10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2019
	Or
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to _____________

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 Pikeville, Kentucky	41501
(Address of principal executive offices)	(Zip code)
(606) 432-1414 (Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  ✓ No

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

Yes  ✓ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ✓	Accelerated filer  ☐	Non-accelerated filer  ☐
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    No ✓

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock – 17,772,770 shares outstanding at April 30, 2019

Securities registered pursuant to Section 12(b) of the Act:

Common Stock

(Title of class)

ctbi	NASDAQ
(Trading symbol)	(Name of exchange on which registered)

CAUTIONARY STATEMENT

REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Community Trust Bancorp, Inc.’s (“CTBI”) actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could.” These forward-looking statements involve risks and uncertainties including, but not limited to, economic conditions, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including the performance of financial markets, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; results of various investment activities; the effects of competitors’ pricing policies, changes in laws and regulations, competition, and demographic changes on target market populations’ savings and financial planning needs; industry changes in information technology systems on which we are highly dependent; failure of acquisitions to produce revenue enhancements or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; and the resolution of legal  proceedings and related matters.  In addition, the banking industry in general is subject to various monetary, operational, and fiscal policies and regulations, which include, but are not limited to, those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, and state regulators, whose policies, regulations, and enforcement actions could affect CTBI’s results.  These statements are representative only on the date hereof, and CTBI undertakes no obligation to update any forward-looking statements made.

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

The accompanying information has not been audited by our independent registered public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period.  All such adjustments are of a normal and recurring nature.

The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Registrant’s annual report on Form 10-K.  Accordingly, the reader of the Form 10-Q should refer to the Registrant’s Form 10-K for the year ended December 31, 2018 for further information in this regard.

Community Trust Bancorp, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)	(unaudited) March 31 2019			December 31 2018
Assets:
Cash and due from banks	$	49,302		$	64,632
Interest bearing deposits		200,058			75,718
Federal funds sold		4,500			1,100
Cash and cash equivalents		253,860			141,450
Certificates of deposit in other banks		1,470			3,920
Securities available-for-sale at fair value (amortized cost of $601,544 and $602,114, respectively)		599,299			593,746
Securities held-to-maturity at amortized cost (fair value of $619 and $649, respectively)		619			649
Equity securities at fair value		1,528			1,173
Loans held for sale		13,649			2,461
Loans		3,189,732			3,208,638
Allowance for loan and lease losses		(35,004	)		(35,908	)
Net loans		3,154,728			3,172,730
Premises and equipment, net		44,554			45,291
Right-of-use asset		15,128			0
Federal Home Loan Bank stock		12,261			14,713
Federal Reserve Bank stock		4,887			4,887
Goodwill		65,490			65,490
Bank owned life insurance		67,433			67,076
Mortgage servicing rights		3,390			3,607
Other real estate owned		24,970			27,273
Other assets		50,027			57,150
Total assets	$	4,313,293		$	4,201,616
Liabilities and shareholders’ equity:
Deposits:
Noninterest bearing	$	841,996		$	803,316
Interest bearing		2,541,107			2,502,634
Total deposits		3,383,103			3,305,950
Repurchase agreements		237,506			232,712
Federal funds purchased		1,800			1,180
Advances from Federal Home Loan Bank		431			436
Long-term debt		59,341			59,341
Deferred taxes		6,529			3,363
Lease liability		15,743			0
Other liabilities		31,333			34,484
Total liabilities		3,735,786			3,637,466
Shareholders’ equity:
Preferred stock, 300,000 shares authorized and unissued		-			-
Common stock, $5 par value, shares authorized 25,000,000; shares outstanding 2019 – 17,767,594; 2018 – 17,732,853		88,839			88,665
Capital surplus		223,426			223,161
Retained earnings		267,016			258,935
Accumulated other comprehensive loss, net of tax		(1,774	)		(6,611	)
Total shareholders’ equity		577,507			564,150
Total liabilities and shareholders’ equity	$	4,313,293		$	4,201,616

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(unaudited)

	Three Months Ended
	March 31
(in thousands except per share data)	2019		2018
Interest income:
Interest and fees on loans, including loans held for sale	$	40,910	$	36,577
Interest and dividends on securities
Taxable		3,163		2,470
Tax exempt		678		697
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock		296		333
Interest on Federal Reserve Bank deposits		786		439
Other, including interest on federal funds sold		56		64
Total interest income		45,889		40,580
Interest expense:
Interest on deposits		8,075		4,872
Interest on repurchase agreements and federal funds purchased		1,156		635
Interest on advances from Federal Home Loan Bank		39		2
Interest on long-term debt		636		480
Total interest expense		9,906		5,989
Net interest income		35,983		34,591
Provision for loan losses		190		946
Net interest income after provision for loan losses		35,793		33,645
Noninterest income:
Service charges on deposit accounts		6,120		6,221
Gains on sales of loans, net		330		279
Trust and wealth management income		2,575		2,958
Loan related fees		573		1,144
Bank owned life insurance		558		1,764
Brokerage revenue		261		283
Securities gains (losses)		356		(288	)
Other noninterest income		1,397		949
Total noninterest income		12,170		13,310
Noninterest expense:
Officer salaries and employee benefits		3,374		3,214
Other salaries and employee benefits		12,585		12,405
Occupancy, net		2,051		2,116
Equipment		739		717
Data processing		1,763		1,636
Bank franchise tax		1,715		1,701
Legal fees		430		474
Professional fees		531		502
Advertising and marketing		792		732
FDIC insurance		177		314
Other real estate owned provision and expense		771		939
Repossession expense		377		409
Amortization of limited partnership investments		777		500
Other noninterest expense		3,001		3,022
Total noninterest expense		29,083		28,681
Income before income taxes		18,880		18,274
Income taxes		3,941		2,460
Net income		14,939		15,814
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period		6,124		(5,498	)
Less: Reclassification adjustments for realized gains included in net income		1		149
Tax expense (benefit)		1,286		(1,186	)
Other comprehensive income (loss), net of tax		4,837		(4,461	)
Comprehensive income	$	19,776	$	11,353
Basic earnings per share	$	0.84	$	0.89
Diluted earnings per share	$	0.84	$	0.89
Weighted average shares outstanding-basic		17,712		17,671
Weighted average shares outstanding-diluted		17,723		17,687

See notes to condensed consolidated financial statements.

Consolidated Statements of Changes in Shareholders’ Equity

Quarterly

(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, 2017		17,692,912		$	88,465		$	221,472		$	224,268		$	(3,506	)	$	530,699
Net income											15,814						15,814
Other comprehensive loss, net of tax of $(1,186)														(4,461	)		(4,461	)
Cash dividends declared ($0.33 per share)											(5,836	)					(5,836	)
Issuance of common stock		29,087			145			451									596
Vesting of restricted stock		(12,582	)		(63	)		63									0
Issuance of restricted stock		11,435			57			(57	)								0
Forfeiture of restricted stock		(115	)		(1	)		1									0
Stock-based compensation								224									224
Implementation of ASU 2014-09											453						453
Implementation of ASU 2016-01											(507	)		507			0
Balance, March 31, 2018		17,720,737		$	88,603		$	222,154		$	234,192		$	(7,460	)	$	537,489
Balance, December 31, 2018		17,732,853		$	88,665		$	223,161		$	258,935		$	(6,611	)	$	564,150
Net income											14,939						14,939
Other comprehensive income, net of tax of $1,286														4,837			4,837
Cash dividends declared ($0.36 per share)											(6,378	)					(6,378	)
Issuance of common stock		19,065			95			163									258
Vesting of restricted stock		(12,186	)		(61	)		61									0
Issuance of restricted stock		27,921			140			(140	)								0
Forfeiture of restricted stock		(59	)		0			0									0
Stock-based compensation								181									181
Implementation of ASU 2016-02											(480	)		0			(480	)
Balance, March 31, 2019		17,767,594		$	88,839		$	223,426		$	267,016		$	(1,774	)	$	577,507

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended
	March 31
(in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	14,939		$	15,814
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,427			965
Deferred taxes		2,008			163
Stock-based compensation		200			236
Provision for loan losses		190			946
Write-downs of other real estate owned and other repossessed assets		489			467
Gains on sale of mortgage loans held for sale		(330	)		(279	)
Securities (gains) losses		(1	)		288
Change in fair market value of equity securities		(355	)		0
Gains on sale of assets, net		(51	)		(68	)
Proceeds from sale of mortgage loans held for sale		14,927			12,811
Funding of mortgage loans held for sale		(25,785	)		(12,644	)
Amortization of securities premiums and discounts, net		1,112			1,132
Change in cash surrender value of bank owned life insurance		(357	)		(1,580	)
Mortgage servicing rights:
Fair value adjustments		(116	)		(122	)
New servicing assets created		333			(100	)
Changes in:
Other assets		7,082			(28,246	)
Other liabilities		(3,622	)		(2,380	)
Net cash provided by (used in) operating activities		12,090			(12,597	)
Cash flows from investing activities:
Certificates of deposit in other banks:
Maturity of certificates of deposit		2,450			1,715
Securities available-for-sale (AFS):
Purchase of AFS securities		(59,583	)		(113,781	)
Proceeds from the sales of AFS securities		12,550			50,327
Proceeds from prepayments and maturities of AFS securities		46,491			37,258
Securities held-to-maturity (HTM):
Proceeds from maturities of HTM securities		30			0
Change in loans, net		18,755			1,945
Purchase of premises and equipment		(226	)		(507	)
Proceeds from sale and retirement of premises and equipment		0			19
Redemption of stock by Federal Home Loan Bank		2,452			0
Proceeds from sale of other real estate and repossessed assets		964			457
Proceeds from settlement of bank owned life insurance		0			3,038
Net cash provided by (used in) investing activities		23,883			(19,529	)
Cash flows from financing activities:
Change in deposits, net		77,153			55,807
Change in repurchase agreements and federal funds purchased, net		5,414			774
Proceeds from Federal Home Loan Bank advances		30,000			0
Payments on advances from Federal Home Loan Bank		(30,005	)		(23	)
Issuance of common stock		258			596
Dividends paid		(6,383	)		(5,834	)
Net cash provided by financing activities		76,437			51,320
Net increase in cash and cash equivalents		112,410			19,194
Cash and cash equivalents at beginning of period		141,450			175,274
Cash and cash equivalents at end of period	$	253,860			194,468

Supplemental disclosures:
Interest paid	$	8,830	$	5,290
Non-cash activities:
Loans to facilitate the sale of other real estate owned and repossessed assets		1,797		432
Common stock dividends accrued, paid in subsequent quarter		215		207
Real estate acquired in settlement of loans		854		1,284

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 - Summary of Significant Accounting Policies

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (which consist of normal recurring adjustments) necessary, to present fairly the condensed consolidated financial position as of March 31, 2019 and the results of operations and cash flows for the three months ended March 31, 2019 and 2018.  In accordance with accounting principles generally accepted in the United States of America for interim financial information, these statements do not include certain information and footnote disclosures required by accounting principles generally accepted in the United States of America for complete annual financial statements.  The results of operations and the cash flows for the three months ended March 31, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year.  The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements of Community Trust Bancorp, Inc. (“CTBI”) for that period.  For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2018, included in our annual report on Form 10-K.

Principles of Consolidation – The unaudited condensed consolidated financial statements include the accounts of CTBI and its separate and distinct, wholly owned subsidiaries Community Trust Bank, Inc. (“CTB”) and Community Trust and Investment Company (“CTIC”).  All significant intercompany transactions have been eliminated in consolidation.

Reclassifications – Certain reclassifications considered to be immaterial have been made in the prior year condensed consolidated financial statements to conform to current year classifications.  These reclassifications had no effect on net income.

New Accounting Standards –

ØLeases – In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).   ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability for all leases with terms longer than 12 months.  Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.  For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases.  A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee.  If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor does not convey risks and rewards or control, an operating lease results.  The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities.  Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with certain practical expedients available.

In August 2018, the FASB issued ASU 2018-11, Leases (Topic 842):  Targeted Improvements.  This ASU is intended to reduce costs and ease implementation of the leases standard for financial statement preparers.  ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract.

Transition: Comparative Reporting at Adoption

The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.  Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP in Topic 840, Leases.  An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840.  The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide).

Separating Components of a Contract

The amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met:

· The timing and pattern of transfer of the non-lease component(s) and associated lease component are the same.

· The lease component, if accounted for separately, would be classified as an operating lease.

An entity electing this practical expedient (including an entity that accounts for the combined component entirely in Topic 606) is required to disclose certain information, by class of underlying asset, as specified in the ASU.

We elected the optional transition method of the modified retrospective approach provided in ASU 2018-11 which was applied on January 1, 2019.  CTBI also elected certain relief options offered in ASU 2016-02, including the package of practical expedients, the option not to separate lease and non-lease components, and instead to account for them as a single lease component for all classes of assets, the hindsight practical expedient to allow entities to use hindsight when determining lease term and impairment of right-of-use assets, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).  Refer to note 6, Leases, below for further information regarding the impact of adoption.

ØAccounting for Credit Losses – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date.  This ASU requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis.  The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses.  The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense.  Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. CTBI has an implementation team working through the provisions of ASU 2016-13 including assessing the impact on its accounting and disclosures.  The team has established the historical data that will be available and has identified the potential loan segments to be analyzed.  The team is in the process of determining the portfolio methodologies to be utilized and plans to begin running parallel with its current model in the third quarter of 2019.

ØSimplifying the Test for Goodwill Impairment – In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.  These amendments eliminate Step 2 from the goodwill impairment test.  The amendments also eliminate the requirements from any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.  The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods with those fiscal years.  ASU 2017-04 should be implemented on a prospective basis.  Management does not expect ASU 2017-04 to have an impact on CTBI’s consolidated financial statements.

ØChanges to the Disclosure Requirements for Fair Value Measurement – In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.  ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820 as follows:

Removals

The following disclosure requirements were removed from Topic 820:

· The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy

· The policy for timing of transfers between levels

· The valuation processes for Level 3 fair value measurements

Modifications

The following disclosure requirements were modified in Topic 820:

· For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and

· The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions

The following disclosure requirements were added to Topic 820:

· The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and

· The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

In addition, the amendments eliminate “at a minimum” from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements.

CTBI plans to adopt ASU 2018-13 effective January 1, 2020 with minimal changes to our current reporting.

ØAccounting for Costs of Implementing a Cloud Computing Service Agreement– In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement.  This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software.

The ASU aligns the following requirements for capitalizing implementation costs:

· Those incurred in a hosting arrangement that is a service contract, and

· Those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU will be effective beginning January 1, 2020.  We do not anticipate a significant impact to our consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes.  Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates.  Such differences could be material to the consolidated financial statements.

We believe the application of accounting policies and the estimates required therein are reasonable.  These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change.  Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

We have identified the following critical accounting policies:

Investments –Management determines the classification of securities at purchase.  We classify debt securities into held-to-maturity, trading, or available-for-sale categories.  Held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost.  In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments – Debt Securities, investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position:

a. Trading securities. Securities that are bought and held principally for the purpose of selling them in the near term (thus held for only a short period of time) shall be classified as trading securities. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.

b. Available-for-sale securities. Investments not classified as trading securities (nor as held-to-maturity securities) shall be classified as available-for-sale securities.

We do not have any securities that are classified as trading securities.  Available-for-sale securities are reported at fair value, with unrealized gains and losses included as a separate component of shareholders’ equity, net of tax.  If declines in fair value are other than temporary, the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related.

Gains or losses on disposition of debt securities are computed by specific identification for those securities.  Interest and dividend income, adjusted by amortization of purchase premium or discount, is included in earnings.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair market value is below amortized cost, additional analysis is performed to determine whether an other than temporary impairment condition exists.  Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment.  The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity.  Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment.  If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on CTBI’s results of operations and financial condition.

Subsequent to the January 1, 2018 effective date of ASU 2016-01, ASC 320 applies only to debt securities and ASC 321, Investments – Equity Securities, applies to equity securities.  ASC 321 requires equity investments (except those accounted for under the equity method and those that result in the consolidation of the investee) to be measured at fair value, with changes in fair values recognized in net income.

Equity securities with a readily determinable fair value are required to be measured at fair value, with changes in fair value recognized through net income.  Equity securities without a readily determinable fair value are carried at cost, less any impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments.  An election can be made, as permitted by ASC 321-10-35-2, to subsequently measure an equity security without a readily determinable fair value, at fair value.  Equity securities held by CTBI include securities without readily determinable fair values.  CTBI has elected to account for these securities at fair value.  The fair value of these securities was determined by a third party service provider using Level 3 inputs as defined in ASC 820, Fair Value Measurement, and changes in fair value are recognized in income.

Loans –Loans with the ability and the intent to be held until maturity and/or payoff are reported at the carrying value of unpaid principal reduced by unearned interest, an allowance for loan and lease losses, and unamortized deferred fees or costs.  Income is recorded on the level yield basis.  Interest accrual is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful.  Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest.  Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured.  Loans are not reclassified as accruing until principal and interest payments remain current for a period of time, generally six months, and future payments appear reasonably certain.  Included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired.  A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.

Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the estimated life of the related loans, leases, or commitments as a yield adjustment.

Allowance for Loan and Lease Losses –We maintain an allowance for loan and lease losses (“ALLL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio.  Credit losses are charged and recoveries are credited to the ALLL.

We utilize an internal risk grading system for commercial credits.  Those larger commercial credits that exhibit probable or observed credit weaknesses are subject to individual review.  The borrower’s cash flow, adequacy of collateral coverage, and other options available to CTBI, including legal remedies, are evaluated.  The review of individual loans includes those loans that are impaired as defined by ASC 310-10-35, Impairment of a Loan.  We evaluate the collectability of both principal and interest when assessing the need for loss provision.  Historical loss rates are analyzed and applied to other commercial loans not subject to specific allocations.  The ALLL allocation for this pool of commercial loans is established based on the historical average, maximum, minimum, and median loss ratios.

A loan is considered impaired when, based on current information and events, it is probable that CTBI will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Homogenous loans, such as consumer installment, residential mortgages, and home equity lines are not individually risk graded.  The associated ALLL for these loans is measured under ASC 450, Contingencies.

When any secured commercial loan is considered uncollectable, whether past due or not, a current assessment of the value of the underlying collateral is made.  If the balance of the loan exceeds the fair value of the collateral, the loan is placed on nonaccrual and the loan is charged down to the value of the collateral less estimated cost to sell or a specific reserve equal to the difference between book value of the loan and the fair value assigned to the collateral is created until such time as the loan is foreclosed.  When the foreclosed collateral has been legally assigned to CTBI, the estimated fair value of the collateral less costs to sell is then transferred to other real estate owned or other repossessed assets, and a charge-off is taken for any remaining balance.  When any unsecured commercial loan is considered uncollectable the loan is charged off no later than at 90 days past due.

All closed-end consumer loans (excluding conventional 1-4 family residential loans and installment and revolving loans secured by real estate) are charged off no later than 120 days (5 monthly payments) delinquent.  If a loan is considered uncollectable, it is charged off earlier than 120 days delinquent.  For conventional 1-4 family residential loans and installment and revolving loans secured by real estate, when a loan is 90 days past due, a current assessment of the value of the real estate is made.  If the balance of the loan exceeds the fair value of the property, the loan is placed on nonaccrual.  Foreclosure proceedings are normally initiated after 120 days.  When the foreclosed property has been legally assigned to CTBI, the fair value less estimated costs to sell is transferred to other real estate owned and the remaining balance is taken as a charge-off.

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition.  We use twelve rolling quarters for our historical loss rate analysis.  Factors that we consider include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, level of recoveries to prior year’s charge-offs, trends in loan losses, industry concentrations and their relative strengths, amount of unsecured loans, and underwriting exceptions.  Management continually reevaluates the other subjective factors included in its ALLL analysis.

Other Real Estate Owned – When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current fair market value less expected sales costs.  Additionally, periodic updated appraisals are obtained on unsold foreclosed properties.  When an updated appraisal reflects a fair market value below the current book value, a charge is booked to current earnings to reduce the property to its new fair market value less expected sales costs.  Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  All revenues and expenses related to the carrying of other real estate owned are recognized through the income statement.

Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes based on the expected future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.  Any interest and penalties incurred in connection with income taxes are recorded as a component of income tax expense in the consolidated financial statements.  During the three months ended March 31, 2019 and 2018, CTBI has not recognized a significant amount of interest expense or penalties in connection with income taxes.

In March 2019, Kentucky enacted legislation requiring financial institutions to transition from a bank franchise tax to the Kentucky corporate income tax beginning in 2021.  As a result, we booked a one-time charge of $1.0 million, or $0.06 per basic share, to income tax expense to recognize our Kentucky deferred tax liability at March 31, 2019.  While this liability will be adjusted periodically, we do not anticipate any further adjustments to have a significant impact to income.

Note 2 – Stock-Based Compensation

CTBI’s compensation expense related to stock option grants was $10 thousand and $53 thousand, respectively, for the three months ended March 31, 2019 and 2018, respectively.  Restricted stock expense for the three months ended March 31, 2019 and 2018 was $190 thousand and $183 thousand, respectively, including $19 thousand and $12 thousand in dividends paid for each period.  As of March 31, 2019, there was a total of $27 thousand of unrecognized compensation expense related to unvested stock option awards that will be recognized as expense as the awards vest over a weighted average period of 0.7 years and a total of $2.0 million of unrecognized compensation expense related to restricted stock grants that will be recognized as expense as the awards vest over a weighted average period of 3.1 years.

There were no stock options granted in the first three months of 2019 and 2018.  There were 27,921 and 11,320 shares of restricted stock granted during the three months ended March 31, 2019 and 2018, respectively.  The restricted stock was issued pursuant to the terms of CTBI’s 2015 Stock Ownership Incentive Plan.  The restrictions on the restricted stock will lapse ratably over four years.  However, in the event of certain participant employee termination events occurring within 24 months of a change in control of CTBI or the death of the participant, the restrictions will lapse, and in the event of the participant’s disability, the restrictions will lapse on a pro rata basis.  The Compensation Committee will have discretion to review and revise restrictions applicable to a participant’s restricted stock in the event of the participant’s retirement.

Note 3 – Securities

Securities are classified into held-to-maturity and available-for-sale categories.  Held-to-maturity (HTM) securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost.  Available-for-sale (AFS) securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons.  Available-for-sale securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.

The amortized cost and fair value of securities at March 31, 2019 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and government agencies	$	178,233	$	195	$	(951	)	$	177,477
State and political subdivisions		123,147		1,524		(942	)		123,729
U.S. government sponsored agency mortgage-backed securities		299,658		2,036		(4,103	)		297,591
Other debt securities		506		0		(4	)		502
Total available-for-sale securities	$	601,544	$	3,755	$	(6,000	)	$	599,299

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State and political subdivisions	$	619	$	0	$	0	$	619
Total held-to-maturity securities	$	619	$	0	$	0	$	619

The amortized cost and fair value of securities at December 31, 2018 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and government agencies	$	219,358	$	48	$	(1,468	)	$	217,938
State and political subdivisions		126,280		633		(2,425	)		124,488
U.S. government sponsored agency mortgage-backed securities		255,969		397		(5,547	)		250,819
Other debt securities		507		0		(6	)		501
Total available-for-sale securities	$	602,114	$	1,078	$	(9,446	)	$	593,746

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State and political subdivisions	$	649	$	0	$	0	$	649
Total held-to-maturity securities	$	649	$	0	$	0	$	649

The amortized cost and fair value of debt securities at March 31, 2019 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	29,546	$	29,499	$	619	$	619
Due after one through five years		93,079		93,111		0		0
Due after five through ten years		80,646		80,248		0		0
Due after ten years		98,109		98,348		0		0
U.S. government sponsored agency mortgage-backed securities		299,658		297,591		0		0
Other debt securities		506		502		0		0
Total debt securities	$	601,544	$	599,299	$	619	$	619

As of March 31, 2019, there was a net securities gain of $356 thousand.  There was a pre-tax gain of $1 thousand realized on sales of AFS securities, and an unrealized gain of $355 thousand from the fair market value adjustment of equity securities.  As of March 31, 2018, there was a net securities loss of $288 thousand.  There was a net gain of $148 thousand realized on sales and calls of AFS securities, consisting of a pre-tax gain of $281 thousand and a pre-tax loss of $133 thousand.  This net securities loss included a loss of $436 thousand from the sale of CTBI’s CRA investment funds.

 Equity Securities at Fair Value

In 2008, Visa distributed 9,918 shares of Visa Class B restricted stock to CTBI which, upon resolution of certain pending legal matters, will become unrestricted and convertible into Visa Class A shares.  Following this distribution, significant concern existed about the ultimate realizable value of these shares, and because CTBI did not have a basis in the stock, the shares were previously not recorded as an asset on CTBI’s balance sheet.  In recent years, the concern over the realizable value has stabilized, and in late 2017 and 2018, several sales of Visa Class B shares have occurred.  While not traded in observable markets, these sales were reported by several financial institutions in various SEC 8-K and 10-K filings.  In 2018, FASB issued a technical correction to its guidance regarding equity securities, ASC 321-10-35-2, allowing an entity to subsequently elect to record an equity security without a readily determinable fair value.  In 2018, CTBI made the election permitted by ASC 321-10-35-2 to record its Visa Class B shares at fair value.  On December 31, 2018, CTBI recorded a $1.2 million gain on the recognition of the fair value of 9,918 Visa Class B shares held in its portfolio.  Equity securities at fair value as of March 31, 2019 were $1.5 million, as a result of a fair market value increase in the first quarter 2019.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $234.8 million at March 31, 2019 and $258.8 million at December 31, 2018.

The amortized cost of securities sold under agreements to repurchase amounted to $278.0 million at March 31, 2019 and $289.1 million at December 31, 2018.

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of March 31, 2019 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total debt securities with unrealized losses as of March 31, 2019 was 55.9% compared to 75.7% as of December 31, 2018.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of March 31, 2019 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of March 31, 2019.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	22,910	$	(8	)	$	22,902
State and political subdivisions		0		0			0
U.S. government sponsored agency mortgage-backed securities		935		(3	)		932
Other debt securities		506		(4	)		502
Total <12 months temporarily impaired AFS securities		24,351		(15	)		24,336
12 Months or More
U.S. Treasury and government agencies		120,811		(943	)		119,868
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		156,877		(4,100	)		152,777
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		317,246		(5,985	)		311,261
Total
U.S. Treasury and government agencies		143,721		(951	)		142,770
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		157,812		(4,103	)		153,709
Other debt securities		506		(4	)		502
Total temporarily impaired AFS securities	$	341,597	$	(6,000	)	$	335,597

The analysis performed as of December 31, 2018 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2018 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of December 31, 2018.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	78,905	$	(271	)	$	78,634
State and political subdivisions		21,707		(194	)		21,513
U.S. government sponsored agency mortgage-backed securities		61,940		(377	)		61,563
Other debt securities		507		(6	)		501
Total <12 months temporarily impaired AFS securities		163,059		(848	)		162,211
12 Months or More
U.S. Treasury and government agencies		97,955		(1,197	)		96,758
State and political subdivisions		51,911		(2,231	)		49,680
U.S. government sponsored agency mortgage-backed securities		147,658		(5,170	)		142,488
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		297,524		(8,598	)		288,926
Total
U.S. Treasury and government agencies		176,860		(1,468	)		175,392
State and political subdivisions		73,618		(2,425	)		71,193
U.S. government sponsored agency mortgage-backed securities		209,598		(5,547	)		204,051
Other debt securities		507		(6	)		501
Total temporarily impaired AFS securities	$	460,583	$	(9,446	)	$	451,137

U.S. Treasury and Government Agencies

The unrealized losses in U.S. Treasury and government agencies were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

State and Political Subdivisions

The unrealized losses in securities of state and political subdivisions were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments before recovery of their amortized cost and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

U.S. Government Sponsored Agency Mortgage-Backed Securities

The unrealized losses in U.S. government sponsored agency mortgage-backed securities were caused by interest rate increases.  CTBI expects to recover the amortized cost basis over the term of the securities.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because (i) the decline in market value is attributable to changes in interest rates and not credit quality, (ii) CTBI does not intend to sell the investments, and (iii) it is not more likely than not we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

Other Debt Securities

The unrealized losses in other debt securities were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

Note 4 – Loans

Major classifications of loans, net of unearned income, deferred loan origination costs, and net premiums on acquired loans, are summarized as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial construction	$	75,364	$	82,715
Commercial secured by real estate		1,182,804		1,183,093
Equipment lease financing		1,354		1,740
Commercial other		388,060		377,198
Real estate construction		54,013		57,160
Real estate mortgage		720,292		722,417
Home equity		108,018		106,299
Consumer direct		141,855		144,289
Consumer indirect		517,972		533,727
Total loans	$	3,189,732	$	3,208,638

CTBI has segregated and evaluates its loan portfolio through nine portfolio segments. CTBI serves customers in small and mid-sized communities in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee.  Therefore, CTBI’s exposure to credit risk is significantly affected by changes in these communities.

Commercial construction loans are for the purpose of erecting or rehabilitating buildings or other structures for commercial purposes, including any infrastructure necessary for development.   Included in this category are improved property, land development, and tract development loans.  The terms of these loans are generally short-term with permanent financing upon completion.

Commercial real estate loans include loans secured by nonfarm, nonresidential properties, 1-4 family/multi-family properties, farmland, and other commercial real estate.  These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral.

Equipment lease financing loans are fixed or variable leases for commercial purposes.

Commercial other loans consist of commercial check loans, agricultural loans, receivable financing, floorplans, loans to financial institutions, loans for purchasing or carrying securities, and other commercial purpose loans.  Commercial loans are underwritten based on the borrower’s ability to service debt from the business’s underlying cash flows.  As a general practice, we obtain collateral such as real estate, equipment, or other assets, although such loans may be uncollateralized but guaranteed.

Real estate construction loans are typically for owner-occupied properties.  The terms of these loans are generally short-term with permanent financing upon completion.

Residential real estate loans are a mixture of fixed rate and adjustable rate first and second lien residential mortgage loans.  As a policy, CTBI holds adjustable rate loans and sells the majority of its fixed rate first lien mortgage loans into the secondary market.  Changes in interest rates or market conditions may impact a borrower’s ability to meet contractual principal and interest payments.  Residential real estate loans are secured by real property.

Home equity lines are revolving adjustable rate credit lines secured by real property.

Consumer direct loans are a mixture of fixed rate and adjustable rate products comprised of unsecured loans, consumer revolving credit lines, deposit secured loans, and all other consumer purpose loans.

Consumer indirect loans are fixed rate loans secured by automobiles, trucks, vans, and recreational vehicles originated at the selling dealership underwritten and purchased by CTBI’s indirect lending department.  Both new and used products are financed.  Only dealers who have executed dealer agreements with CTBI participate in the indirect lending program.

Not included in the loan balances above were loans held for sale in the amount of $13.6 million at March 31, 2019 and $2.5 million at December 31, 2018.

Refer to note 1 to the condensed consolidated financial statements for further information regarding our nonaccrual policy.  Nonaccrual loans segregated by class of loans were as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial:
Commercial construction	$	546	$	639
Commercial secured by real estate		4,967		4,537
Commercial other		1,402		797
Residential:
Real estate construction		289		22
Real estate mortgage		4,691		5,395
Home equity		483		477
Total nonaccrual loans	$	12,378	$	11,867

The following tables present CTBI’s loan portfolio aging analysis, segregated by class, as of March 31, 2019 and December 31, 2018:

	March 31, 2019
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	449	$	0	$	618	$	1,067	$	74,297	$	75,364	$	72
Commercial secured by real estate		7,829		1,460		12,335		21,624		1,161,180		1,182,804		7,794
Equipment lease financing		0		0		0		0		1,354		1,354		0
Commercial other		1,005		772		726		2,503		385,557		388,060		261
Residential:
Real estate construction		258		149		295		702		53,311		54,013		6
Real estate mortgage		1,145		4,836		6,854		12,835		707,457		720,292		4,203
Home equity		818		277		499		1,594		106,424		108,018		260
Consumer:
Consumer direct		735		215		30		980		140,875		141,855		30
Consumer indirect		2,854		611		390		3,855		514,117		517,972		390
Total	$	15,093	$	8,320	$	21,747	$	45,160	$	3,144,572	$	3,189,732	$	13,016

	December 31, 2018
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	87	$	58	$	698	$	843	$	81,872	$	82,715	$	58
Commercial secured by real estate		6,287		1,204		8,776		16,267		1,166,826		1,183,093		4,632
Equipment lease financing		0		0		0		0		1,740		1,740		0
Commercial other		1,057		94		1,067		2,218		374,980		377,198		581
Residential:
Real estate construction		144		438		28		610		56,550		57,160		6
Real estate mortgage		1,272		5,645		7,607		14,524		707,893		722,417		4,095
Home equity		898		365		441		1,704		104,595		106,299		246
Consumer:
Consumer direct		918		191		74		1,183		143,106		144,289		74
Consumer indirect		4,715		975		507		6,197		527,530		533,727		506
Total	$	15,378	$	8,970	$	19,198	$	43,546	$	3,165,092	$	3,208,638	$	10,198

*90+ and Accruing are also included in 90+ Days Past Due column.

The risk characteristics of CTBI’s material portfolio segments are as follows:

Commercial construction loans generally are made to customers for the purpose of building income-producing properties.  Personal guarantees of the principals are generally required.  Such loans are made on a projected cash flow basis and are secured by the project being constructed.  Construction loan draw procedures are included in each specific loan agreement, including required documentation items and inspection requirements.  Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source.  If the loan is to convert to a term loan, the repayment ability is based on the borrower’s projected cash flow.  Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.  Loans in amounts greater than $500,000 generally require a performance bond to be posted by the general contractor to assure completion of the project.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.  Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.  Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria.

Equipment lease financing is underwritten by our commercial lenders using the same underwriting standards as would be applied to a secured commercial loan requesting 100% financing.  The pricing for equipment lease financing is comparable to that of borrowers with similar quality commercial credits with similar collateral.  Maximum terms of equipment leasing are determined by the type and expected life of the equipment to be leased.  Residual values are determined by appraisals or opinion letters from industry experts.  Leases must be in conformity with our consolidated annual tax plan.  As we underwrite our equipment lease financing in a manner similar to our commercial loan portfolio described below, the risk characteristics for this portfolio mirror that of the commercial loan portfolio.

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.  The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value.  Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis.  In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, CTBI generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.  Home equity loans are typically secured by a subordinate interest in 1-4 family residences. Residential construction loans are handled through the home mortgage area of the bank.  The repayment ability of the borrower and the maximum loan-to-value ratio are calculated using the normal mortgage lending criteria.  Draws are processed based on percentage of completion stages including normal inspection procedures.  Such loans generally convert to term loans after the completion of construction.

Consumer loans are secured by consumer assets such as automobiles or recreational vehicles.  Some consumer loans are unsecured such as small installment loans and certain lines of credit.  Our determination of a borrower’s ability to repay these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.  Repayment can also be impacted by changes in property values on residential properties.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The indirect lending area of the bank generally deals with purchasing/funding consumer contracts with new and used automobile dealers.  The dealers generate consumer loan applications which are forwarded to the indirect loan processing area for approval or denial.  Loan approvals or denials are based on the creditworthiness and repayment ability of the borrower, and on the collateral value.  The dealers may have limited recourse agreements with CTB.

Credit Quality Indicators:

CTBI categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  CTBI also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s).  CTBI analyzes commercial loans individually by classifying the loans as to credit risk.  Loans classified as loss, doubtful, substandard, or special mention are reviewed quarterly by CTBI for further deterioration or improvement to determine if appropriately classified and valued if deemed impaired.  All other commercial loan reviews are completed every 12 to 18 months.  In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other information becomes available, CTBI will evaluate the loan grade.  CTBI uses the following definitions for risk ratings:

Ø Pass grades include investment grade, low risk, moderate risk, and acceptable risk loans.  The loans range from loans that have no chance of resulting in a loss to loans that have a limited chance of resulting in a loss.  Customers in this grade have excellent to fair credit ratings.  The cash flows are adequate to meet required debt repayments.

Ø Watch graded loans are loans that warrant extra management attention but are not currently criticized.  Loans on the watch list may be potential troubled credits or may warrant “watch” status for a reason not directly related to the asset quality of the credit.  The watch grade is a management tool to identify credits which may be candidates for future classification or may temporarily warrant extra management monitoring.

Ø Other assets especially mentioned (OAEM) reflects loans that are currently protected but are potentially weak.  These loans constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard.  The credit risk may be relatively minor yet constitute an unwarranted risk in light of circumstances surrounding a specific asset. Loans in this grade display potential weaknesses which may, if unchecked or uncorrected, inadequately protect CTBI’s credit position at some future date.  The loans may be adversely affected by economic or market conditions.

Ø Substandard grading indicates that the loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  These loans have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt with the distinct possibility that CTBI will sustain some loss if the deficiencies are not corrected.

Ø Doubtful graded loans have the weaknesses inherent in the substandard grading with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.  The probability of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to CTBI’s advantage or strengthen the asset(s), its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

The following tables present the credit risk profile of CTBI’s commercial loan portfolio based on rating category and payment activity, segregated by class of loans, as of March 31, 2019 and December 31, 2018:

(in thousands)	Commercial Construction		Commercial Secured by Real Estate		Equipment Leases		Commercial Other		Total
March 31, 2019
Pass	$	67,224	$	1,031,325	$	1,354	$	338,695	$	1,438,598
Watch		2,932		75,404		0		27,317		105,653
OAEM		1,823		18,501		0		5,811		26,135
Substandard		3,385		57,485		0		16,166		77,036
Doubtful		0		89		0		71		160
Total	$	75,364	$	1,182,804	$	1,354	$	388,060	$	1,647,582
December 31, 2018
Pass	$	74,222	$	1,038,309	$	1,740	$	327,431	$	1,441,702
Watch		3,070		71,834		0		28,986		103,890
OAEM		1,594		19,734		0		5,735		27,063
Substandard		3,829		53,125		0		14,970		71,924
Doubtful		0		91		0		76		167
Total	$	82,715	$	1,183,093	$	1,740	$	377,198	$	1,644,746

The following tables present the credit risk profile of CTBI’s residential real estate and consumer loan portfolios based on performing or nonperforming status, segregated by class, as of March 31, 2019 and December 31, 2018:

(in thousands)	Real Estate Construction		Real Estate Mortgage		Home Equity		Consumer Direct		Consumer Indirect		Total
March 31, 2019
Performing	$	53,718	$	711,398	$	107,275	$	141,825	$	517,582	$	1,531,798
Nonperforming (1)		295		8,894		743		30		390		10,352
Total	$	54,013	$	720,292	$	108,018	$	141,855	$	517,972	$	1,542,150
December 31, 2018
Performing	$	57,132	$	712,927	$	105,576	$	144,215	$	533,221	$	1,553,071
Nonperforming (1)		28		9,490		723		74		506		10,821
Total	$	57,160	$	722,417	$	106,299	$	144,289	$	533,727	$	1,563,892

(1)  A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual.

The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings are in process totaled $3.0 million at March 31, 2019 compared to $3.3 million at December 31, 2018.

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable CTBI will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.  Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection.

The following table presents impaired loans, the average investment in impaired loans, and interest income recognized on impaired loans for the periods ended March 31, 2019, December 31, 2018, and March 31, 2018:

	March 31, 2019
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	3,308	$	3,308	$	0	$	3,655	$	46
Commercial secured by real estate		32,407		34,098		0		32,811		347
Commercial other		8,903		10,598		0		8,866		139
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Loans with a specific valuation allowance:
Commercial construction		324		324		164		324		3
Commercial secured by real estate		1,922		3,060		847		1,966		10
Commercial other		1,154		1,154		620		1,169		17
Totals:
Commercial construction		3,632		3,632		164		3,979		49
Commercial secured by real estate		34,329		37,158		847		34,777		357
Commercial other		10,057		11,752		620		10,035		156
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Total	$	50,355	$	54,879	$	1,631	$	51,120	$	581

	December 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,100	$	4,100	$	0	$	3,923	$	171
Commercial secured by real estate		29,645		31,409		0		30,250		1,412
Commercial other		8,285		9,982		0		8,774		530
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Loans with a specific valuation allowance:
Commercial construction		127		127		50		42		0
Commercial secured by real estate		1,854		2,983		605		2,051		1
Commercial other		473		473		146		285		16
Totals:
Commercial construction		4,227		4,227		50		3,965		171
Commercial secured by real estate		31,499		34,392		605		32,301		1,413
Commercial other		8,758		10,455		146		9,059		546
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Total	$	46,366	$	50,956	$	801	$	47,097	$	2,171

	March 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,009	$	4,009	$	0	$	4,168	$	37
Commercial secured by real estate		31,284		33,377		0		31,566		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Loans with a specific valuation allowance:
Commercial secured by real estate		2,105		3,221		739		2,132		0
Totals:
Commercial construction		4,009		4,009		0		4,168		37
Commercial secured by real estate		33,389		36,598		739		33,698		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Total	$	48,185	$	53,132	$	739	$	48,800	$	541

*Cash basis interest is substantially the same as interest income recognized.

Included in certain loan categories of impaired loans are certain loans and leases that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions.  Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances.  Loan modifications that are included as troubled debt restructurings may involve either an increase or reduction of the interest rate, extension of the term of the loan, or deferral of principal and/or interest payments, regardless of the period of the modification.  All of the loans identified as troubled debt restructuring were modified due to financial stress of the borrower.  In order to determine if a borrower is experiencing financial difficulty, an evaluation is performed to determine the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under CTBI’s internal underwriting policy.

When we modify loans and leases in a troubled debt restructuring, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determined that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all troubled debt restructuring, including those that have payment defaults, for possible impairment and recognize impairment through the allowance.

During 2019, certain loans were modified in troubled debt restructurings, where economic concessions were granted to borrowers consisting of reductions in the interest rates, payment extensions, forgiveness of principal, and forbearances.  Presented below, segregated by class of loans, are troubled debt restructurings that occurred during the three months ended March 31, 2019 and 2018 and the year ended December 31, 2018:

	Three Months Ended March 31, 2019
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial secured by real estate		5		828		0		642		1,470
Commercial other		7		1,122		0		140		1,262
Residential:
Real estate mortgage		1		463		0		0		463
Total troubled debt restructurings		13	$	2,413	$	0	$	782	$	3,195

	Year Ended December 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		5	$	2,182	$	0	$	15	$	2,197
Commercial secured by real estate		24		4,004		0		1,383		5,387
Commercial other		8		465		0		0		465
Residential:
Real estate construction		0		0		0		0		0
Real estate mortgage		3		264		0		704		968
Total troubled debt restructurings		40	$	6,915	$	0	$	2,102	$	9,017

	Three Months Ended March 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		2	$	32	$	0	$	15	$	47
Commercial secured by real estate		9		786		0		983		1,769
Commercial other		5		182		0		0		182
Total troubled debt restructurings		16	$	1,000	$	0	$	998	$	1,998

No charge-offs have resulted from modifications for any of the presented periods.  We had commitments to extend additional credit in the amount of $45 thousand on loans that were considered troubled debt restructurings.

Loans retain their accrual status at the time of their modification. As a result, if a loan is on nonaccrual at the time it is modified, it stays as nonaccrual, and if a loan is on accrual at the time of the modification, it generally stays on accrual.  Commercial and consumer loans modified in a troubled debt restructuring are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a troubled debt restructuring subsequently default, CTBI evaluates the loan for possible further impairment.  The allowance for loan losses may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.  There were no loans that were modified as troubled debt restructurings within the past twelve months which have subsequently defaulted as of March 31, 2019 or 2018.  CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual.

Note 5 – Allowance for Loan and Lease Losses

The following tables present the balance in the allowance for loan and lease losses (“ALLL”) and the recorded investment in loans based on portfolio segment and impairment method as of March 31, 2019, December 31, 2018 and March 31, 2018:

	March 31, 2019
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Provision charged to expense		38		287			(2	)		382			(116	)		(278	)		84			(119	)		(86	)		190
Losses charged off		0		(35	)		0			(242	)		0			(120	)		(25	)		(246	)		(1,387	)		(2,055	)
Recoveries		3		17			0			84			0			18			1			117			721			961
Ending balance	$	903	$	14,800		$	10		$	5,217		$	396		$	4,053		$	901		$	1,635		$	7,089		$	35,004
Ending balance:
Individually evaluated for impairment	$	164	$	847		$	0		$	620		$	0		$	0		$	0		$	0		$	0		$	1,631
Collectively evaluated for impairment	$	739	$	13,953		$	10		$	4,597		$	396		$	4,053		$	901		$	1,635		$	7,089		$	33,373
Loans
Ending balance:
Individually evaluated for impairment	$	3,632	$	34,329		$	0		$	10,057		$	0		$	2,337		$	0		$	0		$	0		$	50,355
Collectively evaluated for impairment	$	71,732	$	1,148,475		$	1,354		$	378,003		$	54,013		$	717,955		$	108,018		$	141,855		$	517,972		$	3,139,377

	December 31, 2018
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686	$	14,509		$	18		$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		115		786			(6	)		824			(115	)		(336	)		39			572			4,288			6,167
Losses charged off		0		(988	)		0			(1,513	)		(33	)		(1,004	)		(69	)		(997	)		(6,394	)		(10,998	)
Recoveries		61		224			0			643			0			85			14			445			3,116			4,588
Ending balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Ending balance:
Individually evaluated for impairment	$	50	$	605		$	0		$	146		$	0		$	0		$	0		$	0		$	0		$	801
Collectively evaluated for impairment	$	812	$	13,926		$	12		$	4,847		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,107
Loans
Ending balance:
Individually evaluated for impairment	$	4,227	$	31,499		$	0		$	8,758		$	0		$	1,882		$	0		$	0		$	0		$	46,366
Collectively evaluated for impairment	$	78,488	$	1,151,594		$	1,740		$	368,440		$	57,160		$	720,535		$	106,299		$	144,289		$	533,727		$	3,162,272

	March 31, 2018
(in thousands)	Commercial Construction			Commercial Secured by Real Estate			Equipment Lease Financing		Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686		$	14,509		$	18	$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		(14	)		(191	)		5		(651	)		(4	)		435			5			80			1,281			946
Losses charged off		0			(210	)		0		(236	)		(23	)		(193	)		(1	)		(216	)		(2,098	)		(2,977	)
Recoveries		14			25			0		77			0			6			1			71			875			1,069
Ending balance	$	686		$	14,133		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	35,189
Ending balance:
Individually evaluated for impairment	$	0		$	739		$	0	$	0		$	0		$	0		$	0		$	0		$	0		$	739
Collectively evaluated for impairment	$	686		$	13,394		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	34,450
Loans
Ending balance:
Individually evaluated for impairment	$	4,009		$	33,389		$	0	$	9,183		$	318		$	1,286		$	0		$	0		$	0		$	48,185
Collectively evaluated for impairment	$	74,638		$	1,158,239		$	2,683	$	329,452		$	63,575		$	717,472		$	99,593		$	136,576		$	487,828		$	3,070,056

Note 6 – Leases

Effective January 1, 2019, CTBI adopted ASU No. 2016-02, Leases, (Topic 842) and all subsequent ASUs that modified Topic 842.  Based on leases outstanding at December 31, 2018, the impact of adoption was recording a lease liability of approximately $16.1 million, a right-of-use asset of approximately $15.5 million, and a cumulative-effect adjustment to retained earnings of approximately $0.5 million, net of a $0.1 million adjustment to our deferred tax liability.  CTBI has no finance leases or material subleases or leasing arrangements for which it is the lessor of property or equipment.

CTBI has operating leases for banking and ATM locations.  These leases have remaining lease terms of 1 year to 45 years, some of which include options to extend the leases for up to 5 years.  We evaluated the original lease terms for each operating lease, some of which include options to extend the leases for up to 5 years, using hindsight.  These options, some of which include variable costs related to rent escalations based on recent financial indices, such as the Consumer Price Index, where CTBI estimates future rent increases, are included in the calculation of the lease liability and right-of-use asset when management determines it is reasonably certain the option will be exercised.  CTBI determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate on a collateralized basis, over a similar term at the lease commencement date.  Right-of-use assets are further adjusted for prepaid rent, lease incentives, and initial direct costs, if any.

The components of lease expense for the three months ended March 31, 2019 were as follows:

(in thousands)	2019
Short-term lease cost	$	71
Operating lease cost		461
Sublease income		(68	)
Total lease cost	$	464

Supplemental cash flow information related to CTBI’s operating leases for the three months ended March 31, 2019 was as follows:

(in thousands)	2019
Operating lease – operating cash flows (fixed payments)	$	458
Right-of-use assets obtained in exchange for new operating lease liabilities	$	0
Weighted average lease term – operating leases	15.35 years
Weighted average discount rate – operating leases		3.47	%

Maturities of lease liabilities as of March 31, 2019 are as follows:

(in thousands)	Operating Leases
2019	$	1,271
2020		1,715
2021		1,744
2022		1,729
2023		1,650
Thereafter		12,822
Total lease payments		20,931
Less imputed interest		(5,188	)
Total	$	15,743

At December 31, 2018, minimum non-cancellable rental payments were as follows:

(in thousands)	Operating Lease Payments
2019	$	1,999
2020		1,710
2021		1,737
2022		1,760
2023		1,696
Thereafter		13,031
Total	$	21,933

Note 7 – Other Real Estate Owned

Activity for other real estate owned was as follows:

(in thousands)	March 31, 2019			March 31, 2018
Beginning balance of other real estate owned	$	27,273		$	31,996
New assets acquired		854			1,284
Fair value adjustments		(447	)		(467	)
Sale of assets		(2,710	)		(809	)
Ending balance of other real estate owned	$	24,970		$	32,004

Carrying costs and fair value adjustments associated with foreclosed properties for the three months ended March 31, 2019 and 2018 were $0.8 million and $0.9 million, respectively.  See note 1 for a description of our accounting policies relative to foreclosed properties and other real estate owned.

The major classifications of foreclosed properties are shown in the following table:

(in thousands)	March 31 2019		December 31 2018
1-4 family	$	4,761	$	5,253
Agricultural/farmland		0		0
Construction/land development/other		14,201		15,017
Multifamily		88		88
Non-farm/non-residential		5,920		6,915
Total foreclosed properties	$	24,970	$	27,273

Note 8 – Repurchase Agreements

We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and provide additional funding to our balance sheet.  Repurchase agreements are transactions whereby we offer to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates CTBI to repurchase the security on an agreed upon date at an agreed upon repurchase price plus interest at an agreed upon rate.  Securities sold under agreements to repurchase are recorded at the amount of cash received in connection with the transaction and are reflected in the accompanying consolidated balance sheets.

We monitor collateral levels on a continuous basis and maintain records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security, and we segregate the security from its general assets in accordance with regulations governing custodial holdings of securities.  The primary risk with our repurchase agreements is market risk associated with the securities securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying securities.  Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.  The carrying value of investment securities available-for-sale pledged as collateral under repurchase agreements totaled $277.6 million and $285.2 million at March 31, 2019 and December 31, 2018, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in the accompanying consolidated balance sheets as of March 31, 2019 and December 31, 2018 is presented in the following tables:

	March 31, 2019
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight andContinuous		Up to 30 days		30-90 days		Greater Than90 days		Total
Repurchase agreements andrepurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,358	$	0	$	0	$	61,703	$	87,061
State and political subdivisions		56,322		500		0		13,366		70,188
U.S. government sponsored agency mortgage-backed securities		29,388		0		0		50,869		80,257
Total	$	111,068	$	500	$	0	$	125,938	$	237,506

	December 31, 2018
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight andContinuous		Up to 30 days		30-90 days		Greater Than90 days		Total
Repurchase agreements andrepurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,346	$	0	$	2,548	$	60,699	$	88,593
State and political subdivisions		58,864		0		2,995		10,384		72,243
U.S. government sponsored agency mortgage-backed securities		22,076		0		1,877		47,923		71,876
Total	$	106,286	$	0	$	7,420	$	119,006	$	232,712

Note 9 – Fair Market Value of Financial Assets and Liabilities

Fair Value Measurements

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.  Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.  In this standard, the FASB clarifies the principle that fair value should be based on the exit price when pricing the asset or liability.  In support of this principle, ASC 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.  The fair value hierarchy is as follows:

Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in determining an exit price for the assets or liabilities.

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	177,477	$	56,744	$	120,733	$	0
State and political subdivisions		123,729		0		123,729		0
U.S. government sponsored agency mortgage-backed securities		297,591		0		297,591		0
Other debt securities		502		0		502		0
Equity securities at fair value		1,528		0		0		1,528
Mortgage servicing rights		3,390		0		0		3,390

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	217,938	$	91,028	$	126,910	$	0
State and political subdivisions		124,488		0		124,488		0
U.S. government sponsored agency mortgage-backed securities		250,819		0		250,819		0
Other debt securities		501		0		501		0
Equity securities at fair value		1,173		0		0		1,173
Mortgage servicing rights		3,607		0		0		3,607

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.  These valuation methodologies were applied to all of CTBI’s financial assets carried at fair value.  CTBI had no liabilities measured and recorded at fair value as of March 31, 2019 and December 31, 2018.  There have been no significant changes in the valuation techniques during the quarter ended March 31, 2019.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available-for-Sale Securities

Securities classified as available-for-sale are reported at fair value on a recurring basis.  U.S. Treasury and government agencies are classified as Level 1 of the valuation hierarchy where quoted market prices are available in the active market on which the individual securities are traded.

If quoted market prices are not available, CTBI obtains fair value measurements from an independent pricing service, such as Interactive Data, which utilizes pricing models to determine fair value measurement.  CTBI reviews the pricing quarterly to verify the reasonableness of the pricing.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.  U.S. Treasury and government agencies, state and political subdivisions, U.S. government sponsored agency mortgage-backed securities, and other debt securities are classified as Level 2 inputs.

In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.  Fair value determinations for Level 3 measurements are estimated on a quarterly basis where assumptions used are reviewed to ensure the estimated fair value complies with accounting standards generally accepted in the United States.

Equity Securities at Fair Value

As of March 31, 2019, the only securities owned by CTBI that were valued using Level 3 criteria are Visa Class B Stock (included in equity securities at fair value).  In determining fair value for Visa Class B Stock, CTBI utilizes the expertise of an independent third party.  Accordingly, fair value is determined by the independent third party using an income approach by utilizing assumptions about factors such as quarterly common stock dividend payments, the conversion of the securities to the relevant Class A Stock shares subject to the prevailing conversion rate and conversion date.  We have reviewed the assumptions, processes, and conclusions of the third party provider.  We have determined these assumptions, processes, and conclusions to be  reasonable and appropriate in determining the fair value of this asset.  See the table below for inputs and valuation techniques used for Level 3 equity securities.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices.  CTBI reports mortgage servicing rights at fair value on a recurring basis with subsequent remeasurement of MSRs based on change in fair value.

In determining fair value, CTBI utilizes the expertise of an independent third party.  Accordingly, fair value is determined by the independent third party by utilizing assumptions about factors such as mortgage interest rates, discount rates, mortgage loan prepayment speeds, market trends and industry demand.  Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.  Fair value determinations for Level 3 measurements of mortgage servicing rights are tested for impairment on a quarterly basis where assumptions used are reviewed to ensure the estimated fair value complies with accounting standards generally accepted in the United States.  We have reviewed the assumptions, processes, and conclusions of the third party provider.  We have determined these assumptions, processes, and conclusions to be reasonable and appropriate in determining the fair value of this asset.  See the table below for inputs and valuation techniques used for Level 3 mortgage servicing rights.

Transfers between Levels

There were no transfers between Levels 1, 2, and 3 as of March 31, 2019.

Level 3 Reconciliation

Following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:

(in thousands)	Three Months Ended March 31, 2019					Three Months Ended March 31, 2018
	Equity Securities at Fair Value		Mortgage Servicing Rights			Equity Securities at Fair Value		Mortgage Servicing Rights
Beginning balance	$	1,173	$	3,607		$	0	$	3,484
Total unrealized gains (losses)
Included in net income		355		(234	)		0		228
Issues		0		116			0		100
Settlements		0		(99	)		0		(106	)
Ending balance	$	1,528	$	3,390		$	0	$	3,706
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses related to assets still held at the reporting date	$	355	$	(234	)	$	0	$	228

Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as follows:

Noninterest Income
	Three Months Ended
	March 31
(in thousands)	2019		2018
Total gains	$	116	$	122

Nonrecurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a nonrecurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	1,078	$	0	$	0	$	1,078
Other real estate owned		2,345		0		0		2,345

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	747	$	0	$	0	$	747
Other real estate owned		6,500		0		0		6,500

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell.  Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

CTBI considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.  Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Chief Credit Officer.  Appraisals are reviewed for accuracy and consistency by the Chief Credit Officer.  Appraisers are selected from the list of approved appraisers maintained by management.  The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.  These discounts and estimates are developed by the Chief Credit Officer by comparison to historical results.

Loans considered impaired under ASC 310-35, Impairment of a Loan, are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Impaired loans are subject to nonrecurring fair value adjustments to reflect subsequent (i) partial write-downs that are based on the observable market price or current appraised value of the collateral or (ii) the full charge-off of the loan carrying value.  Quarter-to-date fair value adjustments on impaired loans disclosed above were $0.4 million and $0.3 million for the quarters ended March 31, 2019 and December 31, 2018, respectively.  There were no fair value adjustments on impaired loans for the quarter ended March 31, 2018.

Other Real Estate Owned

In accordance with the provisions of ASC 360, Property, Plant, and Equipment, other real estate owned (“OREO”) is carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the real estate is acquired.  Estimated fair value of OREO is based on appraisals or evaluations.  OREO is classified within Level 3 of the fair value hierarchy.  Long-lived assets are subject to nonrecurring fair value adjustments to reflect subsequent partial write-downs that are based on the observable market price or current appraised value of the collateral.  Quarter-to-date fair value adjustments on other real estate owned disclosed above were $0.4 million, $0.4 million, and $0.5 million for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively.

Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  Appraisers are selected from the list of approved appraisers maintained by management.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2019 and December 31, 2018.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at March 31, 2019		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,528	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,390	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 21.8% (10.5%)
				Probability of default		0.0% - 100.0% (2.8%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	1,078	Market comparable properties	Marketability discount		0.0% - 96.3% (45.6%)
Other real estate owned	$	2,345	Market comparable properties	Comparability adjustments		10.0% - 55.2% (14.9%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2018		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,173	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,607	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 28.1% (9.5%)
				Probability of default		0.0% - 100.0% (2.6%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	747	Market comparable properties	Marketability discount		0.0% - 95.1% (41.5%)
Other real estate owned	$	6,500	Market comparable properties	Comparability adjustments		6.0% - 47.6% (14.9%)

Sensitivity of Significant Unobservable Inputs

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Equity Securities at Fair Value

Fair market value for equity securities is derived based on unobservable inputs, such as the discount rate, quarterly dividend payments payable to the Visa Class B common stock and the prevailing conversion rate at the conversion date.  The most recent conversion rate of 1.6298 and the most recent dividend rate of 0.4074 were used to derive the fair value estimate.  Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement.  Generally, a change in the assumption used for discount rate is accompanied by a directionally opposite change in the fair value estimate.

Mortgage Servicing Rights

Fair market value for mortgage servicing rights is derived based on unobservable inputs, such as prepayment speeds of the underlying loans generated using the Andrew Davidson Prepayment Model, FHLMC/FNMA guidelines, the weighted average life of the loan, the discount rate, the weighted average coupon, and the weighted average default rate.  Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement.  Generally, a change in the assumption used for prepayment speeds is accompanied by a directionally opposite change in the assumption for interest rates.

Fair Value of Financial Instruments

The following table presents estimated fair value of CTBI’s financial instruments as of March 31, 2019 and indicates the level within the fair value hierarchy of the valuation techniques.  In accordance with the prospective adoption of ASU 2016-01, the fair values as of March 31, 2019 were measured using an exit price notion.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	253,860	$	253,860	$	0	$	0
Certificates of deposit in other banks		1,470		0		1,470		0
Securities available-for-sale		599,299		56,744		542,555		0
Securities held-to-maturity		619		0		619		0
Equity securities at fair value		1,528		0		0		1,528
Loans held for sale		13,649		13,752		0		0
Loans, net		3,154,728		0		0		3,150,772
Federal Home Loan Bank stock		12,261		0		12,261		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		15,188		0		15,188		0
Mortgage servicing rights		3,390		0		0		3,390
Financial liabilities:
Deposits	$	3,383,103	$	841,996	$	2,559,903	$	0
Repurchase agreements		237,506		0		0		237,556
Federal funds purchased		1,800		0		1,800		0
Advances from Federal Home Loan Bank		431		0		461		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		3,983		0		3,983		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

The following table presents estimated fair value of CTBI’s financial instruments as of December 31, 2018 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	141,450	$	141,450	$	0	$	0
Certificates of deposit in other banks		3,920		0		3,914		0
Securities available-for-sale		593,746		91,028		502,718		0
Securities held-to-maturity		649		0		649		0
Equity securities at fair value		1,173		0		0		1,173
Loans held for sale		2,461		2,518		0		0
Loans, net		3,172,730		0		0		3,175,908
Federal Home Loan Bank stock		14,713		0		14,713		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		14,432		0		14,432		0
Mortgage servicing rights		3,607		0		0		3,607
Financial liabilities:
Deposits	$	3,305,950	$	803,316	$	2,513,084	$	0
Repurchase agreements		232,712		0		0		232,796
Federal funds purchased		1,180		0		1,180		0
Advances from Federal Home Loan Bank		436		0		468		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		2,902		0		2,902		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

Note 10 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended
	March 30
(in thousands except per share data)	2019		2018
Numerator:
Net income	$	14,939	$	15,814
Denominator:
Basic earnings per share:
Weighted average shares		17,712		17,671
Diluted earnings per share:
Effect of dilutive stock options and restricted stock grants		11		16
Adjusted weighted average shares		17,723		17,687
Earnings per share:
Basic earnings per share	$	0.84	$	0.89
Diluted earnings per share		0.84		0.89

There were no options to purchase common shares that were excluded from the diluted calculations above for the three months ended March 31, 2019 and 2018.  In addition to in-the-money stock options, unvested restricted stock grants were also used in the calculation of diluted earnings per share based on the treasury method.

Note 11 – Accumulated Other Comprehensive Income

Unrealized gains on AFS securities

Amounts reclassified from accumulated other comprehensive income (AOCI) and the affected line items in the statements of income during the three months ended March 31, 2019 and 2018 were:

	Amounts Reclassified from AOCI
(in thousands)	Three Months Ended March 31
	2019		2018
Affected line item in the statements of income
Securities gains	$	1	$	149
Tax expense		0		31
Total reclassifications out of AOCI	$	1	$	118

Note 12 – Subsequent Events

As a bank doing business in Kentucky, CTB is subject to a capital-based Kentucky bank franchise tax and exempt from Kentucky corporate income tax.  However, in March 2019, Kentucky enacted HB354, which will transition CTB from the bank franchise tax to a corporate income tax beginning January 1, 2021.  The current Kentucky corporate income tax rate is 5%.  As of March 31, 2019, CTBI recorded a deferred tax liability, net of the federal benefit, of $1.0 million due to the enactment of HB354.

Subsequent to quarter end, in April 2019, Kentucky enacted HB458.  HB458 allows for combined filing with CTBI, CTB, and CTIC.  CTBI had previously filed a separate company return and generated net operating losses, in which it had maintained a valuation allowance against the related deferred tax asset.  HB458 also allows for certain net operating losses to be utilized on a combined return.  CTBI expects to file a combined return, beginning in 2021, and to utilize these previously generated losses.  The estimated tax benefit to reverse the valuation allowance on the deferred tax asset for these losses is expected to be approximately $3.0 million and will be recorded in the second quarter 2019. 

Item 2.  Management’s Discussion and Analysis of Financial Condition and

Results of Operations

Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand Community Trust Bancorp, Inc., our operations, and our present business environment.  The MD&A is provided as a supplement to – and should be read in conjunction with – our condensed consolidated financial statements and the accompanying notes contained in this quarterly report.  The MD&A includes the following sections:

● Our Business

● Results of Operations and Financial Condition

● Dividends

● Liquidity and Market Risk

● Interest Rate Risk

● Capital Resources

● Impact of Inflation, Changing Prices, and Economic Conditions

● Stock Repurchase Program

● Critical Accounting Policies and Estimates

Our Business

Community Trust Bancorp, Inc. (“CTBI”) is a bank holding company headquartered in Pikeville, Kentucky.  Currently, we own one commercial bank, Community Trust Bank, Inc. (“CTB”) and one trust company, Community Trust and Investment Company, Inc. (“CTIC”).  Through our subsidiaries, we have seventy-nine banking locations in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee, four trust offices across Kentucky, and one trust office in northeastern Tennessee.  At March 31, 2019, we had total consolidated assets of $4.3 billion and total consolidated deposits, including repurchase agreements, of $3.6 billion.  Total shareholders’ equity at March 31, 2019 was $577.5 million.  Trust assets under management, which are excluded from CTBI’s total consolidated assets, at March 31, 2019, were $2.1 billion.  Trust assets under management include CTB’s investment portfolio totaling $0.6 billion.

Through its subsidiaries, CTBI engages in a wide range of commercial and personal banking and trust and wealth management activities, which include accepting time and demand deposits; making secured and unsecured loans to corporations, individuals and others; providing cash management services to corporate and individual customers; issuing letters of credit; renting safe deposit boxes; and providing funds transfer services.  The lending activities of CTB include making commercial, construction, mortgage, and personal loans.  Lease-financing, lines of credit, revolving lines of credit, term loans, and other specialized loans, including asset-based financing, are also available.  Our corporate subsidiaries act as trustees of personal trusts, as executors of estates, as trustees for employee benefit trusts, as paying agents for bond and stock issues, as investment agent, as depositories for securities, and as providers of full service brokerage and insurance services.  For further information, see Item 1 of our annual report on Form 10-K for the year ended December 31, 2018.

Results of Operations and Financial Condition

We reported earnings for the first quarter 2019 of $14.9 million, or $0.84 per basic share, compared to $15.7 million, or $0.89 per basic share, earned during the fourth quarter 2018 and $15.8 million, or $0.89 per basic share, earned during the first quarter 2018.

Quarterly Highlights

● Net interest income for the quarter of $36.0 million was a decrease of $0.3 million, or 0.8%, from fourth quarter 2018 but an increase of $1.4 million, or 4.0%, from prior year first quarter.

● Provision for loan losses for the quarter ended March 31, 2019 decreased $1.6 million from prior quarter and $0.8 million from prior year same quarter with improvement in charge-offs and credit metrics combined with a decline in loan volume during the quarter.

● Our loan portfolio decreased $18.9 million, an annualized 2.4%, during the quarter but increased $71.5 million, or 2.3%, from March 31, 2018.

● Net loan charge-offs for the quarter ended March 31, 2019 were $1.1 million, or 0.14% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the fourth quarter 2018 and $1.9 million, or 0.25%, for the first quarter 2018.

● Nonperforming loans at $25.4 million increased $3.3 million from December 31, 2018 but decreased $0.6 million from March 31, 2018.  Nonperforming assets at $50.4 million increased $1.0 million from December 31, 2018 but decreased $7.7 million from March 31, 2018.

● Deposits, including repurchase agreements, increased $81.9 million, an annualized 9.4%, during the quarter and $56.1 million, or 1.6%, from March 31, 2018.

● Noninterest income for the quarter ended March 31, 2019 of $12.2 million was relatively flat to prior quarter, but a decrease of $1.1 million, or 8.6%, from prior year same quarter.  The decrease in noninterest income from prior year was primarily the result of $1.2 million in death benefits received on bank owned life insurance in the first quarter 2018.

● Noninterest expense for the quarter ended March 31, 2019 of $29.1 million increased $0.9 million, or 3.2%, from prior quarter, and $0.4 million, or 1.4%, from prior year same quarter.  The increase in noninterest expense was primarily due to increased personnel expense.

● In March 2019, Kentucky enacted legislation requiring financial institutions to transition from a bank franchise tax to the Kentucky corporate income tax beginning in 2021.  As a result, we booked a one-time charge of $1.0 million, or $0.06 per basic share, to income tax expense to recognize our Kentucky deferred tax liability at March 31, 2019.  While this liability will be adjusted periodically, we do not anticipate any further adjustments to have a significant impact to income.

Subsequent to quarter end, in April 2019, Kentucky enacted HB458.  HB458 allows for combined filing with CTBI, CTB, and CTIC.  CTBI had previously filed a separate company return and generated net operating losses, in which it had maintained a valuation allowance against the related deferred tax asset.  HB458 also allows for certain net operating losses to be utilized on a combined return.  CTBI expects to file a combined return, beginning in 2021, and to utilize these previously generated losses.  The estimated tax benefit to reverse the valuation allowance on the deferred tax asset for these losses is expected to be approximately $3.0 million and will be recorded in the second quarter 2019.

Income Statement Review

(dollars in thousands)							Change 2019 vs. 2018
Three Months Ended March 31	2019			2018			Amount			Percent
Net interest income	$	35,983		$	34,591		$	1,392			4.0	%
Provision for loan losses		190			946			(756	)		(79.9	)
Noninterest income		12,170			13,310			(1,140	)		(8.6	)
Noninterest expense		29,083			28,681			402			1.4
Income taxes		3,941			2,460			1,481			60.2
Net income	$	14,939		$	15,814		$	(875	)		(5.5	)%
Average earning assets	$	3,966,483		$	3,870,242		$	96,241			2.5	%
Yield on average earnings assets, tax equivalent*		4.71	%		4.28	%		0.43	%		10.3	%
Cost of interest bearing funds		1.43	%		0.87	%		0.56	%		63.5	%
Net interest margin, tax equivalent*		3.70	%		3.65	%		0.05	%		1.5	%

*Yield on average earning assets and net interest margin were computed on a tax equivalent basis using a 21% tax rate.

Net Interest Income

Net interest income for the quarter of $36.0 million was a decrease of $0.3 million, or 0.8%, from fourth quarter 2018 but an increase of $1.4 million, or 4.0%, from prior year first quarter.  Our net interest margin at 3.70% was an increase of 2 basis points from prior quarter and 5 basis points from prior year same quarter, while our average earning assets increased $29.4 million and $96.2 million, respectively, during those same periods.  Our yield on average earning assets increased 13 basis points from prior quarter and 43 basis points from prior year same quarter, and our cost of funds increased 16 basis points from prior quarter and 56 basis points from prior year same quarter.  Our ratio of average loans to deposits, including repurchase agreements, was 89.9% for the quarter ended March 31, 2019 compared to 89.8% for the quarter ended December 31, 2018 and 88.6% for the quarter ended March 31, 2018.

Provision for Loan Losses

The provision for loan losses that was added to the allowance for the first quarter 2019 was $0.2 million compared to $1.7 million for the quarter ended December 31, 2018 and $0.9 million for the quarter ended March 31, 2018.  This provision represented a charge against current earnings in order to maintain the allowance at an appropriate level determined using the accounting estimates described in the Critical Accounting Policies and Estimates section.  Our reserve coverage (allowance for loan and lease loss reserve to nonperforming loans) at March 31, 2019 was 137.8% compared to 162.7% at December 31, 2018 and 135.6% at March 31, 2018.  Our loan loss reserve as a percentage of total loans outstanding at March 31, 2019 was 1.10%, down from the 1.12% at December 31, 2018 and 1.13% at March 31, 2018.  The decrease in our provision for loan losses was driven by the improvement in our twelve quarter performance metrics used in determining the allowance for loan losses, along with the 14 basis points in annualized net charge-offs for the quarter.  The twelve quarter performance metrics that have contributed to the majority of the reduction in required reserves include:  (1) historical losses, (2) delinquency trends, and (3) interest rate risks associated with rising interest rates.

Noninterest Income

Noninterest income for the quarter ended March 31, 2019 of $12.2 million was relatively flat to prior quarter, but a decrease of $1.1 million, or 8.6%, from prior year same quarter.  The decrease in noninterest income from prior year was primarily the result of $1.2 million in death benefits received on bank owned life insurance in the first quarter 2018.  Noninterest income for the quarter was also impacted by decreased deposit service charges ($0.1 million), trust revenue ($0.4 million), and loan related fees ($0.6 million) year over year, offset by a positive variance in securities gains of $0.6 million and miscellaneous income of $0.5 million resulting from an adjustment of a mortgage servicing account held by a third party.  The decrease in loan related fees was the result of a decline in the fair value of our mortgage servicing rights.

Noninterest Expense

Noninterest expense for the quarter ended March 31, 2019 of $29.1 million increased $0.9 million, or 3.2%, from prior quarter, and $0.4 million, or 1.4%, from prior year same quarter.  The increase in noninterest expense was primarily due to increased personnel expense.  The $0.7 million quarter over quarter increase in personnel expense included increases in salaries ($0.3 million), bonuses ($0.5 million), and related taxes ($0.2 million), partially offset by a decrease in the cost of group medical and life insurance ($0.3 million).  The $0.3 million prior year same quarter variance in personnel expense was primarily due to increased salaries ($0.5 million) and other employee benefits ($0.1 million), offset by a $0.4 million decrease in the cost of group medical and life insurance.

Balance Sheet Review

CTBI’s total assets at $4.3 billion increased $111.7 million, or 10.8% annualized, from December 31, 2018 and $117.6 million, or 2.8%, from March 31, 2018.  Loans outstanding at March 31, 2019 were $3.2 billion, a decrease of $18.9 million, an annualized 2.4%, from December 31, 2018 but an increase of $71.5 million, or 2.3%, from March 31, 2018.  We experienced an increase during the quarter of $2.8 million in the commercial loan portfolio, offset by decreases of $15.7 million in the indirect loan portfolio, $3.6 million in the residential loan portfolio, and $2.4 million in the consumer loan portfolio.  CTBI’s investment portfolio increased $5.9 million, or an annualized 4.0%, from December 31, 2018 but decreased $4.1 million, or 0.7%, from March 31, 2018.  Deposits in other banks increased $121.9 million from prior quarter and $43.8 million from prior year same quarter, as the yield earned was favorable to other investment alternatives.  Deposits, including repurchase agreements, at $3.6 billion increased $81.9 million, or an annualized 9.4%, from December 31, 2018 and $56.1 million, or 1.6%, from March 31, 2018.

Shareholders’ equity at March 31, 2019 was $577.5 million, a 9.6% annualized increase from the $564.1 million at December 31, 2018 and a 7.4% increase from the $537.5 million at March 31, 2018.  Our tangible common equity/tangible assets ratio at March 31, 2019 was 12.05%.

Loans

(in thousands)	March 31, 2019
Loan Category	Balance		Variance from Prior Year-End			YTD Net Charge-Offs			Nonperforming		ALLL
Commercial:
Construction	$	75,364		(8.9	)%	$	3		$	618	$	903
Secured by real estate		1,182,804		0.0			(18	)		12,761		14,800
Equipment lease financing		1,354		(22.2	)		0			0		10
Commercial other		388,060		2.9			(158	)		1,663		5,217
Total commercial		1,647,582		0.2			(173	)		15,042		20,930
Residential:
Real estate construction		54,013		(5.5	)		0			295		396
Real estate mortgage		720,292		(0.3	)		(102	)		8,894		4,053
Home equity		108,018		1.6			(24	)		743		901
Total residential		882,323		(0.4	)		(126	)		9,932		5,350
Consumer:
Consumer direct		141,855		(1.7	)		(129	)		30		1,635
Consumer indirect		517,972		(3.0	)		(666	)		390		7,089
Total consumer		659,827		(2.7	)		(795	)		420		8,724
Total loans	$	3,189,732		(0.6	)%	$	(1,094	)	$	25,394	$	35,004

Asset Quality

CTBI’s total nonperforming loans, not including performing troubled debt restructurings, were $25.4 million, or 0.80% of total loans, at March 31, 2019 compared to $22.1 million, or 0.69% of total loans, at December 31, 2018 and $25.9 million, or 0.83% of total loans, at March 31, 2018.  Accruing loans 90+ days past due increased $2.8 million from prior quarter and $4.0 million from March 31, 2018.  The increase in accruing loans 90+ days past due is primarily attributable to two commercial credit relationships which are income-producing, well-collateralized, and in the process of collection.  Nonaccrual loans increased $0.5 million during the quarter but decreased $4.5 million from December 31, 2018.  Accruing loans 30-89 days past due at $21.8 million was a decrease of $0.9 million from prior quarter but an increase of $4.9 million from March 31, 2018.  Our loan portfolio management processes focus on the immediate identification, management, and resolution of problem loans to maximize recovery and minimize loss.   Our loan risk management processes include weekly delinquent loan review meetings at the market levels and monthly delinquent loan review meetings involving senior corporate management to review all nonaccrual loans and loans 30 days or more past due.  Any activity regarding a criticized/classified loan (i.e. problem loan) must be approved by CTB’s Watch List Asset Committee (i.e. Problem Loan Committee).  CTB’s Watch List Asset Committee also meets on a quarterly basis and reviews every criticized/classified loan of $100,000 or greater.  We also have a Loan Review Department that reviews every market within CTB annually and performs extensive testing of the loan portfolio to assure the accuracy of loan grades and classifications for delinquency, troubled debt restructuring, impaired status, impairment, nonaccrual status, and adequate loan loss reserves.

Impaired loans, loans not expected to meet contractual principal and interest payments other than insignificant delays, at March 31, 2019 totaled $50.4 million, compared to $46.4 million at December 31, 2018 and $48.2 million at March 31, 2018.Management evaluates all impaired loans for the amount of impairment, if any, and records a direct charge-off or provides specific reserves when necessary.

For further information regarding nonperforming and impaired loans, see note 4 to the condensed consolidated financial statements.

CTBI generally does not offer high risk loans such as option ARM products, high loan to value ratio mortgages, interest-only loans, loans with initial teaser rates, or loans with negative amortizations, and therefore, CTBI would have no significant exposure to these products.

Our level of foreclosed properties at $25.0 million at March 31, 2019 was a $2.3 million decrease from the $27.3 million at December 31, 2018 and a $7.0 million decrease from the $32.0 million at March 31, 2018.  Sales of foreclosed properties for the quarter ended March 31, 2019 totaled $2.7 million while new foreclosed properties totaled $0.9 million.  At March 31, 2019, the book value of properties under contracts to sell was $3.0 million; however, the closings had not occurred at quarter-end.

When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current market value less expected sales costs.  Additionally, periodic updated appraisals are obtained on unsold foreclosed properties.  When an updated appraisal reflects a fair market value below the current book value, a charge is booked to current earnings to reduce the property to its new market value less expected sales costs.   Charges to earnings in the first quarter 2019 to reflect the decrease in current market values of foreclosed properties totaled $0.4 million.  There were thirteen properties reappraised during the first quarter 2019.  Of these, nine properties were written down by a total of $0.3 million.  Charges to earnings during the quarters ended December 31, 2018 and March 31, 2018 were $0.5 million.  Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  Approximately ninety-three percent of our OREO properties have appraisals dated within the past 18 months.  Management anticipates that our foreclosed properties will remain elevated as we work through current market conditions.

The appraisal aging analysis of foreclosed properties, as well as the holding period, at March 31, 2019 is shown below:

(in thousands)
Appraisal Aging Analysis					Holding Period Analysis
Days Since Last Appraisal	Number of Properties		Current Book Value		Holding Period	Current Book Value
Up to 3 months		17	$	2,902	Less than one year	$	3,059
3 to 6 months		11		844	1 year		2,189
6 to 9 months		36		2,675	2 years		773
9 to 12 months		22		4,875	3 years		5,287
12 to 18 months		21		1,686	4 years		2,310
18 to 24 months		7		11,970	5 years		527
Over 24 months		1		18	6 years*		1,041
Total		115	$	24,970	7 years*		8,415
					8 years*		113
					9 years*		1,256
					Total	$	24,970

*Regulatory approval is required and has been obtained to hold these properties beyond the initial period of 5 years.  Additional approval may be required to continue to hold these properties should they not be liquidated during the extension period, which is typically one year.  To the extent we are not able to sell a foreclosed property in 10 years, we will be required to relinquish ownership of that property.

As disclosed above, CTBI is required to dispose of any foreclosed property that has not been sold within 10 years.  As of December 31, 2018, foreclosed property with a total book value of $2.4 million had been held by us for at least nine years.  During the first quarter 2019, $1.0 million of this total was disposed of with a gain of $0.1 million.  As of March 31, 2019, foreclosed property with a total book value of $1.3 million, representing 5% of our foreclosed properties (based on book value), had been held by us for at least nine years.  The book value at March 31, 2019 represents management’s best estimate of realizable value of properties.

Net loan charge-offs for the quarter ended March 31, 2019 were $1.1 million, or 0.14% of average loans annualized, compared to $1.6 million, or 0.20%, experienced for the fourth quarter 2018 and $1.9 million, or 0.25%, for the first quarter 2018.  Of the net charge-offs for the quarter, $0.2 million were in commercial loans, $0.7 million were in indirect auto loans, $0.1 million were in residential loans, and $0.1 million were in consumer direct loans.

Dividends

The following schedule shows the quarterly cash dividends paid for the past six quarters:

Pay Date	Record Date	Amount Per Share
April 1, 2019	March 15, 2019	$	0.36
January 1, 2019	December 15, 2018	$	0.36
October 1, 2018	September 15, 2018	$	0.36
July 1, 2018	June 15, 2018	$	0.33
April 1, 2018	March 15, 2018	$	0.33
January 1, 2018	December 15, 2017	$	0.33

Liquidity and Market Risk

The objective of CTBI’s Asset/Liability management function is to maintain consistent growth in net interest income within our policy limits.  This objective is accomplished through management of our consolidated balance sheet composition, liquidity, and interest rate risk exposures arising from changing economic conditions, interest rates, and customer preferences.  The goal of liquidity management is to provide adequate funds to meet changes in loan and lease demand or deposit withdrawals.  This is accomplished by maintaining liquid assets in the form of cash and cash equivalents and investment securities, sufficient unused borrowing capacity, and growth in core deposits and wholesale funding (including the use of wholesale brokered deposits).  As of March 31, 2019, we had approximately $253.9 million in cash and cash equivalents and approximately $599.3 million in securities valued at estimated fair value designated as available-for-sale and available to meet liquidity needs on a continuing basis compared to $141.5 million and $593.7 million at December 31, 2018.  Additional asset-driven liquidity is provided by the remainder of the securities portfolio and the repayment of loans.  In addition to core deposit funding, we also have a variety of other short-term and long-term funding sources available.  As of March 31, 2019, we had wholesale brokered deposits outstanding of $42.3 million with a weighted average maturity of 1.33 years compared to $42.3 million with a weighted average maturity of 1.58 years at December 31, 2018.  We also rely on Federal Home Loan Bank advances for both liquidity and management of our asset/liability position.  Federal Home Loan Bank advances were $0.4 million at March 31, 2019 and December 31, 2018.  As of March 31, 2019, we had a $329.3 million available borrowing position with the Federal Home Loan Bank compared to $312.2 million at December 31, 2018.  We generally rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash for our investing activities.    As is typical of many financial institutions, significant financing activities include deposit gathering, use of short-term borrowing facilities such as repurchase agreements and federal funds purchased, use of wholesale brokered deposits, and issuance of long-term debt.  At March 31, 2019 and December 31, 2018, we had $45 million in lines of credit with various correspondent banks available to meet any future cash needs.  Our primary investing activities include purchases of securities and loan originations.  We do not rely on any one source of liquidity and manage availability in response to changing consolidated balance sheet needs.  Included in our cash and cash equivalents at March 31, 2019 were deposits with the Federal Reserve of $197.1 million compared to $73.5 million at December 31, 2018.  At March 31, 2019, cash and cash equivalents included federal funds sold of $4.5 million compared to $1.1 million at December 31, 2018.  Additionally, we project cash flows from our investment portfolio to generate additional liquidity over the next 90 days.

The investment portfolio consists of investment grade short-term issues suitable for bank investments.  The majority of the investment portfolio is in U.S. government and government sponsored agency issuances.  At March 31, 2019, available-for-sale (“AFS”) securities comprised substantially allof the total investment portfolio, and the AFS portfoliowas approximately 104%of equity capital.  Eighty-seven percentof the pledge eligible portfolio was pledged.

Interest Rate Risk

We consider interest rate risk one of our most significant market risks. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates.  Consistency of our net interest revenue is largely dependent upon the effective management of interest rate risk.  We employ a variety of measurement techniques to identify and manage our interest rate risk including the use of an earnings simulation model to analyze net interest income sensitivity to changing interest rates.  The model is based on actual cash flows and repricing characteristics for on and off-balance sheet instruments and incorporates market-based assumptions regarding the effect of changing interest rates on the prepayment rates of certain assets and liabilities.  Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into the model.  These assumptions are inherently uncertain, and as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income.  Actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.

CTBI’s Asset/Liability Management Committee (ALCO), which includes executive and senior management representatives and reports to the Board of Directors, monitors and manages interest rate risk within Board-approved policy limits.  Our current exposure to interest rate risks is determined by measuring the anticipated change in net interest income spread evenly over the twelve-month period.

Capital Resources

Shareholders’ equity was $577.5 million at March 31, 2019 and $564.2 million at December 31, 2018.  CTBI’s annualized dividend yield to shareholders as of March 31, 2019 was 3.51%.  Our primary source of capital growth is the retention of earnings.  Cash dividends were $0.36 per share and $0.33 per share for the three months ended March 31, 2019 and 2018, respectively.  We retained 57.1% of our earnings for the first three months of 2019 compared to 62.9% for the first three months of 2018.

On July 2, 2013, the Federal Reserve approved final rules that substantially amended the regulatory risk-based capital rules applicable to CTBI and CTB.  The FDIC subsequently approved these rules.  The final rules implemented the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.

The rules included new risk-based capital and leverage ratios, which were phased in from 2015 to January 2019, and refined the definition of what constitutes “capital” for purposes of calculating those ratios.  The minimum capital level requirements applicable to CTBI and CTB under the final rules are: (i) a common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6%; (iii) a total capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4% for all institutions.  The final rules also established a “capital conservation buffer” above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital.  The capital conservation buffer began to be phased in on January 1, 2016 at 0.625% of risk-weighted assets increased by 0.625% annually until fully implemented in January 2019.  An institution is subject to limitations on certain activities including payment of dividends, share repurchases, and discretionary bonuses to executive officers if its capital level is below the total capital plus capital conservation buffer amount.

The final rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including CTB, if their capital levels begin to show signs of weakness.  These revisions took effect January 1, 2015.  Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions are required to meet the following capital level requirements in order to qualify as “well capitalized:” (i) a common equity Tier 1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8%; (iii) a total capital ratio of 10%; and (iv) a Tier 1 leverage ratio of 5%.  We currently satisfy the well-capitalized and the capital conservation standards, and based on our current capital composition and levels, we anticipate that our capital ratios, on a Basel III basis, will continue to exceed the well-capitalized minimum capital requirements and capital conservation buffer standards.

As of March 31, 2019, CTBI had a common equity Tier 1 capital ratio of 16.49%, a Tier 1 capital ratio of 18.34%, a total capital ratio of 19.47%, and a Tier 1 leverage ratio of 13.62%.  Our capital conservation buffer at March 31, 2019 was 11.47%.

In December 2017, the Basel Committee on Banking Supervision unveiled the latest round of its regulatory framework, commonly referred to as Basel IV.  The framework makes changes to the capital framework of Basel III and is targeted for a timeframe of 2022-2027 for implementation.  The new framework appears designed to limit the flexibility of financial institutions using advanced approaches to calculate credit and other risks and also makes significant amendments to the standardized approaches to credit risk, credit valuation adjustment risk, and operational risk.  The manner and the form in which the Basel IV framework will be implemented in the U.S. are uncertain.

As of March 31, 2019, we are not aware of any current recommendations by banking regulatory authorities which, if they were to be implemented, would have, or are reasonably likely to have, a material adverse impact on our liquidity, capital resources, or operations.

Impact of Inflation, Changing Prices, and Economic Conditions

The majority of our assets and liabilities are monetary in nature. Therefore, CTBI differs greatly from most commercial and industrial companies that have significant investment in nonmonetary assets, such as fixed assets and inventories.  However, inflation does have an important impact on the growth of assets in the banking industry and on the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio.  Inflation also affects other expenses, which tend to rise during periods of general inflation.

We believe one of the most significant impacts on financial and operating results is our ability to react to changes in interest rates.  We seek to maintain an essentially balanced position between interest rate sensitive assets and liabilities in order to protect against the effects of wide interest rate fluctuations.

Beginning in 2008, the U.S. economy faced a severe economic crisis including a major recession from which recovery was slow and uneven.  Commerce and business growth in certain regions in the U.S. remains reduced and local governments and many businesses continue to experience financial difficulty.  In some areas of the U.S., including certain parts of our service area, unemployment levels remain elevated.  There can be no assurance that these conditions will continue to improve and these conditions could worsen.  In addition, the level of U.S. debt, the Federal Open Market Committee’s monetary policy, potential volatility in oil prices, recent U.S. tax law modifications, political events, and trade policies may have a destabilizing effect on financial markets or a negative effect on the economy.

Our financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment in the markets where we operate, in the states of Kentucky, West Virginia, and Tennessee and in the United States as a whole.  While unemployment rates have improved in all of the markets in which we operate, unemployment rates in our markets remain high compared to the national average.  A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings.  Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; natural disasters; or a combination of these or other factors.

While economic conditions in the United States and worldwide have improved since the recession, there can be no assurance that this improvement will continue or that another recession will not occur.  Economic pressure on consumers and uncertainty regarding continuing economic improvement may result in changes in consumer and business spending, borrowing, and savings habits.  Such conditions could adversely affect the credit quality of our loans and our business, financial condition, and results of operations.

Stock Repurchase Program

CTBI has not acquired any shares of common stock through the stock repurchase program since February 2008.  There are 67,371 shares remaining under CTBI’s current repurchase authorization.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes.  Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates.  Such differences could be material to the consolidated financial statements.

We believe the application of accounting policies and the estimates required therein are reasonable.  These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change.  Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

We have identified the following critical accounting policies:

Investments –Management determines the classification of securities at purchase.  We classify debt securities into held-to-maturity, trading, or available-for-sale categories.  Held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost.  In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments – Debt Securities, investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position:

a. Trading securities. Securities that are bought and held principally for the purpose of selling them in the near term (thus held for only a short period of time) shall be classified as trading securities. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.

b. Available-for-sale securities. Investments not classified as trading securities (nor as held-to-maturity securities) shall be classified as available-for-sale securities.

We do not have any securities that are classified as trading securities.  Available-for-sale securities are reported at fair value, with unrealized gains and losses included as a separate component of shareholders’ equity, net of tax.  If declines in fair value are other than temporary, the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related.

Gains or losses on disposition of debt securities are computed by specific identification for those securities.  Interest and dividend income, adjusted by amortization of purchase premium or discount, is included in earnings.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair market value is below amortized cost, additional analysis is performed to determine whether an other than temporary impairment condition exists.  Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment.  The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity.  Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment.  If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on CTBI’s results of operations and financial condition.

Subsequent to the January 1, 2018 effective date of ASU 2016-01, ASC 320 applies only to debt securities and ASC 321, Investments – Equity Securities, applies to equity securities.  ASC 321 requires equity investments (except those accounted for under the equity method and those that result in the consolidation of the investee) to be measured at fair value, with changes in fair values recognized in net income.

Equity securities with a readily determinable fair value are required to be measured at fair value, with changes in fair value recognized through net income.  Equity securities without a readily determinable fair value are carried at cost, less any impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments.  An election can be made, as permitted by ASC 321-10-35-2, to subsequently measure an equity security without a readily determinable fair value, at fair value.  Equity securities held by CTBI include securities without readily determinable fair values.  CTBI has elected to account for these securities at fair value.  The fair value of these securities was determined by a third party service provider using Level 3 inputs as defined in ASC 820, Fair Value Measurement, and changes in fair value are recognized in income.

Loans –Loans with the ability and the intent to be held until maturity and/or payoff are reported at the carrying value of unpaid principal reduced by unearned interest, an allowance for loan and lease losses, and unamortized deferred fees or costs.  Income is recorded on the level yield basis.  Interest accrual is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful.  Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest.  Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured.  Loans are not reclassified as accruing until principal and interest payments remain current for a period of time, generally six months, and future payments appear reasonably certain.  Included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired.  A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.

Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the estimated life of the related loans, leases, or commitments as a yield adjustment.

Allowance for Loan and Lease Losses –We maintain an allowance for loan and lease losses (“ALLL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio.  Credit losses are charged and recoveries are credited to the ALLL.

We utilize an internal risk grading system for commercial credits.  Those larger commercial credits that exhibit probable or observed credit weaknesses are subject to individual review.  The borrower’s cash flow, adequacy of collateral coverage, and other options available to CTBI, including legal remedies, are evaluated.  The review of individual loans includes those loans that are impaired as defined by ASC 310-10-35, Impairment of a Loan.  We evaluate the collectability of both principal and interest when assessing the need for loss provision.  Historical loss rates are analyzed and applied to other commercial loans not subject to specific allocations.  The ALLL allocation for this pool of commercial loans is established based on the historical average, maximum, minimum, and median loss ratios.

A loan is considered impaired when, based on current information and events, it is probable that CTBI will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Homogenous loans, such as consumer installment, residential mortgages, and home equity lines are not individually risk graded.  The associated ALLL for these loans is measured under ASC 450, Contingencies.

When any secured commercial loan is considered uncollectable, whether past due or not, a current assessment of the value of the underlying collateral is made.  If the balance of the loan exceeds the fair value of the collateral, the loan is placed on nonaccrual and the loan is charged down to the value of the collateral less estimated cost to sell or a specific reserve equal to the difference between book value of the loan and the fair value assigned to the collateral is created until such time as the loan is foreclosed.  When the foreclosed collateral has been legally assigned to CTBI, the estimated fair value of the collateral less costs to sell is then transferred to other real estate owned or other repossessed assets, and a charge-off is taken for any remaining balance.  When any unsecured commercial loan is considered uncollectable the loan is charged off no later than at 90 days past due.

All closed-end consumer loans (excluding conventional 1-4 family residential loans and installment and revolving loans secured by real estate) are charged off no later than 120 days (5 monthly payments) delinquent.  If a loan is considered uncollectable, it is charged off earlier than 120 days delinquent.  For conventional 1-4 family residential loans and installment and revolving loans secured by real estate, when a loan is 90 days past due, a current assessment of the value of the real estate is made.  If the balance of the loan exceeds the fair value of the property, the loan is placed on nonaccrual.  Foreclosure proceedings are normally initiated after 120 days.  When the foreclosed property has been legally assigned to CTBI, the fair value less estimated costs to sell is transferred to other real estate owned and the remaining balance is taken as a charge-off.

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition.  We use twelve rolling quarters for our historical loss rate analysis.  Factors that we consider include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, level of recoveries to prior year’s charge-offs, trends in loan losses, industry concentrations and their relative strengths, amount of unsecured loans, and underwriting exceptions.  Management continually reevaluates the other subjective factors included in its ALLL analysis.

Other Real Estate Owned – When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current fair market value less expected sales costs.  Additionally, periodic updated appraisals are obtained on unsold foreclosed properties.  When an updated appraisal reflects a fair market value below the current book value, a charge is booked to current earnings to reduce the property to its new fair market value less expected sales costs.  Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  All revenues and expenses related to the carrying of other real estate owned are recognized through the income statement.

Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes based on the expected future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.  Any interest and penalties incurred in connection with income taxes are recorded as a component of income tax expense in the consolidated financial statements.  During the three months ended March 31, 2019 and 2018, CTBI has not recognized a significant amount of interest expense or penalties in connection with income taxes.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk management focuses on maintaining consistent growth in net interest income within Board-approved policy limits.  CTBI uses an earnings simulation model to analyze net interest income sensitivity to movements in interest rates.  Given a 200 basis point increase to the yield curve used in the simulation model, it is estimated net interest income for CTBI would increase by 5.71 percent over one year and 9.04 percent over two years.  A 200 basis point decrease in the yield curve would decrease net interest income by an estimated 5.52 percent over one year and 8.98 percent over two years.  For further discussion of CTBI’s market risk, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Market Risk included in the annual report on Form 10-K for the year ended December 31, 2018.

Item 4.  Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

CTBI’s management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.  As of the end of the period covered by this report, an evaluation was carried out by CTBI’s management, with the participation of our Chief Executive Officer and the Executive Vice President, Chief Financial Officer, and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, management concluded that disclosure controls and procedures as of March 31, 2019 were effective in ensuring material information required to be disclosed in this quarterly report on Form 10-Q was recorded, processed, summarized, and reported on a timely basis.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in CTBI’s internal control over financial reporting that occurred during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, CTBI’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	None
Item 1A.	Risk Factors	None
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	None
Item 3.	Defaults Upon Senior Securities	None
Item 4.	Mine Safety Disclosure	Not applicable
Item 5.	Other Information:
	CTBI’s Principal Executive Officer and Principal Financial Officer have furnished to the SEC the certifications with respect to this Form 10-Q that are required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002
Item 6.	Exhibits:
	(1)   Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Exhibit 31.1 Exhibit 31.2
	(2)   Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Exhibit 32.1 Exhibit 32.2
	(3)  XBRL Instance Document	Exhibit 101.INS
	(4)  XBRL Taxonomy Extension Schema	Exhibit 101.SCH
	(5)  XBRL Taxonomy Extension Calculation Linkbase	Exhibit 101.CAL
	(6)  XBRL Taxonomy Extension Definition Linkbase	Exhibit 101.DEF
	(7)  XBRL Taxonomy Extension Label Linkbase	Exhibit 101.LAB
	(8)  XBRL Taxonomy Extension Presentation Linkbase	Exhibit 101.PRE

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, CTBI has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COMMUNITY TRUST BANCORP, INC.
Date:  May 9, 2019	By:	/s/ Jean R. Hale
		Jean R. Hale
		Chairman, President, and Chief Executive Officer

/s/ Kevin J. Stumbo

Kevin J. Stumbo

Executive Vice President, Chief Financial Officer, and Treasurer

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

I, Jean R. Hale, Chairman, President, and Chief Executive Officer of Community Trust Bancorp, Inc. (“CTBI”), certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Community Trust Bancorp, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operation and cash flows of CTBI as of, and for, the periods presented in this report;

(4) CTBI's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for CTBI and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to CTBI, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of CTBI's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in CTBI's internal control over financial reporting that occurred during CTBI's most recent fiscal quarter (CTBI's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, CTBI's internal control over financial reporting; and

(5) CTBI's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to CTBI's auditors and the audit committee of CTBI's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect CTBI's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in CTBI's internal control over financial reporting.

/s/ Jean R. Hale

Jean R. Hale

Chairman, President, and Chief Executive Officer

May 9, 2019

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

I, Kevin J. Stumbo, Executive Vice President, Chief Financial Officer, and Treasurer of Community Trust Bancorp, Inc. (“CTBI”), certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Community Trust Bancorp, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operation and cash flows of CTBI as of, and for, the periods presented in this report;

(4) CTBI's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for CTBI and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to CTBI, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of CTBI's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in CTBI's internal control over financial reporting that occurred during CTBI's most recent fiscal quarter (CTBI's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, CTBI's internal control over financial reporting; and

(5) CTBI's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to CTBI's auditors and the audit committee of CTBI's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect CTBI's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in CTBI's internal control over financial reporting.

/s/ Kevin J. Stumbo

Kevin J. Stumbo

Executive Vice President, Chief Financial Officer, and Treasurer

May 9, 2019

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Community Trust Bancorp, Inc. (“CTBI”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jean R. Hale, Chairman, President, and Chief Executive Officer of CTBI, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of CTBI.

/s/ Jean R. Hale

Jean R. Hale

Chairman, President, and Chief Executive Officer

May 9, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Community Trust Bancorp, Inc. (“CTBI”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin J. Stumbo, Executive Vice President, Chief Financial Officer, and Treasurer of CTBI, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of CTBI.

/s/ Kevin J. Stumbo

Kevin J. Stumbo

Executive Vice President, Chief Financial Officer, and Treasurer

May 9, 2019

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	COMMUNITY TRUST BANCORP INC /KY/
Entity Central Index Key	0000350852
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		17,772,770
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets:
Cash and due from banks	$ 49,302	$ 64,632
Interest bearing deposits	200,058	75,718
Federal funds sold	4,500	1,100
Cash and cash equivalents	253,860	141,450
Certificates of deposit in other banks	1,470	3,920
Securities available-for-sale at fair value (amortized cost of $601,544 and $602,114, respectively)	599,299	593,746
Securities held-to-maturity at amortized cost (fair value of $619 and $649, respectively)	619	649
Equity securities at fair value	1,528	1,173
Loans held for sale	13,649	2,461
Loans	3,189,732	3,208,638
Allowance for loan and lease losses	(35,004)	(35,908)
Net loans	3,154,728	3,172,730
Premises and equipment, net	44,554	45,291
Right-of-use asset	15,128	0
Federal Home Loan Bank stock	12,261	14,713
Federal Reserve Bank stock	4,887	4,887
Goodwill	65,490	65,490
Bank owned life insurance	67,433	67,076
Mortgage servicing rights	3,390	3,607
Other real estate owned	24,970	27,273
Other assets	50,027	57,150
Total assets	4,313,293	4,201,616
Deposits:
Noninterest bearing	841,996	803,316
Interest bearing	2,541,107	2,502,634
Total deposits	3,383,103	3,305,950
Repurchase agreements	237,506	232,712
Federal funds purchased	1,800	1,180
Advances from Federal Home Loan Bank	431	436
Long-term debt	59,341	59,341
Deferred taxes	6,529	3,363
Lease liability	15,743	0
Other liabilities	31,333	34,484
Total liabilities	3,735,786	3,637,466
Shareholders' equity:
Preferred stock, 300,000 shares authorized and unissued	0	0
Common stock, $5 par value, shares authorized 25,000,000; shares outstanding 2019 - 17,767,594; 2018 - 17,732,853	88,839	88,665
Capital surplus	223,426	223,161
Retained earnings	267,016	258,935
Accumulated other comprehensive loss, net of tax	(1,774)	(6,611)
Total shareholders' equity	577,507	564,150
Total liabilities and shareholders' equity	$ 4,313,293	$ 4,201,616

XML

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets:
Securities available-for-sale at amortized cost	$ 601,544	$ 602,114
Securities held-to-maturity at fair value	$ 619	$ 649
Shareholders' equity:
Preferred stock, shares authorized (in shares)	300,000	300,000
Common stock, par value (in dollars per share)	$ 5	$ 5
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares outstanding (in shares)	17,767,594	17,732,853

XML

Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest income:
Interest and fees on loans, including loans held for sale	$ 40,910	$ 36,577
Interest and dividends on securities
Taxable	3,163	2,470
Tax exempt	678	697
Interest and dividends on Federal Reserve Bank and Federal Home Loan Bank stock	296	333
Interest on Federal Reserve Bank deposits	786	439
Other, including interest on federal funds sold	56	64
Total interest income	45,889	40,580
Interest expense:
Interest on deposits	8,075	4,872
Interest on repurchase agreements and federal funds purchased	1,156	635
Interest on advances from Federal Home Loan Bank	39	2
Interest on long-term debt	636	480
Total interest expense	9,906	5,989
Net interest income	35,983	34,591
Provision for loan losses	190	946
Net interest income after provision for loan losses	35,793	33,645
Noninterest income:
Service charges on deposit accounts	6,120	6,221
Gains on sales of loans, net	330	279
Trust and wealth management income	2,575	2,958
Loan related fees	573	1,144
Bank owned life insurance	558	1,764
Brokerage revenue	261	283
Securities gains (losses)	356	(288)
Other noninterest income	1,397	949
Total noninterest income	12,170	13,310
Noninterest expense:
Officer salaries and employee benefits	3,374	3,214
Other salaries and employee benefits	12,585	12,405
Occupancy, net	2,051	2,116
Equipment	739	717
Data processing	1,763	1,636
Bank franchise tax	1,715	1,701
Legal fees	430	474
Professional fees	531	502
Advertising and marketing	792	732
FDIC insurance	177	314
Other real estate owned provision and expense	771	939
Repossession expense	377	409
Amortization of limited partnership investments	777	500
Other noninterest expense	3,001	3,022
Total noninterest expense	29,083	28,681
Income before income taxes	18,880	18,274
Income taxes	3,941	2,460
Net income	14,939	15,814
Unrealized holding gains (losses) on securities available-for-sale:
Unrealized holding gains (losses) arising during the period	6,124	(5,498)
Less: Reclassification adjustments for realized gains included in net income	1	149
Tax expense (benefit)	1,286	(1,186)
Other comprehensive income (loss), net of tax	4,837	(4,461)
Comprehensive income	$ 19,776	$ 11,353
Basic earnings per share (in dollars per share)	$ 0.84	$ 0.89
Diluted earnings per share (in dollars per share)	$ 0.84	$ 0.89
Weighted average shares outstanding-basic (in shares)	17,712	17,671
Weighted average shares outstanding-diluted (in shares)	17,723	17,687

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss), Net of Tax [Member]	Total
Increase (Decrease) in Stockholders' Equity [Roll forward]
Implementation of ASU | ASU 2014-09 [Member]			$ 453		$ 453
Implementation of ASU | ASU 2016-01 [Member]			(507)	$ 507	0
Balance at Dec. 31, 2017	$ 88,465	$ 221,472	224,268	(3,506)	530,699
Balance (in shares) at Dec. 31, 2017	17,692,912
Increase (Decrease) in Stockholders' Equity [Roll forward]
Net income			15,814		15,814
Other comprehensive income (loss), net of tax				(4,461)	(4,461)
Cash dividends declared			(5,836)		(5,836)
Issuance of common stock	$ 145	451			596
Issuance of common stock (in shares)	29,087
Vesting of restricted stock	$ (63)	63			0
Vesting of restricted stock (in shares)	(12,582)
Issuance of restricted stock	$ 57	(57)			0
Issuance of restricted stock (in shares)	11,435
Forfeiture of restricted stock	$ (1)	1			0
Forfeiture of restricted stock (in shares)	(115)
Stock-based compensation		224			224
Balance at Mar. 31, 2018	$ 88,603	222,154	234,192	(7,460)	537,489
Balance (in shares) at Mar. 31, 2018	17,720,737
Increase (Decrease) in Stockholders' Equity [Roll forward]
Implementation of ASU | ASU 2016-02 [Member]			(480)	0	(480)
Balance at Dec. 31, 2018	$ 88,665	223,161	258,935	(6,611)	$ 564,150
Balance (in shares) at Dec. 31, 2018	17,732,853				17,732,853
Increase (Decrease) in Stockholders' Equity [Roll forward]
Net income			14,939		$ 14,939
Other comprehensive income (loss), net of tax				4,837	4,837
Cash dividends declared			(6,378)		(6,378)
Issuance of common stock	$ 95	163			258
Issuance of common stock (in shares)	19,065
Vesting of restricted stock	$ (61)	61			0
Vesting of restricted stock (in shares)	(12,186)
Issuance of restricted stock	$ 140	(140)			0
Issuance of restricted stock (in shares)	27,921
Forfeiture of restricted stock	$ 0	0			0
Forfeiture of restricted stock (in shares)	(59)
Stock-based compensation		181			181
Balance at Mar. 31, 2019	$ 88,839	$ 223,426	$ 267,016	$ (1,774)	$ 577,507
Balance (in shares) at Mar. 31, 2019	17,767,594				17,767,594

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Increase (Decrease) in Stockholders' Equity [Roll forward]
Other comprehensive income (loss), tax	$ 1,286	$ (1,186)
Dividends declared per share (in dollars per share)	$ 0.36	$ 0.33

XML

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net income	$ 14,939	$ 15,814
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,427	965
Deferred taxes	2,008	163
Stock-based compensation	200	236
Provision for loan losses	190	946	$ 6,167
Write-downs of other real estate owned and other repossessed assets	489	467
Gains on sale of mortgage loans held for sale	(330)	(279)
Securities (gains) losses	(1)	288
Change in fair market value of equity securities	(355)	0
Gains on sale of assets, net	(51)	(68)
Proceeds from sale of mortgage loans held for sale	14,927	12,811
Funding of mortgage loans held for sale	(25,785)	(12,644)
Amortization of securities premiums and discounts, net	1,112	1,132
Change in cash surrender value of bank owned life insurance	(357)	(1,580)
Mortgage servicing rights:
Fair value adjustments	(116)	(122)
New servicing assets created	333	(100)
Changes in:
Other assets	7,082	(28,246)
Other liabilities	(3,622)	(2,380)
Net cash provided by (used in) operating activities	12,090	(12,597)
Certificates of deposit in other banks:
Maturity of certificates of deposit	2,450	1,715
Securities available-for-sale (AFS):
Purchase of AFS securities	(59,583)	(113,781)
Proceeds from the sales of AFS securities	12,550	50,327
Proceeds from prepayments and maturities of AFS securities	46,491	37,258
Securities held-to-maturity (HTM):
Proceeds from maturities of HTM securities	30	0
Change in loans, net	18,755	1,945
Purchase of premises and equipment	(226)	(507)
Proceeds from sale and retirement of premises and equipment	0	19
Redemption of stock by Federal Home Loan Bank	2,452	0
Proceeds from sale of other real estate and repossessed assets	964	457
Proceeds from settlement of bank owned life insurance	0	3,038
Net cash provided by (used in) investing activities	23,883	(19,529)
Cash flows from financing activities:
Change in deposits, net	77,153	55,807
Change in repurchase agreements and federal funds purchased, net	5,414	774
Proceeds from Federal Home Loan Bank advances	30,000	0
Payments on advances from Federal Home Loan Bank	(30,005)	(23)
Issuance of common stock	258	596
Dividends paid	(6,383)	(5,834)
Net cash provided by financing activities	76,437	51,320
Net increase in cash and cash equivalents	112,410	19,194
Cash and cash equivalents at beginning of period	141,450	175,274	175,274
Cash and cash equivalents at end of period	253,860	194,468	$ 141,450
Supplemental disclosures:
Interest paid	8,830	5,290
Non-cash activities:
Loans to facilitate the sale of other real estate owned and repossessed assets	1,797	432
Common stock dividends accrued, paid in subsequent quarter	215	207
Real estate acquired in settlement of loans	$ 854	$ 1,284

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 - Summary of Significant Accounting Policies

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (which consist of normal recurring adjustments) necessary, to present fairly the condensed consolidated financial position as of March 31, 2019 and the results of operations and cash flows for the three months ended March 31, 2019 and 2018.  In accordance with accounting principles generally accepted in the United States of America for interim financial information, these statements do not include certain information and footnote disclosures required by accounting principles generally accepted in the United States of America for complete annual financial statements.  The results of operations and the cash flows for the three months ended March 31, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year.  The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements of Community Trust Bancorp, Inc. (“CTBI”) for that period.  For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2018, included in our annual report on Form 10-K.

Principles of Consolidation – The unaudited condensed consolidated financial statements include the accounts of CTBI and its separate and distinct, wholly owned subsidiaries Community Trust Bank, Inc. (“CTB”) and Community Trust and Investment Company (“CTIC”).  All significant intercompany transactions have been eliminated in consolidation.

Reclassifications – Certain reclassifications considered to be immaterial have been made in the prior year condensed consolidated financial statements to conform to current year classifications.  These reclassifications had no effect on net income.

New Accounting Standards –

ØLeases – In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).   ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability for all leases with terms longer than 12 months.  Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.  For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases.  A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee.  If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor does not convey risks and rewards or control, an operating lease results.  The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities.  Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with certain practical expedients available.

In August 2018, the FASB issued ASU 2018-11, Leases (Topic 842):  Targeted Improvements.  This ASU is intended to reduce costs and ease implementation of the leases standard for financial statement preparers.  ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract.

Transition: Comparative Reporting at Adoption

The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.  Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP in Topic 840, Leases.  An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840.  The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide).

Separating Components of a Contract

The amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met:

· The timing and pattern of transfer of the non-lease component(s) and associated lease component are the same.

· The lease component, if accounted for separately, would be classified as an operating lease.

An entity electing this practical expedient (including an entity that accounts for the combined component entirely in Topic 606) is required to disclose certain information, by class of underlying asset, as specified in the ASU.

We elected the optional transition method of the modified retrospective approach provided in ASU 2018-11 which was applied on January 1, 2019.  CTBI also elected certain relief options offered in ASU 2016-02, including the package of practical expedients, the option not to separate lease and non-lease components, and instead to account for them as a single lease component for all classes of assets, the hindsight practical expedient to allow entities to use hindsight when determining lease term and impairment of right-of-use assets, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).  Refer to note 6, Leases, below for further information regarding the impact of adoption.

ØAccounting for Credit Losses – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date.  This ASU requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis.  The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses.  The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense.  Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. CTBI has an implementation team working through the provisions of ASU 2016-13 including assessing the impact on its accounting and disclosures.  The team has established the historical data that will be available and has identified the potential loan segments to be analyzed.  The team is in the process of determining the portfolio methodologies to be utilized and plans to begin running parallel with its current model in the third quarter of 2019.

ØSimplifying the Test for Goodwill Impairment – In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.  These amendments eliminate Step 2 from the goodwill impairment test.  The amendments also eliminate the requirements from any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.  The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods with those fiscal years.  ASU 2017-04 should be implemented on a prospective basis.  Management does not expect ASU 2017-04 to have an impact on CTBI’s consolidated financial statements.

ØChanges to the Disclosure Requirements for Fair Value Measurement – In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.  ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820 as follows:

Removals

The following disclosure requirements were removed from Topic 820:

· The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy

· The policy for timing of transfers between levels

· The valuation processes for Level 3 fair value measurements

Modifications

The following disclosure requirements were modified in Topic 820:

· For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and

· The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions

The following disclosure requirements were added to Topic 820:

· The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and

· The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

In addition, the amendments eliminate “at a minimum” from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements.

CTBI plans to adopt ASU 2018-13 effective January 1, 2020 with minimal changes to our current reporting.

ØAccounting for Costs of Implementing a Cloud Computing Service Agreement– In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement.  This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software.

The ASU aligns the following requirements for capitalizing implementation costs:

· Those incurred in a hosting arrangement that is a service contract, and

· Those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU will be effective beginning January 1, 2020.  We do not anticipate a significant impact to our consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes.  Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates.  Such differences could be material to the consolidated financial statements.

We believe the application of accounting policies and the estimates required therein are reasonable.  These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change.  Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

We have identified the following critical accounting policies:

Investments –Management determines the classification of securities at purchase.  We classify debt securities into held-to-maturity, trading, or available-for-sale categories.  Held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost.  In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments – Debt Securities, investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position:

a. Trading securities. Securities that are bought and held principally for the purpose of selling them in the near term (thus held for only a short period of time) shall be classified as trading securities. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.

b. Available-for-sale securities. Investments not classified as trading securities (nor as held-to-maturity securities) shall be classified as available-for-sale securities.

We do not have any securities that are classified as trading securities.  Available-for-sale securities are reported at fair value, with unrealized gains and losses included as a separate component of shareholders’ equity, net of tax.  If declines in fair value are other than temporary, the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related.

Gains or losses on disposition of debt securities are computed by specific identification for those securities.  Interest and dividend income, adjusted by amortization of purchase premium or discount, is included in earnings.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair market value is below amortized cost, additional analysis is performed to determine whether an other than temporary impairment condition exists.  Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment.  The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity.  Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment.  If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on CTBI’s results of operations and financial condition.

Subsequent to the January 1, 2018 effective date of ASU 2016-01, ASC 320 applies only to debt securities and ASC 321, Investments – Equity Securities, applies to equity securities.  ASC 321 requires equity investments (except those accounted for under the equity method and those that result in the consolidation of the investee) to be measured at fair value, with changes in fair values recognized in net income.

Equity securities with a readily determinable fair value are required to be measured at fair value, with changes in fair value recognized through net income.  Equity securities without a readily determinable fair value are carried at cost, less any impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments.  An election can be made, as permitted by ASC 321-10-35-2, to subsequently measure an equity security without a readily determinable fair value, at fair value.  Equity securities held by CTBI include securities without readily determinable fair values.  CTBI has elected to account for these securities at fair value.  The fair value of these securities was determined by a third party service provider using Level 3 inputs as defined in ASC 820, Fair Value Measurement, and changes in fair value are recognized in income.

Loans –Loans with the ability and the intent to be held until maturity and/or payoff are reported at the carrying value of unpaid principal reduced by unearned interest, an allowance for loan and lease losses, and unamortized deferred fees or costs.  Income is recorded on the level yield basis.  Interest accrual is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful.  Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest.  Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured.  Loans are not reclassified as accruing until principal and interest payments remain current for a period of time, generally six months, and future payments appear reasonably certain.  Included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired.  A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.

Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the estimated life of the related loans, leases, or commitments as a yield adjustment.

Allowance for Loan and Lease Losses –We maintain an allowance for loan and lease losses (“ALLL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio.  Credit losses are charged and recoveries are credited to the ALLL.

We utilize an internal risk grading system for commercial credits.  Those larger commercial credits that exhibit probable or observed credit weaknesses are subject to individual review.  The borrower’s cash flow, adequacy of collateral coverage, and other options available to CTBI, including legal remedies, are evaluated.  The review of individual loans includes those loans that are impaired as defined by ASC 310-10-35, Impairment of a Loan.  We evaluate the collectability of both principal and interest when assessing the need for loss provision.  Historical loss rates are analyzed and applied to other commercial loans not subject to specific allocations.  The ALLL allocation for this pool of commercial loans is established based on the historical average, maximum, minimum, and median loss ratios.

A loan is considered impaired when, based on current information and events, it is probable that CTBI will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Homogenous loans, such as consumer installment, residential mortgages, and home equity lines are not individually risk graded.  The associated ALLL for these loans is measured under ASC 450, Contingencies.

When any secured commercial loan is considered uncollectable, whether past due or not, a current assessment of the value of the underlying collateral is made.  If the balance of the loan exceeds the fair value of the collateral, the loan is placed on nonaccrual and the loan is charged down to the value of the collateral less estimated cost to sell or a specific reserve equal to the difference between book value of the loan and the fair value assigned to the collateral is created until such time as the loan is foreclosed.  When the foreclosed collateral has been legally assigned to CTBI, the estimated fair value of the collateral less costs to sell is then transferred to other real estate owned or other repossessed assets, and a charge-off is taken for any remaining balance.  When any unsecured commercial loan is considered uncollectable the loan is charged off no later than at 90 days past due.

All closed-end consumer loans (excluding conventional 1-4 family residential loans and installment and revolving loans secured by real estate) are charged off no later than 120 days (5 monthly payments) delinquent.  If a loan is considered uncollectable, it is charged off earlier than 120 days delinquent.  For conventional 1-4 family residential loans and installment and revolving loans secured by real estate, when a loan is 90 days past due, a current assessment of the value of the real estate is made.  If the balance of the loan exceeds the fair value of the property, the loan is placed on nonaccrual.  Foreclosure proceedings are normally initiated after 120 days.  When the foreclosed property has been legally assigned to CTBI, the fair value less estimated costs to sell is transferred to other real estate owned and the remaining balance is taken as a charge-off.

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition.  We use twelve rolling quarters for our historical loss rate analysis.  Factors that we consider include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, level of recoveries to prior year’s charge-offs, trends in loan losses, industry concentrations and their relative strengths, amount of unsecured loans, and underwriting exceptions.  Management continually reevaluates the other subjective factors included in its ALLL analysis.

Other Real Estate Owned – When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current fair market value less expected sales costs.  Additionally, periodic updated appraisals are obtained on unsold foreclosed properties.  When an updated appraisal reflects a fair market value below the current book value, a charge is booked to current earnings to reduce the property to its new fair market value less expected sales costs.  Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  All revenues and expenses related to the carrying of other real estate owned are recognized through the income statement.

Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes based on the expected future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.  Any interest and penalties incurred in connection with income taxes are recorded as a component of income tax expense in the consolidated financial statements.  During the three months ended March 31, 2019 and 2018, CTBI has not recognized a significant amount of interest expense or penalties in connection with income taxes.

In March 2019, Kentucky enacted legislation requiring financial institutions to transition from a bank franchise tax to the Kentucky corporate income tax beginning in 2021.  As a result, we booked a one-time charge of $1.0 million, or $0.06 per basic share, to income tax expense to recognize our Kentucky deferred tax liability at March 31, 2019.  While this liability will be adjusted periodically, we do not anticipate any further adjustments to have a significant impact to income.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 2 – Stock-Based Compensation

CTBI’s compensation expense related to stock option grants was $10 thousand and $53 thousand, respectively, for the three months ended March 31, 2019 and 2018, respectively.  Restricted stock expense for the three months ended March 31, 2019 and 2018 was $190 thousand and $183 thousand, respectively, including $19 thousand and $12 thousand in dividends paid for each period.  As of March 31, 2019, there was a total of $27 thousand of unrecognized compensation expense related to unvested stock option awards that will be recognized as expense as the awards vest over a weighted average period of 0.7 years and a total of $2.0 million of unrecognized compensation expense related to restricted stock grants that will be recognized as expense as the awards vest over a weighted average period of 3.1 years.

There were no stock options granted in the first three months of 2019 and 2018.  There were 27,921 and 11,320 shares of restricted stock granted during the three months ended March 31, 2019 and 2018, respectively.  The restricted stock was issued pursuant to the terms of CTBI’s 2015 Stock Ownership Incentive Plan.  The restrictions on the restricted stock will lapse ratably over four years.  However, in the event of certain participant employee termination events occurring within 24 months of a change in control of CTBI or the death of the participant, the restrictions will lapse, and in the event of the participant’s disability, the restrictions will lapse on a pro rata basis.  The Compensation Committee will have discretion to review and revise restrictions applicable to a participant’s restricted stock in the event of the participant’s retirement.

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Securities

3 Months Ended

Mar. 31, 2019

Securities [Abstract]

Securities

Note 3 – Securities

Securities are classified into held-to-maturity and available-for-sale categories.  Held-to-maturity (HTM) securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost.  Available-for-sale (AFS) securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons.  Available-for-sale securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.

The amortized cost and fair value of securities at March 31, 2019 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
U.S. Treasury and government agencies	$	178,233	$	195	$	(951	)	$	177,477
State and political subdivisions		123,147		1,524		(942	)		123,729
U.S. government sponsored agency mortgage-backed securities		299,658		2,036		(4,103	)		297,591
Other debt securities		506		0		(4	)		502
Total available-for-sale securities	$	601,544	$	3,755	$	(6,000	)	$	599,299

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2019
State and political subdivisions	$	619	$	0	$	0	$	619
Total held-to-maturity securities	$	619	$	0	$	0	$	619

The amortized cost and fair value of securities at December 31, 2018 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2018
U.S. Treasury and government agencies	$	219,358	$	48	$	(1,468	)	$	217,938
State and political subdivisions		126,280		633		(2,425	)		124,488
U.S. government sponsored agency mortgage-backed securities		255,969		397		(5,547	)		250,819
Other debt securities		507		0		(6	)		501
Total available-for-sale securities	$	602,114	$	1,078	$	(9,446	)	$	593,746

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2018
State and political subdivisions	$	649	$	0	$	0	$	649
Total held-to-maturity securities	$	649	$	0	$	0	$	649

The amortized cost and fair value of debt securities at March 31, 2019 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	29,546	$	29,499	$	619	$	619
Due after one through five years		93,079		93,111		0		0
Due after five through ten years		80,646		80,248		0		0
Due after ten years		98,109		98,348		0		0
U.S. government sponsored agency mortgage-backed securities		299,658		297,591		0		0
Other debt securities		506		502		0		0
Total debt securities	$	601,544	$	599,299	$	619	$	619

As of March 31, 2019, there was a net securities gain of $356 thousand.  There was a pre-tax gain of $1 thousand realized on sales of AFS securities, and an unrealized gain of $355 thousand from the fair market value adjustment of equity securities.  As of March 31, 2018, there was a net securities loss of $288 thousand.  There was a net gain of $148 thousand realized on sales and calls of AFS securities, consisting of a pre-tax gain of $281 thousand and a pre-tax loss of $133 thousand.  This net securities loss included a loss of $436 thousand from the sale of CTBI’s CRA investment funds.

 Equity Securities at Fair Value

In 2008, Visa distributed 9,918 shares of Visa Class B restricted stock to CTBI which, upon resolution of certain pending legal matters, will become unrestricted and convertible into Visa Class A shares.  Following this distribution, significant concern existed about the ultimate realizable value of these shares, and because CTBI did not have a basis in the stock, the shares were previously not recorded as an asset on CTBI’s balance sheet.  In recent years, the concern over the realizable value has stabilized, and in late 2017 and 2018, several sales of Visa Class B shares have occurred.  While not traded in observable markets, these sales were reported by several financial institutions in various SEC 8-K and 10-K filings.  In 2018, FASB issued a technical correction to its guidance regarding equity securities, ASC 321-10-35-2, allowing an entity to subsequently elect to record an equity security without a readily determinable fair value.  In 2018, CTBI made the election permitted by ASC 321-10-35-2 to record its Visa Class B shares at fair value.  On December 31, 2018, CTBI recorded a $1.2 million gain on the recognition of the fair value of 9,918 Visa Class B shares held in its portfolio.  Equity securities at fair value as of March 31, 2019 were $1.5 million, as a result of a fair market value increase in the first quarter 2019.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $234.8 million at March 31, 2019 and $258.8 million at December 31, 2018.

The amortized cost of securities sold under agreements to repurchase amounted to $278.0 million at March 31, 2019 and $289.1 million at December 31, 2018.

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of March 31, 2019 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total debt securities with unrealized losses as of March 31, 2019 was 55.9% compared to 75.7% as of December 31, 2018.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of March 31, 2019 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of March 31, 2019.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	22,910	$	(8	)	$	22,902
State and political subdivisions		0		0			0
U.S. government sponsored agency mortgage-backed securities		935		(3	)		932
Other debt securities		506		(4	)		502
Total <12 months temporarily impaired AFS securities		24,351		(15	)		24,336
12 Months or More
U.S. Treasury and government agencies		120,811		(943	)		119,868
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		156,877		(4,100	)		152,777
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		317,246		(5,985	)		311,261
Total
U.S. Treasury and government agencies		143,721		(951	)		142,770
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		157,812		(4,103	)		153,709
Other debt securities		506		(4	)		502
Total temporarily impaired AFS securities	$	341,597	$	(6,000	)	$	335,597

The analysis performed as of December 31, 2018 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2018 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of December 31, 2018.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	78,905	$	(271	)	$	78,634
State and political subdivisions		21,707		(194	)		21,513
U.S. government sponsored agency mortgage-backed securities		61,940		(377	)		61,563
Other debt securities		507		(6	)		501
Total <12 months temporarily impaired AFS securities		163,059		(848	)		162,211
12 Months or More
U.S. Treasury and government agencies		97,955		(1,197	)		96,758
State and political subdivisions		51,911		(2,231	)		49,680
U.S. government sponsored agency mortgage-backed securities		147,658		(5,170	)		142,488
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		297,524		(8,598	)		288,926
Total
U.S. Treasury and government agencies		176,860		(1,468	)		175,392
State and political subdivisions		73,618		(2,425	)		71,193
U.S. government sponsored agency mortgage-backed securities		209,598		(5,547	)		204,051
Other debt securities		507		(6	)		501
Total temporarily impaired AFS securities	$	460,583	$	(9,446	)	$	451,137

U.S. Treasury and Government Agencies

The unrealized losses in U.S. Treasury and government agencies were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

State and Political Subdivisions

The unrealized losses in securities of state and political subdivisions were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments before recovery of their amortized cost and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

U.S. Government Sponsored Agency Mortgage-Backed Securities

The unrealized losses in U.S. government sponsored agency mortgage-backed securities were caused by interest rate increases.  CTBI expects to recover the amortized cost basis over the term of the securities.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because (i) the decline in market value is attributable to changes in interest rates and not credit quality, (ii) CTBI does not intend to sell the investments, and (iii) it is not more likely than not we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

Other Debt Securities

The unrealized losses in other debt securities were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par which will equal amortized cost at maturity.  CTBI does not consider those investments to be other-than-temporarily impaired at March 31, 2019, because CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be maturity.

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Loans

3 Months Ended

Mar. 31, 2019

Loans [Abstract]

Loans

Note 4 – Loans

Major classifications of loans, net of unearned income, deferred loan origination costs, and net premiums on acquired loans, are summarized as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial construction	$	75,364	$	82,715
Commercial secured by real estate		1,182,804		1,183,093
Equipment lease financing		1,354		1,740
Commercial other		388,060		377,198
Real estate construction		54,013		57,160
Real estate mortgage		720,292		722,417
Home equity		108,018		106,299
Consumer direct		141,855		144,289
Consumer indirect		517,972		533,727
Total loans	$	3,189,732	$	3,208,638

CTBI has segregated and evaluates its loan portfolio through nine portfolio segments. CTBI serves customers in small and mid-sized communities in eastern, northeastern, central, and south central Kentucky, southern West Virginia, and northeastern Tennessee.  Therefore, CTBI’s exposure to credit risk is significantly affected by changes in these communities.

Commercial construction loans are for the purpose of erecting or rehabilitating buildings or other structures for commercial purposes, including any infrastructure necessary for development.   Included in this category are improved property, land development, and tract development loans.  The terms of these loans are generally short-term with permanent financing upon completion.

Commercial real estate loans include loans secured by nonfarm, nonresidential properties, 1-4 family/multi-family properties, farmland, and other commercial real estate.  These loans are originated based on the borrower’s ability to service the debt and secondarily based on the fair value of the underlying collateral.

Equipment lease financing loans are fixed or variable leases for commercial purposes.

Commercial other loans consist of commercial check loans, agricultural loans, receivable financing, floorplans, loans to financial institutions, loans for purchasing or carrying securities, and other commercial purpose loans.  Commercial loans are underwritten based on the borrower’s ability to service debt from the business’s underlying cash flows.  As a general practice, we obtain collateral such as real estate, equipment, or other assets, although such loans may be uncollateralized but guaranteed.

Real estate construction loans are typically for owner-occupied properties.  The terms of these loans are generally short-term with permanent financing upon completion.

Residential real estate loans are a mixture of fixed rate and adjustable rate first and second lien residential mortgage loans.  As a policy, CTBI holds adjustable rate loans and sells the majority of its fixed rate first lien mortgage loans into the secondary market.  Changes in interest rates or market conditions may impact a borrower’s ability to meet contractual principal and interest payments.  Residential real estate loans are secured by real property.

Home equity lines are revolving adjustable rate credit lines secured by real property.

Consumer direct loans are a mixture of fixed rate and adjustable rate products comprised of unsecured loans, consumer revolving credit lines, deposit secured loans, and all other consumer purpose loans.

Consumer indirect loans are fixed rate loans secured by automobiles, trucks, vans, and recreational vehicles originated at the selling dealership underwritten and purchased by CTBI’s indirect lending department.  Both new and used products are financed.  Only dealers who have executed dealer agreements with CTBI participate in the indirect lending program.

Not included in the loan balances above were loans held for sale in the amount of $13.6 million at March 31, 2019 and $2.5 million at December 31, 2018.

Refer to note 1 to the condensed consolidated financial statements for further information regarding our nonaccrual policy.  Nonaccrual loans segregated by class of loans were as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial:
Commercial construction	$	546	$	639
Commercial secured by real estate		4,967		4,537
Commercial other		1,402		797
Residential:
Real estate construction		289		22
Real estate mortgage		4,691		5,395
Home equity		483		477
Total nonaccrual loans	$	12,378	$	11,867

The following tables present CTBI’s loan portfolio aging analysis, segregated by class, as of March 31, 2019 and December 31, 2018:

	March 31, 2019
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	449	$	0	$	618	$	1,067	$	74,297	$	75,364	$	72
Commercial secured by real estate		7,829		1,460		12,335		21,624		1,161,180		1,182,804		7,794
Equipment lease financing		0		0		0		0		1,354		1,354		0
Commercial other		1,005		772		726		2,503		385,557		388,060		261
Residential:
Real estate construction		258		149		295		702		53,311		54,013		6
Real estate mortgage		1,145		4,836		6,854		12,835		707,457		720,292		4,203
Home equity		818		277		499		1,594		106,424		108,018		260
Consumer:
Consumer direct		735		215		30		980		140,875		141,855		30
Consumer indirect		2,854		611		390		3,855		514,117		517,972		390
Total	$	15,093	$	8,320	$	21,747	$	45,160	$	3,144,572	$	3,189,732	$	13,016

	December 31, 2018
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	87	$	58	$	698	$	843	$	81,872	$	82,715	$	58
Commercial secured by real estate		6,287		1,204		8,776		16,267		1,166,826		1,183,093		4,632
Equipment lease financing		0		0		0		0		1,740		1,740		0
Commercial other		1,057		94		1,067		2,218		374,980		377,198		581
Residential:
Real estate construction		144		438		28		610		56,550		57,160		6
Real estate mortgage		1,272		5,645		7,607		14,524		707,893		722,417		4,095
Home equity		898		365		441		1,704		104,595		106,299		246
Consumer:
Consumer direct		918		191		74		1,183		143,106		144,289		74
Consumer indirect		4,715		975		507		6,197		527,530		533,727		506
Total	$	15,378	$	8,970	$	19,198	$	43,546	$	3,165,092	$	3,208,638	$	10,198

*90+ and Accruing are also included in 90+ Days Past Due column.

The risk characteristics of CTBI’s material portfolio segments are as follows:

Commercial construction loans generally are made to customers for the purpose of building income-producing properties.  Personal guarantees of the principals are generally required.  Such loans are made on a projected cash flow basis and are secured by the project being constructed.  Construction loan draw procedures are included in each specific loan agreement, including required documentation items and inspection requirements.  Construction loans may convert to term loans at the end of the construction period, or may be repaid by the take-out commitment from another financing source.  If the loan is to convert to a term loan, the repayment ability is based on the borrower’s projected cash flow.  Risk is mitigated during the construction phase by requiring proper documentation and inspections whenever a draw is requested.  Loans in amounts greater than $500,000 generally require a performance bond to be posted by the general contractor to assure completion of the project.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.  Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.  Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria.

Equipment lease financing is underwritten by our commercial lenders using the same underwriting standards as would be applied to a secured commercial loan requesting 100% financing.  The pricing for equipment lease financing is comparable to that of borrowers with similar quality commercial credits with similar collateral.  Maximum terms of equipment leasing are determined by the type and expected life of the equipment to be leased.  Residual values are determined by appraisals or opinion letters from industry experts.  Leases must be in conformity with our consolidated annual tax plan.  As we underwrite our equipment lease financing in a manner similar to our commercial loan portfolio described below, the risk characteristics for this portfolio mirror that of the commercial loan portfolio.

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.  The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value.  Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis.  In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, CTBI generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded.  Home equity loans are typically secured by a subordinate interest in 1-4 family residences. Residential construction loans are handled through the home mortgage area of the bank.  The repayment ability of the borrower and the maximum loan-to-value ratio are calculated using the normal mortgage lending criteria.  Draws are processed based on percentage of completion stages including normal inspection procedures.  Such loans generally convert to term loans after the completion of construction.

Consumer loans are secured by consumer assets such as automobiles or recreational vehicles.  Some consumer loans are unsecured such as small installment loans and certain lines of credit.  Our determination of a borrower’s ability to repay these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.  Repayment can also be impacted by changes in property values on residential properties.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The indirect lending area of the bank generally deals with purchasing/funding consumer contracts with new and used automobile dealers.  The dealers generate consumer loan applications which are forwarded to the indirect loan processing area for approval or denial.  Loan approvals or denials are based on the creditworthiness and repayment ability of the borrower, and on the collateral value.  The dealers may have limited recourse agreements with CTB.

Credit Quality Indicators:

CTBI categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  CTBI also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s).  CTBI analyzes commercial loans individually by classifying the loans as to credit risk.  Loans classified as loss, doubtful, substandard, or special mention are reviewed quarterly by CTBI for further deterioration or improvement to determine if appropriately classified and valued if deemed impaired.  All other commercial loan reviews are completed every 12 to 18 months.  In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other information becomes available, CTBI will evaluate the loan grade.  CTBI uses the following definitions for risk ratings:

Ø Pass grades include investment grade, low risk, moderate risk, and acceptable risk loans.  The loans range from loans that have no chance of resulting in a loss to loans that have a limited chance of resulting in a loss.  Customers in this grade have excellent to fair credit ratings.  The cash flows are adequate to meet required debt repayments.

Ø Watch graded loans are loans that warrant extra management attention but are not currently criticized.  Loans on the watch list may be potential troubled credits or may warrant “watch” status for a reason not directly related to the asset quality of the credit.  The watch grade is a management tool to identify credits which may be candidates for future classification or may temporarily warrant extra management monitoring.

Ø Other assets especially mentioned (OAEM) reflects loans that are currently protected but are potentially weak.  These loans constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard.  The credit risk may be relatively minor yet constitute an unwarranted risk in light of circumstances surrounding a specific asset. Loans in this grade display potential weaknesses which may, if unchecked or uncorrected, inadequately protect CTBI’s credit position at some future date.  The loans may be adversely affected by economic or market conditions.

Ø Substandard grading indicates that the loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  These loans have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt with the distinct possibility that CTBI will sustain some loss if the deficiencies are not corrected.

Ø Doubtful graded loans have the weaknesses inherent in the substandard grading with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.  The probability of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to CTBI’s advantage or strengthen the asset(s), its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.

The following tables present the credit risk profile of CTBI’s commercial loan portfolio based on rating category and payment activity, segregated by class of loans, as of March 31, 2019 and December 31, 2018:

(in thousands)	Commercial Construction		Commercial Secured by Real Estate		Equipment Leases		Commercial Other		Total
March 31, 2019
Pass	$	67,224	$	1,031,325	$	1,354	$	338,695	$	1,438,598
Watch		2,932		75,404		0		27,317		105,653
OAEM		1,823		18,501		0		5,811		26,135
Substandard		3,385		57,485		0		16,166		77,036
Doubtful		0		89		0		71		160
Total	$	75,364	$	1,182,804	$	1,354	$	388,060	$	1,647,582
December 31, 2018
Pass	$	74,222	$	1,038,309	$	1,740	$	327,431	$	1,441,702
Watch		3,070		71,834		0		28,986		103,890
OAEM		1,594		19,734		0		5,735		27,063
Substandard		3,829		53,125		0		14,970		71,924
Doubtful		0		91		0		76		167
Total	$	82,715	$	1,183,093	$	1,740	$	377,198	$	1,644,746

The following tables present the credit risk profile of CTBI’s residential real estate and consumer loan portfolios based on performing or nonperforming status, segregated by class, as of March 31, 2019 and December 31, 2018:

(in thousands)	Real Estate Construction		Real Estate Mortgage		Home Equity		Consumer Direct		Consumer Indirect		Total
March 31, 2019
Performing	$	53,718	$	711,398	$	107,275	$	141,825	$	517,582	$	1,531,798
Nonperforming (1)		295		8,894		743		30		390		10,352
Total	$	54,013	$	720,292	$	108,018	$	141,855	$	517,972	$	1,542,150
December 31, 2018
Performing	$	57,132	$	712,927	$	105,576	$	144,215	$	533,221	$	1,553,071
Nonperforming (1)		28		9,490		723		74		506		10,821
Total	$	57,160	$	722,417	$	106,299	$	144,289	$	533,727	$	1,563,892

(1)  A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual.

The total of consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings are in process totaled $3.0 million at March 31, 2019 compared to $3.3 million at December 31, 2018.

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable CTBI will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.  Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection.

The following table presents impaired loans, the average investment in impaired loans, and interest income recognized on impaired loans for the periods ended March 31, 2019, December 31, 2018, and March 31, 2018:

	March 31, 2019
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	3,308	$	3,308	$	0	$	3,655	$	46
Commercial secured by real estate		32,407		34,098		0		32,811		347
Commercial other		8,903		10,598		0		8,866		139
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Loans with a specific valuation allowance:
Commercial construction		324		324		164		324		3
Commercial secured by real estate		1,922		3,060		847		1,966		10
Commercial other		1,154		1,154		620		1,169		17
Totals:
Commercial construction		3,632		3,632		164		3,979		49
Commercial secured by real estate		34,329		37,158		847		34,777		357
Commercial other		10,057		11,752		620		10,035		156
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Total	$	50,355	$	54,879	$	1,631	$	51,120	$	581

	December 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,100	$	4,100	$	0	$	3,923	$	171
Commercial secured by real estate		29,645		31,409		0		30,250		1,412
Commercial other		8,285		9,982		0		8,774		530
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Loans with a specific valuation allowance:
Commercial construction		127		127		50		42		0
Commercial secured by real estate		1,854		2,983		605		2,051		1
Commercial other		473		473		146		285		16
Totals:
Commercial construction		4,227		4,227		50		3,965		171
Commercial secured by real estate		31,499		34,392		605		32,301		1,413
Commercial other		8,758		10,455		146		9,059		546
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Total	$	46,366	$	50,956	$	801	$	47,097	$	2,171

	March 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,009	$	4,009	$	0	$	4,168	$	37
Commercial secured by real estate		31,284		33,377		0		31,566		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Loans with a specific valuation allowance:
Commercial secured by real estate		2,105		3,221		739		2,132		0
Totals:
Commercial construction		4,009		4,009		0		4,168		37
Commercial secured by real estate		33,389		36,598		739		33,698		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Total	$	48,185	$	53,132	$	739	$	48,800	$	541

*Cash basis interest is substantially the same as interest income recognized.

Included in certain loan categories of impaired loans are certain loans and leases that have been modified in a troubled debt restructuring, where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions.  Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances.  Loan modifications that are included as troubled debt restructurings may involve either an increase or reduction of the interest rate, extension of the term of the loan, or deferral of principal and/or interest payments, regardless of the period of the modification.  All of the loans identified as troubled debt restructuring were modified due to financial stress of the borrower.  In order to determine if a borrower is experiencing financial difficulty, an evaluation is performed to determine the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under CTBI’s internal underwriting policy.

When we modify loans and leases in a troubled debt restructuring, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, or use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determined that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all troubled debt restructuring, including those that have payment defaults, for possible impairment and recognize impairment through the allowance.

During 2019, certain loans were modified in troubled debt restructurings, where economic concessions were granted to borrowers consisting of reductions in the interest rates, payment extensions, forgiveness of principal, and forbearances.  Presented below, segregated by class of loans, are troubled debt restructurings that occurred during the three months ended March 31, 2019 and 2018 and the year ended December 31, 2018:

	Three Months Ended March 31, 2019
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial secured by real estate		5		828		0		642		1,470
Commercial other		7		1,122		0		140		1,262
Residential:
Real estate mortgage		1		463		0		0		463
Total troubled debt restructurings		13	$	2,413	$	0	$	782	$	3,195

	Year Ended December 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		5	$	2,182	$	0	$	15	$	2,197
Commercial secured by real estate		24		4,004		0		1,383		5,387
Commercial other		8		465		0		0		465
Residential:
Real estate construction		0		0		0		0		0
Real estate mortgage		3		264		0		704		968
Total troubled debt restructurings		40	$	6,915	$	0	$	2,102	$	9,017

	Three Months Ended March 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		2	$	32	$	0	$	15	$	47
Commercial secured by real estate		9		786		0		983		1,769
Commercial other		5		182		0		0		182
Total troubled debt restructurings		16	$	1,000	$	0	$	998	$	1,998

No charge-offs have resulted from modifications for any of the presented periods.  We had commitments to extend additional credit in the amount of $45 thousand on loans that were considered troubled debt restructurings.

Loans retain their accrual status at the time of their modification. As a result, if a loan is on nonaccrual at the time it is modified, it stays as nonaccrual, and if a loan is on accrual at the time of the modification, it generally stays on accrual.  Commercial and consumer loans modified in a troubled debt restructuring are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a troubled debt restructuring subsequently default, CTBI evaluates the loan for possible further impairment.  The allowance for loan losses may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.  There were no loans that were modified as troubled debt restructurings within the past twelve months which have subsequently defaulted as of March 31, 2019 or 2018.  CTBI considers a loan in default when it is 90 days or more past due or transferred to nonaccrual.

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Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2019

Allowance for Loan and Lease Losses [Abstract]

Allowance for Loan and Lease Losses

Note 5 – Allowance for Loan and Lease Losses

The following tables present the balance in the allowance for loan and lease losses (“ALLL”) and the recorded investment in loans based on portfolio segment and impairment method as of March 31, 2019, December 31, 2018 and March 31, 2018:

	March 31, 2019
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Provision charged to expense		38		287			(2	)		382			(116	)		(278	)		84			(119	)		(86	)		190
Losses charged off		0		(35	)		0			(242	)		0			(120	)		(25	)		(246	)		(1,387	)		(2,055	)
Recoveries		3		17			0			84			0			18			1			117			721			961
Ending balance	$	903	$	14,800		$	10		$	5,217		$	396		$	4,053		$	901		$	1,635		$	7,089		$	35,004
Ending balance:
Individually evaluated for impairment	$	164	$	847		$	0		$	620		$	0		$	0		$	0		$	0		$	0		$	1,631
Collectively evaluated for impairment	$	739	$	13,953		$	10		$	4,597		$	396		$	4,053		$	901		$	1,635		$	7,089		$	33,373
Loans
Ending balance:
Individually evaluated for impairment	$	3,632	$	34,329		$	0		$	10,057		$	0		$	2,337		$	0		$	0		$	0		$	50,355
Collectively evaluated for impairment	$	71,732	$	1,148,475		$	1,354		$	378,003		$	54,013		$	717,955		$	108,018		$	141,855		$	517,972		$	3,139,377

	December 31, 2018
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686	$	14,509		$	18		$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		115		786			(6	)		824			(115	)		(336	)		39			572			4,288			6,167
Losses charged off		0		(988	)		0			(1,513	)		(33	)		(1,004	)		(69	)		(997	)		(6,394	)		(10,998	)
Recoveries		61		224			0			643			0			85			14			445			3,116			4,588
Ending balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Ending balance:
Individually evaluated for impairment	$	50	$	605		$	0		$	146		$	0		$	0		$	0		$	0		$	0		$	801
Collectively evaluated for impairment	$	812	$	13,926		$	12		$	4,847		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,107
Loans
Ending balance:
Individually evaluated for impairment	$	4,227	$	31,499		$	0		$	8,758		$	0		$	1,882		$	0		$	0		$	0		$	46,366
Collectively evaluated for impairment	$	78,488	$	1,151,594		$	1,740		$	368,440		$	57,160		$	720,535		$	106,299		$	144,289		$	533,727		$	3,162,272

	March 31, 2018
(in thousands)	Commercial Construction			Commercial Secured by Real Estate			Equipment Lease Financing		Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686		$	14,509		$	18	$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		(14	)		(191	)		5		(651	)		(4	)		435			5			80			1,281			946
Losses charged off		0			(210	)		0		(236	)		(23	)		(193	)		(1	)		(216	)		(2,098	)		(2,977	)
Recoveries		14			25			0		77			0			6			1			71			875			1,069
Ending balance	$	686		$	14,133		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	35,189
Ending balance:
Individually evaluated for impairment	$	0		$	739		$	0	$	0		$	0		$	0		$	0		$	0		$	0		$	739
Collectively evaluated for impairment	$	686		$	13,394		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	34,450
Loans
Ending balance:
Individually evaluated for impairment	$	4,009		$	33,389		$	0	$	9,183		$	318		$	1,286		$	0		$	0		$	0		$	48,185
Collectively evaluated for impairment	$	74,638		$	1,158,239		$	2,683	$	329,452		$	63,575		$	717,472		$	99,593		$	136,576		$	487,828		$	3,070,056

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Note 6 – Leases

Effective January 1, 2019, CTBI adopted ASU No. 2016-02, Leases, (Topic 842) and all subsequent ASUs that modified Topic 842.  Based on leases outstanding at December 31, 2018, the impact of adoption was recording a lease liability of approximately $16.1 million, a right-of-use asset of approximately $15.5 million, and a cumulative-effect adjustment to retained earnings of approximately $0.5 million, net of a $0.1 million adjustment to our deferred tax liability.  CTBI has no finance leases or material subleases or leasing arrangements for which it is the lessor of property or equipment.

CTBI has operating leases for banking and ATM locations.  These leases have remaining lease terms of 1 year to 45 years, some of which include options to extend the leases for up to 5 years.  We evaluated the original lease terms for each operating lease, some of which include options to extend the leases for up to 5 years, using hindsight.  These options, some of which include variable costs related to rent escalations based on recent financial indices, such as the Consumer Price Index, where CTBI estimates future rent increases, are included in the calculation of the lease liability and right-of-use asset when management determines it is reasonably certain the option will be exercised.  CTBI determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate on a collateralized basis, over a similar term at the lease commencement date.  Right-of-use assets are further adjusted for prepaid rent, lease incentives, and initial direct costs, if any.

The components of lease expense for the three months ended March 31, 2019 were as follows:

(in thousands)	2019
Short-term lease cost	$	71
Operating lease cost		461
Sublease income		(68	)
Total lease cost	$	464

Supplemental cash flow information related to CTBI’s operating leases for the three months ended March 31, 2019 was as follows:

(in thousands)	2019
Operating lease – operating cash flows (fixed payments)	$	458
Right-of-use assets obtained in exchange for new operating lease liabilities	$	0
Weighted average lease term – operating leases	15.35 years
Weighted average discount rate – operating leases		3.47	%

Maturities of lease liabilities as of March 31, 2019 are as follows:

(in thousands)	Operating Leases
2019	$	1,271
2020		1,715
2021		1,744
2022		1,729
2023		1,650
Thereafter		12,822
Total lease payments		20,931
Less imputed interest		(5,188	)
Total	$	15,743

At December 31, 2018, minimum non-cancellable rental payments were as follows:

(in thousands)	Operating Lease Payments
2019	$	1,999
2020		1,710
2021		1,737
2022		1,760
2023		1,696
Thereafter		13,031
Total	$	21,933

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Other Real Estate Owned

3 Months Ended

Mar. 31, 2019

Other Real Estate Owned [Abstract]

Other Real Estate Owned

Note 7 – Other Real Estate Owned

Activity for other real estate owned was as follows:

(in thousands)	March 31, 2019			March 31, 2018
Beginning balance of other real estate owned	$	27,273		$	31,996
New assets acquired		854			1,284
Fair value adjustments		(447	)		(467	)
Sale of assets		(2,710	)		(809	)
Ending balance of other real estate owned	$	24,970		$	32,004

Carrying costs and fair value adjustments associated with foreclosed properties for the three months ended March 31, 2019 and 2018 were $0.8 million and $0.9 million, respectively.  See note 1 for a description of our accounting policies relative to foreclosed properties and other real estate owned.

The major classifications of foreclosed properties are shown in the following table:

(in thousands)	March 31 2019		December 31 2018
1-4 family	$	4,761	$	5,253
Agricultural/farmland		0		0
Construction/land development/other		14,201		15,017
Multifamily		88		88
Non-farm/non-residential		5,920		6,915
Total foreclosed properties	$	24,970	$	27,273

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Repurchase Agreements

3 Months Ended

Mar. 31, 2019

Repurchase Agreements [Abstract]

Repurchase Agreements

Note 8 – Repurchase Agreements

We utilize securities sold under agreements to repurchase to facilitate the needs of our customers and provide additional funding to our balance sheet.  Repurchase agreements are transactions whereby we offer to sell to a counterparty an undivided interest in an eligible security at an agreed upon purchase price, and which obligates CTBI to repurchase the security on an agreed upon date at an agreed upon repurchase price plus interest at an agreed upon rate.  Securities sold under agreements to repurchase are recorded at the amount of cash received in connection with the transaction and are reflected in the accompanying consolidated balance sheets.

We monitor collateral levels on a continuous basis and maintain records of each transaction specifically describing the applicable security and the counterparty’s fractional interest in that security, and we segregate the security from its general assets in accordance with regulations governing custodial holdings of securities.  The primary risk with our repurchase agreements is market risk associated with the securities securing the transactions, as we may be required to provide additional collateral based on fair value changes of the underlying securities.  Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.  The carrying value of investment securities available-for-sale pledged as collateral under repurchase agreements totaled $277.6 million and $285.2 million at March 31, 2019 and December 31, 2018, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in the accompanying consolidated balance sheets as of March 31, 2019 and December 31, 2018 is presented in the following tables:

	March 31, 2019
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,358	$	0	$	0	$	61,703	$	87,061
State and political subdivisions		56,322		500		0		13,366		70,188
U.S. government sponsored agency mortgage-backed securities		29,388		0		0		50,869		80,257
Total	$	111,068	$	500	$	0	$	125,938	$	237,506

	December 31, 2018
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,346	$	0	$	2,548	$	60,699	$	88,593
State and political subdivisions		58,864		0		2,995		10,384		72,243
U.S. government sponsored agency mortgage-backed securities		22,076		0		1,877		47,923		71,876
Total	$	106,286	$	0	$	7,420	$	119,006	$	232,712

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Fair Market Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2019

Fair Market Value of Financial Assets and Liabilities [Abstract]

Fair Market Value of Financial Assets and Liabilities

Note 9 – Fair Market Value of Financial Assets and Liabilities

Fair Value Measurements

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  ASC 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.  Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.  In this standard, the FASB clarifies the principle that fair value should be based on the exit price when pricing the asset or liability.  In support of this principle, ASC 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.  The fair value hierarchy is as follows:

Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in determining an exit price for the assets or liabilities.

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	177,477	$	56,744	$	120,733	$	0
State and political subdivisions		123,729		0		123,729		0
U.S. government sponsored agency mortgage-backed securities		297,591		0		297,591		0
Other debt securities		502		0		502		0
Equity securities at fair value		1,528		0		0		1,528
Mortgage servicing rights		3,390		0		0		3,390

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	217,938	$	91,028	$	126,910	$	0
State and political subdivisions		124,488		0		124,488		0
U.S. government sponsored agency mortgage-backed securities		250,819		0		250,819		0
Other debt securities		501		0		501		0
Equity securities at fair value		1,173		0		0		1,173
Mortgage servicing rights		3,607		0		0		3,607

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.  These valuation methodologies were applied to all of CTBI’s financial assets carried at fair value.  CTBI had no liabilities measured and recorded at fair value as of March 31, 2019 and December 31, 2018.  There have been no significant changes in the valuation techniques during the quarter ended March 31, 2019.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available-for-Sale Securities

Securities classified as available-for-sale are reported at fair value on a recurring basis.  U.S. Treasury and government agencies are classified as Level 1 of the valuation hierarchy where quoted market prices are available in the active market on which the individual securities are traded.

If quoted market prices are not available, CTBI obtains fair value measurements from an independent pricing service, such as Interactive Data, which utilizes pricing models to determine fair value measurement.  CTBI reviews the pricing quarterly to verify the reasonableness of the pricing.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other factors.  U.S. Treasury and government agencies, state and political subdivisions, U.S. government sponsored agency mortgage-backed securities, and other debt securities are classified as Level 2 inputs.

In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.  Fair value determinations for Level 3 measurements are estimated on a quarterly basis where assumptions used are reviewed to ensure the estimated fair value complies with accounting standards generally accepted in the United States.

Equity Securities at Fair Value

As of March 31, 2019, the only securities owned by CTBI that were valued using Level 3 criteria are Visa Class B Stock (included in equity securities at fair value).  In determining fair value for Visa Class B Stock, CTBI utilizes the expertise of an independent third party.  Accordingly, fair value is determined by the independent third party using an income approach by utilizing assumptions about factors such as quarterly common stock dividend payments, the conversion of the securities to the relevant Class A Stock shares subject to the prevailing conversion rate and conversion date.  We have reviewed the assumptions, processes, and conclusions of the third party provider.  We have determined these assumptions, processes, and conclusions to be  reasonable and appropriate in determining the fair value of this asset.  See the table below for inputs and valuation techniques used for Level 3 equity securities.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices.  CTBI reports mortgage servicing rights at fair value on a recurring basis with subsequent remeasurement of MSRs based on change in fair value.

In determining fair value, CTBI utilizes the expertise of an independent third party.  Accordingly, fair value is determined by the independent third party by utilizing assumptions about factors such as mortgage interest rates, discount rates, mortgage loan prepayment speeds, market trends and industry demand.  Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.  Fair value determinations for Level 3 measurements of mortgage servicing rights are tested for impairment on a quarterly basis where assumptions used are reviewed to ensure the estimated fair value complies with accounting standards generally accepted in the United States.  We have reviewed the assumptions, processes, and conclusions of the third party provider.  We have determined these assumptions, processes, and conclusions to be reasonable and appropriate in determining the fair value of this asset.  See the table below for inputs and valuation techniques used for Level 3 mortgage servicing rights.

Transfers between Levels

There were no transfers between Levels 1, 2, and 3 as of March 31, 2019.

Level 3 Reconciliation

Following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:

(in thousands)	Three Months Ended March 31, 2019					Three Months Ended March 31, 2018
	Equity Securities at Fair Value		Mortgage Servicing Rights			Equity Securities at Fair Value		Mortgage Servicing Rights
Beginning balance	$	1,173	$	3,607		$	0	$	3,484
Total unrealized gains (losses)
Included in net income		355		(234	)		0		228
Issues		0		116			0		100
Settlements		0		(99	)		0		(106	)
Ending balance	$	1,528	$	3,390		$	0	$	3,706
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses related to assets still held at the reporting date	$	355	$	(234	)	$	0	$	228

Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as follows:

Noninterest Income
	Three Months Ended
	March 31
(in thousands)	2019		2018
Total gains	$	116	$	122

Nonrecurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a nonrecurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	1,078	$	0	$	0	$	1,078
Other real estate owned		2,345		0		0		2,345

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	747	$	0	$	0	$	747
Other real estate owned		6,500		0		0		6,500

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell.  Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

CTBI considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.  Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Chief Credit Officer.  Appraisals are reviewed for accuracy and consistency by the Chief Credit Officer.  Appraisers are selected from the list of approved appraisers maintained by management.  The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.  These discounts and estimates are developed by the Chief Credit Officer by comparison to historical results.

Loans considered impaired under ASC 310-35, Impairment of a Loan, are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Impaired loans are subject to nonrecurring fair value adjustments to reflect subsequent (i) partial write-downs that are based on the observable market price or current appraised value of the collateral or (ii) the full charge-off of the loan carrying value.  Quarter-to-date fair value adjustments on impaired loans disclosed above were $0.4 million and $0.3 million for the quarters ended March 31, 2019 and December 31, 2018, respectively.  There were no fair value adjustments on impaired loans for the quarter ended March 31, 2018.

Other Real Estate Owned

In accordance with the provisions of ASC 360, Property, Plant, and Equipment, other real estate owned (“OREO”) is carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the real estate is acquired.  Estimated fair value of OREO is based on appraisals or evaluations.  OREO is classified within Level 3 of the fair value hierarchy.  Long-lived assets are subject to nonrecurring fair value adjustments to reflect subsequent partial write-downs that are based on the observable market price or current appraised value of the collateral.  Quarter-to-date fair value adjustments on other real estate owned disclosed above were $0.4 million, $0.4 million, and $0.5 million for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively.

Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  Appraisers are selected from the list of approved appraisers maintained by management.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2019 and December 31, 2018.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at March 31, 2019		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,528	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,390	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 21.8% (10.5%)
				Probability of default		0.0% - 100.0% (2.8%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	1,078	Market comparable properties	Marketability discount		0.0% - 96.3% (45.6%)
Other real estate owned	$	2,345	Market comparable properties	Comparability adjustments		10.0% - 55.2% (14.9%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2018		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,173	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,607	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 28.1% (9.5%)
				Probability of default		0.0% - 100.0% (2.6%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	747	Market comparable properties	Marketability discount		0.0% - 95.1% (41.5%)
Other real estate owned	$	6,500	Market comparable properties	Comparability adjustments		6.0% - 47.6% (14.9%)

Sensitivity of Significant Unobservable Inputs

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Equity Securities at Fair Value

Fair market value for equity securities is derived based on unobservable inputs, such as the discount rate, quarterly dividend payments payable to the Visa Class B common stock and the prevailing conversion rate at the conversion date.  The most recent conversion rate of 1.6298 and the most recent dividend rate of 0.4074 were used to derive the fair value estimate.  Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement.  Generally, a change in the assumption used for discount rate is accompanied by a directionally opposite change in the fair value estimate.

Mortgage Servicing Rights

Fair market value for mortgage servicing rights is derived based on unobservable inputs, such as prepayment speeds of the underlying loans generated using the Andrew Davidson Prepayment Model, FHLMC/FNMA guidelines, the weighted average life of the loan, the discount rate, the weighted average coupon, and the weighted average default rate.  Significant increases (decreases) in either of those inputs in isolation would result in a significantly lower (higher) fair value measurement.  Generally, a change in the assumption used for prepayment speeds is accompanied by a directionally opposite change in the assumption for interest rates.

Fair Value of Financial Instruments

The following table presents estimated fair value of CTBI’s financial instruments as of March 31, 2019 and indicates the level within the fair value hierarchy of the valuation techniques.  In accordance with the prospective adoption of ASU 2016-01, the fair values as of March 31, 2019 were measured using an exit price notion.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	253,860	$	253,860	$	0	$	0
Certificates of deposit in other banks		1,470		0		1,470		0
Securities available-for-sale		599,299		56,744		542,555		0
Securities held-to-maturity		619		0		619		0
Equity securities at fair value		1,528		0		0		1,528
Loans held for sale		13,649		13,752		0		0
Loans, net		3,154,728		0		0		3,150,772
Federal Home Loan Bank stock		12,261		0		12,261		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		15,188		0		15,188		0
Mortgage servicing rights		3,390		0		0		3,390
Financial liabilities:
Deposits	$	3,383,103	$	841,996	$	2,559,903	$	0
Repurchase agreements		237,506		0		0		237,556
Federal funds purchased		1,800		0		1,800		0
Advances from Federal Home Loan Bank		431		0		461		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		3,983		0		3,983		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

The following table presents estimated fair value of CTBI’s financial instruments as of December 31, 2018 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	141,450	$	141,450	$	0	$	0
Certificates of deposit in other banks		3,920		0		3,914		0
Securities available-for-sale		593,746		91,028		502,718		0
Securities held-to-maturity		649		0		649		0
Equity securities at fair value		1,173		0		0		1,173
Loans held for sale		2,461		2,518		0		0
Loans, net		3,172,730		0		0		3,175,908
Federal Home Loan Bank stock		14,713		0		14,713		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		14,432		0		14,432		0
Mortgage servicing rights		3,607		0		0		3,607
Financial liabilities:
Deposits	$	3,305,950	$	803,316	$	2,513,084	$	0
Repurchase agreements		232,712		0		0		232,796
Federal funds purchased		1,180		0		1,180		0
Advances from Federal Home Loan Bank		436		0		468		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		2,902		0		2,902		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

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Earnings Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Note 10 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended
	March 30
(in thousands except per share data)	2019		2018
Numerator:
Net income	$	14,939	$	15,814
Denominator:
Basic earnings per share:
Weighted average shares		17,712		17,671
Diluted earnings per share:
Effect of dilutive stock options and restricted stock grants		11		16
Adjusted weighted average shares		17,723		17,687
Earnings per share:
Basic earnings per share	$	0.84	$	0.89
Diluted earnings per share		0.84		0.89

There were no options to purchase common shares that were excluded from the diluted calculations above for the three months ended March 31, 2019 and 2018.  In addition to in-the-money stock options, unvested restricted stock grants were also used in the calculation of diluted earnings per share based on the treasury method.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note 11 – Accumulated Other Comprehensive Income

Unrealized gains on AFS securities

Amounts reclassified from accumulated other comprehensive income (AOCI) and the affected line items in the statements of income during the three months ended March 31, 2019 and 2018 were:

	Amounts Reclassified from AOCI
(in thousands)	Three Months Ended March 31
	2019		2018
Affected line item in the statements of income
Securities gains	$	1	$	149
Tax expense		0		31
Total reclassifications out of AOCI	$	1	$	118

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Note 12 – Subsequent Events

As a bank doing business in Kentucky, CTB is subject to a capital-based Kentucky bank franchise tax and exempt from Kentucky corporate income tax.  However, in March 2019, Kentucky enacted HB354, which will transition CTB from the bank franchise tax to a corporate income tax beginning January 1, 2021.  The current Kentucky corporate income tax rate is 5%.  As of March 31, 2019, CTBI recorded a deferred tax liability, net of the federal benefit, of $1.0 million due to the enactment of HB354.

Subsequent to quarter end, in April 2019, Kentucky enacted HB458.  HB458 allows for combined filing with CTBI, CTB, and CTIC.  CTBI had previously filed a separate company return and generated net operating losses, in which it had maintained a valuation allowance against the related deferred tax asset.  HB458 also allows for certain net operating losses to be utilized on a combined return.  CTBI expects to file a combined return, beginning in 2021, and to utilize these previously generated losses.  The estimated tax benefit to reverse the valuation allowance on the deferred tax asset for these losses is expected to be approximately $3.0 million and will be recorded in the second quarter 2019. 

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – The unaudited condensed consolidated financial statements include the accounts of CTBI and its separate and distinct, wholly owned subsidiaries Community Trust Bank, Inc. (“CTB”) and Community Trust and Investment Company (“CTIC”).  All significant intercompany transactions have been eliminated in consolidation.

Reclassifications

Reclassifications – Certain reclassifications considered to be immaterial have been made in the prior year condensed consolidated financial statements to conform to current year classifications.  These reclassifications had no effect on net income.

New Accounting Standards

New Accounting Standards –

ØLeases – In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).   ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability for all leases with terms longer than 12 months.  Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.  For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases.  A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee.  If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor does not convey risks and rewards or control, an operating lease results.  The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities.  Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with certain practical expedients available.

In August 2018, the FASB issued ASU 2018-11, Leases (Topic 842):  Targeted Improvements.  This ASU is intended to reduce costs and ease implementation of the leases standard for financial statement preparers.  ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract.

Transition: Comparative Reporting at Adoption

The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard.  Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.  Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP in Topic 840, Leases.  An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840.  The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide).

Separating Components of a Contract

The amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met:

· The timing and pattern of transfer of the non-lease component(s) and associated lease component are the same.

· The lease component, if accounted for separately, would be classified as an operating lease.

An entity electing this practical expedient (including an entity that accounts for the combined component entirely in Topic 606) is required to disclose certain information, by class of underlying asset, as specified in the ASU.

We elected the optional transition method of the modified retrospective approach provided in ASU 2018-11 which was applied on January 1, 2019.  CTBI also elected certain relief options offered in ASU 2016-02, including the package of practical expedients, the option not to separate lease and non-lease components, and instead to account for them as a single lease component for all classes of assets, the hindsight practical expedient to allow entities to use hindsight when determining lease term and impairment of right-of-use assets, and the option not to recognize right-of-use assets and lease liabilities that arise from short-term leases (i.e., leases with terms of twelve months or less).  Refer to note 6, Leases, below for further information regarding the impact of adoption.

ØAccounting for Credit Losses – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The provisions of ASU 2016-13 were issued to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date.  This ASU requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis.  The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses.  The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense.  Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. CTBI has an implementation team working through the provisions of ASU 2016-13 including assessing the impact on its accounting and disclosures.  The team has established the historical data that will be available and has identified the potential loan segments to be analyzed.  The team is in the process of determining the portfolio methodologies to be utilized and plans to begin running parallel with its current model in the third quarter of 2019.

ØSimplifying the Test for Goodwill Impairment – In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.  These amendments eliminate Step 2 from the goodwill impairment test.  The amendments also eliminate the requirements from any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.  The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods with those fiscal years.  ASU 2017-04 should be implemented on a prospective basis.  Management does not expect ASU 2017-04 to have an impact on CTBI’s consolidated financial statements.

ØChanges to the Disclosure Requirements for Fair Value Measurement – In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.  ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820 as follows:

Removals

The following disclosure requirements were removed from Topic 820:

· The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy

· The policy for timing of transfers between levels

· The valuation processes for Level 3 fair value measurements

Modifications

The following disclosure requirements were modified in Topic 820:

· For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and

· The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions

The following disclosure requirements were added to Topic 820:

· The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and

· The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

In addition, the amendments eliminate “at a minimum” from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements.

CTBI plans to adopt ASU 2018-13 effective January 1, 2020 with minimal changes to our current reporting.

ØAccounting for Costs of Implementing a Cloud Computing Service Agreement– In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement.  This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software.

The ASU aligns the following requirements for capitalizing implementation costs:

· Those incurred in a hosting arrangement that is a service contract, and

· Those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This ASU will be effective beginning January 1, 2020.  We do not anticipate a significant impact to our consolidated financial statements.

Critical Accounting Policies and Estimates

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes.  Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates.  Such differences could be material to the consolidated financial statements.

We believe the application of accounting policies and the estimates required therein are reasonable.  These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change.  Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

We have identified the following critical accounting policies:

Investments

Investments –Management determines the classification of securities at purchase.  We classify debt securities into held-to-maturity, trading, or available-for-sale categories.  Held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost.  In accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 320, Investments – Debt Securities, investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position:

a. Trading securities. Securities that are bought and held principally for the purpose of selling them in the near term (thus held for only a short period of time) shall be classified as trading securities. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.

b. Available-for-sale securities. Investments not classified as trading securities (nor as held-to-maturity securities) shall be classified as available-for-sale securities.

We do not have any securities that are classified as trading securities.  Available-for-sale securities are reported at fair value, with unrealized gains and losses included as a separate component of shareholders’ equity, net of tax.  If declines in fair value are other than temporary, the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related.

Gains or losses on disposition of debt securities are computed by specific identification for those securities.  Interest and dividend income, adjusted by amortization of purchase premium or discount, is included in earnings.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair market value is below amortized cost, additional analysis is performed to determine whether an other than temporary impairment condition exists.  Available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment.  The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity and (ii) whether it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity.  Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment.  If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on CTBI’s results of operations and financial condition.

Subsequent to the January 1, 2018 effective date of ASU 2016-01, ASC 320 applies only to debt securities and ASC 321, Investments – Equity Securities, applies to equity securities.  ASC 321 requires equity investments (except those accounted for under the equity method and those that result in the consolidation of the investee) to be measured at fair value, with changes in fair values recognized in net income.

Equity securities with a readily determinable fair value are required to be measured at fair value, with changes in fair value recognized through net income.  Equity securities without a readily determinable fair value are carried at cost, less any impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments.  An election can be made, as permitted by ASC 321-10-35-2, to subsequently measure an equity security without a readily determinable fair value, at fair value.  Equity securities held by CTBI include securities without readily determinable fair values.  CTBI has elected to account for these securities at fair value.  The fair value of these securities was determined by a third party service provider using Level 3 inputs as defined in ASC 820, Fair Value Measurement, and changes in fair value are recognized in income.

Loans

Loans –Loans with the ability and the intent to be held until maturity and/or payoff are reported at the carrying value of unpaid principal reduced by unearned interest, an allowance for loan and lease losses, and unamortized deferred fees or costs.  Income is recorded on the level yield basis.  Interest accrual is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful.  Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest.  Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured.  Loans are not reclassified as accruing until principal and interest payments remain current for a period of time, generally six months, and future payments appear reasonably certain.  Included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired.  A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.

Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the estimated life of the related loans, leases, or commitments as a yield adjustment.

Allowance for Loan and Lease Losses

Allowance for Loan and Lease Losses –We maintain an allowance for loan and lease losses (“ALLL”) at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio.  Credit losses are charged and recoveries are credited to the ALLL.

We utilize an internal risk grading system for commercial credits.  Those larger commercial credits that exhibit probable or observed credit weaknesses are subject to individual review.  The borrower’s cash flow, adequacy of collateral coverage, and other options available to CTBI, including legal remedies, are evaluated.  The review of individual loans includes those loans that are impaired as defined by ASC 310-10-35, Impairment of a Loan.  We evaluate the collectability of both principal and interest when assessing the need for loss provision.  Historical loss rates are analyzed and applied to other commercial loans not subject to specific allocations.  The ALLL allocation for this pool of commercial loans is established based on the historical average, maximum, minimum, and median loss ratios.

A loan is considered impaired when, based on current information and events, it is probable that CTBI will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Homogenous loans, such as consumer installment, residential mortgages, and home equity lines are not individually risk graded.  The associated ALLL for these loans is measured under ASC 450, Contingencies.

When any secured commercial loan is considered uncollectable, whether past due or not, a current assessment of the value of the underlying collateral is made.  If the balance of the loan exceeds the fair value of the collateral, the loan is placed on nonaccrual and the loan is charged down to the value of the collateral less estimated cost to sell or a specific reserve equal to the difference between book value of the loan and the fair value assigned to the collateral is created until such time as the loan is foreclosed.  When the foreclosed collateral has been legally assigned to CTBI, the estimated fair value of the collateral less costs to sell is then transferred to other real estate owned or other repossessed assets, and a charge-off is taken for any remaining balance.  When any unsecured commercial loan is considered uncollectable the loan is charged off no later than at 90 days past due.

All closed-end consumer loans (excluding conventional 1-4 family residential loans and installment and revolving loans secured by real estate) are charged off no later than 120 days (5 monthly payments) delinquent.  If a loan is considered uncollectable, it is charged off earlier than 120 days delinquent.  For conventional 1-4 family residential loans and installment and revolving loans secured by real estate, when a loan is 90 days past due, a current assessment of the value of the real estate is made.  If the balance of the loan exceeds the fair value of the property, the loan is placed on nonaccrual.  Foreclosure proceedings are normally initiated after 120 days.  When the foreclosed property has been legally assigned to CTBI, the fair value less estimated costs to sell is transferred to other real estate owned and the remaining balance is taken as a charge-off.

Historical loss rates for loans are adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition.  We use twelve rolling quarters for our historical loss rate analysis.  Factors that we consider include delinquency trends, current economic conditions and trends, strength of supervision and administration of the loan portfolio, levels of underperforming loans, level of recoveries to prior year’s charge-offs, trends in loan losses, industry concentrations and their relative strengths, amount of unsecured loans, and underwriting exceptions.  Management continually reevaluates the other subjective factors included in its ALLL analysis.

Other Real Estate Owned

Other Real Estate Owned – When foreclosed properties are acquired, appraisals are obtained and the properties are booked at the current fair market value less expected sales costs.  Additionally, periodic updated appraisals are obtained on unsold foreclosed properties.  When an updated appraisal reflects a fair market value below the current book value, a charge is booked to current earnings to reduce the property to its new fair market value less expected sales costs.  Our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months.  All revenues and expenses related to the carrying of other real estate owned are recognized through the income statement.

Income Taxes

Income Taxes – Income tax expense is based on the taxes due on the consolidated tax return plus deferred taxes based on the expected future tax benefits and consequences of temporary differences between carrying amounts and tax bases of assets and liabilities, using enacted tax rates.  Any interest and penalties incurred in connection with income taxes are recorded as a component of income tax expense in the consolidated financial statements.  During the three months ended March 31, 2019 and 2018, CTBI has not recognized a significant amount of interest expense or penalties in connection with income taxes.

In March 2019, Kentucky enacted legislation requiring financial institutions to transition from a bank franchise tax to the Kentucky corporate income tax beginning in 2021.  As a result, we booked a one-time charge of $1.0 million, or $0.06 per basic share, to income tax expense to recognize our Kentucky deferred tax liability at March 31, 2019.  While this liability will be adjusted periodically, we do not anticipate any further adjustments to have a significant impact to income.

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Securities (Tables)

3 Months Ended

Mar. 31, 2019

Securities [Abstract]

Amortized Cost and Fair Value of Available-for-sale Securities

The amortized cost and fair value of securities at March 31, 2019 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
U.S. Treasury and government agencies	$	178,233	$	195	$	(951	)	$	177,477
State and political subdivisions		123,147		1,524		(942	)		123,729
U.S. government sponsored agency mortgage-backed securities		299,658		2,036		(4,103	)		297,591
Other debt securities		506		0		(4	)		502
Total available-for-sale securities	$	601,544	$	3,755	$	(6,000	)	$	599,299

The amortized cost and fair value of securities at December 31, 2018 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2018
U.S. Treasury and government agencies	$	219,358	$	48	$	(1,468	)	$	217,938
State and political subdivisions		126,280		633		(2,425	)		124,488
U.S. government sponsored agency mortgage-backed securities		255,969		397		(5,547	)		250,819
Other debt securities		507		0		(6	)		501
Total available-for-sale securities	$	602,114	$	1,078	$	(9,446	)	$	593,746

Amortized Cost and Fair Value of Held-to-maturity Securities

The amortized cost and fair value of securities at March 31, 2019 are summarized as follows:

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2019
State and political subdivisions	$	619	$	0	$	0	$	619
Total held-to-maturity securities	$	619	$	0	$	0	$	619

The amortized cost and fair value of securities at December 31, 2018 are summarized as follows:

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2018
State and political subdivisions	$	649	$	0	$	0	$	649
Total held-to-maturity securities	$	649	$	0	$	0	$	649

Amortized Cost and Fair Value of Securities by Contractual Maturity

The amortized cost and fair value of debt securities at March 31, 2019 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-Sale				Held-to-Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	29,546	$	29,499	$	619	$	619
Due after one through five years		93,079		93,111		0		0
Due after five through ten years		80,646		80,248		0		0
Due after ten years		98,109		98,348		0		0
U.S. government sponsored agency mortgage-backed securities		299,658		297,591		0		0
Other debt securities		506		502		0		0
Total debt securities	$	601,544	$	599,299	$	619	$	619

Available for Sale Securities and Held-to-Maturity Securities, Continuous Unrealized Loss Position

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of March 31, 2019 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total debt securities with unrealized losses as of March 31, 2019 was 55.9% compared to 75.7% as of December 31, 2018.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of March 31, 2019 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of March 31, 2019.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	22,910	$	(8	)	$	22,902
State and political subdivisions		0		0			0
U.S. government sponsored agency mortgage-backed securities		935		(3	)		932
Other debt securities		506		(4	)		502
Total <12 months temporarily impaired AFS securities		24,351		(15	)		24,336
12 Months or More
U.S. Treasury and government agencies		120,811		(943	)		119,868
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		156,877		(4,100	)		152,777
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		317,246		(5,985	)		311,261
Total
U.S. Treasury and government agencies		143,721		(951	)		142,770
State and political subdivisions		39,558		(942	)		38,616
U.S. government sponsored agency mortgage-backed securities		157,812		(4,103	)		153,709
Other debt securities		506		(4	)		502
Total temporarily impaired AFS securities	$	341,597	$	(6,000	)	$	335,597

The analysis performed as of December 31, 2018 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2018 that are not deemed to be other-than-temporarily impaired.  There were no held-to-maturity securities that were deemed to be impaired as of December 31, 2018.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	78,905	$	(271	)	$	78,634
State and political subdivisions		21,707		(194	)		21,513
U.S. government sponsored agency mortgage-backed securities		61,940		(377	)		61,563
Other debt securities		507		(6	)		501
Total <12 months temporarily impaired AFS securities		163,059		(848	)		162,211
12 Months or More
U.S. Treasury and government agencies		97,955		(1,197	)		96,758
State and political subdivisions		51,911		(2,231	)		49,680
U.S. government sponsored agency mortgage-backed securities		147,658		(5,170	)		142,488
Other debt securities		0		0			0
Total ≥12 months temporarily impaired AFS securities		297,524		(8,598	)		288,926
Total
U.S. Treasury and government agencies		176,860		(1,468	)		175,392
State and political subdivisions		73,618		(2,425	)		71,193
U.S. government sponsored agency mortgage-backed securities		209,598		(5,547	)		204,051
Other debt securities		507		(6	)		501
Total temporarily impaired AFS securities	$	460,583	$	(9,446	)	$	451,137

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Loans (Tables)

3 Months Ended

Mar. 31, 2019

Loans [Abstract]

Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans

Major classifications of loans, net of unearned income, deferred loan origination costs, and net premiums on acquired loans, are summarized as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial construction	$	75,364	$	82,715
Commercial secured by real estate		1,182,804		1,183,093
Equipment lease financing		1,354		1,740
Commercial other		388,060		377,198
Real estate construction		54,013		57,160
Real estate mortgage		720,292		722,417
Home equity		108,018		106,299
Consumer direct		141,855		144,289
Consumer indirect		517,972		533,727
Total loans	$	3,189,732	$	3,208,638

Nonaccrual Loans Segregated by Class of Loans

Nonaccrual loans segregated by class of loans were as follows:

(in thousands)	March 31 2019		December 31 2018
Commercial:
Commercial construction	$	546	$	639
Commercial secured by real estate		4,967		4,537
Commercial other		1,402		797
Residential:
Real estate construction		289		22
Real estate mortgage		4,691		5,395
Home equity		483		477
Total nonaccrual loans	$	12,378	$	11,867

Bank's Loan Portfolio Aging Analysis, Segregated by Class

The following tables present CTBI’s loan portfolio aging analysis, segregated by class, as of March 31, 2019 and December 31, 2018:

	March 31, 2019
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	449	$	0	$	618	$	1,067	$	74,297	$	75,364	$	72
Commercial secured by real estate		7,829		1,460		12,335		21,624		1,161,180		1,182,804		7,794
Equipment lease financing		0		0		0		0		1,354		1,354		0
Commercial other		1,005		772		726		2,503		385,557		388,060		261
Residential:
Real estate construction		258		149		295		702		53,311		54,013		6
Real estate mortgage		1,145		4,836		6,854		12,835		707,457		720,292		4,203
Home equity		818		277		499		1,594		106,424		108,018		260
Consumer:
Consumer direct		735		215		30		980		140,875		141,855		30
Consumer indirect		2,854		611		390		3,855		514,117		517,972		390
Total	$	15,093	$	8,320	$	21,747	$	45,160	$	3,144,572	$	3,189,732	$	13,016

	December 31, 2018
(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ and Accruing*
Commercial:
Commercial construction	$	87	$	58	$	698	$	843	$	81,872	$	82,715	$	58
Commercial secured by real estate		6,287		1,204		8,776		16,267		1,166,826		1,183,093		4,632
Equipment lease financing		0		0		0		0		1,740		1,740		0
Commercial other		1,057		94		1,067		2,218		374,980		377,198		581
Residential:
Real estate construction		144		438		28		610		56,550		57,160		6
Real estate mortgage		1,272		5,645		7,607		14,524		707,893		722,417		4,095
Home equity		898		365		441		1,704		104,595		106,299		246
Consumer:
Consumer direct		918		191		74		1,183		143,106		144,289		74
Consumer indirect		4,715		975		507		6,197		527,530		533,727		506
Total	$	15,378	$	8,970	$	19,198	$	43,546	$	3,165,092	$	3,208,638	$	10,198

*90+ and Accruing are also included in 90+ Days Past Due column.

Credit Risk Profile of the Bank's Commercial Loan Portfolio Based on Rating Category and Payment Activity, Segregated by Class of Loans

The following tables present the credit risk profile of CTBI’s commercial loan portfolio based on rating category and payment activity, segregated by class of loans, as of March 31, 2019 and December 31, 2018:

(in thousands)	Commercial Construction		Commercial Secured by Real Estate		Equipment Leases		Commercial Other		Total
March 31, 2019
Pass	$	67,224	$	1,031,325	$	1,354	$	338,695	$	1,438,598
Watch		2,932		75,404		0		27,317		105,653
OAEM		1,823		18,501		0		5,811		26,135
Substandard		3,385		57,485		0		16,166		77,036
Doubtful		0		89		0		71		160
Total	$	75,364	$	1,182,804	$	1,354	$	388,060	$	1,647,582
December 31, 2018
Pass	$	74,222	$	1,038,309	$	1,740	$	327,431	$	1,441,702
Watch		3,070		71,834		0		28,986		103,890
OAEM		1,594		19,734		0		5,735		27,063
Substandard		3,829		53,125		0		14,970		71,924
Doubtful		0		91		0		76		167
Total	$	82,715	$	1,183,093	$	1,740	$	377,198	$	1,644,746

Credit Risk Profile of Residential Real Estate and Consumer Loan Portfolio Based on Performing and Nonperforming Status Segregated by Class

The following tables present the credit risk profile of CTBI’s residential real estate and consumer loan portfolios based on performing or nonperforming status, segregated by class, as of March 31, 2019 and December 31, 2018:

(in thousands)	Real Estate Construction		Real Estate Mortgage		Home Equity		Consumer Direct		Consumer Indirect		Total
March 31, 2019
Performing	$	53,718	$	711,398	$	107,275	$	141,825	$	517,582	$	1,531,798
Nonperforming (1)		295		8,894		743		30		390		10,352
Total	$	54,013	$	720,292	$	108,018	$	141,855	$	517,972	$	1,542,150
December 31, 2018
Performing	$	57,132	$	712,927	$	105,576	$	144,215	$	533,221	$	1,553,071
Nonperforming (1)		28		9,490		723		74		506		10,821
Total	$	57,160	$	722,417	$	106,299	$	144,289	$	533,727	$	1,563,892

(1)  A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual.

Impaired Loans, Average Investment in Impaired Loans, and Interest Income Recognized on Impaired Loans

The following table presents impaired loans, the average investment in impaired loans, and interest income recognized on impaired loans for the periods ended March 31, 2019, December 31, 2018, and March 31, 2018:

	March 31, 2019
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	3,308	$	3,308	$	0	$	3,655	$	46
Commercial secured by real estate		32,407		34,098		0		32,811		347
Commercial other		8,903		10,598		0		8,866		139
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Loans with a specific valuation allowance:
Commercial construction		324		324		164		324		3
Commercial secured by real estate		1,922		3,060		847		1,966		10
Commercial other		1,154		1,154		620		1,169		17
Totals:
Commercial construction		3,632		3,632		164		3,979		49
Commercial secured by real estate		34,329		37,158		847		34,777		357
Commercial other		10,057		11,752		620		10,035		156
Real estate construction		0		0		0		0		0
Real estate mortgage		2,337		2,337		0		2,329		19
Total	$	50,355	$	54,879	$	1,631	$	51,120	$	581

	December 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,100	$	4,100	$	0	$	3,923	$	171
Commercial secured by real estate		29,645		31,409		0		30,250		1,412
Commercial other		8,285		9,982		0		8,774		530
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Loans with a specific valuation allowance:
Commercial construction		127		127		50		42		0
Commercial secured by real estate		1,854		2,983		605		2,051		1
Commercial other		473		473		146		285		16
Totals:
Commercial construction		4,227		4,227		50		3,965		171
Commercial secured by real estate		31,499		34,392		605		32,301		1,413
Commercial other		8,758		10,455		146		9,059		546
Real estate construction		0		0		0		106		0
Real estate mortgage		1,882		1,882		0		1,666		41
Total	$	46,366	$	50,956	$	801	$	47,097	$	2,171

	March 31, 2018
(in thousands)	Recorded Balance		Unpaid Contractual Principal Balance		Specific Allowance		Average Investment in Impaired Loans		*Interest Income Recognized
Loans without a specific valuation allowance:
Commercial construction	$	4,009	$	4,009	$	0	$	4,168	$	37
Commercial secured by real estate		31,284		33,377		0		31,566		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Loans with a specific valuation allowance:
Commercial secured by real estate		2,105		3,221		739		2,132		0
Totals:
Commercial construction		4,009		4,009		0		4,168		37
Commercial secured by real estate		33,389		36,598		739		33,698		352
Commercial other		9,183		10,913		0		9,332		152
Real estate construction		318		318		0		318		0
Real estate mortgage		1,286		1,294		0		1,284		0
Total	$	48,185	$	53,132	$	739	$	48,800	$	541

*Cash basis interest is substantially the same as interest income recognized.

Troubled Debt Restructuring

Presented below, segregated by class of loans, are troubled debt restructurings that occurred during the three months ended March 31, 2019 and 2018 and the year ended December 31, 2018:

	Three Months Ended March 31, 2019
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial secured by real estate		5		828		0		642		1,470
Commercial other		7		1,122		0		140		1,262
Residential:
Real estate mortgage		1		463		0		0		463
Total troubled debt restructurings		13	$	2,413	$	0	$	782	$	3,195

	Year Ended December 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		5	$	2,182	$	0	$	15	$	2,197
Commercial secured by real estate		24		4,004		0		1,383		5,387
Commercial other		8		465		0		0		465
Residential:
Real estate construction		0		0		0		0		0
Real estate mortgage		3		264		0		704		968
Total troubled debt restructurings		40	$	6,915	$	0	$	2,102	$	9,017

	Three Months Ended March 31, 2018
(in thousands)	Number of Loans		Term Modification		Rate Modification		Combination		Post-Modification Outstanding Balance
Commercial:
Commercial construction		2	$	32	$	0	$	15	$	47
Commercial secured by real estate		9		786		0		983		1,769
Commercial other		5		182		0		0		182
Total troubled debt restructurings		16	$	1,000	$	0	$	998	$	1,998

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Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2019

Allowance for Loan and Lease Losses [Abstract]

Activity in Allowance for Loan and Lease Losses

The following tables present the balance in the allowance for loan and lease losses (“ALLL”) and the recorded investment in loans based on portfolio segment and impairment method as of March 31, 2019, December 31, 2018 and March 31, 2018:

	March 31, 2019
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Provision charged to expense		38		287			(2	)		382			(116	)		(278	)		84			(119	)		(86	)		190
Losses charged off		0		(35	)		0			(242	)		0			(120	)		(25	)		(246	)		(1,387	)		(2,055	)
Recoveries		3		17			0			84			0			18			1			117			721			961
Ending balance	$	903	$	14,800		$	10		$	5,217		$	396		$	4,053		$	901		$	1,635		$	7,089		$	35,004
Ending balance:
Individually evaluated for impairment	$	164	$	847		$	0		$	620		$	0		$	0		$	0		$	0		$	0		$	1,631
Collectively evaluated for impairment	$	739	$	13,953		$	10		$	4,597		$	396		$	4,053		$	901		$	1,635		$	7,089		$	33,373
Loans
Ending balance:
Individually evaluated for impairment	$	3,632	$	34,329		$	0		$	10,057		$	0		$	2,337		$	0		$	0		$	0		$	50,355
Collectively evaluated for impairment	$	71,732	$	1,148,475		$	1,354		$	378,003		$	54,013		$	717,955		$	108,018		$	141,855		$	517,972		$	3,139,377

	December 31, 2018
(in thousands)	Commercial Construction		Commercial Secured by Real Estate			Equipment Lease Financing			Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686	$	14,509		$	18		$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		115		786			(6	)		824			(115	)		(336	)		39			572			4,288			6,167
Losses charged off		0		(988	)		0			(1,513	)		(33	)		(1,004	)		(69	)		(997	)		(6,394	)		(10,998	)
Recoveries		61		224			0			643			0			85			14			445			3,116			4,588
Ending balance	$	862	$	14,531		$	12		$	4,993		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,908
Ending balance:
Individually evaluated for impairment	$	50	$	605		$	0		$	146		$	0		$	0		$	0		$	0		$	0		$	801
Collectively evaluated for impairment	$	812	$	13,926		$	12		$	4,847		$	512		$	4,433		$	841		$	1,883		$	7,841		$	35,107
Loans
Ending balance:
Individually evaluated for impairment	$	4,227	$	31,499		$	0		$	8,758		$	0		$	1,882		$	0		$	0		$	0		$	46,366
Collectively evaluated for impairment	$	78,488	$	1,151,594		$	1,740		$	368,440		$	57,160		$	720,535		$	106,299		$	144,289		$	533,727		$	3,162,272

	March 31, 2018
(in thousands)	Commercial Construction			Commercial Secured by Real Estate			Equipment Lease Financing		Commercial Other			Real Estate Construction			Real Estate Mortgage			Home Equity			Consumer Direct			Consumer Indirect			Total
Allowance for loan losses
Beginning balance	$	686		$	14,509		$	18	$	5,039		$	660		$	5,688		$	857		$	1,863		$	6,831		$	36,151
Provision charged to expense		(14	)		(191	)		5		(651	)		(4	)		435			5			80			1,281			946
Losses charged off		0			(210	)		0		(236	)		(23	)		(193	)		(1	)		(216	)		(2,098	)		(2,977	)
Recoveries		14			25			0		77			0			6			1			71			875			1,069
Ending balance	$	686		$	14,133		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	35,189
Ending balance:
Individually evaluated for impairment	$	0		$	739		$	0	$	0		$	0		$	0		$	0		$	0		$	0		$	739
Collectively evaluated for impairment	$	686		$	13,394		$	23	$	4,229		$	633		$	5,936		$	862		$	1,798		$	6,889		$	34,450
Loans
Ending balance:
Individually evaluated for impairment	$	4,009		$	33,389		$	0	$	9,183		$	318		$	1,286		$	0		$	0		$	0		$	48,185
Collectively evaluated for impairment	$	74,638		$	1,158,239		$	2,683	$	329,452		$	63,575		$	717,472		$	99,593		$	136,576		$	487,828		$	3,070,056

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense for the three months ended March 31, 2019 were as follows:

(in thousands)	2019
Short-term lease cost	$	71
Operating lease cost		461
Sublease income		(68	)
Total lease cost	$	464

Supplemental Cash Flow Information Related to Operating Leases

Supplemental cash flow information related to CTBI’s operating leases for the three months ended March 31, 2019 was as follows:

(in thousands)	2019
Operating lease – operating cash flows (fixed payments)	$	458
Right-of-use assets obtained in exchange for new operating lease liabilities	$	0
Weighted average lease term – operating leases	15.35 years
Weighted average discount rate – operating leases		3.47	%

Maturities of Lease Liabilities

Maturities of lease liabilities as of March 31, 2019 are as follows:

(in thousands)	Operating Leases
2019	$	1,271
2020		1,715
2021		1,744
2022		1,729
2023		1,650
Thereafter		12,822
Total lease payments		20,931
Less imputed interest		(5,188	)
Total	$	15,743

Minimum Non-cancellable Rental Payments

At December 31, 2018, minimum non-cancellable rental payments were as follows:

(in thousands)	Operating Lease Payments
2019	$	1,999
2020		1,710
2021		1,737
2022		1,760
2023		1,696
Thereafter		13,031
Total	$	21,933

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Other Real Estate Owned (Tables)

3 Months Ended

Mar. 31, 2019

Other Real Estate Owned [Abstract]

Activity for Other Real Estate Owned

Activity for other real estate owned was as follows:

(in thousands)	March 31, 2019			March 31, 2018
Beginning balance of other real estate owned	$	27,273		$	31,996
New assets acquired		854			1,284
Fair value adjustments		(447	)		(467	)
Sale of assets		(2,710	)		(809	)
Ending balance of other real estate owned	$	24,970		$	32,004

Major Classifications of Foreclosed Properties

The major classifications of foreclosed properties are shown in the following table:

(in thousands)	March 31 2019		December 31 2018
1-4 family	$	4,761	$	5,253
Agricultural/farmland		0		0
Construction/land development/other		14,201		15,017
Multifamily		88		88
Non-farm/non-residential		5,920		6,915
Total foreclosed properties	$	24,970	$	27,273

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Repurchase Agreements (Tables)

3 Months Ended

Mar. 31, 2019

Repurchase Agreements [Abstract]

Remaining Contractual Maturity of Securities Sold Under Agreements to Repurchase by Class of Collateral Pledged

The remaining contractual maturity of the securities sold under agreements to repurchase by class of collateral pledged included in the accompanying consolidated balance sheets as of March 31, 2019 and December 31, 2018 is presented in the following tables:

	March 31, 2019
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,358	$	0	$	0	$	61,703	$	87,061
State and political subdivisions		56,322		500		0		13,366		70,188
U.S. government sponsored agency mortgage-backed securities		29,388		0		0		50,869		80,257
Total	$	111,068	$	500	$	0	$	125,938	$	237,506

	December 31, 2018
	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions:
U.S. Treasury and government agencies	$	25,346	$	0	$	2,548	$	60,699	$	88,593
State and political subdivisions		58,864		0		2,995		10,384		72,243
U.S. government sponsored agency mortgage-backed securities		22,076		0		1,877		47,923		71,876
Total	$	106,286	$	0	$	7,420	$	119,006	$	232,712

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Fair Market Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Fair Market Value of Financial Assets and Liabilities [Abstract]

Fair Value Assets Measured on Recurring Basis

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	177,477	$	56,744	$	120,733	$	0
State and political subdivisions		123,729		0		123,729		0
U.S. government sponsored agency mortgage-backed securities		297,591		0		297,591		0
Other debt securities		502		0		502		0
Equity securities at fair value		1,528		0		0		1,528
Mortgage servicing rights		3,390		0		0		3,390

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – recurring basis
Available-for-sale securities:
U.S. Treasury and government agencies	$	217,938	$	91,028	$	126,910	$	0
State and political subdivisions		124,488		0		124,488		0
U.S. government sponsored agency mortgage-backed securities		250,819		0		250,819		0
Other debt securities		501		0		501		0
Equity securities at fair value		1,173		0		0		1,173
Mortgage servicing rights		3,607		0		0		3,607

Reconciliation of the Beginning and Ending Balance of Recurring Fair Value Measurements Using Significant Unobservable (Level 3) Inputs

Following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:

(in thousands)	Three Months Ended March 31, 2019					Three Months Ended March 31, 2018
	Equity Securities at Fair Value		Mortgage Servicing Rights			Equity Securities at Fair Value		Mortgage Servicing Rights
Beginning balance	$	1,173	$	3,607		$	0	$	3,484
Total unrealized gains (losses)
Included in net income		355		(234	)		0		228
Issues		0		116			0		100
Settlements		0		(99	)		0		(106	)
Ending balance	$	1,528	$	3,390		$	0	$	3,706
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses related to assets still held at the reporting date	$	355	$	(234	)	$	0	$	228

Realized and Unrealized Gains and Losses for Items Included in Net Income in the Consolidated Statements of Income

Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as follows:

Noninterest Income
	Three Months Ended
	March 31
(in thousands)	2019		2018
Total gains	$	116	$	122

Fair Value Measurements of Recognized Assets Measured on Nonrecurring Basis

The following tables present the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a nonrecurring basis as of March 31, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	1,078	$	0	$	0	$	1,078
Other real estate owned		2,345		0		0		2,345

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets measured – nonrecurring basis
Impaired loans (collateral dependent)	$	747	$	0	$	0	$	747
Other real estate owned		6,500		0		0		6,500

Quantitative Information About Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2019 and December 31, 2018.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at March 31, 2019		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,528	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,390	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 21.8% (10.5%)
				Probability of default		0.0% - 100.0% (2.8%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	1,078	Market comparable properties	Marketability discount		0.0% - 96.3% (45.6%)
Other real estate owned	$	2,345	Market comparable properties	Comparability adjustments		10.0% - 55.2% (14.9%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2018		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,173	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$	3,607	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 28.1% (9.5%)
				Probability of default		0.0% - 100.0% (2.6%)
				Discount rate		10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$	747	Market comparable properties	Marketability discount		0.0% - 95.1% (41.5%)
Other real estate owned	$	6,500	Market comparable properties	Comparability adjustments		6.0% - 47.6% (14.9%)

Fair Value of Financial Instruments and Levels within the Fair Value Hierarchy of the Valuation Techniques

The following table presents estimated fair value of CTBI’s financial instruments as of March 31, 2019 and indicates the level within the fair value hierarchy of the valuation techniques.  In accordance with the prospective adoption of ASU 2016-01, the fair values as of March 31, 2019 were measured using an exit price notion.

			Fair Value Measurements at March 31, 2019 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	253,860	$	253,860	$	0	$	0
Certificates of deposit in other banks		1,470		0		1,470		0
Securities available-for-sale		599,299		56,744		542,555		0
Securities held-to-maturity		619		0		619		0
Equity securities at fair value		1,528		0		0		1,528
Loans held for sale		13,649		13,752		0		0
Loans, net		3,154,728		0		0		3,150,772
Federal Home Loan Bank stock		12,261		0		12,261		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		15,188		0		15,188		0
Mortgage servicing rights		3,390		0		0		3,390
Financial liabilities:
Deposits	$	3,383,103	$	841,996	$	2,559,903	$	0
Repurchase agreements		237,506		0		0		237,556
Federal funds purchased		1,800		0		1,800		0
Advances from Federal Home Loan Bank		431		0		461		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		3,983		0		3,983		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

The following table presents estimated fair value of CTBI’s financial instruments as of December 31, 2018 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 2018 Using
(in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	141,450	$	141,450	$	0	$	0
Certificates of deposit in other banks		3,920		0		3,914		0
Securities available-for-sale		593,746		91,028		502,718		0
Securities held-to-maturity		649		0		649		0
Equity securities at fair value		1,173		0		0		1,173
Loans held for sale		2,461		2,518		0		0
Loans, net		3,172,730		0		0		3,175,908
Federal Home Loan Bank stock		14,713		0		14,713		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		14,432		0		14,432		0
Mortgage servicing rights		3,607		0		0		3,607
Financial liabilities:
Deposits	$	3,305,950	$	803,316	$	2,513,084	$	0
Repurchase agreements		232,712		0		0		232,796
Federal funds purchased		1,180		0		1,180		0
Advances from Federal Home Loan Bank		436		0		468		0
Long-term debt		59,341		0		0		44,166
Accrued interest payable		2,902		0		2,902		0
Unrecognized financial instruments:
Letters of credit	$	0	$	0	$	0	$	0
Commitments to extend credit		0		0		0		0
Forward sale commitments		0		0		0		0

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended
	March 30
(in thousands except per share data)	2019		2018
Numerator:
Net income	$	14,939	$	15,814
Denominator:
Basic earnings per share:
Weighted average shares		17,712		17,671
Diluted earnings per share:
Effect of dilutive stock options and restricted stock grants		11		16
Adjusted weighted average shares		17,723		17,687
Earnings per share:
Basic earnings per share	$	0.84	$	0.89
Diluted earnings per share		0.84		0.89

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Income [Abstract]

Amounts Reclassified from Accumulated Other Comprehensive Income (AOCI)

Amounts reclassified from accumulated other comprehensive income (AOCI) and the affected line items in the statements of income during the three months ended March 31, 2019 and 2018 were:

	Amounts Reclassified from AOCI
(in thousands)	Three Months Ended March 31
	2019		2018
Affected line item in the statements of income
Securities gains	$	1	$	149
Tax expense		0		31
Total reclassifications out of AOCI	$	1	$	118

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Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares	Mar. 31, 2019 Payment Quarter
Loans [Abstract]
Past due period after which loans must be well secured and in the process of collection to continue accruing interest		90 days
Period of current principal and interest payments for reclassifying nonaccrual loans as accruing loans		6 months
Allowance for Loan and Lease Losses [Abstract]
Number of delinquent monthly payments before loan charge off | Payment		5
Current value assessment period for past due loans secured against real estate		90 days
Threshold period past due for initiation of foreclosure proceedings		120 days
Historical loan loss review period | Quarter		12
Minimum [Member]
Other Real Estate Owned [Abstract]
Typical frequency of periodic reviews		12 months
Maximum [Member]
Other Real Estate Owned [Abstract]
Typical frequency of periodic reviews		18 months
Frequency of periodic reviews in general		24 months
State [Member] | Kentucky [Member]
Income Taxes [Abstract]
Income tax expense to record deferred tax liability | $	$ 1.0
Income tax expense to record deferred tax liability (in dollars per share) | $ / shares	$ 0.06
Commercial [Member] | Unsecured Commercial Loan [Member]
Allowance for Loan and Lease Losses [Abstract]
Charge off threshold for loans considered uncollectible		90 days
Consumer [Member] | Closed-End Consumer Loan [Member]
Allowance for Loan and Lease Losses [Abstract]
Charge off threshold for loans considered uncollectible		120 days

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Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock-based Compensation [Abstract]
Stock based compensation expense	$ 200	$ 236
Stock Options [Member]
Stock-based Compensation [Abstract]
Stock based compensation expense	10	$ 53
Unrecognized compensation expense related to unvested stock option awards	$ 27
Unrecognized compensation expense, weighted average period	8 months 12 days
Options granted to purchase shares of CTBI common stock (in shares)	0	0
Restricted Stock [Member]
Stock-based Compensation [Abstract]
Stock based compensation expense	$ 190	$ 183
Dividend paid on stock based compensation	$ 19	$ 12
Unrecognized compensation expense, weighted average period	3 years 1 month 6 days
Unrecognized compensation expense related to restricted stock grants	$ 2,000
Granted (in shares)	27,921	11,320
2015 Plan [Member] | Restricted Stock [Member]
Stock-based Compensation [Abstract]
Award vesting period	4 years
2015 Plan [Member] | Restricted Stock [Member] | Maximum [Member]
Stock-based Compensation [Abstract]
Period of certain participant employee termination events following change in control for restriction on restricted stock granted to lapse	24 months

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Securities, Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale [Abstract]
Amortized cost	$ 601,544	$ 602,114
Gross unrealized gains	3,755	1,078
Gross unrealized losses	(6,000)	(9,446)
Fair value	599,299	593,746
U.S. Treasury and Government Agencies [Member]
Available-for-sale [Abstract]
Amortized cost	178,233	219,358
Gross unrealized gains	195	48
Gross unrealized losses	(951)	(1,468)
Fair value	177,477	217,938
State and Political Subdivisions [Member]
Available-for-sale [Abstract]
Amortized cost	123,147	126,280
Gross unrealized gains	1,524	633
Gross unrealized losses	(942)	(2,425)
Fair value	123,729	124,488
U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Available-for-sale [Abstract]
Amortized cost	299,658	255,969
Gross unrealized gains	2,036	397
Gross unrealized losses	(4,103)	(5,547)
Fair value	297,591	250,819
Other Debt Securities [Member]
Available-for-sale [Abstract]
Amortized cost	506	507
Gross unrealized gains	0	0
Gross unrealized losses	(4)	(6)
Fair value	$ 502	$ 501

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Securities, Held-to-maturity Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Held-to-maturity [Abstract]
Amortized cost	$ 619	$ 649
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Fair value	619	649
State and Political Subdivisions [Member]
Held-to-maturity [Abstract]
Amortized cost	619	649
Gross unrealized gains	0	0
Gross unrealized losses	0	0
Fair value	$ 619	$ 649

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Securities, Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale, amortized cost [Abstract]
Due in one year or less	$ 29,546
Due after one through five years	93,079
Due after five through ten years	80,646
Due after ten years	98,109
Amortized cost	601,544	$ 602,114
Available for sale, fair value [Abstract]
Due in one year or less	29,499
Due after one through five years	93,111
Due after five through ten years	80,248
Due after ten years	98,348
Fair value	599,299	593,746
Held-to-maturity, amortized cost [Abstract]
Due in one year or less	619
Due after one through five years	0
Due after five through ten years	0
Due after ten years	0
Amortized cost	619	649
Held-to-maturity, fair value [Abstract]
Due in one year or less	619
Due after one through five years	0
Due after five through ten years	0
Due after ten years	0
Fair value	619	649
U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Available-for-sale, amortized cost [Abstract]
Without single maturity date	299,658
Amortized cost	299,658	255,969
Available for sale, fair value [Abstract]
Without single maturity date	297,591
Fair value	297,591	250,819
Held-to-maturity, amortized cost [Abstract]
Without single maturity date	0
Held-to-maturity, fair value [Abstract]
Without single maturity date	0
Other Debt Securities [Member]
Available-for-sale, amortized cost [Abstract]
Without single maturity date	506
Amortized cost	506	507
Available for sale, fair value [Abstract]
Without single maturity date	502
Fair value	502	$ 501
Held-to-maturity, amortized cost [Abstract]
Without single maturity date	0
Held-to-maturity, fair value [Abstract]
Without single maturity date	$ 0

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Securities, Gains (Loss) on Securities, Securities Pledged, and Securities Sold Under Agreements to Repurchase (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2008
Gains (Loss) on Sales of Securities [Abstract}
Net securities gain (loss)	$ 356	$ (288)
Net gain (loss) realized on sales and calls of AFS securities		148
Realized pre-tax gain on sales and calls of AFS securities	1	281
Realized pre-tax loss on sales and calls of AFS securities		133
Unrealized gain from equity securities	355
Equity securities at fair value	1,528		$ 1,173
Securities pledged as collateral to secure public deposit and for other purposes	234,800		258,800
Amortized cost of securities sold under agreements to repurchase	278,000		289,100
CRA Investments Funds [Member]
Gains (Loss) on Sales of Securities [Abstract}
Net gain (loss) realized on sales and calls of AFS securities		$ (436)
Class B Restricted Stock [Member]
Gains (Loss) on Sales of Securities [Abstract}
Number of shares of stock acquired (in shares)				9,918
Gain on recognition of fair value of equity securities			$ 1,200
Number of shares held in portfolio (in shares)			9,918
Equity securities at fair value	$ 1,500

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Securities, Securities in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Securities [Abstract]
Percentage of total investment with unrealized losses	55.90%	75.70%
Available-for-sale, amortized cost [Abstract]
Less than 12 months	$ 24,351	$ 163,059
12 months or more	317,246	297,524
Total	341,597	460,583
Available-for-sale, gross unrealized losses [Abstract]
Less than 12 months	(15)	(848)
12 months or more	(5,985)	(8,598)
Total	(6,000)	(9,446)
Available-for-sale, fair value [Abstract]
Less than 12 months	24,336	162,211
12 months or more	311,261	288,926
Total	335,597	451,137
U.S. Treasury and Government Agencies [Member]
Available-for-sale, amortized cost [Abstract]
Less than 12 months	22,910	78,905
12 months or more	120,811	97,955
Total	143,721	176,860
Available-for-sale, gross unrealized losses [Abstract]
Less than 12 months	(8)	(271)
12 months or more	(943)	(1,197)
Total	(951)	(1,468)
Available-for-sale, fair value [Abstract]
Less than 12 months	22,902	78,634
12 months or more	119,868	96,758
Total	142,770	175,392
State and Political Subdivisions [Member]
Available-for-sale, amortized cost [Abstract]
Less than 12 months	0	21,707
12 months or more	39,558	51,911
Total	39,558	73,618
Available-for-sale, gross unrealized losses [Abstract]
Less than 12 months	0	(194)
12 months or more	(942)	(2,231)
Total	(942)	(2,425)
Available-for-sale, fair value [Abstract]
Less than 12 months	0	21,513
12 months or more	38,616	49,680
Total	38,616	71,193
U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Available-for-sale, amortized cost [Abstract]
Less than 12 months	935	61,940
12 months or more	156,877	147,658
Total	157,812	209,598
Available-for-sale, gross unrealized losses [Abstract]
Less than 12 months	(3)	(377)
12 months or more	(4,100)	(5,170)
Total	(4,103)	(5,547)
Available-for-sale, fair value [Abstract]
Less than 12 months	932	61,563
12 months or more	152,777	142,488
Total	153,709	204,051
Other Debt Securities [Member]
Available-for-sale, amortized cost [Abstract]
Less than 12 months	506	507
12 months or more	0	0
Total	506	507
Available-for-sale, gross unrealized losses [Abstract]
Less than 12 months	(4)	(6)
12 months or more	0	0
Total	(4)	(6)
Available-for-sale, fair value [Abstract]
Less than 12 months	502	501
12 months or more	0	0
Total	$ 502	$ 501

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Loans, Major Classifications of Loans, Net of Income and Deferred Loan Origination Cost (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Segment	Dec. 31, 2018 USD ($)
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	$ 3,189,732	$ 3,208,638
Number of portfolio segments | Segment	9
Loans held for sale [Abstract]
Loans held for sale	$ 13,649	2,461
Commercial [Member] | Construction [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	75,364	82,715
Commercial [Member] | Real Estate [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	1,182,804	1,183,093
Commercial [Member] | Equipment Lease Financing [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	1,354	1,740
Commercial [Member] | Other [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	388,060	377,198
Residential [Member] | Construction [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	54,013	57,160
Residential [Member] | Real Estate [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	720,292	722,417
Residential [Member] | Home Equity [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	108,018	106,299
Consumer [Member] | Consumer Direct [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	141,855	144,289
Consumer [Member] | Consumer Indirect [Member]
Major Classification of Loans Net of Unearned Income, Deferred Loan Origination Costs and Net Premiums on Acquired Loans [Abstract]
Total loans	$ 517,972	$ 533,727

XML

Loans, Nonaccrual Loans Segregated by Class of Loans and Loan Portfolio Aging Analysis, Segregated by Class (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Dec. 31, 2018
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		$ 12,378	$ 11,867
Total Past Due		45,160	43,546
Current		3,144,572	3,165,092
Total Loans		3,189,732	3,208,638
90+ and Accruing	[1]	13,016	10,198
Minimum threshold amount of loans requiring performance bond		500
30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		15,093	15,378
60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		8,320	8,970
90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		$ 21,747	19,198
Equipment Lease Financing [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Financing percentage requested for underwriting loans		100.00%
Commercial [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Loans		$ 1,647,582	1,644,746
Commercial [Member] | Construction [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		546	639
Total Past Due		1,067	843
Current		74,297	81,872
Total Loans		75,364	82,715
90+ and Accruing	[1]	72	58
Commercial [Member] | Construction [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		449	87
Commercial [Member] | Construction [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		0	58
Commercial [Member] | Construction [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		618	698
Commercial [Member] | Real Estate [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		4,967	4,537
Total Past Due		21,624	16,267
Current		1,161,180	1,166,826
Total Loans		1,182,804	1,183,093
90+ and Accruing	[1]	7,794	4,632
Commercial [Member] | Real Estate [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		7,829	6,287
Commercial [Member] | Real Estate [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		1,460	1,204
Commercial [Member] | Real Estate [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		12,335	8,776
Commercial [Member] | Equipment Lease Financing [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		0	0
Current		1,354	1,740
Total Loans		1,354	1,740
90+ and Accruing	[1]	0	0
Commercial [Member] | Equipment Lease Financing [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		0	0
Commercial [Member] | Equipment Lease Financing [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		0	0
Commercial [Member] | Equipment Lease Financing [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		0	0
Commercial [Member] | Other [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		1,402	797
Total Past Due		2,503	2,218
Current		385,557	374,980
Total Loans		388,060	377,198
90+ and Accruing	[1]	261	581
Commercial [Member] | Other [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		1,005	1,057
Commercial [Member] | Other [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		772	94
Commercial [Member] | Other [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		726	1,067
Residential [Member] | Construction [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		289	22
Total Past Due		702	610
Current		53,311	56,550
Total Loans		54,013	57,160
90+ and Accruing	[1]	6	6
Residential [Member] | Construction [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		258	144
Residential [Member] | Construction [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		149	438
Residential [Member] | Construction [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		295	28
Residential [Member] | Real Estate [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		4,691	5,395
Total Past Due		12,835	14,524
Current		707,457	707,893
Total Loans		720,292	722,417
90+ and Accruing	[1]	4,203	4,095
Residential [Member] | Real Estate [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		1,145	1,272
Residential [Member] | Real Estate [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		4,836	5,645
Residential [Member] | Real Estate [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		6,854	7,607
Residential [Member] | Home Equity [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Nonaccrual loans segregated by class of loans		483	477
Total Past Due		1,594	1,704
Current		106,424	104,595
Total Loans		108,018	106,299
90+ and Accruing	[1]	260	246
Residential [Member] | Home Equity [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		818	898
Residential [Member] | Home Equity [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		277	365
Residential [Member] | Home Equity [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		499	441
Consumer [Member] | Consumer Direct [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		980	1,183
Current		140,875	143,106
Total Loans		141,855	144,289
90+ and Accruing	[1]	30	74
Consumer [Member] | Consumer Direct [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		735	918
Consumer [Member] | Consumer Direct [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		215	191
Consumer [Member] | Consumer Direct [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		30	74
Consumer [Member] | Consumer Indirect [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		3,855	6,197
Current		514,117	527,530
Total Loans		517,972	533,727
90+ and Accruing	[1]	390	506
Consumer [Member] | Consumer Indirect [Member] | 30-59 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		2,854	4,715
Consumer [Member] | Consumer Indirect [Member] | 60-89 Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		611	975
Consumer [Member] | Consumer Indirect [Member] | 90+ Days Past Due [Member]
Bank's Loan portfolio aging analysis, segregated by class [Abstract]
Total Past Due		$ 390	$ 507

[1] 90+ and Accruing are also included in 90+ Days Past Due column.

XML

Loans, Credit Risk Profile Based on Rating Category and Payment Activity and on Performing and Nonperforming Status, Segregated by Class (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Dec. 31, 2018
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		$ 3,189,732	$ 3,208,638
Consumer mortgage loans secured by real estate properties for which formal foreclosure proceedings are in process		3,000	3,300
Commercial [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,647,582	1,644,746
Commercial [Member] | Pass [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		$ 1,438,598	1,441,702
Commercial [Member] | Pass [Member] | Minimum [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Review period for loans		12 months
Commercial [Member] | Pass [Member] | Maximum [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Review period for loans		18 months
Commercial [Member] | Watch [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		$ 105,653	103,890
Commercial [Member] | OAEM [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		26,135	27,063
Commercial [Member] | Substandard [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		77,036	71,924
Commercial [Member] | Doubtful [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		160	167
Commercial [Member] | Construction [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		75,364	82,715
Commercial [Member] | Construction [Member] | Pass [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		67,224	74,222
Commercial [Member] | Construction [Member] | Watch [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		2,932	3,070
Commercial [Member] | Construction [Member] | OAEM [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,823	1,594
Commercial [Member] | Construction [Member] | Substandard [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		3,385	3,829
Commercial [Member] | Construction [Member] | Doubtful [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		0	0
Commercial [Member] | Real Estate [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,182,804	1,183,093
Commercial [Member] | Real Estate [Member] | Pass [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,031,325	1,038,309
Commercial [Member] | Real Estate [Member] | Watch [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		75,404	71,834
Commercial [Member] | Real Estate [Member] | OAEM [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		18,501	19,734
Commercial [Member] | Real Estate [Member] | Substandard [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		57,485	53,125
Commercial [Member] | Real Estate [Member] | Doubtful [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		89	91
Commercial [Member] | Equipment Leases [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,354	1,740
Commercial [Member] | Equipment Leases [Member] | Pass [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,354	1,740
Commercial [Member] | Equipment Leases [Member] | Watch [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		0	0
Commercial [Member] | Equipment Leases [Member] | OAEM [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		0	0
Commercial [Member] | Equipment Leases [Member] | Substandard [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		0	0
Commercial [Member] | Equipment Leases [Member] | Doubtful [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		0	0
Commercial [Member] | Other [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		388,060	377,198
Commercial [Member] | Other [Member] | Pass [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		338,695	327,431
Commercial [Member] | Other [Member] | Watch [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		27,317	28,986
Commercial [Member] | Other [Member] | OAEM [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		5,811	5,735
Commercial [Member] | Other [Member] | Substandard [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		16,166	14,970
Commercial [Member] | Other [Member] | Doubtful [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		71	76
Residential [Member] | Construction [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		54,013	57,160
Residential [Member] | Construction [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		53,718	57,132
Residential [Member] | Construction [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	295	28
Residential [Member] | Real Estate [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		720,292	722,417
Residential [Member] | Real Estate [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		711,398	712,927
Residential [Member] | Real Estate [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	8,894	9,490
Residential [Member] | Home Equity [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		108,018	106,299
Residential [Member] | Home Equity [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		107,275	105,576
Residential [Member] | Home Equity [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	743	723
Consumer [Member] | Consumer Direct [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		141,855	144,289
Consumer [Member] | Consumer Direct [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		141,825	144,215
Consumer [Member] | Consumer Direct [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	30	74
Consumer [Member] | Consumer Indirect [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		517,972	533,727
Consumer [Member] | Consumer Indirect [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		517,582	533,221
Consumer [Member] | Consumer Indirect [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	390	506
Residential and Consumer Portfolio Segments [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,542,150	1,563,892
Residential and Consumer Portfolio Segments [Member] | Performing [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile		1,531,798	1,553,071
Residential and Consumer Portfolio Segments [Member] | Nonperforming [Member]
Credit Risk Profile, Segregated by Class [Abstract]
Loan portfolio based on credit risk profile	[1]	$ 10,352	$ 10,821

[1] A loan is considered nonperforming if it is 90 days or more past due and/or on nonaccrual.

XML

Loans, Impaired Loans, Average Investments in Impaired Loans, and Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Loans with a specific valuation allowance [Abstract]
Specific Allowance		$ 1,631	$ 739	$ 801
Total impaired loans [Abstract]
Recorded balance		50,355	48,185	46,366
Unpaid Contractual Principal Balance		54,879	53,132	50,956
Specific Allowance		1,631	739	801
Average Investment in Impaired Loans		51,120	48,800	47,097
Interest Income Recognized	[1]	581	541	2,171
Commercial [Member] | Construction [Member]
Loans without a specific valuation allowance [Abstract]
Recorded Balance		3,308	4,009	4,100
Unpaid Contractual Principal Balance		3,308	4,009	4,100
Average Investment in Impaired Loans		3,655	4,168	3,923
Interest Income Recognized	[1]	46	37	171
Loans with a specific valuation allowance [Abstract]
Recorded Balance		324		127
Unpaid Contractual Principal Balance		324		127
Specific Allowance		164	0	50
Average Investment in Impaired Loans		324		42
Interest Income Recognized	[1]	3		0
Total impaired loans [Abstract]
Recorded balance		3,632	4,009	4,227
Unpaid Contractual Principal Balance		3,632	4,009	4,227
Specific Allowance		164	0	50
Average Investment in Impaired Loans		3,979	4,168	3,965
Interest Income Recognized	[1]	49	37	171
Commercial [Member] | Real Estate [Member]
Loans without a specific valuation allowance [Abstract]
Recorded Balance		32,407	31,284	29,645
Unpaid Contractual Principal Balance		34,098	33,377	31,409
Average Investment in Impaired Loans		32,811	31,566	30,250
Interest Income Recognized	[1]	347	352	1,412
Loans with a specific valuation allowance [Abstract]
Recorded Balance		1,922	2,105	1,854
Unpaid Contractual Principal Balance		3,060	3,221	2,983
Specific Allowance		847	739	605
Average Investment in Impaired Loans		1,966	2,132	2,051
Interest Income Recognized	[1]	10	0	1
Total impaired loans [Abstract]
Recorded balance		34,329	33,389	31,499
Unpaid Contractual Principal Balance		37,158	36,598	34,392
Specific Allowance		847	739	605
Average Investment in Impaired Loans		34,777	33,698	32,301
Interest Income Recognized	[1]	357	352	1,413
Commercial [Member] | Other [Member]
Loans without a specific valuation allowance [Abstract]
Recorded Balance		8,903	9,183	8,285
Unpaid Contractual Principal Balance		10,598	10,913	9,982
Average Investment in Impaired Loans		8,866	9,332	8,774
Interest Income Recognized	[1]	139	152	530
Loans with a specific valuation allowance [Abstract]
Recorded Balance		1,154		473
Unpaid Contractual Principal Balance		1,154		473
Specific Allowance		620	0	146
Average Investment in Impaired Loans		1,169		285
Interest Income Recognized	[1]	17		16
Total impaired loans [Abstract]
Recorded balance		10,057	9,183	8,758
Unpaid Contractual Principal Balance		11,752	10,913	10,455
Specific Allowance		620	0	146
Average Investment in Impaired Loans		10,035	9,332	9,059
Interest Income Recognized	[1]	156	152	546
Residential [Member] | Construction [Member]
Loans without a specific valuation allowance [Abstract]
Recorded Balance		0	318	0
Unpaid Contractual Principal Balance		0	318	0
Average Investment in Impaired Loans		0	318	106
Interest Income Recognized	[1]	0	0	0
Loans with a specific valuation allowance [Abstract]
Specific Allowance		0	0	0
Total impaired loans [Abstract]
Recorded balance		0	318	0
Unpaid Contractual Principal Balance		0	318	0
Specific Allowance		0	0	0
Average Investment in Impaired Loans		0	318	106
Interest Income Recognized	[1]	0	0	0
Residential [Member] | Real Estate [Member]
Loans without a specific valuation allowance [Abstract]
Recorded Balance		2,337	1,286	1,882
Unpaid Contractual Principal Balance		2,337	1,294	1,882
Average Investment in Impaired Loans		2,329	1,284	1,666
Interest Income Recognized	[1]	19	0	41
Loans with a specific valuation allowance [Abstract]
Specific Allowance		0	0	0
Total impaired loans [Abstract]
Recorded balance		2,337	1,286	1,882
Unpaid Contractual Principal Balance		2,337	1,294	1,882
Specific Allowance		0	0	0
Average Investment in Impaired Loans		2,329	1,284	1,666
Interest Income Recognized	[1]	$ 19	$ 0	$ 41

[1] Cash basis interest is substantially the same as interest income recognized.

XML

Loans, Troubled Debt Restructurings Segregated by Class (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($) Loan	Mar. 31, 2018 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan	13	16	40
Post-Modification Outstanding Balance	$ 3,195	$ 1,998	$ 9,017
Commitment to extend additional credit on loans modified in TDRs	$ 45
Defaulted restructured loans, number of loans | Loan	0	0
Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	$ 2,413	$ 1,000	6,915
Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	0	0	0
Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	$ 782	$ 998	$ 2,102
Commercial [Member] | Construction [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan		2	5
Post-Modification Outstanding Balance		$ 47	$ 2,197
Commercial [Member] | Construction [Member] | Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance		32	2,182
Commercial [Member] | Construction [Member] | Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance		0	0
Commercial [Member] | Construction [Member] | Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance		$ 15	$ 15
Commercial [Member] | Real Estate [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan	5	9	24
Post-Modification Outstanding Balance	$ 1,470	$ 1,769	$ 5,387
Commercial [Member] | Real Estate [Member] | Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	828	786	4,004
Commercial [Member] | Real Estate [Member] | Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	0	0	0
Commercial [Member] | Real Estate [Member] | Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	$ 642	$ 983	$ 1,383
Commercial [Member] | Other [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan	7	5	8
Post-Modification Outstanding Balance	$ 1,262	$ 182	$ 465
Commercial [Member] | Other [Member] | Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	1,122	182	465
Commercial [Member] | Other [Member] | Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	0	0	0
Commercial [Member] | Other [Member] | Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	$ 140	$ 0	$ 0
Residential [Member] | Construction [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan			0
Post-Modification Outstanding Balance			$ 0
Residential [Member] | Construction [Member] | Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance			0
Residential [Member] | Construction [Member] | Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance			0
Residential [Member] | Construction [Member] | Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance			$ 0
Residential [Member] | Real Estate [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Number of Loans | Loan	1		3
Post-Modification Outstanding Balance	$ 463		$ 968
Residential [Member] | Real Estate [Member] | Term Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	463		264
Residential [Member] | Real Estate [Member] | Rate Modification [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	0		0
Residential [Member] | Real Estate [Member] | Combination [Member]
Troubled Debt Restructurings Segregated by Class [Abstract]
Post-Modification Outstanding Balance	$ 0		$ 704

XML

Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Allowance for loan losses [Roll Forward]
Beginning balance	$ 35,908	$ 36,151	$ 36,151
Provision charged to expense	190	946	6,167
Losses charged off	(2,055)	(2,977)	(10,998)
Recoveries	961	1,069	4,588
Ending balance	35,004	35,189	35,908
Ending balance [Abstract]
Individually evaluated for impairment	1,631	739	801
Collectively evaluated for impairment	33,373	34,450	35,107
Loans ending balance [Abstract]
Individually evaluated for impairment	50,355	48,185	46,366
Collectively evaluated for impairment	3,139,377	3,070,056	3,162,272
Commercial [Member] | Construction [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	862	686	686
Provision charged to expense	38	(14)	115
Losses charged off	0	0	0
Recoveries	3	14	61
Ending balance	903	686	862
Ending balance [Abstract]
Individually evaluated for impairment	164	0	50
Collectively evaluated for impairment	739	686	812
Loans ending balance [Abstract]
Individually evaluated for impairment	3,632	4,009	4,227
Collectively evaluated for impairment	71,732	74,638	78,488
Commercial [Member] | Real Estate [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	14,531	14,509	14,509
Provision charged to expense	287	(191)	786
Losses charged off	(35)	(210)	(988)
Recoveries	17	25	224
Ending balance	14,800	14,133	14,531
Ending balance [Abstract]
Individually evaluated for impairment	847	739	605
Collectively evaluated for impairment	13,953	13,394	13,926
Loans ending balance [Abstract]
Individually evaluated for impairment	34,329	33,389	31,499
Collectively evaluated for impairment	1,148,475	1,158,239	1,151,594
Commercial [Member] | Equipment Lease Financing [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	12	18	18
Provision charged to expense	(2)	5	(6)
Losses charged off	0	0	0
Recoveries	0	0	0
Ending balance	10	23	12
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	10	23	12
Loans ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	1,354	2,683	1,740
Commercial [Member] | Other [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	4,993	5,039	5,039
Provision charged to expense	382	(651)	824
Losses charged off	(242)	(236)	(1,513)
Recoveries	84	77	643
Ending balance	5,217	4,229	4,993
Ending balance [Abstract]
Individually evaluated for impairment	620	0	146
Collectively evaluated for impairment	4,597	4,229	4,847
Loans ending balance [Abstract]
Individually evaluated for impairment	10,057	9,183	8,758
Collectively evaluated for impairment	378,003	329,452	368,440
Residential [Member] | Construction [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	512	660	660
Provision charged to expense	(116)	(4)	(115)
Losses charged off	0	(23)	(33)
Recoveries	0	0	0
Ending balance	396	633	512
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	396	633	512
Loans ending balance [Abstract]
Individually evaluated for impairment	0	318	0
Collectively evaluated for impairment	54,013	63,575	57,160
Residential [Member] | Real Estate [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	4,433	5,688	5,688
Provision charged to expense	(278)	435	(336)
Losses charged off	(120)	(193)	(1,004)
Recoveries	18	6	85
Ending balance	4,053	5,936	4,433
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	4,053	5,936	4,433
Loans ending balance [Abstract]
Individually evaluated for impairment	2,337	1,286	1,882
Collectively evaluated for impairment	717,955	717,472	720,535
Residential [Member] | Home Equity [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	841	857	857
Provision charged to expense	84	5	39
Losses charged off	(25)	(1)	(69)
Recoveries	1	1	14
Ending balance	901	862	841
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	901	862	841
Loans ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	108,018	99,593	106,299
Consumer [Member] | Consumer Direct [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	1,883	1,863	1,863
Provision charged to expense	(119)	80	572
Losses charged off	(246)	(216)	(997)
Recoveries	117	71	445
Ending balance	1,635	1,798	1,883
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	1,635	1,798	1,883
Loans ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	141,855	136,576	144,289
Consumer [Member] | Consumer Indirect [Member]
Allowance for loan losses [Roll Forward]
Beginning balance	7,841	6,831	6,831
Provision charged to expense	(86)	1,281	4,288
Losses charged off	(1,387)	(2,098)	(6,394)
Recoveries	721	875	3,116
Ending balance	7,089	6,889	7,841
Ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	7,089	6,889	7,841
Loans ending balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	$ 517,972	$ 487,828	$ 533,727

XML

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Operating Leases [Abstract]
Lease liability	$ 15,743	$ 0
Right-of-use asset	15,128	0
Components of Lease Expense [Abstract]
Short-term lease cost	71
Operating lease cost	461
Sublease income	(68)
Total lease cost	464
Supplemental Cash Flow Information Related to CTBI's Operating Lease [Abstract]
Operating lease - operating cash flows (fixed payments)	458
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 0
Weighted average lease term - operating leases	15 years 4 months 6 days
Weighted average discount rate - operating leases	3.47%
Maturities of Lease Liabilities [Abstract]
2019	$ 1,271
2020	1,715
2021	1,744
2022	1,729
2023	1,650
Thereafter	12,822
Total lease payments	20,931
Less imputed interest	(5,188)
Total	$ 15,743	0
Minimum Non-cancellable Rental Payments [Abstract]
2019		1,999
2020		1,710
2021		1,737
2022		1,760
2023		1,696
Thereafter		13,031
Total		$ 21,933
Minimum [Member]
Operating Leases [Abstract]
Remaining lease terms	1 year
Maximum [Member]
Operating Leases [Abstract]
Remaining lease terms	45 years
Term of lease renewal	5 years
ASU 2016-02 [Member]
Operating Leases [Abstract]
Lease liability	$ 16,100
Right-of-use asset	15,500
Cumulative-effect adjustment to retained earnings	500
Adjustment to deferred tax liability	100
Maturities of Lease Liabilities [Abstract]
Total	$ 16,100

XML

Other Real Estate Owned (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Activity for other real estate owned [Roll Forward]
Beginning balance of other real estate owned	$ 27,273	$ 31,996
New assets acquired	854	1,284
Fair value adjustments	(447)	(467)
Sale of assets	(2,710)	(809)
Ending balance of other real estate owned	24,970	32,004
Carrying cost and fair value adjustments for foreclosed properties	$ 800	$ 900

XML

Other Real Estate Owned, Major Classifications of Foreclosed Properties (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	$ 24,970	$ 27,273
1-4 Family [Member]
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	4,761	5,253
Agricultural/Farmland [Member]
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	0	0
Construction/Land Development/Other [Member]
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	14,201	15,017
Multifamily [Member]
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	88	88
Non-farm/Non-residential [Member]
Major Classifications of Foreclosed Properties [Abstract]
Total foreclosed properties	$ 5,920	$ 6,915

XML

Repurchase Agreements (Details) - Securities Sold under Agreements to Repurchase [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial Instruments Pledged as Collateral [Abstract]
Carrying value of investment securities available-for-sale pledged as collateral under repurchase agreements	$ 277,600	$ 285,200
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	237,506	232,712
Overnight and Continuous [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	111,068	106,286
Up to 30 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	500	0
30-90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	7,420
Greater Than 90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	125,938	119,006
U.S. Treasury and Government Agencies [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	87,061	88,593
U.S. Treasury and Government Agencies [Member] | Overnight and Continuous [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	25,358	25,346
U.S. Treasury and Government Agencies [Member] | Up to 30 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	0
U.S. Treasury and Government Agencies [Member] | 30-90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	2,548
U.S. Treasury and Government Agencies [Member] | Greater Than 90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	61,703	60,699
State and Political Subdivisions [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	70,188	72,243
State and Political Subdivisions [Member] | Overnight and Continuous [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	56,322	58,864
State and Political Subdivisions [Member] | Up to 30 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	500	0
State and Political Subdivisions [Member] | 30-90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	2,995
State and Political Subdivisions [Member] | Greater Than 90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	13,366	10,384
U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	80,257	71,876
U.S. Government Sponsored Agency Mortgage-backed Securities [Member] | Overnight and Continuous [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	29,388	22,076
U.S. Government Sponsored Agency Mortgage-backed Securities [Member] | Up to 30 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	0
U.S. Government Sponsored Agency Mortgage-backed Securities [Member] | 30-90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	0	1,877
U.S. Government Sponsored Agency Mortgage-backed Securities [Member] | Greater Than 90 Days [Member]
Remaining contractual maturity of securities sold under agreements to repurchase by class of collateral pledged [Abstract]
Repurchase agreements and repurchase-to-maturity transactions	$ 50,869	$ 47,923

XML

Fair Market Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	$ 599,299	$ 593,746
Equity securities at fair value	1,528	1,173
Assets measured-nonrecurring basis [Abstract]
Impaired loans (collateral dependent)	1,078	747
Reconciliation of beginning and ending balances of recurring fair value measurements recognized in balance sheet using significant unobservable (Level 3) inputs [Roll Forward]
Total gains	$ 116		$ 122
Minimum [Member]
Other real estate owned [Abstract]
Typical frequency of periodic reviews	12 months
Maximum [Member]
Other real estate owned [Abstract]
Typical frequency of periodic reviews	18 months
Frequency of periodic reviews in general	24 months
U.S. Treasury and Government Agencies [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	$ 177,477	217,938
State and Political Subdivisions [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	123,729	124,488
U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	297,591	250,819
Other Debt Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	502	501
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	56,744	91,028
Equity securities at fair value	0	0
Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	542,555	502,718
Equity securities at fair value	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Equity securities at fair value	1,528	1,173
Recurring [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Equity securities at fair value	1,528	1,173
Mortgage servicing rights	3,390	3,607
Recurring [Member] | U.S. Treasury and Government Agencies [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	177,477	217,938
Recurring [Member] | State and Political Subdivisions [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	123,729	124,488
Recurring [Member] | U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	297,591	250,819
Recurring [Member] | Other Debt Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	502	501
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Equity securities at fair value	0	0
Mortgage servicing rights	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury and Government Agencies [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	56,744	91,028
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | State and Political Subdivisions [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Debt Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Equity securities at fair value	0	0
Mortgage servicing rights	0	0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury and Government Agencies [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	120,733	126,910
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | State and Political Subdivisions [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	123,729	124,488
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	297,591	250,819
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Debt Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	502	501
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Equity securities at fair value	1,528	1,173
Mortgage servicing rights	3,390	3,607
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury and Government Agencies [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | State and Political Subdivisions [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored Agency Mortgage-backed Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Debt Securities [Member]
Assets Measured at Fair Value on Recurring Basis [Abstract]
Securities available-for-sale	0	0
Recurring [Member] | Equity Securities [Member]
Reconciliation of beginning and ending balances of recurring fair value measurements recognized in balance sheet using significant unobservable (Level 3) inputs [Roll Forward]
Beginning balance	1,173		0
Total unrealized gains (losses) Included in net income	355		0
Issues	0		0
Settlements	0		0
Ending balance	1,528	1,173	0
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses related to assets still held at the reporting date	355		0
Recurring [Member] | Mortgage Servicing Rights [Member]
Reconciliation of beginning and ending balances of recurring fair value measurements recognized in balance sheet using significant unobservable (Level 3) inputs [Roll Forward]
Beginning balance	3,607		3,484
Total unrealized gains (losses) Included in net income	(234)		228
Issues	116		100
Settlements	(99)		(106)
Ending balance	3,390	3,607	3,706
Total gains (losses) for the period included in net income attributable to the change in unrealized gains or losses related to assets still held at the reporting date	(234)		228
Nonrecurring [Member]
Transfers between Levels [Abstract]
Transfers from Level 1 to Level 2	0
Transfers from Level 2 to Level 1	0
Transfers into Level 3	0
Transfers out of Level 3	0
Impaired loan (collateral dependent) [Abstract]
Impaired loans, fair value adjustments	400	300	0
Other real estate owned [Abstract]
Other real estate owned, fair value adjustment	400	400	$ 500
Nonrecurring [Member] | Fair Value [Member]
Assets measured-nonrecurring basis [Abstract]
Impaired loans (collateral dependent)	1,078	747
Other real estate owned	2,345	6,500
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value [Member]
Assets measured-nonrecurring basis [Abstract]
Impaired loans (collateral dependent)	0	0
Other real estate owned	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member]
Assets measured-nonrecurring basis [Abstract]
Impaired loans (collateral dependent)	0	0
Other real estate owned	0	0
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fair Value [Member]
Assets measured-nonrecurring basis [Abstract]
Impaired loans (collateral dependent)	1,078	747
Other real estate owned	$ 2,345	$ 6,500

XML

Fair Market Value of Financial Assets and Liabilities, Quantitative Information about Level 3 Fair Value Measurements (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value	$ 1,528	$ 1,173
Mortgage servicing rights	3,390	3,607
Impaired loans (collateral dependent)	1,078	747
Other real estate owned	$ 2,345	$ 6,500
Conversion Rate [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input	1.6298
Dividend Rate [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input	0.4074
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Discount Rate [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input	0.0800	0.080
Mortgage servicing rights, measurement input	0.100	0.100
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Discount Rate [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input	0.1200	0.120
Mortgage servicing rights, measurement input	0.115	0.115
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Discount Rate [Member] | Weighted Average [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input	0.1000	0.100
Mortgage servicing rights, measurement input	0.101	0.101
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Conversion Date [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input, conversion date	Dec. 31, 2024	Dec. 31, 2024
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Conversion Date [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input, conversion date	Dec. 31, 2022	Dec. 31, 2022
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Conversion Date [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Equity securities at fair value, measurement input, conversion date	Dec. 31, 2026	Dec. 31, 2026
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Constant Prepayment Rate [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	0.070	0.070
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Constant Prepayment Rate [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	0.218	0.281
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Constant Prepayment Rate [Member] | Weighted Average [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	0.105	0.095
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Probability of Default [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	0.000	0.000
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Probability of Default [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	1.000	1.000
Significant Unobservable Inputs (Level 3) [Member] | Valuation, Income Approach [Member] | Probability of Default [Member] | Weighted Average [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Mortgage servicing rights, measurement input	0.028	0.026
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Marketability Discount [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Impaired loans (collateral dependent), measurement input	0.000	0.000
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Marketability Discount [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Impaired loans (collateral dependent), measurement input	0.963	0.951
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Marketability Discount [Member] | Weighted Average [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Impaired loans (collateral dependent), measurement input	0.456	0.415
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Comparability Adjustment [Member] | Minimum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Other real estate owned, measurement input	0.100	0.060
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Comparability Adjustment [Member] | Maximum [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Other real estate owned, measurement input	0.552	0.476
Significant Unobservable Inputs (Level 3) [Member] | Market Comparable Properties [Member] | Comparability Adjustment [Member] | Weighted Average [Member]
Quantitative Information about Unobservable Inputs Used in Level 3 Fair Value Measurements [Abstract]
Other real estate owned, measurement input	0.149	0.149

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Fair Market Value of Financial Assets and Liabilities, Estimated Fair Value of Financial Instruments and Indication of Level Within Fair Value Hierarchy of Valuation Techniques (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial assets [Abstract]
Securities available-for-sale	$ 599,299	$ 593,746
Securities held-to-maturity	619	649
Equity securities at fair value	1,528	1,173
Mortgage servicing rights	3,390	3,607
Carrying Amount [Member]
Financial assets [Abstract]
Cash and cash equivalents	253,860	141,450
Certificates of deposits in other banks	1,470	3,920
Securities available-for-sale	599,299	593,746
Securities held-to-maturity	619	649
Equity securities at fair value	1,528	1,173
Loans held for sale	13,649	2,461
Loans, net	3,154,728	3,172,730
Federal Home Loan Bank stock	12,261	14,713
Federal Reserve Bank stock	4,887	4,887
Accrued interest receivable	15,188	14,432
Mortgage servicing rights	3,390	3,607
Financial liabilities [Abstract]
Deposits	3,383,103	3,305,950
Repurchase agreements	237,506	232,712
Federal funds purchased	1,800	1,180
Advances from Federal Home Loan Bank	431	436
Long-term debt	59,341	59,341
Accrued interest payable	3,983	2,902
Unrecognized financial instruments [Abstract]
Letters of credit	0	0
Commitments to extend credit	0	0
Forward sale commitments	0	0
Fair Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial assets [Abstract]
Cash and cash equivalents	253,860	141,450
Certificates of deposits in other banks	0	0
Securities available-for-sale	56,744	91,028
Securities held-to-maturity	0	0
Equity securities at fair value	0	0
Loans held for sale	13,752	2,518
Loans, net	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	0	0
Mortgage servicing rights	0	0
Financial liabilities [Abstract]
Deposits	841,996	803,316
Repurchase agreements	0	0
Federal funds purchased	0	0
Advances from Federal Home Loan Bank	0	0
Long-term debt	0	0
Accrued interest payable	0	0
Unrecognized financial instruments [Abstract]
Letters of credit	0	0
Commitments to extend credit	0	0
Forward sale commitments	0	0
Fair Value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial assets [Abstract]
Cash and cash equivalents	0	0
Certificates of deposits in other banks	1,470	3,914
Securities available-for-sale	542,555	502,718
Securities held-to-maturity	619	649
Equity securities at fair value	0	0
Loans held for sale	0	0
Loans, net	0	0
Federal Home Loan Bank stock	12,261	14,713
Federal Reserve Bank stock	4,887	4,887
Accrued interest receivable	15,188	14,432
Mortgage servicing rights	0	0
Financial liabilities [Abstract]
Deposits	2,559,903	2,513,084
Repurchase agreements	0	0
Federal funds purchased	1,800	1,180
Advances from Federal Home Loan Bank	461	468
Long-term debt	0	0
Accrued interest payable	3,983	2,902
Unrecognized financial instruments [Abstract]
Letters of credit	0	0
Commitments to extend credit	0	0
Forward sale commitments	0	0
Fair Value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Financial assets [Abstract]
Cash and cash equivalents	0	0
Certificates of deposits in other banks	0	0
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Equity securities at fair value	1,528	1,173
Loans held for sale	0	0
Loans, net	3,150,772	3,175,908
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	0	0
Mortgage servicing rights	3,390	3,607
Financial liabilities [Abstract]
Deposits	0	0
Repurchase agreements	237,556	232,796
Federal funds purchased	0	0
Advances from Federal Home Loan Bank	0	0
Long-term debt	44,166	44,166
Accrued interest payable	0	0
Unrecognized financial instruments [Abstract]
Letters of credit	0	0
Commitments to extend credit	0	0
Forward sale commitments	$ 0	$ 0

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator [Abstract]
Net income	$ 14,939	$ 15,814
Basic earnings per share [Abstract]
Weighted average shares (in shares)	17,712,000	17,671,000
Diluted earnings per share [Abstract]
Effect of dilutive stock options and restricted stock grants (in shares)	11,000	16,000
Adjusted weighted average shares (in shares)	17,723,000	17,687,000
Earnings per share [Abstract]
Basic earnings per share (in dollars per share)	$ 0.84	$ 0.89
Diluted earnings per share (in dollars per share)	$ 0.84	$ 0.89
Options [Member]
Earnings Per Share [Abstract]
Options excluded from diluted calculations (in shares)	0	0

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Amounts Reclassified from AOCI [Abstract]
Securities gains	$ 356	$ (288)
Tax expense	3,941	2,460
Net income	14,939	15,814
Unrealized Gains on AFS Securities [Member] | Reclassification Out of Accumulated Other Comprehensive Income [Member]
Amounts Reclassified from AOCI [Abstract]
Securities gains	1	149
Tax expense	0	31
Net income	$ 1	$ 118

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Subsequent Events (Details) - State [Member] - Kentucky [Member] - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019
Subsequent Event [Abstract]
Corporate income tax rate		5.00%
Deferred tax liability due to enactment of HB354		$ 1.0
Forecast [Member]
Subsequent Event [Abstract]
Estimated tax benefit to reverse valuation allowance on deferred tax asset for net operating losses	$ 3.0