse effect on our financial condition and results of operations.
We are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain. From time to time, banking regulators change these regulatory capital adequacy
guidelines. See Item 1 above for additional information regarding current capital requirements. A failure to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that,
if undertaken, could have a material adverse effect on our financial condition and results of operations.
Environmental Liability Risk
We are subject to environmental liability risk associated with lending activity.
A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing loans. In doing so,
there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws
may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies
with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be
sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of
operations.
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Item 1B.
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Unresolved Staff Comments
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None.
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Item 1C.
|
Cybersecurity
|
As
referenced in the Operational Risks/Cyber Risks section of Item 1A. Risk Factors included in this Form 10-K, our organization may be materially affected by cybersecurity threats and incidents that target its internally managed information
technology systems or our critical vendor systems.
Our
institution utilizes industry standard and regulatory approved assessment tools to identify cybersecurity risks and measure preparedness. The tools provide a repeatable and measurable framework for our organization to measure its cybersecurity
preparedness over time.
Our
institution has purchased and is using tools in the areas of endpoint security, Security Information Event Management (“SIEM”), Privileged Access Management (“PAM”), email and web browsing filtering and management, and user analytics. We also use a comprehensive third party 24-by-7 Security Operations Center (“SOC”) that monitors, detects, and remediates cybersecurity threats adhering to strict service response levels.
The
internal assessment process and internal tools and SOC related key indicators are reported on a quarterly basis to the Security and Information Security Committee and the Enterprise-wide Risk Management Committee and annually to the Board of
Directors.
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Our processes for assessing, identifying, and managing material risks from cybersecurity threats have been integrated into our overall risk
management processes. Our internal audit program executes a comprehensive and layered auditing approach including people, processes and technology in
order to evaluate the effectiveness of existing controls and ensure that cybersecurity risk has been adequately mitigated within our institution. Periodic phishing tests, network and application security reviews, third-party vulnerability
assessments and penetration testing are used to gauge the overall effectiveness of our cybersecurity defenses. The audit program and cybersecurity defense evaluations are key parts of our overall risk management processes.
Our enterprise risk management program is designed to identify, assess, and mitigate risks across various aspects of
our company, including financial, operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats. Our processes and
policies related to cybersecurity are focused on: (i) developing organizational understanding to manage cybersecurity risks, (ii) applying safeguards to protect our systems, (iii) detecting the occurrence of a cybersecurity incident, (iv)
responding to a cybersecurity incident, and (v) recovering from a cybersecurity incident. Where appropriate, these processes and policies are integrated into our overall enterprise risk management systems and processes. For example, all of
our employees with network access are required to complete information security and privacy training on an annual basis. We are continuously working to improve our information technology systems and provide employee awareness training around
phishing, malware, and other cyber risks to enhance our levels of protection.
Other aspects of our cyber and information security risk management program include:
| • |
Monitoring external and internal threats and events, managing access, facilitating use of appropriate authentication options, validating controls and programs by
internal teams and independent third parties and testing various compromise scenarios that are overseen by our information security team;
|
| • |
Investing in threat intelligence platforms and participating in financial services industry and government forums which track and report on cyber and other
information security threats;
|
| • |
Routinely performing vulnerability tests;
|
| • |
Engaging independent consultants and other third-parties to assist CTBI in establishing and improving its policies; and
|
| • |
Conducting “tabletop” exercises at least annually to test CTBI’s processes and policies and using feedback from those exercises to further improve our processes.
|
CTBI also maintains insurance coverage for cybersecurity incidents as part of its overall insurance portfolio.
In the event of a
cybersecurity incident, CTBI maintains incident response plans to investigate, classify, respond to, and manage cybersecurity incidents that may compromise the availability or integrity of our information systems, network resources, or
data. In accordance with the incident response plans, cross-functional management teams assess and assign a threat level to each cybersecurity incident. A cybersecurity incident (or incidents, if aggregated together) determined to be at a critical threat level is escalated to a group consisting of CTBI’s Chief
Executive Officer and certain other officers, including the Chief Legal Officer, Executive Vice President/Operations, Chief Risk Officer, and Chief Financial Officer for review.
In
an effort to continually share threat intelligence and increase awareness of cybersecurity threats, routine communication to employees is conducted to highlight internal control requirements, common cybersecurity threats and schemes. Our incident
response team members also participate in the annual Financial Services Information Sharing and Analysis Center tabletop cybersecurity tabletop exercises.
Our
comprehensive vendor management program and processes assess all new vendors and segments them into criticality tiers. Our most critical vendors (tiers 1 and 2) are evaluated annually based on requested vendor documents, such as Statements on
Standards Attestation Engagements No. 18 (SSAE 18), financial statements, insurance, and due diligence questionnaires. The vendor management team also monitors all news alerts related to all critical vendors.
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Item 2.
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Properties
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Our main office, which is owned by Community Trust Bank, Inc., is located at 346 North Mayo Trail, Pikeville, Kentucky 41501. Following is a schedule of properties owned and leased by CTBI and
our subsidiaries as of December 31, 2025:
|
Location
|
Owned
|
Leased
|
Total
|
||
|
Banking locations:
|
|||||
|
Community Trust Bank, Inc.
|
|||||
|
*
|
Pikeville Market (lease land at 3 owned locations)
|
9
|
1
|
10
|
|
|
10 locations in Pike County, Kentucky
|
|||||
|
Floyd/Knott/Johnson Market (lease land at 1 owned location)
|
3
|
1
|
4
|
||
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2 locations in Floyd County, Kentucky, 1 location in Knott County, Kentucky, and 1 location in Johnson County, Kentucky
|
|||||
|
Tug Valley Market (lease land at 1 owned location)
|
2
|
0
|
2
|
||
|
1 location in Pike County, Kentucky, 1 location in Mingo County, West Virginia
|
|||||
|
Whitesburg Market (lease land at 1 owned location)
|
4
|
1
|
5
|
||
|
5 locations in Letcher County, Kentucky
|
|||||
|
Hazard Market (lease land at 2 owned locations)
|
3
|
0
|
3
|
||
|
3 locations in Perry County, Kentucky
|
|||||
|
*
|
Lexington Market (lease land at 3 owned locations)
|
5
|
2
|
7
|
|
|
6 locations in Fayette County, Kentucky, 1 location in Boone County, Kentucky
|
|||||
|
Winchester Market
|
2
|
0
|
2
|
||
|
2 locations in Clark County, Kentucky
|
|||||
|
Richmond Market (lease land at 1 owned location)
|
3
|
0
|
3
|
||
|
3 locations in Madison County, Kentucky
|
|||||
|
**
|
Mt. Sterling Market
|
0
|
2
|
2
|
|
|
2 locations in Montgomery County, Kentucky
|
|||||
|
Versailles Market (lease land at 2 owned locations)
|
3
|
2
|
5
|
||
|
1 location in Woodford County, Kentucky, 2 locations in Franklin County, Kentucky, and 2 locations in Scott County, Kentucky
|
|||||
|
*
|
Danville Market (lease land at 1 owned location)
|
3
|
0
|
3
|
|
|
2 locations in Boyle County, Kentucky and 1 location in Mercer County, Kentucky
|
|||||
|
***
|
Ashland Market (lease land at 1 owned location)
|
5
|
0
|
5
|
|
|
4 locations in Boyd County, Kentucky and 1 location in Greenup County, Kentucky
|
|||||
|
Flemingsburg Market
|
3
|
0
|
3
|
||
|
3 locations in Fleming County, Kentucky
|
|||||
|
Advantage Valley Market
|
3
|
1
|
4
|
||
|
2 locations in Lincoln County, West Virginia, 1 location in Wayne County, West Virginia, and 1 location in Cabell County, West Virginia
|
|||||
|
Summersville Market
|
1
|
0
|
1
|
||
|
1 location in Nicholas County, West Virginia
|
|||||
|
Middlesboro Market (lease land at 1 owned location)
|
3
|
0
|
3
|
||
|
3 locations in Bell County, Kentucky
|
|||||
|
Williamsburg Market
|
5
|
0
|
5
|
||
|
2 locations in Whitley County, Kentucky and 3 locations in Laurel County, Kentucky
|
|||||
|
Campbellsville Market (lease land at 2 owned locations)
|
9
|
0
|
9
|
||
|
2 locations in Taylor County, Kentucky, 2 locations in Pulaski County, Kentucky, 1 location in Adair County, Kentucky, 1 location in Green County, Kentucky, 1 location in Russell County, Kentucky, 1 location in Marion County, Kentucky,
and 1 location in Hardin County, Kentucky
|
|||||
|
Mt. Vernon Market
|
2
|
0
|
2
|
||
|
2 locations in Rockcastle County, Kentucky
|
|||||
|
*
|
LaFollette Market
|
3
|
0
|
3
|
|
|
2 locations in Campbell County, Tennessee and 1 location in Anderson County, Tennessee
|
|||||
|
Total banking locations
|
71
|
10
|
81
|
||
|
Operational locations:
|
|||||
|
Community Trust Bank, Inc.
|
|||||
|
Pikeville (Pike County, Kentucky) (lease land at 1 owned location)
|
1
|
0
|
1
|
||
|
Total operational locations
|
1
|
0
|
1
|
||
|
Total locations
|
72
|
10
|
82
|
||
* Community Trust and Investment Company has leased offices in the main office locations in these markets.
** The South Ashland Branch and the Ashland Westwood Branch will close effective February 28, 2026.
*** Two of our Mt. Sterling locations were consolidated into a new branch location which opened in February 2026. Mt. Sterling North Branch was sold, and Mt. Sterling Main Branch was donated. The two original
branches continued to operate under short-term lease arrangements until the new branch was opened. Land was purchased in 2024 for the new branch location.
See notes 6 and 7 to the consolidated financial statements contained herein for the year ended December 31, 2025, for additional information relating to lease commitments and amounts invested in
premises and equipment.
18
Table of Contents
|
Item 3.
|
Legal Proceedings |
CTBI and subsidiaries, and from time to time, our officers, are named defendants in legal actions arising from ordinary business activities. Management, after consultation with legal counsel,
believes any pending actions are without merit or that the ultimate liability, if any, will not materially affect our consolidated financial position or results of operations.
|
Item 4.
|
[Reserved]
|
Information about our Executive Officers
Set forth below are the executive officers of CTBI, their positions with CTBI, and the year in which they first became an executive officer.
|
Name and Age (1)
|
Positions and Offices
Currently Held
|
Date First Became
Executive Officer
|
Principal Occupation
|
|
|
Mark A. Gooch; 67
|
Chairman, President, and Chief Executive Officer
|
1997
|
(2)
|
Chairman, President, and CEO of CTBI
|
|
Kevin J. Stumbo; 65
|
Executive Vice President, Chief Financial Officer, and Treasurer
|
2002
|
Executive Vice President/ Chief Financial Officer of CTBI
|
|
|
Billie J. Dollins; 65
|
Executive Vice President
|
2023
|
(3)
|
Executive Vice President/ Central Kentucky Region President of CTB
|
|
C. Wayne Hancock; 51
|
Executive Vice President and Secretary
|
2014
|
(4)
|
Executive Vice President/ Chief Legal Officer of CTB
|
|
Steven E. Jameson; 69
|
Executive Vice President
|
2004
|
(5)
|
Executive Vice President/ Chief Internal Audit & Risk Officer of CTB
|
|
D. Andrew Jones; 63
|
Executive Vice President
|
2010
|
Executive Vice President/ Northeastern Region President of CTB
|
|
|
Thomas E. McCoy; 57
|
Executive Vice President
|
2025
|
(6)
|
Executive Vice President/Operations of CTB
|
|
Richard W. Newsom; 71
|
Executive Vice President
|
2002
|
(7)
|
Executive Vice President/ President of CTB
|
|
Mark E. Smith; 55
|
Executive Vice President
|
2024
|
(8)
|
Executive Vice President/ Chief Credit Officer of CTB
|
|
Ricky D. Sparkman; 63
|
Executive Vice President
|
2002
|
Executive Vice President/ South Central Region President of CTB
|
|
|
David Tackett; 60
|
Executive Vice President
|
2022
|
(9)
|
Executive Vice President/ Eastern Region President of CTB
|
|
Andy D. Waters; 60
|
Executive Vice President
|
2011
|
President and CEO of CTIC
|
|
19
Table of Contents
| (1) |
The ages listed for CTBI’s executive officers are as of February 27, 2026.
|
| (2) |
Mr. Gooch was appointed Chairman of the Board on March 17, 2024. Mr. Gooch became President of CTBI on July 27, 2021 and assumed the additional positions of Vice Chairman and Chief Executive Officer of CTBI effective February 7,
2022. Mr. Gooch retained his previous position as Chief Executive Officer of CTB and assumed the additional roles of Chairman of CTB and Chairman of CTIC also effective on February 7, 2022.
|
| (3) |
Ms. Dollins became Executive Vice President of CTBI and President of the Central Kentucky Region of CTB on January 3, 2023. She previously held the position of President of the Versailles Market of CTB.
|
| (4) |
Mr. Hancock became Secretary of CTBI on February 7, 2022.
|
| (5) |
Mr. Jameson is a non-voting member of the Executive Committee. Mr. Jameson retired effective February 27, 2026. Tracy A. Wesley has been named his successor. Ms. Wesley has served as SVP/Internal Audit Manager since 2012.
|
| (6) |
Mr. McCoy was named Executive Vice President of CTBI and Executive Vice President/Operations of CTB effective February 1, 2025, following the retirement of James B. Draughn, former Executive Vice President of CTBI and Executive Vice
President/Operations of CTB, effective January 31, 2025. Mr. McCoy previously held the position of Senior Vice President/Application Systems Manager.
|
| (7) |
Mr. Newsom became President of CTB on February 7, 2022. He previously served as President of the Eastern Region of CTB.
|
| (8) |
Mr. Smith was named Executive Vice President of CTBI and Executive Vice President/Chief Credit Officer of CTB effective January 2, 2024. He was previously Senior Vice President/Loan Review Manager of CTB.
|
| (9) |
Mr. Tackett became Executive Vice President of CTBI and President of the Eastern Region of CTB on February 7, 2022. He previously held the position of President of the Floyd, Knott, and Johnson Market of CTB.
|
PART II
|
Item 5.
|
Market for the Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities
|
Our common stock is listed on The NASDAQ Global Select Market under the symbol CTBI. As of January 31, 2026, there were approximately 13,800 holders of record of our outstanding common shares.
Dividends
The annual dividend paid to our stockholders was increased from $1.86 per share to $2.00 per share during 2025. We have adopted a conservative policy of cash dividends by generally maintaining
an average annual cash dividend ratio of approximately 45%, with periodic stock dividends. The current year cash dividend ratio was 36.8%, and the 10-year average dividend payout ratio has been 40.6%. Dividends are typically paid on a quarterly
basis. Future dividends are subject to the discretion of CTBI’s Board of Directors, cash needs, general business conditions, dividends from our subsidiaries, and applicable governmental regulations and policies. For information concerning
restrictions on dividends from the subsidiary bank to CTBI, see note 21 to the consolidated financial statements contained herein for the year ended December 31, 2025.
Stock Repurchases
CTBI did not acquire any shares of stock through the stock repurchase program during the year 2025. There are 1,034,706 shares remaining under CTBI’s current repurchase authorization. For
further information, see the Stock Repurchase Program section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
20
Table of Contents
Securities Authorized for Issuance Under Equity Compensation Plans
For information concerning securities authorized for issuance under CTBI’s equity compensation plans, see Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters.
Common Stock Performance
The following graph shows the cumulative total return experienced by CTBI’s shareholders during the last five years compared to the NASDAQ Stock Market (U.S.) and the NASDAQ Bank Stock Index.
The graph assumes the investment of $100 on December 31, 2020 in CTBI’s common stock and in each index and the reinvestment of all dividends paid during the five-year period.
Comparison of 5 Year Cumulative Total Return
among Community Trust Bancorp, Inc., NASDAQ Stock Market (U.S.),
and NASDAQ Bank Stocks
|
Fiscal Year Ending December 31 ($)
|
|||||||
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
||
|
Community Trust Bancorp, Inc.
|
100.00
|
121.94
|
133.13
|
132.35
|
165.63
|
182.71
|
|
|
NASDAQ Stock Market (U.S.)
|
100.00
|
125.89
|
101.05
|
127.76
|
159.03
|
186.96
|
|
|
NASDAQ Bank Stocks
|
100.00
|
137.31
|
113.60
|
125.02
|
168.35
|
216.97
|
|
|
Item 6.
|
[Reserved]
|
21
Table of Contents
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Overview
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand Community Trust Bancorp, Inc., our
operations, and our present business environment. The MD&A is provided as a supplement to—and should be read in conjunction with—our consolidated financial statements and the accompanying notes thereto contained in Item 8 of this annual
report.
Our Business
Community Trust Bancorp, Inc. (“CTBI”) is a bank holding company headquartered in Pikeville, Kentucky. Currently, we own one commercial bank, Community Trust Bank, Inc. (“CTB”) and one trust
company, Community Trust and Investment Company. Through our subsidiaries, we have eighty-one banking locations in eastern, northern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee, four
trust offices across Kentucky, and one trust office in northeastern Tennessee. At December 31, 2025, we had total consolidated assets of $6.7 billion and total consolidated deposits, including repurchase agreements, of $5.7 billion. Total
shareholders’ equity at December 31, 2025 was $856.1 million. Trust assets under management at December 31, 2025 were $4.1 billion, including CTB’s investment portfolio totaling $1.1 billion.
Through our subsidiaries, CTBI engages in a wide range of commercial and personal banking and trust and wealth management activities, which include accepting time and demand deposits; making
secured and unsecured loans to corporations, individuals, and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes; and providing funds transfer services. The
lending activities of CTB include making commercial, construction, mortgage, and personal loans. Lines of credit, revolving lines of credit, term loans, and other specialized loans, including asset-based financing, are also available. Our
corporate subsidiaries act as trustees of personal trusts, as executors of estates, as trustees for employee benefit trusts, as paying agents for bond and stock issues, as investment agent, as depositories for securities, and as providers of
full-service brokerage, and insurance services. For further information, see Item 1 of this annual report.
22
Table of Contents
Financial Goals and Performance
The following table shows the primary measurements used by management to assess annual performance. The goals in the table below should not be viewed as a forecast of our performance for 2026.
Rather, the goals represent a range of target performance for 2026. There is no assurance that any or all of these goals will be achieved. See “Cautionary Statement Regarding Forward Looking Statements.”
|
2025 Goals
|
2025 Performance
|
2026 Goals
|
||
|
Basic earnings per share
|
$4.86 - $5.06
|
$5.44
|
$5.78 - $6.02
|
|
|
Net income
|
$88.0 - $91.6 million
|
$98.1 million
|
$105.1 - $109.3 million
|
|
|
ROAA
|
1.41% - 1.46%
|
1.53%
|
1.53% - $1.59%
|
|
|
ROAE
|
11.17% - 11.62%
|
12.07%
|
11.67% - 12.15%
|
|
|
Revenues
|
$261.6 - $272.3 million
|
$282.6 million
|
$294.7 - $306.7 million
|
|
|
Noninterest revenue as % of total revenue
|
23.50% - 25.50%
|
22.41%
|
22.0% - 24.5%
|
|
|
Assets
|
$6.19 - $6.57 billion
|
$6.68 billion
|
$6.80 - $7.23 billion
|
|
|
Loans
|
$4.53 - $4.71 billion
|
$4.89 billion
|
$5.02 - $5.22 billion
|
|
|
Deposits, including repurchase agreements
|
$5.32 - $5.54 billion
|
$5.70 billion
|
$5.83 - $6.07 billion
|
|
|
Shareholders’ equity
|
$797.8 - $830.3 million
|
$856.1 million
|
$923.9 - $961.6 million
|
Results of Operations and Financial Condition
We reported record earnings of $98.1 million, or $5.44 per basic share, for the year ended December 31, 2025 compared to $82.8 million, or $4.61 per basic share, for the year ended December 31,
2024. Total revenue for 2025 was $34.0 million above prior year, as net interest revenue increased $33.0 million and noninterest income increased $1.1 million compared to prior year. Our provision for credit losses for 2025 increased $1.5
million over prior year, and our noninterest expense increased $12.1 million over prior year.
23
Table of Contents
2025 Highlights
| ❖ |
Net interest income for the year of $219.0 million was $33.0 million, or 17.7%, above prior year, as our net interest margin increased 26 basis points from prior year.
|
| ❖ |
Provision for credit losses at $12.4 million for the year increased $1.5 million from prior year.
|
| ❖ |
Noninterest income for the year of $63.6 million was $1.1 million, or 1.7%, above prior year.
|
| ❖ |
Noninterest expense for the year of $143.1 million was $12.1 million, or 9.3%, above prior year.
|
| ❖ |
Our loan portfolio at $4.9 billion increased $408.3 million, or 9.1%, from prior year end.
|
| ❖ |
We had net loan charge-offs of $7.4 million, or 0.16% of average loans, for the year 2025 compared to $5.5 million, or 0.13% of average loans, for the year 2024.
|
| ❖ |
Our total nonperforming loans at $19.2 million decreased $7.5 million, or 28.2%, from prior year end. Nonperforming assets at $22.2 million decreased $8.1 million from prior year end.
|
| ❖ |
Deposits, including repurchase agreements, at $5.7 billion increased $387.5 million, or 7.3%, from prior year end.
|
| ❖ |
Shareholders’ equity at $856.1 million increased $98.5 million, or 13.0%, from prior year end.
|
Income Statement Review
|
(dollars in thousands)
|
Change 2025 vs. 2024
|
|||||||||||||||
|
Year Ended December 31
|
2025
|
2024
|
Amount
|
Percent
|
||||||||||||
|
Net interest income
|
$
|
218,978
|
$
|
185,995
|
$
|
32,983
|
17.7
|
%
|
||||||||
|
Provision for credit losses
|
12,436
|
10,951
|
1,485
|
13.6
|
||||||||||||
|
Noninterest income
|
63,617
|
62,565
|
1,052
|
1.7
|
||||||||||||
|
Noninterest expense
|
143,067
|
130,923
|
12,144
|
9.3
|
||||||||||||
|
Income taxes
|
29,034
|
23,873
|
5,161
|
21.6
|
||||||||||||
|
Net income
|
$
|
98,058
|
$
|
82,813
|
$
|
15,245
|
18.4
|
%
|
||||||||
24
Table of Contents
Consolidated Average Balance Sheets and Taxable Equivalent Income/Expense and Yields/Rates
|
2025
|
2024
|
|||||||||||||||||||||
|
(in thousands)
|
Average
Balances
|
Interest
|
Average
Rate
|
Average
Balances
|
Interest
|
Average
Rate
|
||||||||||||||||
|
Earning assets:
|
||||||||||||||||||||||
|
Loans (1)(2)(3)
|
$
|
4,690,521
|
$
|
304,894
|
6.50
|
%
|
$
|
4,247,762
|
$
|
274,886
|
6.47
|
%
|
||||||||||
|
Loans held for sale
|
182
|
25
|
13.74
|
165
|
24
|
14.55
|
||||||||||||||||
|
Securities:
|
||||||||||||||||||||||
|
U.S. Treasury and agencies
|
730,797
|
17,230
|
2.36
|
775,788
|
16,526
|
2.13
|
||||||||||||||||
|
Tax exempt state and political subdivisions (3)
|
98,916
|
3,265
|
3.30
|
102,783
|
3,401
|
3.31
|
||||||||||||||||
|
Other securities
|
207,120
|
6,436
|
3.11
|
227,116
|
8,427
|
3.71
|
||||||||||||||||
|
Federal Reserve Bank and Federal Home Loan Bank stock
|
10,199
|
749
|
7.34
|
10,099
|
783
|
7.75
|
||||||||||||||||
|
Federal funds sold
|
185
|
8
|
4.32
|
19
|
1
|
5.26
|
||||||||||||||||
|
Interest bearing deposits
|
337,538
|
14,172
|
4.20
|
204,113
|
10,396
|
5.09
|
||||||||||||||||
|
Other investments
|
245
|
6
|
2.45
|
245
|
6
|
2.45
|
||||||||||||||||
|
Investment in unconsolidated subsidiaries
|
1,856
|
114
|
6.14
|
1,858
|
132
|
7.10
|
||||||||||||||||
|
Total earning assets
|
$
|
6,077,559
|
$
|
346,899
|
5.71
|
%
|
$
|
5,569,948
|
$
|
314,582
|
5.65
|
%
|
||||||||||
|
Allowance for credit losses
|
(57,468
|
)
|
(51,749
|
)
|
||||||||||||||||||
|
6,020,091
|
5,518,199
|
|||||||||||||||||||||
|
Nonearning assets:
|
||||||||||||||||||||||
|
Cash and due from banks
|
56,003
|
58,714
|
||||||||||||||||||||
|
Premises and equipment and right of use assets, net
|
67,048
|
62,584
|
||||||||||||||||||||
|
Other assets
|
267,324
|
254,498
|
||||||||||||||||||||
|
Total assets
|
$
|
6,410,466
|
$
|
5,893,995
|
||||||||||||||||||
|
Interest bearing liabilities:
|
||||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||||
|
Savings and demand deposits
|
$
|
2,497,537
|
$
|
56,626
|
2.27
|
%
|
$
|
2,309,430
|
$
|
62,812
|
2.72
|
%
|
||||||||||
|
Time deposits
|
1,478,344
|
56,121
|
3.80
|
1,260,730
|
49,704
|
3.94
|
||||||||||||||||
|
Repurchase agreements and federal funds purchased
|
255,055
|
10,012
|
3.93
|
229,408
|
10,393
|
4.53
|
||||||||||||||||
|
Advances from Federal Home Loan Bank
|
577
|
12
|
2.08
|
597
|
16
|
2.68
|
||||||||||||||||
|
Long-term debt
|
63,901
|
3,783
|
5.92
|
64,130
|
4,365
|
6.81
|
||||||||||||||||
|
Finance lease liability
|
3,818
|
187
|
4.90
|
3,438
|
158
|
4.60
|
||||||||||||||||
|
Total interest bearing liabilities
|
$
|
4,299,232
|
$
|
126,741
|
2.95
|
%
|
$
|
3,867,733
|
$
|
127,448
|
3.30
|
%
|
||||||||||
|
Noninterest bearing liabilities:
|
||||||||||||||||||||||
|
Demand deposits
|
1,239,531
|
1,238,101
|
||||||||||||||||||||
|
Other liabilities
|
59,541
|
56,042
|
||||||||||||||||||||
|
Total liabilities
|
5,598,304
|
5,161,876
|
||||||||||||||||||||
|
Shareholders’ equity
|
812,162
|
732,119
|
||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
6,410,466
|
$
|
5,893,995
|
||||||||||||||||||
|
Net interest income, tax equivalent
|
$
|
220,158
|
$
|
187,134
|
||||||||||||||||||
|
Less tax equivalent interest income
|
1,180
|
1,139
|
||||||||||||||||||||
|
Net interest income
|
$
|
218,978
|
$
|
185,995
|
||||||||||||||||||
|
Net interest spread
|
2.76
|
%
|
2.35
|
%
|
||||||||||||||||||
|
Benefit of interest free funding
|
0.86
|
1.01
|
||||||||||||||||||||
|
Net interest margin
|
3.62
|
%
|
3.36
|
%
|
||||||||||||||||||
(1) Interest includes fees on loans of $2,284 and $1,998 in 2025 and 2024, respectively.
(2) Loan balances include deferred loan origination costs and principal balances on nonaccrual loans.
(3) Tax exempt income on securities and loans is reported on a fully taxable equivalent basis using a 24.95% rate.
25
Table of Contents
Net Interest Differential
The following table illustrates the approximate effect of volume and rate changes on net interest differentials between 2025 and 2024.
|
Total
Change
|
Change Due to
|
|||||||||||
|
(in thousands)
|
2025/2024
|
Volume
|
Rate
|
|||||||||
|
Interest income:
|
||||||||||||
|
Loans
|
$
|
30,008
|
$
|
28,775
|
$
|
1,233
|
||||||
|
Loans held for sale
|
1
|
2
|
(1
|
)
|
||||||||
|
U.S. Treasury and agencies
|
704
|
(922
|
)
|
1,626
|
||||||||
|
Tax exempt state and political subdivisions
|
(136
|
)
|
(128
|
)
|
(8
|
)
|
||||||
|
Other securities
|
(1,991
|
)
|
(784
|
)
|
(1,207
|
)
|
||||||
|
Federal Reserve Bank and Federal Home Loan Bank stock
|
(34
|
)
|
8
|
(42
|
)
|
|||||||
|
Federal funds sold
|
7
|
7
|
0
|
|||||||||
|
Interest bearing deposits
|
3,776
|
5,855
|
(2,079
|
)
|
||||||||
|
Other investments
|
0
|
0
|
0
|
|||||||||
|
Investment in unconsolidated subsidiaries
|
(18
|
)
|
0
|
(18
|
)
|
|||||||
|
Total interest income
|
32,317
|
32,813
|
(496
|
)
|
||||||||
|
Interest expense:
|
||||||||||||
|
Savings and demand deposits
|
(6,186
|
)
|
4,836
|
(11,022
|
)
|
|||||||
|
Time deposits
|
6,417
|
8,317
|
(1,900
|
)
|
||||||||
|
Repurchase agreements and federal funds purchased
|
(381
|
)
|
1,091
|
(1,472
|
)
|
|||||||
|
Advances from Federal Home Loan Bank
|
(4
|
)
|
(1
|
)
|
(3
|
)
|
||||||
|
Long-term debt
|
(582
|
)
|
(16
|
)
|
(566
|
)
|
||||||
|
Finance lease liability
|
29
|
18
|
11
|
|||||||||
|
Total interest expense
|
(707
|
)
|
14,245
|
(14,952
|
)
|
|||||||
|
Net interest income
|
$
|
33,024
|
$
|
18,568
|
$
|
14,456
|
||||||
For purposes of the above table, changes which are due to both rate and volume are allocated based on a percentage basis, using the absolute values of rate and volume variance as a basis for
percentages. Income is stated at a fully taxable equivalent basis, using a 24.95% tax rate.
Net interest income for the year ended December 31, 2025 of $219.0 million increased $33.0 million, or 17.7%, from prior year with an increase in average earning assets for the year 2025 of
$507.6 million, or 9.1%. Our yield on average earning assets for the year 2025 increased 6 basis points from prior year, while our cost of interest bearing funds decreased 35 basis points. Our net interest margin, on a fully tax equivalent
basis, for the year 2025 increased 26 basis points from the year ended December 31, 2024. Average loans to deposits, including repurchase agreements, for the year ended December 31, 2025 were 85.8% compared to 84.3% for the year ended December
31, 2024.
Provision for Credit Losses
Provision for credit losses for the year 2025 was $12.4 million compared to $11.0 million during the year 2024. Of the provision for the year, $12.5 million was allotted to fund changes in loan
volume and composition, $0.1 million was allotted based on quantitative and qualitative factors, and $0.2 million was credited against the provision for unfunded commitments. See below for discussion of our allowance for credit losses.
26
Table of Contents
Noninterest Income
|
(dollars in thousands)
Year Ended December 31
|
2025
|
2024
|
Percent
Change
|
|||||||
|
Deposit related fees
|
$
|
29,840
|
$
|
29,824
|
0.1
|
%
|
||||
|
Trust and wealth management income
|
16,772
|
14,921
|
12.4
|
|||||||
|
Gains on sales of loans
|
320
|
294
|
8.7
|
|||||||
|
Loan related fees
|
4,043
|
4,957
|
(18.4
|
)
|
||||||
|
Bank owned life insurance revenue
|
4,460
|
5,236
|
(14.8
|
)
|
||||||
|
Brokerage revenue
|
2,130
|
2,272
|
(6.3
|
)
|
||||||
|
Other
|
6,052
|
5,061
|
19.6
|
|||||||
|
Total noninterest income
|
$
|
63,617
|
$
|
62,565
|
1.7
|
%
|
||||
Noninterest income for the year 2025 was impacted year over year by increases in trust and wealth management income ($1.9 million), insurance commissions ($0.4 million), and net gains on the sale
of fixed assets ($0.5 million), partially offset by decreases in loan related fees ($0.9 million), securities gains ($0.3 million), and bank owned life insurance revenue ($0.8 million). The decrease in loan related fees resulted primarily from
the fluctuation in the fair market value of our mortgage servicing rights. The variance in securities gains primarily resulted from changes in the valuation of our equity securities.
In an attempt to modernize our delivery channel in the Mt. Sterling Market, we consolidated two of our branches into a newly constructed modern branch which opened in February 2026. During the
fourth quarter of 2025, we recognized the sale of one of the branch locations, along with a parking lot, resulting in a $0.5 million gain on the sale of fixed assets. We also donated one of the branch locations, which resulted in a $0.4
million contribution expense.
Noninterest Expense
|
(dollars in thousands)
Year Ended December 31
|
2025
|
2024
|
Percent
Change
|
|||||||
|
Salaries
|
$
|
54,830
|
$
|
52,757
|
3.9
|
%
|
||||
|
Employee benefits
|
30,649
|
26,670
|
14.9
|
|||||||
|
Net occupancy and equipment
|
13,246
|
12,204
|
8.5
|
|||||||
|
Data processing
|
12,637
|
11,172
|
13.1
|
|||||||
|
Legal and professional fees
|
4,290
|
3,873
|
10.8
|
|||||||
|
Advertising and marketing
|
3,167
|
3,130
|
1.2
|
|||||||
|
Taxes other than property and payroll
|
2,353
|
1,754
|
34.1
|
|||||||
|
Other
|
21,895
|
19,363
|
13.1
|
|||||||
|
Total noninterest expense
|
$
|
143,067
|
$
|
130,923
|
9.3
|
%
|
||||
Noninterest expense for the year 2025 was primarily impacted by increased expenses year over year in personnel ($6.1 million), data processing ($1.5 million), occupancy and equipment ($1.0
million), taxes other than property and payroll ($0.6 million), legal fees ($0.5 million), and contributions ($0.7 million). The year over year increase in personnel expense included increases in salaries ($2.1 million), bonuses and incentives
($1.9 million), and other employee benefits ($2.1 million). The increase in contribution expense was primarily a result of the $0.4 million contribution expense resulting from a donation of one of our Mt. Sterling branch locations discussed
above in the Noninterest Income section.
Please refer to our annual report on Form 10-K for the year ended December 31, 2024 for detailed income discussion related to the year 2023.
Balance Sheet Review
CTBI’s total assets at $6.7 billion increased $490.9 million, or 7.9%, from December 31, 2024. Loans outstanding at December 31, 2025 were $4.9 billion, increasing $408.3 million, or 9.1%, year
over year. The increase in loans from prior year included a $220.6 million increase in the commercial loan portfolio, a $182.8 million increase in the residential loan portfolio, and a $12.2 million increase in the indirect loan portfolio,
partially offset by a $7.3 million decrease in the consumer direct loan portfolio. CTBI’s investment portfolio increased $65.4 million, or 6.2%, from December 31, 2024. Deposits in other banks increased $4.3 million from December 31, 2024.
Deposits, including repurchase agreements, at $5.7 billion increased $387.5 million, or 7.3%, from December 31, 2024. CTBI is not dependent on any one customer or group of customers for their source of deposits. As of December 31, 2025, two
customers accounted for 3% each of our $5.4 billion in deposits. Only two customer relationships accounted for more than 1% each.
27
Table of Contents
Shareholders’ equity at December 31, 2025 of $856.1 million was a $98.5 million, or 13.0%, increase from the $757.6 million at December 31, 2024. Net unrealized losses on securities, net of tax,
were $64.8 million at December 31, 2025, compared to $98.4 million at December 31, 2024. Management has the ability and intent to hold these securities to recovery or maturity. CTBI’s annualized dividend yield to shareholders as of December 31,
2025 was 3.75%.
Loans
|
(dollars in thousands)
|
December 31, 2025
|
||||||||||||||||||
|
Loan Category
|
Balance
|
Variance
from Prior
Year
|
Net (Charge-Offs)/
Recoveries
|
Nonperforming
|
ACL
|
||||||||||||||
|
Commercial:
|
|||||||||||||||||||
|
Hotel/motel
|
$
|
497,764
|
8.5
|
%
|
$
|
0
|
$
|
0
|
$
|
6,902
|
|||||||||
|
Commercial real estate residential
|
580,652
|
14.2
|
(292
|
)
|
2,952
|
6,397
|
|||||||||||||
|
Commercial real estate nonresidential
|
959,915
|
11.0
|
(1,363
|
)
|
4,245
|
11,630
|
|||||||||||||
|
Dealer floorplans
|
83,812
|
(1.3
|
)
|
0
|
0
|
798
|
|||||||||||||
|
Commercial other
|
371,132
|
4.4
|
(1,366
|
)
|
1,823
|
3,619
|
|||||||||||||
|
Total commercial
|
2,493,275
|
9.7
|
(3,021
|
)
|
9,020
|
29,346
|
|||||||||||||
|
Residential:
|
|||||||||||||||||||
|
Real estate mortgage
|
1,206,820
|
15.7
|
(216
|
)
|
8,527
|
14,047
|
|||||||||||||
|
Home equity
|
186,798
|
11.6
|
12
|
887
|
1,277
|
||||||||||||||
|
Total residential
|
1,393,618
|
15.1
|
(204
|
)
|
9,414
|
15,324
|
|||||||||||||
|
Consumer:
|
|||||||||||||||||||
|
Consumer direct
|
145,591
|
(4.7
|
)
|
(620
|
)
|
51
|
1,971
|
||||||||||||
|
Consumer indirect
|
862,458
|
1.4
|
(3,586
|
)
|
677
|
13,528
|
|||||||||||||
|
Total consumer
|
1,008,049
|
0.5
|
(4,206
|
)
|
728
|
15,499
|
|||||||||||||
|
Total loans
|
$
|
4,894,942
|
9.1
|
%
|
(7,431
|
)
|
$
|
19,162
|
60,169
|
||||||||||
Total Deposits and Repurchase Agreements
|
(dollars in thousands)
|
2025
|
2024
|
Percent
Change
|
|||||||||
|
Noninterest bearing deposits
|
$
|
1,263,243
|
$
|
1,242,676
|
1.7
|
%
|
||||||
|
Interest bearing deposits
|
||||||||||||
|
Interest checking
|
195,458
|
167,736
|
16.5
|
|
||||||||
|
Money market savings
|
1,877,815
|
1,781,415
|
5.4
|
|
||||||||
|
Savings accounts
|
499,276
|
511,378
|
(2.4
|
)
|
||||||||
|
Time deposits
|
1,553,266
|
1,366,984
|
13.6
|
|
||||||||
|
Repurchase agreements
|
308,799
|
240,166
|
28.6
|
|
||||||||
|
Total interest bearing deposits and repurchase agreements
|
4,434,614
|
4,067,679
|
9.0
|
|
||||||||
|
Total deposits and repurchase agreements
|
$
|
5,697,857
|
$
|
5,310,355
|
7.3
|
%
|
||||||
28
Table of Contents
Asset Quality
Our total nonperforming loans were $19.2 million, or 0.39% of total loans, at December 31, 2025 compared to $26.7 million, or 0.59% of total loans, at December 31, 2024. Accruing loans 90+ days
past due at $10.6 million increased $0.3 million from prior year end. Nonaccrual loans at $8.5 million decreased $7.8 million from prior year end. Accruing loans 30-89 days past due at $20.2 million increased $3.3 million from prior year end.
Our loan portfolio risk management processes include weekly delinquent loan review meetings at the market levels and monthly delinquent loan review meetings involving senior corporate management to review all nonaccrual loans and loans 30 days or
more past due. Any activity regarding a criticized/classified loan (i.e. problem loan) must be approved by CTB’s Watch List Asset Committee (i.e. Problem Loan Committee). CTB’s Watch List Asset Committee also meets on a quarterly basis and
reviews every criticized/classified loan of $100,000 or greater. CTB’s Loan Portfolio Risk Management Committee also meets quarterly focusing on the overall asset quality and risk metrics of the loan portfolio. We also have a Loan Review
Department that reviews every market within CTB annually and performs extensive testing of the loan portfolio to assure the accuracy of loan grades and classifications for delinquency, loan modifications for borrowers experiencing financial
difficulty, nonaccrual status, and adequate loan loss reserves. The Loan Review Department has annually reviewed on average 97% of the outstanding commercial loan portfolio for the past three years. The average annual review percentage of the
consumer and residential loan portfolio for the past three years was 82% based on the loan production during the number of months included in the review scope. The review scope is generally four to six months of production. CTBI generally does
not offer high risk loans such as option ARM products, high loan to value ratio mortgages, interest-only loans, loans with initial teaser rates, or loans with negative amortizations, and therefore, CTBI would have no significant exposure to these
products. For further information regarding nonperforming loans, see note 4 to the consolidated financial statements contained herein.
Net loan charge-offs were $7.4 million, 0.16% of average loans, for the year ended December 31, 2025, compared to $5.5 million, 0.13% of average loans, for the year ended December 31, 2024. Of the net
charge-offs for the year, $3.0 million were in commercial loans, $0.2 million were in residential loans, $3.6 million were in consumer indirect loans, and $0.6 million were in consumer direct loans.
Allowance for Credit Losses
Our reserve coverage (allowance for credit losses to nonperforming loans) at December 31, 2025 was 314.0% compared to 206.0% at December 31, 2024. Nonaccrual loans to totals loans were 0.2% at
December 31, 2025 compared to 0.4% at December 31, 2024. The allowance for credit losses to nonaccrual loans at December 31, 2025 was 704.6% compared to 335.8% at December 31, 2024. Our credit loss reserve as a percentage of total loans
outstanding at December 31, 2025 remained at 1.23% from December 31, 2024. See note 4 to our consolidated financial statements for additional information regarding our allowance for credit losses.
Liquidity and Market Risk
The objective of CTBI’s Asset/Liability management function is to maintain consistent growth in net interest income within our policy limits. This objective is accomplished through management of
our consolidated balance sheet composition, liquidity, and interest rate risk exposures arising from changing economic conditions, interest rates, and customer preferences. The goal of liquidity management is to provide adequate funds to meet
changes in loan and lease demand or deposit withdrawals. This is accomplished by maintaining liquid assets in the form of cash and cash equivalents and investment securities, sufficient unused borrowing capacity, and growth in core deposits. As
of December 31, 2025, we had approximately $363.7 million in cash and cash equivalents and approximately $174.7 million in unpledged securities valued at estimated fair value designated as available-for-sale and available to meet liquidity needs
on a continuing basis compared to $369.5 million and $170.6 million, respectively, at December 31, 2024. Additional asset-driven liquidity is provided by the remainder of the securities portfolio and the repayment of loans. In addition to core
deposit funding, we also have a variety of other short-term and long-term funding sources available. We also rely on Federal Home Loan Bank advances for both liquidity and management of our asset/liability position. Federal Home Loan Bank
advances were $0.3 million at December 31, 2025 and December 31, 2024. As of December 31, 2025, we had a $546.9 million available borrowing position with the Federal Home Loan Bank, compared to $485.0 million at December 31, 2024. We generally
rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash for our investing activities. As is typical of many financial institutions, significant financing activities
include deposit gathering, use of short-term borrowing facilities such as repurchase agreements and federal funds purchased, and issuance of long-term debt. At December 31, 2025 and 2024, we had $50 million in lines of credit with various
correspondent banks available to meet any future cash needs. Our primary investing activities include purchases of securities and loan originations. We do not rely on any one source of liquidity and manage availability in response to changing
consolidated balance sheet needs. Included in our cash and cash equivalents at December 31, 2025 were deposits with the Federal Reserve of $288.1 million, compared to $289.4 million at December 31, 2024. Additionally, we project cash flows from
our investment portfolio to generate additional liquidity over the next 90 days.
29
Table of Contents
The investment portfolio consists of investment grade short-term issues suitable for bank investments. The majority of the investment portfolio is in U.S. government and government sponsored
agency issuances. At December 31, 2025, available-for-sale (“AFS”) securities comprised 99.6% of the total investment portfolio, and the AFS portfolio was 131% of
equity capital. Eighty-five percent of the pledge-eligible portfolio was pledged.
Contractual Commitments
Our significant contractual obligations and commitments as of December 31, 2025 include debt, lease, and purchase obligations. As disclosed in the notes to the consolidated financial statements,
we have certain obligations and commitments to make future payments under contracts.
As of December 31, 2025, our outstanding balance on long-term debt was $63.8 million, which includes junior subordinated debentures of $57.8 million and loan related borrowings of $6.0 million.
The interest payments on long-term debt due in one year or less is $3.2 million, and interest payments on long-term debt due in more than one year is $29.9 million. The interest on $57.8 million in junior subordinated debentures is calculated
based on the three-month Chicago Mercantile Exchange (“CME”) Term Secured Overnight Financing Rate (“SOFR”), plus a tenor spread adjustment of 0.26161% plus 1.59% until its maturity of June 1, 2037. The three-month CME Term SOFR rate is
projected using the most likely rate forecast from assumptions incorporated in the interest rate risk model and is determined two business days prior to the interest payment date. The interest on the $6.0 million in loan related borrowings is
based on a fixed rate of 3.25%. Repayment of the liability will be provided by the loan payments made by the loan customer. This principal amount is also guaranteed by the United States Department of Agriculture (the “USDA”). Interest on
long-term debt assumes the liability will not be prepaid and interest is calculated to maturity. These assumptions are uncertain, and as a result, the actual payments will differ from the projection due to changes in economic conditions. Refer
to note 9 to the consolidated financial statements contained herein for additional information regarding long-term debt.
As of December 31, 2025, our remaining contractual commitment for operating and finance leases due in one year or less was $2.2 million and operating leases due in more than one year was $22.4
million. Refer to note 7 to the consolidated financial statements contained herein for additional information regarding leases.
Commitments to extend credit and standby letters of credit do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon. As of December
31, 2025, the commitments due in one year or less for other commitments was $742.3 million and commitments due in more than one year was $256.6 million. Refer to note 14 to the consolidated financial statements contained herein for additional
information regarding other commitments.
Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of December 31, 2025, the value of our non-cancellable
unconditional purchase obligations was $15.3 million.
These contractual obligations impact our liquidity and capital resource needs. We believe our liquidity sources as mentioned in the liquidity discussion are adequate to meet our future cash
requirements.
30
Table of Contents
Investment Maturities
|
Estimated Maturity at December 31, 2025
|
||||||||||||||||||||||||||||||||
|
Within 1 Year
|
1-5 Years
|
5-10 Years
|
After 10 Years
|
Total Fair Value
|
Amortized Cost
|
|||||||||||||||||||||||||||
|
(in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
|||||||||||||||||||||
|
U.S. Treasury, government agencies, and government sponsored agency mortgage-backed securities
|
$
|
87,594
|
0.83
|
%
|
$
|
258,909
|
2.40
|
%
|
$
|
55,024
|
1.82
|
%
|
$
|
422,494
|
3.23
|
%
|
$
|
824,024
|
2.62
|
%
|
$
|
874,012
|
||||||||||
|
State and political subdivisions
|
1,478
|
3.38
|
62,230
|
2.46
|
112,432
|
2.27
|
90,751
|
2.58
|
266,891
|
2.43
|
303,118
|
|||||||||||||||||||||
|
Asset-backed securities
|
0
|
0.00
|
2,063
|
5.07
|
6,909
|
5.43
|
20,835
|
5.13
|
29,807
|
5.20
|
29,808
|
|||||||||||||||||||||
|
Total
|
$
|
89,072
|
0.87
|
%
|
$
|
323,202
|
2.43
|
%
|
$
|
174,365
|
2.25
|
%
|
$
|
534,080
|
3.19
|
%
|
$
|
1,120,719
|
2.64
|
%
|
$
|
1,206,938
|
||||||||||
The calculations of the weighted average yields for each maturity category are based upon yield weighted by the respective costs of the securities. The weighted average rates on state and
political subdivisions are computed on a taxable equivalent basis using a 24.95% tax rate.
Loan Maturities
The following table shows the amounts of loans (excluding residential mortgages of 1-4 family residences, consumer loans, and lease financing) which, based on the remaining scheduled repayments
of principal are due in the periods indicated. Also, the amounts are classified according to sensitivity to changes in interest rates (fixed, variable).
CTB has changed the origination process on commercial and residential construction loans to be almost exclusively construction to permanent financing with only one note. This change is resulting
in a greater number of loans showing in the after five year maturity for construction loans, even though those loans will be converted from construction loans to permanent financing by a change in the internal coding on the loans while the
maturity date remains the same.
|
Maturity at December 31, 2025
|
|||||||||||||
|
After one
|
|||||||||||||
|
Within
|
but within
|
After
|
|||||||||||
|
(in thousands)
|
one year
|
five years
|
five years
|
Total
|
|||||||||
|
Commercial secured by real estate and commercial other
|
$
|
313,723
|
$
|
203,532
|
$
|
1,809,683
|
$
|
2,326,938
|
|||||
|
Commercial and real estate construction
|
90,778
|
11,598
|
211,348
|
313,724
|
|||||||||
|
Total
|
$
|
404,501
|
$
|
215,130
|
$
|
2,021,031
|
$
|
2,640,662
|
|||||
|
Rate sensitivity:
|
|||||||||||||
|
Predetermined rate
|
$
|
74,703
|
$
|
91,492
|
$
|
82,921
|
$
|
249,116
|
|||||
|
Adjustable rate
|
329,798
|
123,638
|
1,938,110
|
2,391,546
|
|||||||||
|
$
|
404,501
|
$
|
215,130
|
$
|
2,021,031
|
$
|
2,640,662
|
||||||
31
Table of Contents
Deposit Maturities
Maturities of uninsured certificates of deposit and other time deposits are presented below:
|
Maturities by Period at December 31, 2025
|
||||||||||||||||||||||||||||
|
(in thousands)
|
Total
|
Within 1
Year
|
2 Years
|
3 Years
|
4 Years
|
5 Years
|
After
5 Years
|
|||||||||||||||||||||
|
Uninsured certificates of deposits and other time deposits greater than $250,000
|
$
|
468,664
|
$
|
445,202
|
$
|
10,537
|
$
|
9,116
|
$
|
2,665
|
$
|
1,144
|
$
|
0
|
||||||||||||||
As of December 31, 2025, we had approximately $1.6 million in uninsured deposits. CTBI has no brokered deposits.
Interest Rate Risk
We consider interest rate risk one of our most significant market risks. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates. Consistency of our
net interest revenue is largely dependent upon the effective management of interest rate risk. We employ a variety of measurement techniques to identify and manage our interest rate risk, including the use of an earnings simulation model to
analyze net interest income sensitivity to changing interest rates. The model is based on actual cash flows and repricing characteristics for on and off-balance sheet instruments and incorporates market-based assumptions regarding the effect of
changing interest rates on the prepayment rates of certain assets and liabilities. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into the model. These
assumptions are inherently uncertain, and as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from simulated
results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.
CTBI’s Asset/Liability Management Committee (ALCO), which includes executive and senior management representatives and reports to the Board of Directors, monitors and manages interest rate risk
within Board-approved policy limits. Our current exposure to interest rate risks is determined by measuring the anticipated change in net interest income spread evenly over the twelve-month period.
The following table shows our estimated earnings sensitivity profile as of December 31, 2025:
|
Change in Interest Rates
(basis points)
|
Percentage Change in Net Interest Income
(12 Months) (%)
|
|
+400
|
4.77
|
|
+300
|
3.61
|
|
+200
|
2.43
|
|
+100
|
1.22
|
|
-100
|
(1.30)
|
|
-200
|
(2.21)
|
|
-300
|
(2.85)
|
|
-400
|
(3.45)
|
32
Table of Contents
The following table shows our estimated earnings sensitivity profile as of December 31, 2024:
|
Change in Interest Rates
(basis points)
|
Percentage Change in Net Interest Income
(12 Months) (%)
|
|
+400
|
3.83
|
|
+300
|
2.88
|
|
+200
|
1.93
|
|
+100
|
0.98
|
|
-100
|
(1.34)
|
|
-200
|
(2.76)
|
|
-300
|
(4.07)
|
|
-400
|
(5.32)
|
The simulation model used the yield curve spread evenly over a twelve-month period. The measurement at December 31, 2025 estimates that our net interest income in an up-rate environment would
increase by 4.77% at a 400 basis point change, increase by 3.61% at a 300 basis point change, increase by 2.43% at a 200 basis point change, and increase by 1.22% at a 100 basis point change. In a down-rate environment, net interest income would
decrease 1.30% at a 100 basis point change, decrease by 2.21% at a 200 basis point change, decrease by 2.85% at a 300 basis point change, and decrease by 3.45% at a 400 basis point change over one year. We actively manage our balance sheet and
limit our exposure to long-term fixed rate financial instruments, including loans. In order to reduce the exposure to interest rate fluctuations and to manage liquidity, we have developed sale procedures for several types of interest-sensitive
assets. Primarily all long-term, fixed rate single family residential mortgage loans underwritten according to Federal Home Loan Mortgage Corporation guidelines are sold for cash upon origination or originated under terms where they could be
sold. Periodically, additional assets such as commercial loans are also sold. In 2025 and 2024, proceeds of $11.9 million and $11.6 million, respectively, were realized on the sale of fixed rate residential mortgages. We focus our efforts on
consistent net interest revenue and net interest margin growth through each of the retail and wholesale business lines. We do not currently engage in trading activities.
The preceding analysis was prepared using a rate ramp analysis which attempts to spread changes evenly over a specified time period as opposed to a rate shock which measures the impact of an
immediate change. Had these measurements been prepared using the rate shock method, the results would vary.
Capital Resources
We continue to grow our shareholders’ equity while also providing an annual dividend yield for the year 2025 of 3.75% to shareholders. Shareholders’ equity increased 13.0% from December 31, 2024
to $856.1 million at December 31, 2025. Our primary source of capital growth is the retention of earnings. Cash dividends were $2.00 per share for 2025 compared to $1.86 per share for 2024. We retained 63.2% of our earnings in 2025 compared to
59.7% in 2024.
Insured depository institutions are required to meet certain capital level requirements. On October 29, 2019, federal banking regulators adopted a final rule to simplify the regulatory capital
requirements for eligible community banks and holding companies that opt-in to the community bank leverage ratio framework (the “CBLR framework”), as required by Section 201 of the Economic Growth, Relief and Consumer Protection Act of 2018.
Under the final rule, which became effective as of January 1, 2020, community banks and holding companies (which includes CTB and CTBI) that satisfy certain qualifying criteria, including having less than $10 billion in average total consolidated
assets and a leverage ratio (referred to as the “community bank leverage ratio”) of greater than 9%, were eligible to opt-in to the CBLR framework. The community bank leverage ratio is the ratio of a banking organization’s Tier 1 capital to its
average total consolidated assets, both as reported on the banking organization’s applicable regulatory filings. Accordingly, a qualifying community banking organization that has a community bank leverage ratio greater than 9% will be considered
to have met: (i) the risk-based and leverage capital requirements of the generally applicable capital rules; (ii) the capital ratio requirements in order to be considered well-capitalized under the prompt corrective action framework; and (iii)
any other applicable capital or leverage requirements. Management elected to use the CBLR framework for CTBI and CTB. CTBI’s CBLR ratio as of December 31, 2025 was 13.64%. CTB’s CBLR ratio as of December 31, 2025 was 13.19%.
33
Table of Contents
As of December 31, 2025, we are not aware of any current recommendations by banking regulatory authorities which, if they were to be implemented, would have, or are reasonably likely to have, a
material adverse impact on our liquidity, capital resources, or operations.
Impact of Inflation, Changing Prices, and Economic Conditions
The majority of our assets and liabilities are monetary in nature. Therefore, CTBI differs greatly from most commercial and industrial companies that have significant investment in nonmonetary
assets, such as fixed assets and inventories. However, inflation does have an important impact on the growth of assets in the banking industry and on the resulting need to increase equity capital at higher than normal rates in order to maintain
an appropriate equity to assets ratio. Inflation also affects other expenses, which tend to rise during periods of general inflation.
We believe one of the most significant impacts on financial and operating results is our ability to react to changes in interest rates. We seek to maintain an essentially balanced position
between interest rate sensitive assets and liabilities in order to protect against the effects of wide interest rate fluctuations.
Stock Repurchase Program
CTBI’s stock repurchase program began in December 1998 with the authorization to acquire up to 500,000 shares and was increased by an additional 1,000,000 shares in each of July 2000, May 2003,
and March 2020. As of December 31, 2025, a total of 2,465,294 shares have been repurchased through this program, leaving 1,034,706 shares remaining under our current repurchase authorization. The following table shows Board authorizations and
repurchases made through the stock repurchase program for the years 1998 through 2025:
|
Board Authorizations
|
Repurchases*
|
Shares Available for
Repurchase
|
||
|
Average Price ($)
|
# of Shares
|
|||
|
1998
|
500,000
|
-
|
0
|
|
|
1999
|
0
|
14.45
|
144,669
|
|
|
2000
|
1,000,000
|
10.25
|
763,470
|
|
|
2001
|
0
|
13.35
|
489,440
|
|
|
2002
|
0
|
17.71
|
396,316
|
|
|
2003
|
1,000,000
|
19.62
|
259,235
|
|
|
2004
|
0
|
23.14
|
60,500
|
|
|
2005
|
0
|
-
|
0
|
|
|
2006
|
0
|
-
|
0
|
|
|
2007
|
0
|
28.56
|
216,150
|
|
|
2008
|
0
|
25.53
|
102,850
|
|
|
2009-2019
|
0
|
-
|
0
|
|
|
2020
|
1,000,000
|
33.64
|
32,664
|
|
|
2021
|
0
|
-
|
0
|
|
|
2022
|
0
|
-
|
0
|
|
|
2023
|
0
|
-
|
0
|
|
|
2024
|
0
|
-
|
0
|
|
|
2025
|
0
|
-
|
0
|
|
|
Total
|
3,500,000
|
16.17
|
2,465,294
|
1,034,706
|
*Repurchased shares and average prices have been restated to reflect stock dividends that have occurred; however, board authorized shares have not been adjusted.
In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a new 1% excise tax on the fair market value of stock repurchased after December
31, 2022 by publicly traded U.S. corporations like CTBI. With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.
34
Table of Contents
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the appropriate application of
certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes. Since future events and their impact
cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements.
We believe the application of accounting policies and the estimates required therein are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made
when facts and circumstances dictate a change. Historically, we have found our application of accounting estimates to be appropriate, and actual results have not differed materially from those determined using necessary estimates.
Our accounting policies are described in note 1 to the consolidated financial statements contained herein. We have identified the following critical accounting estimates:
Allowance for Credit Losses – We disaggregate our portfolio loans into portfolio segments for purposes of
determining the ACL. Our loan portfolio segments include commercial, residential mortgage, and consumer. We further disaggregate our portfolio segments into classes for purposes of monitoring and assessing credit quality based on certain risk
characteristics. For an analysis of CTBI’s ACL by portfolio segment and credit quality information by class, refer to note 4 to the consolidated financial statements contained herein.
The ACL is maintained at a level CTBI considers to be adequate and is based on ongoing quarterly assessments and evaluations of the collectability of loans, including historical credit loss
experience, current and forecasted market and economic conditions, and consideration of various qualitative factors that, in management’s judgment, deserve consideration in estimating expected credit losses. Provisions for credit losses are
recorded for the amounts necessary to adjust the ACL to CTBI’s current estimate of expected credit losses on portfolio loans. CTBI’s strategy for credit risk management includes a combination of conservative exposure limits significantly below
legal lending limits and conservative underwriting, documentation, and collection standards. The strategy also emphasizes diversification on a geographic, industry, and customer level, regular credit examinations, and quarterly management
reviews of large credit exposures and loans experiencing deterioration of credit quality.
CTBI’s methodology for determining the ACL requires significant management judgment and includes an estimate of expected credit losses on a collective basis for groups of loans with similar risk
characteristics and specific allowances for loans which are individually evaluated.
Larger commercial loans with balances exceeding $1 million that exhibit probable or observed credit weaknesses and (i) have a criticized risk rating, (ii) are on nonaccrual status, (iii) have a
borrower experiencing financial difficulty with significant payment delay, or (iv) are 90 days or more past due, are individually evaluated for an ACL. CTBI considers the current value of collateral, credit quality of any guarantees, the
guarantor’s liquidity and willingness to cooperate, the loan structure and other factors when determining the amount of the ACL. Other factors may include the borrower’s susceptibility to risks presented by the forecasted macroeconomic
environment, the industry and geographic region of the borrower, size and financial condition of the borrower, cash flow and leverage of the borrower, and our evaluation of the borrower’s management. Significant management judgment is required
when evaluating which of these factors are most relevant in individual circumstances, and when estimating the amount of expected credit losses based on those factors. When loans are individually evaluated, allowances are determined based on
management’s estimate of the borrower’s ability to repay the loan given the availability of collateral and other sources of cash flow, as well as an evaluation of legal options available to CTBI. Allowances for individually evaluated loans that
are collateral-dependent are typically measured based on the fair value of the underlying collateral, less expected costs to sell where applicable. For collateral-dependent financial assets, the credit loss expected may be zero if the fair value
less costs to sell exceeds the amortized cost of the loan. Loans shall not be included in both collective assessments and individual assessments. Individually evaluated loans that are not collateral-dependent are measured based on the present
value of expected future cash flows discounted at the loan’s effective interest rate. Specific allowances on individually evaluated commercial loans, including loans to borrowers experiencing financial difficulty, are reviewed quarterly and
adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience. Regardless of an initial measurement method, once it is determined that foreclosure is probable, the ACL is measured
based on the fair value of the collateral as of the measurement date. As a practical expedient, the fair value of the collateral may be used for a loan when determining the ACL for which the repayment is expected to be provided substantially
through the operation or sale of the collateral when the borrower is experiencing financial difficulty. The fair value shall be adjusted for selling costs when foreclosure is probable.
35
Table of Contents
Expected credit losses are estimated on a collective basis for loans that are not individually evaluated. These include commercial loans that do not meet the criteria for individual evaluation
as well as homogeneous loans in the residential mortgage and consumer portfolio segments. CTBI uses a discounted cash flow (“DCF”) model for all loan segments. The primary reasons that contributed to this decision were: DCF models allow for the
effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner; the analysis aligns well with other calculations outside of the ACL estimation which will mitigate model risk in other areas; and
peer data is available for certain inputs if first party data is not available or meaningful. Expected credit losses are estimated on a collective basis for loans that are not individually evaluated. These include commercial loans that do not
meet the criteria for individual evaluation as well as homogeneous loans in the residential mortgage and consumer portfolio segments. See note 4 to the consolidated financial statements contained herein for information on CTBI’s risk rating
system.
CTBI’s expected credit loss models consider historical credit loss experience, peer data, current market and economic conditions, and forecasted changes in market and economic conditions if such
forecasts are considered reasonable and supportable. Generally, CTBI considers our forecasts to be reasonable and supportable for a period of up to one year from the estimation date. For periods beyond the reasonable and supportable forecast
period, expected credit losses are estimated by reverting to historical loss information on an input basis. CTBI reverts to a long-run average of the modeled economic factors over four quarters to derive a long-run average probability of
default/loss given default. CTBI evaluates the length of our reasonable and supportable forecast period, our reversion period, and reversion methodology at least annually, or more often if warranted by economic conditions or other circumstances.
Other qualitative factors are used by CTBI in determining the ACL. These considerations inherently require significant management judgment to determine the appropriate factors to be considered
and the extent of their impact on the ACL estimate. Qualitative factors are used to capture characteristics in the portfolio that impact expected credit losses but that are not fully captured within CTBI’s expected credit loss models. These
include adjustments for changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel, and results of internal audit and quality control reviews. These may also include adjustments, when
deemed necessary, for specific idiosyncratic risks such as geopolitical events, natural disasters and their effects on regional borrowers, and changes in product structures. Qualitative factors may also be used to address the impacts of
unforeseen events on key inputs and assumptions within CTBI’s expected credit loss models, such as the reasonable and supportable forecast period, changes to historical loss information, or changes to the reversion period or methodology.
Overall, the collective evaluation process requires significant management judgment when determining the estimation methodology and inputs into the models, as well as in evaluating the
reasonableness of the modeled results and the appropriateness of qualitative adjustments. CTBI’s forecasts of market and economic conditions and the internal risk grades assigned to loans in the commercial portfolio segment are examples of
inputs to the expected credit loss models that require significant management judgment. These inputs have the potential to drive significant variability in the resulting ACL.
The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities and is
included in other liabilities in the consolidated balance sheets. The determination of the adequacy of the reserve is based upon expected credit losses over the remaining contractual life of the commitments, taking into consideration the current
funded balance and estimated exposure over the reasonable and supportable forecast period. This process takes into consideration the same risk elements that are analyzed in the determination of the adequacy of CTBI’s ACL, as previously
discussed.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
CTBI currently does not engage in any hedging activity or any derivative activity which management considers material. Analysis of CTBI’s interest rate sensitivity can be found in the Interest
Rate Risk section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
36
Table of Contents
|
Item 8.
|
Financial Statements and Supplementary Data
|
Consolidated Balance Sheets
|
(in thousands except share data)
December 31
|
2025
|
2024
|
||||||
|
Assets:
|
||||||||
|
Cash and due from banks
|
$
|
|
$
|
|
||||
|
Interest bearing deposits
|
|
|
||||||
|
Cash and cash equivalents
|
|
|
||||||
|
Certificates of deposit in other banks
|
|
|
||||||
|
Debt securities available-for-sale at fair value (amortized cost of $
|
|
|
||||||
|
Equity securities at fair value
|
|
|
||||||
|
Loans held for sale
|
|
|
||||||
|
Loans
|
|
|
||||||
| Allowance for credit losses |
(
|
)
|
(
|
)
|
||||
|
Net loans
|
|
|
||||||
|
Premises and equipment, net
|
|
|
||||||
|
Operating right-of-use assets
|
|
|
||||||
| Finance right-of-use assets |
||||||||
|
Federal Home Loan Bank stock
|
|
|
||||||
|
Federal Reserve Bank stock
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Bank owned life insurance
|
|
|
||||||
|
Mortgage servicing rights
|
|
|
||||||
|
Other real estate owned
|
|
|
||||||
| Deferred tax asset |
||||||||
|
Accrued interest receivable
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and shareholders’ equity:
|
||||||||
|
Deposits:
|
||||||||
|
Noninterest bearing
|
$
|
|
$
|
|
||||
|
Interest bearing
|
|
|
||||||
|
Total deposits
|
|
|
||||||
|
Repurchase agreements
|
|
|
||||||
|
Federal funds purchased
|
|
|
||||||
|
Advances from Federal Home Loan Bank
|
|
|
||||||
|
Long-term debt
|
|
|
||||||
|
Operating lease liabilities
|
|
|
||||||
|
Finance lease liabilities
|
|
|
||||||
|
Accrued interest payable
|
|
|
||||||
|
Other liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Commitments and contingencies (notes 14 and 20)
|
||||||||
|
Shareholders’ equity:
|
||||||||
|
Preferred stock,
|
|
|
||||||
|
Common stock, $
|
|
|
||||||
|
Capital surplus
|
|
|
||||||
|
Retained earnings
|
|
|
||||||
|
Accumulated other comprehensive loss, net of tax
|
(
|
)
|
(
|
)
|
||||
|
Total shareholders’ equity
|
|
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
||||
See notes to consolidated financial statements.
37
Table of Contents
Consolidated Statements of Income and Comprehensive Income
|
(in thousands except per share data)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
|
Interest income:
|
||||||||||||
|
Interest and fees on loans, including loans held for sale
|
$
|
|
$
|
|
$
|
|
||||||
|
Interest and dividends on securities
|
||||||||||||
|
Taxable
|
|
|
|
|||||||||
|
Tax exempt
|
|
|
|
|||||||||
|
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
|
|
|
|
|||||||||
|
Interest on Federal Reserve Bank deposits
|
|
|
|
|||||||||
|
Other, including interest on federal funds sold
|
|
|
|
|||||||||
|
Total interest income
|
|
|
|
|||||||||
|
Interest expense:
|
||||||||||||
|
Interest on deposits
|
|
|
|
|||||||||
|
Interest on repurchase agreements and federal funds purchased
|
|
|
|
|||||||||
|
Interest on advances from Federal Home Loan Bank
|
|
|
|
|||||||||
|
Interest on long-term debt
|
|
|
|
|||||||||
|
Total interest expense
|
|
|
|
|||||||||
|
Net interest income
|
|
|
|
|||||||||
| Provision for credit losses |
|
|
|
|||||||||
| Net interest income after provision for credit losses |
|
|
|
|||||||||
|
Noninterest income:
|
||||||||||||
|
Deposit related fees
|
|
|
|
|||||||||
|
Gains on sales of loans, net
|
|
|
|
|||||||||
|
Trust and wealth management income
|
|
|
|
|||||||||
|
Loan related fees
|
|
|
|
|||||||||
|
Bank owned life insurance revenue
|
|
|
|
|||||||||
|
Brokerage revenue
|
|
|
|
|||||||||
|
Securities gains
|
|
|
|
|||||||||
|
Other noninterest income
|
|
|
|
|||||||||
|
Total noninterest income
|
|
|
|
|||||||||
|
Noninterest expense:
|
||||||||||||
|
Officer salaries and employee benefits
|
|
|
|
|||||||||
|
Other salaries and employee benefits
|
|
|
|
|||||||||
|
Occupancy, net
|
|
|
|
|||||||||
|
Equipment
|
|
|
|
|||||||||
|
Data processing
|
|
|
|
|||||||||
|
Taxes other than property and payroll
|
||||||||||||
|
Legal fees
|
|
|
|
|||||||||
|
Professional fees
|
|
|
|
|||||||||
|
Advertising and marketing
|
|
|
|
|||||||||
|
FDIC insurance
|
|
|
|
|||||||||
|
Other real estate owned provision and expense
|
|
|
|
|||||||||
|
Repossession expense
|
|
|
|
|||||||||
|
Other noninterest expense
|
|
|
|
|||||||||
|
Total noninterest expense
|
|
|
|
|||||||||
|
Income before income taxes
|
|
|
|
|||||||||
|
Income taxes
|
|
|
|
|||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Other comprehensive income:
|
||||||||||||
|
Unrealized holding gains arising during the period
|
$ |
|
$ |
|
$ |
|
||||||
|
Less: Reclassification adjustments for realized gains included in net income
|
|
|
|
|||||||||
|
Tax expense
|
|
|
|
|||||||||
|
Other comprehensive income, net of tax
|
|
|
|
|||||||||
|
Comprehensive income
|
$
|
|
$
|
|
$
|
|
||||||
|
Basic earnings per share
|
$
|
|
$
|
|
$
|
|
||||||
|
Diluted earnings per share
|
$
|
|
$
|
|
$
|
|
||||||
|
Weighted average shares outstanding-basic
|
|
|
|
|||||||||
|
Weighted average shares outstanding-diluted
|
|
|
|
|||||||||
See notes to consolidated financial statements.
38
Table of Contents
Consolidated Statements of Changes in Shareholders’ Equity
|
(in thousands except per share and share amounts)
|
Common
Shares
|
Common
Stock
|
Capital
Surplus
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
|
Total
|
||||||||||||||||||
|
Balance, December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
|
Net income
|
|
|
||||||||||||||||||||||
|
Other comprehensive income
|
|
|
||||||||||||||||||||||
|
Cash dividends declared ($
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
|
Issuance of common stock
|
|
|
|
|
||||||||||||||||||||
|
Issuance of restricted stock
|
|
|
(
|
)
|
|
|||||||||||||||||||
|
Vesting of restricted stock
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||||
|
Forfeiture of restricted stock
|
( |
) | ( |
) | ||||||||||||||||||||
|
Stock-based compensation
|
|
|
||||||||||||||||||||||
|
Balance, December 31, 2023
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
|
( |
) | ( |
) | ||||||||||||||||||||
|
Balance, January 1, 2024
|
( |
) | ||||||||||||||||||||||
|
Net income
|
|
|
||||||||||||||||||||||
|
Other comprehensive income
|
|
|
||||||||||||||||||||||
|
Cash dividends declared ($
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
|
Issuance of common stock
|
|
|
|
|
||||||||||||||||||||
|
Issuance of restricted stock
|
|
|
(
|
)
|
|
|||||||||||||||||||
|
Vesting of restricted stock
|
( |
) | ( |
) | ||||||||||||||||||||
|
Forfeiture of restricted stock
|
( |
) | ( |
) | ||||||||||||||||||||
|
Stock-based compensation
|
|
|
||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Balance, December 31, 2024
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
|
||||||||||||
|
Net income
|
||||||||||||||||||||||||
|
Other comprehensive income
|
||||||||||||||||||||||||
|
Cash dividends declared ($
|
( |
) | ( |
) | ||||||||||||||||||||
|
Issuance of common stock
|
||||||||||||||||||||||||
|
Issuance of restricted stock
|
( |
) | ||||||||||||||||||||||
|
Vesting of restricted stock
|
( |
) | ( |
) | ||||||||||||||||||||
|
Forfeiture of restricted stock
|
( |
) | ( |
) | ||||||||||||||||||||
|
Stock-based compensation
|
||||||||||||||||||||||||
|
Balance, December 31, 2025
|
$ | $ | $ | $ | ( |
) |
$ | |||||||||||||||||
See notes to consolidated financial statements.
39
Table of Contents
Consolidated Statements of Cash Flows
|
(in thousands)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
|
Depreciation and amortization
|
|
|
|
|||||||||
| Amortization of operating lease right-of-use assets |
||||||||||||
|
Deferred tax expense (benefit)
|
(
|
)
|
(
|
)
|
|
|||||||
|
Stock-based compensation
|
|
|
|
|||||||||
| Provision for credit losses |
|
|
|
|||||||||
|
Write-downs of other real estate owned and other repossessed assets
|
|
|
|
|||||||||
|
Gains on sale of mortgage loans held for sale
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
| Securities gains |
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Fair value adjustments in equity securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Gains on sale of assets, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from sale of mortgage loans held for sale
|
|
|
|
|||||||||
|
Funding of mortgage loans held for sale
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Amortization of securities premiums and discounts, net
|
|
|
|
|||||||||
|
Change in cash surrender value of bank owned life insurance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Payment of operating lease liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
| Interest expense on finance lease liabilities |
||||||||||||
| Fair value adjustments in mortgage servicing rights |
||||||||||||
|
Changes in:
|
||||||||||||
|
Accrued interest receivable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other assets
|
(
|
)
|
|
(
|
)
|
|||||||
|
Accrued interest payable
|
|
|
|
|||||||||
|
Other liabilities
|
|
|
(
|
)
|
||||||||
|
Net cash provided by operating activities
|
|
|
|
|||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Certificates of deposit in other banks:
|
||||||||||||
|
Purchase of certificates of deposit
|
|
|
(
|
)
|
||||||||
|
Maturity of certificates of deposit
|
|
|
|
|||||||||
|
Securities available-for-sale (AFS):
|
||||||||||||
|
Purchase of AFS securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from sales of AFS securities
|
|
|
|
|||||||||
|
Proceeds from prepayments, calls, and maturities of AFS securities
|
|
|
|
|||||||||
|
Change in loans, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Purchase of premises and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from sale and retirement of premises and equipment
|
|
|
|
|||||||||
| Purchase of Federal Home Loan Bank stock | ( |
) | ( |
) | ( |
) | ||||||
|
Redemption of Federal Home Loan Bank stock
|
|
|
|
|||||||||
|
Proceeds from sale of other real estate owned and repossessed assets
|
|
|
|
|||||||||
| Additional investment in other real estate owned and repossessed assets |
( |
) | ( |
) | ||||||||
|
Additional investment in bank owned life insurance
|
(
|
)
|
|
(
|
)
|
|||||||
|
Redemption of bank owned life insurance
|
|
|
|
|||||||||
| Proceeds from settlement of bank owned life insurance |
||||||||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Change in deposits, net
|
|
|
|
|||||||||
|
Change in repurchase agreements and federal funds purchased, net
|
|
|
|
|||||||||
|
Proceeds from Federal Home Loan Bank advances
|
|
|
|
|||||||||
|
Payments on advances from Federal Home Loan Bank
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Payment of finance lease liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from long-term debt/other borrowings
|
||||||||||||
|
Repayment of long-term debt/other borrowings
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Issuance of common stock
|
|
|
|
|||||||||
|
Dividends paid
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Net cash provided by financing activities
|
|
|
|
|||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|
||||||||
|
Cash and cash equivalents at beginning of period
|
|
|
|
|||||||||
|
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
$
|
|
||||||
|
Supplemental disclosures:
|
||||||||||||
|
Income taxes paid
|
$
|
|
$
|
|
$
|
|
||||||
|
Interest paid
|
|
|
|
|||||||||
|
Non-cash activities:
|
||||||||||||
|
Loans to facilitate the sale of other real estate owned and repossessed assets
|
|
|
|
|||||||||
|
Common stock dividends accrued, paid in subsequent quarter
|
|
|
|
|||||||||
|
Real estate acquired in settlement of loans
|
|
|
|
|||||||||
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities |
||||||||||||
See notes to consolidated financial statements.
40
Table of Contents
Notes to Consolidated Financial Statements
1. Accounting Policies
Basis of Presentation – The consolidated financial statements include Community Trust Bancorp, Inc. (“CTBI”) and our subsidiaries, including our principal subsidiary, Community Trust Bank, Inc. (“CTB”). Intercompany transactions and accounts
have been eliminated in consolidation.
Nature of Operations – Substantially all assets, liabilities, revenues, and expenses are related to banking operations, including lending, investing of funds, obtaining of deposits, trust and wealth management operations, full service
brokerage operations, and other financing activities. All of our business offices and the majority of our business are located in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee.
Use of Estimates – In preparing the consolidated financial statements, management must make certain estimates and assumptions. These estimates and assumptions affect the amounts reported for assets, liabilities, revenues, and expenses, as well
as affecting the disclosures provided. Future results could differ from the current estimates. Such estimates include, but are not limited to, the allowance for credit losses (“ACL”), goodwill, and the valuation of financial instruments.
The accompanying financial statements have been prepared using values and information currently available to CTBI.
Given the volatility of current economic conditions, the values of assets and liabilities recorded in the financial statements could change rapidly,
resulting in material future adjustments in asset values, the ACL, and capital.
Cash and Cash Equivalents – CTBI considers all liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents include cash on hand, amounts due from banks, interest bearing deposits in other
financial institutions, and federal funds sold. Generally, federal funds are sold for one-day periods.
Certificates of Deposit in Other Banks – Certificates of deposit in other banks generally mature within 18 months and
are carried at cost.
Investments – Management determines the classification of securities at purchase. We classify debt securities into held-to-maturity (“HTM”) or available-for-sale (“AFS”) categories. HTM securities are
those which we have the positive intent and ability to hold to maturity and are reported at amortized cost. We do not currently have any securities that are classified as HTM.
AFS securities are reported at fair value, with unrealized gains and losses reported in shareholders’ equity as a separate component of accumulated
other comprehensive income, net of tax. Gains or losses on disposition of debt securities are computed by specific identification for those securities, and are recognized in income as of the trade date. Interest and dividend income, adjusted by
amortization of purchase premium or discount, is included in earnings. Callable debt securities held at a premium are amortized to the earliest call date, shortening the amortization period. Debt securities held at a discount continue to be amortized
to maturity. The premiums and discounts for securities use the effective interest method. Accrued interest on investment securities is based on stated rates and is presented as a component of accrued interest receivable in the consolidated balance
sheets.
41
Table of Contents
For AFS debt securities in an unrealized loss position, we evaluate the securities to determine whether the decline in the fair value below
the amortized cost basis (impairment) is due to credit-related factors or non-credit related factors. Any impairment that is not credit-related is recognized in accumulated other comprehensive income, net of tax. Credit-related impairment is
recognized as an ACL for AFS debt securities on the consolidated balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Accrued interest receivable on AFS
debt securities is presented within accrued interest receivable on the consolidated balance sheets. CTBI has elected the accounting policy to exclude the accrued interest receivable balances from the amortized cost basis of AFS debt securities
and does not measure an allowance for credit losses for these balances. If a security is placed on nonaccrual status, typically when the collection of interest is considered doubtful, the accrued interest income is written off by reversing
interest income in the current period. We have concluded that this policy results in the timely reversal of uncollectible interest. There has been no accrued interest receivable written of for the years ended December 31, 2025 and 2024. Both
the ACL for AFS debt securities and the adjustment to net income may be reversed if conditions change. However, if we intend to sell an impaired AFS debt security or more likely than not will be required to sell such a security before
recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value,
there is no ACL for AFS debt securities in this situation.
In evaluating AFS debt securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such
securities, we consider the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or the government-sponsored enterprises, whether downgrades by bond rating agencies have occurred, and the
results of reviews of the issuers’ financial condition, among other factors. There were no credit related factors underlying unrealized
losses on AFS debt securities; therefore, no ACL for AFS securities has been recorded.
Losses are charged against the ACL for AFS
debt securities when management believes the uncollectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Equity securities with a readily determinable fair value are measured at fair value, with changes in fair value recognized in net income. Equity securities without a readily determinable fair value are carried at cost, less
any impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments. CTBI has made an irrevocable election to subsequently measure an equity security without a readily determinable fair value,
and all identical or similar investments of the same issuer, including future purchases of identical or similar investments of the same issuer, at fair value. CTBI has made this election for our Visa Class B equity securities. The fair value of
these securities was determined using Level 3 inputs and changes in fair value are recognized in income.
Loans – Loans with the ability and the intent to be held until maturity or for the foreseeable future are reported at the carrying value of unpaid principal reduced by unearned interest, an ACL, and unamortized deferred fees or costs and premiums.
Income is recorded on the level yield basis. Loans are considered past due or delinquent when the contractual principal and/or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date
of the scheduled payment. Interest accrual is discontinued when a loan is greater than 90 days past due or when management believes,
after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest. Cash payments received on nonaccrual loans generally are applied against
principal, and interest income is only recorded once principal recovery is reasonably assured. Loans are not reclassified as accruing until principal and interest payments remain current for a period of time, generally six months , and future payments appear reasonably certain. Loan origination and commitment fees and certain direct loan origination costs are deferred
and the net amount amortized over the estimated life of the related loans or commitments to interest income using the effective interest method.
42
Table of Contents
Allowance for Credit Losses – CTBI measures expected
credit losses of financial assets on a collective (pool) basis using the discounted cash flow method when the financial assets share similar risk characteristics. Loans that do not share risk characteristics are evaluated on an individual
basis. Regardless of an initial measurement method, once it is determined that foreclosure is probable, the ACL is measured based on the fair value of the collateral as of the measurement date. As a practical expedient, the fair value of the
collateral may be used for a loan when determining the ACL for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. The fair value
shall be adjusted for selling costs when foreclosure is probable. For collateral-dependent financial assets, the credit loss expected may be zero if the fair value less costs to sell exceed the amortized cost of the loan. Loans shall not be
included in both collective assessments and individual assessments. CTBI has elected the accounting policy to exclude accrued interest receivable from the amortized cost basis of loans and does not measure an allowance for credit losses for these
balances. Accrued interest receivable on loans is presented in the consolidated financial statements as a component of other assets. When accrued interest is deemed to be uncollectible (typically when a loan is placed on nonaccrual status),
interest income is reversed. In the event that collection of principal becomes uncertain, CTBI has policies in place to reverse accrued interest in a timely manner.
Using the ACL software,
forecasts include gross domestic product, light weight vehicle sales index, and consumer price index considerations. CTBI leverages economic projections from the Federal Open Market Committee to obtain various forecasts for unemployment rate,
gross domestic product, light weight vehicle sales index, and the percentage change in the consumer price index year over year. 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 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. 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 regional and local economic conditions
|
| • |
The effect of other external factors (i.e. competition, legal and regulatory requirements)
|
| • |
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 value of underlying collateral for collateral dependent loans
|
| • |
Changes in the nature and volume of the portfolio and terms of loans
|
While we recognize that import tariffs have created increased volatility and uncertainty in the financial markets, there has been no direct impact
on our loan portfolio to date, and no bank customers have requested financial relief directly because of import tariffs. We will continue to monitor our loan portfolio and work with any customers who become financially impacted by tariffs. We do
not anticipate any immediate or significant negative impact to our asset quality in the near term.
43
Table of Contents
We maintain an ACL at a level that is appropriate to cover estimated credit losses on individually evaluated loans, as well as estimated credit
losses inherent in the remainder of the loan and lease portfolio. Credit losses, when deemed uncollectible, are charged to the ACL and any subsequent recoveries are credited to the ACL.
We utilize an internal risk grading system for commercial credits. Those credits that meet the following criteria
are subject to individual evaluation: the loan has an outstanding bank share balance of $1 90 days or more past due. The borrower’s cash flow, adequacy of collateral coverage, and other options available to CTBI, including legal remedies, are evaluated. Historical loss rates
are analyzed and applied to other commercial loan segments not subject to individual evaluation. As these loans are individually evaluated, analysis could result in a specific reserve allocation within the ACL.
Homogenous loans, such as consumer installment, residential mortgages, and home equity lines are not individually
risk graded. The associated ACL for these loans is measured in pools with similar risk characteristics.
When a secured commercial loan is displaying signs of weakness or deficiency, whether past due or not, a current
assessment of the value of the underlying collateral is made. If the balance of the loan exceeds the fair value of the collateral, the loan is placed on nonaccrual and the loan is charged down to the value of the collateral less estimated cost
to sell. When the foreclosed collateral has been legally assigned to CTBI, the estimated fair value of the collateral less costs to sell is then transferred to other real estate owned or other repossessed assets, and a charge-off is taken for
any remaining balance. When any unsecured commercial loan is considered uncollectible the loan is charged off no later than at 90 days past due. However, overdraft loans, which are included in other commercial loans, are charged off when they have been outstanding 60 days .
All closed-end consumer loans (excluding
conventional 1-4 family residential loans and installment and revolving loans secured by real estate) are charged off no later than 120 days
(five monthly payments) delinquent. If a loan is considered uncollectible, it is charged off earlier than 120 days delinquent. For conventional 1-4 family residential loans and installment and revolving loans secured by real estate, once the loan is 90 days past due, the loan is placed on nonaccrual if payment in full of principal or interest is not expected. Foreclosure proceedings are normally
initiated after 120 days . When the foreclosed property has been legally assigned to CTBI, the fair value less estimated costs to sell is
transferred to other real estate owned and the remaining balance is taken as a charge-off.
CTBI’s loan portfolio segments and the risk characteristics of each are as follows:
Hotel/motel loans are a significant concentration for CTBI, representing approximately 10.2 % of total loans. This industry has unique risk characteristics as it is highly susceptible to changes in the domestic and global economic environments, which can cause the industry to
experience substantial volatility. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Hotel/motel lending typically involves higher loan principal amounts and the repayment of these loans is
generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Management monitors and evaluates all commercial real estate loans based on collateral and risk grade
criteria. Commercial construction loans generally are made to customers for the purpose of building income-producing properties, and any hotel/motel construction loan would be included in this segment. Personal guarantees of the principals are
generally required. Such loans are made on a projected cash flow basis and are secured by the project being constructed. Construction loan draw procedures are included in each specific loan agreement, including required documentation items and
inspection requirements. Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source. If the loan is to convert to a term loan, the repayment
ability is based on the borrower’s projected cash flow. Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.
44
Table of Contents
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. This loan segment consists of loans to dealerships to finance inventory and are collateralized under a
blanket security agreement whereby all vehicle inventory is collateral against the outstanding loan without specific liens on individual units. Advances are made for the dealer cost of individual vehicles in inventory, and the loan is repaid from
the proceeds from the sale of the financed vehicle. This risk is mitigated by the use of monthly inventory audits 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. Additional collateral or other credit enhancements (for example, personal guarantees from dealership owners) are typically obtained to further mitigate credit risk.
Commercial other loans consist of agricultural loans, receivable financing, loans to financial institutions, loans for purchasing or carrying
securities, overdraft loans, 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. 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.
45
Table of Contents
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 with those loans classified as held for sale and not included in loan balances. 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. 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.
Home equity lines are primarily revolving adjustable rate credit lines secured by real property. Changes in interest rates or market
conditions may impact a borrower’s ability to meet contractual principal and interest payments.
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 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.
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. 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.
CTBI utilizes discounted cash flow loss rate methodologies for all loan segments. Within the discount cash flow calculation, an effective yield of the instrument is
calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows. The expected cash flows were modeled considering probability of default and segment-specific loss given default (“LGD”) risk factors, utilizing the
software’s proprietary database of financial institutions’ filings, evaluated first by geography and asset size and then with the utilization of standard deviations, to assure relevance to CTBI’s loan segments along with CTBI’s own loss history.
Cash flows are then discounted at that effective yield to produce an instrument-level net present value (“NPV”) of expected cash flows. An ACL is established for the difference between the instrument’s NPV and amortized cost basis. Any changes in
NPV between periods is recorded as provision for credit losses. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data and adjusted, if necessary, based on the reasonable and
supportable forecast of economic conditions. Management incorporates qualitative factors to loss estimates used to derive CTBI’s total ACL including delinquency trends, current economic conditions and trends, strength of supervision and
administration of the loan portfolio, levels of underperforming loans, underwriting exceptions, and industry concentrations. Forecast factors include gross domestic product, light weight vehicle sales, and the consumer price index. Management
continually reevaluates the other subjective factors included in our ACL analysis.
46
Table of Contents
Loans Held for Sale – Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value.
Changes in fair value and net unrealized losses, if any, are recognized by charges to income. Gains and losses on loan sales are recorded in noninterest income. Mortgage loans held for sale were $0.2
Mortgage Banking Derivatives – At December 31, 2025, we had mortgage loans in the process of origination totaling $0.1 million which
are intended for sale to investors in the secondary market. These forward sale commitments are on an individual loan basis that CTBI originates as part of our mortgage banking activities and are derivatives at fair value with changes in fair value
recognized in earnings. CTBI acquires purchase agreements from secondary market buyers prior to closing these loans. We then deliver the closed loan to the buyer, typically within 30 days of closing. These purchase agreements are acquired to
reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale, since CTBI is exposed to interest rate risk during the period between issuing a loan commitment and the sale of the loan into the secondary
market. There were no mortgage loans in the process of origination at December 31, 2024.
Premises and Equipment – Premises and equipment are stated at cost less accumulated depreciation and amortization. Premises and equipment are evaluated for impairment on a quarterly basis.
Depreciation and amortization are computed primarily using the straight-line method. Estimated useful lives range up to 40 years for buildings, 2 to 10 years for furniture, fixtures, and equipment, and up to the lease term for leasehold improvements.
Leases – CTBI does not record leases on the consolidated balance sheets that are classified as short term (less than one year). A right-of-use asset and a lease liability are recorded for all leases
with terms longer than 12 months. The right-of-use asset represents the right to use the asset under lease for the lease term, and the lease liability represents the contractual obligation to make lease payments. The right-of-use asset is tested
for impairment whenever events or changes in circumstances indicate the carrying value might not be recoverable. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the
consolidated income statement. A lease is treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is
treated as a financing. If the lessor does not convey risks and rewards or control, an operating lease results. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease
payments using a discount rate that represents our incremental borrowing rate, on a collateralized basis, over a similar term at the lease commencement date and may be re-measured for certain modifications or the company’s exercise of options
(renewal, extension, or termination) under the lease. Right-of-use assets are further adjusted for prepaid rent, lease incentives, and initial direct costs, if any. CTBI does not separate lease and non-lease components and instead elects to
account for them as a single lease component. Expenses are recognized through occupancy expense.
Federal Home Loan Bank and Federal Reserve Stock – CTB is a member of the Federal Home Loan Bank (“FHLB”) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors and may invest
additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery par value. Both cash and stock dividends are reported as income.
CTB is also a member of its regional Federal Reserve Bank. Federal Reserve Bank stock is carried at cost, classified as
a restricted security, and periodically evaluated for impairment based on the ultimate recovery par value. Both cash and stock dividends are reported as income.
47
Table of Contents
Goodwill – We evaluate total goodwill for impairment using fair value techniques including multiples of price/equity.
Goodwill is evaluated for impairment on an annual basis or as other events may warrant. The balance of goodwill, at $65.5 million, has
not changed since January 1, 2015. Included in the balance of goodwill is $60.5 million attributable to the community banking services
segment and $5.0 million booked at the holding company.
Bank Owned Life Insurance – CTBI’s bank owned life insurance policies are carried at their cash surrender value. We recognize tax-free income from the periodic increases in cash surrender value of these policies and from death benefits.
Mortgage Servicing Rights – Mortgage servicing rights (“MSRs”) are carried at fair value with changes in fair value recognized in loan related fees. MSRs are valued using Level 3 inputs. The fair value is determined quarterly based on an
independent third-party valuation using a discounted cash flow analysis and calculated using a computer pricing model. The system used in this evaluation, Compass Point, attempts to quantify loan level idiosyncratic risk by calculating a risk
derived value. As a result, each loan’s unique characteristics determine the valuation assumptions ascribed to that loan. Additionally, the computer valuation is based on key economic assumptions including the prepayment speeds of the
underlying loans generated using the Andrew Davidson Prepayment Model, FHLMC/FNMA guidelines, the weighted-average life of the loan, the discount rate, the weighted-average coupon, and the weighted-average default rate, as applicable. Along with
the gains received from the sale of loans, fees are received for servicing loans. These fees include late fees, ancillary fees, and monthly servicing fees, which are recorded in noninterest income. Costs of servicing loans are charged to
expense as incurred. Changes in fair value of the MSRs are reported as an increase or decrease to loan related fees.
Mortgage loans serviced for others are not included in the accompanying balance
sheets. Loans serviced for the benefit of others (primarily FHLMC) totaled $612 million, $667 million, and $725 million at December 31, 2025, 2024, and
2023, respectively. Servicing loans for others generally consist of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and processing foreclosures. Custodial escrow balances maintained in connection
with the foregoing loan servicing, and included in demand deposits, were approximately $2.2 million, $2.2 million, and $2.5 million at
December 31, 2025, 2024, and 2023, respectively.
Other Real Estate Owned – Our other real estate owned (“OREO”) consists entirely of foreclosed properties. When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current fair value less expected
sales costs. Additionally, periodic updated appraisals are obtained on unsold foreclosed properties. When an updated appraisal reflects a fair value below the current book value, a charge is booked to current earnings to reduce the property to
its new fair value less expected sales costs. Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is
typically between 12 and 18
months but generally not more than 24 months. All revenues and expenses related to the carrying of OREO are recognized through the
income statement. OREO revenues are included in other noninterest income, and OREO expenses are included in other real estate owned provision and expense.
Transfers of Financial Assets – Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered
when (i) the assets have been isolated from CTBI—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (ii) the transferee obtains the right (free of conditions that constrain it from
taking advantage of that right) to pledge or exchange the transferred assets, and (iii) CTBI does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to
unilaterally cause the holder to return specific assets. If a transfer of financial assets does not meet all criteria for sale accounting, including circumstances in which the Bank retains effective control through a repurchase agreement or
similar contractual arrangement, the transfer is accounted for as a secured borrowing.
48
Table of Contents
Estimated Credit Losses on Off-Balance Sheet Credit Exposures Recognized as Other Liabilities – CTBI estimates expected credit losses over the contractual period in which it has exposure to credit risk via a contractual obligation to extend credit, unless that
obligation is unconditionally cancellable by CTBI. The ACL on off-balance sheet credit exposures recognized in other liabilities is adjusted as an expense in provision for credit losses. The estimate includes consideration of the likelihood that
funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. Estimating credit losses on unfunded commitments requires CTBI to consider the following categories of off-balance sheet
credit exposure: unfunded commitments to extend credit, unfunded lines of credit, and standby letters of credit. Each of these unfunded commitments is then analyzed for a probability of funding to calculate a probable funding amount. The life of
loan loss factor by related portfolio segment from the loan ACL calculation is then applied to the probable funding amount to calculate the estimated credit losses on off-balance sheet credit exposures recognized as other liabilities.
Revenue Recognition – The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, and investment securities, as well as revenue
related to our mortgage banking activities, as these activities are subject to other principles under GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which
are presented in our income statements as components of noninterest income are as follows:
| ● |
Service charges on deposit accounts represent general service fees for monthly account maintenance and activity- or transaction-based fees and consist of transaction-based revenue,
time-based revenue (service period), item-based revenue, or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when
a transaction has been completed. Payment for such performance obligations is generally received at the time the performance obligations are satisfied.
|
| ● |
Trust and wealth management income represents monthly or quarterly fees due from wealth management customers as consideration for managing the customers’ assets. Wealth management
and trust services include custody of assets, investment management, escrow services, fees for trust services, and similar fiduciary activities. Revenue is recognized when our performance obligation is completed each month or quarter, which
is generally the time that payment is received.
|
| ● |
Brokerage revenue is either fee based and collected upon the settlement of the transaction or commission based and recognized when our performance obligation is completed each month
or quarter, which is generally the time that payment is received. Other sales, such as life insurance, generate commissions from other third parties. These fees are generally collected monthly.
|
| ● |
Other noninterest income primarily includes items such as letter of credit fees, gains on sale of loans held for sale, and servicing fees related to mortgage and commercial loans,
none of which are subject to the requirements of ASC 606.
|
Advertising Expense – It is CTBI’s policy to expense advertising costs in the period in which they are incurred.
49
Table of Contents
Share-Based Compensation – CTBI has a share-based employee compensation plan, which is described more fully in note 16
below. Share-based compensation restricted and performance-based stock units/awards are classified as equity awards and accounted for under the treasury stock method. Compensation expense for non-vested stock units/awards is based on the fair
value of the award on the measurement date, which, for CTBI, is the date of the grant and is recognized ratably over the vesting or performance period of the award. The fair value of non-vested stock units/awards is generally the market price of
CTBI’s stock on the date of grant. CTBI recognizes forfeitures when they occur.
Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes based on the expected
future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates. Any interest and penalties incurred in connection with income taxes are recorded as a
component of income tax expense in our consolidated financial statements. During the years ended December 31, 2025, 2024, and 2023, CTBI has not recognized a significant amount of interest expense or penalties in connection with income taxes.
Earnings Per Share (“EPS”) – Basic EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding, excluding restricted shares.
Diluted EPS adjusts the number of weighted average shares of common stock outstanding by the dilutive effect of stock options, including restricted
shares.
Comprehensive Income – Comprehensive income consists of
net income and other comprehensive income, net of applicable income taxes, consisting of changes in unrealized gains and losses on AFS debt securities.
Segments – Management analyzes the operation of CTBI assuming one reportable segment,
community banking services. CTBI, through our operating subsidiaries, offers a wide range of consumer and commercial community banking services. These services include: (i) residential and commercial real estate loans; (ii) checking accounts;
(iii) regular and term savings accounts and savings certificates; (iv) full service securities brokerage services; (v) consumer loans; (vi) debit cards; (vii) annuity and life insurance products; (viii) Individual Retirement Accounts and Keogh
plans; (ix) commercial loans; (x) trust and wealth management services; (xi) commercial demand deposit accounts; and (xii) repurchase agreements. Operating segments that are not aggregated into the community banking services segment (i.e., the
holding company) are reported separately.
New
Accounting Standards –
➢ FASB
Issues Standard that Enhances Income Tax Disclosures – On January 1, 2025, CTBI adopted Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
on a prospective basis. This ASU requires, among other things, greater disaggregation of information in the income tax rate reconciliation and for paid income taxes to be disaggregated by jurisdiction. The amendments in this ASU did not have an
effect on our financial condition or results of operation. We have expanded our disclosures in the Income Taxes footnote (note 17) below accordingly.
➢ FASB Issues Improvement to Income Statement Expense Disclosures – In November 2024, the
Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses to improve the disclosures about a public business entity’s expenses and address investor requests for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation,
amortization, and depletion) in commonly presented expense captions. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The
amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update, or retrospectively to any or all prior periods presented in the financial statements.
CTBI does not expect ASU 2024-03 to have a material impact on CTBI’s financial statements.
50
Table of Contents
➢ FASB Issues New Guidance on Purchased Loans – In November 2025, the FASB issued ASU 2025-08
Financial Instruments – Credit Losses (Topic 326): Purchased Loans in response to stakeholders’ concerns about the accounting for acquired financial assets in accordance with ASC 326. The ASU amends
the current expected credit loss (CECL) model in ASC 326-20 to: (1) expand the population of acquired financial assets subject to the “gross-up approach” for measuring credit losses to apply to “seasoned” purchased loans. This approach allows
entities to avoid recording a day-one credit loss expense in profit or loss but also reduces interest income recognized in later periods and (2) introduce criteria for determining whether a purchased loan is considered “seasoned” and will be
accounted for using the gross-up approach. The amendments will be effective for interim and annual periods beginning after December 15, 2026, with early adoption allowed for financial statements that have not yet been issued or made available
for issuance. This ASU has no impact on CTBI’s financial statements at this time.
2. Cash and Due from Banks and Interest Bearing Deposits
At December 31, 2025, CTBI had cash accounts which exceeded federally insured limits and, therefore, were not subject to FDIC insurance.
3. Securities
The amortized cost and fair value of debt securities at December 31, 2025 are summarized as follows:
Available-for-Sale
|
(in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
State and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
|
Agency mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
|
Asset-backed securities
|
|
|
(
|
)
|
|
|||||||||||
|
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
The amortized cost and fair value of debt securities at December 31, 2024 are summarized as follows:
Available-for-Sale
|
(in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
State and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
|
Agency mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
|
Asset-backed securities
|
|
|
(
|
)
|
|
|||||||||||
|
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
The amounts reported in the preceding tables exclude accrued interest on securities of $4.5 million and $4.6 million at December 31, 2025 and 2024,
respectively, which is presented as a component of accrued interest receivable in the consolidated balance sheets.
51
Table of Contents
The amortized cost and fair value of debt securities at December 31, 2025 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment
penalties.
| |
Available-for-Sale
|
|||||||
|
(in thousands)
|
Amortized
Cost
|
Fair Value
|
||||||
|
Due in one year or less
|
$
|
|
$
|
|
||||
|
Due after one through five years
|
|
|
||||||
|
Due after five through ten years
|
|
|
||||||
|
Due after ten years
|
|
|
||||||
|
Agency mortgage-backed securities
|
|
|
||||||
|
Asset-backed securities
|
|
|
||||||
|
Total debt securities
|
$
|
|
$
|
|
||||
During the year ended December 31, 2025, we had a net securities gain of $375 thousand, consisting of a pre-tax gain of $2 thousand
realized on calls of AFS securities and an unrealized gain of $373 thousand from the fair value adjustments of equity securities. For
the year ended December 31, 2024, we had a net securities gain of $631 thousand. There was a net gain of $8 thousand realized on sales and calls of AFS securities, and an unrealized gain of $623 thousand from the fair value adjustment of equity securities. For the year 2023, we had a net securities gain of $996 thousand. There was a net gain of $4 thousand realized on
sales and calls of AFS securities, and an unrealized gain of $992 thousand from the fair value adjustment of equity securities.
The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $602.6 million and $630.8 million at
December 31, 2025 and 2024, respectively. The fair value of securities pledged was $556.9 million and $563.2 million at December 31, 2025 and 2024, respectively.
The amortized cost of securities sold under agreements to repurchase amounted to $386.8
million and $330.0 million at December 31, 2025 and 2024, respectively. The fair value of securities pledged was $358.1 million and $292.2 million at
December 31, 2025 and 2024, respectively.
52
Table of Contents
CTBI evaluates its investment portfolio on a quarterly basis for impairment. The analysis performed as
of December 31, 2025 indicates that all impairment is market and interest rate driven and not credit-related. The percentage of total debt securities with unrealized losses as of December 31, 2025 was 85.4 % compared to 95.5 % as of December 31, 2024. The following
table provides the amortized cost, gross unrealized losses, and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2025 that are not
deemed to have credit losses.
Available-for-Sale
|
(in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Losses
|
Fair Value
|
|||||||||
|
Less Than 12 Months
|
||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total <12 months AFS securities with unrealized losses
|
|
(
|
)
|
|
||||||||
|
|
||||||||||||
|
12 Months or More
|
||||||||||||
|
U.S. Treasury and government agencies
|
|
(
|
)
|
|
||||||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total ≥12 months AFS securities with unrealized losses
|
|
(
|
)
|
|
||||||||
|
|
||||||||||||
|
Total
|
||||||||||||
|
U.S. Treasury and government agencies
|
|
(
|
)
|
|
||||||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total AFS securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
53
Table of Contents
The analysis performed as of December 31, 2024 indicated that all impairment was market and interest rate driven and not credit-related. The
following table provides the amortized cost, gross unrealized losses, and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2024 that are
not deemed to have credit losses.
Available-for-Sale
|
(in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Losses
|
Fair Value
|
|||||||||
|
Less Than 12 Months
|
||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total <12 months AFS securities with unrealized losses
|
|
(
|
)
|
|
||||||||
|
|
||||||||||||
|
12 Months or More
|
||||||||||||
|
U.S. Treasury and government agencies
|
|
(
|
)
|
|
||||||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total ≥12 months AFS securities with unrealized losses
|
|
(
|
)
|
|
||||||||
|
|
||||||||||||
|
Total
|
||||||||||||
|
U.S. Treasury and government agencies
|
|
(
|
)
|
|
||||||||
|
State and political subdivisions
|
|
(
|
)
|
|
||||||||
|
Agency mortgage-backed securities
|
|
(
|
)
|
|
||||||||
|
Asset-backed securities
|
|
(
|
)
|
|
||||||||
|
Total AFS securities with unrealized losses
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||
U.S. Treasury and Government Agencies
The unrealized losses in U.S. Treasury and government agencies were caused by interest rate changes. CTBI expects to recover the amortized cost basis
over the term of the securities. These securities are guaranteed by the U.S. government and are generally considered to be risk-free, which is why CTBI does not record an allowance for credit loss on these investments. Furthermore, CTBI does not
intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.
State and Political Subdivisions
The unrealized losses in securities of state and political subdivisions were caused by interest rate changes. These securities benefit from stable dedicated tax
revenues, a legal framework that prioritizes bondholder payments, and third-party bond insurance, which significantly mitigate credit risk. Due to these robust credit protection measures, CTBI does not record an allowance for credit loss on its
state and political subdivisions securities. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity. Furthermore, CTBI does not intend to
sell the investments before recovery of their amortized cost and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.
54
Table of Contents
Agency Mortgage-backed Securities
The unrealized losses in agency mortgage-backed securities were caused by interest rate changes. CTBI expects to recover the amortized cost basis over the term of the securities. These securities are either guaranteed by the U.S.
government or by a government sponsored enterprise and are generally considered to be risk-free, which is why CTBI does not record an allowance for credit loss on these investments. Furthermore, CTBI does not intend to sell the investments and it
is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.
Asset-Backed Securities
The unrealized losses in asset-backed securities were caused by interest rate changes. These securities benefit from structural credit enhancements, which significantly mitigate credit risk. Due to these robust credit protection measures,
CTBI does not record an allowance for credit loss on its asset-backed securities. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.
CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost.
Equity
Securities at Fair Value
Equity
securities at fair value as of December 31, 2025 were $4.2 million, as a result of a $373 thousand increase in the fair value in 2025. Equity securities at fair value as of December 31, 2024 were $3.8 million, as a result of a $623 thousand increase in the fair value during
the year. No
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)
|
December 31
2025
|
December 31
2024
|
||||||
|
Hotel/motel
|
$
|
$
|
|
|||||
|
Commercial real estate residential
|
|
|||||||
|
Commercial real estate nonresidential
|
|
|||||||
|
Dealer floorplans
|
|
|||||||
|
Commercial other
|
|
|||||||
|
Commercial loans
|
|
|||||||
|
Real estate mortgage
|
|
|||||||
|
Home equity lines
|
|
|||||||
|
Residential loans
|
|
|||||||
|
Consumer direct
|
|
|||||||
|
Consumer indirect
|
|
|||||||
|
Consumer loans
|
|
|||||||
|
Net loans
|
$
|
$
|
|
|||||
Unearned fees included above totaled $359
thousand as of December 31, 2025 and $1 thousand as of December 31, 2024, while the unamortized premiums on the indirect lending
portfolio totaled $34.5 million as of December 31, 2025 and $32.0 million as of December 31, 2024.
55
Table of Contents
Loans
identified to be sold into the secondary market are classified as held for sale and are not included in the loans balance above. Loans held for sale are recorded at lower of cost or fair value and were $0.2
Accrued interest receivable from loans, which
is excluded from loan balances, was $19.7 million and $18.7 million at December 31, 2025 and 2024, respectively.
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.
Allowance for Credit Losses
The following tables present the balance in the
ACL for loans for the years ended December 31, 2025 and 2024.
|
Year Ended
December 31, 2025
|
||||||||||||||||||||||||
|
(in thousands)
|
Beginning
Balance
|
Provision
Charged to
Expense
|
Losses
Charged
Off
|
Recoveries
|
Ending
Balance
|
% of
Total
ACL
|
||||||||||||||||||
|
ACL
|
||||||||||||||||||||||||
|
Hotel/motel
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
% | |||||||||||||
|
Commercial real estate residential
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Commercial real estate nonresidential
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Dealer floorplans
|
|
|
|
|
|
|||||||||||||||||||
|
Commercial other
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Real estate mortgage
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Home equity
|
|
(
|
)
|
(
|
)
|
|
|
|||||||||||||||||
|
Consumer direct
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Consumer indirect
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Total ACL
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
% | ||||||||||||
|
Year Ended
December 31, 2024
|
||||||||||||||||||||||||
|
(in thousands)
|
Beginning
Balance
|
Provision
Charged to
Expense
|
Losses
Charged
Off
|
Recoveries
|
Ending
Balance
|
% of
Total
ACL
|
||||||||||||||||||
|
ACL
|
||||||||||||||||||||||||
|
Hotel/motel
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
% | |||||||||||||
|
Commercial real estate residential
|
|
|
|
|
|
|||||||||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
|
|||||||||||||||||||
|
Dealer floorplans
|
|
|
|
|
|
|||||||||||||||||||
|
Commercial other
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Real estate mortgage
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Home equity
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Consumer direct
|
|
(
|
)
|
(
|
)
|
|
|
|||||||||||||||||
|
Consumer indirect
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Total ACL
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
% | ||||||||||||
56
Table of Contents
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 provision expense. The total unfunded commitment
off-balance sheet credit exposure at December 31, 2025 and 2024 is presented below:
|
Year Ended
December 31, 2025
|
||||||||||||||||||||
|
(in thousands)
|
Beginning Balance
|
Provision Charged to Expense
|
Losses
Charged Off
|
Recoveries
|
Ending Balance
|
|||||||||||||||
|
ACL for unfunded commitments:
|
||||||||||||||||||||
|
Commercial
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||
|
Real estate mortgage
|
|
(
|
)
|
|
|
|
||||||||||||||
|
Consumer
|
|
(
|
)
|
|
|
|
||||||||||||||
|
Total unfunded commitment off-balance sheet credit exposure
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||
|
Year Ended
December 31, 2024
|
||||||||||||||||||||
|
(in thousands)
|
Beginning Balance
|
Provision Charged to Expense
|
Losses
Charged Off
|
Recoveries
|
Ending Balance
|
|||||||||||||||
|
ACL for unfunded commitments:
|
||||||||||||||||||||
|
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Real estate mortgage
|
|
|
|
|
|
|||||||||||||||
|
Consumer
|
|
|
|
|
|
|||||||||||||||
|
Total unfunded commitment off-balance sheet credit exposure
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Nonperforming
loans
Nonaccrual loans and loans 90 days past due and still accruing, segregated by loan segment, as of December 31, 2025
and 2024 were as follows:
| December 31, 2025 | ||||||||||||||||
|
(in thousands)
|
Nonaccrual Loans
with No ACL
|
Nonaccrual Loans
with ACL
|
90+ and Still
Accruing
|
Total
Nonperforming
Loans
|
||||||||||||
|
Commercial real estate residential
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
||||||||||||
|
Commercial other
|
||||||||||||||||
|
Total commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Total residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Total consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
57
Table of Contents
| December 31, 2024 | ||||||||||||||||
|
(in thousands)
|
Nonaccrual Loans
with No ACL
|
Nonaccrual Loans
with ACL
|
90+ and Still
Accruing
|
Total
Nonperforming
Loans
|
||||||||||||
|
Commercial real estate residential
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Total commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Total residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Total consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest income recognized on nonaccrual loans for the years ended December 31, 2025 and 2024 totaled $66.2 thousand and $189.4 thousand,
respectively.
The following tables present CTBI’s loan portfolio aging analysis, segregated by loan
segment, as of December 31, 2025 and 2024 (includes loans 90 days past due and still accruing as well):
| December 31, 2025 | ||||||||||||||||||||||||
|
(in thousands)
|
30-59 Days
Past Due
|
60-89
Days Past
Due
|
90+ Days
Past Due
|
Total
Past Due
|
Current
|
Total Loans
|
||||||||||||||||||
|
Hotel/motel
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Commercial real estate residential
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
|
|
||||||||||||||||||
|
Dealer floorplans
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial other
|
|
|
|
|
|
|
||||||||||||||||||
|
Total commercial loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Real estate mortgage
|
|
|
|
|
|
|
||||||||||||||||||
|
Home equity lines
|
|
|
|
|
|
|
||||||||||||||||||
|
Total residential loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer direct
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer indirect
|
|
|
|
|
|
|
||||||||||||||||||
|
Total consumer loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Loans and lease financing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
58
Table of Contents
| December 31, 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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Commercial real estate residential
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
|
|
||||||||||||||||||
|
Dealer floorplans
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial other
|
|
|
|
|
|
|
||||||||||||||||||
|
Total commercial loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Real estate mortgage
|
|
|
|
|
|
|
||||||||||||||||||
|
Home equity lines
|
|
|
|
|
|
|
||||||||||||||||||
|
Total residential loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer direct
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer indirect
|
|
|
|
|
|
|
||||||||||||||||||
|
Total consumer loans
|
|
|
|
|
|
|
||||||||||||||||||
|
Loans and lease financing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Credit Quality Indicators and Profile
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.
|
59
Table of Contents
| ➢ |
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
As of December 31, 2025
|
||||||||||||||||||||||||||||||||
|
(in thousands)
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Revolving
Loans
|
Total
|
||||||||||||||||||||||||
|
Hotel/motel
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total hotel/motel
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Hotel/motel current period gross charge-offs
|
||||||||||||||||||||||||||||||||
|
Commercial real estate residential
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate residential
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate residential current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
|
Commercial real estate nonresidential
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate nonresidential
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate nonresidential current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
|
Dealer floorplans
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total dealer floorplans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
| Dealer floorplans current period gross charge-offs |
||||||||||||||||||||||||||||||||
|
Commercial other
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial other current
period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Commercial loans
|
||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total commercial loans current period gross charge-offs
|
$ |
( |
) | $ | ( |
) | $ |
( |
) | $ | ( |
) | $ |
( |
) | $ | ( |
) | $ |
$ | ( |
) |
60
Table of Contents
|
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2024
|
||||||||||||||||||||||||||||||||
|
(in thousands)
|
2024 |
2023 |
2022
|
2021 | 2020 | Prior | Revolving Loans | Total | ||||||||||||||||||||||||
|
Hotel/motel
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total hotel/motel
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Hotel/motel current period gross charge-offs
|
||||||||||||||||||||||||||||||||
|
Commercial real estate residential
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate residential
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate residential current period gross charge-offs
|
||||||||||||||||||||||||||||||||
|
Commercial real estate nonresidential
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial real estate nonresidential
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial real estate nonresidential current period gross charge-offs
|
||||||||||||||||||||||||||||||||
| Dealer floorplans | ||||||||||||||||||||||||||||||||
| Risk rating: | ||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total dealer floorplans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Dealer floorplans current period gross charge-offs
|
||||||||||||||||||||||||||||||||
|
Commercial other
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Commercial other current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Commercial loans
|
||||||||||||||||||||||||||||||||
|
Risk rating:
|
||||||||||||||||||||||||||||||||
|
Pass
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
OAEM
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total commercial loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total commercial loans current period gross charge-offs
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) |
61
Table of Contents
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 loan segment:
|
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2025
|
||||||||||||||||||||||||||||||||
|
(in thousands)
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Revolving
Loans
|
Total
|
||||||||||||||||||||||||
|
Home equity lines
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total home equity lines
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Home equity current period gross charge-offs
|
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Mortgage loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total mortgage loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Mortgage loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
|
Residential loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total residential loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total residential loans current period gross charge-offs
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||
|
Consumer direct loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer direct loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer direct loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Consumer indirect loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer indirect loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer indirect loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Consumer loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total consumer loans current period gross charge-offs
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||
62
Table of Contents
|
|
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2024
|
|||||||||||||||||||||||||||||||
|
(in thousands)
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Revolving Loans
|
Total
|
||||||||||||||||||||||||
|
Home equity lines
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total home equity lines
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Home equity lines current period gross charge-offs
|
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Mortgage loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total mortgage loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Mortgage loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
|
Residential loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total residential loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total residential loans current period gross charge-offs
|
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||
|
Consumer direct loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer direct loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer direct loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Consumer indirect loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer indirect loans
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Consumer indirect loans current period gross charge-offs
|
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
Consumer loans
|
||||||||||||||||||||||||||||||||
|
Performing
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Total consumer loans current period gross charge-offs
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||
63
Table of Contents
The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings are in process was $3.1 million and $4.0 million at December
31, 2025 and 2024, respectively.
Individually Evaluated Loans
If a loan does not share risk characteristics with other pooled loans in determining the ACL, the loan is 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:
| December 31, 2025 | ||||||||||||
|
(in thousands)
|
Number of
Loans
|
Recorded
Investment
|
Specific
Reserve
|
|||||||||
|
Hotel/motel
|
|
$
|
|
$
|
|
|||||||
|
Commercial real estate residential
|
|
|
|
|||||||||
|
Commercial real estate nonresidential
|
|
|
|
|||||||||
|
Commercial other
|
|
|
|
|||||||||
|
Total collateral dependent loans
|
|
$
|
|
$
|
|
|||||||
|
December 31, 2024
|
||||||||||||
|
(in thousands)
|
Number of
Loans
|
Recorded
Investment
|
Specific
Reserve
|
|||||||||
|
Hotel/motel
|
|
$
|
|
$
|
|
|||||||
|
Commercial real estate residential
|
|
|
|
|||||||||
|
Commercial real estate nonresidential
|
|
|
|
|||||||||
|
Commercial other
|
|
|
|
|||||||||
|
Total collateral dependent loans
|
|
$
|
|
$
|
|
|||||||
Based on the quarterly evaluation of losses for
these credits, the combined amount of expected loss is $0.7 million. This expected loss is tied to four unrelated loans that demonstrate a shortfall in collateral which is insufficient to repay the principal balance of the loans in the event of a
liquidation of the collateral and after estimated selling costs. All other evaluated credits show sufficient collateral to repay the entire loan balances after estimated selling costs. The hotel/motel, commercial real estate residential, and
commercial real estate nonresidential segments are all collateralized with real estate. Four loans listed in the commercial other
segment at December 31, 2025 are collateralized by inventory, equipment, and accounts receivable.
64
Table of Contents
Loan Modifications
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 year ended December 31, 2025:
|
Amortized Cost at December 31, 2025
|
||||||||||||||||
|
(in thousands)
|
Interest Rate
Reduction
|
% of total
|
Term Extension |
% of total
|
||||||||||||
|
Hotel/motel
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Commercial real estate residential
|
|
|
|
|
||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|||||||||||||
|
Dealer floorplans
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
|
%
|
$
|
|
% | |||||||||
|
Amortized Cost at December 31, 2025
|
||||||||||||||||
|
(in thousands)
|
Combination –
Term Extension
and Interest Rate
Reduction
|
% of total
|
Payment Change |
% of total
|
||||||||||||
|
Hotel/motel
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Commercial real estate residential
|
|
|
|
|
||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
||||||||||||
|
Dealer floorplans
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
65
Table of Contents
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2025:
|
Loan Type
|
Interest Rate Reduction
Financial Impact
|
Term Extension
Financial Impact
|
||
|
Commercial real estate residential
|
|
Added a weighted-average
|
||
|
Commercial real estate nonresidential
|
Reduced weighted-average contractual interest rate from
|
Added a weighted-average
|
||
|
Commercial other
|
Added a weighted-average
|
|||
|
Real estate mortgage
|
Reduced weighted-average contractual interest rate from
|
Added a weighted-average
|
||
|
Home equity lines
|
Reduced weighted-average contractual interest rate from |
Added a weighted-average
|
||
|
Consumer direct
|
Added a weighted-average
|
|||
|
Consumer indirect
|
Added a weighted-average
|
|
Loan Type
|
Combination – Term Extension and
Interest Rate Reduction
Financial Impact |
Payment Changes
Financial Impact
|
||
|
Commercial real estate residential
|
Reduced weighted-average contractual interest rate from
|
Provided payment changes that will be added to the end of the original loan term |
||
|
Commercial real estate nonresidential
|
Reduced weighted-average contractual interest rate from |
Provided payment changes that will be added to the end of the original loan term |
||
|
Commercial other
|
Increased weighted-average contractual interest rate from |
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
|
Provided payment changes that will be added to the end of the original loan term |
||
|
Home Equity Lines
|
Reduced weighted-average contractual interest rate from
|
|
||
|
Consumer indirect
|
Provided payment changes that will be added to the end of the original loan term
|
66
Table of Contents
These
loans, segregated by loan segment and concession granted, are presented below for the year ended December 31, 2024:
|
Amortized Cost at December 31, 2024
|
||||||||||||||||
|
(in thousands)
|
Interest Rate
Reduction
|
% of total
|
Term Extension |
% of total
|
||||||||||||
|
Hotel/motel
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Commercial real estate residential
|
|
|
|
|
||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|||||||||||||
|
Dealer floorplans
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
|
%
|
$
|
|
% | |||||||||
|
Amortized Cost at December 31, 2024
|
||||||||||||||||
|
(in thousands)
|
Combination –
Term Extension
and Interest Rate
Reduction
|
% of total
|
Payment Change |
% of total
|
||||||||||||
|
Hotel/motel
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Commercial real estate residential
|
|
|
|
|
||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
||||||||||||
|
Dealer floorplans
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Commercial loans
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Residential loans
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
|
Consumer loans
|
|
|
|
|
||||||||||||
|
Loans and lease financing
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
67
Table of Contents
The
following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2024:
|
Loan Type
|
Interest Rate Reduction
Financial Impact
|
Term Extension
Financial Impact
|
||
|
Hotel/motel
|
Added a weighted-average |
|||
|
Commercial real estate residential
|
|
Added a weighted-average
|
||
|
Commercial real estate nonresidential
|
Reduced weighted-average contractual interest rate from
|
|
||
|
Dealer floorplans
|
Added a weighted-average |
|||
|
Commercial other
|
Added a weighted-average
|
|||
|
Real estate mortgage
|
Reduced weighted-average contractual interest rate from
|
Added a weighted-average
|
||
|
Home equity lines
|
Added a weighted-average
|
|||
|
Consumer direct
|
Added a weighted-average
|
|||
|
Consumer indirect
|
Added a weighted-average
|
68
Table of Contents
|
Loan Type
|
Combination – Term Extension and
Interest Rate Reduction
Financial Impact |
Payment Changes
Financial Impact
|
||
|
Hotel/motel
|
||||
|
Commercial real estate residential
|
Weighted-average contractual interest rate remained at
|
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 |
Provided payment changes that will be added to the end of the original loan term | ||
|
Dealer floorplans
|
||||
|
Commercial other
|
Increased weighted-average contractual interest rate from |
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
|
|||
|
Home equity lines
|
Reduced weighted-average contractual interest rate from
|
|
||
|
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 |
No
charge-offs have resulted from the presented modifications. We had commitments to extend additional credit in the amount of $41
thousand and $100 thousand at December 31, 2025 and 2024, respectively, on loans that were considered in financial difficulty.
69
Table of Contents
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 loans to borrowers experiencing financial difficulty for the past 12 months as of December 31, 2025.
|
Past Due Status (Amortized Cost Basis)
|
||||||||||||||||
| (in thousands) |
Current
|
30-89 Days
|
90+ Days
|
Nonaccrual
|
||||||||||||
|
Hotel/motel
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Commercial real estate residential
|
|
|
|
|
||||||||||||
|
Commercial real estate nonresidential
|
|
|
|
|
||||||||||||
|
Dealer floorplans
|
|
|
|
|
||||||||||||
|
Commercial other
|
|
|
|
|
||||||||||||
|
Real estate mortgage
|
|
|
|
|
||||||||||||
|
Home equity lines
|
|
|
|
|
||||||||||||
|
Consumer direct
|
|
|
|
|
||||||||||||
|
Consumer indirect
|
|
|
|
|
||||||||||||
| Loans to borrowers experiencing
financial difficulty |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
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 year ended December 31, 2025, there were seven 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 segment, are loans to borrowers experiencing financial difficulty for which there was a
payment default during the periods indicated and such default was within 12 months of the loan modification.
|
Year Ended
December 31, 2025
|
||||||||
|
(in thousands)
|
Number of Loans
|
Recorded Balance
|
||||||
| Commercial: | ||||||||
|
Commercial other
|
$ | |||||||
| Residential: |
||||||||
|
Real estate mortgage
|
|
|
||||||
| Home equity lines |
||||||||
|
Loans to borrowers experiencing financial difficulty
|
|
$
|
|
|||||
|
|
Year Ended
December 31, 2024
|
|||||||
|
(in thousands)
|
Number of Loans
|
Recorded Balance
|
||||||
| Commercial: |
||||||||
| Commercial other |
$ | |||||||
|
Residential:
|
||||||||
|
Real estate mortgage
|
|
|
|
|||||
|
Loans to borrowers experiencing financial difficulty
|
|
$
|
|
|||||
5. Concentrations of Credit Risk
CTBI’s banking activities include granting commercial, residential, and consumer loans to customers primarily located in eastern, northeastern,
central, and south central Kentucky, southern West Virginia, and northeastern Tennessee. CTBI is continuing to manage all components of its portfolio mix in a manner to reduce risk from changes in economic conditions. Concentrations of credit, as
defined for regulatory purposes, are reviewed quarterly by management to ensure that internally established limits based on Tier 1 Capital plus the ACL are not exceeded. At December 31, 2025 and 2024, our concentrations of hospitality industry
credits were 65 % and 64 %
of Tier 1 capital plus the ACL, respectively. Lessors of residential buildings and dwellings credits were 53 % and 51 % for each period end, respectively, and lessors of non-residential buildings credits were 33 % and 32 % for each period end, respectively. These percentages are within our
internally established limits regarding concentrations of credit.
70
Table of Contents
6. Premises and Equipment
Premises and equipment are summarized as follows:
|
(in thousands)
December 31
|
2025
|
2024
|
||||||
|
Land and buildings
|
$
|
|
$
|
|
||||
|
Leasehold improvements
|
|
|
||||||
|
Furniture, fixtures, and equipment
|
|
|
||||||
|
Construction in progress
|
|
|
||||||
|
Total premises and equipment
|
|
|
||||||
|
Less accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
|
Premises and equipment, net
|
$
|
|
$
|
|
||||
Depreciation and amortization of premises and equipment for 2025, 2024, and 2023 was $4.0 million, $3.7 million, and $3.6 million, respectively.
7. Leases
CTBI has three finance leases for property but no material sublease or leasing arrangements for which it is
the lessor of property or equipment. CTBI has operating leases for banking and ATM locations. These leases have original remaining lease terms of 1
year to 45 years, some of which include options to renew the leases for up to five years . These options, some of which include variable costs related to rent escalations based on recent financial indices such as the Consumer Price Index which CTBI
uses to estimate future rent increases, are included in the calculation of the lease liability and right-of-use asset when management determines it is reasonably certain the option will be exercised. CTBI determines this on each lease by
considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments
using a discount rate that represents our incremental borrowing rate, on a collateralized basis, over a similar term, at the lease commencement date. Right-of-use assets are further adjusted for prepaid rent, lease incentives, and initial
direct costs, if any.
The components of lease expense for the years ended December 31, 2025 and 2024 were as follows:
|
(in thousands)
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||||||
|
Finance lease cost:
|
||||||||
|
Amortization of right-of-use assets – finance leases
|
$
|
|
$
|
|
||||
|
Interest on lease liabilities – finance leases
|
|
|
||||||
|
Total finance lease cost
|
|
|
||||||
|
Short-term lease cost
|
|
|
||||||
|
Operating lease cost
|
|
|
||||||
|
Total lease cost
|
||||||||
|
Sublease income
|
(
|
)
|
(
|
)
|
||||
|
Net lease cost
|
$
|
|
$
|
|
||||
71
Table of Contents
Supplemental cash flow information related to CTBI’s operating and finance leases for the years ended December 31, 2025 and 2024 was as follows:
|
(in thousands)
|
Year Ended
December 31, 2025
|
Year Ended
December 31, 2024
|
||||||
|
Finance lease – operating cash flows
|
$
|
|
$
|
|
||||
|
Finance lease – financing cash flows
|
$ |
|
$
|
|
||||
|
Operating lease – operating cash flows (fixed payments)
|
$
|
|
$
|
|
||||
|
Operating lease – operating cash flows (liability reduction)
|
$
|
|
$
|
|
||||
|
New right-of-use assets – operating leases
|
$
|
|
$
|
|
||||
|
New right-of-use assets – finance leases
|
$ |
$ | ||||||
|
Weighted average lease term – financing leases
|
|
|
||||||
|
Weighted average lease term – operating leases
|
|
|
||||||
|
Weighted average discount rate – financing leases
|
|
%
|
|
%
|
||||
|
Weighted average discount rate – operating leases
|
|
%
|
|
%
|
||||
Maturities of lease liabilities as of December 31, 2025 are as follows:
|
(in thousands)
|
Operating Leases
|
Finance Leases
|
||||||
|
2026
|
$
|
|
$
|
|
||||
|
2027
|
|
|
||||||
|
2028
|
|
|
||||||
|
2029
|
|
|
||||||
|
2030
|
|
|
||||||
|
Thereafter
|
|
|
||||||
|
Total lease payments
|
|
|
||||||
|
Less imputed interest
|
(
|
)
|
(
|
)
|
||||
|
Total
|
$
|
|
$
|
|
||||
Maturities of lease liabilities as of December 31, 2024 are as follows:
|
(in thousands)
|
Operating Leases
|
Finance Leases
|
||||||
|
2025
|
$
|
|
$
|
|
||||
|
2026
|
|
|
||||||
|
2027
|
|
|
||||||
|
2028
|
|
|
||||||
|
2029
|
|
|
||||||
|
Thereafter
|
|
|
||||||
|
Total lease payments
|
|
|
||||||
|
Less imputed interest
|
(
|
)
|
(
|
)
|
||||
|
Total
|
$
|
|
$
|
|
||||
72
Table of Contents
8. Deposits
Major classifications of deposits are categorized as follows:
|
(in thousands)
December 31
|
2025
|
2024
|
||||||
|
Noninterest bearing deposits
|
$
|
|
$
|
|
||||
|
Interest bearing demand deposits
|
|
|
||||||
|
Money market deposits
|
|
|
||||||
|
Savings
|
|
|
||||||
| Certificates of deposit and other time deposits | ||||||||
|
Total deposits
|
$
|
|
$
|
|
||||
Certificates of deposit and other time deposits of $250,000 or more at December 31, 2025 and 2024 were $493.9 million and $396.3 million, respectively.
Maturities of certificates of deposits and other time deposits are presented below:
|
Maturities by Period at December 31, 2025
|
||||||||||||||||||||||||||||
|
(in thousands)
|
Total
|
Within 1
Year
|
2 Years
|
3 Years
|
4 Years
|
5 Years
|
After 5
Years
|
|||||||||||||||||||||
|
Certificates of deposit and other time deposits
|
$
|
|
$
|
|
$ |
|
$
|
|
$
|
|
$ |
|
$ |
|
||||||||||||||
9. Borrowings
Short-term debt is categorized as follows:
|
(in thousands)
December 31
|
2025
|
2024
|
||||||
|
Repurchase agreements
|
$
|
|
$
|
|
||||
|
Federal funds purchased
|
|
|
||||||
|
Total short-term debt
|
$
|
|
$
|
|
||||
See note 10 for additional information regarding our repurchase agreements. All federal funds purchased mature and reprice daily. The average rates
paid for federal funds purchased and repurchase agreements on December 31, 2025 were 3.55 % and 3.56 %, respectively.
Long-term debt is categorized as follows:
|
(in thousands)
December 31
|
2025
|
2024
|
||||||
|
Junior subordinated debentures,
|
$
|
|
$
|
|
||||
|
Loan related borrowings,
|
||||||||
|
Total long-term debt
|
$ | $ | ||||||
On March 30, 2007, CTBI issued $61.3
million in junior subordinated debentures to a newly formed unconsolidated Delaware statutory trust subsidiary which in turn issued $59.5
million of capital securities in a private placement to institutional investors. The debentures, which mature in 30 years but are
redeemable at par at CTBI’s option after five years , were issued at a rate of 6.52 % until June 1, 2012, and thereafter at a floating rate based on the three-month
London Interbank Offered Rate (“LIBOR”) plus 1.59 %. The underlying capital securities were issued at the equivalent rates and terms.
With the elimination of LIBOR, the benchmark replacement rate used is the 3 -month CME Term as adjusted by the relevant spread adjustment, which is 0.26161 %,
plus 1.59 %. The proceeds of the debentures were used to fund the redemption on April 2, 2007 of all CTBI’s outstanding 9.0 % and 8.25 % junior subordinated
debentures in the total amount of $61.3 million. In May 2017, CTBI was able to purchase $2.0 million of the junior subordinated debentures in the open market at a purchase price of $1.4 million, resulting in a gain of $0.6 million. In August 2019, an additional $1.5 million was purchased
in the open market at a price of $1.3 million, resulting in a gain
of $0.2 million. The junior subordinated debentures will be
retained by CTBI until maturity, and CTBI will continue to report the junior subordinated debentures at the net amount outstanding of $57.8
million.
73
Table of Contents
On November 26, 2025, the coupon rate was set at 5.64395 %
for the March 2, 2026 distribution date, which was based on the 3 -month CME Term rate as of November 26, 2025 of 3.79234 % plus 0.26161 % spread adjustment plus 1.59 %.
CTB sold the guaranteed portion of a loan in a transaction that did not meet the accounting requirements to qualify for recognition as a sold loan.
The gross amount of the loan is recognized in the loan portfolio as an earning asset and the sold portion is recognized as a loan related borrowing. Repayment of the liability will be provided by the loan payments made by the loan customer. The
principal amount is also guaranteed by the USDA.
10. Repurchase Agreements
Repurchase
agreements are accounted for as secured borrowings. The following table presents information regarding the balances of our repurchase agreement borrowings as of and for the periods indicated:
|
(in thousands)
|
Balance Outstanding at
Year End
|
Average Balance
Outstanding For the
Year Ended
|
Maximum Balance
Outstanding During the Year
Ended
|
|||||||||
|
December 31, 2025
|
$
|
|
$
|
|
$
|
|
||||||
|
December 31, 2024
|
$
|
|
$
|
|
$
|
|
||||||
We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and provide additional funding to our balance
sheet. Repurchase agreements are transactions whereby we offer to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates CTBI to repurchase the security on an agreed upon date at an
agreed upon repurchase price plus interest at an agreed upon rate. Securities sold under agreements to repurchase are recorded at the amount of cash received in connection with the transaction and are reflected in the accompanying consolidated
balance sheets. At December 31, 2025 and 2024, we had amounts at risk under repurchase agreements for one 10 148.0 million and $98.0 million and weighted average maturities of 4.6 months and
3.2 months, respectively.
We monitor collateral levels on a continuous basis and maintain records of each transaction specifically describing the applicable security and the
counterparty’s fractional interest in that security, and we segregate the security from its general assets in accordance with regulations governing custodial holdings of securities. The primary risk with our repurchase agreements is market risk
associated with the securities securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained
with our safekeeping agents. The carrying value of investment securities available-for-sale pledged as collateral under repurchase agreements totaled $358.1
million and $292.2 million at December 31, 2025
and 2024, respectively.
74
Table of Contents
The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in the accompanying
consolidated balance sheets as of December 31, 2025 and 2024 is presented in the following tables:
|
December 31, 2025
|
||||||||||||||||||||
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
|
(in thousands)
|
Overnight
and
Continuous
|
Up to
30 days
|
30-90 days
|
Greater
Than
90 days
|
Total
|
|||||||||||||||
|
Repurchase agreements and repurchase-to-maturity transactions:
|
||||||||||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
State and political subdivisions
|
|
|
|
|
|
|||||||||||||||
|
Agency mortgage-backed securities
|
|
|
|
|
|
|||||||||||||||
|
Asset-backed securities
|
||||||||||||||||||||
|
Total repurchase agreements
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
December 31, 2024
|
||||||||||||||||||||
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
|
(in thousands)
|
Overnight
and
Continuous
|
Up to
30 days
|
30-90 days
|
Greater
Than
90 days
|
Total
|
|||||||||||||||
|
Repurchase agreements and repurchase-to-maturity transactions:
|
||||||||||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
State and political subdivisions
|
|
|
|
|
|
|||||||||||||||
|
Agency mortgage-backed securities
|
|
|
|
|
|
|||||||||||||||
|
Asset-backed securities
|
||||||||||||||||||||
|
Total repurchase agreements
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
75
Table of Contents
Repurchase agreements are subject to underlying agreements with master netting or similar arrangements, which provide for the right of setoff in the
event of default or in the event of bankruptcy of either party to the transactions. Repurchase agreements are reported to these arrangements on a gross basis. The following
table presents information regarding repurchase agreements as if it was presented on a net basis as of December 31, 2025 and 2024 :
|
Gross Amount Not Offset
in the Balance Sheet
|
||||||||||||||||||||||||
|
(in thousands)
|
Gross
Amount of
Recognized
Liabilities
|
Gross
Amount
Offset in the
Balance
Sheet
|
Net Amount
of Liabilities
Presented in
the Balance
Sheet
|
Financial
Instruments
Posted as
Collateral
|
Cash Posted
as Collateral
|
Net Amount
|
||||||||||||||||||
|
December 31, 2025:
|
||||||||||||||||||||||||
|
Repurchase agreements
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||
|
December 31, 2024:
|
||||||||||||||||||||||||
|
Repurchase agreements
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||
Amounts disclosed for collateral received or posted include cash and securities up to and not exceeding the net amount of the repurchase agreement
liability presented in the balance sheet. The fair value of the total collateral may exceed the amounts presented. Refer to note 3 for the total fair value of financial instruments pledged as collateral for repurchase agreements.
11. Advances from Federal Home Loan Bank
FHLB advances consisted of the following monthly amortizing borrowings at December 31:
|
(in thousands)
|
2025
|
2024
|
||||||
|
Monthly amortizing
|
$
|
|
$
|
|
||||
|
Total FHLB advances
|
$
|
|
$
|
|
||||
The advances from the FHLB that require monthly principal payments were due for repayment as follows:
|
Principal Payments Due by Period at December 31, 2025
|
||||||||||||||||||||||||||||
|
(in thousands)
|
Total
|
Within 1 Year
|
2 Years
|
3 Years
|
4 Years
|
5 Years
|
After 5 Years
|
|||||||||||||||||||||
|
Outstanding advances, weighted average interest rate –
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
At December 31, 2025, our FHLB
advances were collateralized by FHLB stock of $5.2 million and a blanket lien on qualifying 1-4 family first mortgage loans. We had a $688.5 million FHLB borrowing capacity with $0.3
million in advances and $141.3 million in letters of credit used for public fund pledging, leaving $546.9 million available for additional advances as of year-end. The advances had fixed interest rates of 0.00 % and 2.00 % with a weighted average rate of 0.04 %. The advances are subject to restrictions or penalties in the event of prepayment.
76
Table of Contents
12. Fair Value of Financial Assets and Liabilities
Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction
between market participants at the measurement date (i.e., the “exit price”). CTBI uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief
description of each level:
Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include
quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in determining an exit price for the assets or liabilities.
A financial instrument’s categorization within the above valuation hierarchy is based upon the lowest level of input that is significant to the fair
value measurement. CTBI’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and CTBI considers factors specific to the assets or liabilities. The following is a description of
the valuation methodologies used for CTBI’s assets and liabilities measured at fair value on a recurring basis.
Recurring Measurements
The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a
recurring basis as of December 31, 2025 and 2024 and indicate the level within the fair value hierarchy of the valuation techniques.
|
|
Fair Value Measurements at
December 31, 2025 Using
|
|||||||||||||||
| (in thousands) |
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Assets measured – recurring basis
|
||||||||||||||||
|
Available-for-sale securities:
|
||||||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
State and political subdivisions
|
|
|
|
|
||||||||||||
|
Agency mortgage-backed securities
|
|
|
|
|
||||||||||||
|
Asset-backed securities
|
|
|
|
|
||||||||||||
|
Equity securities at fair value
|
|
|
|
|
||||||||||||
|
Mortgage servicing rights
|
|
|
|
|
||||||||||||
77
Table of Contents
|
|
Fair Value Measurements at
December 31, 2024 Using
|
|||||||||||||||
| (in thousands) |
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Assets measured – recurring basis
|
||||||||||||||||
|
Available-for-sale securities:
|
||||||||||||||||
|
U.S. Treasury and government agencies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
State and political subdivisions
|
|
|
|
|
||||||||||||
|
Agency mortgage-backed securities
|
|
|
|
|
||||||||||||
|
Asset-backed securities
|
|
|
|
|
||||||||||||
|
Equity securities at fair value
|
|
|
|
|
||||||||||||
|
Mortgage servicing rights
|
|
|
|
|
||||||||||||
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in
the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. These valuation methodologies were applied to all of CTBI’s financial assets carried at fair value. CTBI had no
Uncertainty of Fair Value Measurements
The following is a discussion of the uncertainty of fair value measurements, the interrelationships between those inputs and other unobservable
inputs used in recurring fair value measurement, and how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.
|
•
|
Available-for-Sale Securities |
U.S. Treasury and government agencies are classified as Level 1 of the valuation hierarchy where quoted market prices are available in the active
market on which the individual securities are traded.
If quoted market prices are not available, the fair value measurements consider observable data that may include dealer quotes, market spreads, cash
flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other factors. U.S. Treasury and government agencies, state and
political subdivisions, agency mortgage-backed securities, and asset-backed securities are classified as Level 2 inputs.
|
•
|
Equity Securities at Fair Value |
Fair value for equity securities is derived based on unobservable inputs, such as the discount rate,
quarterly dividends payable to the Visa Class B common stock, and the prevailing conversion rate at the conversion date. The most recent conversion rate of 1.5491 and the most recent dividend rate of 1.0379 were used to derive the
fair value estimate. Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for discount rate is accompanied by a
directionally opposite change in the fair value estimate. The weighted averages presented in the tables below are determined by taking the median of the estimates in conversion dates and discount rate.
78
Table of Contents
|
•
|
Mortgage Servicing Rights |
In determining fair value, CTBI utilizes assumptions about factors such as mortgage interest rates, discount rates, mortgage loan prepayment speeds,
market trends, and industry demand. Due to the nature of the valuation inputs, MSRs are classified within Level 3 of the hierarchy. We have determined these assumptions, processes, and conclusions to be reasonable and appropriate in determining
the fair value of this asset. See the table below for inputs and valuation techniques used for Level 3 MSRs.
Fair value for MSRs is derived based on unobservable inputs, such as prepayment speeds of the underlying loans generated using the Andrew Davidson
Prepayment Model, FHLMC/FNMA guidelines, the weighted average life of the loan, the discount rate, the weighted average coupon, and the weighted average default rate. Significant increases (decreases) in either of those inputs in isolation would
result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for prepayment speeds is accompanied by a directionally opposite change in the assumption for interest rates.
Level 3 Reconciliation
Following is a reconciliation of the beginning and ending balances of recurring fair value measurements, for the periods indicated, using
significant unobservable (Level 3) inputs:
|
2025
|
2024
|
|||||||||||||||
| (in thousands) |
Equity
Securities
at Fair
Value
|
Mortgage
Servicing
Rights
|
Equity
Securities
at Fair
Value
|
Mortgage
Servicing
Rights
|
||||||||||||
|
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Total unrealized gains (losses)
|
||||||||||||||||
|
Included in net income
|
|
(
|
)
|
|
|
|||||||||||
|
Issues
|
|
|
|
|
||||||||||||
|
Settlements
|
|
(
|
)
|
|
(
|
)
|
||||||||||
|
Ending balance
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses
related to assets still held at the reporting date
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||
Realized and unrealized gains and losses for items reflected in the tables above are included in net income in the consolidated statements of income
as follows:
|
Noninterest Income
|
||||||||
|
(in thousands)
|
2025
|
2024
|
||||||
|
Total gains (losses)
|
$
|
(
|
)
|
$
|
|
|||
79
Table of Contents
Nonrecurring Measurements
The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a
nonrecurring basis as of December 31, 2025 and 2024 and indicate the level within the fair value hierarchy of the valuation techniques.
|
|
Fair Value Measurements at
December 31, 2025 Using
|
|||||||||||||||
| (in thousands) |
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Assets measured – nonrecurring basis
|
||||||||||||||||
|
Collateral dependent loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Other real estate owned
|
|
|
|
|
||||||||||||
|
|
Fair Value Measurements at
December 31, 2024 Using
|
|||||||||||||||
| (in thousands) |
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Assets measured – nonrecurring basis
|
||||||||||||||||
|
Collateral dependent loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Other real estate owned
|
|
|
|
|
||||||||||||
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized
in the accompanying balance sheet.
Collateral Dependent Loans
The estimated fair value of collateral-dependent loans is based on the appraised fair value of the collateral, less estimated cost to sell.
Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.
CTBI considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the
environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Chief Credit Officer.
The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the
Chief Credit Officer by comparison to historical results.
Loans considered collateral-dependent are loans for which the repayment is expected to be provided substantially through the operation or sale of
the collateral when the borrower is experiencing financial difficulty. There was one fair value adjustment to collateral-dependent loans during the year ended December 31, 2025 totaling $0.4 million. Fair value adjustments for the year ended December 31, 2024 were $0.1
million.
80
Table of Contents
Other Real Estate Owned
Estimated fair value of OREO is based on appraisals or evaluations. OREO is classified within Level 3 of the fair value hierarchy. Long-lived
assets are subject to nonrecurring fair value adjustments to reflect subsequent partial write-downs that are based on the observable market price or current appraised value of the collateral. Fair value adjustments to OREO disclosed above for the
years ended December 31, 2025 and 2024 were $38 thousand and $63 thousand, respectively.
Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived
market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months. Appraisers are selected from
the list of approved appraisers maintained by management.
Unobservable (Level 3) Inputs
Unobservable inputs for mortgage servicing rights were weighted by loan amount. Unobservable inputs
for equity securities were weighted by security value. Unobservable inputs for OREO were weighted by estimated cost to sell. There were no transfers in or out of Level 3 during 2025 or 2024. The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring
Level 3 fair value measurements at December 31, 2025 and 2024.
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
| (in thousands) |
Fair Value at
December 31,
2025
|
Valuation
Technique(s)
|
Unobservable Input
|
Range (Weighted
Average)
|
|||||
|
Equity securities at fair value
|
$
|
|
Discount cash flows
|
Discount rate
|
(
|
||||
|
Conversion date
|
-
()
|
||||||||
|
Mortgage servicing rights
|
$
|
|
Discount cash flows
|
Constant prepayment rate
|
(
|
||||
| Cost to service |
|
$
($
|
|||||||
|
Probability of default
|
(
|
||||||||
|
Discount rate
|
(
|
||||||||
|
Collateral-dependent loans
|
$
|
|
Market comparable properties
|
Marketability discount
|
(
|
||||
|
Other real estate owned
|
$
|
|
Market comparable properties
|
Comparability adjustments
|
(
|
||||
81
Table of Contents
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||
| (in thousands) |
Fair Value at
December 31,
2024
|
Valuation
Technique(s)
|
Unobservable Input
|
Range (Weighted
Average)
|
|||||
|
Equity securities at fair value
|
$
|
|
Discount cash flows
|
Discount rate
|
(
|
||||
|
Conversion date
|
-
()
|
||||||||
|
Mortgage servicing rights
|
$
|
|
Discount cash flows
|
Constant prepayment rate
|
(
|
||||
| |
Cost to service |
|
$
($
|
||||||
|
Probability of default
|
(
|
||||||||
|
Discount rate
|
(
|
||||||||
|
Collateral-dependent loans
|
$
|
|
Market comparable properties
|
Marketability discount
|
(
|
||||
|
Other real estate owned
|
$
|
|
Market comparable properties
|
Comparability adjustments
|
(
|
||||
82
Table of Contents
Fair Value of Financial Instruments
The following table presents estimated fair value of CTBI’s financial instruments as of December 31, 2025 and indicates the level within the fair value hierarchy of the valuation techniques.
|
|
Fair Value Measurements
at December 31, 2025 Using
|
|||||||||||||||
| (in thousands) |
Carrying
Amount
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Financial assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Certificates of deposit in other banks
|
|
|
|
|
||||||||||||
|
Debt securities available-for-sale
|
|
|
|
|
||||||||||||
|
Equity securities at fair value
|
|
|
|
|
||||||||||||
|
Loans held for sale
|
|
|
|
|
||||||||||||
|
Loans, net
|
|
|
|
|
||||||||||||
|
Federal Home Loan Bank stock
|
|
|
|
|
||||||||||||
|
Federal Reserve Bank stock
|
|
|
|
|
||||||||||||
|
Mortgage servicing rights
|
||||||||||||||||
|
Accrued interest receivable
|
|
|
|
|
||||||||||||
|
Financial liabilities:
|
||||||||||||||||
|
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Repurchase agreements
|
|
|
|
|
||||||||||||
|
Federal funds purchased
|
|
|
|
|
||||||||||||
|
Advances from Federal Home Loan Bank
|
|
|
|
|
||||||||||||
|
Long-term debt
|
|
|
|
|
||||||||||||
|
Accrued interest payable
|
|
|
|
|
||||||||||||
|
Unrecognized financial instruments:
|
||||||||||||||||
|
Letters of credit
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Commitments to extend credit
|
|
|
|
|
||||||||||||
|
Forward sale commitments
|
|
|
|
|
||||||||||||
83
Table of Contents
The following table presents estimated fair value of CTBI’s financial instruments as of December 31, 2024 and indicates the level within the fair value hierarchy of the valuation techniques.
|
|
Fair Value Measurements
at December 31, 2024 Using
|
|||||||||||||||
| (in thousands) |
Carrying
Amount
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
|
Financial assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Certificates of deposit in other banks
|
|
|
|
|
||||||||||||
|
Debt securities available-for-sale
|
|
|
|
|
||||||||||||
|
Equity securities at fair value
|
|
|
|
|
||||||||||||
|
Loans held for sale
|
|
|
|
|
||||||||||||
|
Loans, net
|
|
|
|
|
||||||||||||
|
Federal Home Loan Bank stock
|
|
|
|
|
||||||||||||
|
Federal Reserve Bank stock
|
|
|
|
|
||||||||||||
|
Mortgage servicing rights
|
||||||||||||||||
|
Accrued interest receivable
|
|
|
|
|
||||||||||||
|
Financial liabilities:
|
||||||||||||||||
|
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Repurchase agreements
|
|
|
|
|
||||||||||||
|
Federal funds purchased
|
|
|
|
|
||||||||||||
|
Advances from Federal Home Loan Bank
|
|
|
|
|
||||||||||||
|
Long-term debt
|
|
|
|
|
||||||||||||
|
Accrued interest payable
|
|
|
|
|
||||||||||||
|
Unrecognized financial instruments:
|
||||||||||||||||
|
Letters of credit
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Commitments to extend credit
|
|
|
|
|
||||||||||||
|
Forward sale commitments
|
|
|
|
|
||||||||||||
The reclassification to Level 2 for repurchase agreements and long-term debt resulted from a review of the fair value at December 31, 2025 concluding predominantly observable inputs are used within the discounted cash flow
model. There were no transfers in or out of Level 3 during 2024.
13. Related Party Transactions
In the ordinary course of business, CTB has made extensions of credit and had transactions with certain directors and executive officers of CTBI or
our subsidiaries, including their associates (as defined by the Securities and Exchange Commissions). We believe such extensions of credit and transactions were made on substantially the same terms, including interest rate and collateral, as those
prevailing at the same time for comparable transactions with other persons.
Activity for related party extensions of credit during 2025,
2024, and 2023 is as follows:
|
(in thousands)
|
2025
|
2024
|
2023 | |||||||||
|
Related party extensions of credit, beginning of year
|
$
|
|
$
|
|
$ | |||||||
|
New loans and advances on lines of credit
|
|
|
||||||||||
|
Repayments
|
(
|
)
|
(
|
)
|
( |
) | ||||||
|
Net decrease due to changes in related parties
|
(
|
)
|
(
|
)
|
( |
) | ||||||
|
Related party extensions of credit, end of year
|
$
|
|
$
|
|
$ | |||||||
84
Table of Contents
The aggregate balances of related party deposits at December 31, 2025, 2024,
and 2023 were $36.4 million, $29.5 million, and $28.3 million, respectively.
A shareholder in a law firm that provided services to CTBI and our subsidiaries has been a director of CTBI during the years 2025, 2024, and 2023. Approximately $0.5 0.1 0.6 0.4 million in legal fees and $0.1
million in expenses paid on behalf of CTBI, $0.5 million total, were paid to this law firm during 2023.
14. Off-Balance Sheet Transactions and Guarantees
CTBI is a party to transactions with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These
financial instruments include standby letters of credit and commitments to extend credit in the form of unused lines of credit. CTBI uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet
instruments.
At December 31, 2025 and 2024, CTBI had the following off-balance sheet financial instruments, whose approximate contract amounts represent additional
credit risk to CTBI:
|
(in thousands)
|
2025
|
2024
|
||||||
|
Standby letters of credit
|
$
|
|
$
|
|
||||
|
Commitments to extend credit
|
|
|
||||||
|
Total off-balance sheet financial instruments
|
$
|
|
$
|
|
||||
Standby letters of credit represent conditional commitments to guarantee the performance of a third party. The credit risk involved is essentially
the same as the risk involved in making loans. At December 31, 2025, we maintained a credit loss reserve recorded in other liabilities
of approximately $0.1 million relating to these financial standby letters of credit. The reserve coverage calculation was determined using
essentially the same methodology as used for the ACL. Approximately 70 % of the total standby letters of credit are secured, with $26.4 million of the total $37.5 million
secured by cash. Collateral for the remaining secured standby letters of credit varies but is comprised primarily of accounts receivable, inventory, property, equipment, and income-producing properties.
Commitments to extend credit are agreements to originate loans to customers as long as there is no violation of any condition of the contract. At
December 31, 2025, a credit loss reserve recorded in other liabilities of $1.3 million was maintained relating to these commitments. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of
the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if
deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. A portion
of the commitments is to extend credit at fixed rates. Fixed rate loan commitments at December 31, 2025 of $87.7 million had interest rates ranging predominantly from 4.0 %
to 8.3 % and terms of predominantly 2 years
or less. These credit commitments were based on prevailing rates, terms, and conditions applicable to other loans being made.
85
Table of Contents
15. Revenue Recognition
CTBI’s primary source of revenue is interest income generated from loans and investment securities. Interest income is recognized according to the
terms of the financial instrument agreement over the life of the loan or investment security unless it is determined that the counterparty is unable to continue making interest payments. Interest income also includes prepaid interest fees from
commercial customers, which approximates the interest foregone on the balance of the loan prepaid.
CTBI’s additional source of income, also referred to as noninterest income, includes service charges on deposit accounts, gains on sales of loans,
trust and wealth management income, loan related fees, brokerage revenue, and other miscellaneous income and is largely based on contracts with customers. In these cases, CTBI recognizes revenue when it satisfies a performance obligation by
transferring control over a product or service to a customer. CTBI considers a customer to be any party to which we will provide goods or services that are an output of CTBI’s ordinary activities in exchange for consideration. There is little
seasonality with regards to revenue from contracts with customers and all inter-company revenue is eliminated when CTBI’s financial statements are consolidated.
Generally, CTBI enters into contracts with customers that are short-term in nature where the performance obligations are fulfilled and payment is
processed at the same time. Such examples include revenue related to merchant fees, interchange fees, and investment services income. In addition, revenue generated from existing customer relationships such as deposit accounts are also considered
short-term in nature, because the relationship may be terminated at any time and payment is processed at the time performance obligations are fulfilled. As a result, CTBI does no
Generally, the pricing of transactions between CTBI and each customer is either (i) established within a legally enforceable contract between the two
parties, as is the case with loan sales, or (ii) disclosed to the customer at a specific point in time, as is the case when a deposit account is opened or before a new loan is underwritten. Fees are usually fixed at a specific amount or as a
percentage of a transaction amount. No judgment or estimates by management are required to record revenue related to these transactions and pricing is clearly identified within these contracts.
CTBI primarily operates in Kentucky and contiguous areas. Therefore, all significant operating decisions are based upon analysis of CTBI as one operating segment.
We disaggregate our revenue from contracts with customers by contract-type and timing of revenue recognition, as we believe it best depicts how the
nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. Noninterest income not generated from customers during CTBI’s ordinary activities primarily relates to MSRs, gains/losses on the sale of
investment securities, gains/losses on the sale of OREO, gains/losses on the sale of property, plant and equipment, and income from bank owned life insurance.
All revenue streams in the scope of the revenue recognition accounting standard are recognized at a point in
time. For more information related to our components of noninterest income, see the consolidated statements of income and comprehensive income.
86
Table of Contents
16. Employee Benefits
CTBI maintains two separate retirement
savings plans, a 401(k) Plan and an Employee Stock Ownership Plan (“ESOP”).
The 401(k) Plan is available for participant contributions to all employees (age 21 and over) who are credited with 90 days of service and for employer matching
as described below at one year of service (12 consecutive month period with at least 1,000 hours). Participants in the plan have the option to contribute a percentage of their annual compensation up to the maximum permitted by law. CTBI matches 100 % on the first 3 % and 50 % on the next 2 % of participant
contributions, not to exceed 4 % of compensation. CTBI may, at our discretion, contribute an additional percentage of covered employees’
compensation. CTBI’s matching contributions were $1.7 million, $1.4 million, and $1.2 million for the three years ended December 31, 2025, 2024,
and 2023, respectively. The 401(k) Plan owned 304,335 , 304,554 , and 367,106 shares of CTBI’s common stock at December 31, 2025, 2024,
and 2023, respectively. Substantially all shares owned by the 401(k) Plan were allocated to employee accounts on those dates. The market price of the shares at the date of allocation is essentially the same as the market price at the date of
purchase.
The ESOP is available to all employees (age 21
and over) who are credited with one year of service (12 consecutive month period with at least 1,000 hours). CTBI currently contributes 4 % of covered employees’
compensation to the ESOP. The ESOP uses the contributions to acquire shares of CTBI’s common stock. CTBI’s contributions to the ESOP were $2.1
million, $2.0 million, and $1.8
million for the three years ended December 31, 2025, 2024, and 2023, respectively. The ESOP owned 766,780 , 760,396 , and 772,351 shares of CTBI’s
common stock at December 31, 2025, 2024,
and 2023, respectively. Substantially all shares owned by the ESOP were allocated to employee accounts on those dates. The market
price of the shares at the date of allocation is essentially the same as the market price at the date of purchase.
CTBI
provides split-dollar life insurance arrangements to qualifying members of senior management. CTBI’s accrued liabilities for these agreements as of December 31, 2025 and 2024, which are included in other liabilities in the accompanying
consolidated balance sheets, were $9.9 million and $8.8 million, respectively. The costs of this benefit are recorded in the accompanying consolidated statements of income and comprehensive income as a component of officer salaries and employee benefits of $1.1 million, $0.3 million, and $0.6 million in 2025, 2024, and 2023, respectively.
87
Table of Contents
Stock-Based Compensation:
As of December 31, 2025, CTBI maintained one active and one inactive incentive stock ownership plan covering key
employees. The 2025 Employee Stock Ownership Incentive Plan (“2025 Plan”) was approved by the Board of Directors and the Shareholders in 2024 and became active on February 1, 2025. The 2025 Plan had 550,000 shares authorized, all of which were available at December 31, 2025. The 2015 Stock Ownership Incentive Plan (“2015 Plan”) was approved by the Board of Directors and
the Shareholders in 2015. The 2015 Plan was rendered inactive as of February 1, 2025. The 2006 Stock Ownership Incentive Plan (“2006 Plan”) was approved by the Board of Directors and the Shareholders in 2006. The 2006 Plan was rendered inactive
as of April 28, 2015, and all outstanding options had been exercised under the 2006 Plan as of December 31, 2024. Shares issuable pursuant to awards which were granted under the 2015 Plan on or before their respective expiration or termination
dates will be issued from the remaining shares reserved for issuance under the 2015 Plan. The shares of common stock reserved for issuance under the 2015 Plan in excess of the number of shares as to which options or other benefits are awarded
thereunder, and any shares as to which options or other benefits granted under the 2015 Plan may lapse, expire, terminate, or be canceled, will not be reserved and available for issuance or reissuance under the 2025 Plan. The following table provides detail of the number of shares to be issued upon
exercise of outstanding stock-based awards and remaining shares available for future issuance under all of CTBI’s equity compensation plans as of December 31, 2025:
|
Plan Category (shares in thousands)
|
Number of
Shares to Be
Issued Upon
Exercise
|
Weighted
Average Price
|
Shares
Available for
Future Issuance
|
|||||||||
|
Equity compensation plans approved by shareholders:
|
||||||||||||
|
Stock options
|
|
|
|
|
(a)
|
|||||||
|
Restricted stock
|
(c)
|
(b)
|
(a)
|
|||||||||
|
Performance units
|
(d)
|
(b)
|
(a)
|
|||||||||
|
Stock appreciation rights (“SARs”)
|
(e)
|
(b)
|
(a)
|
|||||||||
|
Total
|
|
|||||||||||
| (a) |
|
| (b) |
|
| (c) |
|
| (d) |
|
| (e) |
|
The 2025 Plan became effective on February 1, 2025. As of December 31, 2025, no shares had been issued under the Plan; therefore, there were 550,000 shares available for future
issuance. The 2015 Plan was rendered inactive as of February 1, 2025; therefore, there were no shares available for future issuance
as of December 31, 2025.
There
were no
88
Table of Contents
The 2025 Plan:
There had been no
activity for the 2025 Plan as of December 31, 2025.
The 2015 Plan:
There was no
The following table shows restricted stock activity for the 2015 Plan for the years ended December 31, 2025, 2024, and 2023:
|
December 31
|
2025
|
2024
|
2023
|
|||||||||||||||||||||
|
Grants
|
Weighted
Average
Fair
Value at
Grant
|
Grants
|
Weighted
Average
Fair
Value at
Grant
|
Grants
|
Weighted
Average
Fair
Value at
Grant
|
|||||||||||||||||||
|
Outstanding at beginning of year
|
|
$
|
|
|
$
|
|
|
$
|
|
|||||||||||||||
|
Granted
|
|
|
|
|
|
|
||||||||||||||||||
|
Vested
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Forfeited
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Outstanding at end of year
|
|
$ |
|
|
$
|
|
|
$
|
|
|||||||||||||||
The
restricted stock grants were issued pursuant to the terms of the 2015 Plan. The restrictions on these shares of restricted stock lapse ratably over four years , subject to such employee’s continued employment, except for 32,500 shares granted pursuant to management
retention restricted stock awards which cliff vest five years from the grant date. However, in the event of certain participant
employee termination events occurring within 24 months of a change in control of CTBI or the death of the participant, the restrictions
lapse, and in the event of the participant’s disability, the restrictions lapse on a pro rata basis. The Compensation Committee has discretion to review and revise restrictions applicable to a participant’s restricted stock in the event of the
participant’s retirement.
The 2006 Plan:
There was no no
|
December 31
|
2024
|
2023
|
||||||||||||||
|
Options
|
Weighted
Average
Exercise
Price
|
Options
|
Weighted
Average
Exercise
Price
|
|||||||||||||
|
Outstanding at beginning of year
|
|
$
|
|
|
$
|
|
||||||||||
|
Exercised
|
|
|
|
|
||||||||||||
|
Outstanding at end of year
|
|
$
|
|
|
$
|
|
||||||||||
|
Exercisable at end of year
|
|
$
|
|
|
$
|
|
||||||||||
89
Table of Contents
The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 2006 Plan for the years ended December 31, 2024 and 2023:
|
(in thousands)
|
2024
|
2023
|
||||||
|
Options exercised
|
$
|
|
$
|
|
||||
|
Options exercisable
|
|
|
||||||
|
Outstanding options
|
|
|
||||||
Stock options were issued with
a contractual term of 10 years. The weighted-average remaining contractual term for all options outstanding and exercisable at December
31, 2023 was one year . There were no
Restricted
stock expense for the years ended December 31, 2025, 2024, and 2023 was $1.8 million, $1.4 million, and $1.6 million, respectively, including $0.2 no no
The following table shows the unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at
December 31, 2025, 2024,
and 2023 and the total grant-date fair value of shares vested, cash received from option exercises under all share-based payment
arrangements, and the actual tax benefit realized for the tax deductions from option exercises of the share-based payment arrangements for the years ended December 31, 2025, 2024, and 2023.
|
(in thousands)
|
2025
|
2024
|
2023
|
|||||||||
|
Unrecognized compensation cost of nonvested share-based compensation arrangements granted under the plan at year-end
|
$
|
|
$
|
|
$
|
|
||||||
|
Total fair value of shares vested for the year
|
|
|
|
|||||||||
|
Cash received from option exercises under all share-based payment arrangements for the year
|
|
|
|
|||||||||
|
Tax benefit realized for the tax deductions from option exercises of the share-based payment arrangements for the year
|
|
|
|
|||||||||
The unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plan at December 31, 2025 is expected to be recognized over a weighted-average period of 2.6 years.
17. Income Taxes
The components of the provision for income taxes are as follows:
|
(in thousands)
|
2025
|
2024
|
2023
|
|||||||||
|
Current federal income tax expense
|
$
|
|
$
|
|
$
|
|
||||||
|
Current state income tax expense
|
|
|
|
|||||||||
|
Deferred federal income tax expense (benefit)
|
(
|
)
|
(
|
)
|
|
|||||||
|
Deferred state income tax expense (benefit)
|
( |
) | ( |
) | ||||||||
|
Total income tax expense
|
$
|
|
$
|
|
$
|
|
||||||
90
Table of Contents
A reconciliation of income tax expense at the statutory rate to
our actual income tax expense for 2025 is shown below:
|
(in thousands)
|
2025
|
|||||||
|
Computed at the statutory rate
|
$
|
|
|
%
|
||||
|
State income taxes, net of federal benefit (1)
|
|
|
|
|||||
|
Low-income housing and historic tax credits
|
(
|
)
|
(
|
)
|
||||
|
Work opportunity tax credits
|
(
|
)
|
(
|
)
|
||||
|
State tax credits (1)
|
(
|
)
|
(
|
)
|
||||
|
Nontaxable and nondeductible items
|
(
|
)
|
(
|
)
|
||||
|
Other
|
(
|
)
|
(
|
)
|
||||
|
Total
|
$
|
|
|
%
|
||||
|
(1)
|
|
The following table presents income taxes paid (net of
refunds received):
|
(in thousands)
|
2025
|
|||
|
Federal
|
$
|
|
||
|
State and local
|
||||
|
Kentucky
|
|
|||
|
Other
|
|
|||
|
Income taxes paid
|
$
|
|
||
A
reconciliation of income tax expense at the statutory rate to our actual income tax expense for the years 2024 and 2023 is shown below:
|
(in thousands)
|
2024
|
2023
|
||||||||||||||
|
Computed at the statutory rate
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Adjustments resulting from:
|
||||||||||||||||
|
Tax-exempt interest
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Housing and new markets credits
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Bank owned life insurance
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
ESOP dividend deduction
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Stock option exercises and
restricted stock vesting
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
State income taxes
|
|
|
|
|
||||||||||||
|
Split dollar life insurance
|
|
|
|
|
||||||||||||
|
Other
|
(
|
)
|
(
|
)
|
|
|
||||||||||
|
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
91
Table of Contents
The components of the net deferred tax asset as of December 31,
2025 and 2024 are as follows:
|
(in thousands)
|
December 31
2025
|
December 31
2024
|
||||||
|
Deferred tax assets:
|
||||||||
|
Allowance for credit losses
|
$
|
|
$
|
|
||||
|
Interest on nonaccrual loans
|
|
|
||||||
|
Accrued expenses
|
|
|
||||||
|
Unrealized losses on AFS securities
|
||||||||
|
Allowance for other real estate owned
|
|
|
||||||
|
Lease liabilities
|
|
|
||||||
| Limited partnership investments |
||||||||
|
Other
|
|
|
||||||
|
Total deferred tax assets
|
|
|
||||||
|
Deferred tax liabilities:
|
||||||||
|
Depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
|
FHLB stock dividends
|
(
|
)
|
(
|
)
|
||||
|
Loan fee income
|
(
|
)
|
(
|
)
|
||||
|
Mortgage servicing rights
|
(
|
)
|
(
|
)
|
||||
|
Right of use assets
|
(
|
)
|
(
|
)
|
||||
|
Other
|
(
|
)
|
(
|
)
|
||||
|
Total deferred tax liabilities
|
(
|
)
|
(
|
)
|
||||
|
Net deferred tax asset
|
$
|
|
$
|
|
||||
Current income tax expense reflects taxes to be paid or refunded
for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. CTBI determines deferred income taxes using the asset and liability (or balance sheet) method. Under this method,
the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred
income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or
all of a deferred tax asset will not be realized.
On January 1, 2024, CTBI adopted ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax
Credit Structures Using the Proportional Amortization Method, which is intended to improve the accounting and disclosures for investments in tax credit structures.
As a result of the implementation of this ASU, we recorded a cumulative effect impact that reduced retained earnings by $2.0 million at January 1, 2024. Additionally, we had a decrease in amortization expense, recognized in , that totaled $2.6 million for the year ended December 31, 2023. The amortization expense included in was $2.9 million and $3.0 million for the years ended December 31, 2025 and 2024, respectively. The amount of income tax
credits and other tax benefits recognized was $4.0 million and $4.3 million for the years ended December 31, 2025 and 2024, respectively. The amortization, income tax credits, and other tax benefits recognized were included in on the consolidated statement of income and in net income on the consolidated statement of cash flows. We had $19.8 million and $16.1
million in tax investments at December 31, 2025 and 2024, respectively, included in on the consolidated balance sheet.
There were no non-income tax related activities or other returns received that were recognized outside of income tax expense and the consolidated statement of income and the consolidated statement of cash flows. There were also no significant
modifications or events that resulted in a change in the nature of the investment or change in the relationship with the underlying projects. No
investment income or loss was included in pre-tax income, and no impairment was recognized during the quarter or year to date resulting
from the forfeiture or ineligibility of income tax credits or other circumstances. At December 31, 2025, there was $6.1 million in
unfunded commitments. Of the amount outstanding, the contribution schedule was as follows:
92
Table of Contents
|
(in thousands)
Amount due in:
|
Unfunded Commitments
|
|||
|
2026
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030
|
|
|||
|
After
|
|
|||
Uncertain
tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms
examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of
tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the
more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. CTBI has no uncertain tax positions.
With
a few exceptions, CTBI is no longer subject to U.S. federal tax examinations by tax authorities for years before 2022, and state and local income tax examinations by tax authorities for years before 2021. For federal tax purposes, CTBI recognizes
interest and penalties on income taxes as a component of income tax expense. CTBI files consolidated income tax returns with our subsidiaries.
The One Big Beautiful Bill Act, enacted July 4, 2025, introduces new regulatory, compliance, and tax provisions affecting financial institutions. CTBI has assessed these changes and determined that they will not have a material impact on our
operations, products, or financial statements.
18. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
|
(in thousands except per share data)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
|
Numerator:
|
||||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Denominator:
|
||||||||||||
|
Basic earnings per share:
|
||||||||||||
|
Weighted average shares
|
|
|
|
|||||||||
|
Diluted earnings per share:
|
||||||||||||
|
Dilutive effect of equity grants
|
|
|
|
|||||||||
|
Adjusted weighted average shares
|
|
|
|
|||||||||
|
Earnings per share:
|
||||||||||||
|
Basic earnings per share
|
$
|
|
$
|
|
$
|
|
||||||
|
Diluted earnings per share
|
$ |
|
$ |
|
$ |
|
||||||
There were no
93
Table of Contents
19. Accumulated Other Comprehensive Income (Loss)
The following table shows the reconciliation of accumulated other comprehensive income (loss) (“AOCI”) for the years ended December 31, 2025, 2024,
and 2023 and amounts reclassified to earnings during these periods.
|
(in thousands)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
| Beginning balance |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
| Unrealized holding gains on debt securities AFS |
||||||||||||
|
Tax expense
|
||||||||||||
| Unrealized holding gains on debt securities AFS, net of tax |
||||||||||||
| Reclassification adjustments for realized gains included in securities |
||||||||||||
| Tax expense |
|
|
|
|||||||||
|
Reclassification adjustments for realized gains included in securities, net of tax
|
|
|
|
|||||||||
|
Other comprehensive income
|
||||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
20. Commitments and Contingencies
CTBI and our subsidiaries, and from time to time, our officers, are named defendants in legal actions arising from ordinary business activities.
Management, after consultation with legal counsel, believes any pending actions at December 31, 2025 are without merit or that the ultimate liability, if any, will not materially affect our consolidated financial position or results of operations.
21. Regulatory Matters
CTBI’s principal source of funds is dividends received from our banking subsidiary, CTB. Regulations limit the amount of dividends that may be paid
by CTB without prior approval. During 2026, approximately $113.6 million plus any 2026 net profits can be paid by CTB without prior
regulatory approval.
CTBI and CTB are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a material adverse effect on CTBI’s financial statements. Under regulatory capital adequacy guidelines, CTBI
and CTB must meet specific capital guidelines that involve quantitative measures of CTBI’s and CTB’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Additionally, CTB must meet specific
capital guidelines to be considered well capitalized per the regulatory framework for prompt corrective action. CTBI’s and CTB’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk
weightings, and other factors.
CTBI and CTB must maintain certain minimum capital ratios as set forth in the table below for capital adequacy purposes. On October 29, 2019, federal
banking regulators adopted a final rule to simplify the regulatory capital requirements for eligible community banks and holding companies that opt-in to the community bank leverage ratio framework (the “CBLR framework”), as required by Section 201
of the Economic Growth, Relief and Consumer Protection Act of 2018. Under the final rule, which became effective as of January 1, 2020, community banks and holding companies (which includes CTB and CTBI) that satisfy certain qualifying criteria,
including having less than $10 billion in average total consolidated assets and a leverage ratio (referred to as the “community bank leverage ratio”) of greater than 9%, were eligible to opt-in to the CBLR framework. The community bank leverage
ratio is the ratio of a banking organization’s Tier 1 capital to its average total consolidated assets, both as reported on the banking organization’s applicable regulatory filings. Accordingly, a qualifying community banking organization that has a community bank leverage ratio
greater than 9% will be considered to have met: (i) the risk-based and leverage capital requirements of the generally applicable capital rules; (ii) the capital ratio requirements in order to be considered well-capitalized under the prompt
corrective action framework; and (iii) any other applicable capital or leverage requirements. Management elected to use the CBLR framework for CTBI and CTB. CTBI’s and CTB’s CBLR ratios as of December 31, 2025 and 2024 are disclosed below.
94
Table of Contents
Consolidated Capital Ratios
|
Actual
|
For Capital Adequacy
Purposes
|
|||||||||||||||
|
(in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
|
As of December 31, 2025:
|
||||||||||||||||
|
CBLR
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
As of December 31, 2024:
|
||||||||||||||||
|
CBLR
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
Community Trust Bank, Inc.’s Capital Ratios
|
Actual
|
For Capital Adequacy
Purposes
|
|||||||||||||||
|
(in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
|
As of December 31, 2025:
|
||||||||||||||||
|
CBLR
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
As of December 31, 2024:
|
||||||||||||||||
|
CBLR
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
22. Parent Company Financial Statements
Condensed Balance Sheets
|
(in thousands)
December 31
|
2025
|
2024
|
||||||
|
Assets:
|
||||||||
|
Cash on deposit
|
$
|
|
$
|
|
||||
|
Investment in and advances to subsidiaries
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Premises and equipment, net
|
|
|
||||||
|
Deferred tax asset
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and shareholders’ equity:
|
||||||||
|
Long-term debt
|
$
|
|
$
|
|
||||
|
Other liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Shareholders’ equity
|
|
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
||||
95
Table of Contents
Condensed Statements of Income and Comprehensive Income
|
(in thousands)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
|
Income:
|
||||||||||||
|
Dividends from subsidiaries
|
$
|
|
$
|
|
$
|
|
||||||
|
Other income
|
|
|
|
|||||||||
|
Total income
|
|
|
|
|||||||||
|
Expenses:
|
||||||||||||
|
Interest expense
|
|
|
|
|||||||||
|
Depreciation expense
|
|
|
|
|||||||||
|
Other expenses
|
|
|
|
|||||||||
|
Total expenses
|
|
|
|
|||||||||
|
Income before income taxes and equity in undistributed income of subsidiaries
|
|
|
|
|||||||||
|
Income tax benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Income before equity in undistributed income of subsidiaries
|
|
|
|
|||||||||
|
Equity in undistributed income of subsidiaries
|
|
|
|
|||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Condensed Statements of Cash Flows
|
(in thousands)
Year Ended December 31
|
2025
|
2024
|
2023
|
|||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
|
Depreciation
|
|
|
|
|||||||||
|
Equity in undistributed earnings of subsidiaries
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Deferred taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Stock-based compensation
|
|
|
|
|||||||||
|
Gains on sale of assets, net
|
( |
) | ||||||||||
|
Changes in:
|
||||||||||||
|
Other assets
|
|
(
|
)
|
|
||||||||
|
Other liabilities
|
|
(
|
)
|
|
||||||||
|
Net cash provided by operating activities
|
|
|
|
|||||||||
|
|
||||||||||||
|
Cash flows from investing activities:
|
||||||||||||
|
Net purchases of premises and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from sale and retirement of premises and equipment
|
||||||||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
|
||||||||||||
|
Cash flows from financing activities:
|
||||||||||||
|
Issuance of common stock
|
|
|
|
|||||||||
|
Dividends paid
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
|
||||||||||||
|
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
(
|
)
|
|
|||||||
|
Cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
|
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
$
|
|
||||||
96
Table of Contents
23. Segment Reporting
CTBI is a financial holding company, whose principal activity is the ownership and management of its wholly-owned subsidiaries, including CTB and
Community Trust and Investment Company. As a community-oriented financial institution, the majority of CTBI’s operations consist of commercial and personal banking services. Management analyzed the operation of CTBI and determined it has one The following tables present the
reconciliations of reportable segment revenues and measures of profit or loss and line item reconciliation to CTBI’s consolidated financial statement totals for the periods indicated.
|
(in thousands)
Year Ended December 31, 2025
|
Community
Banking
Services
|
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Interest income:
|
||||||||||||||||
|
Interest and fees on loans, including loans held for sale
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest and dividends on securities:
|
0 |
0 |
0 |
|||||||||||||
|
Taxable
|
|
|
|
|
||||||||||||
|
Tax exempt
|
|
|
|
|
||||||||||||
|
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
|
|
|
|
|
||||||||||||
|
Interest on Federal Reserve Bank deposits
|
|
|
|
|
||||||||||||
|
Other, including interest on federal funds sold
|
|
|
|
|
||||||||||||
|
Total interest income
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Interest on deposits
|
|
|
|
|
||||||||||||
|
Interest on repurchase agreements and federal funds purchased
|
|
|
|
|
||||||||||||
|
Interest on advances from Federal Home Loan Bank
|
|
|
|
|
||||||||||||
|
Interest on long-term debt
|
|
|
(
|
)
|
|
|||||||||||
|
Total interest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Net interest income
|
|
(
|
)
|
|
|
|||||||||||
|
Provision for credit losses
|
|
|
|
|
||||||||||||
|
Net interest income after provision for credit losses
|
|
(
|
)
|
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Deposit related fees
|
|
|
|
|
||||||||||||
|
Gains on sales of loans, net
|
|
|
|
|
||||||||||||
|
Trust and wealth management income
|
|
|
(
|
)
|
|
|||||||||||
|
Loan related fees
|
|
|
|
|
||||||||||||
|
Bank owned life insurance
|
|
|
|
|
||||||||||||
|
Brokerage revenue
|
|
|
|
|
||||||||||||
|
Securities gains (losses)
|
|
|
|
|
||||||||||||
|
Dividend and undistributed income from subsidiaries
|
|
|
(
|
)
|
|
|||||||||||
|
Other noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Officer salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Other salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Occupancy, net
|
|
|
|
|
||||||||||||
|
Equipment
|
|
|
(
|
)
|
|
|||||||||||
|
Data processing
|
|
|
(
|
)
|
|
|||||||||||
|
Taxes other than property and payroll
|
|
|
|
|||||||||||||
|
Legal fees
|
|
|
|
|
||||||||||||
|
Professional fees
|
|
|
(
|
)
|
|
|||||||||||
|
Advertising and marketing
|
|
|
|
|
||||||||||||
|
FDIC insurance
|
|
|
|
|
||||||||||||
|
Other real estate owned provision and expense
|
|
|
|
|
||||||||||||
|
Repossession expense
|
|
|
|
|
||||||||||||
|
Other noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Income before income taxes
|
|
|
(
|
)
|
|
|||||||||||
|
Income taxes
|
|
(
|
)
|
|
|
|||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
97
Table of Contents
|
(in thousands)
Year Ended December 31, 2024
|
Community
Banking
Services
|
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Interest income:
|
||||||||||||||||
|
Interest and fees on loans, including loans held for sale
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest and dividends on securities:
|
||||||||||||||||
|
Taxable
|
|
|
|
|
||||||||||||
|
Tax exempt
|
|
|
|
|
||||||||||||
|
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
|
|
|
|
|
||||||||||||
|
Interest on Federal Reserve Bank deposits
|
|
|
|
|
||||||||||||
|
Other, including interest on federal funds sold
|
|
|
|
|
||||||||||||
|
Total interest income
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Interest on deposits
|
|
|
|
|
||||||||||||
|
Interest on repurchase agreements and federal funds purchased
|
|
|
|
|
||||||||||||
|
Interest on advances from Federal Home Loan Bank
|
|
|
|
|
||||||||||||
|
Interest on long-term debt
|
|
|
(
|
)
|
|
|||||||||||
|
Total interest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Net interest income
|
|
(
|
)
|
|
|
|||||||||||
|
Provision for credit losses
|
|
|
|
|
||||||||||||
|
Net interest income after provision for credit losses
|
|
(
|
)
|
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Deposit related fees
|
|
|
|
|
||||||||||||
|
Gains on sales of loans, net
|
|
|
|
|
||||||||||||
|
Trust and wealth management income
|
|
|
|
|
||||||||||||
|
Loan related fees
|
|
|
|
|
||||||||||||
|
Bank owned life insurance
|
|
|
|
|
||||||||||||
|
Brokerage revenue
|
|
|
|
|
||||||||||||
|
Securities gains (losses)
|
|
|
|
|
||||||||||||
|
Dividend and undistributed income from subsidiaries
|
|
|
(
|
)
|
|
|||||||||||
|
Other noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Officer salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Other salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Occupancy, net
|
|
|
|
|
||||||||||||
|
Equipment
|
|
|
(
|
)
|
|
|||||||||||
|
Data processing
|
|
|
|
|
||||||||||||
|
Taxes other than property and payroll
|
|
|
||||||||||||||
|
Legal fees
|
|
|
|
|
||||||||||||
|
Professional fees
|
|
|
(
|
)
|
|
|||||||||||
|
Advertising and marketing
|
|
|
|
|
||||||||||||
|
FDIC insurance
|
|
|
|
|
||||||||||||
|
Other real estate owned provision and expense
|
|
|
|
|
||||||||||||
|
Repossession expense
|
|
|
|
|
||||||||||||
|
Other noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Income before income taxes
|
|
|
(
|
)
|
|
|||||||||||
|
Income taxes
|
|
(
|
)
|
|
|
|||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
98
Table of Contents
|
(in thousands)
Year Ended December 31, 2023
|
Community
Banking
Services
|
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Interest income:
|
||||||||||||||||
|
Interest and fees on loans, including loans held for sale
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Interest and dividends on securities:
|
||||||||||||||||
|
Taxable
|
|
|
|
|
||||||||||||
|
Tax exempt
|
|
|
|
|
||||||||||||
|
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock
|
|
|
|
|
||||||||||||
|
Interest on Federal Reserve Bank deposits
|
|
|
|
|
||||||||||||
|
Other, including interest on federal funds sold
|
|
|
|
|
||||||||||||
|
Total interest income
|
|
|
|
|
||||||||||||
|
|
||||||||||||||||
|
Interest expense:
|
||||||||||||||||
|
Interest on deposits
|
|
|
|
|
||||||||||||
|
Interest on repurchase agreements and federal funds purchased
|
|
|
|
|
||||||||||||
|
Interest on advances from Federal Home Loan Bank
|
|
|
|
|
||||||||||||
|
Interest on long-term debt
|
|
|
(
|
)
|
|
|||||||||||
|
Total interest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Net interest income
|
|
(
|
)
|
|
|
|||||||||||
|
Provision for credit losses
|
|
|
|
|
||||||||||||
|
Net interest income after provision for credit losses
|
|
(
|
)
|
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest income:
|
||||||||||||||||
|
Deposit related fees
|
|
|
|
|
||||||||||||
|
Gains on sales of loans, net
|
|
|
|
|
||||||||||||
|
Trust and wealth management income
|
|
|
|
|
||||||||||||
|
Loan related fees
|
|
|
|
|
||||||||||||
|
Bank owned life insurance
|
|
|
|
|
||||||||||||
|
Brokerage revenue
|
|
|
|
|
||||||||||||
|
Securities gains (losses)
|
|
|
|
|
||||||||||||
|
Dividend and undistributed income from subsidiaries
|
|
|
(
|
)
|
|
|||||||||||
|
Other noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest income
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Noninterest expense:
|
||||||||||||||||
|
Officer salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Other salaries and employee benefits
|
|
|
(
|
)
|
|
|||||||||||
|
Occupancy, net
|
|
|
|
|
||||||||||||
|
Equipment
|
|
|
(
|
)
|
|
|||||||||||
|
Data processing
|
|
|
|
|
||||||||||||
|
Taxes other than property and payroll
|
|
|
|
|||||||||||||
|
Legal fees
|
|
|
|
|
||||||||||||
|
Professional fees
|
|
|
(
|
)
|
|
|||||||||||
|
Advertising and marketing
|
|
|
|
|
||||||||||||
|
FDIC insurance
|
|
|
|
|
||||||||||||
|
Other real estate owned provision and expense
|
|
|
|
|
||||||||||||
|
Repossession expense
|
|
|
|
|
||||||||||||
|
Other noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
Total noninterest expense
|
|
|
(
|
)
|
|
|||||||||||
|
|
||||||||||||||||
|
Income before income taxes
|
|
|
(
|
)
|
|
|||||||||||
|
Income taxes
|
|
(
|
)
|
|
|
|||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
99
Table of Contents
The following tables present other segment disclosures:
|
(thousands)
Year Ended December 31, 2025
|
Community
Banking
Services
|
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Amortization of operating lease right-of-use assets
|
|
|
|
|
||||||||||||
|
Significant non-cash items:
|
||||||||||||||||
|
Provision for credit losses
|
||||||||||||||||
|
Change in cash surrender value of bank owned life insurance
|
||||||||||||||||
|
Expenditures for long-lived assets
|
|
|
|
|
||||||||||||
|
(thousands)
Year Ended December 31, 2024
|
Community
Banking
Services |
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Depreciation and amortization
|
$
|
$
|
|
$
|
|
$
|
|
|||||||||
|
Amortization of operating lease right-of-use assets
|
|
|
|
|
||||||||||||
|
Significant non-cash items:
|
||||||||||||||||
|
Provision for credit losses
|
||||||||||||||||
|
Change in cash surrender value of bank owned life insurance
|
||||||||||||||||
|
Expenditures for long-lived assets
|
|
|
|
|
||||||||||||
|
(thousands)
Year Ended December 31, 2023
|
Community
Banking
Services
|
Holding
Company
|
Eliminations
|
Consolidated
|
||||||||||||
|
Depreciation and amortization
|
$
|
$
|
$
|
$
|
|
|||||||||||
|
Amortization of operating lease right-of-use assets
|
|
|
|
|
||||||||||||
|
Significant non-cash items:
|
||||||||||||||||
|
Provision for credit losses
|
||||||||||||||||
|
Change in cash surrender value of bank owned life insurance
|
||||||||||||||||
|
Expenditures for long-lived assets
|
|
|
|
|
||||||||||||
Below is a reconciliation of our reportable segment assets to CTBI’s consolidated total assets:
|
(in thousands)
|
December 31
2025
|
December 31
2024
|
||||||
|
Assets
|
||||||||
|
Community banking services assets
|
$
|
|
$
|
|
||||
|
Holding company assets
|
|
|
||||||
|
Elimination of subsidiary and parent cash and intercompany receivables
|
(
|
)
|
(
|
)
|
||||
|
Elimination of investment in subsidiaries
|
(
|
)
|
(
|
)
|
||||
|
Consolidated total assets
|
$
|
|
$
|
|
||||
100
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders, Board of Directors, and Audit Committee
Community Trust Bancorp, Inc.
Pikeville, Kentucky
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Community Trust
Bancorp, Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025, and the results of
its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 27, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We
believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current
period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
101
Table of Contents
Allowance for Credit Losses on Certain Loan Portfolio Segments
As described in Note 1 to the Company’s consolidated financial statements, the
Company estimates an allowance for credit losses (“ACL”) on loans on a collective (pool) basis using the discounted cash flow method when the loans share similar risk characteristics. Loans that do not share risk characteristics are evaluated on
an individual basis. The Company’s methodology for estimating the ACL also includes consideration for qualitative loss factors. Each qualitative loss factor is given a risk weighting that is applied to determine the relevant adjustment to the
ACL. Management uses significant judgment in determining the appropriate qualitative loss factors to be considered and the extent of their impact on the ACL estimate. As described in Note 4 to the Company’s consolidated financial statements, the
Company’s ACL on loans was $60.2 million as of December 31, 2025.
We identified management’s assessment of the following qualitative loss factors
used to estimate the ACL as a critical audit matter: (i) economic conditions, (ii) delinquency trends within the commercial real estate nonresidential and consumer indirect loan segments, and (iii) changes in the value of underlying collateral
within the commercial real estate nonresidential and consumer indirect loan segments. Auditing these estimates involved especially subjective and complex auditor judgment.
The primary procedures we performed to address this critical audit matter
included:
|
•
|
Testing the design and operating effectiveness of certain internal controls over the assessment of these qualitative loss factors and resulting adjustment to the ACL.
|
|
•
|
Evaluating the reasonableness of management’s judgments involved in determining risk weighting for these qualitative loss factors, including assessing the consistency of management’s application of its
underlying framework and assessing for potential contradictory evidence.
|
|
•
|
Evaluating the relevance and reliability of the external data sources used by management related to the qualitative loss factor assessment for: (i) economic conditions, and (ii) changes in the value of
underlying collateral within the commercial real estate nonresidential loan segment.
|
|
•
|
Testing the completeness and accuracy of the internal data sources used by management related to the qualitative loss factor assessment for: (i) delinquency trends within the commercial real estate
nonresidential and consumer indirect loan segments, and (ii) changes in the value of underlying collateral qualitative loss factor within the consumer indirect loan segment.
|
/s/ BDO USA, P.C.
We have served as the Company’s auditor since 2025.
Grand Rapids, Michigan
February 27, 2026
102
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders, Board of Directors, and Audit Committee
Community Trust Bancorp, Inc.
Pikeville, Kentucky
Opinion on Internal Control over Financial Reporting
We have audited Community Trust Bancorp, Inc.’s (the “Company’s”) internal control
over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2025, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for
the year ended December 31, 2025, and the related notes and our report dated February 27, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ BDO USA, P.C.
February 27, 2026
103
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders, Board of Directors, and Audit Committee
Community Trust Bancorp, Inc.
Pikeville, Kentucky
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Community Trust
Bancorp, Inc. (Company) as of December 31, 2024, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the
results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
/s/
We served as the Company’s auditor from 2006 to 2025.
February 28, 2025
104
Table of Contents
| Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
None.
|
Item 9A.
|
Controls and Procedures
|
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
CTBI’s management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934. As of December 31, 2025, an evaluation was carried out by CTBI’s management, with the participation of our Chief Executive Officer and our Chief Financial Officer of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, management concluded that disclosure controls and procedures as of December 31, 2025 were effective in ensuring material information required to be disclosed in this annual
report on Form 10-K was recorded, processed, summarized, and reported on a timely basis.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
Management has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the control criteria in the 2013 COSO Framework issued by the
Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on such evaluation, we have concluded that CTBI’s internal control over financial reporting is effective as of December 31, 2025.
There were no changes in CTBI’s internal control over financial reporting that occurred during the year ended December 31, 2025 that have materially affected, or are reasonably likely to
materially affect, CTBI’s internal control over financial reporting.
105
Table of Contents
MANAGEMENT REPORT ON INTERNAL CONTROL
We, as management of Community Trust Bancorp, Inc. and its subsidiaries (“CTBI”), are responsible for establishing and maintaining adequate internal control over financial reporting.
Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial
officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| • |
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
| • |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and
|
| • |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
|
All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly,
even effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
Because of the inherent limitations, any system of internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements due to the possibility
that a control can be circumvented or overridden or that misstatements due to error or fraud may occur that are not detected. Also, projections of the effectiveness to future periods are subject to the risk that the internal controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures included in such controls may deteriorate.
Management has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the control criteria in the 2013 COSO Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that CTBI’s internal control over financial reporting is effective as of December 31, 2025.
The effectiveness of CTBI’s internal control over financial reporting as of December 31, 2025 has been audited by BDO USA, P.C., an independent registered public accounting firm that
audited CTBI’s consolidated financial statements included in this annual report.
| February 27, 2026 |
/s/ Mark A. Gooch |
|
|
|
Mark A. Gooch |
|
|
|
Chairman, President, and Chief Executive Officer |
|
|
|
|
|
|
|
/s/ Kevin J. Stumbo |
|
|
|
Kevin J. Stumbo |
|
|
|
Executive Vice President, Chief Financial Officer,
and Treasurer
|
|
106
Table of Contents
|
Item 9B.
|
Other Information
|
| (a) |
Information required to be disclosed in a report on Form 8-K None
|
| (b) |
Insider trading arrangements
|
During the quarter ended December 31, 2025, no director or officer of CTBI adopted terminated
PART III
|
Item 10.
|
Directors, Executive Officers, and Corporate Governance
|
The information required by this item (other than disclosure of our executive officers, which is included in Part I, Item 1 of this report) is omitted, because CTBI is filing a definitive
proxy statement pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report which includes the required information. The required information contained in CTBI’s proxy statement is
incorporated herein by reference.
|
Item 11.
|
Executive Compensation
|
The information required by this item is omitted because CTBI is filing a definitive proxy statement pursuant to Regulation 14A not later than 120 days after the end of the fiscal year
covered by this report which includes the required information. The required information contained in CTBI’s proxy statement is incorporated herein by reference.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
|
The information required by this item other than the information provided below is omitted, because CTBI is filing a definitive proxy statement pursuant to Regulation 14A not later than
120 days after the end of the fiscal year covered by this report which includes the required information. The required information contained in CTBI’s proxy statement is incorporated herein by reference.
107
Table of Contents
Equity Compensation Plan Information
The following table provides information as of December 31, 2025, with respect to equity compensation plans under which common shares of CTBI are authorized for issuance to officers or
employees in exchange for consideration in the form of services provided to CTBI and/or our subsidiaries. At December 31, 2025, CTBI maintained one active and one inactive incentive stock ownership plans covering key employees. The 2025
Employee Stock Ownership Incentive Plan (“2025 Plan”) was approved by the Board of Directors and the Shareholders in 2024 and became active on February 1, 2025. The 2025 Plan had 550,000 shares authorized, all of which were available at
December 31, 2025. The 2015 Stock Ownership Incentive Plan (“2015 Plan”) was approved by the Board of Directors and the Shareholders in 2015. The 2015 Plan was rendered inactive as of February 1, 2025. Shares issuable pursuant to
awards which were granted under the 2015 Plan on or before their respective expiration or termination dates will be issued from the remaining shares reserved for issuance under the 2015 Plan. The shares of common stock reserved for
issuance under the 2015 Plan in excess of the number of shares as to which options or other benefits are awarded thereunder, and any shares as to which options or other benefits granted under the 2015 Plan may lapse, expire, terminate, or
be canceled, will not be reserved and available for issuance or reissuance under the 2025 Plan.
|
A
|
B
|
C
|
|
|
Plan Category
(shares in thousands)
|
Number of Common
Shares to be Issued
Upon Exercise
|
Weighted Average
Price
|
Number of Securities
Available for Future
Issuance Under Equity
Compensation Plans
(excluding securities
reflected in Column A)
|
|
Equity compensation plans approved by shareholders
|
0
|
--
|
550
|
|
Equity compensation plans not approved by shareholders
|
0
|
--
|
0
|
|
Total
|
550
|
Additional information regarding CTBI’s equity compensation plans can be found in notes 1 and 16 to the consolidated financial statements contained herein.
|
Item 13.
|
Certain Relationships, Related Transactions, and Director Independence
|
The information required by this item is omitted, because CTBI is filing a definitive proxy statement pursuant to Regulation 14A not later than 120 days after the end of the fiscal year
covered by this report which includes the required information. The required information contained in CTBI’s proxy statement is incorporated herein by reference.
|
Item 14.
|
Principal Accountant Fees and Services
|
The information required by this item is omitted, because CTBI is filing a definitive proxy statement pursuant to Regulation 14A not later than 120 days after the end of the fiscal year
covered by this report which includes the required information. The required information contained in CTBI’s proxy statement is incorporated herein by reference.
108
Table of Contents
PART IV
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
(a) 1. Financial Statements
The following financial statements of CTBI and the auditor’s report thereon are filed as part of this Form 10-K under Item 8. Financial Statements and Supplementary
Data:
Consolidated Balance Sheets
Consolidated Statements of Income and Other Comprehensive Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (BDO USA, P.C., Grand Rapids, Michigan, PCAOB ID )
Report of Independent Registered Public Accounting Firm (Forvis Mazars, LLP, Louisville, Kentucky, PCAOB ID )
2. Financial Statement Schedules
All required financial statement schedules for CTBI have been included in this Form 10-K in the consolidated financial statements or the related footnotes.
3. Exhibits
|
Exhibit No.
|
Description of Exhibits
|
|
3.1
|
Articles of Incorporation and all amendments thereto {incorporated by reference to registration statement no. 33-35138}
|
|
3.2
|
By-laws of CTBI as amended July 25, 1995 {incorporated by reference to registration statement no. 33-61891}
|
|
3.3
|
By-laws of CTBI as amended January 29, 2008 {incorporated by reference to Exhibit 3.1 of current report on Form 8-K filed January 30, 2008}
|
|
4.1
|
Description of CTBI’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 {incorporated by reference to Exhibit 4.1 of Form 10-K for the fiscal year ended December 31,
2021}
|
|
10.1*
|
Community Trust Bancorp, Inc. Employee Stock Ownership Plan (effective January 1, 2007) {incorporated herein by reference to Exhibit 10.1 of Form 10-K for the fiscal year ended December 31, 2006}
|
|
10.2*
|
Community Trust Bancorp, Inc. Savings and Employee Stock Ownership Plan (Amendment Number One effective January 1, 2002, Amendment Number Two effective January 1, 2004, Amendment Number Three
effective March 28, 2005, and Amendment Number Four effective January 1, 2006) {incorporated herein by reference to Exhibit 10.2 of Form 10-K for the fiscal year ended December 31, 2006}
|
109
Table of Contents
|
10.3*
|
Form of Severance Agreement between Community Trust Bancorp, Inc. and executive officers (currently in effect with respect to twelve executive officers) {incorporated herein by reference to Exhibit
10.4 of Form 10-K for the fiscal year ended December 31, 2001}
|
|
10.4*
|
Community Trust Bancorp, Inc. 2015 Stock Ownership Incentive Plan {incorporated by reference to Appendix A of Definitive Proxy Statement on Schedule 14A filed March 20, 2015}
|
|
10.5*
|
Restricted Stock Agreement {incorporated by reference to Exhibit 10.8 of Form 10-K for the fiscal year ended December 31, 2011}
|
|
10.6*
|
Community Trust Bancorp, Inc. 2025 Stock Ownership Incentive Plan {incorporated by reference to Appendix A of Definitive Proxy Statement on Schedule 14A filed March 18, 2024}
|
|
10.7*
|
Senior Management Incentive Compensation Plan (2026) {incorporated by reference to Exhibit 10.1 of current report on Form 8-K filed January 28, 2026}
|
|
10.8*
|
Employee Incentive Compensation Plan (2026) {incorporated by reference to Exhibit 10.2 of current report on Form 8-K filed January 28, 2026}
|
|
10.9*
|
Community Trust Bancorp, Inc. 2024 Executive Committee Long-Term Incentive Compensation Plan {incorporated by reference to Exhibit 10.21 of current report on Form 8-K filed January 25, 2024}
|
|
10.10*
|
Community Trust Bancorp, Inc. 2025 Executive Committee Long-Term Incentive Compensation Plan {incorporated by reference to Exhibit 10.3 of current report on Form 8-K filed January 29, 2025}
|
|
10.11*
|
Community Trust Bancorp, Inc. 2026 Executive Committee Long-Term Incentive Compensation Plan {incorporated by reference to Exhibit 10.3 of current report on Form 8-K filed January 28, 2026}
|
|
19.1*
|
Community Trust Bancorp, Inc. and Community Trust Bank, Inc. Insider Trading Policy {incorporated herein by reference to Exhibit 19.1 of Form 10-K for the fiscal year ended December 31, 2024}
|
|
21+
|
Subsidiaries of the Registrant
|
|
23.1+
|
Consent of BDO USA, P.C., Independent Registered Public Accounting Firm
|
|
23.2+
|
Consent of Forvis Mazars, LLP, Independent Registered Public Accounting Firm
|
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31.1+
|
Certification of Principal Executive Officer (Mark A. Gooch, Chairman, President, and Chief Executive Officer)
|
|
31.2+
|
Certification of Principal Financial Officer (Kevin J. Stumbo, Executive Vice President, Chief Financial Officer, and Treasurer)
|
|
32.1++
|
Certification of Mark A. Gooch, Chairman, President, and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
110
Table of Contents
|
32.2++
|
Certification of Kevin J. Stumbo, Executive Vice President, Chief Financial Officer, and Treasurer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
|
97*
|
Community Trust Bancorp, Inc. Policy for the Recovery of Erroneously Awarded Compensation {incorporated by reference to Exhibit 97 of Form 10-K for the fiscal year ended December 31, 2023}
|
|
99.1
|
Community Trust Bancorp, Inc. Dividend Reinvestment Plan, as amended December 20, 2013 {incorporated by reference to registration statement no. 333-193011}
|
|
101.INS
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
* Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.
+ Filed with this report.
++ Furnished with this report.
(b) Exhibits
The response to this portion of Item 15 is submitted in (a) 3. above.
(c) Financial Statement Schedules
None
|
Item 16.
|
Form 10-K Summary
|
None
111
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
| COMMUNITY TRUST BANCORP, INC. | |||
| February 27, 2026 | By: | /s/ Mark A. Gooch |
|
|
|
Mark A. Gooch |
|
|
|
|
Chairman, President, and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
/s/ Kevin J. Stumbo |
|
|
|
|
Kevin J. Stumbo |
|
|
|
|
|
Executive Vice President, Chief Financial Officer,
and Treasurer
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
|
February 27, 2026
|
/s/ Mark A. Gooch
|
Chairman, President, and Chief Executive Officer
|
|
|
Mark A. Gooch
|
|||
|
February 27, 2026
|
/s/ Eugenia “Crit” Luallen
|
Vice Chairman and Lead Independent Director
|
|
|
Eugenia “Crit” Luallen
|
|||
|
February 27, 2026
|
/s/ Kevin J. Stumbo
|
Executive Vice President, Chief Financial Officer, and Treasurer
|
|
|
Kevin J. Stumbo
|
|||
|
February 27, 2026
|
/s/ David L. Baird
|
Director
|
|
|
David L. Baird
|
|||
|
February 27, 2026
|
/s/ Ina Michelle Matthews
|
Director
|
|
|
Ina Michelle Matthews
|
|
February 27, 2026
|
/s/ James E. McGhee, II
|
Director
|
|
|
James E. McGhee II
|
|||
|
February 27, 2026
|
/s/ Franky Minnifield
|
Director
|
|
|
Franky Minnifield
|
|||
|
February 27, 2026
|
/s/ Jefferson F. Sandlin
|
Director
|
|
|
Jefferson F. Sandlin
|
|||
|
February 27, 2026
|
/s/ Anthony W. St. Charles
|
Director
|
|
|
Anthony W. St. Charles
|
|||
|
February 27, 2026
|
/s/ Chad C. Street
|
Director
|
|
|
Chad C. Street
|
|||
|
February 27, 2026
|
/s/ Lillian (Kay) Webb
|
Director
|
|
|
Lillian (Kay) Webb
|
112
FAQ
How did Community Trust Bancorp (CTBI) perform financially in 2025?
Community Trust Bancorp reported record 2025 earnings of $98.1 million. Basic earnings per share increased to $5.44 from $4.61 in 2024. Total revenue reached $282.6 million as net interest income rose 17.7%, while profitability improved, with ROAA at 1.53% and ROAE at 12.07%.
What were Community Trust Bancorp’s assets, loans, and deposits at year-end 2025?
At December 31, 2025, CTBI’s total assets were $6.7 billion. Loans outstanding reached $4.89 billion, driven by commercial and residential real estate growth. Deposits, including repurchase agreements, totaled $5.7 billion, reflecting broad-based funding growth across the company’s Kentucky, West Virginia, and Tennessee markets.
How strong is Community Trust Bancorp’s capital position under the community bank leverage ratio?
CTBI reports strong capital under the community bank leverage ratio framework. As of December 31, 2025, the holding company’s community bank leverage ratio was 13.64%, while Community Trust Bank’s ratio was 13.19%, both well above the 9% qualifying threshold for the simplified capital regime.
What dividend did Community Trust Bancorp (CTBI) pay in 2025 and what is its payout approach?
In 2025, CTBI increased its annual dividend from $1.86 to $2.00 per share. The company targets a conservative policy, aiming for an average payout ratio around 45% over time; the 2025 cash dividend ratio was 36.8%, with a 10‑year average of 40.6%.
What are key credit and concentration risks highlighted by Community Trust Bancorp?
CTBI emphasizes credit risk tied to real estate and consumer lending. About 70% of loans are secured by real estate, including 42% in commercial real estate, and roughly 21% of the portfolio is consumer, largely indirect auto loans, which can be more vulnerable in economic downturns.
How is Community Trust Bancorp addressing cybersecurity and technology risk?
CTBI integrates cybersecurity into its enterprise risk management framework. It uses endpoint security, SIEM, PAM, a 24x7 security operations center, regular phishing tests, vulnerability assessments, and penetration testing, with quarterly reporting to risk committees and the board, plus insurance coverage and defined incident response plans.
What were Community Trust Bancorp’s 2026 financial performance targets?
For 2026, CTBI targeted higher earnings and balance sheet growth. Management goals include basic EPS of $5.78–$6.02, net income of $105.1–$109.3 million, revenues of $294.7–$306.7 million, loans of $5.02–$5.22 billion, and assets of $6.80–$7.23 billion.
Community Tr Bancorp Inc
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Mar 20, 2026
[ARS] COMMUNITY TRUST BANCORP INC /KY/ SEC Filing