Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value of Financial Assets and Liabilities [Abstract]

Fair value 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 March 31, 2014 and December 31, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)			Fair Value Measurements at March 31, 2014 Using
	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	$	136,479	$	0	$	136,479	$	0
State and political subdivisions		130,570		0		130,570		0
U.S. government sponsored agency mortgage-backed securities		358,651		0		358,651		0
Marketable equity securities		24,427		24,427		0		0
Mortgage servicing rights		3,258		0		0		3,258

(in thousands)			Fair Value Measurements at December 31, 2013 Using
	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	$	60,610	$	0	$	60,610	$	0
State and political subdivisions		116,703		0		116,703		0
U.S. government sponsored agency mortgage-backed securities		379,310		0		379,310		0
Marketable equity securities		52,782		52,782		0		0
Mortgage servicing rights		3,424		0		0		3,424

Reconciliation of the beginning and ending balance of recurring fair value measurement using significant unobservable (level 3) inputs

Following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs for the three months ended March 31, 2014 and 2013:

(in thousands)	Three Months Ended March 31, 2014
	Mortgage Servicing Rights
Beginning balance	$	3,424
Total recognized gains (losses)
Included in net income		(126	)
Issues		63
Settlements		(103	)
Ending balance	$	3,258

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	$	(126	)

(in thousands)	Three Months Ended March 31, 2013
	Mortgage Servicing Rights
Beginning balance	$	2,364
Total recognized gains (losses)
Included in net income		117
Issues		357
Settlements		(186	)
Ending balance	$	2,652

Total gains 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	$	117

Realized and unrealized gains and losses for items included in net income in the consolidated statement of income

Realized and unrealized gains and losses for items reflected in the tables above are included in net income in the consolidated statements of income as follows:

(in thousands)	Three Months Ended March 31, 2014
	Noninterest Income			Noninterest Expense
Total gains	$	(289	)	$	0

(in thousands)	Three Months Ended March 31, 2013
	Noninterest Income			Noninterest Expense
Total gains	$	(69	)	$	0

Fair value measurements of recognized assets measured on nonrecurring basis

The following table presents the fair value measurements of assets recognized in the accompanying balance sheets measured at fair value on a nonrecurring basis as of March 31, 2014 and December 31, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)			Fair Value Measurements at March 31, 2014 Using
	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
Impaired loans (collateral dependent)	$	4,020	$	0	$	0	$	4,020
Other real estate/assets owned		4,440		0		0		4,440

(in thousands)			Fair Value Measurements at December 31, 2013 Using
	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
Impaired loans (collateral dependent)	$	6,830	$	0	$	0	$	6,830
Other real estate/assets owned		11,111		0		0		11,111

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 March 31, 2014 and December 31, 2013.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at March 31, 2014		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Mortgage servicing rights	$	3,258	Discount cash flows, computer pricing model	Constant prepayment rate		7.1% - 24.6%
						(10.6%)
				Probability of default		0.00% - 10.67%
					(2.99%)
				Discount rate	Not applicable
						(10.0%)

Impaired loans (collateral-dependent)	$	4,020	Market comparable properties	Marketability discount		5.0% - 10.0%
						(7.0%)

Other real estate/assets owned	$	4,440	Market comparable properties	Comparability adjustments (%)		5.0% - 46.0%
						(21.0%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2013		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Mortgage servicing rights	$	3,424	Discount cash flows, computer pricing model	Constant prepayment rate		4.3% - 23.6%
						(9.7%)
				Probability of default		0.00% - 33.33%
					(3.36%)
				Discount rate	Not applicable
					(10.0%)

Impaired loans (collateral-dependent)	$	6,830	Market comparable properties	Marketability discount		5.0% - 10.0%
						(7.0%)

Other real estate/assets owned	$	11,111	Market comparable properties	Comparability adjustments (%)		5.0% - 38.0%
						(9.0%)

Fair value of financial instruments and levels within the fair value hierarchy of the valuation techniques

The following table presents estimated fair value of CTBI’s financial instruments as of March 31, 2014 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)			Fair Value Measurements at March 31, 2014 Using
	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	$	193,689	$	193,689	$	0	$	0
Certificates of deposit in other banks		9,568		0		9,605		0
Securities available-for-sale		650,127		24,427		625,700		0
Securities held-to-maturity		1,662		0		1,619		0
Loans held for sale		1,610		1,645		0		0
Loans, net		2,551,893		0		0		2,563,294
Federal Home Loan Bank stock		17,927		0		17,927		0
Federal Reserve Bank stock		4,887		0		4,887		0
Accrued interest receivable		12,924		0		12,924		0
Mortgage servicing rights		3,258		0		0		3,258

Financial liabilities:
Deposits	$	2,924,189	$	652,170	$	2,267,890	$	0
Repurchase agreements		217,656		0		0		217,630
Federal funds purchased		8,723		0		8,723		0
Advances from Federal Home Loan Bank		1,257		0		1,500		0
Long-term debt		61,341		0		0		35,244
Accrued interest payable		1,181		0		1,181		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, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)			Fair Value Measurements at December 31, 2013 Using
	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	$	106,641	$	106,641	$	0	$	0
Certificates of deposit in other banks		9,568		0		9,582		0
Securities available-for-sale		609,405		52,782		556,623		0
Securities held-to-maturity		1,662		0		1,601		0
Loans held for sale		828		845		0		0
Loans, net		2,581,346		0		0		2,589,811
Federal Home Loan Bank stock		25,673		0		25,673		0
Federal Reserve Bank stock		4,886		0		4,886		0
Accrued interest receivable		12,886		0		12,886		0
Mortgage servicing rights		3,424		0		0		3,424

Financial liabilities:
Deposits	$	2,855,074	$	621,321	$	2,230,608	$	0
Repurchase agreements		208,067		0		0		207,992
Federal funds purchased		12,465		0		12,465		0
Advances from Federal Home Loan Bank		1,286		0		1,531		0
Long-term debt		61,341		0		0		31,362
Accrued interest payable		1,032		0		1,032		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

- Definition

Tabular disclosure of the amount of gains or losses for the period included in earnings or resulted in a change to net assets, have arisen from the use of significant unobservable inputs (level 3) to measure the fair value of assets, liabilities, and financial instruments classified in shareholders' equity.

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- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

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Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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