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Securities
 6 Months Ended
Jun. 30, 2017
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 June 30, 2017 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
 
$
236,345
  
$
173
  
$
(460
)
 
$
236,058
 
State and political subdivisions
  
129,872
   
2,833
   
(763
)
  
131,942
 
U.S. government sponsored agency mortgage-backed securities
  
219,961
   
836
   
(2,925
)
  
217,872
 
Total debt securities
  
586,178
   
3,842
   
(4,148
)
  
585,872
 
CRA investment funds
  
25,000
   
90
   
(594
)
  
24,496
 
Total available-for-sale securities
 
$
611,178
  
$
3,932
  
$
(4,742
)
 
$
610,368
 

Held-to-Maturity

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
State and political subdivisions
 
$
858
  
$
0
  
$
0
  
$
858
 
Total held-to-maturity securities
 
$
858
  
$
0
  
$
0
  
$
858
 
 
The amortized cost and fair value of securities at December 31, 2016 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
 
$
223,014
  
$
193
  
$
(743
)
 
$
222,464
 
State and political subdivisions
  
133,351
   
1,957
   
(1,792
)
  
133,516
 
U.S. government sponsored agency mortgage-backed securities
  
227,574
   
1,008
   
(3,526
)
  
225,056
 
Total debt securities
  
583,939
   
3,158
   
(6,061
)
  
581,036
 
CRA investment funds
  
25,000
   
76
   
(718
)
  
24,358
 
Total available-for-sale securities
 
$
608,939
  
$
3,234
  
$
(6,779
)
 
$
605,394
 

Held-to-Maturity

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
State and political subdivisions
 
$
866
  
$
1
  
$
0
  
$
867
 
Total held-to-maturity securities
 
$
866
  
$
1
  
$
0
  
$
867
 

The amortized cost and fair value of securities at June 30, 2017 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
 
$
69,861
  
$
69,819
  
$
0
  
$
0
 
Due after one through five years
  
162,304
   
163,221
   
858
   
858
 
Due after five through ten years
  
51,203
   
52,067
   
0
   
0
 
Due after ten years
  
82,849
   
82,893
   
0
   
0
 
U.S. government sponsored agency mortgage-backed securities
  
219,961
   
217,872
   
0
   
0
 
Total debt securities
  
586,178
   
585,872
   
858
   
858
 
CRA investment funds
  
25,000
   
24,496
   
0
   
0
 
Total securities
 
$
611,178
  
$
610,368
  
$
858
  
$
858
 

During the three months ended June 30, 2017, there was a net gain of $18 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $30 thousand and a pre-tax loss of $12 thousand.  During the three months ended June 30, 2016, there was a net loss of $4 thousand on calls of AFS securities, consisting of a pre-tax gain of $1 thousand and a pre-tax loss of $5 thousand.

During the six months ended June 30, 2017, there was a combined gain of $10 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $29 thousand and a pre-tax loss of $19 thousand.  During the six months ended June 30, 2016, there was a combined gain of $64 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $69 thousand and a pre-tax loss of $5 thousand.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $224.1 million at June 30, 2017 and $221.2 million at December 31, 2016.

The amortized cost of securities sold under agreements to repurchase amounted to $297.1 million at June 30, 2017 and $303.5 million at December 31, 2016.

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of June 30, 2017 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total investments with unrealized losses as of June 30, 2017 was 60.7% compared to 65.6% as of December 31, 2016.  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 June 30, 2017 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 June 30, 2017.

Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Losses
  
Fair Value
 
Less Than 12 Months
         
U.S. Treasury and government agencies
 
$
139,137
  
$
(419
)
 
$
138,718
 
State and political subdivisions
  
26,970
   
(742
)
  
26,228
 
U.S. government sponsored agency mortgage-backed securities
  
132,510
   
(2,076
)
  
130,434
 
Total debt securities
  
298,617
   
(3,237
)
  
295,380
 
CRA investment funds
  
17,500
   
(347
)
  
17,153
 
Total <12 months temporarily impaired AFS securities
  
316,117
   
(3,584
)
  
312,533
 
             
12 Months or More
            
U.S. Treasury and government agencies
  
21,647
   
(41
)
  
21,606
 
State and political subdivisions
  
2,383
   
(21
)
  
2,362
 
U.S. government sponsored agency mortgage-backed securities
  
30,644
   
(849
)
  
29,795
 
Total debt securities
  
54,674
   
(911
)
  
53,763
 
CRA investment funds
  
5,000
   
(247
)
  
4,753
 
Total ≥12 months temporarily impaired AFS securities
  
59,674
   
(1,158
)
  
58,516
 
             
Total
            
U.S. Treasury and government agencies
  
160,784
   
(460
)
  
160,324
 
State and political subdivisions
  
29,353
   
(763
)
  
28,590
 
U.S. government sponsored agency mortgage-backed securities
  
163,154
   
(2,925
)
  
160,229
 
Total debt securities
  
353,291
   
(4,148
)
  
349,143
 
CRA investment funds
  
22,500
   
(594
)
  
21,906
 
Total temporarily impaired AFS securities
 
$
375,791
  
$
(4,742
)
 
$
371,049
 

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 June 30, 2017, 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 June 30, 2017, 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 June 30, 2017, 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.

CRA Investment Funds

CTBI’s CRA investment funds consist of investments in fixed income mutual funds ($24.5 million of the total fair value and $594 thousand of the total unrealized losses in common stock investments).  The severity of the impairment (fair value is approximately 2.4% less than cost) and the duration of the impairment correlates with the decline in long-term interest rates in 2017.  CTBI evaluated the near-term prospects of these funds in relation to the severity and duration of the impairment.  Based on that evaluation, CTBI does not consider those investments to be other-than-temporarily impaired at June 30, 2017.

The analysis performed as of December 31, 2016 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, 2016 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, 2016.

Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Losses
  
Fair Value
 
Less Than 12 Months
         
U.S. Treasury and government agencies
 
$
158,732
  
$
(716
)
 
$
158,016
 
State and political subdivisions
  
53,491
   
(1,780
)
  
51,711
 
U.S. government sponsored agency mortgage-backed securities
  
135,939
   
(2,646
)
  
133,293
 
Total debt securities
  
348,162
   
(5,142
)
  
343,020
 
CRA investment funds
  
17,500
   
(444
)
  
17,056
 
Total <12 months temporarily impaired AFS securities
  
365,662
   
(5,586
)
  
360,076
 
             
12 Months or More
            
U.S. Treasury and government agencies
  
1,880
   
(27
)
  
1,853
 
State and political subdivisions
  
751
   
(12
)
  
739
 
U.S. government sponsored agency mortgage-backed securities
  
31,132
   
(880
)
  
30,252
 
Total debt securities
  
33,763
   
(919
)
  
32,844
 
CRA investment funds
  
5,000
   
(274
)
  
4,726
 
Total ≥12 months temporarily impaired AFS securities
  
38,763
   
(1,193
)
  
37,570
 
             
Total
            
U.S. Treasury and government agencies
  
160,612
   
(743
)
  
159,869
 
State and political subdivisions
  
54,242
   
(1,792
)
  
52,450
 
U.S. government sponsored agency mortgage-backed securities
  
167,071
   
(3,526
)
  
163,545
 
Total debt securities
  
381,925
   
(6,061
)
  
375,864
 
CRA investment funds
  
22,500
   
(718
)
  
21,782
 
Total temporarily impaired AFS securities
 
$
404,425
  
$
(6,779
)
 
$
397,646