UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Commission file number 001-31220 COMMUNITY TRUST BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-0979818 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 346 North Mayo Trail P.O. Box 2947 Pikeville, Kentucky 41502 (Address of principal executive of ices) (Zip code) (606) 432-1414 (Registrant's telephone number) Securities registered pursuant to S ...

Core Insights - Community Trust Bancorp, Inc. (CTBI) is a significant entity in the Zacks Banks - Southeast industry, providing a wide range of banking services while striving to achieve strong financial results despite competitive pressures [1] Financial Performance - For Q3 2025, CTBI reported an Earnings Per Share (EPS) of $1.32, which was below the expected $1.38, resulting in a negative earnings surprise of 4.35%. However, this EPS reflects an improvement from the previous year's $1.23, indicating growth in profitability [2][6] - The company's revenue for the quarter was $71.5 million, slightly under the forecast of $72.05 million, but it represented a 13.4% increase compared to the same period last year. This revenue figure also marginally exceeded the Zacks Consensus Estimate of $71.4 million, leading to a positive surprise of 0.14% [3][6] - CTBI's net income for Q3 2025 was $23.9 million, a decrease from $24.9 million in the previous quarter but an increase from $22.1 million in Q3 2024, demonstrating a consistent year-over-year growth trend despite quarterly fluctuations [4][6] Financial Ratios - The return on average assets was reported at 1.46%, and the return on average equity was 11.53%, both showing slight declines from the previous quarter. The efficiency ratio was 50.86%, indicating the company's operational efficiency [5] - CTBI's debt-to-equity ratio stood at 0.38, and the current ratio was 0.18, suggesting a moderate level of debt but potential liquidity concerns [5]

Core Insights - BAD BEAT Investing, led by Quad 7 Capital, is a team of 7 analysts with nearly 12 years of experience in identifying investment opportunities [1] - The firm is recognized for its February 2020 recommendation to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The team possesses expertise across various fields including business, policy, economics, mathematics, game theory, and sciences [1] - BAD BEAT Investing focuses on short- and medium-term investments, income generation, special situations, and momentum trades [1] - The company emphasizes educating investors to become proficient traders through a structured playbook, providing in-depth research with clear entry and exit targets [1] Benefits of BAD BEAT Investing - Investors learn to navigate the volatile nature of markets and execute well-researched trade ideas weekly [2] - Access to 4 chat rooms and daily complimentary summaries of key analyst upgrades and downgrades [2] - Educational resources on basic options trading and a variety of extensive trading tools are provided [2]

Core Insights - The company, Quad 7 Capital, is known for its investment strategy called BAD BEAT Investing, which has been operational for nearly 12 years and emphasizes both long and short trades [1] - The team consists of 7 analysts with diverse expertise in various fields, including business, policy, economics, and game theory [1] - The investment approach focuses on short- and medium-term investments, income generation, special situations, and momentum trades, aiming to educate investors on becoming proficient traders [1] Group 1 - Quad 7 Capital has a proven track record, highlighted by a significant market call in February 2020 to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The company provides in-depth, high-quality research with clear entry and exit targets to save investors time [1] - The investment group shares both long and short trades and invests personally in equities discussed within the group [1] Group 2 - Benefits of BAD BEAT Investing include learning market dynamics, executing well-researched trade ideas weekly, and access to multiple chat rooms for discussions [2] - Members receive daily summaries of key analyst upgrades and downgrades, along with education on basic options trading and extensive trading tools [2]

Core Insights - Community Trust Bancorp (CTBI) reported a revenue of $71.5 million for the quarter ended September 2025, reflecting a year-over-year increase of 13.4% [1] - The earnings per share (EPS) for the quarter was $1.32, up from $1.23 in the same quarter last year, although it fell short of the consensus estimate of $1.38 by 4.35% [1] Financial Performance Metrics - The efficiency ratio was reported at 50.9%, slightly above the average estimate of 49.9% from three analysts [4] - Average balances of interest-earning assets were $6.15 billion, exceeding the average estimate of $6.07 billion [4] - The net interest margin was reported at 3.6%, matching the average estimate from three analysts [4] - Net charge-offs as a percentage of average loans and leases were 0.1%, better than the average estimate of 0.2% from two analysts [4] - Total non-interest income was $15.95 million, slightly below the average estimate of $15.97 million [4] - Net interest income was $55.55 million, surpassing the average estimate of $55.45 million [4] - Deposit-related fees were reported at $8.13 million, higher than the average estimate of $7.7 million [4] - Loan-related fees were $0.9 million, below the average estimate of $1.13 million [4] - Trust revenue was $4.28 million, exceeding the average estimate of $4.07 million [4] Stock Performance - Shares of Community Trust Bancorp have returned +0.9% over the past month, compared to a +1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Community Trust Bancorp reported quarterly earnings of $1.32 per share, missing the Zacks Consensus Estimate of $1.38 per share, but showing an increase from $1.23 per share a year ago [1] Financial Performance - The earnings surprise for the quarter was -4.35%, with the company previously exceeding expectations by +8.66% in the prior quarter [2] - Revenues for the quarter ended September 2025 were $71.5 million, surpassing the Zacks Consensus Estimate by 0.14%, and up from $63.04 million year-over-year [3] Stock Performance - Community Trust Bancorp shares have increased by approximately 5.9% since the beginning of the year, compared to a 13% gain in the S&P 500 [4] Future Outlook - The company's earnings outlook is mixed, with current consensus EPS estimates of $1.37 for the coming quarter and $5.35 for the current fiscal year [8] - The Zacks Rank for the stock is currently 3 (Hold), indicating expected performance in line with the market [7] Industry Context - The Banks - Southeast industry is currently in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

[Executive Summary](index=1&type=section&id=Executive%20Summary) Community Trust Bancorp, Inc. reported Q3 2025 net income of $23.9 million, a decrease QoQ but an increase YoY, driven by strong net interest income growth despite higher credit loss provisions and noninterest expenses [Earnings Overview](index=1&type=section&id=Earnings%20Overview) Community Trust Bancorp, Inc. reported net income of $23.9 million for Q3 2025, a decrease from Q2 2025 but an increase from Q3 2024, with similar trends in earnings per share Key Financial Metrics (in thousands except per share data) | Metric (in thousands except per share data) | 3Q 2025 | 2Q 2025 | 3Q 2024 | YTD 2025 | YTD 2024 | | :--------------------------------- | :------ | :------ | :------ | :------- | :------- | | Net income | $23,911 | $24,899 | $22,142 | $70,782 | $60,320 | | Earnings per share | $1.33 | $1.38 | $1.23 | $3.93 | $3.36 | | Earnings per share - diluted | $1.32 | $1.38 | $1.23 | $3.92 | $3.36 | | Return on average assets | 1.46% | 1.58% | 1.50% | 1.50% | 1.38% | | Return on average equity | 11.53% | 12.51% | 11.77% | 11.84% | 11.15% | | Efficiency ratio | 50.86% | 50.70% | 51.75% | 51.12% | 52.91% | | Dividends declared per share | $0.53 | $0.47 | $0.47 | $1.47 | $1.39 | | Book value per share | $45.91 | $44.57 | $42.14 | | | - Net income for Q3 2025 was **$23.9 million**, or **$1.33 per basic share**, a decrease from **$24.9 million** (**$1.38 per basic share**) in Q2 2025, but an increase from **$22.1 million** (**$1.23 per basic share**) in Q3 2024[1](index=1&type=chunk) - Total revenue for the quarter increased **$1.3 million QoQ** and **$8.7 million YoY**. Net interest revenue increased **$1.5 million QoQ** and **$8.4 million YoY**[1](index=1&type=chunk) [Q3 2025 Highlights](index=1&type=section&id=Q3%202025%20Highlights) Key financial highlights for Q3 2025 include a significant increase in net interest income both quarter-over-quarter and year-over-year, despite a slight decrease in net interest margin QoQ - Net interest income for Q3 2025 was **$55.6 million**, up **2.8% QoQ** and **17.7% YoY**. Net interest margin decreased **4 basis points QoQ** but increased **21 basis points YoY**[2](index=2&type=chunk) - Provision for credit losses was **$3.9 million**, an increase of **$1.8 million QoQ** and **$1.1 million YoY**[2](index=2&type=chunk) - Noninterest income was **$15.9 million**, down **1.4% QoQ** but up **2.5% YoY**[2](index=2&type=chunk) - Noninterest expense was **$36.7 million**, up **3.0% QoQ** and **13.0% YoY**[2](index=2&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) The company's Q3 2025 financial performance was characterized by increased net interest income and noninterest expense, with a slight decrease in noninterest income quarter-over-quarter [Net Interest Income](index=2&type=section&id=Net%20Interest%20Income) Net interest income for Q3 2025 increased significantly both quarter-over-quarter and year-over-year, driven by higher income on earning assets, with the net interest margin slightly decreasing QoQ but increasing YoY Components of Net Interest Income (in thousands) | Components of net interest income ($ in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | Change (%) 3Q 2025 Compared to 2Q 2025 | Change (%) 3Q 2025 Compared to 3Q 2024 | | :--------------------------------- | :------ | :------ | :------ | :------------------------------------- | :------------------------------------- | | Income on earning assets | $88,562 | $85,571 | $79,814 | 3.5 | 11.0 | | Expense on interest bearing liabilities | $33,008 | $31,531 | $32,615 | 4.7 | 1.2 | | Net interest income | $55,554 | $54,040 | $47,199 | 2.8 | 17.7 | | Net interest income, tax equivalent | $55,855 | $54,323 | $47,479 | 2.8 | 17.6 | | Net interest margin (TEQ) | 3.60% | 3.64% | 3.39% | (1.1) | 6.2 | - Net interest income for Q3 2025 was **$55.6 million**, up **$1.5 million (2.8%)** from Q2 2025 and **$8.4 million (17.7%)** from Q3 2024[3](index=3&type=chunk) - Net interest margin (tax equivalent) was **3.60%**, a decrease of **4 basis points QoQ** but an increase of **21 basis points YoY**[3](index=3&type=chunk) - Average earning assets increased **$168.0 million (11.1% annualized) QoQ** and **$581.0 million (10.4%) YoY**[3](index=3&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income for Q3 2025 slightly decreased quarter-over-quarter due to lower net securities gains and loan-related fees, but increased year-over-year primarily driven by higher trust revenue and deposit-related fees Noninterest Income Components (in thousands) | ($ in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | Change (%) 3Q 2025 Compared to 2Q 2025 | Change (%) 3Q 2025 Compared to 3Q 2024 | | :------------------------- | :------ | :------ | :------ | :------------------------------------- | :------------------------------------- | | Deposit related fees | $8,131 | $7,350 | $7,886 | 10.6 | 3.1 | | Trust revenue | $4,277 | $4,092 | $3,707 | 4.5 | 15.4 | | Loan related fees | $897 | $1,249 | $813 | (28.1) | 10.4 | | Total noninterest income | $15,946 | $16,171 | $15,563 | (1.4) | 2.5 | - Total noninterest income for Q3 2025 was **$15.9 million**, a **1.4% decrease QoQ** but a **2.5% increase YoY**[7](index=7&type=chunk) - QoQ variance was mainly due to decreases in net securities gains (**$0.6 million**) and loan related fees (**$0.4 million**), partially offset by increased deposit related fees (**$0.8 million**)[7](index=7&type=chunk) - YoY increases in trust revenue (**$0.6 million**) and deposit related fees (**$0.2 million**) were partially offset by a decrease in securities gains (**$0.7 million**)[7](index=7&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense for Q3 2025 increased both quarter-over-quarter and year-over-year, driven by rises in repossession, data processing, and marketing expenses QoQ, and broader increases including personnel and data processing YoY Noninterest Expense Components (in thousands) | ($ in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | Change (%) 3Q 2025 Compared to 2Q 2025 | Change (%) 3Q 2025 Compared to 3Q 2024 | | :------------------------------- | :------ | :------ | :------ | :------------------------------------- | :------------------------------------- | | Salaries | $13,913 | $13,667 | $13,374 | 1.8 | 4.0 | | Employee benefits | $7,861 | $7,987 | $6,147 | (1.6) | 27.9 | | Data processing | $3,575 | $3,326 | $2,804 | 7.5 | 27.5 | | Total noninterest expense | $36,744 | $35,663 | $32,512 | 3.0 | 13.0 | - Total noninterest expense for Q3 2025 was **$36.7 million**, up **3.0% QoQ** and **13.0% YoY**[8](index=8&type=chunk) - QoQ increase was mainly due to increases in repossession expense (**$0.4 million**), data processing expense (**$0.2 million**), and marketing and promotional (**$0.2 million**)[8](index=8&type=chunk) - YoY increase included personnel expense (**$2.3 million**), data processing expense (**$0.8 million**), repossession expense (**$0.4 million**), and marketing and promotional (**$0.2 million**)[8](index=8&type=chunk) [Balance Sheet Review](index=3&type=section&id=Balance%20Sheet%20Review) The balance sheet for Q3 2025 shows growth in total loans, deposits, and shareholders' equity, with deposits outpacing loan growth [Loans](index=3&type=section&id=Loans) Total loans outstanding at September 30, 2025, reached $4.8 billion, showing growth both quarter-over-quarter and year-over-year, primarily driven by increases in commercial and residential loan portfolios Total Loans (in thousands) | Total Loans ($ in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | Change (%) 3Q 2025 Compared to 2Q 2025 | Change (%) 3Q 2025 Compared to 3Q 2024 | | :--------------------------------- | :---------- | :---------- | :---------- | :------------------------------------- | :------------------------------------- | | Commercial nonresidential real estate | $921,682 | $913,463 | $834,985 | 0.9 | 10.4 | | Commercial residential real estate | $573,270 | $559,906 | $485,004 | 2.4 | 18.2 | | Total commercial | $2,424,910 | $2,382,565 | $2,214,090 | 1.8 | 9.5 | | Total residential | $1,341,731 | $1,289,807 | $1,166,136 | 4.0 | 15.1 | | Total consumer | $1,027,274 | $1,029,421 | $970,248 | (0.2) | 5.9 | | Total loans | $4,793,915 | $4,701,793 | $4,350,474 | 2.0 | 10.2 | - Loans outstanding at **$4.8 billion** increased **$92.1 million (7.8% annualized) QoQ** and **$443.4 million (10.2%) YoY**[6](index=6&type=chunk)[11](index=11&type=chunk) - The QoQ increase in loans included a **$42.3 million** increase in commercial loans and a **$51.9 million** increase in residential loans, partially offset by decreases in consumer indirect and direct loans[11](index=11&type=chunk) [Deposits and Repurchase Agreements](index=4&type=section&id=Deposits%20and%20Repurchase%20Agreements) Total deposits and repurchase agreements grew to $5.7 billion, showing strong increases both quarter-over-quarter and year-over-year, primarily driven by increases in interest-bearing deposits, outpacing loan growth Total Deposits and Repurchase Agreements (in thousands) | Total Deposits and Repurchase Agreements ($ in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | Change (%) 3Q 2025 Compared to 2Q 2025 | Change (%) 3Q 2025 Compared to 3Q 2024 | | :---------------------------------------- | :---------- | :---------- | :---------- | :------------------------------------- | :------------------------------------- | | Noninterest bearing deposits | $1,248,573 | $1,258,205 | $1,204,515 | (0.8) | 3.7 | | Interest checking | $194,327 | $173,795 | $156,249 | 11.8 | 24.4 | | Time deposits | $1,626,261 | $1,472,311 | $1,316,807 | 10.5 | 23.5 | | Repurchase agreements | $284,863 | $225,075 | $233,324 | 26.6 | 22.1 | | Total deposits and repurchase agreements | $5,670,324 | $5,458,083 | $5,071,586 | 3.9 | 11.8 | - Deposits, including repurchase agreements, at **$5.7 billion** increased **$212.2 million (15.4% annualized) QoQ** and **$598.7 million (11.8%) YoY**[6](index=6&type=chunk)[11](index=11&type=chunk) - Deposit growth outpaced loan growth, leading to an increase in deposits in other banks by **$117.7 million QoQ** and **$281.4 million YoY**[11](index=11&type=chunk) [Shareholders' Equity](index=4&type=section&id=Shareholders'%20Equity) Shareholders' equity increased to $831.4 million, reflecting growth both quarter-over-quarter and year-over-year, alongside a reduction in net unrealized losses on securities - Shareholders' equity at **$831.4 million** increased **$24.5 million (12.0% annualized)** during the quarter and **$70.6 million (9.3%)** from September 30, 2024[6](index=6&type=chunk)[12](index=12&type=chunk) - Net unrealized losses on securities, net of deferred taxes, decreased to **$71.1 million** at September 30, 2025, from **$80.6 million** at June 30, 2025 and September 30, 2024[12](index=12&type=chunk) - The annualized dividend yield to shareholders as of September 30, 2025, was **3.79%**[12](index=12&type=chunk) [Asset Quality](index=4&type=section&id=Asset%20Quality) Asset quality in Q3 2025 saw an increase in provision for credit losses and net charge-offs, while nonperforming loans remained relatively stable [Nonperforming Assets and Past Due Loans](index=4&type=section&id=Nonperforming%20Assets%20and%20Past%20Due%20Loans) Total nonperforming loans saw a slight increase QoQ but a decrease YoY, with accruing loans 90+ days past due increasing QoQ but significantly decreasing YoY - Total nonperforming loans were **$24.7 million**, an increase of **$0.3 million QoQ** but a decrease of **$0.4 million YoY**[6](index=6&type=chunk)[13](index=13&type=chunk) - Accruing loans 90+ days past due increased **$0.6 million QoQ** to **$9.0 million**, but decreased **$10.1 million YoY**[13](index=13&type=chunk) - Nonaccrual loans decreased **$0.3 million QoQ** to **$15.6 million**, but increased **$9.7 million YoY**[13](index=13&type=chunk) [Loan Charge-offs](index=4&type=section&id=Loan%20Charge-offs) Net loan charge-offs for Q3 2025 increased significantly compared to prior periods, primarily due to a large charge-off on one commercial credit, with commercial and consumer indirect loans being the main contributors - Net loan charge-offs for Q3 2025 were **$2.7 million (0.23% annualized of average loans)**, compared to **$1.4 million (0.12% annualized)** in Q2 2025 and **$1.5 million (0.14% annualized)** in Q3 2024[6](index=6&type=chunk)[14](index=14&type=chunk) - The primary increase in net charge-offs included a **$1 million** charge-off on one commercial credit totaling **$8 million**[15](index=15&type=chunk) - Of the Q3 2025 net charge-offs, **$1.2 million** were in commercial loans and **$1.2 million** were in consumer indirect loans[14](index=14&type=chunk) [Allowance for Credit Losses](index=5&type=section&id=Allowance%20for%20Credit%20Losses) The provision for credit losses increased significantly in Q3 2025, primarily to fund changes in loan volume and composition, leading to an improved reserve coverage ratio while the loan loss reserve as a percentage of total loans remained stable - Provision for credit losses was **$3.9 million** for Q3 2025, an increase of **$1.8 million QoQ** and **$1.1 million YoY**[16](index=16&type=chunk) - Of the Q3 provision, **$3.8 million** was allotted for changes in loan volume and composition[16](index=16&type=chunk) - Reserve coverage (allowance for credit losses to nonperforming loans) improved to **239.5%** at September 30, 2025, from **237.1%** at June 30, 2025 and **212.7%** at September 30, 2024[16](index=16&type=chunk) - Loan loss reserve as a percentage of total loans outstanding remained at **1.23%** at September 30, 2025[16](index=16&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) The company provides forward-looking statements with inherent risks and details its profile as a $6.6 billion asset financial institution [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, portfolio performance, regulatory changes, and integration difficulties from acquisitions, with no obligation to update these statements - Forward-looking statements are identified by words like "believe," "expect," "anticipate," and similar expressions[17](index=17&type=chunk) - Risks and uncertainties include economic conditions, portfolio growth and credit performance, inflation and interest rates, regulatory changes, competition, and integration challenges from acquisitions[17](index=17&type=chunk) - CTBI undertakes no obligation to update any forward-looking statements[17](index=17&type=chunk) [Company Profile](index=5&type=section&id=Company%20Profile) Community Trust Bancorp, Inc. is headquartered in Pikeville, Kentucky, with $6.6 billion in assets and a broad banking presence across Kentucky, West Virginia, and Tennessee, including multiple trust offices - Community Trust Bancorp, Inc. has assets of **$6.6 billion**[18](index=18&type=chunk) - Headquartered in Pikeville, Kentucky, it operates **72 banking locations** across Kentucky, **six** in southern West Virginia, and **three** in northeastern Tennessee[18](index=18&type=chunk) - The company also has **four trust offices** across Kentucky and **one** in Tennessee[18](index=18&type=chunk) [Detailed Financial Statements](index=6&type=section&id=Detailed%20Financial%20Statements) This section presents comprehensive income statements, balance sheets, key financial ratios, and market price information for the reported periods [Income Statement and Performance Ratios](index=6&type=section&id=Income%20Statement%20and%20Performance%20Ratios) The detailed financial summary provides a comprehensive breakdown of the income statement for Q3 2025, Q2 2025, Q3 2024, and year-to-date figures, including interest income and expense, noninterest income and expense components, net income, and key performance ratios Income Statement and Performance Ratios (in thousands except per share data) | (in thousands except per share data) | Three Months Ended Sep 30, 2025 | Three Months Ended Jun 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest income | $88,562 | $85,571 | $79,814 | $256,187 | $231,464 | | Interest expense | $33,008 | $31,531 | $32,615 | $95,326 | $94,996 | | Net interest income | $55,554 | $54,040 | $47,199 | $160,861 | $136,468 | | Provision for credit losses | $3,866 | $2,094 | $2,736 | $9,528 | $8,364 | | Total noninterest income | $15,946 | $16,171 | $15,563 | $47,014 | $46,405 | | Total noninterest expense | $36,744 | $35,663 | $32,512 | $106,615 | $97,154 | | Net income | $23,911 | $24,899 | $22,142 | $70,782 | $60,320 | | Basic earnings per share | $1.33 | $1.38 | $1.23 | $3.93 | $3.36 | | Return on average assets | 1.46% | 1.58% | 1.50% | 1.50% | 1.38% | | Net interest margin (tax equivalent) | 3.60% | 3.64% | 3.39% | 3.61% | 3.34% | | Efficiency ratio (tax equivalent) | 50.86% | 50.70% | 51.75% | 51.12% | 52.91% | [Balance Sheet and Key Ratios](index=8&type=section&id=Balance%20Sheet%20and%20Key%20Ratios) The balance sheet provides a snapshot of assets, liabilities, and equity as of September 30, 2025, June 30, 2025, and September 30, 2024, including key components like loans, securities, deposits, and shareholders' equity, along with critical ratios and asset quality metrics Balance Sheet and Key Ratios (in thousands) | (in thousands) | As of Sep 30, 2025 | As of Jun 30, 2025 | As of Sep 30, 2024 | | :--------------------------------- | :----------------- | :----------------- | :----------------- | | Loans | $4,793,915 | $4,701,793 | $4,350,474 | | Allowance for credit losses | $(59,135) | $(57,825) | $(53,360) | | Total Assets | $6,638,129 | $6,390,938 | $5,962,968 | | Total deposits | $5,385,461 | $5,233,008 | $4,838,262 | | Repurchase agreements | $284,863 | $225,075 | $233,324 | | Shareholders' equity | $831,373 | $806,869 | $760,762 | | 90 days past due loans | $9,040 | $8,449 | $19,111 | | Nonaccrual loans | $15,647 | $15,937 | $5,980 | | Community bank leverage ratio | 13.68% | 13.80% | 13.99% | | Tangible equity to tangible assets ratio | 11.65% | 11.72% | 11.79% | [Market Price Information](index=7&type=section&id=Market%20Price%20Information) The market price information provides the high, low, and closing stock prices for Community Trust Bancorp, Inc. for the third quarter of 2025, second quarter of 2025, and third quarter of 2024, as well as year-to-date figures Market Price Information | Market Price | 3Q 2025 | 2Q 2025 | 3Q 2024 | YTD 2025 | YTD 2024 | | :----------- | :------ | :------ | :------ | :------- | :------- | | High | $59.67 | $53.82 | $52.22 | $59.67 | $52.22 | | Low | $52.60 | $44.60 | $41.50 | $44.60 | $38.44 | | Close | $55.95 | $52.92 | $49.66 | $55.95 | $49.66 |

Core Viewpoint - Community Trust Bancorp, Inc. reported a net income of $23.9 million for the third quarter of 2025, reflecting a decrease from the previous quarter but an increase compared to the same quarter last year. The company experienced growth in net interest income and total revenue, while facing increases in noninterest expenses and provisions for credit losses. Financial Performance - Net income for 3Q2025 was $23.9 million, or $1.33 per basic share, down from $24.9 million in 2Q2025 but up from $22.1 million in 3Q2024 [1] - Total revenue for the quarter was $1.3 million above the prior quarter and $8.7 million above the same quarter last year [1] - Net interest revenue increased by $1.5 million from the prior quarter and $8.4 million from the same quarter last year [1][2] - Noninterest income for 3Q2025 was $15.9 million, a decrease of $0.2 million from the prior quarter but an increase of $0.4 million from the same quarter last year [2][8] Loan and Deposit Growth - The loan portfolio reached $4.8 billion, increasing by $92.1 million from the previous quarter and $443.4 million from the same quarter last year [2][14] - Total deposits, including repurchase agreements, increased to $5.7 billion, up by $212.2 million from the prior quarter and $598.7 million from the same quarter last year [5][14] Expense and Efficiency Metrics - Noninterest expense for 3Q2025 was $36.7 million, an increase of $1.1 million from the prior quarter and $4.2 million from the same quarter last year [11] - The efficiency ratio improved to 50.86% from 51.75% in the same quarter last year [1] Asset Quality - The provision for credit losses was $3.9 million, an increase of $1.8 million from the prior quarter and $1.1 million from the same quarter last year [2][19] - Total nonperforming loans were $24.7 million, an increase of $0.3 million from the prior quarter but a decrease of $0.4 million from the same quarter last year [5][16] Shareholder Returns - Dividends declared per share increased to $0.53 from $0.47 in the previous quarter and the same quarter last year [1] - Shareholders' equity rose to $831.4 million, an increase of $24.5 million during the quarter and $70.6 million from the same quarter last year [15]

Group 1 - Community Trust Bancorp is expected to have a decent year in 2025, with expanding net interest margins and a growing balance sheet [1] - Asset quality for Community Trust Bancorp remains resilient for the time being [1]

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) This section provides foundational details about Community Trust Bancorp, Inc. (CTBI), including its SEC filing status and a cautionary statement regarding forward-looking information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for Community Trust Bancorp, Inc. (CTBI), including its SEC filing status as a large accelerated filer and the number of common shares outstanding as of July 31, 2025 - CTBI is a **Large Accelerated Filer**[4](index=4&type=chunk) - The report is a **Quarterly Report** pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2025[5](index=5&type=chunk) Common Stock Outstanding | Date | Shares Outstanding | | :----------- | :----------------- | | July 31, 2025 | 18,110,585 | [Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD%20LOOKING%20STATEMENTS) This statement advises readers that the report contains forward-looking statements, which are subject to various risks and uncertainties, and CTBI does not undertake to update these statements - **Forward-looking statements** are identified by words like 'believe,' 'expect,' 'anticipate,' 'intend,' 'estimate,' and future or conditional verbs[8](index=8&type=chunk) - **Risks and uncertainties** include economic conditions, portfolio growth and credit performance, financial market performance, inflation and interest rates, regulatory changes, and competition[8](index=8&type=chunk) - CTBI undertakes **no obligation to update** any forward-looking statements[8](index=8&type=chunk) [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents CTBI's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents CTBI's unaudited condensed consolidated financial statements, including the balance sheets, statements of income and comprehensive income, statements of changes in shareholders' equity, and statements of cash flows, along with their accompanying notes - The accompanying information has **not been audited** by independent registered public accountants but reflects all necessary normal and recurring adjustments for a **fair presentation**[10](index=10&type=chunk) - The statements do **not include all disclosures** normally required by GAAP for complete annual financial statements; readers should refer to the **Form 10-K** for the year ended December 31, 2024, for further information[11](index=11&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a growth in total assets and shareholders' equity from December 31, 2024, to June 30, 2025, primarily driven by an increase in net loans and interest-bearing deposits, alongside a rise in total deposits Condensed Consolidated Balance Sheets (in thousands) | (in thousands except share data) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | **Assets:** | | | | Cash and due from banks | $76,556 | $73,021 | | Interest bearing deposits | 318,734 | 296,484 | | Cash and cash equivalents | 395,290 | 369,505 | | Debt securities available-for-sale at fair value | 994,990 | 1,055,728 | | Loans, net | 4,643,968 | 4,431,669 | | Total assets | $6,390,938 | $6,193,245 | | **Liabilities and shareholders' equity:** | | | | Total deposits | 5,233,008 | 5,070,189 | | Total liabilities | 5,584,069 | 5,435,661 | | Total shareholders' equity | 806,869 | 757,584 | | Total liabilities and shareholders' equity | $6,390,938 | $6,193,245 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) CTBI reported increased net income and comprehensive income for both the three and six months ended June 30, 2025, compared to the prior year, driven by higher total interest income and net interest income, despite an increase in total noninterest expense Condensed Consolidated Statements of Income and Comprehensive Income (in thousands except per share data) | (in thousands except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $85,571 | $76,648 | $167,625 | $151,650 | | Total interest expense | 31,531 | 30,970 | 62,318 | 62,381 | | Net interest income | 54,040 | 45,678 | 105,307 | 89,269 | | Provision for credit losses | 2,094 | 2,972 | 5,662 | 5,628 | | Total noninterest income | 16,171 | 15,708 | 31,068 | 30,842 | | Total noninterest expense | 35,663 | 32,422 | 69,871 | 64,642 | | Net income | 24,899 | 19,499 | 46,871 | 38,178 | | Comprehensive income | $30,347 | $19,265 | $64,623 | $34,398 | | Basic earnings per share | $1.38 | $1.09 | $2.60 | $2.13 | | Diluted earnings per share | $1.38 | $1.09 | $2.60 | $2.13 | [Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased significantly from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income, partially offset by cash dividends declared Consolidated Statements of Changes in Shareholders' Equity (Quarterly, in thousands) | (in thousands except per share and share amounts) | Common Shares | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Tax | Total | | :------------------------------------------------ | :------------ | :----------- | :-------------- | :---------------- | :-------------------------------------------------------- | :---- | | Balance, March 31, 2025 | 18,101,765 | $90,510 | $234,355 | $545,372 | $(86,065) | $784,172 | | Net income | | | | 24,899 | | 24,899 | | Other comprehensive income (loss) | | | | | 5,448 | 5,448 | | Cash dividends declared ($0.47 per share) | | | | (8,466) | | (8,466) | | Issuance of common stock | 11,776 | 59 | 397 | | | 456 | | Vesting of restricted stock | (2,608) | (14) | 14 | | | 0 | | Forfeiture of restricted stock | (5,562) | (28) | 28 | | | 0 | | Stock-based compensation | | | 360 | | | 360 | | Balance, June 30, 2025 | 18,105,371 | $90,527 | $235,154 | $561,805 | $(80,617) | $806,869 | Consolidated Statements of Changes in Shareholders' Equity (Year-to-Date, in thousands) | (in thousands except per share and share amounts) | Common Shares | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Tax | Total | | :------------------------------------------------ | :------------ | :----------- | :-------------- | :---------------- | :-------------------------------------------------------- | :---- | | Balance, December 31, 2024 | 18,057,923 | $90,290 | $233,802 | $531,861 | $(98,369) | $757,584 | | Net income | | | | 46,871 | | 46,871 | | Other comprehensive income (loss) | | | | | 17,752 | 17,752 | | Cash dividends declared ($0.94 per share) | | | | (16,927) | | (16,927) | | Issuance of common stock | 42,578 | 213 | 519 | | | 732 | | Issuance of restricted stock | 38,538 | 193 | (193) | | | 0 | | Vesting of restricted stock | (28,106) | (141) | 141 | | | 0 | | Forfeiture of restricted stock | (5,562) | (28) | 28 | | | 0 | | Stock-based compensation | | | 857 | | | 857 | | Balance, June 30, 2025 | 18,105,371 | $90,527 | $235,154 | $561,805 | $(80,617) | $806,869 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, CTBI experienced a net increase in cash and cash equivalents, primarily driven by strong cash flows from operating and financing activities, which offset significant cash used in investing activities Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $52,513 | $46,155 | | Net cash used in investing activities | (158,059) | (151,260) | | Net cash provided by (used in) financing activities | 131,331 | (4,634) | | Net increase (decrease) in cash and cash equivalents | 25,785 | (109,739) | | Cash and cash equivalents at beginning of period | 369,505 | 271,400 | | Cash and cash equivalents at end of period | $395,290 | $161,661 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on CTBI's accounting policies, financial instruments, and operational segments, offering crucial context to the condensed financial statements - The condensed consolidated financial statements include CTBI and its **wholly-owned subsidiaries**, Community Trust Bank, Inc. (CTB) and Community Trust and Investment Company, with all significant intercompany transactions **eliminated**[25](index=25&type=chunk) - FASB ASU No. 2023-09 (Income Tax Disclosures) is **effective January 1, 2025**, affecting annual financial statement disclosure only, with **no impact** on results of operations or financial condition[26](index=26&type=chunk) - The One Big Beautiful Bill Act (OBBBA), **signed July 4, 2025**, introduces regulatory changes, financial product changes, and tax/investment incentives; CTBI is **still assessing its implications**[28](index=28&type=chunk)[29](index=29&type=chunk)[35](index=35&type=chunk) [Note 1 - Summary of Significant Accounting Policies](index=12&type=section&id=Note%201%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines CTBI's critical accounting policies, including principles of consolidation, the impact of new accounting standards, and detailed methodologies for investments, loans, allowance for credit losses (ACL), goodwill, income taxes, and off-balance sheet credit exposures [Principles of Consolidation](index=12&type=section&id=Principles%20of%20Consolidation) This section details the entities included in CTBI's consolidated financial statements and the treatment of intercompany transactions - The unaudited condensed consolidated financial statements include the accounts of CTBI and its **wholly-owned subsidiaries** Community Trust Bank, Inc. (CTB) and Community Trust and Investment Company[25](index=25&type=chunk) - All significant intercompany transactions have been **eliminated** in consolidation[25](index=25&type=chunk) [New Accounting Standards](index=12&type=section&id=New%20Accounting%20Standards) This section discusses the impact and effective dates of recently adopted and future accounting standards, including FASB ASUs and the One Big Beautiful Bill Act (OBBBA) - FASB ASU No. 2023-09 (Income Taxes) became **effective January 1, 2025**, enhancing income tax disclosures for annual financial statements, with **no impact** on CTBI's interim results or financial condition[26](index=26&type=chunk) - FASB ASU No. 2024-03 (Income Statement Expenses) is **effective for fiscal years beginning after December 15, 2026**, and is **not expected to have a material impact** on CTBI's financial statements[27](index=27&type=chunk) - The One Big Beautiful Bill Act (OBBBA), **signed July 4, 2025**, introduces CFPB funding cuts, a 1% foreign remittance excise tax, enhanced due diligence for green energy incentives, new tax-advantaged savings accounts (Trump Accounts), agricultural finance expansion, permanent 100% bonus depreciation, and reinstatement of R&E expenditure expensing; CTBI is **still assessing its implications**[28](index=28&type=chunk)[29](index=29&type=chunk)[35](index=35&type=chunk) [Significant Accounting Policies](index=13&type=section&id=Significant%20Accounting%20Policies) This section outlines CTBI's key accounting policies for financial instruments, credit losses, goodwill, and off-balance sheet exposures, emphasizing management's use of estimates - AFS debt securities are reported at **fair value**, with **unrealized gains/losses** in shareholders' equity; credit-related impairment is recognized as an **allowance for credit losses (ACL)** on the balance sheet, limited to the amount by which amortized cost exceeds fair value[33](index=33&type=chunk)[34](index=34&type=chunk) - Loans are reported at **carrying value**, reduced by ACL and unamortized deferred fees/costs; interest accrual is discontinued for loans greater than **90 days past due** or when collection is doubtful[39](index=39&type=chunk) - ACL for financial assets is measured on a **collective basis** using **discounted cash flow**, or **individually** for loans not sharing risk characteristics; forecasts include GDP, vehicle sales, and housing price index, with a **four-quarter forecast period** reverting to long-run averages[40](index=40&type=chunk)[41](index=41&type=chunk) - Goodwill is evaluated **annually for impairment** using fair value techniques, with the balance unchanged at **$65.5 million** since January 1, 2015[62](index=62&type=chunk) - CTBI estimates **expected credit losses** for **off-balance sheet credit exposures** (unfunded commitments, lines of credit, standby letters of credit) over their contractual period, recognized as other liabilities and adjusted as an expense in provision for credit losses[64](index=64&type=chunk) [Note 2 - Stock-Based Compensation](index=18&type=section&id=Note%202%20-%20Stock-Based%20Compensation) This note details CTBI's stock-based compensation, primarily restricted stock grants under the 2015 Stock Ownership Incentive Plan, showing increased expense and remaining unrecognized compensation Restricted Stock Expense (in thousands) | Period | 2025 (in thousands) | 2024 (in thousands) | | :------------------------- | :------------------ | :------------------ | | Three Months Ended June 30 | $403 | $344 | | Six Months Ended June 30 | $947 | $687 | - As of June 30, 2025, there was **$3.2 million** of unrecognized compensation expense related to restricted stock grants, to be recognized over a weighted average period of **2.9 years**[65](index=65&type=chunk) - Restricted stock grants generally lapse ratably over **four years**, subject to continued employment, with a specific management retention award cliff vesting at **five years**; forfeitures are recognized when they occur[67](index=67&type=chunk) - There was **no stock option activity** or related compensation expense for the periods presented, as all stock option awards have fully vested[68](index=68&type=chunk) [Note 3 - Securities](index=19&type=section&id=Note%203%20-%20Securities) This note provides a detailed breakdown of CTBI's debt and equity securities, primarily available-for-sale (AFS) debt securities, highlighting a decrease in total AFS securities and an improvement in unrealized losses Available-for-Sale Debt Securities (in thousands) | (in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :------------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :------------------------ | | U.S. Treasury and government agencies | $259,632 | $247,526 | $360,027 | $341,495 | | State and political subdivisions | 303,197 | 257,745 | 304,588 | 253,557 | | Agency mortgage-backed securities | 490,995 | 441,411 | 471,000 | 409,709 | | Asset-backed securities | 48,434 | 48,308 | 51,034 | 50,967 | | Total available-for-sale securities | $1,102,258 | $994,990 | $1,186,649 | $1,055,728 | - The percentage of total debt securities with unrealized losses improved to **90.2%** at June 30, 2025, from **95.5%** at December 31, 2024[76](index=76&type=chunk) - All impairment in the investment portfolio is **market and interest rate driven**, **not credit-related**, and CTBI **does not intend to sell** these investments before recovery of their amortized cost[76](index=76&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) Net Securities Gains (Losses) (in thousands) | Period | 2025 (in thousands) | 2024 (in thousands) | | :------------------------- | :------------------ | :------------------ | | Three Months Ended June 30 | $150 | $(474) | | Six Months Ended June 30 | $630 | $(103) | - Equity securities at fair value increased to **$4.4 million** at June 30, 2025, from **$3.8 million** at December 31, 2024, due to fair value adjustments[84](index=84&type=chunk) [Note 4 - Loans](index=23&type=section&id=Note%204%20-%20Loans) This note provides a comprehensive analysis of CTBI's loan portfolio, including major classifications, allowance for credit losses (ACL), nonaccrual and past due loans, credit quality indicators, and loan modifications Major Classifications of Loans, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Commercial loans | $2,382,565 | $2,272,679 | | Residential loans | 1,289,807 | 1,210,826 | | Consumer loans | 1,029,421 | 1,003,132 | | Loans and lease financing (Net Loans) | $4,701,793 | $4,486,637 | - Hotel/motel loans represent a significant concentration (**10.1%** of total loans) and are susceptible to economic changes[52](index=52&type=chunk)[87](index=87&type=chunk) - The ACL for loans increased to **$57.8 million** at June 30, 2025, from **$54.9 million** at December 31, 2024[97](index=97&type=chunk)[98](index=98&type=chunk) - Total nonperforming loans decreased to **$24.4 million** at June 30, 2025, from **$26.7 million** at December 31, 2024[99](index=99&type=chunk) - Loan modifications for borrowers experiencing financial difficulty included interest rate reductions, term extensions, and payment changes, with a total amortized cost of **$7.3 million** for interest rate reductions and **$4.0 million** for term extensions for the three months ended June 30, 2025[113](index=113&type=chunk)[114](index=114&type=chunk) [Loan Classifications](index=23&type=section&id=Loan%20Classifications) This section details CTBI's loan portfolio by classification, highlighting concentrations and risk mitigation strategies across various segments Loan Portfolio by Classification (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Hotel/motel | $477,175 | $458,832 | | Commercial real estate residential | 559,906 | 508,310 | | Commercial real estate nonresidential | 913,463 | 865,031 | | Dealer floorplans | 70,270 | 84,956 | | Commercial other | 361,751 | 355,550 | | Real estate mortgage | 1,112,672 | 1,043,401 | | Home equity lines | 177,135 | 167,425 | | Consumer direct | 150,915 | 152,843 | | Consumer indirect | 878,506 | 850,289 | | Total Loans and lease financing | $4,701,793 | $4,486,637 | - CTBI's loan portfolio is segregated into **nine segments** with similar risk characteristics, serving small and mid-sized communities in Kentucky, West Virginia, and Tennessee[86](index=86&type=chunk) - Hotel/motel loans represent **10.1%** of total loans and are highly susceptible to economic changes[87](index=87&type=chunk) - Dealer floorplans are **collateralized** under a blanket security agreement and **mitigated** by monthly inventory audits and additional credit enhancements[90](index=90&type=chunk) - Residential real estate loans include **fixed and adjustable rate mortgages**, with adjustable rate loans typically held and fixed rate loans sold into the secondary market[92](index=92&type=chunk) [Allowance for Credit Losses (ACL)](index=25&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)) This section details the movements in the Allowance for Credit Losses (ACL) for loans, including provisions, charge-offs, and recoveries, reflecting management's assessment of credit risk Allowance for Credit Losses for Loans (in thousands) | (in thousands) | Beginning Balance (Mar 31, 2025) | Provision Charged to Expense | Losses Charged Off | Recoveries | Ending Balance (June 30, 2025) | | :------------------------------- | :------------------------------- | :--------------------------- | :----------------- | :--------- | :----------------------------- | | Hotel/motel | $5,594 | $10 | $0 | $0 | $5,604 | | Commercial real estate residential | 6,059 | 457 | (41) | 5 | 6,480 | | Commercial real estate nonresidential | 11,381 | 72 | 0 | 4 | 11,457 | | Dealer floorplans | 551 | (44) | 0 | 0 | 507 | | Commercial other | 3,936 | 220 | (551) | 106 | 3,711 | | Real estate mortgage | 12,322 | 630 | (2) | 3 | 12,953 | | Home equity | 1,309 | 298 | (7) | 4 | 1,604 | | Consumer direct | 2,127 | 104 | (199) | 99 | 2,131 | | Consumer indirect | 13,682 | 470 | (1,728) | 954 | 13,378 | | Total ACL | $56,961 | $2,217 | $(2,528) | $1,175 | $57,825 | - The ACL is maintained at a level appropriate to cover **estimated credit losses** on individually evaluated loans and inherent losses in the remainder of the portfolio[46](index=46&type=chunk) - Credit losses, when deemed uncollectible, are **charged to the ACL**, and subsequent recoveries are **credited to it**[46](index=46&type=chunk) [Nonaccrual Loans and Loans 90 Days Past Due](index=27&type=section&id=Nonaccrual%20Loans%20and%20Loans%2090%20Days%20Past%20Due) This section presents the balances of nonaccrual loans and loans 90 days past due, indicating a decrease in total nonperforming loans and a significant reduction in recognized interest income from these assets Nonaccrual Loans and Loans 90 Days Past Due (in thousands) | (in thousands) | June 30, 2025 Total Nonperforming Loans | December 31, 2024 Total Nonperforming Loans | | :------------------------------- | :-------------------------------------- | :------------------------------------------ | | Commercial real estate residential | $3,300 | $1,617 | | Commercial real estate nonresidential | 11,343 | 13,154 | | Commercial other | 1,313 | 1,416 | | Real estate mortgage | 6,840 | 8,820 | | Home equity lines | 687 | 648 | | Consumer direct | 224 | 269 | | Consumer indirect | 679 | 762 | | Total Nonperforming Loans | $24,386 | $26,686 | - Interest income recognized on nonaccrual loans decreased significantly to **$9.6 thousand** at June 30, 2025, from **$189.4 thousand** at December 31, 2024[99](index=99&type=chunk) [Loan Portfolio Aging Analysis](index=28&type=section&id=Loan%20Portfolio%20Aging%20Analysis) This section provides an aging analysis of the loan portfolio, detailing the total past due amounts by loan classification Loan Portfolio Aging Analysis (in thousands) | (in thousands) | June 30, 2025 Total Past Due | December 31, 2024 Total Past Due | | :------------------------------- | :--------------------------- | :------------------------------- | | Hotel/motel | $120 | $0 | | Commercial real estate residential | 4,379 | 1,847 | | Commercial real estate nonresidential | 13,077 | 14,357 | | Dealer floorplans | 0 | 0 | | Commercial other | 2,046 | 2,646 | | Real estate mortgage | 12,305 | 11,956 | | Home equity lines | 2,878 | 2,880 | | Consumer direct | 1,325 | 1,251 | | Consumer indirect | 6,257 | 6,730 | | Total Loans and lease financing | $42,387 | $41,667 | [Credit Quality Indicators](index=29&type=section&id=Credit%20Quality%20Indicators) This section outlines CTBI's internal credit risk rating system, categorizing loans based on borrower ability, collateral, and guarantor strength, with regular reviews for deterioration or improvement - CTBI categorizes loans into **risk categories** (Pass, Watch, OAEM, Substandard, Doubtful) based on borrower ability to service debt, collateral value, and guarantor strength[102](index=102&type=chunk) - Loans classified as loss, doubtful, substandard, or special mention are **reviewed quarterly** for deterioration or improvement[102](index=102&type=chunk) - **Pass grades** indicate excellent to fair credit ratings with adequate cash flows; **Watch graded** loans warrant extra management attention but are not currently criticized; **OAEM loans** are potentially weak but currently protected; **Substandard loans** are inadequately protected and have well-defined weaknesses; **Doubtful loans** have weaknesses making collection highly questionable, with a high probability of loss[102](index=102&type=chunk) [Loan Modifications](index=37&type=section&id=Loan%20Modifications) This section details loan modifications granted to borrowers experiencing financial difficulty, categorized by concession type, and notes subsequent defaults Loan Modifications by Concession Granted (Three Months Ended June 30, 2025, in thousands) | (in thousands) | Interest Rate Reduction | Term Extension | Combination – Term Extension and Interest Rate Reduction | Payment Change | | :------------------------------- | :---------------------- | :------------- | :------------------------------------------------------- | :------------- | | Hotel/motel | $0 | $0 | $0 | $0 | | Commercial real estate residential | 0 | 299 | 498 | 0 | | Commercial real estate nonresidential | 7,254 | 0 | 0 | 92 | | Dealer floorplans | 0 | 0 | 0 | 0 | | Commercial other | 0 | 264 | 203 | 29 | | Real estate mortgage | 57 | 3,007 | 560 | 35 | | Home equity lines | 0 | 107 | 49 | 0 | | Consumer direct | 0 | 176 | 0 | 0 | | Consumer indirect | 0 | 121 | 0 | 51 | | Total Loans and lease financing | $7,311 | $3,974 | $1,310 | $207 | - For the three months ended June 30, 2025, commercial real estate nonresidential loans had the largest interest rate reduction (**$7.3 million**), while real estate mortgage loans had the largest term extension (**$3.0 million**)[113](index=113&type=chunk) - **Two loans** to borrowers experiencing financial difficulty subsequently defaulted during the quarter ended June 30, 2025, totaling **$128 thousand**[127](index=127&type=chunk)[128](index=128&type=chunk) [Off-Balance Sheet Credit Exposures](index=51&type=section&id=Off-Balance%20Sheet%20Credit%20Exposures) This section details the Allowance for Credit Losses (ACL) for unfunded commitments, outlining changes due to provisions, charge-offs, and recoveries ACL for Unfunded Commitments (in thousands) | (in thousands) | Beginning Balance (Mar 31, 2025) | Provision Charged to Expense | Losses Charged Off | Recoveries | Ending Balance (June 30, 2025) | | :------------------------------- | :------------------------------- | :--------------------------- | :----------------- | :--------- | :----------------------------- | | Commercial | $1,071 | $(172) | $0 | $0 | $899 | | Real estate mortgage | 372 | 48 | 0 | 0 | 420 | | Consumer | 22 | 1 | 0 | 0 | 23 | | Total unfunded commitment off-balance sheet credit exposure | $1,465 | $(123) | $0 | $0 | $1,342 | - A liability for **expected credit losses** for **off-balance sheet exposures** is recognized if the entity has a present contractual obligation to extend credit and the obligation is not unconditionally cancellable[129](index=129&type=chunk) [Note 5 - Repurchase Agreements](index=52&type=section&id=Note%205%20-%20Repurchase%20Agreements) This note describes CTBI's use of repurchase agreements for customer needs and funding, which are recorded as secured borrowings, and details the carrying value of pledged investment securities - Repurchase agreements are used to facilitate customer needs and provide additional funding, recorded as **secured borrowings**[130](index=130&type=chunk) - The primary risk is **market risk** associated with the securities securing the transactions, requiring additional collateral based on fair value changes[131](index=131&type=chunk) Carrying Value of Investment Securities Pledged as Collateral (in millions) | Date | Carrying Value (in millions) | | :----------- | :--------------------------- | | June 30, 2025 | $299.0 | | Dec 31, 2024 | $292.2 | Repurchase Agreements Balances (in thousands) | ($ in thousands) | Balance Outstanding as of Quarter End | | :--------------- | :------------------------------------ | | June 30, 2025 | $225,075 | | December 31, 2024 | $240,166 | [Note 6 - Fair Value of Financial Assets and Liabilities](index=53&type=section&id=Note%206%20-%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note details CTBI's fair value measurements for financial assets and liabilities, categorized into a three-level hierarchy based on input observability, emphasizing Level 3 valuations - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) Fair Value Measurements of Assets (Recurring Basis, June 30, 2025, in thousands) | (in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | | :------------------------------- | :--------- | :-------- | :-------- | :-------- | | U.S. Treasury and government agencies | $247,526 | $236,704 | $10,822 | $0 | | State and political subdivisions | 257,745 | 0 | 257,745 | 0 | | Agency mortgage-backed securities | 441,411 | 0 | 441,411 | 0 | | Asset-backed securities | 48,308 | 0 | 48,308 | 0 | | Equity securities at fair value | 4,410 | 0 | 0 | 4,410 | | Mortgage servicing rights | 7,096 | 0 | 0 | 7,096 | - Equity securities at fair value (Visa Class B Stock) and Mortgage Servicing Rights (MSRs) are valued using **Level 3 inputs** due to **unobservable factors** like discount rates, conversion dates, and prepayment speeds[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) Level 3 Reconciliation (Three Months Ended June 30, 2025, in thousands) | (in thousands) | Equity Securities at Fair Value | Mortgage Servicing Rights | | :------------- | :------------------------------ | :------------------------ | | Beginning balance | $4,261 | $7,093 | | Total unrealized gains (losses) included in net income | 149 | 157 | | Issues | 0 | 30 | | Settlements | 0 | (184) | | Ending balance | $4,410 | $7,096 | Fair Value of Financial Instruments (June 30, 2025, in thousands) | (in thousands) | Carrying Amount | Level 1 | Level 2 | Level 3 | | :------------------------------- | :-------------- | :------------ | :------------ | :------------ | | **Financial assets:** | | | | | | Cash and cash equivalents | $395,290 | $395,290 | $0 | $0 | | Debt securities available-for-sale | 994,990 | 236,704 | 758,286 | 0 | | Equity securities at fair value | 4,410 | 0 | 0 | 4,410 | | Loans, net | 4,643,968 | 0 | 0 | 4,590,027 | | **Financial liabilities:** | | | | | | Deposits | $5,233,008 | $1,258,205 | $3,785,850 | $0 | | Repurchase agreements | 225,075 | 0 | 0 | 225,034 | | Long-term debt | 63,901 | 0 | 0 | 58,297 | [Note 7 - Segment Reporting](index=62&type=section&id=Note%207%20-%20Segment%20Reporting) CTBI operates as a single operating segment, community banking services, which encompasses commercial and personal banking, and trust and wealth management activities, with performance evaluated by the Executive Committee - CTBI's principal activity is the ownership and management of its **wholly-owned subsidiaries**, CTB and Community Trust and Investment Company[166](index=166&type=chunk) - Management analyzes CTBI's operations as **one operating segment**: community banking services, offering a wide range of consumer and commercial banking services[166](index=166&type=chunk) - The Executive Committee uses **net income**, **net interest income**, and **noninterest income** for resource allocation and performance evaluation[166](index=166&type=chunk) Consolidated Total Assets Reconciliation (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Community banking services assets | $6,384,442 | $6,186,518 | | Holding company assets | 871,431 | 822,851 | | Elimination of subsidiary and parent cash and intercompany receivables | (3,803) | (3,779) | | Elimination of investment in subsidiaries | (861,132) | (812,345) | | Consolidated total assets | $6,390,938 | $6,193,245 | [Note 8 - Revenue Recognition](index=68&type=section&id=Note%208%20-%20Revenue%20Recognition) This note outlines CTBI's revenue recognition policies, primarily focusing on interest income from loans and securities, and noninterest income from customer contracts and other sources - CTBI's primary revenue source is **interest income** from loans and investment securities, recognized over the instrument's life[174](index=174&type=chunk) - Noninterest income from customer contracts (e.g., deposit fees, loan fees, brokerage revenue) is recognized when **performance obligations are satisfied**, typically for short-term services with fixed pricing[175](index=175&type=chunk)[177](index=177&type=chunk) - Noninterest income **not generated from customer contracts** includes MSRs, gains/losses on securities sales, OREO sales, property/plant/equipment sales, and bank-owned life insurance income[179](index=179&type=chunk) [Note 9 - Earnings Per Share](index=69&type=section&id=Note%209%20-%20Earnings%20Per%20Share) This note presents the computation of basic and diluted earnings per share (EPS) for the three and six months ended June 30, 2025 and 2024, showing an increase in both basic and diluted EPS for the current periods Earnings Per Share (in thousands except per share data) | (in thousands except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $24,899 | $19,499 | $46,871 | $38,178 | | Basic earnings per share | $1.38 | $1.09 | $2.60 | $2.13 | | Diluted earnings per share | $1.38 | $1.09 | $2.60 | $2.13 | - Diluted EPS calculations include the **dilutive effect** of equity grants and unvested restricted stock grants using the **treasury method**[181](index=181&type=chunk) [Note 10 – Accumulated Other Comprehensive Income (Loss)](index=69&type=section&id=Note%2010%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note reconciles the changes in accumulated other comprehensive income (loss) (AOCI) for the three and six months ended June 30, 2025 and 2024, showing a significant improvement due to unrealized holding gains on debt securities Accumulated Other Comprehensive Income (Loss) Reconciliation (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $(86,065) | $(106,867) | $(98,369) | $(103,321) | | Unrealized holding gains (losses) on debt securities AFS, net of tax | 5,449 | (233) | 17,753 | (3,779) | | Reclassification adjustments for realized gains (losses) included in securities, net of tax | 1 | 1 | 1 | 1 | | Other comprehensive income (loss) | 5,448 | (234) | 17,752 | (3,780) | | Ending balance | $(80,617) | $(107,101) | $(80,617) | $(107,101) | - The ending balance of AOCI improved to a loss of **$80.6 million** at June 30, 2025, from a loss of **$98.4 million** at December 31, 2024, primarily due to unrealized holding gains on debt securities AFS[183](index=183&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CTBI's financial performance and condition for the quarter and six months ended June 30, 2025, highlighting record earnings, asset growth, and strategic management of risks - CTBI reported **record earnings of $24.9 million** (**$1.38 per basic share**) for the quarter ended June 30, 2025, an increase from **$19.5 million** (**$1.09 per basic share**) in the prior year's same quarter[187](index=187&type=chunk) - Year-to-date earnings reached **$46.9 million** (**$2.60 per basic share**), up **$8.7 million** (**$0.47 per basic share**) from the prior year[187](index=187&type=chunk) - Total consolidated assets were **$6.4 billion** and total consolidated deposits, including repurchase agreements, were **$5.5 billion** at June 30, 2025[185](index=185&type=chunk) [Overview and Business](index=70&type=section&id=Overview%20and%20Business) This section provides an overview of CTBI's business, including its headquarters, operational footprint, and the range of commercial and personal banking services offered - CTBI is a **bank holding company** headquartered in Pikeville, Kentucky, owning Community Trust Bank, Inc. (CTB) and Community Trust and Investment Company[185](index=185&type=chunk) - The company operates **81 banking locations** across Kentucky, West Virginia, and Tennessee, with **four trust offices** in Kentucky and **one in Tennessee**[185](index=185&type=chunk) - CTBI offers **commercial and personal banking services**, including deposits, secured/unsecured loans, cash management, letters of credit, and trust and wealth management activities[186](index=186&type=chunk) [Results of Operations and Financial Condition](index=70&type=section&id=Results%20of%20Operations%20and%20Financial%20Condition) This section summarizes CTBI's financial performance for the six months ended June 30, 2025, highlighting increases in net interest income, loan portfolio, and deposits, alongside a decrease in nonperforming loans Key Financial Highlights (Six Months Ended June 30, in thousands) | (dollars in thousands) | 2025 | 2024 | Change Amount | Percent Change (%) | | :------------------------ | :---------- | :---------- | :------------ | :----------------- | | Net interest income | $105,307 | $89,269 | $16,038 | 18.0 | | Provision for credit losses | 5,662 | 5,628 | 34 | 0.6 | | Noninterest income | 31,068 | 30,842 | 226 | 0.7 | | Noninterest expense | 69,871 | 64,642 | 5,229 | 8.1 | | Income taxes | 13,971 | 11,663 | 2,308 | 19.8 | | Net income | $46,871 | $38,178 | $8,693 | 22.8 | - Net interest income for the quarter increased **$2.8 million** (**5.4%**) from prior quarter and **$8.4 million** (**18.3%**) from prior year same quarter[190](index=190&type=chunk) - The loan portfolio increased **$65.3 million** (annualized **5.6%**) during the quarter and **$215.2 million** (**4.8%**) from prior year end[190](index=190&type=chunk) - Total nonperforming loans decreased **$2.1 million** during the quarter and **$2.3 million** from prior year end[190](index=190&type=chunk) - Deposits, including repurchase agreements, increased **$100.2 million** (annualized **7.5%**) during the quarter and **$147.7 million** (**2.8%**) from prior year end[190](index=190&type=chunk) [Quarterly Highlights](index=71&type=section&id=Quarterly%20Highlights) This section provides key financial highlights for the quarter ended June 30, 2025, including changes in net interest income, provision for credit losses, noninterest income, and noninterest expense - Net interest income for the quarter was **$54.0 million**, up **5.4%** from prior quarter and **18.3%** from prior year same quarter[190](index=190&type=chunk) - Provision for credit losses decreased **$1.5 million** from prior quarter and **$0.9 million** from prior year same quarter[190](index=190&type=chunk) - Noninterest income increased **$1.3 million** (**8.6%**) from prior quarter and **$0.5 million** (**2.9%**) from prior year same quarter[190](index=190&type=chunk) - Noninterest expense increased **$1.5 million** (**4.3%**) from prior quarter and **$3.2 million** (**10.0%**) from prior year same quarter[190](index=190&type=chunk) [Income Statement Review](index=71&type=section&id=Income%20Statement%20Review) This section reviews CTBI's income statement for the six months ended June 30, 2025, detailing changes in net interest income, provision for credit losses, noninterest income, noninterest expense, and net income, along with key profitability metrics Income Statement Review (Six Months Ended June 30, in thousands) | (dollars in thousands) | 2025 | 2024 | Change Amount | Percent Change (%) | | :------------------------ | :---------- | :---------- | :------------ | :----------------- | | Net interest income | $105,307 | $89,269 | $16,038 | 18.0 | | Provision for credit losses | 5,662 | 5,628 | 34 | 0.6 | | Noninterest income | 31,068 | 30,842 | 226 | 0.7 | | Noninterest expense | 69,871 | 64,642 | 5,229 | 8.1 | | Income taxes | 13,971 | 11,663 | 2,308 | 19.8 | | Net income | $46,871 | $38,178 | $8,693 | 22.8 | | Average earning assets | $5,915,965 | $5,463,944 | $452,021 | 8.3 | | Yield on average earnings assets, tax equivalent* | 5.73% | 5.60% | 0.13% | 2.3 | | Cost of interest bearing funds | 3.01% | 3.32% | (0.31)% | (9.5) | | Net interest margin, tax equivalent* | 3.61% | 3.31% | 0.30% | 9.1 | [Consolidated Average Balance Sheets and Taxable Equivalent Income/Expense and Yields/Rates](index=72&type=section&id=Consolidated%20Average%20Balance%20Sheets%20and%20Taxable%20Equivalent%20Income%2FExpense%20and%20Yields%2FRates) This section provides detailed average balance sheets and corresponding interest income/expense and yields/rates for earning assets and interest-bearing liabilities for the three and six months ended June 30, 2025 and 2024 Consolidated Average Balance Sheets and Taxable Equivalent Income/Expense and Yields/Rates (Three Months Ended June 30, in thousands) | (in thousands) | Average Balances (June 30, 2025) | Interest (June 30, 2025) | Rate (June 30, 2025) | Average Balances (June 30, 2024) | Interest (June 30, 2024) | Rate (June 30, 2024) | | :------------------------------- | :------------------------------- | :----------------------- | :------------------- | :------------------------------- | :----------------------- | :------------------- | | Total earning assets | $5,983,093 | $85,854 | 5.76% | $5,469,813 | $76,940 | 5.66% | | Total interest bearing liabilities | $4,215,573 | $31,531 | 3.00% | $3,776,362 | $30,970 | 3.30% | | Net interest income, tax equivalent | | $54,323 | | | $45,970 | | | Net interest margin | | | 3.64% | | | 3.38% | Consolidated Average Balance Sheets and Taxable Equivalent Income/Expense and Yields/Rates (Six Months Ended June 30, in thousands) | (in thousands) | Average Balances (June 30, 2025) | Interest (June 30, 2025) | Rate (June 30, 2025) | Average Balances (June 30, 2024) | Interest (June 30, 2024) | Rate (June 30, 2024) | | :------------------------------- | :------------------------------- | :----------------------- | :------------------- | :------------------------------- | :----------------------- | :------------------- | | Total earning assets | $5,915,965 | $168,181 | 5.73% | $5,463,944 | $152,236 | 5.60% | | Total interest bearing liabilities | $4,177,225 | $62,318 | 3.01% | $3,774,937 | $62,381 | 3.32% | | Net interest income, tax equivalent | | $105,863 | | | $89,855 | | | Net interest margin | | | 3.61% | | | 3.31% | [Net Interest Differential](index=76&type=section&id=Net%20Interest%20Differential) This section analyzes the approximate effect of volume and rate changes on net interest income, showing positive contributions from both for the six months ended June 30, 2025 Effect of Volume and Rate Changes on Net Interest Differential (Three Months Ended June 30, in thousands) | (in thousands) | Total Change 2025/2024 | Change Due to Volume | Change Due to Rate | | :-------------------- | :--------------------- | :------------------- | :----------------- | | Total interest income | $8,914 | $8,621 | $293 | | Total interest expense | 561 | 3,613 | (3,052) | | Net interest income | $8,353 | $5,008 | $3,345 | Effect of Volume and Rate Changes on Net Interest Differential (Six Months Ended June 30, in thousands) | (in thousands) | Total Change 2025/2024 | Change Due to Volume | Change Due to Rate | | :-------------------- | :--------------------- | :------------------- | :----------------- | | Total interest income | $15,945 | $7,810 | $8,135 | | Total interest expense | (63) | 3,166 | (3,229) | | Net interest income | $16,008 | $4,644 | $11,364 | - Net interest income for the quarter increased by **$8.4 million** (**18.3%**) from the prior year, with the net interest margin increasing by **26 basis points** to **3.64%**[201](index=201&type=chunk) [Provision for Credit Losses Discussion](index=77&type=section&id=Provision%20for%20Credit%20Losses%20Discussion) The provision for credit losses decreased for the quarter ended June 30, 2025, compared to both the prior quarter and prior year, primarily due to funding net charge-offs and changes in loan volume and composition Provision for Credit Losses (in millions) | Period | Provision for Credit Losses (in millions) | | :------------------------- | :---------------------------------------- | | Quarter Ended June 30, 2025 | $2.1 | | Prior Quarter | $3.6 | | Prior Year Same Quarter | $3.0 | - The provision for the quarter included **$1.4 million** for net charge-offs, **$0.6 million** for changes in loan volume and composition, and a **$123 thousand** credit for unfunded commitments[202](index=202&type=chunk) - Reserve coverage (ACL to nonperforming loans) was **237.1%** at June 30, 2025, compared to **263.0%** at June 30, 2024[202](index=202&type=chunk) [Noninterest Income Discussion](index=78&type=section&id=Noninterest%20Income%20Discussion) Noninterest income increased for the quarter ended June 30, 2025, compared to both the prior quarter and prior year, driven by higher deposit-related fees and loan-related fees Noninterest Income (in thousands) | $(in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | YTD 2025 | YTD 2024 | | :------------------------------ | :-------- | :-------- | :-------- | :-------- | :-------- | | Deposit related fees | $7,350 | $6,822 | $7,308 | $14,172 | $14,319 | | Trust and wealth management income | 4,092 | 3,981 | 3,736 | 8,073 | 7,253 | | Gains on sales of loans | 77 | 47 | 119 | 124 | 164 | | Loan related fees | 1,249 | 965 | 1,320 | 2,214 | 2,672 | | Bank owned life insurance revenue | 1,102 | 1,035 | 1,815 | 2,137 | 3,107 | | Brokerage revenue | 526 | 494 | 683 | 1,020 | 1,173 | | Other | 1,775 | 1,553 | 727 | 3,328 | 2,154 | | Total noninterest income | $16,171 | $14,897 | $15,708 | $31,068 | $30,842 | - Quarter-over-quarter increase was primarily due to increases in deposit related fees (**$0.5 million**) and loan related fees (**$0.3 million**)[204](index=204&type=chunk) - Year-over-year increases in trust and wealth management income (**$0.4 million**) and securities gains (**$0.6 million**) were partially offset by a decrease in bank owned life insurance revenue (**$0.7 million**)[204](index=204&type=chunk) [Noninterest Expense Discussion](index=79&type=section&id=Noninterest%20Expense%20Discussion) Noninterest expense increased for the quarter ended June 30, 2025, compared to both the prior quarter and prior year, mainly due to higher accruals for annual incentive payments and data processing Noninterest Expense (in thousands) | $(in thousands) | 2Q 2025 | 1Q 2025 | 2Q 2024 | YTD 2025 | YTD 2024 | | :------------------------------ | :-------- | :-------- | :-------- | :-------- | :-------- | | Salaries | $13,667 | $13,269 | $13,037 | $26,936 | $26,073 | | Employee benefits | 7,987 | 6,849 | 6,554 | 14,836 | 13,640 | | Net occupancy and equipment | 3,172 | 3,440 | 3,089 | 6,612 | 6,117 | | Data processing | 3,326 | 2,859 | 2,669 | 6,185 | 5,187 | | Legal and professional fees | 1,001 | 1,225 | 978 | 2,226 | 1,810 | | Advertising and marketing | 765 | 673 | 856 | 1,438 | 1,433 | | Taxes other than property and payroll | 573 | 529 | 438 | 1,102 | 880 | | Other | 5,172 | 5,364 | 4,801 | 10,536 | 9,502 | | Total noninterest expense | $35,663 | $34,208 | $32,422 | $69,871 | $64,642 | - The quarter-over-quarter increase was primarily due to an increase in the accrual for the annual incentive payment to employees and a **$0.5 million** increase in data processing expense[206](index=206&type=chunk) - The year-over-year increase was primarily due to increases in personnel expense (**$2.1 million**) and data processing expense (**$0.7 million**)[206](index=206&type=chunk) [Balance Sheet Review](index=79&type=section&id=Balance%20Sheet%20Review) CTBI's total assets, loans outstanding, and shareholders' equity all increased during the quarter and from prior year-end, with significant growth in commercial and residential loan portfolios and deposits - Total assets increased **$114.4 million** (annualized **7.3%**) during the quarter and **$197.7 million** (annualized **38.8%**) from prior year end, reaching **$6.4 billion**[207](index=207&type=chunk) - Loans outstanding increased **$65.3 million** (annualized **5.6%**) during the quarter and **$215.2 million** (annualized **58.3%**) from prior year end, reaching **$4.7 billion**[207](index=207&type=chunk) - Shareholders' equity increased **$22.7 million** (annualized **11.6%**) during the quarter and **$49.3 million** (annualized **79.2%**) from prior year end, reaching **$806.9 million**[209](index=209&type=chunk) - Net unrealized losses on securities, net of deferred taxes, improved to **$80.6 million** at June 30, 2025, from **$98.4 million** at December 31, 2024[209](index=209&type=chunk) [Loans Discussion](index=80&type=section&id=Loans%20Discussion) CTBI's total loan portfolio grew by **4.8%** from prior year-end to **$4.7 billion** at June 30, 2025, with growth in commercial and residential categories and managed net charge-offs Loan Portfolio Summary (June 30, 2025, in thousands) | Loan Category | Balance (June 30, 2025) | Variance from Prior Year End (%) | Net (Charge Offs)/Recoveries (YTD) | Nonperforming (June 30, 2025) | ACL (June 30, 2025) | | :------------------------------ | :---------------------- | :------------------------------- | :--------------------------------- | :---------------------------- | :------------------ | | Hotel/motel | $477,175 | 4.0 | $0 | $0 | $5,604 | | Commercial real estate residential | 559,906 | 10.2 | (49) | 3,300 | 6,480 | | Commercial real estate nonresidential | 913,463 | 5.6 | 6 | 11,343 | 11,457 | | Dealer floorplans | 70,270 | (17.3) | 0 | 0 | 507 | | Commercial other | 361,751 | 1.7 | (769) | 1,313 | 3,711 | | Real estate mortgage | 1,112,672 | 6.6 | (65) | 6,840 | 12,953 | | Home equity | 177,135 | 5.8 | 6 | 687 | 1,604 | | Consumer direct | 150,915 | (1.3) | (287) | 224 | 2,131 | | Consumer indirect | 878,506 | 3.3 | (1,770) | 679 | 13,378 | | Total loans | $4,701,793 | 4.8 | $(2,928) | $24,386 | $57,825 | - The increase in loans from prior quarter included a **$24.9 million** increase in commercial loans and a **$50.2 million** increase in residential loans, partially offset by a **$10.1 million** decrease in indirect consumer loans[207](index=207&type=chunk) [Total Deposits and Repurchase Agreements Discussion](index=80&type=section&id=Total%20Deposits%20and%20Repurchase%20Agreements%20Discussion) Total deposits and repurchase agreements increased by **1.9%** during the quarter and **2.8%** from prior year-end, reaching **$5.46 billion**, with growth in noninterest-bearing and time deposits Total Deposits and Repurchase Agreements (in thousands) | (dollars in thousands) | 2Q 2025 | 1Q 2025 | YE 2024 | Percent Change 2Q 2025 vs 1Q 2025 (%) | Percent Change 2Q 2025 vs YE 2024 (%) | | :--------------------------------------- | :---------- | :---------- | :---------- | :------------------------------------ | :------------------------------------ | | Noninterest bearing deposits | $1,258,205 | $1,235,544 | $1,242,676 | 1.8 | 1.2 | | Interest checking | 173,795 | 158,968 | 167,736 | 9.3 | 3.6 | | Money market savings | 1,820,230 | 1,828,051 | 1,781,415 | (0.4) | 2.2 | | Savings accounts | 508,467 | 516,379 | 511,378 | (1.5) | (0.6) | | Time deposits | 1,472,311 | 1,372,363 | 1,366,984 | 7.3 | 7.7 | | Repurchase agreements | 225,075 | 246,556 | 240,166 | (8.7) | (6.3) | | Total deposits and repurchase agreements | $5,458,083 | $5,357,861 | $5,310,355 | 1.9 | 2.8 | - CTBI is **not dependent** on any one customer or group of customers for deposits, with no single customer accounting for more than **3%** of total deposits[208](index=208&type=chunk) [Deposit Maturities](index=81&type=section&id=Deposit%20Maturities) This section provides a breakdown of uninsured certificates of deposit and other time deposits by maturity period, with the majority maturing within one year Maturities of Uninsured Certificates of Deposit and Other Time Deposits (June 30, 2025, in thousands) | (in thousands) | Total | Within 1 Year | 2 Years | 3 Years | 4 Years | 5 Years | After 5 Years | | :------------- | :--------- | :------------ | :-------- | :-------- | :-------- | :-------- | :------------ | | Uninsured certificates of deposits and other time deposits greater than $250,000 | $411,915 | $393,919 | $5,346 | $9,192 | $2,950 | $508 | $0 | - As of June 30, 2025, CTBI had approximately **$1.5 million** in uninsured deposits and **no brokered deposits**[212](index=212&type=chunk) [Repurchase Agreements Discussion](index=81&type=section&id=Repurchase%20Agreements%20Discussion) This section provides information on CTBI's repurchase agreement borrowings, which decreased from December 31, 2024, to June 30, 2025, and are accounted for as secured borrowings Repurchase Agreements Balances (in thousands) | ($ in thousands) | Balance Outstanding as of Quarter End | | :--------------- | :------------------------------------ | | June 30, 2025 | $225,075 | | December 31, 2024 | $240,166 | | June 30, 2024 | $227,576 | - Repurchase agreements are accounted for as **secured borrowings**[213](index=213&type=chunk) [Asset Quality Discussion](index=81&type=section&id=Asset%20Quality%20Discussion) CTBI's asset quality improved, with total nonperforming loans decreasing from prior quarter and prior year-end, while net loan charge-offs remained stable, supported by robust risk management processes - Total nonperforming loans decreased to **$24.4 million** at June 30, 2025, from **$26.7 million** at December 31, 2024[214](index=214&type=chunk) - Net loan charge-offs for the quarter were **$1.4 million** (annualized **0.12%** of average loans), stable compared to the prior year's same period[215](index=215&type=chunk) - The allowance for credit losses to nonaccrual loans was **362.8%** at June 30, 2025, compared to **1,017.1%** at June 30, 2024[214](index=214&type=chunk) - CTBI's **risk management** includes weekly and monthly delinquent loan review meetings, a Watch List Asset Committee, and a Loan Review Department that annually reviews a high percentage of the loan portfolio[214](index=214&type=chunk) - CTBI generally **does not offer high-risk loans** such as option ARM products, high LTV mortgages, interest-only loans, or loans with negative amortizations[214](index=214&type=chunk) [Dividends](index=82&type=section&id=Dividends) CTBI has consistently paid quarterly cash dividends, with a recent increase declared by the Board of Directors, resulting in an annualized dividend yield of **3.55%** as of June 30, 2025 Quarterly Cash Dividends Paid | Pay Date | Record Date | Amount Per Share | | :---------- | :------------ | :--------------- | | July 1, 2025 | June 15, 2025 | $0.47 | | April 1, 2025 | March 15, 2025 | $0.47 | | January 1, 2025 | December 15, 2024 | $0.47 | | October 1, 2024 | September 15, 2024 | $0.47 | | July 1, 2024 | June 15, 2024 | $0.46 | | April 1, 2024 | March 15, 2024 | $0.46 | - On July 22, 2025, the Board declared a quarterly cash dividend of **$0.53 per share**, representing a **12.8% increase**, to be paid on October 1, 2025[216](index=216&type=chunk) - The annualized dividend yield to shareholders was **3.55%** as of June 30, 2025[209](index=209&type=chunk)[221](index=221&type=chunk) [Liquidity and Market Risk](index=82&type=section&id=Liquidity%20and%20Market%20Risk) CTBI manages liquidity to meet loan demand and deposit withdrawals by maintaining liquid assets, unused borrowing capacity, and core deposit growth, ensuring diverse funding sources - CTBI's objective is to maintain **consistent growth in net interest income** through effective management of balance sheet composition, liquidity, and interest rate risk[217](index=217&type=chunk) - As of June 30, 2025, CTBI had **$395.3 million** in cash and cash equivalents and **$109.4 million** in unpledged AFS securities for liquidity needs[217](index=217&type=chunk) - CTBI had a **$527.0 million** available borrowing position with the Federal Home Loan Bank at June 30, 2025, and **$50 million** in lines of credit with correspondent banks[217](index=217&type=chunk) - The investment portfolio consists primarily of investment grade short-term U.S. government and agency issuances, with **99.6%** in AFS securities[218](index=218&type=chunk) [Interest Rate Risk](index=83&type=section&id=Interest%20Rate%20Risk) CTBI considers interest rate risk a significant market risk and manages it using an earnings simulation model to analyze net interest income sensitivity, monitored by the Asset/Liability Management Committee (ALCO) - Interest rate risk is managed using an **earnings simulation model** to analyze net interest income sensitivity to movements in interest rates[219](index=219&type=chunk) - A **200 basis point increase** in the yield curve is estimated to increase net interest income by **1.41%** over one year and **3.76%** over two years[243](index=243&type=chunk) - A **200 basis point decrease** in the yield curve is estimated to decrease net interest income by **2.12%** over one year and **5.09%** over two years[243](index=243&type=chunk) - CTBI's **Asset/Liability Management Committee (ALCO)** monitors and manages interest rate risk within Board-approved policy limits[220](index=220&type=chunk) [Capital Resources](index=83&type=section&id=Capital%20Resources) CTBI's capital growth is primarily driven by retained earnings, with the company and its bank subsidiary meeting the Community Bank Leverage Ratio (CBLR) framework requirements, indicating strong capital levels - CTBI's primary source of capital growth is the **retention of earnings**, with **63.8%** of earnings retained year-to-date, compared to **56.8%** in the prior year[221](index=221&type=chunk) - CTBI and CTB elected to use the **Community Bank Leverage Ratio (CBLR) framework**, which requires a leverage ratio greater than **9%** for eligible community banks[222](index=222&type=chunk) Community Bank Leverage Ratio (CBLR) | Entity | CBLR Ratio (June 30, 2025) | | :----- | :------------------------- | | CTBI | 13.80% | | CTB | 13.33% | [Impact of Inflation, Changing Prices, and Economic Conditions](index=84&type=section&id=Impact%20of%20Inflation%2C%20Changing%20Prices%2C%20and%20Economic%20Conditions) CTBI acknowledges that inflation impacts asset growth and the need for increased equity capital, emphasizing its ability to react to interest rate changes as a significant factor influencing financial results - **Inflation impacts asset growth** in the banking industry, requiring **increased equity capital** to maintain appropriate equity-to-assets ratios, and also affects other expenses[224](index=224&type=chunk) - CTBI considers its **ability to react to changes in interest rates** as one of the most significant impacts on financial and operating results[225](index=225&type=chunk) - The company seeks to maintain a **balanced position** between interest rate sensitive assets and liabilities to mitigate the effects of wide interest rate fluctuations[225](index=225&type=chunk) [Stock Repurchase Program](index=84&type=section&id=Stock%20Repurchase%20Program) CTBI has an ongoing stock repurchase program, which has been increased multiple times since its inception in 1998, with a significant number of shares repurchased and remaining authorization - CTBI's stock repurchase program began in December 1998 and has been increased multiple times, including by an additional **1,000,000 shares** in March 2020[226](index=226&type=chunk) Stock Repurchase Program Status (June 30, 2025) | Metric | Amount | | :----------------------------------- | :----------- | | Total shares repurchased through program | 2,465,294 | | Shares remaining under authorization | 1,034,706 | [Critical Accounting Estimates](index=84&type=section&id=Critical%20Accounting%20Estimates) This section highlights CTBI's critical accounting estimates, primarily the Allowance for Credit Losses (ACL) and Goodwill impairment testing, which require significant management judgment and assumptions about future events - The preparation of consolidated financial statements requires **significant estimates and assumptions**, which are constantly reevaluated[227](index=227&type=chunk)[228](index=228&type=chunk) - The Allowance for Credit Losses (ACL) is a **critical accounting estimate**, determined through ongoing **quarterly assessments** of loan collectability, historical loss experience, current/forecasted economic conditions, and qualitative factors[229](index=229&type=chunk)[230](index=230&type=chunk) - ACL methodology involves **collective evaluation** for pooled loans using a **discounted cash flow (DCF) model** with **economic forecasts** (up to one year) and specific allowances for **individually evaluated loans** (e.g., collateral-dependent loans)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Goodwill is another **critical accounting estimate**, tested **annually for impairment** by comparing its fair value to its carrying amount, involving subjective estimates and judgments related to cash flows and discount rates[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reiterates CTBI's approach to managing interest rate risk, which is considered a significant market risk, using an earnings simulation model to assess net interest income sensitivity to yield curve changes - Interest rate risk management focuses on maintaining **consistent growth in net interest income** within Board-approved policy limits[243](index=243&type=chunk) - An **earnings simulation model** is used to analyze net interest income sensitivity to movements in interest rates[243](index=243&type=chunk) Estimated Impact of Yield Curve Changes on Net Interest Income | Scenario | Estimated Change in Net Interest Income (1 Year) | Estimated Change in Net Interest Income (2 Years) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | 200 basis point increase | +1.41% | +3.76% | | 200 basis point decrease | -2.12% | -5.09% | [Item 4. Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of CTBI's disclosure controls and procedures as of June 30, 2025, and states that there were no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2025, ensuring timely and accurate reporting of material information[244](index=244&type=chunk) - There were **no changes** in internal control over financial reporting during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect CTBI