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