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Fair Market Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

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 September 30, 2018 and December 31, 2017 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at September 30, 2018 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		$	242,799			$	91,465			$	151,334			$	0
State and political subdivisions			123,992				0				123,992				0
U.S. government sponsored agency mortgage-backed securities			201,911				0				201,911				0
Other debt securities			506				0				506				0
Mortgage servicing rights			3,815				0				0				3,815

(in thousands)						Fair Value Measurements at December 31, 2017 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		$	210,572			$	64,598			$	145,974			$	0
State and political subdivisions			145,015				0				145,015				0
U.S. government sponsored agency mortgage-backed securities			205,309				0				205,309				0
Other debt securities			507				0				507				0
CRA investment funds			24,358				24,358				0				0
Mortgage servicing rights			3,484				0				0				3,484

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 recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs for the three and nine months ended September 30, 2018 and 2017:

Mortgage Servicing Rights
		Three Months Ended								Nine Months Ended
		September 30								September 30
(in thousands)		2018				2017				2018				2017
Beginning balance		$	3,772			$	3,304			$	3,484			$	3,433
Total recognized gains (losses)
Included in net income			45				5				341				(73	)
Issues			118				98				329				269
Settlements			(120	)			(124	)			(339	)			(346	)
Ending balance		$	3,815			$	3,283			$	3,815			$	3,283
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		$	45			$	5			$	341			$	(73	)

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								Nine Months Ended
		September 30								September 30
(in thousands)		2018				2017				2018				2017
Total gains (losses)		$	(75	)		$	(119	)		$	2			$	(419	)

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 September 30, 2018 and December 31, 2017 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at September 30, 2018 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)		$	556			$	0			$	0			$	556
Other real estate owned			7,640				0				0				7,640

						Fair Value Measurements at December 31, 2017 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)		$	2,709			$	0			$	0			$	2,709
Other real estate owned			18,951				0				0				18,951

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 September 30, 2018 and December 31, 2017.

(in thousands)		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at September 30, 2018			Valuation Technique(s)	Unobservable Input		Range (Weighted Average)
Mortgage servicing rights		$	3,815		Discount cash flows, computer pricing model	Constant prepayment rate			7.0% - 28.0% (8.3%)
						Probability of default			0.0% - 100.0% (2.5%)
						Discount rate			10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)		$	556		Market comparable properties	Marketability discount			10.0% - 100.0% (44.1%)
Other real estate owned		$	7,640		Market comparable properties	Comparability adjustments			6.0% - 32.0% (15.7%)

(in thousands)		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value at December 31, 2017			Valuation Technique(s)	Unobservable Input		Range (Weighted Average)
Mortgage servicing rights		$	3,484		Discount cash flows, computer pricing model	Constant prepayment rate			7.0% - 45.0% (10.0%)
						Probability of default			0.0% - 100.0% (3.0%)
						Discount rate			10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)		$	2,709		Market comparable properties	Marketability discount			1.9% - 89.8% (38.5%)
Other real estate owned		$	18,951		Market comparable properties	Comparability adjustments			6.0% - 58.6% (15.0%)

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 September 30, 2018 and indicates the level within the fair value hierarchy of the valuation techniques.  In accordance with the prospective adoption of ASU 2016-01, the fair values as of September 30, 2018 were measured using an exit price notion.

						Fair Value Measurements at September 30, 2018 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		$	171,333			$	171,333			$	0			$	0
Certificates of deposit in other banks			5,145				0				5,134				0
Securities available-for-sale			569,208				91,465				477,743				0
Securities held-to-maturity			659				0				660				0
Loans held for sale			1,029				1,050				0				0
Loans, net			3,142,097				0				0				3,137,941
Federal Home Loan Bank stock			14,713				0				14,713				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			14,628				0				14,628				0
Mortgage servicing rights			3,815				0				0				3,815
Financial liabilities:
Deposits		$	3,273,646			$	826,804			$	2,460,736			$	0
Repurchase agreements			250,983				0				0				251,261
Federal funds purchased			1,305				0				1,305				0
Advances from Federal Home Loan Bank			787				0				845				0
Long-term debt			59,341				0				0				44,166
Accrued interest payable			4,381				0				4,381				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, 2017 and indicates the level within the fair value hierarchy of the valuation techniques.

(in thousands)						Fair Value Measurements at December 31, 2017 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		$	175,274			$	175,274			$	0			$	0
Certificates of deposit in other banks			9,800				0				9,772				0
Securities available-for-sale			585,761				88,956				496,805				0
Securities held-to-maturity			659				0				660				0
Loans held for sale			1,033				1,060				0				0
Loans, net			3,086,789				0				0				3,092,437
Federal Home Loan Bank stock			17,927				0				17,927				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			13,338				0				13,338				0
Mortgage servicing rights			3,484				0				0				3,484
Financial liabilities:
Deposits		$	3,263,863			$	790,930			$	2,319,278			$	0
Repurchase agreements			243,814				0				0				243,932
Federal funds purchased			7,312				0				7,312				0
Advances from Federal Home Loan Bank			845				0				841				0
Long-term debt			59,341				0				0				44,166
Accrued interest payable			2,228				0				2,228				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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