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Securities
 9 Months Ended
Sep. 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 September 30, 2023 and December 31, 2022, CTBI had no HTM securities.



The amortized cost and fair value of debt securities at September 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
  
$
387,012
    
$
135
    
$
(35,808
)
  
$
351,339
  
State and political subdivisions
    
313,867
      
1
      
(69,390
)
    
244,478
  
U.S. government sponsored agency mortgage-backed securities
    
534,442
      
0
      
(82,144
)
    
452,298
  
Asset-backed securities
    
88,818
      
0
      
(1,055
)
    
87,763
  
Total available-for-sale securities
  
$
1,324,139
    
$
136
    
$
(188,397
)
  
$
1,135,878
  


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 September 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
  
$
23,805
    
$
23,585
  
Due after one through five years
    
372,557
      
335,324
  
Due after five through ten years
    
129,061
      
106,680
  
Due after ten years
    
175,456
      
130,228
  
U.S. government sponsored agency mortgage-backed securities
    
534,442
      
452,298
  
Asset-backed securities
    
88,818
      
87,763
  
Total debt securities
  
$
1,324,139
    
$
1,135,878
  


During the three months ended September 30, 2023, we had an unrealized gain of $355 thousand from the fair value adjustment of equity securities.  During the three months ended September 30, 2022, we had an unrealized loss of $159 thousand from the fair value adjustment of equity securities.



During the nine months ended September 30, 2023, we had a net securities gain of $738 thousand, consisting of a pre-tax gain of $4 thousand realized on sales and calls of AFS securities and an unrealized gain of $734 thousand from the fair value adjustment of equity securities.  During the nine months ended September 30, 2022, we had a net securities loss of $285 thousand, consisting of a pre-tax loss of $1 thousand realized on calls of AFS securities and an unrealized loss of $284 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 September 30, 2023 were $2.9 million, as a result of a $355 thousand increase in the fair value in the third quarter 2023.  The fair value of equity securities decreased $159 thousand in the third quarter 2022.  No equity securities were sold during the nine months ended September 30, 2023 and 2022.


The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $752.2 million at September 30, 2023 and $725.0 million at December 31, 2022.


The amortized cost of securities sold under agreements to repurchase amounted to $350.2 million at September 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 September 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 September 30, 2023 was 98.9% 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 September 30, 2023 that are not deemed to have credit losses.  As stated above, CTBI had no HTM securities as of September 30, 2023.

Available-for-Sale

(in thousands)
  
Amortized
Cost
    
Gross
Unrealized
Losses
    
Fair Value
  
Less Than 12 Months
                  
U.S. Treasury and government agencies
  
$
4,781
    
$
(6
)
  
$
4,775
  
State and political subdivisions
    
25,808
      
(2,565
)
    
23,243
  
U.S. government sponsored agency mortgage-backed securities
    
15,879
      
(507
)
    
15,372
  
Asset-backed securities
    
0
      
0
   
0
  
Total <12 months temporarily impaired AFS securities
    
46,468
      
(3,078
)
    
43,390
  
                         
12 Months or More
                        
U.S. Treasury and government agencies
    
370,697
      
(35,802
)
    
334,895
  
State and political subdivisions
    
287,629
      
(66,825
)
    
220,804
  
U.S. government sponsored agency mortgage-backed securities
    
518,517
      
(81,637
)
    
436,880
  
Asset-backed securities
    
88,818
      
(1,055
)
    
87,763
  
Total ≥12 months temporarily impaired AFS securities
    
1,265,661
      
(185,319
)
    
1,080,342
  
                         
Total
                        
U.S. Treasury and government agencies
    
375,478
      
(35,808
)
    
339,670
  
State and political subdivisions
    
313,437
      
(69,390
)
    
244,047
  
U.S. government sponsored agency mortgage-backed securities
    
534,396
      
(82,144
)
    
452,252
  
Asset-backed securities
    
88,818
      
(1,055
)
    
87,763
  
Total temporarily impaired AFS securities
  
$
1,312,129
    
$
(188,397
)
  
$
1,123,732
  


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.