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Fair Market Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

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, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at June 30, 2019 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		$	150,742			$	35,668			$	115,074			$	0
State and political subdivisions			105,439				0				105,439				0
U.S. government sponsored agency mortgage-backed securities			333,005				0				333,005				0
Other debt securities			2,400				0				2,400				0
Equity securities at fair value			1,727				0				0				1,727
Mortgage servicing rights			3,119				0				0				3,119

						Fair Value Measurements at December 31, 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		$	217,938			$	91,028			$	126,910			$	0
State and political subdivisions			124,488				0				124,488				0
U.S. government sponsored agency mortgage-backed securities			250,819				0				250,819				0
Other debt securities			501				0				501				0
Equity securities at fair value			1,173				0				0				1,173
Mortgage servicing rights			3,607				0				0				3,607

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 six months ended June 30, 2019 and 2018:

(in thousands)		Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
		Equity Securities at Fair Value				Mortgage Servicing Rights				Equity Securities at Fair Value				Mortgage Servicing Rights
Beginning balance		$	1,528			$	3,390			$	0			$	3,706
Total unrealized gains (losses)
Included in net income			199				(348	)			0				68
Issues			0				191				0				111
Settlements			0				(114	)			0				(113	)
Ending balance		$	1,727			$	3,119			$	0			$	3,772
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		$	199			$	(348	)		$	0			$	68

(in thousands)		Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
		Equity Securities at Fair Value				Mortgage Servicing Rights				Equity Securities at Fair Value				Mortgage Servicing Rights
Beginning balance		$	1,173			$	3,607			$	0			$	3,484
Total unrealized gains (losses)
Included in net income			554				(582	)			0				296
Issues			0				307				0				211
Settlements			0				(213	)			0				(219	)
Ending balance		$	1,727			$	3,119			$	0			$	3,772
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		$	554			$	(582	)		$	0			$	296

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 June 30								Six Months Ended June 30
(in thousands)		2019				2018				2019				2018
Total gains (losses)		$	(263	)		$	(45	)		$	(241	)		$	77

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 June 30, 2019 and December 31, 2018 and indicate the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at June 30, 2019 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)		$	1,343			$	0			$	0			$	1,343
Other real estate owned			2,271				0				0				2,271

						Fair Value Measurements at December 31, 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)		$	747			$	0			$	0			$	747
Other real estate owned			6,500				0				0				6,500

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, 2019 and December 31, 2018.

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at June 30, 2019	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$1,727	Discount cash flows, computer pricing model	Discount rate	8.0% - 12.0% (10.0%)
			Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$3,119	Discount cash flows, computer pricing model	Constant prepayment rate	7.0% - 23.6% (12.9%)
			Probability of default	0.0% - 100.0% (2.1%)
			Discount rate	10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$1,343	Market comparable properties	Marketability discount	0.6% - 97.1% (62.0%)
Other real estate owned	$2,271	Market comparable properties	Comparability adjustments	10.0% - 34.4% (12.7%)

(in thousands)	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at December 31, 2018	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Equity securities at fair value	$1,173	Discount cash flows, computer pricing model	Discount rate	8.0% - 12.0% (10.0%)
			Conversion date	Dec 2022 – Dec 2026 (Dec 2024)
Mortgage servicing rights	$3,607	Discount cash flows, computer pricing model	Constant prepayment rate	7.0% - 28.1% (9.5%)
			Probability of default	0.0% - 100.0% (2.6%)
			Discount rate	10.0% - 11.5% (10.1%)
Impaired loans (collateral-dependent)	$747	Market comparable properties	Marketability discount	0.0% - 95.1% (41.5%)
Other real estate owned	$6,500	Market comparable properties	Comparability adjustments	6.0% - 47.6% (14.9%)

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, 2019 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 June 30, 2019 were measured using an exit price notion.

						Fair Value Measurements at June 30, 2019 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		$	321,639			$	321,639			$	0			$	0
Certificates of deposit in other banks			245				0				245				0
Securities available-for-sale			591,586				35,668				555,918				0
Securities held-to-maturity			619				0				619				0
Equity securities at fair value			1,727				0				0				1,727
Loans held for sale			1,067				1,093				0				0
Loans, net			3,157,209				0				0				3,189,802
Federal Home Loan Bank stock			11,360				0				11,360				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			14,923				0				14,923				0
Mortgage servicing rights			3,119				0				0				3,119
Financial liabilities:
Deposits		$	3,437,181			$	833,044			$	2,624,918			$	0
Repurchase agreements			233,238				0				0				233,245
Federal funds purchased			3,900				0				3,900				0
Advances from Federal Home Loan Bank			426				0				458				0
Long-term debt			59,341				0				0				44,166
Accrued interest payable			5,600				0				5,600				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, 2018 and indicates the level within the fair value hierarchy of the valuation techniques.

						Fair Value Measurements at December 31, 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		$	141,450			$	141,450			$	0			$	0
Certificates of deposit in other banks			3,920				0				3,914				0
Securities available-for-sale			593,746				91,028				502,718				0
Securities held-to-maturity			649				0				649				0
Equity securities at fair value			1,173				0				0				1,173
Loans held for sale			2,461				2,518				0				0
Loans, net			3,172,730				0				0				3,175,908
Federal Home Loan Bank stock			14,713				0				14,713				0
Federal Reserve Bank stock			4,887				0				4,887				0
Accrued interest receivable			14,432				0				14,432				0
Mortgage servicing rights			3,607				0				0				3,607
Financial liabilities:
Deposits		$	3,305,950			$	803,316			$	2,513,084			$	0
Repurchase agreements			232,712				0				0				232,796
Federal funds purchased			1,180				0				1,180				0
Advances from Federal Home Loan Bank			436				0				468				0
Long-term debt			59,341				0				0				44,166
Accrued interest payable			2,902				0				2,902				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 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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