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Loans | 3 Months Ended
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Mar. 31, 2024
Loans [Abstract] |
Loans | Note 4 – Loans Major classifications of loans, net of unearned income, deferred loan origination costs and fees, and net premiums on acquired loans, are summarized as follows:
(in thousands) |  | March 31 2024 |  |  | December 31 2023 |
Hotel/motel |  | $ | 416,759 |  |  | $ | 395,765 |
Commercial real estate residential |  |  | 456,585 |  |  |  | 417,943 |
Commercial real estate nonresidential |  |  | 813,904 |  |  |  | 778,637 |
Dealer floorplans |  |  | 77,221 |  |  |  | 70,308 |
Commercial other |  |  | 320,701 |  |  |  | 321,082 |
Commercial loans |  |  | 2,085,170 |  |  |  | 1,983,735 |
Real estate mortgage |  |  | 955,616 |  |  |  | 937,524 |
Home equity lines |  |  | 151,577 |  |  |  | 147,036 |
Residential loans |  |  | 1,107,193 |  |  |  | 1,084,560 |
Consumer direct |  |  | 155,807 |  |  |  | 159,106 |
Consumer indirect |  |  | 813,005 |  |  |  | 823,505 |
Consumer loans |  |  | 968,812 |  |  |  | 982,611 |
Loans and lease financing |  | $ | 4,161,175 |  |  | $ | 4,050,906 |
The loan portfolios presented above are net of unearned fees and unamortized premiums. Unearned fees included above totaled $0.8 million as of March 31, 2024 and December 31, 2023, while the unamortized premiums on the indirect lending portfolio totaled $30.9 million as of March 31, 2024 and $31.4 million as of December 31, 2023. 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. Hotel/motel loans are a significant concentration for CTBI, representing approximately 10.0% 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. Additionally, any hotel/motel construction loans would be included in this segment as CTBI’s construction loans are primarily completed as one loan going from construction to permanent financing. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral. Commercial real estate residential loans are commercial purpose construction and permanent financed loans for commercial purpose 1-4 family/multi-family properties. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral. Commercial real estate nonresidential loans are secured by nonfarm, nonresidential properties, farmland, and other commercial real estate. These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral. Construction for commercial real estate nonresidential loans are also included in this segment as these loans are generally one loan for construction to permanent financing. Dealer floorplans consist of loans to dealerships to finance inventory and are collateralized under a blanket security agreement and without specific liens on individual units. This risk is mitigated by the use of periodic inventory audits. These audits are performed monthly and follow up is required on any out of compliance items identified. These audits are subject to increasing frequency when fact patterns suggest more scrutiny is required. Commercial other loans consist of agricultural loans, receivable financing, loans to financial institutions, loans for purchasing or carrying securities, and other commercial purpose loans. Commercial loans are underwritten based on the borrower’s ability to service debt from the business’s underlying cash flows. As a general practice, we obtain collateral such as equipment, or other assets, although such loans may be uncollateralized but guaranteed. 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. Changes in interest rates or market conditions may impact a borrower’s ability to meet contractual principal and interest payments. Residential real estate loans are secured by real property. Home equity lines are primarily revolving adjustable rate credit lines secured by real property. Consumer direct loans are a mixture of fixed rate and adjustable rate products comprised of unsecured loans, consumer revolving credit lines, deposit secured loans, and all other consumer purpose loans. 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. Not included in the loan balances above were loans held for sale in the amount of $57 thousand at March 31, 2024 and $152 thousand at December 31, 2023. The following tables present the balance in the ACL for the periods ended March 31, 2024, December 31, 2023 and March 31, 2023.
|  | Three Months Ended March 31, 2024 |
(in thousands) |  | Beginning Balance |  |  | Provision Charged to Expense |  |  | Losses Charged Off |  |  | Recoveries |  |  | Ending Balance |
ACL |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hotel/motel |  | $ | 4,592 |  |  | $ | 348 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 4,940 |
Commercial real estate residential |  |  | 4,285 |  |  |  | (161 | ) |  |  | 0 |  |  |  | 4 |  |  |  | 4,128 |
Commercial real estate nonresidential |  |  | 7,560 |  |  |  | 615 |  |  |  | 0 |  |  |  | 3 |  |  |  | 8,178 |
Dealer floorplans |  |  | 659 |  |  |  | 62 |  |  |  | 0 |  |  |  | 0 |  |  |  | 721 |
Commercial other |  |  | 3,760 |  |  |  | 114 |  |  |  | (167 | ) |  |  | 92 |  |  |  | 3,799 |
Real estate mortgage |  |  | 10,197 |  |  |  | 141 |  |  |  | (27 | ) |  |  | 14 |  |  |  | 10,325 |
Home equity |  |  | 1,367 |  |  |  | (65 | ) |  |  | 0 |  |  |  | 2 |  |  |  | 1,304 |
Consumer direct |  |  | 3,261 |  |  |  | 803 |  |  |  | (533 | ) |  |  | 40 |  |  |  | 3,571 |
Consumer indirect |  |  | 13,862 |  |  |  | 799 |  |  |  | (1,940 | ) |  |  | 884 |  |  |  | 13,605 |
Total |  | $ | 49,543 |  |  | $ | 2,656 |  |  | $ | (2,667 | ) |  | $ | 1,039 |  |  | $ | 50,571 |
|  | Year Ended December 31, 2023 |
(in thousands) |  | Beginning Balance |  |  | Provision Charged to Expense |  |  | Losses Charged Off |  |  | Recoveries |  |  | Ending Balance |
ACL |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hotel/motel |  | $ | 5,171 |  |  | $ | (579 | ) |  | $ | 0 |  |  | $ | 0 |  |  | $ | 4,592 |
Commercial real estate residential |  |  | 4,894 |  |  |  | (706 | ) |  |  | (28 | ) |  |  | 125 |  |  |  | 4,285 |
Commercial real estate nonresidential |  |  | 9,419 |  |  |  | (2,252 | ) |  |  | (294 | ) |  |  | 687 |  |  |  | 7,560 |
Dealer floorplans |  |  | 1,776 |  |  |  | (1,117 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 659 |
Commercial other |  |  | 5,285 |  |  |  | (91 | ) |  |  | (1,900 | ) |  |  | 466 |  |  |  | 3,760 |
Real estate mortgage |  |  | 7,932 |  |  |  | 2,364 |  |  |  | (140 | ) |  |  | 41 |  |  |  | 10,197 |
Home equity |  |  | 1,106 |  |  |  | 278 |  |  |  | (23 | ) |  |  | 6 |  |  |  | 1,367 |
Consumer direct |  |  | 1,694 |  |  |  | 1,804 |  |  |  | (541 | ) |  |  | 304 |  |  |  | 3,261 |
Consumer indirect |  |  | 8,704 |  |  |  | 7,110 |  |  |  | (5,333 | ) |  |  | 3,381 |  |  |  | 13,862 |
Total |  | $ | 45,981 |  |  | $ | 6,811 |  |  | $ | (8,259 | ) |  | $ | 5,010 |  |  | $ | 49,543 |
|  | Three Months Ended March 31, 2023 |
(in thousands) |  | Beginning Balance |  |  | Provision Charged to Expense |  |  | Losses Charged Off |  |  | Recoveries |  |  | Ending Balance |
ACL |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hotel/motel |  | $ | 5,171 |  |  | $ | 116 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 5,287 |
Commercial real estate residential |  |  | 4,894 |  |  |  | 186 |  |  |  | 0 |  |  |  | 77 |  |  |  | 5,157 |
Commercial real estate nonresidential |  |  | 9,419 |  |  |  | (553 | ) |  |  | 0 |  |  |  | 144 |  |  |  | 9,010 |
Dealer floorplans |  |  | 1,776 |  |  |  | (82 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 1,694 |
Commercial other |  |  | 5,285 |  |  |  | (416 | ) |  |  | (187 | ) |  |  | 100 |  |  |  | 4,782 |
Real estate mortgage |  |  | 7,932 |  |  |  | 21 |  |  |  | (40 | ) |  |  | 4 |  |  |  | 7,917 |
Home equity |  |  | 1,106 |  |  |  | (64 | ) |  |  | 0 |  |  |  | 2 |  |  |  | 1,044 |
Consumer direct |  |  | 1,694 |  |  |  | 105 |  |  |  | (156 | ) |  |  | 103 |  |  |  | 1,746 |
Consumer indirect |  |  | 8,704 |  |  |  | 1,803 |  |  |  | (1,382 | ) |  |  | 921 |  |  |  | 10,046 |
Total |  | $ | 45,981 |  |  | $ | 1,116 |  |  | $ | (1,765 | ) |  | $ | 1,351 |  |  | $ | 46,683 |
Using the ACL software, forecasts include gross domestic product (GDP), retail sales and housing price index considerations. CTBI leverages economic projections from the Federal Open Market Committee to obtain various forecasts for unemployment rate and gross domestic product, the PNC forecast for the Case-Shiller National Home Price Index, and the Wells Fargo forecast for the Advanced Retail Sales. 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, as permitted in ASC 326-20-30-9, 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 provided 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 such as delinquency trends, supervision and administration, quality control exceptions, collateral values, and industry concentrations. 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 international, national, regional, and local conditions
| • | The effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses
| • | 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 nature and volume of the portfolio and terms of loans
| • | Changes in the experience, depth, and ability of lending management
Our provision for credit losses for the quarter increased $0.8 million from prior quarter and $1.5 million from prior year same quarter. Our reserve coverage (ACL to nonperforming loans) at March 31, 2024 was 319.0%, compared to 354.7% at December 31, 2023 and 382.3% at March 31, 2023. Our credit loss reserve as a percentage of total loans outstanding at March 31, 2024 remained at 1.22% from December 31, 2023, down from the 1.24% at March 31, 2023. Management continues to note the continued impact of global uncertainty, the current rate of inflation, the uncertain interest rate environment, and the fact that there is no immediate end foreseen, and these conditions are now part of qualitative factors noted above. As in previous periods, an allocation was made for delinquency trends, industry concentrations, supervisory and administration, loan exceptions, and collateral values. Refer to Note 1 to the condensed consolidated financial statements for further information regarding our nonaccrual policy. Nonaccrual loans and loans 90 days past due and still accruing segregated by class of loans for both March 31, 2024 and December 31, 2023 were as follows:
|  | March 31, 2024 |
(in thousands) |  | Nonaccrual Loans with No ACL |  |  | Nonaccrual Loans with ACL |  |  | 90+ and Still Accruing |  |  | Total Nonperforming Loans |
Hotel/motel |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Commercial real estate residential |  |  | 0 |  |  |  | 283 |  |  |  | 1,458 |  |  |  | 1,741 |
Commercial real estate nonresidential |  |  | 0 |  |  |  | 632 |  |  |  | 2,136 |  |  |  | 2,768 |
Commercial other |  |  | 232 |  |  |  | 398 |  |  |  | 748 |  |  |  | 1,378 |
Total commercial loans |  |  | 232 |  |  |  | 1,313 |  |  |  | 4,342 |  |  |  | 5,887 |
Real estate mortgage |  |  | 0 |  |  |  | 2,149 |  |  |  | 5,853 |  |  |  | 8,002 |
Home equity lines |  |  | 0 |  |  |  | 157 |  |  |  | 588 |  |  |  | 745 |
Total residential loans |  |  | 0 |  |  |  | 2,306 |  |  |  | 6,441 |  |  |  | 8,747 |
Consumer direct |  |  | 0 |  |  |  | 451 |  |  |  | 48 |  |  |  | 499 |
Consumer indirect |  |  | 0 |  |  |  | 0 |  |  |  | 719 |  |  |  | 719 |
Total consumer loans |  |  | 0 |  |  |  | 451 |  |  |  | 767 |  |  |  | 1,218 |
Loans and lease financing |  | $ | 232 |  |  | $ | 4,070 |  |  | $ | 11,550 |  |  | $ | 15,852 |
|  | December 31, 2023 |
(in thousands) |  | Nonaccrual Loans with No ACL |  |  | Nonaccrual Loans with ACL |  |  | 90+ and Still Accruing |  |  | Total Nonperforming Loans |
Hotel/motel |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Commercial real estate residential |  |  | 0 |  |  |  | 498 |  |  |  | 1,059 |  |  |  | 1,557 |
Commercial real estate nonresidential |  |  | 0 |  |  |  | 680 |  |  |  | 2,270 |  |  |  | 2,950 |
Dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Commercial other |  |  | 236 |  |  |  | 452 |  |  |  | 162 |  |  |  | 850 |
Total commercial loans |  |  | 236 |  |  |  | 1,630 |  |  |  | 3,491 |  |  |  | 5,357 |
Real estate mortgage |  |  | 0 |  |  |  | 1,996 |  |  |  | 5,302 |  |  |  | 7,298 |
Home equity lines |  |  | 0 |  |  |  | 186 |  |  |  | 557 |  |  |  | 743 |
Total residential loans |  |  | 0 |  |  |  | 2,182 |  |  |  | 5,859 |  |  |  | 8,041 |
Consumer direct |  |  | 0 |  |  |  | 0 |  |  |  | 15 |  |  |  | 15 |
Consumer indirect |  |  | 0 |  |  |  | 0 |  |  |  | 555 |  |  |  | 555 |
Total consumer loans |  |  | 0 |  |  |  | 0 |  |  |  | 570 |  |  |  | 570 |
Loans and lease financing |  | $ | 236 |  |  | $ | 3,812 |  |  | $ | 9,920 |  |  | $ | 13,968 |
Discussion of the Nonaccrual Policy The accrual of interest income on loans is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that the collection of interest is doubtful. Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured. Any loans greater than 90 days past due must be well secured and in the process of collection to continue accruing interest. See Note 1 to the condensed consolidated financial statements for further discussion on our nonaccrual policy. The following tables present CTBI’s loan portfolio aging analysis, segregated by class, as of March 31, 2024 and December 31, 2023 (includes loans 90 days past due and still accruing as well):
|  | March 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 |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 416,759 |  |  | $ | 416,759 |
Commercial real estate residential |  |  | 406 |  |  |  | 0 |  |  |  | 1,741 |  |  |  | 2,147 |  |  |  | 454,438 |  |  |  | 456,585 |
Commercial real estate nonresidential |  |  | 1,295 |  |  |  | 757 |  |  |  | 2,490 |  |  |  | 4,542 |  |  |  | 809,362 |  |  |  | 813,904 |
Dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 77,221 |  |  |  | 77,221 |
Commercial other |  |  | 317 |  |  |  | 172 |  |  |  | 1,201 |  |  |  | 1,690 |  |  |  | 319,011 |  |  |  | 320,701 |
Total commercial loans |  |  | 2,018 |  |  |  | 929 |  |  |  | 5,432 |  |  |  | 8,379 |  |  |  | 2,076,791 |  |  |  | 2,085,170 |
Real estate mortgage |  |  | 894 |  |  |  | 2,471 |  |  |  | 6,801 |  |  |  | 10,166 |  |  |  | 945,450 |  |  |  | 955,616 |
Home equity lines |  |  | 749 |  |  |  | 317 |  |  |  | 719 |  |  |  | 1,785 |  |  |  | 149,792 |  |  |  | 151,577 |
Total residential loans |  |  | 1,643 |  |  |  | 2,788 |  |  |  | 7,520 |  |  |  | 11,951 |  |  |  | 1,095,242 |  |  |  | 1,107,193 |
Consumer direct |  |  | 623 |  |  |  | 168 |  |  |  | 499 |  |  |  | 1,290 |  |  |  | 154,517 |  |  |  | 155,807 |
Consumer indirect |  |  | 3,596 |  |  |  | 831 |  |  |  | 719 |  |  |  | 5,146 |  |  |  | 807,859 |  |  |  | 813,005 |
Total consumer loans |  |  | 4,219 |  |  |  | 999 |  |  |  | 1,218 |  |  |  | 6,436 |  |  |  | 962,376 |  |  |  | 968,812 |
Loans and lease financing |  | $ | 7,880 |  |  | $ | 4,716 |  |  | $ | 14,170 |  |  | $ | 26,766 |  |  | $ | 4,134,409 |  |  | $ | 4,161,175 |
|  | December 31, 2023 |
(in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |
Hotel/motel |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 395,765 |  |  | $ | 395,765 |
Commercial real estate residential |  |  | 1,047 |  |  |  | 275 |  |  |  | 1,525 |  |  |  | 2,847 |  |  |  | 415,096 |  |  |  | 417,943 |
Commercial real estate nonresidential |  |  | 549 |  |  |  | 332 |  |  |  | 2,619 |  |  |  | 3,500 |  |  |  | 775,137 |  |  |  | 778,637 |
Dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 70,308 |  |  |  | 70,308 |
Commercial other |  |  | 663 |  |  |  | 494 |  |  |  | 641 |  |  |  | 1,798 |  |  |  | 319,284 |  |  |  | 321,082 |
Total commercial loans |  |  | 2,259 |  |  |  | 1,101 |  |  |  | 4,785 |  |  |  | 8,145 |  |  |  | 1,975,590 |  |  |  | 1,983,735 |
Real estate mortgage |  |  | 1,323 |  |  |  | 3,455 |  |  |  | 6,168 |  |  |  | 10,946 |  |  |  | 926,578 |  |  |  | 937,524 |
Home equity lines |  |  | 911 |  |  |  | 273 |  |  |  | 707 |  |  |  | 1,891 |  |  |  | 145,145 |  |  |  | 147,036 |
Total residential loans |  |  | 2,234 |  |  |  | 3,728 |  |  |  | 6,875 |  |  |  | 12,837 |  |  |  | 1,071,723 |  |  |  | 1,084,560 |
Consumer direct |  |  | 1,013 |  |  |  | 118 |  |  |  | 15 |  |  |  | 1,146 |  |  |  | 157,960 |  |  |  | 159,106 |
Consumer indirect |  |  | 4,550 |  |  |  | 1,029 |  |  |  | 555 |  |  |  | 6,134 |  |  |  | 817,371 |  |  |  | 823,505 |
Total consumer loans |  |  | 5,563 |  |  |  | 1,147 |  |  |  | 570 |  |  |  | 7,280 |  |  |  | 975,331 |  |  |  | 982,611 |
Loans and lease financing |  | $ | 10,056 |  |  | $ | 5,976 |  |  | $ | 12,230 |  |  | $ | 28,262 |  |  | $ | 4,022,644 |  |  | $ | 4,050,906 |
The risk characteristics of CTBI’s material portfolio segments are as follows: Hotel/motel loans are a significant concentration for CTBI, representing approximately 10.0% 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. 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. 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. With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, CTBI generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences. Residential construction loans are handled through the home mortgage area of the bank. The repayment ability of the borrower and the maximum loan-to-value ratio are calculated using the normal mortgage lending criteria. Draws are processed based on percentage of completion stages including normal inspection procedures. Such loans generally convert to term loans after the completion of construction. Consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Our determination of a borrower’s ability to repay these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. The indirect lending area of the bank 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. Credit Quality Indicators: CTBI categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. CTBI also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s). CTBI analyzes commercial loans individually by classifying the loans as to credit risk. Loans classified as loss, doubtful, substandard, or special mention are reviewed quarterly by CTBI for further deterioration or improvement to determine if appropriately classified and valued if deemed impaired. All other commercial loan reviews are completed every 12 to 18 months. In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other information becomes available, CTBI will evaluate the loan grade. CTBI uses the following definitions for risk ratings:
| ➢ | Pass grades include investment grade, low risk, moderate risk, and acceptable risk loans. The loans range from loans that have no chance of resulting in a loss to loans that have a limited chance of resulting in a loss. Customers in this grade have excellent to fair credit ratings. The cash flows are adequate to meet required debt repayments.
| ➢ | Watch graded loans are loans that warrant extra management attention but are not currently criticized. Loans on the watch list may be potential troubled credits or may warrant “watch” status for a reason not directly related to the asset quality of the credit. The watch grade is a management tool to identify credits which may be candidates for future classification or may temporarily warrant extra management monitoring.
| ➢ | Other assets especially mentioned (OAEM) reflects loans that are currently protected but are potentially weak. These loans constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of circumstances surrounding a specific asset. Loans in this grade display potential weaknesses which may, if unchecked or uncorrected, inadequately protect CTBI’s credit position at some future date. The loans may be adversely affected by economic or market conditions.
| ➢ | Substandard grading indicates that the loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These loans have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt with the distinct possibility that CTBI will sustain some loss if the deficiencies are not corrected.
| ➢ | Doubtful graded loans have the weaknesses inherent in the substandard grading with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The probability of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to CTBI’s advantage or strengthen the asset(s), its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.
The following tables present the credit risk profile of CTBI’s commercial loan portfolio based on rating category and payment activity, segregated by class of loans and based on last credit decision or year of origination:
|  | Term Loans Amortized Cost Basis by Origination Year |
(in thousands) March 31 |  |  | 2024 |  |  |  | 2023 |  |  |  | 2022 |  |  |  | 2021 |  |  |  | 2020 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Hotel/motel |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 23,157 |  |  | $ | 75,614 |  |  | $ | 148,082 |  |  | $ | 27,789 |  |  | $ | 17,576 |  |  | $ | 81,081 |  |  | $ | 5,146 |  |  | $ | 378,445 |
Watch |  |  | 0 |  |  |  | 11,494 |  |  |  | 2,801 |  |  |  | 6,745 |  |  |  | 4,566 |  |  |  | 4,925 |  |  |  | 0 |  |  |  | 30,531 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 3,982 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,954 |  |  |  | 0 |  |  |  | 5,936 |
Substandard |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,847 |  |  |  | 0 |  |  |  | 1,847 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total hotel/motel |  |  | 23,157 |  |  |  | 87,108 |  |  |  | 154,865 |  |  |  | 34,534 |  |  |  | 22,142 |  |  |  | 89,807 |  |  |  | 5,146 |  |  |  | 416,759 |
Commercial real estate residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 53,504 |  |  |  | 100,676 |  |  |  | 88,387 |  |  |  | 96,851 |  |  |  | 30,029 |  |  |  | 44,984 |  |  |  | 15,866 |  |  |  | 430,297 |
Watch |  |  | 91 |  |  |  | 2,211 |  |  |  | 3,661 |  |  |  | 425 |  |  |  | 1,422 |  |  |  | 6,830 |  |  |  | 177 |  |  |  | 14,817 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 62 |  |  |  | 0 |  |  |  | 62 |
Substandard |  |  | 0 |  |  |  | 995 |  |  |  | 414 |  |  |  | 4,188 |  |  |  | 734 |  |  |  | 4,936 |  |  |  | 142 |  |  |  | 11,409 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total commercial real estate residential |  |  | 53,595 |  |  |  | 103,882 |  |  |  | 92,462 |  |  |  | 101,464 |  |  |  | 32,185 |  |  |  | 56,812 |  |  |  | 16,185 |  |  |  | 456,585 |
Commercial real estate nonresidential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 50,150 |  |  |  | 152,323 |  |  |  | 135,583 |  |  |  | 133,424 |  |  |  | 66,865 |  |  |  | 190,555 |  |  |  | 32,112 |  |  |  | 761,012 |
Watch |  |  | 0 |  |  |  | 548 |  |  |  | 3,643 |  |  |  | 6,249 |  |  |  | 2,298 |  |  |  | 7,637 |  |  |  | 338 |  |  |  | 20,713 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 15 |  |  |  | 0 |  |  |  | 7,255 |  |  |  | 1,459 |  |  |  | 0 |  |  |  | 8,729 |
Substandard |  |  | 470 |  |  |  | 4,341 |  |  |  | 1,594 |  |  |  | 2,523 |  |  |  | 4,480 |  |  |  | 9,966 |  |  |  | 74 |  |  |  | 23,448 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2 |  |  |  | 0 |  |  |  | 2 |
Total commercial real estate nonresidential |  |  | 50,620 |  |  |  | 157,212 |  |  |  | 140,835 |  |  |  | 142,196 |  |  |  | 80,898 |  |  |  | 209,619 |  |  |  | 32,524 |  |  |  | 813,904 |
Dealer floorplans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 76,789 |  |  |  | 76,789 |
Watch |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 432 |  |  |  | 432 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Substandard |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 77,221 |  |  |  | 77,221 |
Commercial other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 25,705 |  |  |  | 57,125 |  |  |  | 45,270 |  |  |  | 38,679 |  |  |  | 28,943 |  |  |  | 23,401 |  |  |  | 80,907 |  |  |  | 300,030 |
Watch |  |  | 457 |  |  |  | 700 |  |  |  | 620 |  |  |  | 291 |  |  |  | 119 |  |  |  | 837 |  |  |  | 6,065 |  |  |  | 9,089 |
OAEM |  |  | 0 |  |  |  | 28 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 30 |  |  |  | 58 |
Substandard |  |  | 1,584 |  |  |  | 4,579 |  |  |  | 2,552 |  |  |  | 538 |  |  |  | 862 |  |  |  | 253 |  |  |  | 1,006 |  |  |  | 11,374 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 117 |  |  |  | 33 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 150 |
Total commercial other |  |  | 27,746 |  |  |  | 62,432 |  |  |  | 48,559 |  |  |  | 39,541 |  |  |  | 29,924 |  |  |  | 24,491 |  |  |  | 88,008 |  |  |  | 320,701 |
Commercial other current period gross charge-offs |  |  | (145 | ) |  |  | 0 |  |  |  | (20 | ) |  |  | 0 |  |  |  | (2 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (167 | )
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 152,516 |  |  |  | 385,738 |  |  |  | 417,322 |  |  |  | 296,743 |  |  |  | 143,413 |  |  |  | 340,021 |  |  |  | 210,820 |  |  |  | 1,946,573 |
Watch |  |  | 548 |  |  |  | 14,953 |  |  |  | 10,725 |  |  |  | 13,710 |  |  |  | 8,405 |  |  |  | 20,229 |  |  |  | 7,012 |  |  |  | 75,582 |
OAEM |  |  | 0 |  |  |  | 28 |  |  |  | 3,997 |  |  |  | 0 |  |  |  | 7,255 |  |  |  | 3,475 |  |  |  | 30 |  |  |  | 14,785 |
Substandard |  |  | 2,054 |  |  |  | 9,915 |  |  |  | 4,560 |  |  |  | 7,249 |  |  |  | 6,076 |  |  |  | 17,002 |  |  |  | 1,222 |  |  |  | 48,078 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 117 |  |  |  | 33 |  |  |  | 0 |  |  |  | 2 |  |  |  | 0 |  |  |  | 152 |
Total commercial loans |  | $ | 155,118 |  |  | $ | 410,634 |  |  | $ | 436,721 |  |  | $ | 317,735 |  |  | $ | 165,149 |  |  | $ | 380,729 |  |  | $ | 219,084 |  |  | $ | 2,085,170 |
Total commercial loans current period gross charge-offs |  | $ | (145 | ) |  | $ | 0 |  |  | $ | (20 | ) |  | $ | 0 |  |  | $ | (2 | ) |  | $ | 0 |  |  | $ | 0 |  |  | $ | (167 | )
|  | Term Loans Amortized Cost Basis by Origination Year |
(in thousands) December 31 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Hotel/motel |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 79,651 |  |  | $ | 144,826 |  |  | $ | 28,011 |  |  | $ | 17,664 |  |  | $ | 40,873 |  |  | $ | 42,030 |  |  | $ | 4,042 |  |  | $ | 357,097 |
Watch |  |  | 11,569 |  |  |  | 2,826 |  |  |  | 6,835 |  |  |  | 4,623 |  |  |  | 3,361 |  |  |  | 1,648 |  |  |  | 0 |  |  |  | 30,862 |
OAEM |  |  | 0 |  |  |  | 3,982 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,954 |  |  |  | 0 |  |  |  | 5,936 |
Substandard |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,118 |  |  |  | 0 |  |  |  | 1,118 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 752 |  |  |  | 0 |  |  |  | 752 |
Total hotel/motel |  |  | 91,220 |  |  |  | 151,634 |  |  |  | 34,846 |  |  |  | 22,287 |  |  |  | 44,234 |  |  |  | 47,502 |  |  |  | 4,042 |  |  |  | 395,765 |
Commercial real estate residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 109,304 |  |  |  | 89,119 |  |  |  | 98,896 |  |  |  | 30,972 |  |  |  | 11,908 |  |  |  | 36,964 |  |  |  | 14,700 |  |  |  | 391,863 |
Watch |  |  | 2,317 |  |  |  | 2,131 |  |  |  | 473 |  |  |  | 1,395 |  |  |  | 721 |  |  |  | 6,359 |  |  |  | 124 |  |  |  | 13,520 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 63 |  |  |  | 0 |  |  |  | 63 |
Substandard |  |  | 760 |  |  |  | 854 |  |  |  | 4,532 |  |  |  | 834 |  |  |  | 285 |  |  |  | 5,232 |  |  |  | 0 |  |  |  | 12,497 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total commercial real estate residential |  |  | 112,381 |  |  |  | 92,104 |  |  |  | 103,901 |  |  |  | 33,201 |  |  |  | 12,914 |  |  |  | 48,618 |  |  |  | 14,824 |  |  |  | 417,943 |
Commercial real estate residential current period gross charge-offs |  |  | 0 |  |  |  | 0 |  |  |  | (28 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (28 | )
Commercial real estate nonresidential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 149,633 |  |  |  | 142,580 |  |  |  | 136,090 |  |  |  | 68,240 |  |  |  | 55,850 |  |  |  | 140,074 |  |  |  | 31,536 |  |  |  | 724,003 |
Watch |  |  | 552 |  |  |  | 3,664 |  |  |  | 6,305 |  |  |  | 2,347 |  |  |  | 1,938 |  |  |  | 6,003 |  |  |  | 354 |  |  |  | 21,163 |
OAEM |  |  | 2,375 |  |  |  | 15 |  |  |  | 0 |  |  |  | 7,255 |  |  |  | 0 |  |  |  | 1,486 |  |  |  | 0 |  |  |  | 11,131 |
Substandard |  |  | 2,520 |  |  |  | 1,598 |  |  |  | 2,538 |  |  |  | 4,472 |  |  |  | 2,000 |  |  |  | 9,199 |  |  |  | 0 |  |  |  | 22,327 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 13 |  |  |  | 0 |  |  |  | 13 |
Total commercial real estate nonresidential |  |  | 155,080 |  |  |  | 147,857 |  |  |  | 144,933 |  |  |  | 82,314 |  |  |  | 59,788 |  |  |  | 156,775 |  |  |  | 31,890 |  |  |  | 778,637 |
Commercial real estate nonresidential current period gross charge-offs |  |  | 0 |  |  |  | 0 |  |  |  | (7 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (287 | ) |  |  | 0 |  |  |  | (294 | )
Dealer floorplans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 70,308 |  |  |  | 70,308 |
Watch |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
OAEM |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Substandard |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 70,308 |  |  |  | 70,308 |
Commercial other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 73,115 |  |  |  | 47,575 |  |  |  | 40,448 |  |  |  | 30,033 |  |  |  | 4,780 |  |  |  | 22,588 |  |  |  | 81,791 |  |  |  | 300,330 |
Watch |  |  | 1,138 |  |  |  | 1,109 |  |  |  | 569 |  |  |  | 126 |  |  |  | 239 |  |  |  | 635 |  |  |  | 5,877 |  |  |  | 9,693 |
OAEM |  |  | 29 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 30 |  |  |  | 59 |
Substandard |  |  | 4,921 |  |  |  | 3,581 |  |  |  | 381 |  |  |  | 890 |  |  |  | 211 |  |  |  | 403 |  |  |  | 613 |  |  |  | 11,000 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total commercial other |  |  | 79,203 |  |  |  | 52,265 |  |  |  | 41,398 |  |  |  | 31,049 |  |  |  | 5,230 |  |  |  | 23,626 |  |  |  | 88,311 |  |  |  | 321,082 |
Commercial other current period gross charge-offs |  |  | (725 | ) |  |  | (710 | ) |  |  | (302 | ) |  |  | (27 | ) |  |  | (90 | ) |  |  | (46 | ) |  |  | 0 |  |  |  | (1,900 | )
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 411,703 |  |  |  | 424,100 |  |  |  | 303,445 |  |  |  | 146,909 |  |  |  | 113,411 |  |  |  | 241,655 |  |  |  | 202,377 |  |  |  | 1,843,600 |
Watch |  |  | 15,576 |  |  |  | 9,730 |  |  |  | 14,182 |  |  |  | 8,491 |  |  |  | 6,259 |  |  |  | 14,645 |  |  |  | 6,355 |  |  |  | 75,238 |
OAEM |  |  | 2,404 |  |  |  | 3,997 |  |  |  | 0 |  |  |  | 7,255 |  |  |  | 0 |  |  |  | 3,503 |  |  |  | 30 |  |  |  | 17,189 |
Substandard |  |  | 8,201 |  |  |  | 6,033 |  |  |  | 7,451 |  |  |  | 6,196 |  |  |  | 2,496 |  |  |  | 15,952 |  |  |  | 613 |  |  |  | 46,942 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 766 |  |  |  | 0 |  |  |  | 766 |
Total commercial loans |  | $ | 437,884 |  |  | $ | 443,860 |  |  | $ | 325,078 |  |  | $ | 168,851 |  |  | $ | 122,166 |  |  | $ | 276,521 |  |  | $ | 209,375 |  |  | $ | 1,983,735 |
Total commercial loans current period gross charge-offs |  | $ | (725 | ) |  | $ | (710 | ) |  | $ | (337 | ) |  | $ | (27 | ) |  | $ | (90 | ) |  | $ | (333 | ) |  | $ | 0 |  |  | $ | (2,222 | )
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:
(in thousands) |  | Term Loans Amortized Cost Basis by Origination Year |
March 31 |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Home equity lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 7,846 |  |  | $ | 142,986 |  |  | $ | 150,832 |
Nonperforming |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 471 |  |  |  | 274 |  |  |  | 745 |
Total home equity lines |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 8,317 |  |  |  | 143,260 |  |  |  | 151,577 |
Mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 35,865 |  |  |  | 207,193 |  |  |  | 154,086 |  |  |  | 156,133 |  |  |  | 116,396 |  |  |  | 277,941 |  |  |  | 0 |  |  |  | 947,614 |
Nonperforming |  |  | 0 |  |  |  | 29 |  |  |  | 469 |  |  |  | 188 |  |  |  | 192 |  |  |  | 7,124 |  |  |  | 0 |  |  |  | 8,002 |
Total mortgage loans |  |  | 35,865 |  |  |  | 207,222 |  |  |  | 154,555 |  |  |  | 156,321 |  |  |  | 116,588 |  |  |  | 285,065 |  |  |  | 0 |  |  |  | 955,616 |
Mortgage loans current period gross charge-offs |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (27 | ) |  |  | 0 |  |  |  | (27 | )
Residential loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 35,865 |  |  |  | 207,193 |  |  |  | 154,086 |  |  |  | 156,133 |  |  |  | 116,396 |  |  |  | 285,787 |  |  |  | 142,986 |  |  |  | 1,098,446 |
Nonperforming |  |  | 0 |  |  |  | 29 |  |  |  | 469 |  |  |  | 188 |  |  |  | 192 |  |  |  | 7,595 |  |  |  | 274 |  |  |  | 8,747 |
Total residential loans |  | $ | 35,865 |  |  | $ | 207,222 |  |  | $ | 154,555 |  |  | $ | 156,321 |  |  | $ | 116,588 |  |  | $ | 293,382 |  |  | $ | 143,260 |  |  | $ | 1,107,193 |
Total residential loans current period gross charge-offs |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | (27 | ) |  | $ | 0 |  |  | $ | (27 | )
Consumer direct loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 14,253 |  |  | $ | 54,867 |  |  | $ | 30,487 |  |  | $ | 24,055 |  |  | $ | 14,354 |  |  | $ | 17,292 |  |  | $ | 0 |  |  | $ | 155,308 |
Nonperforming |  |  | 0 |  |  |  | 44 |  |  |  | 451 |  |  |  | 0 |  |  |  | 4 |  |  |  | 0 |  |  |  | 0 |  |  |  | 499 |
Total consumer direct loans |  |  | 14,253 |  |  |  | 54,911 |  |  |  | 30,938 |  |  |  | 24,055 |  |  |  | 14,358 |  |  |  | 17,292 |  |  |  | 0 |  |  |  | 155,807 |
Total consumer direct loans current period gross charge-offs |  |  | 0 |  |  |  | (24 | ) |  |  | (470 | ) |  |  | (14 | ) |  |  | (7 | ) |  |  | (18 | ) |  |  | 0 |  |  |  | (533 | )
Consumer indirect loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 72,500 |  |  |  | 329,063 |  |  |  | 227,378 |  |  |  | 97,397 |  |  |  | 59,720 |  |  |  | 26,228 |  |  |  | 0 |  |  |  | 812,286 |
Nonperforming |  |  | 0 |  |  |  | 316 |  |  |  | 249 |  |  |  | 110 |  |  |  | 3 |  |  |  | 41 |  |  |  | 0 |  |  |  | 719 |
Total consumer indirect loans |  |  | 72,500 |  |  |  | 329,379 |  |  |  | 227,627 |  |  |  | 97,507 |  |  |  | 59,723 |  |  |  | 26,269 |  |  |  | 0 |  |  |  | 813,005 |
Total consumer indirect loans current period gross charge-offs |  |  | 0 |  |  |  | (577 | ) |  |  | (743 | ) |  |  | (442 | ) |  |  | (79 | ) |  |  | (99 | ) |  |  | 0 |  |  |  | (1,940 | )
Consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 86,753 |  |  |  | 383,930 |  |  |  | 257,865 |  |  |  | 121,452 |  |  |  | 74,074 |  |  |  | 43,520 |  |  |  | 0 |  |  |  | 967,594 |
Nonperforming |  |  | 0 |  |  |  | 360 |  |  |  | 700 |  |  |  | 110 |  |  |  | 7 |  |  |  | 41 |  |  |  | 0 |  |  |  | 1,218 |
Total consumer loans |  | $ | 86,753 |  |  | $ | 384,290 |  |  | $ | 258,565 |  |  | $ | 121,562 |  |  | $ | 74,081 |  |  | $ | 43,561 |  |  | $ | 0 |  |  | $ | 968,812 |
Total consumer loans current period gross charge-offs |  | $ | 0 |  |  | $ | (601 | ) |  | $ | (1,213 | ) |  | $ | (456 | ) |  | $ | (86 | ) |  | $ | (117 | ) |  | $ | 0 |  |  | $ | (2,473 | )
(in thousands) |  | Term Loans Amortized Cost Basis by Origination Year |
December 31 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving Loans |  |  | Total |
Home equity lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 7,630 |  |  | $ | 138,663 |  |  | $ | 146,293 |
Nonperforming |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 442 |  |  |  | 301 |  |  |  | 743 |
Total home equity lines |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 8,072 |  |  |  | 138,964 |  |  |  | 147,036 |
Home equity lines current period gross charge-offs |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (23 | ) |  |  | 0 |  |  |  | (23 | )
Mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 200,442 |  |  |  | 162,407 |  |  |  | 159,857 |  |  |  | 119,772 |  |  |  | 56,601 |  |  |  | 231,147 |  |  |  | 0 |  |  |  | 930,226 |
Nonperforming |  |  | 0 |  |  |  | 200 |  |  |  | 151 |  |  |  | 192 |  |  |  | 533 |  |  |  | 6,222 |  |  |  | 0 |  |  |  | 7,298 |
Total mortgage loans |  |  | 200,442 |  |  |  | 162,607 |  |  |  | 160,008 |  |  |  | 119,964 |  |  |  | 57,134 |  |  |  | 237,369 |  |  |  | 0 |  |  |  | 937,524 |
Mortgage loans current period gross charge-offs |  |  | 0 |  |  |  | 0 |  |  |  | (47 | ) |  |  | 0 |  |  |  | (40 | ) |  |  | (53 | ) |  |  | 0 |  |  |  | (140 | )
Residential loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 200,442 |  |  |  | 162,407 |  |  |  | 159,857 |  |  |  | 119,772 |  |  |  | 56,601 |  |  |  | 238,777 |  |  |  | 138,663 |  |  |  | 1,076,519 |
Nonperforming |  |  | 0 |  |  |  | 200 |  |  |  | 151 |  |  |  | 192 |  |  |  | 533 |  |  |  | 6,664 |  |  |  | 301 |  |  |  | 8,041 |
Total residential loans |  | $ | 200,442 |  |  | $ | 162,607 |  |  | $ | 160,008 |  |  | $ | 119,964 |  |  | $ | 57,134 |  |  | $ | 245,441 |  |  | $ | 138,964 |  |  | $ | 1,084,560 |
Total residential loans current period gross charge-offs |  | $ | 0 |  |  | $ | 0 |  |  | $ | (47 | ) |  | $ | 0 |  |  | $ | (40 | ) |  | $ | (76 | ) |  | $ | 0 |  |  | $ | (163 | )
Consumer direct loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 63,686 |  |  | $ | 34,722 |  |  | $ | 26,250 |  |  | $ | 15,560 |  |  | $ | 6,951 |  |  | $ | 11,922 |  |  | $ | 0 |  |  | $ | 159,091 |
Nonperforming |  |  | 0 |  |  |  | 4 |  |  |  | 11 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 15 |
Total consumer direct loans |  |  | 63,686 |  |  |  | 34,726 |  |  |  | 26,261 |  |  |  | 15,560 |  |  |  | 6,951 |  |  |  | 11,922 |  |  |  | 0 |  |  |  | 159,106 |
Total consumer direct loans current period gross charge-offs |  |  | (65 | ) |  |  | (263 | ) |  |  | (129 | ) |  |  | (37 | ) |  |  | (27 | ) |  |  | (20 | ) |  |  | 0 |  |  |  | (541 | )
Consumer indirect loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 359,049 |  |  |  | 251,086 |  |  |  | 109,231 |  |  |  | 69,319 |  |  |  | 23,767 |  |  |  | 10,498 |  |  |  | 0 |  |  |  | 822,950 |
Nonperforming |  |  | 133 |  |  |  | 223 |  |  |  | 157 |  |  |  | 11 |  |  |  | 22 |  |  |  | 9 |  |  |  | 0 |  |  |  | 555 |
Total consumer indirect loans |  |  | 359,182 |  |  |  | 251,309 |  |  |  | 109,388 |  |  |  | 69,330 |  |  |  | 23,789 |  |  |  | 10,507 |  |  |  | 0 |  |  |  | 823,505 |
Total consumer indirect loans current period gross charge-offs |  |  | (541 | ) |  |  | (2,320 | ) |  |  | (1,688 | ) |  |  | (492 | ) |  |  | (121 | ) |  |  | (171 | ) |  |  | 0 |  |  |  | (5,333 | )
Consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 422,735 |  |  |  | 285,808 |  |  |  | 135,481 |  |  |  | 84,879 |  |  |  | 30,718 |  |  |  | 22,420 |  |  |  | 0 |  |  |  | 982,041 |
Nonperforming |  |  | 133 |  |  |  | 227 |  |  |  | 168 |  |  |  | 11 |  |  |  | 22 |  |  |  | 9 |  |  |  | 0 |  |  |  | 570 |
Total consumer loans |  | $ | 422,868 |  |  | $ | 286,035 |  |  | $ | 135,649 |  |  | $ | 84,890 |  |  | $ | 30,740 |  |  | $ | 22,429 |  |  | $ | 0 |  |  | $ | 982,611 |
Total consumer loans current period gross charge-offs |  | $ | (606 | ) |  | $ | (2,583 | ) |  | $ | (1,817 | ) |  | $ | (529 | ) |  | $ | (148 | ) |  | $ | (191 | ) |  | $ | 0 |  |  | $ | (5,874 | )
* A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual. The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings are in process was $3.1 million and $3.5 million at March 31, 2024 and December 31, 2023, respectively. In accordance with ASC 326-20-30-2, if a loan does not share risk characteristics with other pooled loans in determining the ACL, the loan shall be evaluated for expected credit losses on an individual basis. Of the loans that CTBI has individually evaluated, the loans listed below by segment are those that are collateral dependent:
|  | March 31, 2024 |
(in thousands) |  | Number of Loans |  |  | Recorded Investment |  |  | Specific Reserve |
Hotel/motel |  |  | 3 |  |  | $ | 6,798 |  |  | $ | 0 |
Commercial real estate residential |  |  | 2 |  |  |  | 4,530 |  |  |  | 0 |
Commercial real estate nonresidential |  |  | 9 |  |  |  | 21,549 |  |  |  | 325 |
Commercial other |  |  | 2 |  |  |  | 5,265 |  |  |  | 0 |
Total collateral dependent loans |  |  | 16 |  |  | $ | 38,142 |  |  | $ | 325 |
|  | December 31, 2023 |
(in thousands) |  | Number of Loans |  |  | Recorded Investment |  |  | Specific Reserve |
Hotel/motel |  |  | 3 |  |  | $ | 6,810 |  |  | $ | 0 |
Commercial real estate residential |  |  | 2 |  |  |  | 5,080 |  |  |  | 0 |
Commercial real estate nonresidential |  |  | 9 |  |  |  | 21,637 |  |  |  | 250 |
Commercial other |  |  | 2 |  |  |  | 5,658 |  |  |  | 0 |
Total collateral dependent loans |  |  | 16 |  |  | $ | 39,185 |  |  | $ | 250 |
|  | March 31, 2023 |
(in thousands) |  | Number of Loans |  |  | Recorded Investment |  |  | Specific Reserve |
Hotel/motel |  |  | 2 |  |  | $ | 8,193 |  |  | $ | 0 |
Commercial real estate residential |  |  | 3 |  |  |  | 6,380 |  |  |  | 0 |
Commercial real estate nonresidential |  |  | 6 |  |  |  | 11,712 |  |  |  | 0 |
Commercial other |  |  | 2 |  |  |  | 8,043 |  |  |  | 0 |
Total collateral dependent loans |  |  | 13 |  |  | $ | 34,328 |  |  | $ | 0 |
The hotel/motel, commercial real estate residential, and commercial real estate nonresidential segments are all collateralized with real estate. The two loans listed in the commercial other segment at March 31, 2024 are collateralized by inventory, equipment, and accounts receivable. 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 class of loans and concession granted, are presented below for the quarters ended March 31, 2024 and 2023:
| Amortized Cost at March 31, 2024 |
(in thousands) | Interest Rate Reduction |  | % of total |  | Term Extension |  | % of total |
Hotel/motel |  | $ | 0 |  |  |  | 0.00 | % |  | $ | 0 |  |  |  | 0.00 | %
Commercial real estate residential |  |  | 0 |  |  |  | 0.00 |  |  |  | 65 |  |  |  | 0.01 |
Commercial real estate nonresidential |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Dealer floorplans |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Commercial other |  |  | 0 |  |  |  | 0.00 |  |  |  | 1,517 |  |  |  | 0.47 |
Commercial loans |  |  | 0 |  |  |  | 0.00 |  |  |  | 1,582 |  |  |  | 0.08 |
Real estate mortgage |  |  | 189 |  |  |  | 0.02 |  |  |  | 2,782 |  |  |  | 0.29 |
Home equity lines |  |  | 0 |  |  |  | 0.00 |  |  |  | 32 |  |  |  | 0.02 |
Residential loans |  |  | 189 |  |  |  | 0.02 |  |  |  | 2,814 |  |  |  | 0.25 |
Consumer direct |  |  | 0 |  |  |  | 0.00 |  |  |  | 38 |  |  |  | 0.02 |
Consumer indirect |  |  | 0 |  |  |  | 0.00 |  |  |  | 269 |  |  |  | 0.03 |
Consumer loans |  |  | 0 |  |  |  | 0.00 |  |  |  | 307 |  |  |  | 0.03 |
Loans and lease financing |  | $ | 189 |  |  |  | 0.00 | % |  | $ | 4,703 |  |  |  | 0.11 | %
| Amortized Cost at March 31, 2024 |
(in thousands) | Combination – Term Extension and Interest Rate Reduction |  | % of total |  | Payment Change |  | % of total |
Hotel/motel |  | $ | 0 |  |  |  | 0.00 | % |  | $ | 0 |  |  |  | 0.00 | %
Commercial real estate residential |  |  | 15 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Commercial real estate nonresidential |  |  | 28 |  |  |  | 0.00 |  |  |  | 11 |  |  |  | 0.00 |
Dealer floorplans |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Commercial other |  |  | 0 |  |  |  | 0.00 |  |  |  | 858 |  |  |  | 0.27 |
Commercial loans |  |  | 43 |  |  |  | 0.00 |  |  |  | 869 |  |  |  | 0.04 |
Real estate mortgage |  |  | 278 |  |  |  | 0.03 |  |  |  | 0 |  |  |  | 0.00 |
Home equity lines |  |  | 39 |  |  |  | 0.03 |  |  |  | 0 |  |  |  | 0.00 |
Residential loans |  |  | 317 |  |  |  | 0.03 |  |  |  | 0 |  |  |  | 0.00 |
Consumer direct |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Consumer indirect |  |  | 0 |  |  |  | 0.00 |  |  |  | 25 |  |  |  | 0.00 |
Consumer loans |  |  | 0 |  |  |  | 0.00 |  |  |  | 25 |  |  |  | 0.00 |
Loans and lease financing |  | $ | 360 |  |  |  | 0.01 | % |  | $ | 894 |  |  |  | 0.02 | %
|  | Interest Rate Reduction |  |  | Term Extension |
(in thousands) |  | Amortized Cost at March 31, 2023 |  |  | % of total |  |  | Amortized Cost at March 31, 2023 |  |  | % of total |
Hotel/motel |  | $ | 0 |  |  |  | 0.00 | % |  | $ | 0 |  |  |  | 0.00 | %
Commercial real estate residential |  |  | 358 |  |  |  | 0.09 |  |  |  | 1,369 |  |  |  | 0.36 |
Commercial real estate nonresidential |  |  | 4,506 |  |  |  | 0.60 |  |  |  | 4,715 |  |  |  | 0.63 |
Dealer floorplans |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Commercial other |  |  | 0 |  |  |  | 0.00 |  |  |  | 963 |  |  |  | 0.30 |
Commercial loans |  |  | 4,864 |  |  |  | 0.26 |  |  |  | 7,047 |  |  |  | 0.38 |
Real estate mortgage |  |  | 59 |  |  |  | 0.01 |  |  |  | 2,446 |  |  |  | 0.29 |
Home equity lines |  |  | 0 |  |  |  | 0.00 |  |  |  | 55 |  |  |  | 0.04 |
Residential loans |  |  | 59 |  |  |  | 0.01 |  |  |  | 2,501 |  |  |  | 0.26 |
Consumer direct |  |  | 0 |  |  |  | 0.00 |  |  |  | 178 |  |  |  | 0.11 |
Consumer indirect |  |  | 0 |  |  |  | 0.00 |  |  |  | 396 |  |  |  | 0.05 |
Consumer loans |  |  | 0 |  |  |  | 0.00 |  |  |  | 574 |  |  |  | 0.06 |
Loans and lease financing |  | $ | 4,923 |  |  |  | 0.13 | % |  | $ | 10,122 |  |  |  | 0.27 | %
|  | Combination – Term Extension and Interest Rate Reduction |  |  | Payment Change |
(in thousands) |  | Amortized Cost at March 31, 2023 |  |  | % of total |  |  | Amortized Cost at March 31, 2023 |  |  | % of total |
Hotel/motel |  | $ | 0 |  |  |  | 0.00 | % |  | $ | 0 |  |  |  | 0.00 | %
Commercial real estate residential |  |  | 45 |  |  |  | 0.01 |  |  |  | 0 |  |  |  | 0.00 |
Commercial real estate nonresidential |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Dealer floorplans |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Commercial other |  |  | 0 |  |  |  | 0.00 |  |  |  | 111 |  |  |  | 0.04 |
Commercial loans |  |  | 45 |  |  |  | 0.00 |  |  |  | 111 |  |  |  | 0.01 |
Real estate mortgage |  |  | 217 |  |  |  | 0.03 |  |  |  | 0 |  |  |  | 0.00 |
Home equity lines |  |  | 35 |  |  |  | 0.03 |  |  |  | 60 |  |  |  | 0.05 |
Residential loans |  |  | 252 |  |  |  | 0.03 |  |  |  | 60 |  |  |  | 0.01 |
Consumer direct |  |  | 0 |  |  |  | 0.00 |  |  |  | 21 |  |  |  | 0.01 |
Consumer indirect |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Consumer loans |  |  | 0 |  |  |  | 0.00 |  |  |  | 21 |  |  |  | 0.00 |
Loans and lease financing |  | $ | 297 |  |  |  | 0.01 | % |  | $ | 192 |  |  |  | 0.01 | %
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended March 31, 2024:
|  | Interest Rate Reduction |  | Term Extension
Loan Type |  | Financial Impact |  | Financial Impact
Hotel/motel |  |  |  |
Commercial real estate residential |  |  |  | Added a weighted-average 0.3 years to life of the loans
Commercial real estate nonresidential |  |  |  |
Dealer floorplans |  |  |  |
Commercial other |  |  |  | Added a weighted-average 0.5 years to life of the loans
Real estate mortgage |  | Reduced weighted-average contractual interest rate from 9.8% to 5.0% |  | Added a weighted-average 0.4 years to life of the loans
Home equity lines |  |  |  | Added a weighted-average 0.5 years to life of the loans
Consumer direct |  |  |  | Added a weighted-average 0.1 years to life of the loans
Consumer indirect |  |  |  | Added a weighted-average 0.1 years to life of the loans
|  | Combination – Term Extension and Interest Rate Reduction |  | Payment Changes
Loan Type |  | Financial Impact |  | Financial Impact
Hotel/motel |  |  |  |
Commercial real estate residential |  | Weighted-average contractual interest rate remained at 8.5% and increased the weighted-average life by 4.0 years |  |
Commercial real estate nonresidential |  | Weighted-average contractual interest rate remained at 6.0% and increased the weighted-average life by 10.3 years |  | Provided payment changes that will be added to the end of the original loan term.
Dealer floorplans |  |  |  |
Commercial other |  |  |  | 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 5.3% to 5.2% and increased the weighted-average life by 5 years |  |
Home equity lines |  | Reduced weighted-average contractual interest rate from 10.0% to 8.5% and increased the weighted-average life by 17.7 years |  |
Consumer direct |  |  |  |
Consumer indirect |  |  |  | Provided payment changes that will be added to the end of the original loan term.
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty at March 31, 2023:
Loan Type |  | Interest Rate Reduction Financial Impact |  | Term Extension Financial Impact
Hotel/motel |  |  |  |
Commercial real estate residential |  | Reduced weighted-average contractual interest rate from 9.6% to 8.0% |  | The weighted-average term was not increased with the changes to this portfolio
Commercial real estate nonresidential |  | Reduced weighted-average contractual interest rate from 9.5% to 7.5% |  | The weighted-average term was not increased with the changes to this portfolio
Dealer floorplans |  |  |  |
Commercial other |  |  |  | Added a weighted-average 1.8 years to life of the loans, which reduced monthly payment amounts to the borrower
Real estate mortgage |  | Changed from an adjustable rate to a fixed rate mortgage maintaining the contractual interest rate of 3.0% |  | Added a weighted-average 2.3 years to life of the loans, which reduced monthly payment amounts to the borrower
Home equity lines |  |  |  | Added a weighted-average 6.67 years to life of the loans, which reduced monthly payment amounts to the borrower
Consumer direct |  |  |  | Added a weighted-average 0.2 years to the life of the loans
Consumer indirect |  |  |  | Added a weighted-average 0.3 years to the life of the loans
Loan Type |  | Combination – Term Extension and Interest Rate Reduction Financial Impact |  | Payment Changes Financial Impact
Hotel/motel |  |  |  |
Commercial real estate residential |  | Reduced weighted-average contractual interest rate from 10.8% to 6.5% and increased the weighted-average life by 0.3 years |  |
Commercial real estate nonresidential |  |  |  |
Dealer floorplans |  |  |  |
Commercial other |  |  |  | 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 7.4% to 6.1% and increased the weighted-average life by 12.9 years |  |
Home equity lines |  | While the weighted-average contractual interest rate did not change materially from 7.7%, the weighted-average life increased by 5.0 years |  | Provided payment changes that will be added to the end of the original loan term
Consumer direct |  |  |  | Provided payment changes that will be added to the end of the original loan term
Consumer indirect |  |  |  |
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 modified loans to borrowers experiencing financial difficulty.
|  | Past Due Status (Amortized Cost Basis) |
(in thousands) |  | Current |  |  |  | 30-89 Days |  |  |  | 90+ Days |  |  | Nonaccrual |
Hotel/motel |  | $ | 1,955 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Commercial real estate residential |  |  | 624 |  |  |  | 0 |  |  |  | 412 |  |  |  | 0 |
Commercial real estate nonresidential |  |  | 1,606 |  |  |  | 0 |  |  |  | 28 |  |  |  | 0 |
Dealer floorplans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Commercial other |  |  | 5,961 |  |  |  | 135 |  |  |  | 389 |  |  |  | 75 |
Real estate mortgage |  |  | 6,145 |  |  |  | 418 |  |  |  | 380 |  |  |  | 365 |
Home equity lines |  |  | 423 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Consumer direct |  |  | 64 |  |  |  | 14 |  |  |  | 0 |  |  |  | 0 |
Consumer indirect |  |  | 346 |  |  |  | 3 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 17,124 |  |  | $ | 570 |  |  | $ | 1,209 |  |  | $ | 440 |
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. CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual. Presented below, segregated by class of loans, are loans to borrowers experiencing financial difficulty for which there was a payment default during the period indicated and such default was within twelve months of the loan modification. There were no defaults as of March 31, 2023.
| Three Months Ended March 31, 2024 |
(in thousands) | Number of Loans |  | Recorded Balance |
Commercial: |  |  |  |
Commercial other |  |  | 4 |  |  | $ | 422 |
Commercial real estate residential |  |  | 2 |  |  |  | 412 |
Real estate mortgage |  |  | 3 |  |  |  | 197 |
Total defaulted restructured loans |  |  | 9 |  |  | $ | 1,031 |
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 other operating expenses within the non-interest expense category. As of March 31, 2024 and December 31, 2023, the total unfunded commitment off-balance sheet credit exposure was $1.5 million, respectively.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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