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Fair Market Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

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 March 31, 2015 and December 31, 2014 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at March 31, 2015 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		$	186,714			$	498			$	186,216			$	0
State and political subdivisions			136,313				0				136,313				0
U.S. government sponsored agency mortgage-backed securities			278,188				0				278,188				0
CRA investment funds			25,120				25,120				0				0
Mortgage servicing rights			2,797				0				0				2,797

						Fair Value Measurements at December 31, 2014 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		$	188,932			$	492			$	188,440			$	0
State and political subdivisions			137,458				0				137,458				0
U.S. government sponsored agency mortgage-backed securities			288,907				0				288,907				0
CRA investment funds			24,889				24,889				0				0
Mortgage servicing rights			2,968				0				0				2,968

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, 2015 and 2014:

(in thousands)		Three Months Ended March 31, 2015
		Mortgage Servicing Rights
Beginning balance		$	2,968
Total recognized losses
Included in net income			(161	)
Issues			84
Settlements			(94	)
Ending balance		$	2,797
Total 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		$	(161	)

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

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, 2015
		Noninterest Income				Noninterest Expense
Total losses		$	(255	)		$	0

(in thousands)		Three Months Ended March 31, 2014
		Noninterest Income				Noninterest Expense
Total losses		$	(229	)		$	0

Fair value measurements of recognized 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 March 31, 2015 and December 31, 2014 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at March 31, 2015 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
Impaired loans (collateral dependent)		$	2,760			$	0			$	0			$	2,760
Other real estate/assets owned			265				0				0				265

						Fair Value Measurements at December 31, 2014 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
Impaired loans (collateral dependent)		$	4,665			$	0			$	0			$	4,665
Other real estate/assets owned			6,472				0				0				6,472

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, 2015 and December 31, 2014.

(in thousands)		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at March 31, 2015			Valuation Technique(s)	Unobservable Input		Range (Weighted Average)
Mortgage servicing rights		$	2,797		Discount cash flows, computer pricing model	Constant prepayment rate			4.7% - 25.4% (12.10%)
						Probability of default			0.0% - 100.0% (3.50%)
						Discount rate		Not applicable, (10.13%)
Impaired loans (collateral-dependent)		$	2,760		Market comparable properties	Marketability discount			5.0% - 10.0% (7.0%)
Other real estate/assets owned		$	265		Market comparable properties	Comparability adjustments			5.0% - 93.0% (29.57%)

(in thousands)		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at December 31, 2014			Valuation Technique(s)	Unobservable Input		Range (Weighted Average)
Mortgage servicing rights		$	2,968		Discount cash flows, computer pricing model	Constant prepayment rate			4.6% - 25.1% (11.3	%)
						Probability of default			0.0% - 100.0% (3.61	%)
						Discount rate			10.0% - 11.5% (10.1	%)
Impaired loans (collateral-dependent)		$	4,665		Market comparable properties	Marketability discount			5.0% - 10.0% (7.0	%)
Other real estate/assets owned		$	6,472		Market comparable properties	Comparability adjustments			3.0% - 67.0% (18.0	%)

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, 2015 and indicates the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at March 31, 2015 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		$	141,049			$	141,049			$	0			$	0
Certificates of deposit in other banks			6,665				0				6,680				0
Securities available-for-sale			626,335				25,618				600,717				0
Securities held-to-maturity			1,661				0				1,653				0
Loans held for sale			1,505				1,535				0				0
Loans, net			2,711,876				0				0				2,710,825
Federal Home Loan Bank stock			17,927				0				17,927				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			13,543				0				13,543				0
Mortgage servicing rights			2,797				0				0				2,797
Financial liabilities:
Deposits		$	2,939,540			$	704,150			$	2,231,379			$	0
Repurchase agreements			244,570				0				0				244,855
Federal funds purchased			12,041				0				12,041				0
Advances from Federal Home Loan Bank			1,141				0				1,318				0
Long-term debt			61,341				0				0				35,674
Accrued interest payable			1,021				0				1,021				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, 2014 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)						Fair Value Measurements at December 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		$	105,517			$	105,517			$	0			$	0
Certificates of deposit in other banks			8,197				0				8,213				0
Securities available-for-sale			640,186				25,381				614,805				0
Securities held-to-maturity			1,662				0				1,644				0
Loans held for sale			2,264				2,321				0				0
Loans, net			2,699,377				0				0				2,691,906
Federal Home Loan Bank stock			17,927				0				17,927				0
Federal Reserve Bank stock			4,869				0				4,869				0
Accrued interest receivable			13,548				0				13,548				0
Mortgage servicing rights			2,968				0				0				2,968
Financial liabilities:
Deposits		$	2,874,257			$	677,626			$	2,192,848			$	0
Repurchase agreements			235,186				0				0				235,193
Federal funds purchased			11,041				0				11,041				0
Advances from Federal Home Loan Bank			61,170				0				61,106				0
Long-term debt			61,341				0				0				35,615
Accrued interest payable			908				0				908				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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