Fair Market Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

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 September 30, 2014 and December 31, 2013 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at September 30, 2014 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	$	138,408	$	0	$	138,408	$	0
State and political subdivisions		136,690		0		136,690		0
U.S. government sponsored agency mortgage-backed securities		333,793		0		333,793		0
Marketable equity securities		24,681		24,681		0		0
Mortgage servicing rights		3,112		0		0		3,112

			Fair Value Measurements at December 31, 2013 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	$	60,610	$	0	$	60,610	$	0
State and political subdivisions		116,703		0		116,703		0
U.S. government sponsored agency mortgage-backed securities		379,310		0		379,310		0
Marketable equity securities		52,782		52,782		0		0
Mortgage servicing rights		3,424		0		0		3,424

Reconciliation of the beginning and ending balance of recurring fair value measurement 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 for the three and nine months ended September 30, 2014 and 2013:

(in thousands)	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
	Mortgage Servicing Rights			Mortgage Servicing Rights
Beginning balance	$	3,062		$	3,424
Total recognized gains (losses)
Included in net income		80			(212	)
Issues		89			234
Settlements		(119	)		(334	)
Ending balance	$	3,112		$	3,112

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	$	80		$	(212	)

(in thousands)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
	Mortgage Servicing Rights			Mortgage Servicing Rights
Beginning balance	$	3,222		$	2,364
Total recognized gains (losses)
Included in net income		10			656
Issues		206			768
Settlements		(133	)		(483	)
Ending balance	$	3,305		$	3,305

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	$	10		$	656

Realized and unrealized gains and losses for items included in net income in the consolidated statement of income

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

(in thousands)	Three Months Ended September 30, 2014					Nine Months Ended September 30, 2014
	Noninterest Income			Noninterest Expense		Noninterest Income			Noninterest Expense
Total gains (losses)	$	(39	)	$	0	$	(546	)	$	0

(in thousands)	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Noninterest Income			Noninterest Expense		Noninterest Income		Noninterest Expense
Total gains (losses)	$	(123	)	$	0	$	173	$	0

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 September 30, 2014 and December 31, 2013 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at September 30, 2014 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)	$	7,375	$	0	$	0	$	7,375
Other real estate/assets owned		6,316		0		0		6,316

			Fair Value Measurements at December 31, 2013 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)	$	6,830	$	0	$	0	$	6,830
Other real estate/assets owned		11,111		0		0		11,111

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 September 30, 2014 and December 31, 2013.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at September 30, 2014		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Mortgage servicing rights	$	3,112	Discount cash flows, computer pricing model	Constant prepayment rate		4.6% - 24.4%
						(10.5%)
				Probability of default		0.00% - 100.00%
						(3.54%)
				Discount rate		9.94% - 11.50%
						(10.13%)

Impaired loans (collateral-dependent)	$	7,375	Market comparable properties	Marketability discount		5.0% - 10.0%
						(7.0%)

Other real estate/assets owned	$	6,316	Market comparable properties	Comparability adjustments (%)		3.0% - 67.0%
						(17.1%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2013		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Mortgage servicing rights	$	3,424	Discount cash flows, computer pricing model	Constant prepayment rate		4.3% - 23.6%
						(9.7%)
				Probability of default		0.00% - 33.33%
						(3.36%)
				Discount rate	Not applicable
					(10.0%)

Impaired loans (collateral-dependent)	$	6,830	Market comparable properties	Marketability discount		5.0% - 10.0%
						(7.0%)

Other real estate/assets owned	$	11,111	Market comparable properties	Comparability adjustments (%)		5.0% - 38.0%
						(9.0%)

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 September 30, 2014 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at September 30, 2014 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	$	118,458	$	118,458	$	0	$	0
Certificates of deposit in other banks		9,179		0		9,202		0
Securities available-for-sale		633,572		24,681		608,891		0
Securities held-to-maturity		1,662		0		1,631		0
Loans held for sale		367		376		0		0
Loans, net		2,649,815		0		0		2,661,358
Federal Home Loan Bank stock		17,927		0		17,927		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		13,333		0		13,333		0
Mortgage servicing rights		3,112		0		0		3,112

Financial liabilities:
Deposits	$	2,902,181	$	660,100	$	2,236,889	$	0
Repurchase agreements		220,095		0		0		220,077
Federal funds purchased		11,114		0		11,114		0
Advances from Federal Home Loan Bank		1,199		0		1,420		0
Long-term debt		61,341		0		0		35,557
Accrued interest payable		1,863		0		1,863		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, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 2013 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	$	106,641	$	106,641	$	0	$	0
Certificates of deposit in other banks		9,568		0		9,582		0
Securities available-for-sale		609,405		52,782		556,623		0
Securities held-to-maturity		1,662		0		1,601		0
Loans held for sale		828		845		0		0
Loans, net		2,581,346		0		0		2,589,811
Federal Home Loan Bank stock		25,673		0		25,673		0
Federal Reserve Bank stock		4,886		0		4,886		0
Accrued interest receivable		12,886		0		12,886		0
Mortgage servicing rights		3,424		0		0		3,424

Financial liabilities:
Deposits	$	2,855,074	$	621,321	$	2,230,608	$	0
Repurchase agreements		208,067		0		0		207,992
Federal funds purchased		12,465		0		12,465		0
Advances from Federal Home Loan Bank		1,286		0		1,531		0
Long-term debt		61,341		0		0		31,362
Accrued interest payable		1,032		0		1,032		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

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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