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Fair Market Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Fair Market 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 June 30, 2014 and December 31, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)						Fair Value Measurements at June 30, 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		$	137,877			$	0			$	137,877			$	0
State and political subdivisions			137,104				0				137,104				0
U.S. government sponsored agency mortgage-backed securities			347,804				0				347,804				0
Marketable equity securities			24,751				24,751				0				0
Mortgage servicing rights			3,062				0				0				3,062

(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 and six months ended June 30, 2014 and 2013:

(in thousands)		Three Months Ended June 30, 2014				Six Months Ended June 30, 2014
		Mortgage Servicing Rights				Mortgage Servicing Rights
Beginning balance		$	3,258			$	3,424
Total recognized gains (losses)
Included in net income			(166	)			(292	)
Issues			82				145
Settlements			(112	)			(215	)
Ending balance		$	3,062			$	3,062
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		$	(166	)		$	(292	)

(in thousands)		Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
		Mortgage Servicing Rights				Mortgage Servicing Rights
Beginning balance		$	2,652			$	2,364
Total recognized gains (losses)
Included in net income			529				646
Issues			205				562
Settlements			(164	)			(350	)
Ending balance		$	3,222			$	3,222
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		$	529			$	646

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 June 30, 2014								Six Months Ended June 30, 2014
		Noninterest Income				Noninterest Expense				Noninterest Income				Noninterest Expense
Total gains (losses)		$	(278	)		$	0			$	(507	)		$	0

(in thousands)		Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
		Noninterest Income				Noninterest Expense				Noninterest Income				Noninterest Expense
Total gains (losses)		$	365			$	0			$	296			$	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 June 30, 2014 and December 31, 2013 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)						Fair Value Measurements at June 30, 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)		$	4,444			$	0			$	0			$	4,444
Other real estate/assets owned			5,918				0				0				5,918

(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 June 30, 2014 and December 31, 2013.

(in thousands)		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at June 30, 2014			Valuation Technique(s)	Unobservable Input		Range  (Weighted Average)
Mortgage servicing rights		$	3,062		Discount cash flows, computer pricing model	Constant prepayment rate			7.6% - 24.8 (10.7	% %)
						Probability of default			0.00% - 50.00 (3.09	% %)
						Discount rate			10.00% - 11.00 (10.13	% %)
Impaired loans (collateral-dependent)		$	4,444		Market comparable properties	Marketability discount			5.0% - 10.0 (7.0	% %)
Other real estate/assets owned		$	5,918		Market comparable properties	Comparability adjustments (%)			5.0% - 46.0 (15.4	% %)

(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 June 30, 2014 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)						Fair Value Measurements at June 30, 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		$	137,973			$	137,973			$	0			$	0
Certificates of deposit in other banks			9,473				0				9,505				0
Securities available-for-sale			647,536				24,751				622,785				0
Securities held-to-maturity			1,662				0				1,632				0
Loans held for sale			895				912				0				0
Loans, net			2,598,992				0				0				2,613,007
Federal Home Loan Bank stock			17,927				0				17,927				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			12,354				0				12,354				0
Mortgage servicing rights			3,062				0				0				3,062
Financial liabilities:
Deposits		$	2,887,189			$	651,588			$	2,232,133			$	0
Repurchase agreements			217,979				0				0				218,121
Federal funds purchased			15,205				0				15,205				0
Advances from Federal Home Loan Bank			1,228				0				1,464				0
Long-term debt			61,341				0				0				35,501
Accrued interest payable			1,522				0				1,522				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

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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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