Balance Sheet ReviewCTBIs total assets at 3

Our loan portfolio increased an annualized 5.6 during the quarter with $32.6million in growth Loan growth from prior year-end was $120.8 million or 5.4. CTBIs effective income tax rate was 26.6 for the year ended December 31,2008, compared to 30.95 for the year ended December 31, 2007. The reducedincome tax rate was driven by the increase in the ratio of tax exempt income tototal income and the adjustment of a tax deferred item in the fourth quarter2008 which had a positive impact to earnings of $0.04 per share.Net Interest IncomeOur quarterly net interest margin declined 28 basis points from prior quarterand 33 basis points from prior year fourth quarter, and our net interest marginfor the year ended December 31, 2008 decreased 2 basis points compared to thesame period in 2007. Net interestincome for the year ended December 31, 2008 decreased $2.4 million from prioryear as the cost of interest bearing funds decreased 108 basis points while theyield on average earning assets decreased 94 basis points and average earningassets declined $57.0 million. We experienced increases year over year in the corebanking noninterest income areas of gains on sales of loans, deposit servicecharges, and trust revenue which were partially offset by declines in loan feesand the fair value of mortgage servicing rights.

Noninterest ExpenseNoninterest expense controls were positive during 2008 as we experienced adecline in total noninterest expense which was driven by decreases in bothpersonnel and occupancy expenses Commensurate with the U.S. Treasury placingFreddie Mac and Fannie Mae into conservatorship, noninterest expense for theyear 2008 was impacted by a $0.8 million charge relative to trust activity forwhich CTBI had financial responsibility. Noninterest expense for thequarter decreased 2.4 from prior quarter but increased 2.4 from prior yearfourth quarter. Balance Sheet ReviewCTBIs total assets at $3.0 billion increased an annualized 6.2 from priorquarter and 1.8 from prior year.

Loans outstanding at December 31, 2008 were$2.3 billion reflecting an annualized 5.6 growth during the quarter and a 5.4growth from December 31, 2007. CTBI's investment portfolio, however, decreasedan annualized 24.4 from prior quarter and 18.0 from prior year as a result ofthe use of the liquidity in our investment portfolio to fund loan growth and theother than temporary impairment charges for auction rate securities. Deposits,including repurchase agreements, at $2.5 billion increased an annualized 9.4from prior quarter and 1.5 from prior year. Shareholders equity at December 31, 2008 was $308.2 million compared to $305.0million at September 30, 2008 and $301.4 at December 31, 2007. Asset QualityNonperforming loans increased during the fourth quarter by $2.9 million withincreases in all of our regions. CTBI's total nonperforming loans at December31, 2008 were $52.2 million compared to $49.3 million at September 30, 2008 and$31.9 million at December 31, 2007. Our loan portfolio management processesfocus on maintaining appropriate reserves for potential losses.