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, 2013 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	$	61,100	$	435	$	(272	)	$	61,263
State and political subdivisions		115,724		4,949		(225	)		120,448
U.S. government sponsored agency mortgage-backed securities		428,787		11,992		(309	)		440,470
Total debt securities		605,611		17,376		(806	)		622,181
Marketable equity securities		55,000		606		(277	)		55,329
Total available-for-sale securities	$	660,611	$	17,982	$	(1,083	)	$	677,510

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and government agencies	$	480	$	0	$	(7	)	$	473
State and political subdivisions		1,182		1		0			1,183
Total held-to-maturity securities	$	1,662	$	1	$	(7	)	$	1,656

The amortized cost and fair value of securities as of December 31, 2012 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	$	60,625	$	463	$	(173	)	$	60,915
State and political subdivisions		107,987		5,369		(135	)		113,221
U.S. government sponsored agency mortgage-backed securities		370,246		13,347		(12	)		383,581
Total debt securities		538,858		19,179		(320	)		557,717
Marketable equity securities		45,000		791		(165	)		45,626
Total available-for-sale securities	$	583,858	$	19,970	$	(485	)	$	603,343

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and government agencies	$	480	$	0	$	(4	)	$	476
State and political subdivisions		1,182		1		0			1,183
Total held-to-maturity securities	$	1,662	$	1	$	(4	)	$	1,659

The amortized cost and fair value of securities at March 31, 2013 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	$	7,602	$	7,653	$	0	$	0
Due after one through five years		23,004		24,051		0		0
Due after five through ten years		107,594		109,952		1,182		1,183
Due after ten years		38,624		40,055		480		473
U.S. government sponsored agency mortgage-backed securities		428,787		440,470		0		0
Total debt securities		605,611		622,181		1,662		1,656
Marketable equity securities		55,000		55,329		0		0
Total securities	$	660,611	$	677,510	$	1,662	$	1,656

There were no sales of securities and no gains or losses realized as of March 31, 2013 or 2012.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $258.6 million at March 31, 2013 and $262.4 million at December 31, 2012.

The amortized cost of securities sold under agreements to repurchase amounted to $237.0 million at March 31, 2013 and $237.3 million at December 31, 2012.

Certain investments in debt and marketable equity securities are reported in the financial statements at amounts less than their historical costs. CTBI evaluates its investment portfolio on a quarterly basis for impairment. The analysis performed as of March 31, 2013 indicates that all impairment is considered temporary, market driven, and not credit-related. The percentage of total investments with unrealized losses as of March 31, 2013 was 22.2% compared to 14.8% as of December 31, 2012. 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, 2013 that are not deemed to be other-than-temporarily impaired.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	48,078	$	(272	)	$	47,806
State and political subdivisions		17,012		(212	)		16,800
U.S. government sponsored agency mortgage-backed securities		55,489		(309	)		55,180
Total debt securities		120,579		(793	)		119,786
Marketable equity securities		30,000		(277	)		29,723
Total <12 months temporarily impaired AFS securities		150,579		(1,070	)		149,509

12 Months or More
State and political subdivisions		1,106		(13	)		1,093
Total ≥12 months temporarily impaired AFS securities		1,106		(13	)		1,093

Total
U.S. Treasury and government agencies		48,078		(272	)		47,806
State and political subdivisions		18,118		(225	)		17,893
U.S. government sponsored agency mortgage-backed securities		55,489		(309	)		55,180
Total debt securities		121,685		(806	)		120,879
Marketable equity securities		30,000		(277	)		29,723
Total temporarily impaired AFS securities	$	151,685	$	(1,083	)	$	150,602

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	480	$	(7	)	$	473
Total temporarily impaired HTM securities	$	480	$	(7	)	$	473

The analysis performed as of December 31, 2012 indicated that all impairment was considered temporary, market 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, 2012 that are not deemed to be other-than-temporarily impaired.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	47,576	$	(173	)	$	47,403
State and political subdivisions		11,126		(135	)		10,991
U.S. government sponsored agency mortgage-backed securities		10,563		(12	)		10,551
Total debt securities		69,265		(320	)		68,945
Marketable equity securities		20,000		(165	)		19,835
Total <12 months temporarily impaired AFS securities		89,265		(485	)		88,780

Total
U.S. Treasury and government agencies		47,576		(173	)		47,403
State and political subdivisions		11,126		(135	)		10,991
U.S. government sponsored agency mortgage-backed securities		10,563		(12	)		10,551
Total debt securities		69,265		(320	)		68,945
Marketable equity securities		20,000		(165	)		19,835
Total temporarily impaired AFS securities	$	89,265	$	(485	)	$	88,780

Held-to-Maturity

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	480	$	(4	)	$	476
Total temporarily impaired HTM securities	$	480	$	(4	)	$	476