Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value of Financial Assets and Liabilities [Abstract]

Fair Value Measurements of 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, 2022 and December 31, 2021 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at September 30, 2022 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	$	401,772	$	362,015	$	39,757	$	0
State and political subdivisions		258,076		0		258,076		0
U.S. government sponsored agency mortgage-backed securities		549,039		0		549,039		0
Asset-backed securities		89,705		0		89,705		0
Equity securities at fair value		1,969		0		0		1,969
Mortgage servicing rights		8,576		0		0		8,576

			Fair Value Measurements at December 31, 2021 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	$	295,770	$	242,214	$	53,556	$	0
State and political subdivisions		334,203		0		334,203		0
U.S. government sponsored agency mortgage-backed securities		730,809		0		730,809		0
Asset-backed securities		94,647		0		94,647		0
Equity securities at fair value		2,253		0		0		2,253
Mortgage servicing rights		6,774		0		0		6,774

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:

	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(in thousands)	Equity Securities at Fair Value			Mortgage Servicing Rights			Equity Securities at Fair Value			Mortgage Servicing Rights
Beginning balance	$	2,128		$	8,220		$	2,523		$	5,899
Total unrealized gains (losses)
Included in net income		(159	)		504			(62	)		141
Issues		0			103			0			407
Settlements		0			(251	)		0			(182	)
Ending balance	$	1,969		$	8,576		$	2,461		$	6,265
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	$	(159	)	$	504		$	(62	)	$	141

	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(in thousands)	Equity Securities at Fair Value			Mortgage Servicing Rights			Equity Securities at Fair Value			Mortgage Servicing Rights
Beginning balance	$	2,253		$	6,774		$	2,471		$	4,068
Total unrealized gains (losses)
Included in net income		(284	)		1,955			(10	)		1,042
Issues		0			555			0			1,817
Settlements		0			(708	)		0			(662	)
Ending balance	$	1,969		$	8,576		$	2,461		$	6,265
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	$	(284	)	$	1,955		$	(10	)	$	1,042

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					Nine Months Ended
	September 30					September 30
(in thousands)	2022		2021			2022		2021
Total gains (losses)	$	94	$	(103	)	$	963	$	370

Fair Value Measurements of 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, 2022 and December 31, 2021 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at September 30, 2022 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	$	4,809	$	0	$	0	$	4,809
Other real estate owned		597		0		0		597

			Fair Value Measurements at December 31, 2021 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	$	1,238	$	0	$	0	$	1,238
Other real estate owned		1,487		0		0		1,487

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, 2022 and December 31, 2021.

	Quantitative Information about Level 3 Fair Value Measurements
(in thousands)	Fair Value at September 30, 2022		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	1,969	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2024 – Dec 2028 (Dec 2026)
Mortgage servicing rights	$	8,576	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 24.9% (7.1%)
				Probability of default		0.0% - 100.0% (1.2%)
				Discount rate		9.5% - 11.7% (10.0%)
Collateral dependent loans	$	4,809	Market comparable properties	Marketability discount		33.0% - 46.0% (39.0%)
Other real estate owned	$	597	Market comparable properties	Comparability adjustments		0.0% - 10.0% (10.0%)

	Quantitative Information about Level 3 Fair Value Measurements
(in thousands)	Fair Value at December 31, 2021		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	2,253	Discount cash flows, computer pricing model	Discount rate		8.0% - 12.0% (10.0%)
				Conversion date	Dec 2024 – Dec 2028 (Dec 2026)
Mortgage servicing rights	$	6,774	Discount cash flows, computer pricing model	Constant prepayment rate		7.0% - 26.7% (10.0%)
				Probability of default		0.0% - 75.0% (1.4%)
				Discount rate		10.0% - 11.5% (10.1%)
Collateral-dependent loans	$	1,238	Market comparable properties	Marketability discount		20.0% - 62.0% (41.0%)
Other real estate owned	$	1,487	Market comparable properties	Comparability adjustments		10.0% - 45.5% (15.1%)

Fair Value of Financial Instruments and Levels within Fair Value Hierarchy of Valuation Techniques

The following table presents estimated fair value of CTBI’s financial instruments as of September 30, 2022 and indicates the level within the fair value hierarchy of the valuation techniques.  In accordance with the adoption of ASU 2016-01, the fair values as of September 30, 2022 were measured using an exit price notion.

			Fair Value Measurements at September 30, 2022 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	$	259,629	$	259,629	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		1,298,592		362,015		936,577		0
Equity securities at fair value		1,969		0		0		1,969
Loans held for sale		1,043		1,065		0		0
Loans, net		3,586,183		0		0		3,540,716
Federal Home Loan Bank stock		6,676		0		6,676		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		16,513		0		16,513		0
Financial liabilities:
Deposits	$	4,535,068	$	1,481,078	$	3,064,938	$	0
Repurchase agreements		230,123		0		0		230,238
Federal funds purchased		500		0		500		0
Advances from Federal Home Loan Bank		360		0		381		0
Long-term debt		57,841		0		0		50,759
Accrued interest payable		2,501		0		2,501		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, 2021 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 2021 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	$	311,756	$	311,756	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		1,455,429		242,214		1,213,215		0
Equity securities at fair value		2,253		0		0		2,253
Loans held for sale		2,632		2,693		0		0
Loans, net		3,367,057		0		0		3,480,803
Federal Home Loan Bank stock		8,139		0		8,139		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		15,415		0		15,415		0
Financial liabilities:
Deposits	$	4,344,292	$	1,331,103	$	3,043,339	$	0
Repurchase agreements		271,088		0		0		271,186
Federal funds purchased		500		0		500		0
Advances from Federal Home Loan Bank		375		0		400		0
Long-term debt		57,841		0		0		45,854
Accrued interest payable		1,016		0		1,016		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