15. 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 20% 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 years ended December 31, 2017, 2016, and 2015. The 401(k) Plan owned 406,021, 482,426, and 515,062 shares of CTBI's common stock at December 31, 2017, 2016, and 2015, 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 $1.6 million for the year ended December 31, 2017 and $1.5 million for the years ended December 31, 2016 and 2015. The ESOP owned 737,079, 788,308, and 765,630 shares of CTBI's common stock at December 31, 2017, 2016, and 2015, 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:

As of December 31, 2017, CTBI maintained one active and two inactive incentive stock ownership plans covering key employees. The 2015 Stock Ownership Incentive Plan (“2015 Plan”) was approved by the Board of Directors and the Shareholders in 2015. 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. 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 2015 Plan has 550,000 shares authorized, 519,140 of which were available at December 31, 2017. Shares issuable pursuant to awards which were granted under the prior plans on or before their respective expiration or termination dates will be issued from the remaining shares reserved for issuance under the prior plans. The shares of common stock reserved for issuance under the prior plans 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 prior plans may lapse, expire, terminate or be canceled, will not be reserved and available for issuance or reissuance under the 2015 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, 2017:

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

32.26

519

(a)

Restricted stock

(c)

(b)

(a)

Performance units

(d)

(b)

(a)

Stock appreciation rights (“SARs”)

(e)

(b)

(a)

Total

519

(a)

Under the 2015 Plan, 550,000 shares are authorized for issuance; 33,668 have been issued as of December 31, 2017. In January of 2016, 18,069 restricted stock shares were issued under the terms of the 2015 Plan pursuant to awards granted under the 2006 Plan. Additional shares will not be issued pursuant to awards granted from prior plans.

(b)	Not applicable

(c)	The maximum number of shares of restricted stock that may be granted is 550,000 shares, and the maximum that may be granted to a participant during any calendar year is 75,000 shares.

(d)	No performance units payable in stock had been issued as of December 31, 2017. The maximum payment that can be made pursuant to performance units granted to any one participant in any calendar year shall be $1,000,000.

(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 2015 Plan at December 31, 2017.

Plan Category	Shares Available for Future Issuance
Shares available at January 1, 2017	540,131
Stock option issuances	0
Restricted stock issuances	(23,668)
Forfeitures	2,677
Shares available for future issuance	519,140

There were no stock options issued in 2017. 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:

	2016	2015
Expected option life (in years)	7.5	7.5
Expected volatility	34.34%	43.11%
Expected dividend yield	3.70%	3.72%
Risk-free interest rate	1.45%	1.54%

The expected life of options granted is estimated from past experience activity and represents the period of time that granted options are expected to be outstanding. 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 2017, 2016, and 2015 was $0.6 million, $0.5 million, and $0.8 million, respectively. Included in stock-based compensation expense were dividends paid on restricted stock shares in the amount of $53 thousand, $37 thousand, and $80 thousand, respectively, for the same periods.

The 2015 Plan:

CTBI’s stock option activity for the 2015 Plan for the years ended December 31, 2017 and 2016 is summarized as follows:

December 31	2017				2016
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding at beginning of year		10,000	$	33.55		0	$	0
Granted		0		0		10,000		33.55
Exercised		0		0		0		0
Forfeited/expired		0		0		0		0
Outstanding at end of year		10,000	$	33.55		10,000	$	33.55

Exercisable at end of year		0	$	0		0	$	0

A summary of the status of CTBI’s 2015 Plan for nonvested options as of December 31, 2017, and changes during the year ended December 31, 2017, is presented as follows:

Nonvested Options	Options		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		10,000	$	6.82
Granted		0		0
Vested		0		0
Forfeited		0		0
Nonvested at December 31, 2017		10,000	$	6.82

The weighted average remaining contractual term in years of the options outstanding at December 31, 2017 was 8.1 years.

There were no options granted from the 2015 Plan for the year ended December 31, 2017.

The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 2015 Plan for the years ended December 31, 2017:

(in thousands)	2017
Options exercised	$	0
Options exercisable		0
Outstanding options		136

The following table shows restricted stock activity for the 2015 Plan for the years ended December 31, 2017 and 2016:

December 31	2017					2016
	Grants			Weighted Average Fair Value at Grant		Grants			Weighted Average Fair Value at Grant
Outstanding at beginning of year		17,496		$	33.55		0		$	0
Granted*		23,668			46.45		18,069			33.55
Vested		(5,751	)		35.79		(442	)		33.55
Forfeited		(2,328	)		41.31		(131	)		33.55
Outstanding at end of year		33,085		$	41.84		17,496		$	33.55

* Grants issued in 2016 were issued under the terms of the 2015 Plan pursuant to awards granted and earned under the 2006 Plan.

The 2006 Plan:

CTBI’s stock option activity for the 2006 Plan for the years ended December 31, 2017, 2016, and 2015 is summarized as follows:

December 31	2017					2016					2015
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		61,041		$	29.84		118,574		$	32.36		98,821		$	32.35
Granted		0			0		0			0		20,000			32.27
Exercised		(25,665	)		27.01		(57,423	)		35.02		(247	)		24.12
Forfeited/expired		0			0		(110	)		35.41		0			0
Outstanding at end of year		35,376		$	31.90		61,041		$	29.84		118,574		$	32.36

Exercisable at end of year		5,376		$	25.22		30,629		$	26.64		87,749		$	32.12

A summary of the status of CTBI’s 2006 Plan for nonvested options as of December 31, 2017, and changes during the year ended December 31, 2017, is presented as follows:

Nonvested Options	Options			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		30,412		$	7.00
Granted		0			0
Vested		(412	)		8.23
Forfeited		0			0
Nonvested at December 31, 2017		30,000		$	6.98

The weighted average remaining contractual term in years of the options outstanding at December 31, 2017 was 6.0 years.

There were no options granted from the 2006 Plan for the years 2017 and 2016. The weighted-average fair value of options granted from the 2006 Plan during the year 2015 was $0.1 million or $6.60 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, 2017, 2016, and 2015:

(in thousands)	2017		2016		2015
Options exercised	$	537	$	139	$	3
Options exercisable		118		703		275
Outstanding options		538		1,206		334

The following table shows restricted stock activity for the years ended December 31, 2017, 2016, and 2015:

December 31	2017					2016					2015
	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		11,989		$	32.85		64,735		$	28.92		101,309		$	26.19
Granted		0			0		0			0		10,582			32.27
Vested		(6,214	)		32.48		(52,521	)		28.01		(46,482	)		23.66
Forfeited		(349	)		33.31		(225	)		32.52		(674	)		33.31
Outstanding at end of year		5,426		$	33.24		11,989		$	32.85		64,735		$	28.92

The 1998 Plan:

The 1998 Plan had no outstanding options and no activity for the year ended December 31, 2017. CTBI’s stock option activity for the 1998 Plan for the years ended December 31, 2016 and 2015 is summarized as follows:

December 31	2016					2015
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		2,980		$	29.49		43,960		$	29.43
Granted		0			0		0			0
Exercised		(2,980	)		29.49		(40,980	)		29.42
Forfeited/expired		0			0		0			0
Outstanding at end of year		0		$	0		2,980		$	29.49

Exercisable at end of year		0		$	0		2,980		$	29.49

The following table shows the intrinsic values of options exercised, exercisable, and outstanding for the 1998 Plan for the years ended December 31, 2016 and 2015:

(in thousands)	2016		2015
Options exercised	$	13	$	241
Options exercisable		0		16
Outstanding options		0		16

There were no nonvested options in the 1998 Plan for the years December 31, 2017, 2016, and 2015.

The following table shows the unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at December 31, 2017, 2016, and 2015 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, 2017, 2016, and 2015.

(in thousands)	2017		2016		2015
Unrecognized compensation cost of unvested share-based compensation arrangements granted under the plan at year-end	$	1,242	$	835	$	495
Grant date fair value of shares vested for the year		564		1,490		1,111
Cash received from option exercises under all share-based payment arrangements for the year		693		2,099		1,212
Tax benefit realized for the tax deductions from option exercises of the share-based payment arrangements for the year		138		3		82

The unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans at December 31, 2017 is expected to be recognized over a weighted-average period of 2.6 years.