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Securities
 9 Months Ended
Sep. 30, 2021
Securities [Abstract]  
Securities
Note 3 – Securities


Debt 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.  As of September 30, 2021 and December 31, 2020, CTBI had no held-to-maturity securities.


The amortized cost and fair value of debt securities at September 30, 2021 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
  
$
303,897
    
$
575
    
$
(2,062
)
  
$
302,410
  
State and political subdivisions
    
335,389
      
5,548
      
(5,381
)
    
335,556
  
U.S. government sponsored agency mortgage-backed securities
    
784,733
      
7,070
      
(4,296
)
    
787,507
  
Asset-backed securities
    
99,995
      
401
      
(131
)
    
100,265
  
Total available-for-sale securities
  
$
1,524,014
    
$
13,594
    
$
(11,870
)
  
$
1,525,738
  


The amortized cost and fair value of debt securities at December 31, 2020 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
  
$
148,507
    
$
483
    
$
(197
)
  
$
148,793
  
State and political subdivisions
    
133,287
      
7,132
      
(3
)
    
140,416
  
U.S. government sponsored agency mortgage-backed securities
    
640,537
      
11,648
      
(378
)
    
651,807
  
Asset-backed securities
    
56,443
      
10
      
(208
)
    
56,245
  
Total available-for-sale securities
  
$
978,774
    
$
19,273
    
$
(786
)
  
$
997,261
  


The amortized cost and fair value of debt securities at September 30, 2021 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
  
(in thousands)
  
Amortized Cost
    
Fair Value
  
Due in one year or less
  
$
5,945
    
$
6,032
  
Due after one through five years
    
110,913
      
110,757
  
Due after five through ten years
    
288,950
      
288,026
  
Due after ten years
    
233,478
      
233,151
  
U.S. government sponsored agency mortgage-backed securities
    
784,733
      
787,507
  
Asset-backed securities
    
99,995
      
100,265
  
Total debt securities
  
$
1,524,014
    
$
1,525,738
  


During the three months ended September 30, 2021, we had an unrealized loss of $62 thousand from the fair market value adjustment of equity securities.  During the three months ended September 30, 2020, we had a net securities gain of $142 thousand, consisting of a pre-tax gain of $23 thousand realized on sales and calls of AFS securities and an unrealized gain of $119 thousand from the fair market value adjustment of equity securities.


During the nine months ended September 30, 2021, we had a net securities gain of $50 thousand, consisting of a pre-tax gain of $62 thousand and a pre-tax loss of $2 thousand realized on sales and calls of AFS securities, and an unrealized loss of $10 thousand from the fair market value adjustment of equity securities. During the nine months ended September 30, 2020, we had a net securities gain of $1.3 million, consisting of a pre-tax gain of $1.0 million realized on sales and calls of AFS securities and an unrealized gain of $0.3 million from the fair market value adjustment of equity securities.

Equity Securities at Fair Value


CTBI made the election permitted by ASC 321-10-35-2 to record its Visa Class B shares at fair value.  Equity securities at fair value as of September 30, 2021 were $2.5 million, as a result of a $62 thousand decrease in the fair market value in the third quarter 2021.  The fair market value of equity securities increased $119 thousand in the third quarter 2020.  No equity securities were sold during the nine months ended September 30, 2021 and 2020.


The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $434.4 million at September 30, 2021 and $354.5 million at December 31, 2020.


The amortized cost of securities sold under agreements to repurchase amounted to $389.2 million at September 30,2021 and $386.6 million at December 31, 2020.


CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of September 30, 2021 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 September 30,2021 was 61.0% compared to 16.2% as of December 31, 2020.  The following table provides 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 September 30, 2021 that are not deemed to have credit losses.  As stated above, CTBI had no HTM securities as of September 30, 2021.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
206,535
    
$
(1,996
)
  
$
204,539
  
State and political subdivisions
    
194,869
      
(5,363
)
    
189,506
  
U.S. government sponsored agency mortgage-backed securities
    
470,340
      
(4,257
)
    
466,083
  
Asset-backed securities
    
49,236
      
(130
)
    
49,106
  
Total <12 months temporarily impaired AFS securities
    
920,980
      
(11,746
)
    
909,234
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
15,963
      
(66
)
    
15,897
  
State and political subdivisions
    
532
      
(18
)
    
514
  
U.S. government sponsored agency mortgage-backed securities
    
3,487
      
(39
)
    
3,448
  
Asset-backed securities
    
1,420
      
(1
)
    
1,419
  
Total ≥12 months temporarily impaired AFS securities
    
21,402
      
(124
)
    
21,278
  
                         
Total
                        
U.S. Treasury and government agencies
    
222,498
      
(2,062
)
    
220,436
  
State and political subdivisions
    
195,401
      
(5,381
)
    
190,020
  
U.S. government sponsored agency mortgage-backed securities
    
473,827
      
(4,296
)
    
469,531
  
Asset-backed securities
    
50,656
      
(131
)
    
50,525
  
Total temporarily impaired AFS securities
  
$
942,382
    
$
(11,870
)
  
$
930,512
  


The analysis performed as of December 31, 2020 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.  The following table provides 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, 2020 that are not deemed to be other-than-temporarily impaired.  As stated above, CTBI had no HTM securities as of December 31, 2020.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
5,604
    
$
(7
)
  
$
5,597
  
State and political subdivisions
    
534
      
(3
)
    
531
  
U.S. government sponsored agency mortgage-backed securities
    
58,463
      
(336
)
    
58,127
  
Asset-backed securities
    
22,660
      
(29
)
    
22,631
  
Total <12 months temporarily impaired AFS securities
    
87,261
      
(375
)
    
86,886
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
46,163
      
(190
)
    
45,973
  
State and political subdivisions
    
0
      
0
      
0
  
U.S. government sponsored agency mortgage-backed securities
    
2,801
      
(42
)
    
2,759
  
Asset-backed securities
    
26,283
      
(179
)
    
26,104
  
Total ≥12 months temporarily impaired AFS securities
    
75,247
      
(411
)
    
74,836
  
                         
Total
                        
U.S. Treasury and government agencies
    
51,767
      
(197
)
    
51,570
  
State and political subdivisions
    
534
      
(3
)
    
531
  
U.S. government sponsored agency mortgage-backed securities
    
61,264
      
(378
)
    
60,886
  
Asset-backed securities
    
48,943
      
(208
)
    
48,735
  
Total temporarily impaired AFS securities
  
$
162,508
    
$
(786
)
  
$
161,722
  

U.S. Treasury and Government Agencies


The unrealized losses in U.S. Treasury and government agencies were caused by interest rate changes.  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 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.

State and Political Subdivisions


The unrealized losses in securities of state and political subdivisions were caused by interest rate changes.  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 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.

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 changes.  CTBI expects to recover the amortized cost basis over the term of the securities.  CTBI does not intend to sell the investments, and it is not more likely than not we will be required to sell the investments before recovery of their amortized cost.

Asset-Backed Securities


The unrealized losses in asset-backed securities were caused by interest rate changes.  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 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.