Fair Market Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

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, 2020 and December 31, 2019 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2020 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	$	159,871	$	70,050	$	89,821	$	0
State and political subdivisions		99,196		0		99,196		0
U.S. government sponsored agency mortgage-backed securities		321,043		0		321,043		0
Other debt securities		53,369		0		53,369		0
Equity securities at fair value		1,721		0		0		1,721
Mortgage servicing rights		2,481		0		0		2,481

			Fair Value Measurements at December 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	$	171,150	$	54,263	$	116,887	$	0
State and political subdivisions		102,307		0		102,307		0
U.S. government sponsored agency mortgage-backed securities		295,245		0		295,245		0
Other debt securities		31,142		0		31,142		0
Equity securities at fair value		1,953		0		0		1,953
Mortgage servicing rights		3,263		0		0		3,263

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, for the periods indicated, using significant unobservable (Level 3) inputs:

(in thousands)	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Equity Securities at Fair Value			Mortgage Servicing Rights			Equity Securities at Fair Value		Mortgage Servicing Rights
Beginning balance	$	1,953		$	3,263		$	1,173	$	3,607
Total unrealized gains (losses) Included in net income		(232	)		(818	)		355		(234	)
Issues		0			145			0		116
Settlements		0			(109	)		0		(99	)
Ending balance	$	1,721		$	2,481		$	1,528	$	3,390
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	$	(232	)	$	(818	)	$	355	$	(234	)

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)	2020			2019
Total gains (losses)	$	(1,159	)	$	22

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, 2020 and December 31, 2019 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at March 31, 2020 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
Collateral dependent loans	$	2,870	$	0	$	0	$	2,870
Other real estate owned		1,162		0		0		1,162

			Fair Value Measurements at December 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)	$	3,217	$	0	$	0	$	3,217
Other real estate owned		12,593		0		0		12,593

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, 2020 and December 31, 2019.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at March 31, 2020	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$1,721	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	$2,481	Discount cash flows, computer pricing model	Constant prepayment rate	0.0% - 24.7% (16.7%)
			Probability of default	0.0% - 100.0% (2.4%)
			Discount rate	10.0% - 11.5% (10.1%)
Collateral dependent loans	$2,870	Market comparable properties	Marketability discount	8.0%- 88.0% (41.0%)
Other real estate owned	$1,162	Market comparable properties	Comparability adjustments	10.0% - 42.5% (13.2%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2019	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$1,953	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	$3,263	Discount cash flows, computer pricing model	Constant prepayment rate	0.0% - 24.3% (11.7%)
			Probability of default	0.0% - 100.0% (2.7%)
			Discount rate	10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$3,217	Market comparable properties	Marketability discount	7.0% - 99.0% (46.0%)
Other real estate owned	$12,593	Market comparable properties	Comparability adjustments	6.0% - 29.8% (11.3%)

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, 2020 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, 2020 were measured using an exit price notion.

			Fair Value Measurements at March 31, 2020 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	$	192,702	$	192,702	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		633,479		70,050		563,429		0
Equity securities at fair value		1,721		0		0		1,721
Loans held for sale		1,403		1,433		0		0
Loans, net		3,238,096		0		0		3,341,686
Federal Home Loan Bank stock		11,354		0		11,354		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		14,680		0		14,680		0
Mortgage servicing rights		2,481		0		0		2,481
Financial liabilities:
Deposits	$	3,395,108	$	860,844	$	2,580,002	$	0
Repurchase agreements		236,908		0		0		237,008
Federal funds purchased		4,907		0		4,907		0
Advances from Federal Home Loan Bank		411		0		463		0
Long-term debt		57,841		0		0		49,382
Accrued interest payable		3,447		0		3,447		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, 2019 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 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	$	264,683	$	264,683	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		599,844		54,263		545,581		0
Debt securities held-to-maturity		517		0		517		0
Equity securities at fair value		1,953		0		0		1,953
Loans held for sale		1,167		1,191		0		0
Loans, net		3,213,568		0		0		3,283,876
Federal Home Loan Bank stock		10,474		0		10,474		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		14,836		0		14,836		0
Mortgage servicing rights		3,263		0		0		3,263
Financial liabilities:
Deposits	$	3,405,572	$	865,760	$	2,560,271	$	0
Repurchase agreements		226,917		0		0		226,921
Federal funds purchased		7,906		0		7,906		0
Advances from Federal Home Loan Bank		415		0		446		0
Long-term debt		57,841		0		0		49,382
Accrued interest payable		2,839		0		2,839		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