14. 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 to all employees (age 21 and over) with one year of service and who work at least 1,000 hours per year. Participants in the plan have the option to contribute from 1% to 15% of their annual compensation. CTBI matches 50% of participant contributions up to 4% of gross pay. CTBI may at its discretion, contribute an additional percentage of covered employees' compensation. CTBI's matching contributions were $1.0 million for the year ended December 31, 2012 and $0.9 million for both of the years ended December 31, 2011 and 2010. The 401(k) Plan owned 501,388, 531,361, and 507,932 shares of CTBI's common stock at December 31, 2012, 2011, and 2010, respectively. Substantially all shares owned by the 401(k) 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 Plan has the same entrance requirements as the 401(k) Plan above. CTBI currently contributes 4% of covered employees' gross compensation to the ESOP. The ESOP uses the contributions to acquire shares of CTBI's common stock. CTBI's contributions to the ESOP were $1.4 million for both of the years ended December 31, 2012 and 2011 and $1.3 million for the year ended December 31, 2010. The ESOP owned 680,613, 661,691, and 647,158 shares of CTBI's common stock at December 31, 2012, 2011, and 2010, 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.

Stock-Based Compensation:

CTBI currently maintains one active and one inactive incentive stock option plan covering key employees. The 2006 Stock Ownership Incentive Plan ("2006 Plan") was approved by the Board of Directors and the Shareholders in 2006. The 1998 Stock Option Plan ("1998 Plan") was approved by the Board of Directors and the Shareholders in 1998. The 1998 Plan was rendered inactive as of April 26, 2006. The 2006 Plan had 1,500,000 shares authorized, 1,245,189 of which were available at December 31, 2012 for future grants. In addition, any shares reserved for issuance under the 1998 Stock Option Plan ("1998 Plan") in excess of the number of shares as to which options or other benefits are awarded thereunder, plus any shares as to which options or other benefits granted under the 1998 Plan may lapse, expire, terminate or be canceled, shall also be reserved and available for issuance or reissuance under the 2006 Plan. As of December 31, 2012, the 1998 Plan had 1,046,831 shares authorized, 198,024 of which were transferred to the 2006 Plan. The total shares available for issuance under the 2006 Plan as of December 31, 2012 was 1,443,213. 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, 2012:

Plan Category (shares in thousands)	Number of Shares to Be Issued Upon Exercise/Vesting	Weighted Average Price	Shares Available for Future Issuance
Equity compensation plans approved by shareholders:
Stock options	326	$32.64	1,443 (a)
Restricted stock	(c)	(b)	(a)
Performance units	(d)	(b)	(a)
Stock appreciation rights ("SARs")	(e)	(b)	(a)
Total			1,443

(a)

Under the 2006 Plan, 1.5 million shares (plus any shares reserved for issuance under the 1998 Stock Option Plan) were authorized for issuance as nonqualified and incentive stock options, SARS, restricted stock and performance units. As of December 31, 2012, the above shares remained available for issuance.

(b)	Not applicable

(c)	The maximum number of shares of Restricted Stock that may be granted is 400,000 shares, and the maximum that may be granted to a participant during any calendar year is 40,000 shares.

(d)	No performance units had been issued as of December 31, 2012. The maximum payment that can be made pursuant to Performance Units granted to any one Participant in any calendar year shall be $250,000.

(e)	No SARS have been issued. The maximum number of shares with respect to which SARs may be granted to a Participant during any calendar year shall be 100,000 shares.

The following table details the shares available for future issuance under the 2006 Plan at December 31, 2012.

Plan Category	Shares Available for Future Issuance
Shares available at January 1, 2012	1,442,719
1998 Plan forfeitures in 2012	100
2006 Plan restricted stock issuances in 2012	(331	)
2006 Plan forfeitures in 2012	725
Shares available for future issuance	1,443,213

CTBI uses a Black-Scholes option pricing model with the following weighted average assumptions, which are evaluated and revised as necessary, in estimating the grant-date fair value of each option grant for the year end:

	2012		2011		2010
Expected option life (in years)		--		--		7.5
Expected volatility		--		--		0.391
Expected dividend yield		--		--		4.78	%
Risk-free interest rate		--		--		3.139	%

The expected option life is derived from the "safe-harbor" rules for estimating option life in ASC 718, Share-Based Payment. The expected volatility is based on historical volatility of the stock using a historical look back that approximates the expected life of the option grant. The interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. CTBI's stock-based compensation expense for the years 2012, 2011, and 2010 was $0.6 million, $0.7 million, and $0.8 million, respectively. Dividends paid on restricted stock shares were $121 thousand, $120 thousand, and $74 thousand, respectively, for the same periods.

CTBI's stock option activity for the 2006 Plan for the years ended December 31, 2012, 2011, and 2010 is summarized as follows:

December 31	2012					2011					2010
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		152,571		$	34.57		177,125		$	34.61		174,678		$	34.85
Granted		0			--		0			--		4,525			25.09
Exercised		(3,188	)		28.51		0			--		0			--
Forfeited/expired		(725	)		30.05		(24,554	)		34.84		(2,078	)		33.83
Outstanding at end of year		148,658		$	34.72		152,571		$	34.57		177,125		$	34.61

Exercisable at end of year		102,323		$	37.69		101,092		$	37.81		90,962		$	37.70

A summary of the status of CTBI's 2006 Plan for nonvested shares as of December 31, 2012, and changes during the year ended December 31, 2012, is presented as follows:

Nonvested Shares	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2012		51,479		$	6.53
Granted		0			--
Vested		(4,894	)		7.02
Forfeited		(250	)		7.05
Nonvested at December 31, 2012		46,335		$	6.48

The 2006 Plan had options with the following remaining lives at December 31, 2012:

2006 Option Plan
Remaining Life	Outstanding Options		Weighted Average Price
Four years		89,746	$	38.95
Five years		46,700		28.32
Six years		7,937		29.82
Seven years		4,275		25.09
Total outstanding		148,658
Weighted average price			$	34.72

No stock options were granted during 2012 or 2011. The weighted-average fair value of options granted from the 2006 Plan during the year 2010 was $0.03 million or $6.53 per share.

The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 2006 Plan for the years ended December 31, 2012, 2011, and 2010:

(in thousands)	2012		2011		2010
Options exercised	$	22	$	0	$	0
Options exercisable		88		43		0
Outstanding options		388		345		0

The following table shows restricted stock activity for the years ended December 31, 2012, 2011, and 2010:

December 31	2012				2011					2010
	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		96,543	$	27.91		52,834		$	26.10		16,786		$	28.83
Granted		331		30.92		45,542			30.09		44,996			25.09
Exercised		--		--		(1,617	)		30.09		(4,474	)		26.14
Forfeited/expired		--		--		(216	)		30.09		(4,474	)		26.14
Outstanding at end of year		96,874	$	27.92		96,543		$	27.91		52,834		$	26.10

During 2011 and 2010, the Compensation Committee of the Board of Directors approved the accelerated vesting of restricted stock grants of certain employees who had retired. The total amount of restricted stock grants for which vesting was accelerated during the years 2011 and 2010 was 1,617 shares at a weighted average fair value of $30.09 and 4,474 shares at a weighted average fair value of $26.14, respectively. During 2010, the Compensation Committee also approved the accelerated vesting of regular stock options consisting of 5,215 shares with an option price of $38.95 and 3,750 shares with an option price of $28.32.

CTBI's stock option activity for the 1998 Plan for the years ended December 31, 2012, 2011, and 2010 is summarized as follows:

December 31	2012					2011					2010
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		321,540		$	26.85		371,077		$	27.07		420,731		$	25.64
Granted		0			--		0			--		0			--
Exercised		(143,914	)		21.83		(6,824	)		19.63		(48,730	)		14.66
Forfeited/expired		(100	)		32.44		(42,713	)		29.94		(924	)		32.44
Outstanding at end of year		177,526		$	30.89		321,540		$	26.85		371,077		$	27.07

Exercisable at end of year		177,526		$	30.89		321,540		$	26.85		361,077		$	26.92

The 1998 Plan had options with the following remaining lives at December 31, 2012:

1998 Option Plan
Remaining Life	Outstanding Options		Weighted Average Price
One year or less		2,435	$	20.99
Two years		34,100		27.85
Three years		57,849		30.88
Four years		83,142		32.44
Total outstanding		177,526
Weighted average price			$	30.89

The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 1998 Plan for the years ended December 31, 2012, 2011, and 2010:

(in thousands)	2012		2011		2010
Options exercised	$	690	$	27	$	627
Options exercisable		1,517		833		1,206
Outstanding options		1,517		833		1,206

There were no nonvested shares in the 1998 Plan shares as of December 31, 2012 and December 31, 2011.

The following table shows the unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at December 31, 2012, 2011, and 2010 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, 2012, 2011, and 2010.

(in thousands)	2012		2011		2010
Unrecognized compensation cost of unvested share-based compensation arrangements granted under the plan at year-end	$	1,133	$	1,729	$	990
Grant date fair value of shares vested for the year		34		284		719
Cash received from option exercises under all share-based payment arrangements for the year		3,137		134		672
Tax benefit realized for the tax deductions from option exercises of the share-based payment arrangements for the year		496		23		205

The unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at December 31, 2012 is expected to be recognized over a weighted-average period of 1.5 years.