ctb10q0309.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2009

	Or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to _____________

Commission file number 0-11129

COMMUNITY TRUST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Kentucky	61-0979818
(State or other jurisdiction of incorporation or organization)	IRS Employer Identification No.

346 North Mayo Trail Pikeville, Kentucky (address of principal executive offices)	41501 (Zip Code)

(606) 432-1414

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ü

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Accelerated filer ü	Non-accelerated filer	Smaller reporting company
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

No ü

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock – 15,134,248 shares outstanding at April 30, 2009

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

The accompanying information has not been audited by independent registered public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal and recurring nature.

The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Registrant’s annual report on Form 10-K. Accordingly, the reader of the Form 10-Q should refer to the Registrant’s Form 10-K for the year ended December 31, 2008 for further information in this regard.

Community Trust Bancorp, Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)	(unaudited) March 31 2009			December 31 2008
Assets:
Cash and due from banks	$	86,646		$	89,576
Interest bearing deposits		6,601			5,422
Federal funds sold		97,498			45,880
Cash and cash equivalents		190,745			140,878

Other short-term investments		23,620			100
Securities available-for-sale at fair value
(amortized cost of $263,661 and $265,999, respectively)		267,003			267,376
Securities held-to-maturity at amortized cost
(fair value of $24,150 and $25,496, respectively)		23,782			25,597
Loans held for sale		3,085			623

Loans		2,335,607			2,348,651
Allowance for loan losses		(30,599	)		(30,821	)
Net loans		2,305,008			2,317,830

Premises and equipment, net		51,280			51,590
Federal Reserve Bank and Federal Home Loan Bank stock		29,045			29,040
Goodwill		65,059			65,059
Core deposit intangible (net of accumulated amortization of $6,380 and
$6,222, respectively)		1,124			1,282
Bank owned life insurance		25,289			24,135
Mortgage servicing rights		2,475			2,168
Other assets		34,684			28,853
Total assets	$	3,022,199		$	2,954,531

Liabilities and shareholders’ equity:
Deposits
Noninterest bearing	$	469,096		$	450,360
Interest bearing		1,914,344			1,881,474
Total deposits		2,383,440			2,331,834

Repurchase agreements		148,707			157,422
Federal funds purchased and other short-term borrowings		26,497			11,492
Advances from Federal Home Loan Bank		60,708			60,727
Long-term debt		61,341			61,341
Other liabilities		28,892			23,509
Total liabilities		2,709,585			2,646,325

Shareholders’ equity:
Preferred stock, 300,000 shares authorized and unissued		-			-
Common stock, $5 par value, shares authorized 25,000,000;
shares outstanding 2009 –15,075,662 ; 2008 – 15,066,248		75,378			75,331
Capital surplus		150,472			150,037
Retained earnings		84,783			81,943
Accumulated other comprehensive income, net of tax		1,981			895
Total shareholders’ equity		312,614			308,206

Total liabilities and shareholders’ equity	$	3,022,199		$	2,954,531

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Condensed Consolidated Statements of Income and Other Comprehensive Income

(unaudited)

	Three Months Ended
	March 31
(in thousands except per share data)	2009		2008
Interest income:
Interest and fees on loans, including loans held for sale	$	34,188	$	39,755
Interest and dividends on securities
Taxable		2,599		3,412
Tax exempt		430		474
Interest and dividends on Federal Reserve and Federal Home Loan Bank stock		344		509
Other, including interest on federal funds sold		115		530
Total interest income		37,676		44,680

Interest expense:
Interest on deposits		11,054		15,527
Interest on repurchase agreements and other short-term borrowings		672		1,468
Interest on advances from Federal Home Loan Bank		476		377
Interest on long-term debt		1,000		1,000
Total interest expense		13,202		18,372

Net interest income		24,474		26,308
Provision for loan losses		1,981		2,369
Net interest income after provision for loan losses		22,493		23,939

Noninterest income:
Service charges on deposit accounts		4,949		5,099
Gains on sales of loans, net		1,931		546
Trust income		1,162		1,191
Loan related fees		748		299
Bank owned life insurance		256		263
Securities gains (losses)		519		(50	)
Other		1,188		1,395
Total noninterest income		10,753		8,743

Noninterest expense:
Salaries and employee benefits		11,268		10,711
Occupancy, net		1,804		1,626
Equipment		1,119		1,053
Data processing		1,487		1,381
Bank franchise tax		910		890
Legal and professional fees		1,070		713
Other		4,764		3,627
Total noninterest expense		22,422		20,001

Income before income taxes		10,824		12,681
Income taxes		3,461		4,136
Net income		7,363		8,545

Other comprehensive income, net of tax:
Unrealized holding gains on securities available-for-sale		1,086		3,031
Comprehensive income	$	8,449	$	11,576

Basic earnings per share	$	0.49	$	0.57
Diluted earnings per share	$	0.48	$	0.57

Weighted average shares outstanding-basic		15,076		15,000
Weighted average shares outstanding-diluted		15,193		15,116

Dividends per share	$	0.30	$	0.29

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Three months ended
	March 31
(in thousands)	2009			2008

Cash flows from operating activities:
Net income	$	7,363		$	8,545
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,274			1,292
Deferred taxes		3,191			1,492
Stock based compensation		147			186
Excess tax benefits of stock-based compensation		149			241
Provision for loan and other real estate losses		2,308			2,401
Securities gains/(losses)		(519	)		50
Gains on sale of mortgage loans held for sale		(1,931	)		(546	)
Losses on sale of assets, net		(11	)		(37	)
Proceeds from sale of mortgage loans held for sale		96,211			26,056
Funding of mortgage loans held for sale		(96,742	)		(24,485	)
Amortization of securities premiums, net		168			(7	)
Change in cash surrender value of bank owned life insurance		(209	)		(223	)
Fair value adjustments of mortgage servicing rights		274			535
Changes in:
Other liabilities		1,305			996
Other assets		(1,714	)		1,422
Net cash provided by operating activities		11,264			17,804

Cash flows from investing activities:
Investment in other short-term investments		(23,520	)		0
Securities available-for-sale:
Proceeds from sales		37,209			29,950
Proceeds from prepayments and maturities		15,242			10,425
Purchase of securities		(49,745	)		(11,443	)
Securities held-to-maturity:
Proceeds from prepayments and maturities		2,283			1,832
Purchase of securities		(480	)		0
Change in loans, net		5,387			(27,383	)
Purchase of premises, equipment, and other real estate		(806	)		(574	)
Proceeds from sale of premises and equipment		9			0
Additional investment in equity securities		(5	)		(4	)
Proceeds from sale of other real estate and other repossessed assets		460			2,155
Additional investment in other real estate owned		(29	)		(76	)
Additional investment in bank owned life insurance		(945	)		0
Net cash provided by (used in) investing activities		(14,940	)		4,882

Cash flows from financing activities:
Change in deposits, net		51,606			12,403
Change in repurchase agreements and other short-term borrowings, net		6,290			(20,094	)
Payments on advances from Federal Home Loan Bank		(19	)		(48	)
Issuance of common stock		333			647
Purchase of common stock		0			(2,631	)
Excess tax benefits of stock-based compensation		(149	)		(241	)
Dividends paid		(4,518	)		(4,360	)
Net cash provided by (used in) financing activities		53,543			(14,324	)
Net increase in cash and cash equivalents		49,867			8,362
Cash and cash equivalents at beginning of period		140,878			137,250
Cash and cash equivalents at end of period	$	190,745		$	145,612

Supplemental disclosures:
Income taxes paid	$	52		$	1,254
Interest paid		15,261			16,940
Non-cash activities
Loans to facilitate the sale of other real estate and other repossessed assets		81			281
Common stock dividends accrued, paid in subsequent quarter		4,523			4,339
Real estate acquired in settlement of loans		5,535			1,921

See notes to condensed consolidated financial statements.

Community Trust Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 - Summary of Significant Accounting Policies

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (which consist of normal recurring accruals) necessary, to present fairly the condensed consolidated financial position as of March 31, 2009, the results of operations for the three months ended March 31, 2009 and 2008, and the cash flows for the three months ended March 31, 2009 and 2008. In accordance with accounting principles generally accepted in the United States of America for interim financial information, these statements do not include certain information and footnote disclosures required by accounting principles generally accepted in the United States of America for complete annual financial statements. The condensed consolidated balance sheet as of December 31, 2008 has been derived from the audited consolidated financial statements of Community Trust Bancorp, Inc. (“CTBI”) for that period. The results of operations for the three months ended March 31, 2009 and 2008, and the cash flows for the three months ended March 31, 2009 and 2008, are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2008, included in CTBI’s Annual Report on Form 10-K.

Principles of Consolidation – The unaudited condensed consolidated financial statements include the accounts of CTBI and its separate and distinct, wholly owned subsidiaries Community Trust Bank, Inc. (the “Bank”) and Community Trust and Investment Company. All significant intercompany transactions have been eliminated in consolidation.

Reclassifications – Certain reclassifications considered to be immaterial have been made in the prior year consolidated financial statements to conform to current year classifications. These reclassifications had no effect on net income.

New Accounting Standards –

Ø Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities – This FASB Staff Position No. EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method described in paragraphs 60 and 61 of FASB Statement No. 128, Earnings Per Share. This FSP was effective January 1, 2009, and did not have a significant impact on our consolidated financial statements.

Ø Business Combinations (Revised 2007) – The FASB recently issued SFAS 141(R), which replaces FAS 141, Business Combinations, and applies to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141R requires an acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities, and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost-allocation process required under SFAS 141 whereby the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. SFAS 141R requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed as was previously the case under SFAS 141. Under SFAS 141R, the requirements of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting, and instead, that contingency would be subject to the probable and estimable recognition criteria of SFAS 5, Accounting for Contingencies. This Statement defines a bargain purchase as a business combination in which the total acquisition date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, and it requires the acquirer to recognize that excess in earnings as a gain attributable to the acquirer. In contrast, Statement 141 required the “negative goodwill” amount to be allocated as a pro rata reduction of the amounts that otherwise would have been assigned to particular assets acquired. SFAS 141R is effective for business combinations occurring after January 1, 2009.

Ø Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly –FSP SFAS 157-4 affirms that the objective of fair value when the market for an asset is not active is the price that would be received to sell the asset in an orderly transaction and clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. FSP SFAS 157-4 requires an entity to base its conclusion about whether a transaction was not orderly on the weight of the evidence. FSP SFAS 157-4 also amended SFAS 157, Fair Value Measurements, to expand certain disclosure requirements. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. CTBI did not elect to early adopt. This FSP is not expected to have a significant impact on our consolidated financial statements.

Ø Recognition and Presentation of Other-Than-Temporary Impairments – FSP SFAS 115-2 and SFAS 124-2 (i) changes existing guidance for determining whether an impairment is other than temporary to debt securities and (ii) replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert: (a) it does not have the intent to sell the security; and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis. Under FSP SFAS 115-2 and SFAS 124-2, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. CTBI did not elect to early adopt. This FSP is not expected to have a significant impact on our consolidated financial statements.

Ø Interim Disclosures about Fair Value of Financial Instruments – FSP SFAS 107-1 and APB 28-1 amends SFAS 107, Disclosures about Fair Value of Financial Instruments, to require an entity to provide disclosures about fair value of financial instruments in interim financial information and amends Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. Under FSP SFAS 107-1 and APB 28-1, a publicly traded company shall include disclosures about the fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods. In addition, entities must disclose, in the body or in the accompanying notes of its summarized financial information for interim reporting periods and in its financial statements for annual reporting periods, the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position, as required by SFAS 107. The new interim disclosures required by FSP SFAS 107-1 and APB 28-1 will be included in our interim financial statements beginning with the second quarter of 2009. This FSP is not expected to have a significant impact on our consolidated financial statements.

Ø Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies – FSP SFAS 141R-1 amends the guidance in SFAS 141R to require that assets acquired and liabilities assumed in a business combination that arise from contingencies be recognized at fair value if fair value can be reasonably estimated. If fair value of such an asset or liability cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with SFAS 5, Accounting for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation of the Amount of a Loss. FSP SFAS 141R-1 removes subsequent accounting guidance for assets and liabilities arising from contingencies from SFAS 141R and requires entities to develop a systematic and rational basis for subsequently measuring and accounting for assets and liabilities arising from contingencies. FSP SFAS 141R-1 eliminates the requirement to disclose an estimate of the range of outcomes of recognized contingencies at the acquisition date. For unrecognized contingencies, entities are required to include only the disclosures required by SFAS 5. FSP SFAS 141R-1 also requires that contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be treated as contingent consideration of the acquirer and should be initially and subsequently measured at fair value in accordance with SFAS 141R. FSP SFAS 141R-1 is effective for assets or liabilities arising from contingencies CTBI acquires in business combinations occurring after January 1, 2009.

Note 2 – Stock-Based Compensation

CTBI’s compensation expense related to stock option grants was $124 thousand and $175 thousand, respectively, for the three months ended March 31, 2009 and 2008, respectively. Restricted stock expense for the first three months of 2009 and 2008 was $22 thousand and $11 thousand, respectively. As of March 31, 2009, there was a total of $0.8 million of unrecognized compensation expense related to unvested stock option awards that will be recognized as expense as the awards vest over a weighted average period of 1.2 years.

There were options to purchase 9,000 shares of CTBI common stock and 5,710 shares of restricted stock granted during the three months ended March 31, 2009. The options were granted pursuant to the terms of the 2006 Stock Ownership Incentive Plan, with an exercise price per share of $29.82 (equal to fair market value on date of grant), a term of 10 years, and vesting in five years. The restrictions on the restricted stock will lapse at the end of five years. However, in the event of a change in control of CTBI or the death of the participant, the restrictions will lapse. In the event of the disability of the participant, the restrictions will lapse on a pro rata basis (with respect to 20% of the participant’s restricted stock for each year since the date of award). The Compensation Committee of the Board of Directors will have discretion to review and revise restrictions applicable to a participant’s restricted stock in the event of the participant’s retirement. There were options to purchase 63,700 shares of CTBI common stock and 11,076 shares of restricted stock granted during the three months ended March 31, 2008.

The fair values of options granted during the three months ended March 31, 2009 and 2008, were established at the date of grant using a Black-Scholes option pricing model with the weighted average assumptions as follows:

	Three Months Ended
	March 31
	2009			2008
Expected dividend yield		4.02	%		4.10	%
Risk-free interest rate		2.23	%		3.23	%
Expected volatility		37.12	%		31.01	%
Expected term (in years)		7.5			7.5
Weighted average fair value of options	$	7.69		$	6.41

Note 3 – Securities

Securities are classified into held-to-maturity and available-for-sale categories. Held-to-maturity securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost. Available-for-sale securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons. Available-for-sale securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.

The amortized cost and fair value of securities at March 31, 2009 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Fair Value
U.S. Treasury and government agencies	$	11,998	$	12,107
State and political subdivisions		44,385		44,978
U.S. government sponsored agencies and mortgage-backed pass through certificates		186,737		189,797
Collateralized mortgage obligations		1		1
Total debt securities		243,121		246,883
Marketable equity securities		20,540		20,120
Total available-for-sale securities	$	263,661	$	267,003

Held-to-Maturity

(in thousands)	Amortized Cost		Fair Value
State and political subdivisions	$	1,576	$	1,586
U.S. government sponsored agencies and mortgage-backed pass through certificates		21,726		22,084
Other debt securities		480		480
Total held-to-maturity securities	$	23,782	$	24,150

The amortized cost and fair value of securities as of December 31, 2008 are summarized as follows:

Available-for-Sale

(in thousands)	Amortized Cost		Fair Value
U.S. Treasury and government agencies	$	18,330	$	18,906
State and political subdivisions		39,738		39,844
U.S. government sponsored agencies and mortgage-backed pass through certificates		187,390		188,305
Collateralized mortgage obligations		1		1
Other debt securities		20,000		19,780
Total debt securities		265,459		266,836
Marketable equity securities		540		540
Total available-for-sale securities	$	265,999	$	267,376

Held-to-Maturity

(in thousands)	Amortized Cost		Fair Value
State and political subdivisions	$	1,576	$	1,585
U.S. government sponsored agencies and mortgage-backed pass through certificates		24,021		23,911
Total held-to-maturity securities	$	25,597	$	25,496

Note 4 – Loans

Major classifications of loans, net of unearned income and deferred loan origination costs, are summarized as follows:

(in thousands)	March 31 2009		December 31 2008
Commercial construction	$	143,660	$	156,425
Commercial secured by real estate		682,003		663,663
Commercial other		373,903		365,685
Real estate construction		52,265		56,298
Real estate mortgage		578,432		609,394
Consumer		488,738		484,843
Equipment lease financing		16,606		12,343
Total loans	$	2,335,607	$	2,348,651

Activity in the allowance for loan and lease losses was as follows:

	Three Months Ended
	March 31
(in thousands)	2009			2008
Allowance balance at January 1	$	30,821		$	28,054
Additions to allowance charged against operations		1,981			2,369
Recoveries credited to allowance		856			586
Losses charged against allowance		(3,059	)		(2,410	)
Allowance balance at March 31	$	30,599		$	28,599

Note 5 – Mortgage Servicing Rights

The following table presents the components of mortgage banking income:

	Three Months Ended
	March 31
(in thousands)	2009			2008
Net gain on sale of loans held for sale	$	1,931		$	546
Net loan servicing income
Servicing fees		238			213
Late fees		18			17
Ancillary fees		226			71
Fair value adjustments		(274	)		(535	)
Net loan servicing income (loss)		208			(234	)
Mortgage banking income	$	2,139		$	312

Mortgage loans serviced for others are not included in the accompanying balance sheets. Loans serviced for the benefit of others (primarily FHLMC) were $392 million at March 31, 2009 and $349 million at December 31, 2008. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and processing foreclosures. Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in demand deposits, were approximately $0.8 million at March 31, 2009 compared to $0.4 million at December 31, 2008.

Activity for capitalized mortgage servicing rights using the fair value method was as follows:

	Three Months Ended
	March 31
(in thousands)	2009			2008
Fair value, beginning of period	$	2,168		$	3,258
New servicing assets created		581			113
Change in fair value during the period due to:
Time decay (1)		(33	)		(42	)
Payoffs (2)		(202	)		(72	)
Changes in valuation inputs or assumptions (3)		(39	)		(420	)
Fair value, end of period	$	2,475		$	2,837

(1)	Represents decrease in value due to regularly scheduled loan principal payments and partial loan paydowns.

(2)	Represents decrease in value due to loans that paid off during the period.

(3)	Represents change in value resulting from market-driven changes in interest rates and prepayment speeds.

The fair value of capitalized mortgage servicing rights was $2.5 million at March 31, 2009 compared to $2.2 million at December 31, 2008. Fair values for the quarters ended March 31, 2009 and December 31, 2008 were determined by third-party valuations using a discount rate of 10% and weighted average default rates of 1.6% and 1.7%, respectively. Prepayment speeds generated using the Andrew Davidson Prepayment Model averaged 20.4% at March 31, 2009 compared to 20.7% at December 31, 2008. MSR values are very sensitive to movement in interest rates as expected future net servicing income depends on the projected balance of the underlying loans, which can be greatly impacted by the level of prepayments. CTBI does not currently hedge against changes in the fair value of its MSR portfolio.

Note 6 – Borrowings

Short-term debt consists of the following:

(in thousands)	March 31 2009		December 31 2008
Subsidiaries:
Repurchase agreements	$	148,707	$	157,422
Federal funds purchased		26,497		11,492
Total short-term debt	$	175,204	$	168,914

Effective July 28, 2008, CTBI extended its revolving note agreement for a line of credit in the amount of $12 million, all of which is currently available to meet any future cash needs. The agreement will mature on July 29, 2009. We expect to renew this agreement upon maturity.

All federal funds purchased and the majority of repurchase agreements mature and reprice daily. The average rates paid for federal funds purchased and repurchase agreements on March 31, 2009 were 0.21% and 1.65%, respectively.

Federal Home Loan Bank advances consisted of the following monthly amortizing and term borrowings:

(in thousands)	March 31 2009		December 31 2008
Monthly amortizing	$	708	$	727
Term		60,000		60,000
	$	60,708	$	60,727

The advances from the Federal Home Loan Bank that require monthly principal payments were due for repayment as follows:

	Principal Payments Due by Period at March 31, 2009
(in thousands)	Total		Within 1 Year		2 Years		3 Years		4 Years		5 Years		After 5 Years
Outstanding advances, weighted average interest rate – 3.74%	$	708	$	467	$	189	$	8	$	8	$	8	$	28

The term advances that require the total payment to be made at maturity follow:

(in thousands)	March 31 2009		December 31 2008
Advance #154, 3.17%, due 8/04/09	$	20,000	$	20,000
Advance #155, 3.18%, due 9/02/09		40,000		40,000
Total Term Advances	$	460,000	$	60,000

Advances totaling $60.7 million at March 31, 2009 were collateralized by FHLB stock of $24.7 million and a blanket lien on qualifying first mortgage loans. As of March 31, 2009, CTBI had a $386 million FHLB borrowing capacity, leaving $234 million available for additional advances. The advances had fixed interest rates ranging from 1.00% to 4.00% with a weighted average rate of 3.18%. The advances are subject to restrictions or penalties in the event of prepayment.

Long-term debt consists of the following:

(in thousands)		March 31 2009				December 31 2008
Junior subordinated debentures, 6.52%, due 6/1/37		$	61,341			$	61,341

CTBI has outstanding $61.3 million in junior subordinated debentures with an unconsolidated Delaware statutory trust subsidiary which in turn issued $59.5 million of capital securities in a private placement to institutional investors. The debentures, which mature in 30 years but are redeemable at par at CTBI's option after five years, were issued at a rate of 6.52% until June 1, 2012, and thereafter at a floating rate based on the three-month LIBOR plus 1.59%. The underlying capital securities were issued at the equivalent rates and terms. The proceeds of the debentures were used to fund the redemption on April 2, 2007 of all CTBI's outstanding 9.0% and 8.25% junior subordinated debentures in the total amount of $61.3 million.

Note 7 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended
	March 31
(in thousands)	2009		2008
Numerator:
Net income	$	7,363	$	8,545

Denominator:
Basic earnings per share: