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Securities
 6 Months Ended
Jun. 30, 2023
Securities [Abstract]  
Securities
Note 3 – Securities


Debt securities are classified into HTM and AFS categories.  HTM securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost.  AFS securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons.  AFS securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.  As of June 30, 2023 and December 31, 2022, CTBI had no HTM securities.



The amortized cost and fair value of debt securities at June 30, 2023 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
  
$
400,148
    
$
143
    
$
(34,897
)
  
$
365,394
  
State and political subdivisions
    
314,048
      
2
      
(54,225
)
    
259,825
  
U.S. government sponsored agency mortgage-backed securities
    
558,964
      
1
      
(71,066
)
    
487,899
  
Asset-backed securities
    
89,588
      
0
      
(1,453
)
    
88,135
  
Total available-for-sale securities
  
$
1,362,748
    
$
146
    
$
(161,641
)
  
$
1,201,253
  


The amortized cost and fair value of debt securities at December 31, 2022 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
  
$
418,579
    
$
212
    
$
(36,859
)
  
$
381,932
  
State and political subdivisions
    
326,746
      
32
      
(61,676
)
    
265,102
  
U.S. government sponsored agency mortgage-backed securities
    
593,917
      
1
      
(73,833
)
    
520,085
  
Asset-backed securities
    
91,363
      
0
      
(2,256
)
    
89,107
  
Total available-for-sale securities
  
$
1,430,605
    
$
245
    
$
(174,624
)
  
$
1,256,226
  



The amortized cost and fair value of debt securities at June 30, 2023 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
  
$
33,089
    
$
32,613
  
Due after one through five years
    
336,248
      
305,693
  
Due after five through ten years
    
169,173
      
145,760
  
Due after ten years
    
175,686
      
141,153
  
U.S. government sponsored agency mortgage-backed securities
    
558,964
      
487,899
  
Asset-backed securities
    
89,588
      
88,135
  
Total debt securities
  
$
1,362,748
    
$
1,201,253
  


During the three months ended June 30, 2023, we had an unrealized gain of $165 thousand from the fair value adjustment of equity securities.  During the three months ended June 30, 2022, we had a net securities loss of $225 thousand, consisting of a pre-tax loss of $1 thousand realized on calls of AFS securities and an unrealized loss of $224 thousand from the fair value adjustment of equity securities.



During the six months ended June 30, 2023, we had a net securities gain of $383 thousand, consisting of a pre-tax gain of $4 thousand realized on sales and calls of AFS securities and an unrealized gain of $379 thousand from the fair value adjustment of equity securities.  During the six months ended June 30, 2022, we had a net securities loss of $126 thousand, consisting of a pre-tax loss of $1 thousand realized on calls of AFS securities and an unrealized loss of $125 thousand from the fair 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 June 30, 2023 were $2.5 million, as a result of a $165 thousand increase in the fair value in the second quarter 2023.  The fair value of equity securities decreased $224 thousand in the second quarter 2022.  No equity securities were sold during the six months ended June 30, 2023 and 2022.


The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $744.4 million at June 30, 2023 and $725.0 million at December 31, 2022.


The amortized cost of securities sold under agreements to repurchase amounted to $342.9 million at June 30, 2023 and $316.9 million at December 31, 2022.


CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of June 30, 2023 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 June 30, 2023 was 98.7% compared to 97.4% as of December 31, 2022.  The following table provides the amortized cost, gross unrealized losses, and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of June 30, 2023 that are not deemed to have credit losses.  As stated above, CTBI had no HTM securities as of June 30, 2023.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
7,188
    
$
(10
)
  
$
7,178
  
State and political subdivisions
    
34,386
      
(1,493
)
    
32,893
  
U.S. government sponsored agency mortgage-backed securities
    
51,640
      
(1,806
)
    
49,834
  
Asset-backed securities
    
0
      
0
   
0
  
Total <12 months temporarily impaired AFS securities
    
93,214
      
(3,309
)
    
89,905
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
380,143
      
(34,887
)
    
345,256
  
State and political subdivisions
    
277,291
      
(52,732
)
    
224,559
  
U.S. government sponsored agency mortgage-backed securities
    
507,278
      
(69,260
)
    
438,018
  
Asset-backed securities
    
89,588
      
(1,453
)
    
88,135
  
Total ≥12 months temporarily impaired AFS securities
    
1,254,300
      
(158,332
)
    
1,095,968
  
                         
Total
                        
U.S. Treasury and government agencies
    
387,331
      
(34,897
)
    
352,434
  
State and political subdivisions
    
311,677
      
(54,225
)
    
257,452
  
U.S. government sponsored agency mortgage-backed securities
    
558,918
      
(71,066
)
    
487,852
  
Asset-backed securities
    
89,588
      
(1,453
)
    
88,135
  
Total temporarily impaired AFS securities
  
$
1,347,514
    
$
(161,641
)
  
$
1,185,873
  


The analysis performed as of December 31, 2022 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 value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2022 that are not deemed to be other-than-temporarily impaired.  As stated above, CTBI had no HTM securities as of December 31, 2022.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
144,305
    
$
(6,953
)
  
$
137,352
  
State and political subdivisions
    
94,277
      
(6,257
)
    
88,020
  
U.S. government sponsored agency mortgage-backed securities
    
139,314
      
(6,883
)
    
132,431
  
Asset-backed securities
    
38,882
      
(1,231
)
    
37,651
  
Total <12 months temporarily impaired AFS securities
    
416,778
      
(21,324
)
    
395,454
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
249,424
      
(29,906
)
    
219,518
  
State and political subdivisions
    
225,019
      
(55,419
)
    
169,600
  
U.S. government sponsored agency mortgage-backed securities
    
454,357
      
(66,950
)
    
387,407
  
Asset-backed securities
    
52,480
      
(1,025
)
    
51,455
  
Total ≥12 months temporarily impaired AFS securities
    
981,280
      
(153,300
)
    
827,980
  
                         
Total
                        
U.S. Treasury and government agencies
    
393,729
      
(36,859
)
    
356,870
  
State and political subdivisions
    
319,296
      
(61,676
)
    
257,620
  
U.S. government sponsored agency mortgage-backed securities
    
593,671
      
(73,833
)
    
519,838
  
Asset-backed securities
    
91,362
      
(2,256
)
    
89,106
  
Total temporarily impaired AFS securities
  
$
1,398,058
    
$
(174,624
)
  
$
1,223,434
  

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 that we will be required to sell the investments before recovery of their amortized cost.

Asset-Backed Securities


The unrealized losses in asset-backed 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.