ctbi10q

10-Q 1 ctbi10q.htm SEPTEMBER 30, 2002 10-Q ctbi10q 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 September 30, 2002

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

Common stock - 11,222,762 shares outstanding at October 31, 2002

PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

The accompanying information has not been audited by independent 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 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, 2001 for further information in this regard.

Condensed Consolidated Balance Sheets

*(dollars in thousands except share data)*			September 30 2002		December 31 2001
			(unaudited)
Assets:
Cash and due from banks		$	73,981	$	96,173
Federal funds sold			46,150		113,623
Securities available-for-sale at fair value
	(amortized cost of $463,320 and $364,218, respectively)		475,264		367,233
Securities held-to-maturity at amortized cost
	(fair value of $56,939 and $85,088, respectively)		55,167		83,324
Loans held for sale at lower of cost or market			11,434		1,246

Loans			1,628,128		1,709,826
	Allowance for loan losses		(23,694)		(23,648)
	Net loans		1,604,434		1,686,178

Premises and equipment, net			50,554		51,101
Goodwill (net of accumulated amortization of $16,824)			60,122		59,545
Core deposit intangible (net of accumulated amortization of $2,406 and $1,972, respectively)			4,554		4,989
Other assets			39,729		40,493
	Total assets	$	2,421,389	$	2,503,905

Liabilities and shareholders' equity:
Deposits
	Noninterest bearing	$	313,719	$	320,437
	Interest bearing		1,759,642		1,835,335
Total deposits			2,073,361		2,155,772

Federal funds purchased and other short-term borrowings			56,725		82,584
Advances from Federal Home Loan Bank			6,528		9,525
Trust preferred securities			59,500		34,500
Long-term debt			1,127		13,444
Other liabilities			18,162		16,474
	Total liabilities		2,215,403		2,312,299

Shareholders' equity:
Preferred stock, 300,000 shares authorized and unissued
Common stock, $5 par value, shares authorized 25,000,000;
	shares outstanding 2002 - 11,244,609; 2001 - 11,425,770		56,223		57,129
Capital surplus			47,132		51,122
Retained earnings			94,867		81,395
Accumulated other comprehensive income, net of tax			7,764		1,960
	Total shareholders' equity		205,986		191,606

	Total liabilities and shareholders' equity	$	2,421,389	$	2,503,905

Condensed Consolidated Statements of Income
(unaudited)

		Three months ended				Nine months ended
		September 30				September 30
(in thousands except per share data)		2002		2001		2002		2001

Interest income:
Interest and fees on loans		$	29,805	$	37,243	$	92,267	$	116,728
Interest and dividends on securities
	Taxable		5,139		4,280		16,218		11,155
	Tax exempt		672		709		2,057		2,154
Other, including interest on fed funds sold			308		1,304		1,247		5,437
	Total interest income		35,924		43,536		111,789		135,474

Interest expense:
Interest on deposits			11,820		21,253		38,752		67,977
Interest on federal funds purchased and other short-term borrowings			328		703		1,128		2,627
Interest on advances from Federal Home Loan Bank			98		155		335		505
Interest on long-term debt and trust preferred securities			1,318		1,062		3,994		3,198
	Total interest expense		13,564		23,173		44,209		74,307

	Net interest income		22,360		20,363		67,580		61,167
Provision for loan and lease losses			2,530		2,428		8,416		6,345
	Net interest income after provision for loan losses		19,830		17,935		59,164		54,822

Noninterest income:
Service charges on deposit accounts			3,631		2,738		9,306		8,112
Gains on sales of loans, net			1,016		645		2,347		1,675
Trust income			546		624		1,702		1,907
Securities gains, net			1,528		0		1,528		637
Other			1,966		1,505		4,840		5,283
	Total noninterest income		8,687		5,512		19,723		17,614

Noninterest expense:
Salaries and employee benefits			8,742		7,315		25,594		22,949
Occupancy, net			1,400		1,327		4,192		4,040
Equipment			917		883		2,657		2,810
Data processing			939		1,048		2,957		3,036
Stationery, printing, and office supplies			318		306		1,147		1,052
Taxes other than payroll, property, and income			614		538		1,837		1,634
FDIC insurance			89		96		289		291
Other			3,764		4,179		10,817		12,461
	Total noninterest expense		16,783		15,692		49,490		48,273

	Income before income taxes		11,734		7,755		29,397		24,163
Income taxes			3,801		2,482		8,765		7,734
	Net income		7,933		5,273		20,632		16,429

Other comprehensive income, net of tax:
	Unrealized holding gains (losses) arising during period		2,070		3,001		5,804		4,539
Comprehensive income		$	10,003	$	8,274	$	26,436	$	20,968

Basic earnings per share		$	0.70	$	0.46	$	1.81	$	1.42
Diluted earnings per share		$	0.69	$	0.46	$	1.80	$	1.42

Average shares outstanding			11,320		11,420		11,379		11,548

Condensed Consolidated Statements of Cash Flows
(unaudited)

			Nine months ended
			September 30
(in thousands)			2002		2001

Cash flows from operating activities:
Net income			$	20,632	$	16,429
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			3,307		5,715
	Change in net deferred tax asset, net			22		(2,420)
	Provision for loan and other real estate losses			8,475		6,596
	Securities gains, net			(1,528)		(637)
	Gains on sale of mortgage loans held for sale			(2,347)		(1,675)
	Gains (losses) on sale of assets, net			(21)		14
	Proceeds from sale of mortgage loans held for sale			82,765		77,376
	Accretion of securities premiums, net			164		(226)
	Change in mortgage loans held for sale, net			(10,188)		(1,568)
	Changes in:
		Other liabilities		563		9,120
		Other assets		(505)		980
	Net cash provided by operating activities			101,339		109,704

Cash flows from investing activities:
Securities available-for-sale:
	Proceeds from sales			74,960		20,800
	Proceeds from prepayments and maturities			76,784		82,350
	Purchase of securities			(249,515)		(222,964)
Securities held-to-maturity:
	Proceeds from prepayments and maturities			28,730		10,203
	Purchase of securities			(540)		0
Change in loans, net				(11,587)		(114,687)
Purchase of premises, equipment, and other real estate				(2,325)		(2,929)
Proceeds from sale of premises and equipment				0		548
Proceeds from sale of other real estate				3,705		4,919
Assets acquired net of cash				(577)		(9,576)
	Net cash used in investing activities			(80,365)		(231,336)

Cash flows from financing activities:
Change in deposits, net				(82,411)		125,668
Change in federal funds purchased and other short-term borrowings, net				(25,859)		19,690
Payments on advances from Federal Home Loan Bank				(2,997)		(2,829)
Payments on long-term debt				12,683		(115)
Issuance of common stock, net				1,217		1,387
Repurchase of common stock				(6,113)		(6,538)
Dividends paid				(7,159)		(6,921)
	Net cash provided by (used in) financing activities			(110,639)		130,342
Net increase (decrease) in cash and cash equivalents				(89,665)		8,710
Cash and cash equivalents at beginning of year				209,796		169,715
	Cash and cash equivalents at end of period		$	120,131	$	178,425

Notes to Condensed Consolidated Financial Statements

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 September 30, 2002, the results of operations for the three and nine months ended September 30, 2002 and 2001, and the statements of cash flows for the nine months ended September 30, 2002 and 2001. 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. Financial information as of December 31, 2001 has been derived from the audited Consolidated Financial Statements of Community Trust Bancorp, Inc. (the "Corporation"). The results of operations for the three and nine months ended September 30, 2002 and 2001 and the statements of cash flows for the nine months ended September 30, 2002 and 2001 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, 2001, included in the Corporation's Annual Report on Form 10-K.

Principles of Consolidation - The unaudited condensed consolidated financial statements include the accounts of the Corporation and its separate and distinct, wholly owned subsidiaries Community Trust Bank, National Association; Trust Company of Kentucky, National Association; CTBI Preferred Capital Trust; and CTBI Preferred Capital Trust II. All significant intercompany transactions have been eliminated in consolidation.

On January 1, 2001, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Certain Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that all derivatives, including those embedded in other contracts, be recognized as either assets or liabilities and that those financial instruments be measured at fair value. The accounting for changes in the fair value of derivatives depends on their intended use and designation. Management has reviewed the requirements of SFAS No. 133 and has determined that the Corporation has no freestanding or embedded derivatives. All contracts that contain provisions meeting the definition of a derivative also meet the requirements of, and have been designated as, normal purchases or sales. The Corporation's policy is to not use freestanding derivatives and to not enter into contracts with terms that cannot be designated as normal purchases or sales. This statement did not impact the Corporation's financial position or results of operation.

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment.

Effective January 1, 2002, the Corporation adopted SFAS No. 142. Upon adoption, the Corporation ceased amortizing goodwill of approximately $59.5 million arising from previous purchase transactions. This will reduce amortization expense on an annual basis by $3.1 million and increase earnings on an annual basis by $2.3 million. Goodwill will continue to be evaluated for impairment in accordance with SFAS No. 142. Third quarter and year-to-date 2002 earnings were positively impacted by $0.05 per share and $0.15 per share, respectively, due to the implementation of SFAS No. 142. The following tables show on a pro forma basis the results for the quarter and nine months ended September 30, 2001 had SFAS No. 142 been implemented on January 1, 2001. Amortization of core deposit intangible for the quarter and nine months ended September 30, 2002 was $145 thousand and $434 thousand, respectively. Anticipated amortization for the next five years is $578 thousand annually.

		Quarter Ended September 30, 2001
				Amortization
		Reported Earnings		Goodwill		Pro Forma
Income before income tax expense		$	7,755	$	806	$	8,561
	Income tax expense		2,482		215		2,697
Net income		$	5,273	$	591	$	5,864

Basic earnings per share		$	0.46	$	0.05	$	0.51

Diluted earnings per common share		$	0.46	$	0.05	$	0.51

		Nine Months Ended September 30, 2001
				Amortization
		Reported Earnings		Goodwill		Pro Forma
Income before income tax expense		$	24,163	$	2,308	$	26,471
	Income tax expense		7,734		605		8,339
Net income		$	16,429	$	1,703	$	18,132

Basic earnings per share		$	1.42	$	0.15	$	1.57

Diluted earnings per common share		$	1.42	$	0.15	$	1.57

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which was required to be adopted January 1, 2002. SFAS No. 144 supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and APB Opinion No. 30, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, and combines the two accounting models into a single model based on the framework established in SFAS No. 121. Effects of adopting SFAS No. 144 on January 1, 2002 have had no material impact on our earnings and financial position.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which is required to be adopted January 1, 2003. SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinquishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinquishments of Debt Made to Satisfy Sinking-Fund Requirements. Under SFAS No. 4, all gains and losses from extinquishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. This Statement eliminates Statement 4 and, thus, the exception to applying APB Opinion No. 30 to all gains and losses related to extinquishments of debt (other than extinquishments of debt to satisfy sinking-fund requirements -the exception to application of Statement 4 noted in SFAS No. 64). As a result, gains and losses from extinquishment of debt should be classified as extraordinary items only if they meet the criteria in APB Opinion No. 30. Applying the provisions of Opinion 30 will distinguish transactions that are part of an entity's recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item. SFAS No. 145 also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor Carriers. SFAS No. 145 amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. Management has determined that the adoption of this Statement will have no material effect on the Corporation's financial position, results of operations, or cash flows.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which is required to be adopted January 1, 2003. SFAS No. 146 requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon management's commitment to an exit plan, which is generally before an actual liability has been incurred. Management has determined that the adoption of this Statement will have no material effect on the Corporation's financial position, results of operations, or cash flows.

SFAS No. 147, Acquisitions of Certain Financial Institutions, was issued in October 2002. This statement clarifies that, if certain criteria are met, an acquisition of a less-than-whole financial institution (such as a branch acquisition) should be accounted for as a business combination. SFAS No. 147 states that, in such instances, the excess of the fair value of liabilities assumed over the value of tangible and identifiable intangible assets acquired represents goodwill. Prior to SFAS No. 147, such excesses were classified as an unidentifiable intangible asset subject to continuing amortization under SFAS No. 142. As a result of SFAS No. 147, entities are required to reclassify and restate both the goodwill asset and amortization expense as of the date SFAS No. 142 was adopted. In addition, SFAS No. 147 amends SFAS No. 144 to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets. As a result, those intangible assets are subject to the same undiscounted cash flow recoverability test and impairment loss recognition and measurement provisions that SFAS No. 144 requires for other long-lived assets that are held and used by a company. SFAS No. 147 is effective October 1, 2002 and is not expected to have a material impact on the Corporation's financial statements.

Note 2 - Business Combinations

On January 26, 2001, Community Trust Bank, National Association, the Corporation's lead bank, acquired the deposits, loans, and fixed assets of The Bank of Mt.Vernon, Inc. The offices acquired from The Bank of Mt. Vernon, Inc. are located in Mt. Vernon, Somerset, Richmond, and Berea, Kentucky. The offices acquired had deposits totaling $109.3 million and loans totaling $79 million. The purchase price paid by Community Trust Bank, N.A. for the offices was a 9.5% premium on the non-brokered deposits as of the closing date plus approximately $1.6 million for fixed assets, $12.6 million for investment securities, and $1.0 million for the cash held at the acquired branches of The Bank of Mt. Vernon, Inc.

During the third quarter 2001, the Corporation acquired 75.28% of the outstanding shares of Citizens National Bank and Trust of Hazard, Kentucky independently valued at that time at $15.1 million in lieu of a debt owed to the Corporation by a Citizens' shareholder. On January 3, 2002, the Corporation acquired the remaining 24.72% of Citizens National for $4.9 million. Citizens National had total assets of $138.5 million and equity capital of $19.4 million as of December 31, 2001. On March 15, 2002, Citizens National was merged into the Corporation's lead bank, Community Trust Bank, National Association.

Note 3 - Securities

Securities are classified into held-to-maturity and available-for-sale categories. Held-to-maturity securities are those that the Corporation has the positive intent and ability to hold to maturity and are reported at amortized cost. Available-for-sale securities are those that the Corporation 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 available-for-sale as of September 30, 2002 are summarized as follows:

(in thousands)		Amortized Cost		Fair Value
U.S. Treasury and Government agencies		$	88,902	$	90,825
States and political subdivisions			156,987		159,745
Mortgage-backed pass through certificates			178,771		186,083
Collateralized mortgage obligations			8,278		8,631
Other debt securities			1,793		1,829
	Total debt securities		434,731		447,113
Equity securities			28,588		28,151
	Total available-for-sale securities	$	463,320	$	475,264

The amortized cost and fair value of securities held-to-maturity as of September 30, 2002 are summarized as follows:

(in thousands)		Amortized Cost		Fair Value
U.S. Treasury and Government agencies		$	37,317	$	38,553
States and political subdivisions			17,310		17,846
Mortgage-backed pass through certificates			28		28
Other debt securities			512		512
	Total held-to-maturity securities	$	55,167	$	56,939

The amortized cost and fair value of securities available-for-sale as of December 31, 2001 are summarized as follows:

(in thousands)		Amortized Cost		Fair Value
U.S. Treasury and Government agencies		$	51,726	$	51,347
States and political subdivisions			40,812		41,265
Mortgage-backed pass through certificates			229,400		232,505
Collateralized mortgage obligations			9,654		9,901
Other debt securities			26,258		26,343
	Total debt securities		357,850		361,361
Equity securities			6,368		5,872
	Total available-for-sale securities	$	364,218	$	367,233

The amortized cost and fair value of securities held-to-maturity as of December 31, 2001 are summarized as follows:

(in thousands)		Amortized Cost		Fair Value
U.S. Treasury and Government agencies		$	57,499	$	58,645
States and political subdivisions			23,739		24,341
Mortgage-backed pass through certificates			2,086		2,102
	Total held-to-maturity securities	$	83,324	$	85,088

Note 4 - Loans

Major classifications of loans are summarized as follows:

(in thousands)		September 30 2002		December 31 2001
Commercial, secured by real estate		$	502,879	$	510,070
Commercial, other			264,951		280,222
Real estate - construction			88,099		98,441
Real estate mortgage			388,992		423,952
Consumer			374,600		390,311
Equipment lease financing			8,607		6,830
	Total loans	$	1,628,128	$	1,709,826

Note 5 - Borrowings

Short-term debt consists of the following:

(in thousands)		September 30 2002		December 31 2001
Parent Company:
	$14 million revolving line of credit, 4.1875% interest due semiannually. Paid February 1, 2002.	$	0	$	8,000
Subsidiaries:
	Federal funds purchased		9,539		16,864
	Securities sold under agreements to repurchase		47,186		57,720
	Total short-term debt	$	56,725	$	82,584

On April 29, 2002, the Corporation entered into a 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 April 28, 2003.

All federal funds purchased and the majority of securities sold under agreements to repurchase mature and reprice daily. The average rates paid for federal funds purchased and repurchase agreements on September 30, 2002 were 1.80% and 2.19%, respectively.

Long-term debt consists of the following:

(in thousands)		September 30 2002		December 31 2001
Parent Company:
	Ten Year Senior Notes, 8.25% interest, due January 1, 2003; interest payable semiannually; redeemable in whole or in part at the option of the Corporation. Redeemed February 25, 2002.	$	0	$	12,230
Subsidiaries:
	Capital lease obligations, interest at lender's prime rate, payable in quarterly principal and interest installments of $53 thousand, adjusted for prime rate changes through September 2004, secured by real property. The Bank has a purchase option in September 2004 for $921 thousand or a renewal option for five years.		1,125		1,212
Other			2		2
	Total long-term debt	$	1,127	$	13,444

Note 6 - Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts Holding Solely the Junior Subordinated Debentures of the Corporation

The following table is a summary of the obligated trust preferred securities as of September 30, 2002.

(in thousands)

Issuance

Trust

Issuance Date

Amount

Rate Amount

Rate Type

Maturity Date

Redemption Date

CTBI Preferred Capital Trust

3/31/97

$34,500

9.00%

Fixed

3/31/27

3/31/07

CTBI Preferred Capital Trust II

2/1/02

$25,000

8.25%

Fixed

3/31/32

3/31/07

Note 7 - Subsequent Events

On October 24, 2002, the Corporation announced the declaration of a 10% stock dividend to shareholders of record on December 1, 2002. The dividend will be distributed on December 15, 2002. This dividend is in addition to the quarterly cash dividend of $0.21 per share that will be paid on January 1, 2003, to shareholders of record on December 15, 2002. This represents an increase of 10% in the quarterly cash dividend after adjusting for the stock dividend. The following table shows the impact on earnings per share and average shares outstanding for the quarter and nine months ended September 30, 2001 and September 30, 2002 as adjusted for this stock dividend.

(in thousands except per share data)	Three Months Ended September 30				Nine Months Ended September 30
	2002		2001		2002		2001
Basic earnings per share	$	0.64	$	0.42	$	1.65	$	1.29
Diluted earnings per share		0.63		0.42		1.64		1.29

Average shares outstanding		12,452		12,562		12,517		12,703

Item 2. Management's Discussion and Analysis of Financial Condition

and Results of Operations

Overview

Community Trust Bancorp, Inc. (the "Corporation") is a bank holding company headquartered in Pikeville, Kentucky. At September 30, 2002, the Corporation owned one commercial bank and one trust company. Through its subsidiaries, the Corporation has seventy-four banking locations in Eastern and Central Kentucky and West Virginia. The banking locations are segmented into eighteen markets within four regions. The Corporation had total assets of $2.4 billion and total shareholders' equity of $206.0 million as of September 30, 2002. The Corporation's common stock is listed on NASDAQ under the symbol CTBI. Current market participants are Ferris, Baker Watts Incorporated, Baltimore, Maryland; Herzog, Heine, Geduld, Inc., New York, New York; J.J.B. Hilliard, W.L. Lyons, Inc., Louisville, Kentucky; Keefe, Bruyette & Woods, Inc., New York, New York; FTN Financial First Tennessee Securities Corp., Nashville, Tennessee; Robinson Salomon Smith Barney, Atlanta, Georgia; Sandler O'Neill & Partners, New York, New York; Sherwood Securities Corp., New York, New York; and Spear, Leeds & Kellogg, New York, New York.

Charter Changes

On October 29, 2002, two of the Corporation's subsidiaries, Community Trust Bank, National Association ("Bank") and Trust Company of Kentucky, National Association ("Trust Company"), filed an application with the Kentucky Department of Financial Institutions requesting approval of the conversion of their charters to state charters from national associations. The Bank is also filing an application to remain a member of the Federal Reserve System following conversion. Following its conversion, Trust Company intends to change its name to Community Trust and Investment Company in order to identify more closely Trust Company with the Bank. While the Corporation believes that the conversions will result in some reduction in expenses, the conversions will not result in any changes in the management or operations of the Bank or Trust Company.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the financial statements.

The Corporation believes the application of accounting policies and the estimates required therein are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, the Corporation has found its application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

The Corporation's accounting policies are more fully described in note 1 to the condensed consolidated financial statements. The Corporation has identified the following critical accounting policies:

Loans are reported at the carrying value of unpaid principal reduced by unearned interest and an allowance for loan losses. Income is recorded on the level yield basis. Interest accrual is discontinued when management believes, after considering economic and business conditions, collateral value, and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Any loan greater than 90 days past due must be well secured and in the process of collection to continue accruing interest. Cash payments received on nonaccrual loans generally are applied against principal, and interest income is only recorded once principal recovery is reasonably assured. Loans are not reclassified as accruing until principal and interest payments are brought current and future payments appear reasonably certain.

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses, if any, would be recognized in a valuation allowance by charges to income.

The adequacy of the allowance is reviewed quarterly by management using a methodology that includes several key factors. The Corporation utilizes an internal risk grading system for commercial credits, and those larger commercial credits identified through this grading system as having weaknesses are individually reviewed for the customer's ability and potential to repay their loans. The borrower's cash flow, adequacy of collateral held for the loan, and other options available to the Corporation including legal avenues are all evaluated. Based upon this individual credit evaluation, a specific allocation to the allowance may be made for the loan.

For other commercial loans that are not individually evaluated, an allowance allocation is determined by applying an eight-quarter moving average historical loss rate for this group of loans. Consumer installment and residential mortgage loans are not individually risk graded. Allowance allocations are provided for these pools of loans based upon an eight-quarter moving average historical loss rate for each of these categories of loans.

An unallocated portion of the allowance is also determined in recognition of the inherent inability to precisely determine the loss potential in any particular loan or pool of loans. The factors considered by management in determining this amount of inherent risk include delinquency trends, current economic conditions and trends, strength of the supervision and administration of the loan portfolio, level of nonperforming loans, trend in loan losses, recovery rates associated with previously charged-off loans, concentrations within commercial credits, problem loan identification strengths and weaknesses, collateral evaluation strengths and weaknesses, and level of financial statement exceptions. These factors are reviewed quarterly and weighted as deemed appropriate by management. The total of these weighted factors is then applied against the total loan portfolio and the allowance is adjusted accordingly.

The Corporation has not substantively changed any aspect of its overall approach in the determination of the allowance for loan losses, except converting to an eight quarter moving average for determining historical loss rates, using specific allocations for homogenous pools of loans, and applying the inherent risk factors discussed above against the total loan portfolio instead of against the preliminary allowance calculation as was done previously. There have been no material changes in assumptions or estimation techniques as compared to prior years that impacted the determination of the current year allowance.

Effect of Accounting Change

Effective January 1, 2002, the Corporation adopted Statement of Financial Accounting Standard ("SFAS") No. 142, Goodwill and Other Intangible Assets. Upon adoption, the Corporation ceased amortizing goodwill of approximately $59.5 million arising from previous purchase transactions. This will reduce amortization expense on an annual basis beginning in 2002 by $3.1 million and increase earnings on an annual basis beginning in 2002 by $2.3 million. Goodwill will continue to be evaluated for impairment in accordance with SFAS No. 142. The Corporation believes its past branch acquisitions meet the provisions of SFAS No. 142 which requires that goodwill not be amortized but be evaluated for impairment. Third quarter and year-to-date 2002 earnings were positively impacted by $0.05 per share and $0.15 per share, respectively, due to the implementation of SFAS No. 142. The tables in note 1 to the financial statements show on a pro forma basis the results for the quarter and nine months ended September 30, 2001 had SFAS No. 142 been implemented on January 1, 2001.

Dividends

The following schedule shows the quarterly cash dividends paid for the past six quarters:

Pay Date	Record Date	Amount
October 1, 2002	September 15, 2002	21 cents per share
July 1, 2002	June 15, 2002	21 cents per share
April 1, 2002	March 15, 2002	21 cents per share
January 1, 2002	December 15, 2001	21 cents per share
October 1, 2001	September 15, 2001	20 cents per share
July 1, 2001	June 15, 2001	20 cents per share

Mergers and Acquisitions

Income Statement Review

The Corporation's net income for the three months ended September 30, 2002 was $7.9 million or $0.70 basic earnings per share. This exceeds by $0.24 per share the $5.3 million or $0.46 basic earnings per share earned during the same period in 2001. Earnings for the nine months ended September 30, 2002 were $20.6 million or $1.81 basic earnings per share, a 27.5% increase in earnings per share from the $16.4 million or $1.42 basic earnings per share earned during the first nine months of 2001. Third quarter and year-to-date 2002 earnings were positively impacted by $0.05 per share and $0.15 per share, respectively, due to the implementation of SFAS No. 142. Earnings per share for the quarter were also positively impacted by $0.09 per share due to gains on the sale of securities. Due to the high level of prepayments of residential mortgages resulting from refinancing in the current low interest rate environment, management made the decision to sell certain mortgage-backed securities for an after tax gain of $993 thousand. The Corporation had average shares outstanding of 11.4 million and 11.5 million for the nine months ended September 30, 2002 and 2001, respectively. The following table sets forth on an annualized basis the return on average assets and return on average shareholders' equity for the three and nine-month periods ended September 30, 2002 and 2001:

	Three months ended				Nine months ended
	September 30				September 30
	2002		2001		2002		2001
Return on average shareholders' equity	15.32	%	11.10	%	13.74	%	11.78	%
Return on average assets	1.30	%	0.86	%	1.12	%	0.91	%

Net Interest Income

Our net interest margin of 4.06% is a 37 basis point or 10.1% increase from the 3.69% for the quarter ended September 30, 2001. While the third quarter's net interest margin is an increase over the prior year third quarter, it reflects a 5 basis point decline from the prior quarter ended June 30, 2002. On November 6, 2002, the Federal Open Market Committee reduced the Federal Funds Sold rate to 1.25% from 1.75%. While the Corporation is negatively gapped over a 12-month period, it is positively gapped in the overnight to three-month period, meaning that more assets will be impacted by a rate change than liabilities. Management expects this short-term positive gap position to put continued pressure on its net interest margin. Interest income decreased $7.6 million or 17% for the quarter ending September 30, 2002 as compared to the same period in 2001, and interest expense decreased $9.6 million or 41%.

The following table summarizes the annualized net interest spread and net interest margin for the three and nine months ended September 30, 2002 and 2001.

	Three months ended				Nine months ended
	September 30				September 30
	2002		2001		2002		2001
Yield on interest earning assets	6.47	%	7.79	%	6.67	%	8.22	%
Cost of interest bearing funds	2.84	%	4.74	%	3.04	%	5.13	%

Net interest spread	3.63	%	3.05	%	3.63	%	3.09	%

Net interest margin	4.06	%	3.69	%	4.06	%	3.76	%

Provision for Loan Losses

The analysis of the changes in the allowance for loan losses and selected ratios is set forth below:

		Nine months ended
		September 30
(in thousands)		2002		2001

Allowance balance at January 1		$	23,648	$	25,886
	Additions to allowance charged against operations		8,416		6,345
	Recoveries credited to allowance		2,875		3,010
	Losses charged against allowance		(11,245)		(11,182)
Allowance balance at September 30		$	23,694	$	24,059

Allowance for loan losses to period-end loans		1.46		%	1.41	%

Average loans, net of unearned income		$	1,668,194	$	1,750,473

Provision for loan losses to average loans, annualized		0.67		%	0.48	%

Loan charge-offs net of recoveries, to average loans, annualized		0.67		%	0.62	%

Net charge-offs for the quarter ending September 30, 2002 were $3.0 million, an annualized rate of 0.72% of average loans compared to $2.9 million or an annualized rate of 0.65% of average loans for the quarter ending September 30, 2001. For the nine months ending September 30, 2002, charge-offs of $8.4 million or an annualized rate of 0.67% of average loans remained relatively flat compared to the $8.2 million or an annualized rate of 0.62% of average loans for the same period in 2001. Our reserve for losses on loans and leases as a percentage of total loans outstanding increased to 1.46% at September 30, 2002 from the 1.41% of September 30, 2001. Management increased its reserve for losses on loans to be reflective of currently weak economic conditions.

Noninterest Income

Noninterest income for the quarter and nine months ended September 30, 2002 of $8.7 million and $19.7 million, respectively, were 57.6% and 12.0% increases from the $5.5 million and $17.6 million earned during the same periods in 2001. The increases in noninterest income for the quarter and nine months ended September 30, 2002 are primarily the result of increased gains on sales of securities, increased deposit service charge revenue due to the implementation of our Overdraft Honor program, increased gains on sale of residential real estate loans due to increased refinancing activity, and increased other noninterest income.

Noninterest Expense

Noninterest expense for the third quarter 2002 of $16.8 million is a 7.0% increase from $15.7 million for the third quarter 2001 to $16.8 million for the third quarter 2002. The increase in noninterest expense was primarily due to a $1.4 million increase in personnel expense. The increase in personnel expense is primarily attributable to the implementation of a revised employee incentive program based on corporate performance resulting in a year-to-date increase in incentive expense of $0.5 million and an increase of $0.5 million in salaries. The increase in salary expense is due to the base salary costs associated with the acquisition of our Hazard Market, the filling of budgeted key positions within the Company, and annual merit increases.

Balance Sheet Review

The Corporation's assets decreased 3.3% from December 31, 2001 to September 30, 2002 from $2.5 billion to $2.4 billion. The Corporation's largest liability, deposits, decreased 3.8% to $2.1 billion from the $2.2 billion at December 31, 2001. Noninterest bearing deposits decreased 2.1% and interest bearing deposits decreased 4.1%.

Loans

The loan portfolio decreased from $1.7 billion at December 31, 2001 to $1.6 billion at September 30, 2002. The Company's balance sheet continues to be impacted by current economic conditions as is evidenced by the lack of internal loan growth resulting from the continuing weak commercial loan demand and the migration of portfolio residential real estate loans to long-term fixed rate secondary market loans.

Foreclosed properties on September 30, 2002 were $3.3 million, an increase from the $2.0 million reported at December 31, 2001. The increase is primarily reflective of normal foreclosure and liquidation activities in the residential loan portfolio.

Nonperforming loans amounted to 1.75% of total loans outstanding as of September 30, 2002 and 1.97% of total loans outstanding as of December 31, 2001. The decline in nonperforming loans is reflective of the Company's continuing focus on asset quality during this weak period in the economy. Specific reserves are established for all large loans where a loss may occur; therefore, no significant losses are anticipated except for those loans with specific reserve allocations.

The allowance for loan losses increased from 1.38% of total loans outstanding as of December 31, 2001 to 1.46% as of September 30, 2002. The allowance for loan losses as a percentage of nonperforming loans was 70.3% at December 31, 2001 and 83.0% at September 30, 2002.

The following table summarizes the Corporation's nonperforming loans as of September 30, 2002 and December 31, 2001.

(in thousands)		Nonaccrual loans		As a % of Loan Balances by Category		Restructured Loans		As a % of Loan Balances by Category		Accruing Loans Past Due 90 Days or More		As a % of Loan Balances by Category		Loan Portfolio Balances
September 30, 2002
Commercial loans-real estate secured		$	14,680	2.58	%	$	284	0.05	%	$	321	0.06	%	$	569,191
Commercial loans-other			2,631	0.96			0	0.00			315	0.12			273,558
Consumer loans-real estate secured			8,202	2.00			0	0.00			1,183	0.29			410,779
Consumer loans-other			86	0.02			0	0.00			838	0.22			374,600
	Total	$	25,599	1.57	%	$	284	0.02	%	$	2,657	0.16	%	$	1,628,128

December 31, 2001
Commercial loans-real estate secured		$	13,967	2.37	%	$	349	0.06	%	$	801	0.14	%	$	588,578
Commercial loans-other			7,030	2.45			169	0.06			358	0.12			287,052
Consumer loans-real estate secured			9,397	2.12			0	0.00			892	0.20			443,885
Consumer loans-other			102	0.03			0	0.00			589	0.15			390,311
	Total	$	30,496	1.78	%	$	518	0.03	%	$	2,640	0.15	%	$	1,709,826

Allowance for Loan Losses

Management analyzes the adequacy of its allowance for loan losses on a quarterly basis. The loan portfolio of each market is analyzed by each major loan category, with a review of the following areas: (i) specific allocations based upon a review of selected loans for loss potential; (ii) an allocation which estimates reserves based upon the remaining pool of loans in each category derived from historical net charge-off data; and (iii) an unallocated portion of the allowance using delinquency trends and other relevant factors which provides for a margin of error in estimating the allocations described above and provides for risks inherent in the portfolio which may not be specifically addressed elsewhere. Volume and trends in delinquencies are monitored monthly by management and the boards of directors of the Bank and the Corporation quarterly.

Securities

The Corporation uses its securities held-to-maturity for production of income and to manage cash flow needs through expected maturities. The Corporation uses its securities available-for-sale for income and balance sheet liquidity management. The fair value of securities available-for-sale increased from $367 million as of December 31, 2001 to $475 million at September 30, 2002. Securities held-to-maturity declined from $83 million to $55 million during the same period. Total securities as a percentage of total assets were 18.0% as of December 31, 2001 and 21.9% as of September 30, 2002.

Liquidity and Capital Resources

The Corporation's liquidity objectives are to ensure that funds are available for the subsidiary bank to meet deposit withdrawals and credit demands without unduly penalizing profitability, and to ensure that funding is available for the Corporation to meet ongoing cash needs while maximizing profitability. The Corporation continues to identify ways to provide for liquidity on both a current and long-term basis. The subsidiary bank relies mainly on core deposits, certificates of deposits of $100,000 or more, repayment of principal and interest on loans and securities and federal funds sold and purchased to create long-term liquidity. The subsidiary bank also relies on the sale of securities under repurchase agreements, securities available-for-sale and Federal Home Loan Bank borrowings.

Due to the nature of the markets served by the subsidiary bank, management believes that the majority of its certificates of deposits of $100,000 or more are no more volatile than its core deposits. During periods of interest rate volatility, these deposit balances have remained stable as a percentage of total deposits. In addition, an arrangement has been made with a correspondent bank for the purchase of federal funds on an unsecured basis, up to $20 million, if necessary, to meet the Corporation's liquidity needs.

The Corporation owns $475 million of securities valued at estimated fair value that are designated as available-for-sale and available to meet liquidity needs on a continuing basis. The Corporation also relies on Federal Home Loan Bank advances for both liquidity and management of its asset/liability position. Federal Home Loan Bank advances decreased from $9.5 million at December 31, 2001 to $6.5 million at September 30, 2002.

The Corporation generally relies upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash for its investing activities. As is typical of many financial institutions, significant financing activities include deposit gathering, use of short-term borrowing facilities such as federal funds purchased and securities sold under repurchase agreements, and issuance of long-term debt. The Corporation currently has a $12 million revolving line of credit, all of which is currently available to meet any future cash needs. The Corporation's primary investing activities include purchases of securities and loan originations.

During the third quarter of 2002, the Corporation continued its stock repurchase program, acquiring 133,892 shares of the Corporation's stock. The Corporation's stock repurchase program continues to be accretive to shareholder value. The Corporation began a program of stock repurchase in December 1998 with the authorization to acquire up to 500,000 shares. The Corporation issued a press release in July 2000 announcing its intention to repurchase up to an additional 1,000,000 shares. As of September 30, 2002, a total of 985,987 shares have been repurchased through this program.

In conjunction with maintaining a satisfactory level of liquidity, management monitors the degree of interest rate risk assumed on the balance sheet. The Corporation monitors its interest rate risk by use of the static gap model and dynamic gap model at the one-year interval. The Corporation uses the Sendero system to monitor its interest rate risk. The static gap model monitors the difference in interest rate sensitive assets and interest rate sensitive liabilities as a percentage of total assets that mature within the specified time frame. The dynamic gap model goes further in that it assumes that interest rate sensitive assets and liabilities will be reinvested. The Corporation desires an interest sensitivity gap of not more than fifteen percent of total assets at the one-year interval.

The Corporation's principal source of funds used to pay dividends to shareholders and service long-term debt is the dividends it receives from the subsidiary bank. Various federal statutory provisions, in addition to regulatory policies and directives, limit the amount of dividends that subsidiary banks can pay without prior regulatory approval. These restrictions have had no major impact on the Corporation's dividend policy or its ability to service long-term debt, nor is it anticipated that they would have any major impact in the foreseeable future. During the remainder of 2002, approximately $16.2 million plus any remaining 2002 net profits can be paid by the Corporation's banking subsidiary without prior regulatory approval.

The primary source of capital for the Corporation is retained earnings. The Corporation paid cash dividends of $0.63 per share during the first nine months of 2002 and $0.60 per share during the first nine months of 2001. Basic earnings per share for the same periods were $1.81 and $1.42, respectively. The Corporation retained 65% of earnings for the first nine months of 2002.

Under guidelines issued by banking regulators, the Corporation and its subsidiary bank are required to maintain a minimum Tier 1 risk-based capital ratio of 4% and a minimum total risk-based ratio of 8%. Risk-based capital ratios weight the relative risk factors of all assets and consider the risk associated with off-balance sheet items. The Corporation must also maintain a minimum Tier 1 leverage ratio of 4%. The Corporation's Tier 1 leverage, Tier 1 risk-based, and total risk-based ratios were 8.19%, 11.18%, and 12.43%, respectively as of September 30, 2002.

As of September 30, 2002, management is not aware of any current recommendations by banking regulatory authorities which, if they were to be implemented, would have, or would be reasonably likely to have, a material adverse impact on the Corporation's liquidity, capital resources, or operations.

Impact of Inflation and Changing Prices

The majority of the Corporation's assets and liabilities are monetary in nature. Therefore, the Corporation differs greatly from most commercial and industrial companies that have significant investment in nonmonetary assets, such as fixed assets and inventories. However, inflation does have an important impact on the growth of assets in the banking industry and on the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio. Inflation also affects other expenses, which tend to rise during periods of general inflation.

Management believes the most significant impact on financial and operating results is the Corporation's ability to react to changes in interest rates. Management seeks to maintain an essentially balanced position between interest rate sensitive assets and liabilities in order to protect against the effects of wide interest rate fluctuations.

FORWARD-LOOKING STATEMENTS

Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The Corporation's actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," and "could." These forward-looking statements involve risks and uncertainties including, but not limited to, economic conditions, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including the performance of financial markets, the performance of coal and coal related industries, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; results of various investment activities; the effects of competitors' pricing policies, of changes in laws and regulations on competition and of demographic changes on target market populations' savings and financial planning needs; industry changes in information technology systems on which we are highly dependent; failure of acquisitions to produce revenue enhancements or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; the adoption by the Corporation of an FFIEC policy that provides guidance on the reporting of delinquent consumer loans and the timing of associated credit charge-offs for financial institution subsidiaries; and the resolution of legal proceedings and related matters. In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and state regulators, whose policies and regulations could affect the Corporation's results. These statements are representative only on the date hereof, and the Corporation undertakes no obligation to update any forward-looking statements made.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk management focuses on maintaining consistent growth in net interest income within Board-approved policy limits. The Corporation uses an earnings simulation model to analyze net interest income sensitivity to movements in interest rates. Given an immediate, sustained 200 basis point increase to the yield curve used in the simulation model, it is estimated net interest income for the Corporation would decrease by 9.55 percent over one year and decrease by 5.57 percent over two years. A 200 basis point immediate, sustained decrease in the yield curve would increase net interest income by an estimated 6.94 percent over one year and increase by 11.18 percent over two years. For further discussion of the Corporation's market risk, see the Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Market Risk included in the Annual Report on Form 10-K for the year ended December 31, 2001.

Item 4. Controls and Procedures

Within 90 days prior to the filing date of this report, the Corporation performed an evaluation, under the supervision and with the participation of the Corporation's management, including the Corporation's Principal Executive Officer and Principal Financial Officer, of the effectiveness and the design and operation of the Corporation's disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that the Corporation's disclosure controls and procedures are effective in timely alerting them to material information relating to the Corporation required to be included in the Corporation's periodic SEC filings. Since the date of the Corporation's most recent evaluation, there were no significant changes in the Corporation's internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	None

Item 2.	Changes in Securities	None

Item 3.	Defaults Upon Senior Securities	None

Item 4.	Submission of Matters to a Vote of Security Holders	None

Item 5.	Other Information:
	The Company's principal executive officer and principal financial officer have furnished to the SEC the certification with respect to this Form 10-Q that is required by Section 906 of the Sarbanes-Oxley Act of 2002

Item 6.	Exhibits and Reports on Form 8-K:
	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Exhibit 99.1 Exhibit 99.2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COMMUNITY TRUST BANCORP, INC.

	By:



Date: November 14, 2002	/s/ Jean R. Hale
	Jean R. Hale
	Vice Chairman, President, and
	Chief Executive Officer


	/s/ Kevin J. Stumbo
	Kevin J. Stumbo
	Executive Vice President/Controller

Certification of Principal Executive Officer

I, Jean R. Hale, Vice Chairman, President, and Chief Executive Officer of the Corporation, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Community Trust Bancorp, Inc. (the "Corporation");

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements and other financial information included in this quarterly report fairly present in all material respects the financial condition, results of operation, and cash flows of the Corporation as of and for the periods presented in this quarterly report;

(4) The Corporation's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Corporation and we have:

(a) designed such disclosure controls and procedures to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the Corporation's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(5) The Corporation's other certifying officer and I have disclosed, based on our most recent evaluation, to the Corporation's auditors and the Audit Committee of the Corporation's Board of Directors:

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Corporation's ability to record, process, summarize, and report financial data and have identified for the Corporation's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's internal controls; and

(6) The Corporation's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ Jean R. Hale

Jean R. Hale

Vice Chairman, President and CEO

November 14, 2002

Certification of Principal Financial Officer

I, Kevin J. Stumbo, Executive Vice President/Controller of the Corporation, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Community Trust Bancorp, Inc. (the "Corporation");

(b) evaluated the effectiveness of the Corporation's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's internal controls; and

/s/ Kevin J. Stumbo

Kevin J. Stumbo

Executive Vice President/Controller

November 14, 2002