Securities

3 Months Ended

Mar. 31, 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 March 31, 2021 and December 31, 2020, CTBI had no held-to-maturity securities.

The amortized cost and fair value of debt securities at March 31, 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	$	205,355	$	419	$	(2,155	)	$	203,619
State and political subdivisions		219,389		5,416		(4,688	)		220,117
U.S. government sponsored agency mortgage-backed securities		669,134		8,616		(2,918	)		674,832
Other debt securities		56,346		301		(20	)		56,627
Total available-for-sale securities	$	1,150,224	$	14,752	$	(9,781	)	$	1,155,195

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
Other debt 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 March 31, 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	$	1,330	$	1,334
Due after one through five years		92,173		92,176
Due after five through ten years		167,212		166,553
Due after ten years		164,029		163,673
U.S. government sponsored agency mortgage-backed securities		669,134		674,832
Other debt securities		56,346		56,627
Total debt securities	$	1,150,224	$	1,155,195

During the three months ended March 31, 2021, we had a net securities loss of $168 thousand, consisting of a pre-tax gain of $60 thousand realized on sales and calls of AFS securities and an unrealized loss of $228 thousand from the fair market value adjustment of equity securities. During the three months ended March 31, 2020, we had a net securities gain of $249 thousand, consisting of a pre-tax gain of $481 thousand realized on calls of AFS securities and an unrealized loss of $232 thousand 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 March 31, 2021 were $2.2 million, as a result of a $0.2 million decrease in the fair market value in the first quarter 2021.  The fair market value of equity securities decreased $0.2 million in the first quarter 2020.  No equity securities were sold during the three months ended March 31, 2021 and 2020.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $413.5 million at March 31, 2021 and $354.5 million at December 31, 2020.

The amortized cost of securities sold under agreements to repurchase amounted to $389.9 million at March 31,2021 and $386.6 million at December 31, 2020.

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of March 31, 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 March 31,2021 was 53.2% 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 March 31, 2021 that are not deemed to have credit losses.  As stated above, CTBI had no HTM securities as of March 31, 2021.

Available-for-Sale

(in thousands)	Amortized Cost		Gross Unrealized Losses			Fair Value
Less Than 12 Months
U.S. Treasury and government agencies	$	136,625	$	(2,028	)	$	134,597
State and political subdivisions		101,944		(4,660	)		97,284
U.S. government sponsored agency mortgage-backed securities		347,136		(2,905	)		344,231
Other debt securities		0		0			0
Total <12 months temporarily impaired AFS securities		585,705		(9,593	)		576,112
12 Months or More
U.S. Treasury and government agencies		28,763		(127	)		28,636
State and political subdivisions		533		(28	)		505
U.S. government sponsored agency mortgage-backed securities		2,614		(13	)		2,601
Other debt securities		6,538		(20	)		6,518
Total ≥12 months temporarily impaired AFS securities		38,448		(188	)		38,260
Total
U.S. Treasury and government agencies		165,388		(2,155	)		163,233
State and political subdivisions		102,477		(4,688	)		97,789
U.S. government sponsored agency mortgage-backed securities		349,750		(2,918	)		346,832
Other debt securities		6,538		(20	)		6,518
Total temporarily impaired AFS securities	$	624,153	$	(9,781	)	$	614,372

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
Other debt 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
Other debt 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
Other debt 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.

Other Debt Securities

The unrealized losses in other debt 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.