Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

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 June 30, 2023 and December 31, 2022 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at June 30, 2023 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	$	365,394	$	341,199	$	24,195	$	0
State and political subdivisions		259,825		0		259,825		0
U.S. government sponsored agency mortgage-backed securities		487,899		0		487,899		0
Asset-backed securities		88,135		0		88,135		0
Equity securities at fair value		2,545		0		0		2,545
Mortgage servicing rights		8,230		0		0		8,230

			Fair Value Measurements at December 31, 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	$	381,932	$	346,265	$	35,667	$	0
State and political subdivisions		265,102		0		265,102		0
U.S. government sponsored agency mortgage-backed securities		520,085		0		520,085		0
Asset-backed securities		89,107		0		89,107		0
Equity securities at fair value		2,166		0		0		2,166
Mortgage servicing rights		8,468		0		0		8,468

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 June 30, 2023					Three Months Ended June 30, 2022
(in thousands)	Equity Securities at Fair Value		Mortgage Servicing Rights			Equity Securities at Fair Value			Mortgage Servicing Rights
Beginning balance	$	2,380	$	8,121		$	2,352		$	7,748
Total unrealized gains (losses)
Included in net income		165		80			(224	)		468
Issues		0		46			0			223
Settlements		0		(17	)		0			(219	)
Ending balance	$	2,545	$	8,230		$	2,128		$	8,220
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	$	165	$	80		$	(224	)	$	468

	Six Months Ended June 30, 2023					Six Months Ended June 30, 2022
(in thousands)	Equity Securities at Fair Value		Mortgage Servicing Rights			Equity Securities at Fair Value			Mortgage Servicing Rights
Beginning balance	$	2,166	$	8,468		$	2,253		$	6,774
Total unrealized gains (losses)
Included in net income		379		(134	)		(125	)		1,451
Issues		0		96			0			452
Settlements		0		(200	)		0			(457	)
Ending balance	$	2,545	$	8,230		$	2,128		$	8,220
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	$	379	$	(134	)	$	(125	)	$	1,451

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				Six Months Ended
	June 30				June 30
(in thousands)	2023		2022		2023		2022
Total gains	$	227	$	25	$	44	$	869

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 June 30, 2023 and December 31, 2022 and indicate the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at June 30, 2023 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
Other real estate owned	$	177	$	0	$	0	$	177

			Fair Value Measurements at December 31, 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	$	2,703	$	0	$	0	$	2,703
Other real estate owned		570		0		0		570

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 June 30, 2023 and December 31, 2022.

	Quantitative Information about Level 3 Fair Value Measurements
(in thousands)	Fair Value at June 30, 2023		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	2,545	Discount cash flows, computer pricing model	Discount rate	8.0% - 12.0% (10.0%)
				Conversion date	Dec 2025 - Dec 2029 (Dec 2027)
Mortgage servicing rights	$	8,230	Discount cash flows, computer pricing model	Constant prepayment rate	0.0% - 26.7% (7.4%)
				Probability of default	0.0% - 100% (1.3%)
				Discount rate	9.5% - 11.5% (10.0%)
Other real estate owned	$	177	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, 2022		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$	2,166	Discount cash flows, computer pricing model	Discount rate	8.0% - 12.0% (10.0%)
				Conversion date	Dec 2025 - Dec 2029 (Dec 2027)
Mortgage servicing rights	$	8,468	Discount cash flows, computer pricing model	Constant prepayment rate	6.5% - 28.0% (7.1%)
				Probability of default	0.0% - 100.0% (1.2%)
				Discount rate	9.5% - 12.0% (10.0%)
Collateral-dependent loans	$	2,703	Market comparable properties	Marketability discount	52.0% - 52.0% (52.0%)
Other real estate owned	$	570	Market comparable properties	Comparability adjustments	10.0% - 30.6% (10.9%)

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 June 30, 2023 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 June 30, 2023 were measured using an exit price notion.

			Fair Value Measurements at June 30, 2023 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	$	109,545	$	109,545	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		1,201,253		341,199		860,054		0
Equity securities at fair value		2,545		0		0		2,545
Loans held for sale		238		244		0		0
Loans, net		3,881,677		0		0		3,717,729
Federal Home Loan Bank stock		6,545		0		6,545		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		20,257		0		20,257		0
Financial liabilities:
Deposits	$	4,516,660	$	1,361,078	$	3,163,628	$	0
Repurchase agreements		229,020		0		0		229,277
Federal funds purchased		500		0		500		0
Advances from Federal Home Loan Bank		345		0		242		0
Long-term debt		64,350		0		0		52,043
Accrued interest payable		5,624		0		5,624		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, 2022 and indicates the level within the fair value hierarchy of the valuation techniques.

			Fair Value Measurements at December 31, 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	$	128,686	$	128,686	$	0	$	0
Certificates of deposit in other banks		245		0		245		0
Debt securities available-for-sale		1,256,226		346,265		909,961		0
Equity securities at fair value		2,166		0		0		2,166
Loans held for sale		109		112		0		0
Loans, net		3,663,309		0		0		3,511,810
Federal Home Loan Bank stock		6,676		0		6,676		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		19,592		0		19,592		0
Financial liabilities:
Deposits	$	4,426,143	$	1,394,915	$	3,050,144	$	0
Repurchase agreements		215,431		0		0		215,542
Federal funds purchased		500		0		500		0
Advances from Federal Home Loan Bank		355		0		380		0
Long-term debt		57,841		0		0		55,860
Accrued interest payable		2,237		0		2,237		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