CBK 10-K & 10-Q changes, risk factors and insider trading

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2025 included in the 2025 Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Report, particularly in the section titled “Cautionary Note Regarding Forward-Looking StatementsStatements,” as well as in the section titled “Risk Factors” in the 2025 Annual Report. We assume no obligation to update any of these forward-looking statements except to the extent required by law.

The Parent Company is a bank holding company headquartered in Harrogate, Tennessee that has elected under the BHC Act to become a financial holding company. WeThe wereParent Company was incorporated in Tennessee in 1975, 1975 and we operateoperates primarily through ourits wholly owned subsidiary, the Bank, a Tennessee-chartered banking corporation organized in 1976. We provide banking services from 34 offices in select markets in Kentucky, North Carolina, and Tennessee, and we also operate one loan production office in Lincolnton, North Carolina. The Bank is a full-service community banking institution that offers traditional consumer consumer and commercial products and services to serve businesses and individuals in our markets.

Our consolidated financial statements are prepared in accordance with GAAP and follow general practices within the banking industry. The application of these principles requires management to make estimates, assumptions and complex judgements that affect amounts presented in our consolidated financial statements. These estimates, assumptions and judgements are based on information available as of the date of the financial statements; accordingly, as this information changes, the consolidated financial statements could reflect different estimates, assumptions, and judgements. Management has identified the ACLACL, as a critical accounting policy as included in Note 1 of our consolidated financial statements as of and for the fiscal year ended December 31, 2025, and included in the 2025 Annual ReportReport, to be an accounting area that requires the most complex and subjective judgements and, as such, could be most subject to revision as new and additional information becomes available or circumstances change, including changes in the economic climate and interest rate changes. TheseCritical policies,accounting policies we have identified, along with the disclosures presented in the other notes to theour consolidated financial statements and in this analysisdiscussion and discussion,analysis, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. There have been no significant changes to the accounting policies, estimates, and assumptions, or the judgments affecting the application of these policies, estimates, and assumptions, from those disclosed in the 2025 Annual Report.

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as an emerging growth company, wethe Parent Company can elect to opt out of the extended transition period for adopting any new or revised accounting standards. WeThe haveParent Company has elected to take advantage of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public orand private companies, the weParent Company may adopt the standard on the application date for private companies. WeThe haveParent Company has elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and wethe Parent Company may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as weit qualifyqualifies as an emerging growth company.

Three and Six Months ended MarchJune 31,30, 2026 Highlights

Net interest income is our principal source of net income and represents the difference between interest income and interest expense. We generate interest income from interest-earning assets that we own, including loans and investment securities. We incur interest expense from interest-bearing liabilities, including interest-bearing deposits and other borrowings, notably FHLB advances,advances and outstanding holdingloans companyto loan agreement with Community Trust Bank, Inc. (the “CTBParent Loan”)Company and theParent SubordinatedCompany Debentures.subordinated debt securities. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the cost of our deposits and other funding sources; (iii) our net interest spread; and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is a ratio of net interest income to average interest earning assets for the same period.

Noninterest income primarily consists of: (i) service charges on deposit accounts; (ii) net realized gains on the sale of premises and equipment; (iii) net realized gains on the sale of foreclosed assets; (iv) automated teller machine (“ATM”) and debit card fees; (v) benefits from changes in the cash surrender value of bank owned life insurance (“BOLI”); and (vi) other miscellaneous fees and income.

Noninterest expense primarily consists of: (i) salaries and employee benefits; (ii) occupancy expenses; (iii) professional fees; (iv) data processing expenses; (v) Federal Deposit Insurance Corporation ( “FDIC”) deposit insurance premiums; (vi) depreciation and amortization; and (vii) other operating expenses.

Deposits primarily consist of commercial and personal accounts maintained by businesses and individuals in our primary market areas. We also utilize brokered deposits (Multi-Bank Securities, Inc. and LPL Financial) and non-brokered deposits (National CD Rateline), certificates of deposits and reciprocal deposits through a third-party network that effectively allows depositors to receive insurance on amounts greater than the FDIC insurance limit, which is currently $250,000 per depositor, per FDIC-insured bank for each account ownership category. We manage liquidity based on factors that include liquid assets to loans, cash flow projections, short-term funding needs and sources, and the availability of unused funding sources. As of MarchJune 31,30, 2026, approximately $305.0$227.2 million was available for borrowing on committed lines with the FHLB and $77.5$102.5 million was was available for purchases of federal funds from correspondents on an overnight uncommitted basis.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following tabletables showsshow the average outstanding balance of each principal category of our assets, liabilities and shareholders’ equity, together with the average yields on our assets and average costs of our liabilities, for the periods indicated. Yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

The following tabletables setsset forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to: (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate), and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of thisthese table,tables, changes attributable to both rate and volume that cannot be segregated have been proportionately allocated to both volume and rate.

Net interest income for the three months ended MarchJune 31,30, 2026 was $20.5$21.5 million compared to $19.3$20.1 million for the three months ended MarchJune 31,30, 2025, an increase of $1.1$1.4 million, or 5.9%.7.3%. The increase in net interest income was comprised of an approximately $1.3$0.7 million, or 4.2%,2.3%, decrease in interest income and and dividend income, andoffset by an approximately $2.4$2.2 million, or 21.4%,20.0%, decrease in interest expense. The $2.4primary milliondrivers decreaseof changes in interest interest expense forand theincome three-monthwere period ended March 31, 2026, was primarily relatedadjustments to a 0.5% decrease in thedeposit rates paid on interest-bearing liabilities and a decrease of $88.9 million, or 5.4%,reduction in averagelong interest-bearingterm liabilities as of March 31, 2026, compared to March 31, 2025. The decrease in average interest-bearing liabilities from March 31, 2025 to March 31, 2026 was due to decreases in our time deposit balances.debt. For the three months ended MarchJune 31,30, 2026, net interest margin and net interest spread were 3.9%4.06% and 3.3%,3.44%, respectively, compared to 3.7%3.84% and 3.0%,3.40%, respectively, for the same period in 2025, which reflects the decrease in interest income discussed above relative to the slight decrease in interest expense.2025.

The provision for credit losses on loans for the three months ended MarchJune 31,30, 2026, was $122$404 thousand compared to $0 for the three months ended MarchJune 31,30, 2025. The provision recorded for the three months ended March 31, 2026, was based on an increase in the number of loans outstanding. There were no significant net charge-offs in the three months ended MarchJune 31,30, 2026.

The ACL as a percentage of total loans was 0.97%0.96% at bothJune March 31,30, 2026, andcompared to 0.97% at December 31, 2025.

Noninterest income for the three months ended MarchJune 31,30, 2026, was $2.6$2.7 million compared to $2.4$2.2 million for the three months ended MarchJune 31,30, 2025, an increase of $0.1$0.5 million, or 19.2%. Noninterest income for the six months ended June 30, 2026, was $5.2 million compared to $4.7 million for the six months ended June 30, 2025, an increase of $0.5 million, or 6.1%.12.3%. The following table sets forth the major components of our noninterest income for the three threeand six months ended MarchJune 31,30, 2026 and 2025:

Customer service fees include fees for overdraft privilege charges, insufficient funds charges, account analysis service fees on commercial accounts, and monthly account service fees. These fees increased $126$100 thousand, or 19.2%,14.8%, to $781$774 thousand for the three months ended MarchJune 31,30, 2026, from $655$674 thousand for the three months ended MarchJune 31,30, 2025. This increase was primarily the result of normalan fluctuationsincrease in ourcustomer operations.transactions. For the six months ended June 30, 2026, customer service fees increased $227 thousand, or 17.0%, to $1.6 million from $1.3 million for the six months ended June 30, 2025. This increase was primarily the result of an increase in customer transactions.

ATM and debit card fees increased $55$85 thousand, or 6.9%,9.5%, to $854$977 thousand for the three months ended MarchJune 31,30, 2026, from $799$892 thousand for the three months ended MarchJune 31, 30, 2025. TheFor increasethe six wasmonths ended June 30, 2026, ATM and debit card fees increased $141 thousand, or 8.3%, to $1.8 million from $1.7 million for the six months ended June 30, 2025. These increases were primarily the result of changesincreased inusage transactionalof volumeCommercial thatBank generates interchange fees.ATMs.

The income on BOLI increaseddecreased $4$21 thousand, or 6.3%, 1.3%, to $312$315 thousand for the three months ended MarchJune 31,30, 2026, from $308$336 thousand for the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, income on BOLI decreased $18 thousand, or 2.8%, to $626 thousand from $644 thousand for the six months ended June 30, 2025. The increaseThese wasdecreases were primarily the result of a gaindecrease onin athe policyearnings duerate to aand death benefit and an increasebenefits in earnings rates.previous periods.

Other income and fees decreasedincreased $169$264 thousand, or 23.9%,91.0%, to $537$554 thousand for the three months ended MarchJune 31,30, 2026 from $706$290 thousand for the three months ended MarchJune 31,30, 2025. This was primarily due to a BOLI death benefit payment of $103 thousand during 2026 and other normal fluctuations in customer transactions. For the six months ended June 30, 2026, other income and fees increased $96 thousand, or 9.5%, to $1.1 million from $1.0 million for the six months ended June 30, 2025. This decreaseincrease was primarily due to normal fluctuations in our operations.

Noninterest expense for the three months ended MarchJune 31,30, 2026 was $11.1$10.9 million compared to $10.6$10.7 million for the three months ended MarchJune 31,30, 2025, an increase of $506$147 thousand, or 4.8%,1.4%, which was primarily a result of increases in professional fees. Noninterest expense for the six months ended June 30, 2026 was $22.0 million compared to $21.3 million for the six months ended June 30, 2025, an increase of $653 thousand, or 3.1%, which was primarily a result of a loss on the early extinguishmentretirement of debt. The following table sets forth the major components of our noninterest expense for the three and six months ended MarchJune 31,30, 2026 and 2025:

Salaries and employee benefits primarily include: (i) amounts paid to employees for base pay, incentive compensation, and bonuses; (ii) health and other related insurance expenses paid by the Bank on behalf of our employees; and (iii) the annual cost for any increases in the liability for non-qualified plans maintained maintained for certain key employees. Salaries and employee benefits forremained theconsistent three months ended March 31, 2026 wereat $5.7 million, an increase of $0.1 million, or 1.6%, compared to $5.6 million for the three months ended MarchJune 30, 31,2026 increasing by $26 thousand, or 0.5%, compared to the corresponding period in 2025. ThisFor the six months ended June 30, 2026, salaries and employee benefits were $11.4 million, an increase of $116 thousand, or 1.0%, compared to $11.3 million for the six months ended June 30, 2025. These slight increaseincreases waswere primarily due to pay increases net of turnover.

Occupancy expenses consist of depreciation on property, premises, equipment and software, rent expense for leased facilities, maintenance agreements on equipment, property taxes, and other expenses related to maintaining owned or leased assets. Occupancy expenses for the three months ended MarchJune 31,30, 2026 were $0.84$856 millionthousand compared to $0.87$916 millionthousand for the three months ended MarchJune 31,30, 2025, a decrease of $0.03$60 million,thousand, or 3.7%.6.6%. TheFor the six months ended June 30, 2026, occupancy expenses were $1.7 million compared to $1.8 million for the six months ended June 30, 2025, a decrease wasof $0.1 million, or 5.1%. These decreases were primarily attributable to normal fluctuations Data processing expenses, which primarily consist of expenses for data processing services for core processing, decreased $0.1 million, or 8.8%, to $1.1 million for the three months ended March 31, 2026 from $1.2 million for the three months ended March 31, 2025.fluctuations.

OtherData processing expenses, which primarily consist of expenses increasedfor $0.5data processing services for core processing, decreased $0.1 million, or 35.8%, 4.5%, to $2.0$1.1 million for the three months ended June 30, 2026 from $1.2 million for the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, compareddata processing expenses decreased $0.2 million, or 6.7%, to $1.5$2.2 million from $2.4 million for the threesix months ended March 31,June 30, 2025. This increase was primarily attributable to a write-off of a discount of $0.6 million due to the redemption of the Subordinated Debentures and Trust Preferred Securities.

Total assets were $2.3$2.4 billion as of MarchJune 30, 31, 2026, an increase of $37.3$85.1 million, or 1.6%,3.7%, from December 31, 2025. This increase was primarily the result of an increase of $67.0 million in netgross loans ofless $18.4deferred millionfees and an increase in interest-bearing deposits in banks of $37.1 million.discounts.

We have fourthree loan portfolio segments: (i) real estate (which is divided into four classes), (ii) commercial, and (iii) consumer and (iv)other. other.Prior period segment presentation has been reclassified to combine the “Consumer” and “Other” loan segments into “Consumer and Other” to conform to current period presentation and historical MD&A disclosures. This reclassification has no impact on total loans or net financial results for any period presented. A segment is generally determined based on the initial measurement attribute, risk characteristics of the loan, and method for monitoring and assessing credit risk. Classes within the real estate portfolio segment include (i) CRE, (ii) C&D, (iii) residential, and (iv) other.

Consumer and Other — This loan portfolio segment includes non-real estate secured direct loans to consumers for household, family, and other personal expenditures.expenditures; tax-exempt commercial loans; undisbursed loans of all types; and unpaid overdrafts on deposit accounts. In addition to consumer installment loans, this portfolio segment also includes secured and unsecured personal lines of credit as well as overdraft protection lines. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.

Net loans were $1.9 billion as of MarchJune 31,30, 2026, 2026, an increase of $18.4$66.4 million, or 1.0%,3.6%, from December 31, 2025. The increase in net loans outstanding was primarily due to organic loan growth in the Nashville MSA, the Knoxville MSA and the Charlotte MSA.

The following table shows the contractual maturities of the Company’s loans, excluding loan discounts, as of MarchJune 31,30, 2026, and December 31, 2025, respectively:

We are primarily involved in real estate, commercial, and consumer lending activities with customers throughout our markets in Kentucky, North Carolina, and Tennessee. About 90.0%89.8% and 89.5% of our total loans were secured by real property as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We believe that these loans loans are not concentrated in any one single property type and that they are geographically dispersed throughout our markets. Our debtors’ ability to repay their loans is substantially dependent upon the economic conditions of the markets in which we operate, which consist primarily of the Nashville MSA, the Knoxville MSA, Chattanooga, and Kingsport in Tennessee and the Charlotte MSA in North Carolina.

CRE loans were 58.7%59.0% of total loans as of MarchJune 31,30, 2026, and represented 59.2% of total loans as of December 31, 2025. C&D loans were 10.3%10.0% of total loans as of MarchJune 31,30, 2026, and represented 9.4% of total loans as of December 31, 2025. The ratio of our CRE loans to total risk-based bank capital was 417%275% as of MarchJune 31,30, 2026 and 435%276% as of December 31, 2025. C&D loans represented 73.0%65% of total risk-based bank capital as of MarchJune 30, 31, 2026 as compared to 69.1%59% as of December 31, 2025.

We have established concentration limits in our loan portfolio for CRE loans by loan type, including collateral and industry, among others. All loan types are within established limits other than our hotels/motels category, which has occasionally exceeded our limit of 50% of total risk-based capital. For further information on the risks associated with the concentration of our loan portfolio in certain industries, please see the risk factor titled “We have a concentration of credit exposure to borrowers in certain industries, and we also target small to medium-sized businesses and make other loans that may carry increased levels of credit risk” in the section titled “Risk Factors” in the 2025 Annual Report. Despite this category being outside of our established limits, we believe lending risk in this category is mitigated by a significant portion of the financed properties being owner-occupied hotels/motels, meaning that the properties are run by their owners. All but one of the hotel/motel projects currently in our loan portfolio are “flag” hotels. Further, our exposure to the hotels/motels category is geographically dispersed throughout the states of Florida, Kentucky, North Carolina, South CarolinaCarolina, and Tennessee. We have restricted lending on lodging projects to existing clients only for the foreseeable future. Our lending concentration in the hotels/motels sector is actively managed by our senior management team, including our President and Chief Executive Officer and Chief Credit Officer.

C&D loans increased $18.5$25.1 million, or 14.2%, 10.5%, to $195.2$201.8 million as of MarchJune 31,30, 2026, from $176.7 million as of December 31, 2025. The majority of this increase was due to new loan volume.growth as well as an increase in funded balances as the projects funded near completion. Residential C&D loans were relatively$36.5 flat million compared to $165.3 million in commercial C&D loans.loans as of June 30, 2026.

Residential.We We offer one-to-four family mortgage loans on both owner-occupied primary residences and investor-owned residences, which made up approximately 89.0% 17.8% and 18.1% of our residential loan portfolio as of MarchJune 30, 2026, and December 31, 2026.2025, respectively. Our residential loans also include home equity lines of credit, which totaled $37.0$39.7 million, or approximately 9.8%2.04% of our residential portfolio, as of MarchJune 30, 2026, and $38.9 million, or approximately 2.07% of our portfolio, as of December 31, 2026.2025. By offering a full line of residential loan products, the owners of the small to medium-sized businesses that we lend to are able to use us, instead of a competitor, for financing a personal residence.

CommercialOur Real Estate. Our CRE loan portfolio includes loans for commercial property that is owned by real estate investors, construction loans to build owner-occupied properties, and loans to developers of CRE investment properties and residential developments. CRE loans are subject to underwriting standards and processes similar to our commercial loans. These loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the properties securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing our real estate portfolio are diversified by type and geographic location. We believe this diversity helps reduce our exposure to adverse economic events that may affect any single market or industry. CRE loans remained constant at $1.1 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. This decrease was primarily driven by customer payoffs.2025. As of MarchJune 31,30, 2026, our CRE portfolio was comprised of $357.4 $397.2 million in non-owner occupied CRE loans and $432.5$484.6 million in owner-occupied properties and $212.1$258.1 million in multi-family properties.properties, as compared to $388.7 million in non-owner occupied CRE loans and $466.1 million in owner-occupied properties and $257.8 million in multi-family properties as of December 31, 2025.

Commercial loans decreasedincreased $3.2$5.7 million, or 1.85%, 3.3%, to $171.0$179.9 million as of MarchJune 31,30, 2026, from $174.2 million as of December 31, 2025.

Consumer and other loans (non-real estate loans) decreased $3.3$3.4 million, or 14.7%,14.6%, to $19.5 million as of MarchJune 31,30, 2026, from $22.9 million as of December 31, 2025.

OnAs Marchof 31,June 30, 2026, and December 31, 2025, loan participations sold to third parties (which are not included in the accompanying consolidated balance sheets) totaled $116.5$37.5 million and $116.0 million, respectively. We sell participations to manage our credit exposures to borrowers. OnAs Marchof 31,June 30, 2026, and December 31, 2025, loan participations purchased totaled $0. The variance in loan participations sold comes from sales of participations in the ordinary course of business.

Our ACL was $18.3$18.7 million at MarchJune 31,30, 2026 compared compared to $18.1 million at December 31, 2025, an increase of $0.2$0.6 million, or 1.3%.3.5%. A provision of $122$404 thousand was recorded for the three months ended MarchJune 31,30, 2026 compared to $0 for the three months ended MarchJune 31,30, 2025. Additional provisions were recorded based on national, regional and economic conditions and changes inFor the volumesix andmonths natureended June 30, 2026, a provision of our$526 loanthousand portfolio.was recorded compared to $0 for the six months ended June 30, 2025.

Net charge-offs for the threesix months ended MarchJune 31,30, 2026 totaled $0.1$100 million.thousand. Net charge-offs for the year ended December 31, 20252025, totaled ($0.3)$525 million.thousand.

Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as foreclosed assets held for sale (OREO) until sold and is initially recorded at fair value less costs to sell when acquired, establishing a new carrying value. OREO totaled approximately $0.6$0.8 million at MarchJune 31,30, 2026, and and $0.3 million at December 31, 2025.

Nonaccrual loans were $5.9$6.7 million at MarchJune 30, 2026, compared to $6.2 million at December 31, 2026.2025. We had no loans 90 days past due and still accruing at MarchJune 30, 2026, or December 31, 2026.2025.

Total nonperforming loansassets decreasedincreased approximately $0.04$0.9 million from December 31, 2025 to MarchJune 31,30, 2026. The decreaseincrease was primarily the result of normalan fluctuations.increase in foreclosed assets held for sale for 1-4 family foreclosures and a slight increase in nonaccruals, primarily residential real estate loans.

The following tables present the contractual aging of the recorded investment and loan discount in current and past due loans by class of loans as of MarchJune 31,30, 2026, and December 31, 2025:

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2023-02 — Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2023-02”). ASU 2023-02 eliminates the troubled debt restructuring (TDR) measurement and recognition guidance and requires that entities evaluate whether a modification represents a new loan or a continuation of an existing loan consistent with the accounting for other loan modifications. Additional disclosures relating to modifications to borrowers experiencing financial difficulty are required under ASU 2023-02. The Company adopted this ASU on a prospective basis.

These loans are excluded from our nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are past due 90 days or more after the restructuring. The balance of these loans as of MarchJune 31,30, 2026 and December 31, 2025, was immaterial.

The following tables summarize the risk categories of our loan portfolio based upon the most recent analysis performed as of MarchJune 31,30, 2026, and December 31, 2025, respectively:

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At MarchJune 31,30, 2026, we evaluated the securities that had an unrealized loss for other-than-temporary impairment and determined all declines in value to be temporary. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities, and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity.

The following tables set forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of MarchJune 31,30, 2026 and December 31, 2025. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Allowance for Credit Losses (ACL) — Held-to-Maturity Securities: Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type and any other risk characteristics used to segment the portfolio. Accrued interest receivable on held-to-maturity debt securities totaled $528,655$215,406 and $291,460 as of MarchJune 31,30, 2026, and December 31, 2025, respectively.