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Loans | 12 Months Ended
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Dec. 31, 2011
Loans [Abstract] |
Loans | 5. Loans Classes of loans, net of deferred loan origination costs, are summarized as follows:
(in thousands) |  | December 31 2011 |  |  | December 31 2010 |
Commercial construction |  | $ | 120,577 |  |  | $ | 135,091 |
Commercial secured by real estate |  |  | 798,887 |  |  |  | 807,049 |
Equipment lease financing |  |  | 9,706 |  |  |  | 14,151 |
Commercial other |  |  | 374,597 |  |  |  | 388,746 |
Real estate construction |  |  | 53,534 |  |  |  | 56,910 |
Real estate mortgage |  |  | 650,075 |  |  |  | 623,851 |
Home equity |  |  | 84,841 |  |  |  | 85,103 |
Consumer direct |  |  | 123,949 |  |  |  | 126,046 |
Consumer indirect |  |  | 340,382 |  |  |  | 368,233 |
Total loans |  | $ | 2,556,548 |  |  | $ | 2,605,180 |
CTBI has segregated and evaluates its loan portfolio through nine portfolio classes. The nine classes are commercial construction, commercial secured by real estate, equipment lease financing, commercial other, real estate construction, real estate mortgage, home equity, consumer direct, and consumer indirect. CTBI serves customers in small and mid-sized communities in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee. Therefore, CTBI's exposure to credit risk is significantly affected by changes in these communities. Commercial construction loans are for the purpose of erecting or rehabilitating buildings or other structures for commercial purposes, including any infrastructure necessary for development. Included in this category are improved property, land development, and tract development loans. The terms of these loans are generally short-term with permanent financing upon completion. Commercial real estate loans include loans secured by nonfarm, nonresidential properties, 1-4 family/ multi-family properties, farmland, and other commercial real estate. These loans are originated based on the borrower's ability to service the debt and secondarily based on the fair value of the underlying collateral. Equipment lease financing loans are fixed, variable, and tax exempt leases for commercial purposes. Commercial other loans consist of commercial check loans, agricultural loans, receivable financing, floorplans, loans to financial institutions, loans for purchasing or carrying securities, and other commercial purpose loans. Commercial loans are underwritten based on the borrower's ability to service debt from the business's underlying cash flows. As a general practice, we obtain collateral such as real estate, equipment, or other assets, although such loans may be uncollateralized but guaranteed. Real estate construction loans are typically for owner-occupied properties. The terms of these loans are generally short-term with permanent financing upon completion. Residential real estate loans are a mixture of fixed rate and adjustable rate first and second lien residential mortgage loans. As a policy, CTBI holds adjustable rate loans and sells the majority of its fixed rate first lien mortgage loans into the secondary market. Changes in interest rates or market conditions may impact a borrower's ability to meet contractual principal and interest payments. Residential real estate loans are secured by real property. Home equity lines are revolving adjustable rate credit lines secured by real property. Consumer direct loans are fixed rate products comprised of unsecured loans, consumer revolving credit lines, deposit secured loans, and all other consumer purpose loans. Consumer indirect loans are fixed rate loans secured by automobiles, trucks, vans, and recreational vehicles originated at the selling dealership underwritten and purchased by CTBI's indirect lending department. Both new and used products are financed. Only dealers who have executed dealer agreements with CTBI participate in the indirect lending program. Not included in the loan balances above were loans held for sale in the amount of $0.5 million at December 31, 2011 and 2010, respectively. The amount of capitalized fees and costs under ASC 310-20, included in the above loan totals were $0.7 million and $0.8 million at December 31, 2011 and 2010, respectively. CTBI acquired loans through the acquisition of First National Bank of LaFollette in the fourth quarter 2010. At acquisition, the transferred loans with evidence of deterioration of credit quality since origination were not significant; therefore, none of the loans acquired were accounted for under the guidance in ASC 310-30. Credit discounts representing principal losses expected over the life of the loans are a component of the initial fair value for purchased loans acquired that are not deemed impaired at acquisition. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Subsequent to the acquisition date, the methods used to estimate the required allowance for credit losses for these loans is similar to originated loans; however, CTBI records a provision for loan losses only when the required allowance exceeds any remaining credit discounts. The remaining difference between the purchase price and the unpaid principal balance at the date of acquisition is recorded in interest income over the life of the loans. Management estimated the cash flows expected to be collected at acquisition using a third party that incorporated estimates of current key assumptions, such as default rates, severity, and prepayment speeds. The carrying amounts of those loans included in the balance sheet are $88.5 million and $115.7 million at December 31, 2011 and 2010, respectively. Changes in accretable yield for the years ended December 31, 2011 and 2010 are as follows:
(in thousands) |  | 2011 |  |  | 2010 |
Beginning balance |  | $ | 2,995 |  |  | $ | 0 |
Additions |  |  | 0 |  |  |  | 3,152 |
Accretion |  |  | (1,067 | ) |  |  | (126 | )
Disposals |  |  | (1,208 | ) |  |  | (31 | )
Ending balance |  | $ | 720 |  |  | $ | 2,995 |
The amount of loans on a non-accruing income status was $25.8 million, $45.0 million, and $32.2 million at December 31, 2011, 2010, and 2009, respectively. The total of loans on non-accrual that were in homogeneous pools and not evaluated individually for impairment were $5.0 million, $7.6 million, and $5.6 million at December 31, 2011, 2010, and 2009, respectively. Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest. The amount of loans 90 days or more past due and still accruing interest was $11.5 million, $17.0 million, and $9.1 million at December 31, 2011, 2010, and 2009, respectively. Refer to note 1 to the consolidated financial statements for further information regarding our nonaccrual policy. Nonaccrual loans segregated by class of loans were as follows:
(in thousands) |  | December 31 2011 |  |  | December 31 2010 |
Commercial: |  |  |  |  |  |
Commercial construction |  | $ | 7,029 |  |  | $ | 13,138 |
Commercial secured by real estate |  |  | 9,810 |  |  |  | 15,608 |
Commercial other |  |  | 3,914 |  |  |  | 9,338 |
Residential: |  |  |  |  |  |  |  |
Real estate construction |  |  | 607 |  |  |  | 636 |
Real estate mortgage |  |  | 4,204 |  |  |  | 6,137 |
Home equity |  |  | 189 |  |  |  | 164 |
Total nonaccrual loans |  | $ | 25,753 |  |  | $ | 45,021 |
The following tables present CTBI's loan portfolio aging analysis, segregated by class, as of December 31, 2011 and 2010:
|  | December 31, 2011 |
(in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | 90+ and Accruing* |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  | $ | 362 |  |  | $ | 33 |  |  | $ | 10,171 |  |  | $ | 10,566 |  |  | $ | 110,011 |  |  | $ | 120,577 |  |  | $ | 3,292 |
Commercial secured by real estate |  |  | 4,566 |  |  |  | 2,978 |  |  |  | 11,998 |  |  |  | 19,542 |  |  |  | 779,345 |  |  |  | 798,887 |  |  |  | 3,969 |
Equipment lease financing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 9,706 |  |  |  | 9,706 |  |  |  | 0 |
Commercial other |  |  | 2,286 |  |  |  | 688 |  |  |  | 2,504 |  |  |  | 5,478 |  |  |  | 369,119 |  |  |  | 374,597 |  |  |  | 619 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate construction |  |  | 305 |  |  |  | 91 |  |  |  | 622 |  |  |  | 1,018 |  |  |  | 52,516 |  |  |  | 53,534 |  |  |  | 16 |
Real estate mortgage |  |  | 2,067 |  |  |  | 4,974 |  |  |  | 6,547 |  |  |  | 13,588 |  |  |  | 636,487 |  |  |  | 650,075 |  |  |  | 2,719 |
Home equity |  |  | 968 |  |  |  | 312 |  |  |  | 482 |  |  |  | 1,762 |  |  |  | 83,079 |  |  |  | 84,841 |  |  |  | 346 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer direct |  |  | 1,723 |  |  |  | 171 |  |  |  | 71 |  |  |  | 1,965 |  |  |  | 121,984 |  |  |  | 123,949 |  |  |  | 71 |
Consumer indirect |  |  | 2,684 |  |  |  | 755 |  |  |  | 483 |  |  |  | 3,922 |  |  |  | 336,460 |  |  |  | 340,382 |  |  |  | 483 |
Total |  | $ | 14,961 |  |  | $ | 10,002 |  |  | $ | 32,878 |  |  | $ | 57,841 |  |  | $ | 2,498,707 |  |  | $ | 2,556,548 |  |  | $ | 11,515 |
|  | December 31, 2010 |
(in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | 90+ and Accruing* |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  | $ | 1,800 |  |  | $ | 545 |  |  | $ | 14,290 |  |  | $ | 16,635 |  |  | $ | 118,456 |  |  | $ | 135,091 |  |  | $ | 1,178 |
Commercial secured by real estate |  |  | 6,382 |  |  |  | 8,618 |  |  |  | 22,195 |  |  |  | 37,195 |  |  |  | 769,854 |  |  |  | 807,049 |  |  |  | 9,641 |
Equipment lease financing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 14,151 |  |  |  | 14,151 |  |  |  | 0 |
Commercial other |  |  | 6,737 |  |  |  | 539 |  |  |  | 5,039 |  |  |  | 12,315 |  |  |  | 376,431 |  |  |  | 388,746 |  |  |  | 1,692 |
Residential: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate construction |  |  | 109 |  |  |  | 767 |  |  |  | 1,009 |  |  |  | 1,885 |  |  |  | 55,025 |  |  |  | 56,910 |  |  |  | 372 |
Real estate mortgage |  |  | 1,478 |  |  |  | 3,764 |  |  |  | 8,844 |  |  |  | 14,086 |  |  |  | 609,765 |  |  |  | 623,851 |  |  |  | 3,337 |
Home equity |  |  | 885 |  |  |  | 276 |  |  |  | 295 |  |  |  | 1,456 |  |  |  | 83,647 |  |  |  | 85,103 |  |  |  | 226 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer direct |  |  | 1,569 |  |  |  | 242 |  |  |  | 70 |  |  |  | 1,881 |  |  |  | 124,165 |  |  |  | 126,046 |  |  |  | 70 |
Consumer indirect |  |  | 2,851 |  |  |  | 684 |  |  |  | 498 |  |  |  | 4,033 |  |  |  | 364,200 |  |  |  | 368,233 |  |  |  | 498 |
Total |  | $ | 21,811 |  |  | $ | 15,435 |  |  | $ | 52,240 |  |  | $ | 89,486 |  |  | $ | 2,515,694 |  |  | $ | 2,605,180 |  |  | $ | 17,014 |
*90+ and Accruing are also included in 90+ Days Past Due column. Credit Quality Indicators: CTBI categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. CTBI also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s). CTBI analyzes commercial loans individually by classifying the loans as to credit risk. Loans classified as loss, doubtful, substandard, or special mention are reviewed quarterly for further deterioration or improvement to determine if appropriately classified and valued if deemed impaired. All other commercial loan reviews are completed every 12 to 18 months. In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other information becomes available, CTBI will evaluate the loan grade. CTBI uses the following definitions for risk ratings:
? | Pass grades include investment grade, low risk, moderate risk, and acceptable risk loans. The loans range from loans that have no chance of resulting in a loss to loans that have a limited chance of resulting in a loss. Customers in this grade have excellent to fair credit ratings. The cash flows are adequate to meet required debt repayments.
? | Watch graded loans are loans that warrant extra management attention but are not currently criticized. Loans on the watch list may be potential troubled credits or may warrant "watch" status for a reason not directly related to the asset quality of the credit. The watch grade is a management tool to identify credits which may be candidates for future classification or may temporarily warrant extra management monitoring.
? | Other assets especially mentioned (OAEM) reflects loans that are currently protected but are potentially weak. These loans constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of circumstances surrounding a specific asset. Loans in this grade display potential weaknesses which may, if unchecked or uncorrected, inadequately protect CTBI's credit position at some future date. The loans may be adversely affected by economic or market conditions.
? | Substandard grading indicates that the loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These loans have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt with the distinct possibility that CTBI will sustain some loss if the deficiencies are not corrected.
? | Doubtful graded loans have the weaknesses inherent in the substandard grading with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The probability of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to CTBI's advantage or strengthen the asset(s), its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.
? | A loss grading applies to loans that are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery value, but rather it is not practical or desirable to defer writing off the asset. Losses must be taken in the period in which they surface as uncollectible, or in the case of collateral-dependent loans, a specific reserve in the amount of the expected loss is applied to the loan until the collateral is liquidated or we have taken possession and moved it into other real estate owned.
The following tables present the credit risk profile of CTBI's commercial loan portfolio based on rating category and payment activity, segregated by class of loans, as of December 31, 2011 and 2010:
(in thousands) |  | Commercial Construction |  |  | Commercial Secured by Real Estate |  |  | Commercial Other |  |  | Equipment Leases |  |  | Total |
December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 85,886 |  |  | $ | 643,312 |  |  | $ | 323,471 |  |  | $ | 9,706 |  |  | $ | 1,062,375 |
Watch |  |  | 17,721 |  |  |  | 78,611 |  |  |  | 38,185 |  |  |  | 0 |  |  |  | 134,517 |
OAEM |  |  | 1,379 |  |  |  | 21,087 |  |  |  | 1,668 |  |  |  | 0 |  |  |  | 24,134 |
Substandard |  |  | 8,783 |  |  |  | 46,238 |  |  |  | 7,364 |  |  |  | 0 |  |  |  | 62,385 |
Doubtful |  |  | 6,808 |  |  |  | 9,639 |  |  |  | 3,909 |  |  |  | 0 |  |  |  | 20,356 |
Loss |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 120,577 |  |  | $ | 798,887 |  |  | $ | 374,597 |  |  | $ | 9,706 |  |  | $ | 1,303,767 |
December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 80,235 |  |  | $ | 651,804 |  |  | $ | 315,495 |  |  | $ | 14,151 |  |  | $ | 1,061,685 |
Watch |  |  | 27,510 |  |  |  | 80,128 |  |  |  | 57,716 |  |  |  | 0 |  |  |  | 165,354 |
OAEM |  |  | 853 |  |  |  | 8,163 |  |  |  | 731 |  |  |  | 0 |  |  |  | 9,747 |
Substandard |  |  | 13,987 |  |  |  | 53,141 |  |  |  | 7,348 |  |  |  | 0 |  |  |  | 74,476 |
Doubtful |  |  | 12,506 |  |  |  | 13,813 |  |  |  | 7,456 |  |  |  | 0 |  |  |  | 33,775 |
Loss |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 135,091 |  |  | $ | 807,049 |  |  | $ | 388,746 |  |  | $ | 14,151 |  |  | $ | 1,345,037 |
The following tables present the credit risk profile of CTBI's residential real estate and consumer loan portfolios based on performing or nonperforming status, segregated by class, as of December 31, 2011 and 2010:
(in thousands) |  | Real Estate Construction |  |  | Real Estate Mortgage |  |  | Home Equity |  |  | Consumer Direct |  |  | Consumer Indirect |  |  | Total |
December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 52,911 |  |  | $ | 643,152 |  |  | $ | 84,306 |  |  | $ | 123,878 |  |  | $ | 339,899 |  |  | $ | 1,244,146 |
Nonperforming (1) |  |  | 623 |  |  |  | 6,923 |  |  |  | 535 |  |  |  | 71 |  |  |  | 483 |  |  |  | 8,635 |
Total |  | $ | 53,534 |  |  | $ | 650,075 |  |  | $ | 84,841 |  |  | $ | 123,949 |  |  | $ | 340,382 |  |  | $ | 1,252,781 |
December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 55,902 |  |  | $ | 614,377 |  |  | $ | 84,713 |  |  | $ | 125,976 |  |  | $ | 367,735 |  |  | $ | 1,248,703 |
Nonperforming (1) |  |  | 1,008 |  |  |  | 9,474 |  |  |  | 390 |  |  |  | 70 |  |  |  | 498 |  |  |  | 11,440 |
Total |  | $ | 56,910 |  |  | $ | 623,851 |  |  | $ | 85,103 |  |  | $ | 126,046 |  |  | $ | 368,233 |  |  | $ | 1,260,143 |
(1) A loan is considered nonperforming if it is 90 days or more past due or on nonaccrual. A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable CTBI will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection. The following table presents impaired loans, the average investment in impaired loans, and interest income recognized on impaired loans for the years ended December 31, 2011 and 2010:
|  | December 31, 2011 |
(in thousands) |  | Recorded Balance |  |  | Unpaid Contractual Principal Balance |  |  | Specific Allowance |  |  | Average Investment in Impaired Loans |  |  | Interest Income Recognized |
Loans without a specific valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  | $ | 4,778 |  |  | $ | 4,778 |  |  | $ | 0 |  |  | $ | 8,992 |  |  | $ | 252 |
Commercial secured by real estate |  |  | 27,811 |  |  |  | 29,765 |  |  |  | 0 |  |  |  | 31,480 |  |  |  | 1,543 |
Commercial other |  |  | 1,770 |  |  |  | 2,501 |  |  |  | 0 |  |  |  | 3,392 |  |  |  | 143 |
Real estate construction |  |  | 27 |  |  |  | 27 |  |  |  | 0 |  |  |  | 19 |  |  |  | 1 |
Real estate mortgage |  |  | 82 |  |  |  | 82 |  |  |  | 0 |  |  |  | 84 |  |  |  | 5 |
Consumer direct |  |  | 93 |  |  |  | 93 |  |  |  | 0 |  |  |  | 82 |  |  |  | 9 |
Consumer indirect |  |  | 112 |  |  |  | 112 |  |  |  | 0 |  |  |  | 99 |  |  |  | 12 |
Loans with a specific valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  |  | 5,794 |  |  |  | 6,643 |  |  |  | 2,203 |  |  |  | 7,681 |  |  |  | 0 |
Commercial secured by real estate |  |  | 3,525 |  |  |  | 3,669 |  |  |  | 1,156 |  |  |  | 4,747 |  |  |  | 23 |
Commercial other |  |  | 3,432 |  |  |  | 6,022 |  |  |  | 1,310 |  |  |  | 5,071 |  |  |  | 22 |
Commercial |  |  | 47,110 |  |  |  | 53,378 |  |  |  | 4,669 |  |  |  | 61,363 |  |  |  | 1,983 |
Residential |  |  | 109 |  |  |  | 109 |  |  |  | 0 |  |  |  | 103 |  |  |  | 6 |
Consumer |  |  | 205 |  |  |  | 205 |  |  |  | 0 |  |  |  | 181 |  |  |  | 21 |
Total |  | $ | 47,424 |  |  | $ | 53,692 |  |  | $ | 4,669 |  |  | $ | 61,647 |  |  | $ | 2,010 |
|  | December 31, 2010 |
(in thousands) |  | Recorded Balance |  |  | Unpaid Contractual Principal Balance |  |  | Specific Allowance |  |  | Average Investment in Impaired Loans |  |  | Interest Income Recognized |
Loans without a specific valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  | $ | 6,313 |  |  | $ | 6,313 |  |  | $ | 0 |  |  | $ | 6,262 |  |  | $ | 43 |
Commercial secured by real estate |  |  | 23,503 |  |  |  | 24,034 |  |  |  | 0 |  |  |  | 23,629 |  |  |  | 330 |
Commercial other |  |  | 4,357 |  |  |  | 4,616 |  |  |  | 0 |  |  |  | 4,407 |  |  |  | 71 |
Real estate construction |  |  | 790 |  |  |  | 790 |  |  |  | 0 |  |  |  | 790 |  |  |  | 0 |
Real estate mortgage |  |  | 950 |  |  |  | 950 |  |  |  | 0 |  |  |  | 950 |  |  |  | 0 |
Loans with a specific valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial construction |  |  | 9,528 |  |  |  | 10,813 |  |  |  | 2,554 |  |  |  | 9,686 |  |  |  | 0 |
Commercial secured by real estate |  |  | 9,188 |  |  |  | 9,358 |  |  |  | 2,575 |  |  |  | 9,191 |  |  |  | 2 |
Commercial other |  |  | 8,680 |  |  |  | 10,338 |  |  |  | 3,093 |  |  |  | 8,090 |  |  |  | 85 |
Commercial |  |  | 61,569 |  |  |  | 65,472 |  |  |  | 8,222 |  |  |  | 61,265 |  |  |  | 531 |
Residential |  |  | 1,740 |  |  |  | 1,740 |  |  |  | 0 |  |  |  | 1,740 |  |  |  | 0 |
Total |  | $ | 63,309 |  |  | $ | 67,212 |  |  | $ | 8,222 |  |  | $ | 63,005 |  |  | $ | 531 |
Cash basis interest is substantially the same as interest income recognized for the years ended December 31, 2011, 2010, and 2009. At December 31, 2009, the recorded investment in impaired loans was $37.6 million. Included in this amount was $19.2 million of impaired loans for which specific reserves for loan losses were carried in the amount of $6.6 million. The average investment in impaired loans at December 31, 2009 was $35.4 million, while interest income of $0.5 million was recognized. Included in certain loan categories of impaired loans are certain loans and leases that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances. Loan modifications that are included as troubled debt restructurings may involve either an increase or reduction of the interest rate, extension of the term of the loan, or deferral of principal and/or interest payments, regardless of the period of the modification. All of the loans identified as troubled debt restructuring were modified due to financial stress of the borrower. In order to determine if a borrower is experiencing financial difficulty, an evaluation is performed to determine the probability that the borrower will be in payment default on any of its debt in the foreseeable future with the modification. This evaluation is performed under CTBI's internal underwriting policy. When we modify loans and leases in a troubled debt restructuring, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determined that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all troubled debt restructuring, including those that have payment defaults, for possible impairment and recognize impairment through the allowance. Restructured loans segregated by class of loans were as follows:
(in thousands) |  | December 31 2011 |  |  | December 31 2010 |
Commercial: |  |  |  |  |  |
Commercial construction |  | $ | 5,464 |  |  | $ | 2,973 |
Commercial secured by real estate |  |  | 18,881 |  |  |  | 2,511 |
Commercial other |  |  | 2,445 |  |  |  | 1,156 |
Residential: |  |  |  |  |  |  |  |
Real estate construction |  |  | 27 |  |  |  | 0 |
Real estate mortgage |  |  | 82 |  |  |  | 0 |
Consumer: |  |  |  |  |  |  |  |
Consumer direct |  |  | 92 |  |  |  | 0 |
Consumer indirect |  |  | 112 |  |  |  | 0 |
Total restructured loans |  | $ | 27,104 |  |  | $ | 6,640 |
As of December 31, 2011, commitments to extend credit of $0.5 million and a standby letter of credit in the amount of $0.8 million were outstanding and are not included in the above table. During 2011, certain loans were modified in troubled debt restructurings, where economic concessions were granted to borrowers consisting of reductions in the interest rates, payment extensions, forgiveness of principal, and forbearances. Presented below, segregated by class of loans, are troubled debt restructurings that occurred during the year ended December 31, 2011:
|  | Year Ended December 31, 2011 |
(in thousands) |  | Number of Loans |  |  | Post-Modification Outstanding Balance |  |  | Net Charge-offs Resulting from Modification |
Commercial: |  |  |  |  |  |  |  |  |
Commercial construction |  |  | 7 |  |  | $ | 3,457 |  |  | $ | 0 |
Commercial secured by real estate |  |  | 19 |  |  |  | 17,497 |  |  |  | 0 |
Commercial other |  |  | 13 |  |  |  | 2,068 |  |  |  | (1 | )
Residential: |  |  |  |  |  |  |  |  |  |  |  |
Real estate construction |  |  | 1 |  |  |  | 28 |  |  |  | 0 |
Real estate mortgage |  |  | 2 |  |  |  | 82 |  |  |  | 0 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Consumer direct |  |  | 8 |  |  |  | 93 |  |  |  | 0 |
Consumer indirect |  |  | 8 |  |  |  | 112 |  |  |  | 0 |
Total troubled debt restructurings |  |  | 58 |  |  | $ | 23,337 |  |  | $ | (1 | )
In the preceding table, additional specific reserves were allocated for loan modifications to the following loan classifications: $200 thousand for one loan modification in commercial other and $11 thousand for two loan modifications in commercial secured by real estate. Presented below, segregated by class of loans, are troubled debt restructurings that were performing in accordance with their modified terms. CTBI considers a troubled debt restructuring to be performing in accordance with its modified terms if the loan is not past due 30 days or more as of the reporting date.
(in thousands) |  | December 31 2011 |  |  | December 31 2010 |
Commercial: |  |  |  |  |  |
Commercial construction |  | $ | 1,323 |  |  | $ | 1,633 |
Commercial secured by real estate |  |  | 16,082 |  |  |  | 2,427 |
Commercial other |  |  | 390 |  |  |  | 771 |
Residential: |  |  |  |  |  |  |  |
Real estate construction |  |  | 0 |  |  |  | 0 |
Real estate mortgage |  |  | 0 |  |  |  | 0 |
Consumer: |  |  |  |  |  |  |  |
Consumer direct |  |  | 59 |  |  |  | 0 |
Consumer indirect |  |  | 112 |  |  |  | 0 |
Total current restructured loans |  | $ | 17,966 |  |  | $ | 4,831 |
Loans retain their accrual status at the time of their modification. As a result, if a loan is on nonaccrual at the time it is modified, it stays as nonaccrual, and if a loan is on accrual at the time of the modification, it generally stays on accrual. Commercial and consumer loans modified in a troubled debt restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a troubled debt restructuring subsequently default, CTBI evaluates the loan for possible further impairment. The allowance for loan losses may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. Presented below, segregated by class of loans, are loans that were modified as troubled debt restructurings within the previous 12 months which have subsequently defaulted. CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual.
(in thousands) |  | Year Ended December 31, 2011 |
|  | Number of Loans |  |  | Recorded Balance |
Commercial: |  |  |  |  |  |
Commercial construction |  |  | 2 |  |  | $ | 3,913 |
Commercial secured by real estate |  |  | 2 |  |  |  | 1,669 |
Commercial other |  |  | 6 |  |  |  | 1,280 |
Residential: |  |  |  |  |  |  |  |
Real estate construction |  |  | 0 |  |  |  | 0 |
Real estate mortgage |  |  | 0 |  |  |  | 0 |
Consumer: |  |  |  |  |  |  |  |
Consumer direct |  |  | 1 |  |  |  | 7 |
Consumer indirect |  |  | 0 |  |  |  | 0 |
Total defaulted restructured loans |  |  | 11 |  |  | $ | 6,869 |

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